Ad and Promo: Chapter 2
Much of the state legislation that deals with advertising is based on the
"truth-in-advertising" model developed by Printer's Ink, the industry trade paper for many years.
What effect does advertising have on consumer demand?
Advertising slows the rate of product decline.
The ____, an association of the largest ad agencies in the United States, monitors industry-wide advertising practices.
American Association of Advertising Agencies
Which of the following is the largest of the U.S. business-monitoring organizations?
Better business bureau
How do advertisers show their social responsibility
By providing millions of dollars of pro bono work to nonprofit organizations
To promote responsible children's advertising and to respond to public concerns, the Council of Better Business Bureaus established the:
Children's Advertising Review Unit (CARU).
_____ is defined as social action designed to dramatize the rights of the buying public.
Consumerism
_____ means doing what the advertiser and the advertiser's peers believe is morally right in a given situation.
Ethical advertising
Advertisers today do not use male and female stereotypes in their ads.
False
Deceptive advertising occurs when a consumer is "unjustifiably injured" or there is a "violation of public policy".
False
Intense competition cannot reduce the number of businesses in an industry
False
The FTC can request a company to use corrective advertising, but it may not legally require a company to do so.
False
The U.S. Supreme Court does not differentiate between speech and commercial speech.
False
The chief function of the consumer protection agencies found in many cities and counties is to act as a watchdog for the federal regulators.
False
The importance of advertising is best demonstrated by the iceberg principle.
False
Uniform newspaper advertising codes make it easy for advertisers to make sure that their ads meet all legal and ethical requirements.
False
The _____ has indirect control over advertising through its authority to license or revoke the license of all broadcasting stations.
Federal Communications Commission
How has the U.S. Supreme Court intervened in the rights of advertisers under the First Amendment?
It has distinguished between "speech" and "commercial speech" and offered significant protection for truthful commercial speech.
Which of the following statements about the proliferation of advertising is true?
Most people tolerate ad clutter as the price they must pay for freedom of the press, free TV and a high standard of living.
Which of the following statements is true about deceptive advertising?
Puffery can be called deceptive advertising when consumers believe it to be true.
Which of the following statements is true about how advertising affects competition?
Some observers believe that advertising actually restricts competition.
Which of the following statements about the Food and Drug Administration (FDA) is true?
The FDA has authority over the labeling, packaging and branding of all packaged foods and therapeutic devices.
An ad in a 1940 Time magazine states, "Listerine mouthwash reduces germs on up to 96.7% of tissue surfaces 15 minutes after a Listerine gargle. Which federal agency would have the authority to determine if this claim was correct?
The Food and Drug Administration
Which federal agency would have the authority to deal with the fact that a brand of hotdog marked "Low Fat" contains only ten percent less fat than regular hotdogs?
The Food and Drug Administration
Which of the following statements about how advertising affects price is true?
The consumer who buys the product pays for the advertising
Which of the following statements about consumer privacy issues is true
The fact Web sites gather information about visitors without knowledge of the visitors is a privacy concern.
Which of the following can be copyrighted?
The newest book by Dan Brown
According to the text, which of the following images best describes the chain reaction of economic events that takes place once a company begins to advertise?
The opening break shot in billiards
How does advertising affect the value of a product?
The value of advertising explains why someone would buy the more expensive Bayer aspirin rather than the store brand of aspirin that treats the same symptoms.
Which of the following statements is true about cease-and-desist orders?
They prohibit further use of the offending advertisement.
According to advertising supporters, it promotes a higher standard of living, subsidizes the arts and supports freedom of the press.
True
Adherence to ethical and socially responsible principles is the moral obligation of advertisers.
True
Advertising adds value to a brand by educating customers about new uses for a product.
True
Because there are so many federal, state and local agencies that regulate different aspects of advertising, advertisers sometimes find it difficult to comply with regulations.
True
Critics argue there is too much advertising due to the proliferation of new media.
True
Critics claim advertising is so powerful that consumers are helpless to defend themselves against it.
True
The big cursive G that appears in all ads for General Mills cereals is an example of a trademark.
True
The economic effect of advertising triggers off a chain reaction of hard to predict economic events.
True
The largest of the U.S. business-monitoring organizations is the Better Business Bureau.
True
When State Farm insurance uses advertising to show that it has lower rates than Progressive insurance, it is using comparative advertising.
True
When an ad states that chicken soup made with Swanson chicken broth "tastes as good as grandma", it is using puffery.
True
While most children and parents are still joint consumers, more and more children are becoming sole decision makers.
True
_____ advertising occurs when a consumer is "unjustifiably injured" or there is a "violation of public policy".
Unfair
Which of the following statements about the effects of advertising on the business cycle is true?
When business cycles are down, advertising may act as a stabilizing force.
According to the ____, if an economy produces more goods and services than can be consumed, advertising allows companies to compete more effectively for consumer dollars and keeps consumers informed of their selection alternatives
abundance principle
The Federal Trade Commission (FTC) regulates:
advertising for products sold in interstate commerce.
When Grace looked at the container of Roundup weed and grass killer, she saw a notice that read, "Avoid contact with eyes. This product can cause eye irritation". This _____ would be important to all of us who wanted to take the best possible care of our eyes.
affirmative disclosure
Under current law, the only product claims that are considered deceptive are those that:
are factually false and have the potential of misleading reasonable people.
Nike's Air Jordan XX3, the 23rd edition of the series of shoes endorsed by retired basketball star Michael Jordan, differs from its predecessors because it is the first basketball shoe shaped by what Nike calls "Nike Considered," an approach to design that favors environmentally-preferable materials, reduces toxic chemicals and curbs waste. By adopting such environmentally-supportive standards to make its products, Nike is:
behaving in a socially responsible fashion.
In 2005, Adolph Coors Co. ran an ad which featured a purported taste test between Aspen Edge and Anheuser-Busch's Michelob Ultra. A taste-tester downed a glass of Aspen Edge and took only a sip of Michelob Ultra. A print version of the ad said, "Beer drinkers agree that Aspen Edge has more taste than Michelob Ultra". This ad is an example of _____ advertising.
comparative
Two companies, Le Shuttle and P&O European Ferries, provide Europeans with the ability to cross the English Channel. An advertisement for Le Shuttle claimed it was more popular with travelers than P&O European Ferries. This is an example of _____ advertising.
comparative
A(n) _____ is a document that the advertiser accused of deceptive or unfair advertising signs in which it agrees to stop the objectionable advertising.
consent decree
When the Federal Trade Commission determines that an ad is deceptive or unfair, it can:
convince the advertiser to sign a consent decree.
Two companies, Le Shuttle and P&O European Ferries, provide Europeans with the ability to cross the English Channel. An advertisement for Le Shuttle claimed it was more popular with travelers than P&O European Ferries. P&O European Ferries lodged an objection with a European regulatory agency and pointed out that they had carried 1. 4 million cars in the previous year compared to only 1 million on the Shuttle. P&O European Ferries was hoping to get Le Shuttle to run _____ advertising.
corrective
The Federal Trade Commission has filed a complaint against Provide Commerce, the parent company of Pro-Flowers, for "false and misleading" advertising. Pro-Flowers claim that it ships inventory "directly from the fields". The ads imply that the flowers are not picked until they are ordered. Pro-Flowers actually stores flowers in refrigerated warehouses and ships from these warehouses. The FTC can order Pro-Flowers to run _____ and inform its customers that its flowers do not come fresh from the field.
corrective advertisement
The FTC defines _____ as any ad that contains a misrepresentation, omission or other practice that can mislead a significant number of reasonable consumers to their detriment.
deceptive advertising
Safeway, a UK supermarket chain, was reprimanded by a government agency in the United Kingdom because it distributed a leaflet titled "More reasons NOT to shop at Morrisons". (Morrisons is one of Safeway's primary competitors in the UK). In the leaflet, Safeway depicted two shopping receipts, one for Safeway and one for Morrisons. The Safeway receipt claimed goods purchased at Safeway were much cheaper than the same goods purchased at Morrisons. Morrsions said that the goods on the imaginary receipt were not typical purchases and that the reason they were cheaper on the Safeway receipt was because the goods were on sale in the Safeway store. The FTC would have said that Safeway was guilty of:
deceptive advertising.
U.S. Caviar ran ads in an onboard American Airlines magazine offering real Russian caviar at substantially lower prices than it typically sold for. Later FTC investigators determined that the caviar U.S. Caviar was selling as exotic Russian caviar was produced in the U.S. and was actually overpriced given its quality. U.S. Caviar engaged in:
deceptive advertising.
Socially responsible advertisers:
do what society views as best for the welfare of people in general.
With respect to offensiveness in advertising, Benetton ads frequently come under attack for its usage of nudity and sexual innuendo. Professionals indicate that the ultimate regulator of such ads is the fact that:
if the ads don't pull in the audience, the campaign will falter and die—the marketplace has the ultimate veto power.
The National Advertising Division (NAD) of the National Advertising Review Council (NARC):
is a monitoring and investigative body.
Good Housekeeping magazine places its "Seal of Approval" on all the products advertised in it. If any of the products are later found to be defective, Good Housekeeping promises to refund the money paid for the products. This kind of careful screening:
is a way for a medium to monitor its advertisements.
A trademark:
is any word, name, symbol or device or combination thereof, which identifies one particular product or line of products from a single source.
The abundance principle states that in an economy that produces more goods and services than can be consumed, advertising:
keeps consumers informed of their selection alternatives.
When advertisers spend millions of dollars trying to convince people that their products will make them sexier, healthier and more successful, they are trying to:
manipulate consumers' value systems.
Through the issuance of ____, the government provides incentives to invent, invest in and disclose new technology worldwide.
patents
According to the owner of NPC & Associates, Maryland's largest African-American-owned ad agency, "If you were to come from another planet and watch American television, you would think that all black people did was play basketball and hang out on street corners and do rap music." He is accusing advertising of:
perpetuating stereotypes.
Mike and Lou are going to the mall. Mike wants to buy a pair of jeans and Lou wants to buy a pair of Levi boot-cut jeans. Mike illustrates _____ demand while Lou illustrates _____ demand.
primary; selective
The primary purpose of the National Advertising Review Council is to:
promote and enforce standards of truth, accuracy, taste, morality and social responsibility in advertising.
_____ refers to exaggerated, subjective claims that can't be proven true or false.
puffery
In a 1940 issue of Time magazine, the Chesapeake and Ohio train lines advertised that riding its trains would provide travelers with "the most pleasant trip they have ever known." This advertiser is using:
puffery.
When the city of Pensacola, Florida, advertises itself as "the perfect place for the perfect Florida vacation", it is using:
puffery.
Maria is very upset because the writers' strike has caused her to have to live without learning what's to come with the women on Desperate Housewives and how dangerous the secret organization depicted in Heroes is. Her husband is happy as long as something mindless is on television. Maria is exhibiting _____ demand.
selective
According to the text, externalities are:
social costs.
Ever since the Napoleonic Wars, the British have used the derogatory term 'frogs' to refer to the French. When the London-based Institute Francais advertised French language courses at all levels from beginners to advanced students, it pictured the development of a frog in stages from egg through tadpole to full maturity. This would be an example of:
stereotype perpetuation.
The basic premise of _____ is that advertisers intentionally create ads with sexual messages that are hidden in the illustrations just below the limen.
subliminal advertising
Consumer advocate groups:
submit complaints about ads to appropriate government agencies.
A complaint was filed with the Federal Trade Commission that accused the film industry regularly advertised R-rated movies during television shows and in magazines most popular with children. In other words, the FTC investigated to see if the film industry was guilty of:
unfair advertising
In 2005, Adolph Coors Co. ran an ad which featured a purported taste test between Aspen Edge and Anheuser-Busch's Michelob Ultra. A taste-tester downed a glass of Aspen Edge and took only a sip of Michelob Ultra. A print version of the ad said, "Beer drinkers agree that Aspen Edge has more taste than Michelob Ultra". Coors was forced to remove the television advertisements after Anheuser-Busch said it made unsubstantiated claims about consumer preferences. Anheuser-Busch:
wanted to see the research data that supported this claim of superior taste.
According to Wilson Bryan Key, subliminal advertising:
works through embedded messages that seduce consumers into buying the good or service.
