Page 623 - Business Principles and Management

C HAPTER 22 A SSESSMENT

CASE IN POINT

CASE 22-1: Advertising: The Root of All Evil?
Peter and Torrie were watching television. During a commercial they
discussed how companies use advertising.
Peter: Companies spend too much money on advertising. If they would
spend less, the prices of products would be a lot lower. I heard
that companies that advertise on the Super Bowl program spend
more than $1 million for one ad.
Torrie: Companies are not only placing ads in the middle of shows, they’re
also putting them into movies and television shows. I think they
should remove ads from television and radio. I usually switch
between channels during commercials anyway.
Peter: It seems like advertising is everywhere. No matter where you go
or what you do, you see products promoted. My parents bought
a TiVo, so I don’t even see commercials on our system.
Torrie: It seems that companies advertise to get people to buy products
they don’t want. I’ve bought some things just because of the ad
and regretted it later. Companies with good products shouldn’t
have to advertise. People will find out about them from others
who try the products and like them.
Peter: The worst thing about advertising is that businesses can say any-
thing they want to about products, even if the statements are
untrue. They often criticize their competitors, making you think
there’s something wrong with the other product. After watching
or listening to an ad, you’re more confused than ever about what
to buy.

THINK CRITICALLY
1. Do you believe product prices would decrease if companies did not
advertise? Explain.
2. Explain why some companies would pay $1 million to advertise
during the Super Bowl.
3 What would happen to television and radio if advertising support
was dropped?
4. Do good products need to be advertised? Why or why not?
5. What types of controls are there on what a business can say in its
advertising? What can consumers do if they believe they have been
misled by advertising?
6. Do you believe advertising results in more confusion than help for
consumers? Justify your answer.
7. Do you think that the high level of advertising creates needs rather
than simply informing the customer of product benefits? Explain
your answer.
8. How do channel surfing and TiVo affect the effectiveness of advertis-
ing? How are companies shifting strategy in this new environment?
9. Develop an argument to convince Peter and Torrie that advertising
is a vital part of a marketing strategy.

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