what are two effects of competitive advertising?

Question

please help me on my econ final thanks!

Answer 1

a price war

increase in innovation.

Answer 2

Speaking out of my a$$ here, so take it for what you think its worth.

If I had to guess, I would say:

1)higher prices, as companies pass on their advertising costs to the consumers

2)a more informed and better protected consumer.

Companies advertising provides information to potential customers that is very valuable. It allows the consumer to make a more informed purchasing decision. However, the customer ultimately pays for this information via higher prices as mentioned above.

Regarding advertising protecting consumers - advertising builds a brand image for a company. This image is very costly to maintain, and the high cost prevents companies from doing anything(particularly making crappy products) that would be detrimental to their image.

For example, assume Nike thought that they could cut expenses by making one out of every ten shoes defective. This strategy would save them in expenses in the short run, however, they know that in the long run it would cost them sales as their reputation would be tarnished. Therefore, the millions they have spent on advertising in order to differentiate themselves would have been wasted.

Hope that helps.

Answer 3

More money for the ad company
and more money for the advertisers

Answer 4

brand loyalty, and increase competion