Advertising Quiz 1

Externalities

benefit or harm caused by the sale or consumption of products to people who are not involved in the transaction and didn’t pay for the product

Added Value

the increase in worth of a product or service as a result of a particular activity. In the context of advertising, the added value is provided by the communication of benefits over and above those offered by the product itself

Primary Demand

demand for the entire product class (ex: needing a car, any car)

Selective Demand

demand for a particular brand (ex: wanting a Lamborghini)

Abundance Principle

an economy produces more goods and services than can be consumed; advertising keeps consumers informed of alternatives and it allows companies to compete more effectively for consumer dollars

Puffery

refers to exaggerated, opinionated claims that cannot be proven true or false (ex: “the best hamburger” or “the most comfortable shoe”)

Subliminal Advertising

advertisements with messages (often provocative) supposedly embedded in illustrations just below the threshold of perception

Ethical Advertising

doing what the advertiser and the advertiser’s peers believe is morally right in a given situation

Social Responsibility

doing what society or some group views as best for the welfare of people in general or for a specific community of people

Central Hudson test

Does the commercial speech at issue concern a lawful activity?

Does the restriction of commercial speech serve the asserted government interest substantially?

Does the regulation directly advance the government interest asserted?

Is the restriction no more than necessary to further the interest asserted?

CARU (Children’s Advertising Review Unit)

the review and evaluation of child-directed advertising in all media

General Data Protection Regulation (Europe)

strict regulations for how, when, and where companies doing business in Europe can collect and manage consumer data

California Consumer Privacy Act

California legislation that guarantees consumers have the right to know how their personal information is collected and shared and to demand that such information be erased

Federal Trade Commission (FTC)

major regulator of advertising; it is the FTC’s responsibility to maintain the existence of many sellers in marketplace, to provide more complete information to consumers, and to keep marketing activities as free of externalities as possible

Deceptive Advertising

any ad that contains a misrepresentation, omission, or any practice that is likely to mislead reasonable consumers to their detriment

Unfair Advertising

occurs when a consumer is “unjustifiably injured” or there is a “violation of public policy”

Comparative Advertising

advertising that claims superiority to competitors in some aspect; such ads are legal in the US as long as the comparison is truthfule

Substantiation

evidence that backs up cited survey finding or scientific studies that the FTC may request from a suspected advertising violator

Endorsements

the use of satisfied customers and celebrities to endorse a product; if an endorser is paid this must be disclosed

Affirmative Disclosure

advertisers must make known their product’s limitations or deficiencies (ex: EPA mileage rating for cars, pesticide warnings)

Consent Decree

a document advertisers sign, without admitting any wrongdoing, in which they agree to stop objectionable advertising

Cease and Desist

may be issued by the FTC if an advertiser won’t sign a consent decree; prohibits further use of an ad

Corrective Advertising

may be required by the FTC for a period of time to explain and correct offending ads

The Better Business Bureau

operates primarily at the local level to protect consumers against fraudulent and deceptive advertising and sales practices

The Advertising Self-Regulatory Council

primary purpose is to promote and enforce standards of truth, accuracy, taste, morality, and social responsibility in advertising

Marketing Communications

the various efforts and tools companies use to communicate with customers and prospects, including newspaper ads, event sponsorship, publicity, telemarketing, digital ads, and coupons

Advertising

a paid, mediated form of communication from an identifiable source, designed to persuade the receiver to take some action, now or in the future

Consumers

people who buy products and services for their own, or someone else’s, personal use

Public Service Announcements

an advertisement serving the public interest, often for a nonprofit organization, carried by the media at no charge

Medium

any nonpersonal means used to deliver an ad to its target audience

Word-of-Mouth

the passing of information, especially product recommendations, in an informal, unpaid, person-to-person manner, rather than by advertising or other forms of traditional marketing

Mass Media

print or broadcast media that reach very large audiences; mass media include radio, television, newspapers, magazines, and billboards

Goods

tangible products such as suits, soap, and soft drinks

Services

a bundle of benefits that may or may not be physical, that are temporary in nature, and that come from the completion of a task

Ideas

economic, political, religious, or social viewpoints that advertising may attempt to sell

Product

the particular good or service a company sells

Marketing

the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large

Process

a sequence of actions or methods aimed at satisfying consumer needs profitably

Marketing Mix (4P’s)

four elements (product, price, place, and promotion) that every company has the option of adding, subtracting, or modifying in order to create a desired marketing strategy

Advertising Strategy

will refine the target audience and define what response the advertiser is seeking; it consists of two sub strategies: the creative strategy and the media strategy

Economy

the production, distribution, and consumption of products by different people and groups

Four Fundamental Assumptions of Free Market Economics

Self-Interest

Complete Information

Many buyers and sellers

Absence of externalities (social costs)

Branding

a marketing function that identifies products and their source and differentiates them from all other products

Preindustrial Age

period of time between the beginning of written history and roughly the start of the nineteenth century, during which the invention of paper and the printing press and increased literacy gave rise to the first forms of written advertising; most people couldn’t read, so the signs often used symbols

Industrial Age

the period of time from the mid-1700s through the end of World War II when manufacturers were principally concerned with production

Consumer packaged goods

Everyday-use consumer products packaged by manufacturers and sold through retail outlets. Generally these are goods such as food and beverages, health and beauty care, cleaning products, and detergents that get used up and have to be replaced frequently

Product Differentiation

manufacturers portraying their brands as different from and better than similar competitive products through advertising, packaging, or physical product differences

Unique selling proposition (USP)

the distinctive benefits that make a product different than any other; reason marketers believe consumers will buy a product even though it may seem no different from many others just like it

Market segmentation

Strategy of identifying groups of people or organizations with certain shared needs and characteristics within the broad markets for consumer or business products and aggregating these groups into larger market segments according to their mutual interest in the product’s utility

Positioning

the association of a brand’s features and benefits with a particular set of customer needs, clearly differentiating it from the competition in the mind of the customer

Demarketing

term coined during the energy shortage of the 1970s and 1980s when advertising was used to slow the demand for products

Sales Promotion

a direct inducement offering extra incentives all along the marketing route—from manufacturers through distribution channels to customers—to accelerate the movement of the product from the producer to the consumer

Narrowcasting

delivering programming to a specific group defined by demographics and/or program content, rather than mass appeal; usually used to describe cable networks; the opposite of broadcasting

Cable Cutting

the practice of choosing to discontinue cable service and instead watch programming on demand over Internet services such as Netflix and others

OTT (over the top) video

video delivered by streaming over the Internet

Advertisers

companies that sponsor advertising for themselves and their products

Advertising Agencies

independent organizations of creative people and businesspeople that specialize in developing and preparing advertising plans, advertisements, and other promotional tools for advertisers; the agencies also arrange for or contract for purchases of space and time in various media

Suppliers

people and organizations that assist both advertisers and agencies in the preparation of advertising materials, such as photography, illustration, printing, and production

Local Advertising

advertising by businesses within a city or county directed toward customers within the same geographic area

Advertising Manager

the person who performs all the administrative, planning, budgeting, and coordinating functions. He or she may lay out ads, write ad copy, and select the media.

Product Advertising

advertising intended to promote goods and services; also a functional classification of advertising.

Sale Advertising

a type of retail advertising designed to stimulate the movement of particular merchandise or generally increase store traffic by placing the emphasis on special reduced prices

Institutional Advertising

a type of advertising that attempts to obtain favorable attention for the business as a whole, not for a specific product or service the store or business sells; the effects are intended to be long term

Classified Advertising

short, text-only ads appearing in the classified sections of print media or in online listings such as Craig’s List; typically used to locate and recruit new employees, offer services, or sell or lease new and used merchandise

Integrated Marketing Communications (IMC)

the process of building and reinforcing mutually profitable relationships with employees, customers, other stakeholders, and the general public by developing and coordinating a strategic communications program that enables them to make consecutive contact with the company/brand through a variety of media

Cooperative (co-op) Advertising

the sharing of advertising costs by the manufacturer and the distributor or retailer; the manufacturer may repay 50 or 100 percent of the dealer’s advertising costs or some other amount based on sales

Regional Advertisers

companies that operate in one part of the country and market exclusively to that region

National Advertisers

companies that advertise in several geographic regions or throughout the country

Centralized Advertising Department

a staff of employees, usually located at corporate headquarters, responsible for all the organization’s advertising; the department is often structured by product, advertising subfunction, end user, media, or geography

Brand Managers

the individuals within the advertiser’s company who are assigned the authority and responsibility for the successful marketing of a particular brand

Decentralized System

the establishment of advertising departments by products or brands or in various divisions, subsidiaries, countries, regions, or other categories that suit the firm’s needs, which operate with a major degree of independence

Multinational Corporations

corporations operating and investing throughout many countries and making decisions based availabilities worldwide

Global Marketers

multinationals that use a standardized approach to marketing and advertising in all countries

International Media

media serving several countries, usually without change, that is available to an international audience

Foreign Media

the local media of each country used by advertisers for campaigns targeted to consumers or businesses within a single country

Full-Service Advertising Agency

supplies both advertising and nonadvertising services in all areas of communications and promotion

General Consumer Agency

an agency that represents the widest variety of accounts, but it concentrates on companies that make goods purchased chiefly by consumers

business-to-business (B2B) agency

represents clients that market products to other businesses

Media-Buying Service

an organization that specializes in purchasing and packaging radio and television time

Interactive Agency

an advertising agency that specializes in the creation of ads for a digital medium

account executives (AEs)

the liaisons between the agency and the client; account executives are responsible both for managing all the agency’s services for the benefit of the client and for representing the agency’s point of view to the client

management (account) supervisors

managers who supervise account executives and who report to the agency’s director of account services

Account Planning

a hybrid discipline that bridges the gap between traditional research, account management, and creative direction whereby agency people represent the view of the consumer in order to better define and plan the client’s advertising program

Media Planning

the strategic identification and selection of media vehicles for a client’s advertising messages

Copywriters

people who create the words and concepts for ads and commercials

Art Directors

along with graphic designers and production artists, individuals who determine how the ad’s verbal and visual symbols will fit together

Creative Director

head of a creative team of agency copywriters and artists who is assigned to a client’s business and who is ultimately responsible for the creative product—the form the final ad takes

Production Department

the department in an advertising agency that is responsible for managing the steps that transform creative concepts into finished advertisements and collateral materials

Traffic Department

the department in an advertising agency that coordinates all phases of production and makes sure everything is completed before the deadline

Sales Promotion Department

in larger agencies, a staff to produce dealer ads, window posters, point-of-purchase displays, and dealer sales material

Departmental System

the organization of an ad agency into departments based on function: account services, creative services, marketing services, and administration

Group System

the organization of an ad agency into a number of little agencies or groups, each with the various people required to meet the needs of the particular clients being served by the group

Media Commission

compensation paid by a medium to recognized advertising agencies, traditionally 15 percent (16⅔ percent for outdoor), for advertising placed with it

Markup

a source of agency income gained by adding some amount to a supplier’s bill, usually 17.65 percent

Fee-Commission Combination

a pricing system in which an advertising agency charges the client a basic monthly fee for its services and also retains any media commissions earned

Straight-fee (retainer) method

a method of compensation for ad agency services in which a straight fee, or retainer, is based on a cost-plus-fixed-fees formula; under this system, the agency estimates the amount of personnel time required by the client, determines the cost of that personnel, and multiplies by some factor

Incentive System

a form of compensation in which the agency shares in the client’s success when a campaign attains specific, agreed-upon goals

in-house agency

agency wholly owned by an advertiser and set up and staffed to do all the work of an independent full-service agency

Speculative Presentation

an agency’s presentation of the advertisement it proposes using in the event it is hired; it is usually made at the request of a prospective client and is often not paid for by the client