Introduction
Advertising is a form of communication that typically attempts to persuade potential customers to purchase or to consume more of a particular brand of product or service. Advertising is both applauded and criticized not only for its role in selling products but also for its influence on the economy and on society. For years, critics have denigrated advertising for a wide range of sins - some real, some imagined.
Many people are influenced by the advertising, so nowadays this problem is very important and we have to know why it is so and how it works.
The target of this work is to find out the economic, social and regulatory aspects of advertising. We have to accomplish some tasks: to find out what is advertising, what is the economic impact of advertising, what is the social impact of advertising, what are regulatory aspects of advertising and of course we have to find out how advertising influenced children, for example. It is very important because children are that persons that can be influenced the easiest.
For that work I used theory from the books, but for examples I used internet resources.
1. The economic impact of advertising
The economic effect of advertising is like the break shot in billiards or pool. The moment a company begins to advertise, it sets off a chain reaction of economic events. The extent of the chain reaction, although hard to predict, is related to the force of the shot and the economic environment in which it occurred. So we have to consider seven economic questions.
The first is effect on the Value of Products. One advantage of the free-market system is that consumers can choose the values they want in the products they buy. If, for example, low price is important, they can buy an inexpensive economy car. If status and luxury are important, they can buy a fancy sedan or racy sports car. Many of our wants are emotional, social, or psychological rather than functional. One way we communicate who we are (or want to be) is through the products we purchase and display.
In terms of our economic framework, by adding value to products, advertising contributes to self-interest - for both the consumer and the advertiser. It also contributes to the number of sellers. That increases competition, which also serves the consumer’s self-interest.
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