Name: Advertising and Integrated Brand Promotion, International Edition 5th Edition Thomas O'Guinn - Test Bank - Eazyquizes
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Advertising and Integrated Brand Promotion, International Edition 5th Edition Thomas O’Guinn – Test Bank

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Chapter 2 – The Structure of the Advertising Industry: Advertisers, Agencies, Media Companies, and Support Organizations

TRUE/FALSE

While many facets of advertising have undergone a great deal of change since the early days of advertising, the essence of the creative process has remained constant.

ANS: T DIF: Easy REF: p. 44 OBJ: 2-1

TYP: Knowledge

In the 1990s, full-service agencies acquired and merged with other full-service agencies and interactive shops. One such merger sequence began when Leo Burnett (the long-standing Chicago-based full-service agency) merged with the MacManus group to create a $1.7 billion-a-year agency known as Omnicom.

ANS: F DIF: Moderate REF: p. 45 OBJ: 2-1

TYP: Comprehension

The increased number of cable television stations, new direct marketing technology, Web options, and alternative new media has caused a consolidation of media options.

ANS: F DIF: Moderate REF: p. 46 OBJ: 2-1

TYP: Comprehension

Advertisers are looking to the full complement of promotional opportunities in sales promotions, event sponsorships, new media options, and public relations instead of the primary advertising efforts of brands.

ANS: F DIF: Moderate REF: p. 47 OBJ: 2-1

TYP: Comprehension

Media clutter, once a major problem of the mass media, has intensified as a barrier to quality advertising messages because of the introduction of new technologies and their contribution to an increased number of messages.

ANS: T DIF: Difficult REF: p. 46-47 OBJ: 2-1

TYP: Comprehension

Given the backlash against advertising that clutter can cause, advertisers and their agencies are spending more money for longer messages as the best way to communicate with consumers.

ANS: F DIF: Easy REF: p. 47 OBJ: 2-1

TYP: Comprehension

While the amount spent on advertising across the world has increased, it has actually decreased in the United States. This has caused agencies in the United States to look overseas for growth possibilities.

ANS: F DIF: Difficult REF: p. 50 OBJ: 2-2

TYP: Application

Spending on all forms of advertising and promotion has not yet reached 250 billion dollars.

ANS: F DIF: Difficult REF: p. 50-51 OBJ: 2-2

TYP: Comprehension

Different types of advertisers each use advertising somewhat differently, depending on how big their budgets are.

ANS: F DIF: Moderate REF: p. 52 OBJ: 2-3

TYP: Comprehension

Manufacturers, service firms, governments, social organizations and agencies all participate in the advertising process in one way or another.

ANS: T DIF: Moderate REF: p. 53-55 OBJ: 2-3

TYP: Comprehension

Howard Davis, retired CEO of the full-service advertising agency Tracy-Locke, refers to the creative process in the industry as the “art of the brand”.

ANS: F DIF: Difficult REF: p. 63 OBJ: 2-3

TYP: Application

Most large agencies, such as Omnicom, Chiat/Day, and Fallon McElligott, set up their own interactive media groups years ago in response to client demands that the Internet media option be included in nearly every IBP plan.

ANS: T DIF: Difficult REF: p. 64 OBJ: 2-3

TYP: Application

Advertising by social organizations at the national level is common but not at state and local levels.

ANS: F DIF: Moderate REF: p. 54 OBJ: 2-3

TYP: Comprehension

The reason GAP, Calvin Klein, and Revlon rely on advertising agencies is that agencies house a collection of professionals with very specialized talent, experience, and expertise that simply cannot be matched by their in-house talent.

ANS: F DIF: Moderate REF: p. 58 OBJ: 2-3

TYP: Application

Unilever decided to turn over its $575 million media-buying and planning tasks to MindShare Worldwide, an ad agency which now creates its ads.

ANS: F DIF: Moderate REF: p. 59 OBJ: 2-3

TYP: Application

Gap, Calvin Klein, and Revlon have developed their own in-house agencies because of economic reasons, and the fact that their in house agencies have brand specific control over and knowledge of their own marketing activities.

ANS: T DIF: Difficult REF: p. 58 OBJ: 2-3

TYP: Application

A creative boutique like E-volution Media or Fusion Idea Lab specializes in the creation of inventive advertising concepts.

ANS: T DIF: Difficult REF: p. 57 OBJ: 2-3

TYP: Application

Cramer-Kasselt advertising is a mid-sized advertising agency that has a select list of relatively smaller budget clients including Air-Tran and Bombardier ATVs. The company is nevertheless considered a “full service” agency because it provides a wide array of promotional services.

ANS: T DIF: Difficult REF: p. 57 OBJ: 2-3

TYP: Application

Interactive agencies help advertisers prepare communications for new media on the world wide web.

ANS: T DIF: Easy REF: p. 57 OBJ: 2-3

TYP: Knowledge

DeeAnne Watson ensures that research is part of each creative development decision; she is a media planner.

ANS: F DIF: Moderate REF: p. 63 OBJ: 2-4

TYP: Application

Over the past two decades, and particularly in the past three years with the change in consumer media use, most agencies like J Walter Thompson now operate under a variety of compensation contracts from the traditional 15% commission to fee-based services and pay for results.

ANS: T DIF: Difficult REF: p. 64-65 OBJ: 2-3

TYP: Application

There are four typical agency compensation systems used in modern advertising including commission, markup, fee, and pay-for-results.

ANS: T DIF: Difficult REF: p. 64-65 OBJ: 2-3

TYP: Comprehension

A fee system is much like that used by consultants or attorneys, whereby the advertiser and the agency agree on a fixed percentage of the media spending amount.

ANS: F DIF: Easy REF: p. 64-65 OBJ: 2-3

TYP: Knowledge

Direct marketing agencies and database agencies (sometimes also called direct response agencies) provide a variety of direct marketing services and maintain and manage large websites as one of their services.

ANS: F DIF: Moderate REF: p. 60 OBJ: 2-4

TYP: Knowledge

While playing golf, Tom sees a billboard on the adjoining highway for McDonald’s. This is an example of interactive advertising because Tom responds by having lunch at the Golden Arches.

ANS: F DIF: Easy REF: p. 70 OBJ: 2-4

TYP: Application

MULTIPLE CHOICE

With media consolidation and fragmentation, there are

a.	opportunities for accreditation of advertising agency principals.
b.	many more types of “players” in the industry.
c.	less and less media choices available to advertisers.
d.	more receptive consumers than ever before.

ANS: B DIF: Difficult REF: p. 42-43 OBJ: 2-1

TYP: Comprehension

Which one of the following is not a trend affecting the advertising industry?

a.	Media proliferation and consolidation.
b.	A return to strict 25% commission compensation for advertising agencies.
c.	The undoing of Agency Consolidation and Globalization.
d.	Media evolution and clutter.

ANS: B DIF: Moderate REF: p. 42 OBJ: 2-1

TYP: Comprehension

The high speed technology that allows consumers to customize programming received over the Internet:

a.	is known as broadband.
b.	is an example of the halo effort.
c.	is an example of scattering.
d.	forbids localization of a master network.

ANS: A DIF: Easy REF: p. 70 OBJ: 2-1

TYP: Knowledge

InterActiveCorp (IAC) has amassed a media empire of Internet sites that is as diverse as it is successful. The holdings include all but this one of these web companies:

a.	Ask.com
b.	Amazon.com
c.	Ticketmaster
d.	Lending Tree

ANS: B DIF: Difficult REF: p. 46 OBJ: 2-1

TYP: Knowledge

Web sites frequented by individuals with common interest where they can post facts, opinions, and personal experiences, are emerging as new and sophisticated sources of product and brand information. They are known as:

a.	piracy
b.	media proliferation
c.	fragmentation
d.	blogs

ANS: D DIF: Moderate REF: p. 47 OBJ: 2-1

TYP: Knowledge

Which one of the following is an interactive broadband television news network that allows Web users to customize their news broadcasts to their personal preference?

a.	The FeedRoom
b.	Thesaurus.com
c.	FledglingMedia.com
d.	TheNewsSource

ANS: A DIF: Difficult REF: p. 70 OBJ: 2-1

TYP: Application

Which one of the statements regarding advertising compensation is true?

a.	Advertising competition has not changed since Volney B. Palmer created the first agency.
b.	Agencies now work for the company on the advertisers payroll.
c.	Agencies working abroad are not entitled to agency commission on international media.
d.	P & G’s Global Marketing Officer identified the basis for compensation change when he declared that the media model based on the 30-second TV spot was broken.

ANS: D DIF: Difficult REF: p. 65 OBJ: 2-2

TYP: Application

Today, expenditures worldwide on all forms of promotion is:

a.	$25 billion
b.	$50 billion
c.	$200 billion
d.	$1 trillion

ANS: D DIF: Moderate REF: p. 49 OBJ: 2-2

TYP: Knowledge

Production is the area where advertisers and their agencies rely most heavily on external facilitators. Who are the specialists who offer essential services both during and after the production process?

a.	Marketing research firms
b.	Bankers
c.	Production facilitators
d.	Preceptors

ANS: C DIF: Difficult REF: p. 68 OBJ: 2-2

TYP: Knowledge

Advertising is a major business in the United States. One indication of this is the fact that

a.	advertising agencies do not have to actively compete to get business.
b.	advertising in the United States is subject to the fewest government restrictions of any country in the world.
c.	of the estimated $600 Billion spent worldwide, the United States accounts for half.
d.	only agencies in the United States are financially capable of offering a complete range of advertising services.

ANS: C DIF: Moderate REF: p. 49 OBJ: 2-2

TYP: Comprehension

Event sponsorships can be targeted to household consumers or trade markets. The type of agency that specializes in this form of advertising is called:

a.	An advertising research firm
b.	A client
c.	An event-planning agency
d.	An accounting firm, specializing in the account

ANS: C DIF: Moderate REF: p. 61 OBJ: 2-3

TYP: Knowledge

When one considers the largest manufacturing organizations in the United States, it is clear that they all have one thing in common. They all

a.	use advertising better than small manufacturers.
b.	are the most prominent users of promotion.
c.	engage in international advertising.
d.	are resellers of products.

ANS: B DIF: Moderate REF: p. 53 OBJ: 2-3

TYP: Comprehension

A regional fast food chain, Chopsticks, features rice bowls as a mainline product and is interested in expanding into a new market. What type of firm might conduct the research needed to expand into the new market?

a.	the advertiser because they know the product best
b.	an advertising agency because it is imaginative
c.	an external facilitator like a marketing or advertising research firm
d.	media organizations because they have large datasets available

ANS: C DIF: Moderate REF: p. 66 OBJ: 2-3

TYP: Application

The Seaside Resort & Hospitality Company wants to purchase land and construct a resort hotel on the shorefront in San Clemente, California next to the Nixon retreat. However, the resort company would also like to construct a golf course on the property as well and needs help with local political relationships to accomplish this. The company might hire which of the following to assist in the project?

a.	A creative boutique
b.	A consultant.
c.	A sports marketing company.
d.	A wholesale company.

ANS: B DIF: Moderate REF: p. 67 OBJ: 2-3

TYP: Application

McMann and Young advertising agency has been hired by Broadway Bicycles, Inc. to assist with advertising and promotions for a chain of bicycle stores in Vermont. The agency has agreed that a certain level of awareness and interest in Broadway Bicycles will be generated in order to gain the sales results the company desires, and they have agreed to be paid accordingly. This is called:

a.	pay-for-results compensation
b.	retainer
c.	cost plus
d.	amortization

ANS: A DIF: Difficult REF: p. 65-66 OBJ: 2-3

TYP: Application

The United States federal government spends more than $1.2 billion in advertising. Most of that money is spent in two areas. Those areas are

a.	social issue advertising and armed forces recruitment.
b.	campaign advertising and armed forces recruitment.
c.	social issue advertising and political campaign advertising.
d.	lottery advertising and armed forces recruitment.

ANS: A DIF: Moderate REF: p. 54 OBJ: 2-3

TYP: Application

A local group called Gimme Shelter erected a billboard urging people to help in the group’s struggle to find shelter for the homeless. The same day, Duplico launches a multimillion dollar, multinational advertising campaign to sell a new brand of office copying machine. Which one of these statements regarding these efforts is true?

a.	Gimme Shelter must be concerned with media clutter; Duplico need not worry about it.
b.	Both are committed to using advertising and other promotional tools as part of the organizations overall marketing strategy to grow the brand
c.	Both groups will not pay for their advertising.
d.	Gimme Shelter is attempting to shape behavior; Duplico is not.

ANS: B DIF: Difficult REF: p. 53-54 OBJ: 2-3

TYP: Application

Which of the following would not be classified as an advertiser?

a.	I.R.S. Audit Department
b.	The Limited Stores
c.	Merrill Lynch
d.	U.S. Government

ANS: A DIF: Moderate REF: p. 53-544 OBJ: 2-3

TYP: Application

The most visible reseller advertisers are:

a.	wholesalers like Simpatico Foods, Inc.
b.	industrial organizations
c.	transportation companies like DHL and Southern Pacific Railroad
d.	retailers that sell in national or global markets like Sears, The Limited and McDonald’s

ANS: D DIF: Moderate REF: p. 53 OBJ: 2-3

TYP: Application

Buds ‘n’ Stuff, a chain of garden supply stores, handles most of its own marketing services. It wants an agency that will provide it with one aspect of the communications mix: the actual advertisements for its chain. Therefore, they will look for

a.	a full-service agency.
b.	a consultation firm.
c.	an in-house agency.
d.	a creative boutique.

ANS: D DIF: Moderate REF: p. 57 OBJ: 2-3

TYP: Comprehension

An organization that provides only copywriting and artistic services to its clients is a(n)

a.	full-service agency.
b.	creative boutique.
c.	media buying service.
d.	in-house agency.

ANS: B DIF: Moderate REF: p. 57 OBJ: 2-3

TYP: Knowledge

There are many types of external facilitators in the advertising community. ____ help advertisers help advertisers prepare communications for new media.

a.	Production facilitators
b.	Communication organizations
c.	advertising research firms
d.	interactive agencies

ANS: D DIF: Moderate REF: p. 57 OBJ: 2-3

TYP: Comprehension

Which of the following is considered to be an element of interactive media?

a.	kiosks
b.	directories
c.	satellite radio
d.	cable television

ANS: A DIF: Moderate REF: p. 69 OBJ: 2-3

TYP: Knowledge

A(n) ____ agency is often referred to as the advertising department within a firm.

a.	in-house
b.	interactive
c.	media-buying
d.	creative boutique

ANS: A DIF: Easy REF: p. 58 OBJ: 2-4

TYP: Knowledge

The person in an advertising agency who will work with the client in translating cultural and consumer values into advertising messages is the

a.	account executive.
b.	director of production.
c.	media services director.
d.	administrative executive.

ANS: A DIF: Easy REF: p. 62 OBJ: 2-3

TYP: Knowledge

____ is responsible for coming up with the concepts that express the benefits of a brand to a target audience.

a.	The research department
b.	Creative and production services
c.	Account services
d.	The direct-marketing department

ANS: B DIF: Easy REF: p. 63 OBJ: 2-3

TYP: Knowledge

Art directors and copywriters are typically found in the ____ department of an advertising agency.

a.	account services
b.	marketing services
c.	creative services
d.	production services

ANS: C DIF: Easy REF: p. 63 OBJ: 2-3

TYP: Knowledge

One method of agency compensation has been accused of encouraging advertising agencies to recommend the most costly media vehicles available. This method is

a.	the fee system.
b.	the markup charge system.
c.	the retainer system.
d.	the commission system.

ANS: D DIF: Moderate REF: p. 64 OBJ: 2-3

TYP: Comprehension

Under the traditional commission system for compensating agencies for their work, how much money would an agency receive from billing $500,000 of television airtime?

a.	$150,00
b.	$125,000
c.	$100,000
d.	$75,000

ANS: D DIF: Moderate REF: p. 64 OBJ: 2-3

TYP: Knowledge

When an ad agency uses a compensation system much like that used by consultants or attorneys to bill clients, it is using

a.	a commission system.
b.	markup charges.
c.	a fee system.
d.	a media commission system.

ANS: C DIF: Easy REF: p. 65 OBJ: 2-3

TYP: Knowledge

Dooley, Fishback and Waller advertising agency sets an hourly rate for its services. The rate is based on the average salary of all the members of a particular department. This is an example of

a.	the fee system.
b.	the fixed-fee system.
c.	the markup charge system.
d.	the commission system.

ANS: A DIF: Moderate REF: p. 65 OBJ: 2-3

TYP: Application

Recently, advertising agencies have developed compensation programs that are based upon achievement of specific objectives for the client. These programs are known as ____ compensation.

a.	fee-based
b.	pay-for-results
c.	commission
d.	markup

ANS: B DIF: Moderate REF: p. 65-66 OBJ: 2-3

TYP: Comprehension

Van Poolen and Associates has been a successful mid-sized, full-service advertising agency for more than two decades. In an attempt to serve its clients more efficiently in a competitive marketplace, the agency has changed its compensation package to include payment based on results. If the client agrees, what results must Van Poolen and Associates not agree to?

a.	Increasing brand awareness
b.	Generating sales increases versus previous year
c.	Changing target consumer attitude toward brand
d.	Flex-pay following in-market performance measures

ANS: B DIF: Moderate REF: p. 66 OBJ: 2-3

TYP: Application

The reason many firms rely on advertising agencies is:

a.	they are lazy
b.	fewer agencies are providing a full range of services.
c.	more agencies are hiring marketing people.
d.	agencies house a collection of professionals with very specialized talent, experience, and expertise that simply cannot be matched by in-house talent.

ANS: D DIF: Easy REF: p. 55 OBJ: 2-3

TYP: Comprehension

Which of the following is not an external facilitator in the structure of the advertising industry?

a.	Advertising research firm
b.	Major television network
c.	Creative consultant
d.	Songwriter

ANS: B DIF: Moderate REF: p. 68 OBJ: 2-4

TYP: Comprehension

An advertising agency hires Starch INRA Hooper to act as an external facilitator. Most likely, Starch INRA Hooper will be asked to

a.	examine the agency’s billing structure for inefficiencies.
b.	aid the agency in the production process.
c.	run recognition tests on print advertising.
d.	oversee the agency’s IBP efforts.

ANS: C DIF: Difficult REF: p. 68 OBJ: 2-4

TYP: Application

Porter, Goss, and Norander advertising agency decided to add public relations and media buying to the creative services it offers clients today. What kind of agency will it become?

a.	Creative boutique
b.	Large
c.	Full service
d.	Promotion

ANS: C DIF: Moderate REF: p. 52 OBJ: 2-3

TYP: Application

Which of the following is an external facilitator?

a.	public relations firm.
b.	direct marketing firm.
c.	marketing research provider
d.	Internet web provider.
e.	sales promotion agency.

ANS: C DIF: Easy REF: p. 61 OBJ: 2-4

TYP: Knowledge

Which of the following is a promotion agency available to advertisers?

a.	Direct marketing and database agency
b.	An e-commerce agency
c.	Event planning agency
d.	All of these

ANS: D DIF: Moderate REF: p. 60-61 OBJ: 2-3

TYP: Comprehension

Which of the following is true of organizations whose audiences are primarily non-consumer business and government audiences?

a.	They only use personal selling to further their business goals
b.	Few rely on public relations to maintain their brand images
c.	Many engage in IBP and use the full variety of IBP tools
d.	They rely primarily on business journals written for their industries

ANS: C DIF: Moderate REF: p. 70 OBJ: 2-4

TYP: Comprehension

Scenario 2-1

Golf America is a small, national golf company that owns and operates two dozen golf courses in sunbelt cities in the Southwest, Texas, Florida and North Carolina. The company prides itself on buying older courses and investing in them to increase membership, outside play, and update the facility. Members of existing clubs see tremendous changes in grounds, landscaping, food service and golf amenities when Golf America assumes ownership and management responsibilities. In each market in which it owned and operates, Golf America engages a marketing group or agency to assist with communications and promotions.

(Scenario 2-1) Golf America enters a new market in which the new course they have purchased has a fifty-year history in the community. It is important to the new owners to enhance the reputation of the course, continue the relationship with existing members, yet at the same time invite new members to join and sponsor promotions to entice outside play to fill in the unused tee times and maximize course revenues. Most likely, Golf America would engage the following type of agency to manage its relationships:

a.	Full-Service advertising agency.
b.	Promotional agency.
c.	Interactive agency.
d.	Creative boutique.

ANS: A DIF: Moderate REF: p. 56-57 OBJ: 2-3

TYP: Application

(Scenario 2-1) Golf America has decided against forming an in-house advertising agency because it feels it needs representation in local markets from people who have established reputations. What other reason would there be NOT to form an in-house agency?

a.	Golf America is excellent at golf management.
b.	Golf America knows golf, but does not have employees who are experts in advertising.
c.	Golf America courses are noted for challenging design.
d.	All the pros that work for the company are sanctioned golf professionals

ANS: B DIF: Difficult REF: p. 55-56 OBJ: 2-3

TYP: Application

(Scenario 2-1) Golf America just purchased a new golf course in Palm Springs. The course has long been the home of a “celebrity” golf tournament that in recent years has not been well attended. In order to spur interest in the tournament, Golf America decides to hire Golf Events & Tournaments, Inc. Which type of agency has Golf America hired for this project?

a.	Trade Reseller.
b.	Marketing Research Firm.
c.	Media Buying Firm.
d.	Promotion Agency.

ANS: D DIF: Difficult REF: p. 59 OBJ: 2-3

TYP: Application

(Scenario 2-1) Golf America is also considering hiring an external facilitator to develop an on-line presence and sell golf membership, tee times at its courses and golf merchandise from its proshops on-line. What type of firm might it hire?

a.	an e-commerce agency.
b.	an information intermediator.
c.	a direct-marketing expert.
d.	a media conglomerate.

ANS: A DIF: Difficult REF: p. 59-60 OBJ: 2-3

TYP: Application

(Scenario 2-1) Golf America may enlist the services of Handley & Scott, a public relations firm. One goal of the public relations firm would be to

a.	moderate creative and strategic differences between Golf America and its advertising agency.
b.	sell the product to businesses and government agencies.
c.	create awareness, understanding, and goodwill toward Golf America courses, its employees and golf professionals, and facilities.
d.	design and operate contests, sweepstakes, and special displays for Golf America.

ANS: C DIF: Moderate REF: p. 61 OBJ: 2-3

TYP: Application

Scenario 2-2

Brush Strokes is an art supply store located in a town with a population of about 100,000 people. The town is also home to a major state university. Brush Strokes gets a majority of its business from the student population. It has used the services of a local full-service advertising agency in the past. A great majority of its marketing budget has gone toward running small advertisements in the local and school newspapers at the beginning of each term. The advertising agency is now recommending that Brush Strokes devote a majority of its budget to running television spots during broadcasts of the university’s football and basketball games. While the owners of Brush Strokes agree that they could be doing a better job of reaching the student population, they have not come to any conclusions about the best way to accomplish this.

(Scenario 2-2) In all likelihood, with which one of the following would Brush Strokes’s full service agency be least qualified to handle?

a.	Forecasting dividend earnings of stockholders.
b.	Creating a 30-second television commercial
c.	Interpreting research on the student market
d.	Creating a competitive position against other art supply stores

ANS: A DIF: Easy REF: p. 56-59 OBJ: 2-3

TYP: Application

(Scenario 2-2) The owners of Brush Strokes have called a meeting with their agency to determine how Brush Strokes can benefit best from its advertising. The one agency department that must be represented at this meeting is

a.	account services.
b.	administrative services.
c.	media-planning services.
d.	creative services.

ANS: A DIF: Moderate REF: p. 62 OBJ: 2-3

TYP: Application

(Scenario 2-2) The owners of Brush Strokes are concerned that their agency may be recommending television advertising because it would be profitable for the agency. To protect against this, Brush Strokes should suggest that compensation for the agency should be

a.	set at a 15 percent commission with no additional charges.
b.	changed from a commission system to a fee system.
c.	based on services plus markup
d.	changed to a pay-for-results basis for compensation

ANS: D DIF: Moderate REF: p. 64-65 OBJ: 2-3

TYP: Application

(Scenario 2-2) The agency has informed Brush Strokes that if Brush Strokes agrees to its recommendation, the agency will have to rely heavily on outside sources. In all likelihood, the area the agency will seek the most help in will be

a.	developing the strategy behind the spots.
b.	creating the ideas for the spots.
c.	producing the spots.
d.	assessing the effectiveness of the spots.

ANS: C DIF: Moderate REF: p. 63-64 OBJ: 2-4

TYP: Application

(Scenario 2-2) As a small business, Brush Strokes is always looking for ways to trim its expenses. Which one of the following would be an effective strategy?

a.	Move consumer advertising in house.
b.	Assign the project to a media conglomerate.
c.	Shift half the advertising budget to an interactive agency specializing in college age target audiences
d.	Use a media-buying service.

ANS: C DIF: Moderate REF: p. 57 OBJ: 2-4

TYP: Comprehension

Scenario 2-3

ABC television network notified the Miss America Organization that it would not pick up the show for broadcast in 2005, leaving the pageant without a major broadcast outlet for the first time in 50 years. The news cannot have come as a shock to the Miss America Organization. A little more than a decade ago, the competition that started as an Atlantic City publicity stunt had grown to about 27 million viewers; in 2004, it drew a record-low 9.8 million, with the median age of the Miss America audience at 51. ABC paid $5.6 million for broadcast rights to the pageant in 2003. ABC, which took over the pageant after 30-year sponsor NBC bowed out, was not doing Miss America any favors airing it on Saturdays — a low-viewership night.

(“No More Miss America Pageantry for ABC,” Washington Post.com, Lisa de Moraes,

October 21, 2004)

(Scenario 2-3) The Miss America Pageant has had a struggle over the last few years in gaining the viewers and resulting ratings and advertising revenues from airing the program on network television. The board of directors of the pageant has considered simulcasting the event live on the Internet. What kind of organization might be helpful in planning the webcast?

a.	an advertiser.
b.	an advertising agency.
c.	a consultant with the right expertise
d.	a creative boutique.

ANS: C DIF: Difficult REF: p. 67 OBJ: 2-4

TYP: Application

(Scenario 2-3) One of the problems the Miss America Pageant has encountered has been an indifference or sometimes negative response to beauty pageants in general. Many viewers are critical of the swimsuit contest, which awards points for physical characteristics. The pageant feels the competition is integral to the overall program and wants to educate the public about why the swimsuit competition is included and how it contributes to a well-rounded program. To achieve its goals in this area, the pageant might employ the services of:

a.	a public relations specialist.
b.	in-house agency.
c.	media-buying service.
d.	media departments at their full-service agency.

ANS: A DIF: Moderate REF: p. 61 OBJ: 2-3

TYP: Application

(Scenario 2-3) One of the events new to the pageant this year is a sweepstakes in which the lucky viewer who predicts the winner will be awarded one million dollars at the end of the live broadcast. To oversee this new component of the event, the pageant should hire the following:

a.	a new full service ad agency
b.	new pageant emcee
c.	a sales promotion agency.
d.	an event planning agency

ANS: D DIF: Moderate REF: p. 60 OBJ: 2-3

TYP: Application

(Scenario 2-3) The pageant’s board of directors has come to the realization that the one night event is the only aspect that the general public equates to the Miss America contest. In reality, the event lasts year round with pageants in all fifty states during the year leading up to the nationally televised event. The board has selected a new full-service agency to tie all the events together in a cohesive marketing program including an interactive component. To do this, the agency will focus on:

a.	integrated brand promotion using the full spectrum of promotional tools
b.	development of a new brand logo
c.	creating a compelling new ad campaign
d.	a website directed to a new younger audience

ANS: A DIF: Difficult REF: p. 56|p. 61 OBJ: 2-3

TYP: Application

Scenario 2-4

Advertising is a $300-billion-per-year business in the United States. Understandably, competition for clients is fierce among advertising agencies. There are many different reasons why a client may choose to move its business to a new agency, but there is one constant. The agency that wins the business is celebrated by the press; the agency that loses the business, however, is typically forgotten fairly soon.

(Scenario 2-4) What type of agency might Subway select to promote its new line of sandwiches and bread to a national television audience?

a.	Full-service advertising agency.
b.	In-house advertising agency.
c.	Creative boutique.
d.	Internet publisher.

ANS: A DIF: Easy REF: p. 58 OBJ: 2-3

TYP: Application

(Scenario 2-4) Kentucky Fried Chicken, a subsidiary of Yum! Brands, Inc. which owns A&W, KFC, Long John Silvers, Pizza Hut and Taco Bell restaurants, is the world’s largest restaurant company with nearly 32,500 system units in more than 100 countries and territories. KFC is looking for a new advertising agency to assist with advertising in Mexico and Canada. The client feels that it would be best served by a very large agency offering a wide range of services. To have the most agencies to choose from, it should focus its search on agencies with headquarters in

a.	Tokyo.
b.	Paris.
c.	New York.
d.	Mexico City.

ANS: C DIF: Moderate REF: p. 56-57 OBJ: 2-3

TYP: Application

(Scenario 2-4) A client is unhappy because the work that its agency is turning out is constantly behind schedule and over budget. This client is likely to look for a new agency with

a.	a stronger creative department.
b.	stronger account management function
c.	a stronger billing department.
d.	a stronger marketing services department.

ANS: B DIF: Moderate REF: p. 62 OBJ: 2-3

TYP: Application

(Scenario 2-4) During a new business presentation, an agency says that one reason it should get the business is that all of its different department teams are so well coordinated. The department that brings all the different efforts together on a day-to-day basis is

a.	creative services.
b.	account services.
c.	administrative services.
d.	marketing services.

ANS: B DIF: Moderate REF: p. 62 OBJ: 2-3

TYP: Comprehension

(Scenario 2-4) A client has grown dissatisfied with its ad campaign. What is the best way the agency can respond?

a.	Account management should first talk with the client about the nature of their dissatisfaction; then proceed with item “c” below.
b.	Assemble the entire agency team assigned to this client and have a brainstorming session
c.	Call on the planner to assemble data on how the ads are received by the target consumer, then call a meeting of Account Management, Creative, and Account planning with client executives to identify the best path forward
d.	Blame on problems with the client’s product line that no advertising should be expected to fix

ANS: A DIF: Difficult REF: p. 62-63 OBJ: 2-3

TYP: Comprehension

(Scenario 2-4) A client chooses six full-service agencies to compete for its business. Which one of the following services is least likely to be offered by all six agencies?

a.	Account services
b.	Creative services
c.	Marketing services
d.	Public relations

ANS: D DIF: Moderate REF: p. 62-63 OBJ: 2-3

TYP: Comprehension

Scenario 2-5

Thomas Motors is an independent auto dealer in a metropolitan market dominated by a number of national franchise dealerships including General Motors, Ford, Daimler/Chrysler, and foreign imports Honda, Toyota and more. In order to maintain their share of market, Thomas must do significant advertising in a number of different media. They carry several different popular makes of automobiles, both foreign and domestic, and maintain a high level of inventory on their lot at all times.

(Scenario 2-5) Thomas Motors wants to better understand the media consumption behaviors of consumers in their target markets. As a result, they wish to conduct a marketing research project to learn more about this issue. Which of the following types of firms are they most likely to commission to do such work?

a.	an advertiser
b.	an advertising agency
c.	an external facilitator
d.	a media organization

ANS: C DIF: Moderate REF: p. 66 OBJ: 2-4

TYP: Application

(Scenario 2-5) The marketing director at Thomas has decided that the firm needs a creative slogan or theme to be used consistently in advertising to help position the firm in the minds of local consumers. Which of the following types of advertising agencies would likely be the best choice to accomplish this specific goal?

a.	an interactive agency
b.	a creative boutique
c.	a full-service agency
d.	an in-house agency

ANS: B DIF: Easy REF: p. 57 OBJ: 2-3

TYP: Knowledge

(Scenario 2-5) Thomas’ management has budgeted $1,000,000 for television advertising for the coming year. How much can their advertising agency expect to earn from this commitment using a traditional commission system compensation plan?

a.	$10,000
b.	$15,000
c.	$100,000
d.	$150,000

ANS: D DIF: Difficult REF: p. 64 OBJ: 2-3

TYP: Application

(Scenario 2-5) Thomas is very interested in collecting information on customer purchase transaction histories of all consumers that have purchased new vehicles in the metropolitan area during the past two years. Which of the following types of external facilitators will they most likely contract to do such work for them?

a.	a marketing research firm
b.	a consultant
c.	a production facilitator
d.	an information intermediator

ANS: A DIF: Moderate REF: p. 66 OBJ: 2-4

TYP: Application

(Scenario 2-5) To stimulate more consumer traffic at the dealership, Thomas Motors has decided to offer a chance to win a free automobile for anyone who comes in and test drives any vehicle on their lot. Which of the following types of organizations are they most likely to employ to design and operate this contest?

a.	a public relations firm
b.	a full-service advertising agency
c.	a direct marketing firm
d.	a sales promotion specialist

ANS: D DIF: Moderate REF: p. 60 OBJ: 2-3

TYP: Application

Scenario 2-6

SC Johnson & Son produces a wide variety of very popular consumer products such as Shout^®, Windex^®, Mr. Muscle^®, Ziploc^®, Edge^®, Glade^®, Vanish^®, Raid^®, OFF!^®, Pledge^®, Scrubbing Bubbles^® Bathroom Cleaner. These products are in highly competitive markets and require substantial investments in consumer promotion to maintain market share.

(Scenario 2-6) The advertising industry has been called an “industry of transition” by many observers. Which of the following elements of the ad industry are changes that might be relevant to an advertiser like SC Johnson?

a.	increased media options
b.	changes in advertising agency compensation
c.	new creative technologies
d.	all of these are relevant ad industry changes

ANS: D DIF: Moderate REF: p. 44 OBJ: 2-1

TYP: Application

(Scenario 2-6) SC Johnson is not interested in doing any of the duties associated with advertising research, creative development, or media placement. Which of the following types of organizations would likely be the best match for their needs?

a.	a full-service agency
b.	a creative boutique
c.	a media buying service
d.	an in-house agency

ANS: A DIF: Moderate REF: p. 56-57 OBJ: 2-3

TYP: Application

(Scenario 2-6) SC Johnson has recently hired an advertising agency to help promote their products. Several of the senior managers have indicated that they are uncertain as to the specific benefits of advertising their consumer products. Which of the following departments of their agency should be involved in giving this information to this client?

a.	administrative services
b.	marketing research services
c.	creative services
d.	account services

ANS: D DIF: Moderate REF: p. 63 OBJ: 2-3

TYP: Application

(Scenario 2-6) SC Johnson has decided that additional research is necessary to determine specific messages that should be directed towards consumers. Which of the following departments in their ad agency will likely be responsible for this research work?

a.	creative services
b.	marketing research services
c.	account services
d.	media services

ANS: B DIF: Moderate REF: p. 63 OBJ: 2-4

TYP: Comprehension

(Scenario 2-6) SC Johnson managers have agreed that their advertising agency will be compensated based on measures of audience awareness of their consumer products. This indicates that they have chosen a ____ compensation program for their agency.

a.	commission
b.	fee
c.	markup
d.	pay-for-results

ANS: D DIF: Moderate REF: p. 65 OBJ: 2-4

TYP: Comprehension

ESSAY

There are several key aspects of change that are affecting the structure of the advertising industry. Please discuss the four trends discussed in the book.

ANS:

(1) The “undoing” of consolidation and globalization. The advertising industry has just come out of a period of extreme consolidation, which was occurring in two ways. Full-service agencies were acquiring and merging with other full-service agencies and interactive shops. Globalization occurred through mergers, partnerships and acquisitions. However, these mega agencies have not satisfied all the needs for all clients. It is unlikely that the giant agencies will dismantle all they have created. Some advertising clients are pleased to be able to consolidate all their integrated brand promotion (IBP) needs with one shop. But there is enough burden on the agencies from debt and conflict of interest that some unconsolidation will most certainly take place.

(2) The proliferation of cable television, direct marketing technology, Web options, and alternative new media has caused a proliferation of media options, while agency consolidation may just be starting. Control of media has always been a driving force behind many media companies. But there has always been a legal barrier to just how much control any one media company could acquire.In turn, the evolution of media options has spawned new specialized agencies to sell and manage these new media opportunities

(3) While the media industry may be consolidating into fewer and fewer large firms with more control, that does not mean that there are fewer media options. Quite the contrary is true. There are more ways to try to reach consumers than ever before. Advertisers are looking to the full complement of promotional opportunities in sales promotions (like the Miller chairs), event sponsorships, new media options, and public relations as means to support and enhance the primary advertising effort for brands.

(4) Historically, advertisers controlled information and the flow of information as a one-way communication through mass media. But, as the introductory scenario highlights, consumers are now in greater control of the information they receive about product categories and the brands within those categories. The simplest and most obvious example is when consumers log on to the Internet and visit sites they choose to visit for either information or shopping. But it gets a lot more complicated from there. The emergence of blogs, Web sites frequented by individuals with common interest where they can post facts, opinions, and personal experiences, are emerging as a new and sophisticated sources of product and brand information. Another new and dramatic example of consumer control is the growth of personal video recorders (PVRs), like TiVo, which allow TV viewers to essentially skip broadcast advertising.

DIF: Difficult REF: p. 44-48 OBJ: 2-1 TYP: Comprehension

The definition of an advertising agency is “an independent organization of professionals who provide creative and business services to clients related to planning, preparing, and placing advertisements.” List the major agency departments involved in each one of these phases (planning, preparing, and placing). In general terms, describe the role each department plays.

ANS:

The planning phase is dominated by account services. Account services managers identify benefits, target audiences, and develop positioning. The media services department is also involved in the planning process, as it comes up with the most effective plan to reach the target audience. The preparing phase is dominated by creative services, which translates the benefits into creative concepts. Production services assists in the preparation of the ads. The placing phase is dominated by media-planning and -buying services, which buys the media space. Throughout the entire process, the traffic department (part of administrative services) makes sure deadlines are being met.

DIF: Difficult REF: p. 62-64 OBJ: 2-3 TYP: Comprehension

One of the trends in the advertising industry today is the fragmentation of marketing budgets. Advertising agencies can continue to get a healthy share of their clients’ business by redesigning their role and structure. List three departments that a full-service agency can add to accomplish this. Explain what each of these departments is responsible for.

ANS:

(1) A public relations department handles the needs of organizations regarding relationships with the local community, competitors, industry associations, and government organizations. The goal of public relations efforts is to communicate information about a firm, its products, and its employees so as to achieve public awareness, understanding, and good will. (2) A sales promotion department designs and operates contests, sweepstakes, special displays, or couponing campaigns for advertisers. (3) A direct-marketing department maintains large databases of mailing lists as one of its services. It can also design direct-marketing campaigns either through the mail or by telemarketing. (4) Event-marketing departments help clients identify whether and how to sponsor major events and local community events. (5) Interactive media departments can help advertisers prepare communications for new media like the Internet, interactive kiosks, CD-ROMs, and interactive television.

DIF: Difficult REF: p. 58-61 OBJ: 2-3 TYP: Application

A company that you work for has asked you to write a brief report that evaluates the advantages and disadvantages of creating an in-house agency. What points would you consider in your report?

ANS:

An in-house agency provides greater coordination and control throughout the advertising process. An in-house agency has greater knowledge and control over marketing activities. Plus, a firm can keep any media commissions that would have gone to an outside agency. However, in-house agencies suffer from a lack of objectivity. In addition, it’s hard to match the breadth and depth of experience offered by an external agency.

DIF: Moderate REF: p. 58 OBJ: 2-3 TYP: Application

Briefly explain the three major methods of agency compensation. Outline any advantages or disadvantages associated with each system.

ANS:

The commission system is based on the amount of money the advertiser spends on media. Under this method, 15 percent of the total amount billed by the media organization is retained by the advertising agency as compensation for all costs in creating advertising for the client. This system can create pressure on agencies to recommend the most expensive media options.

With a fee system, compensation is based on an agreed-upon hourly rate for services provided. A variation on the fee system, the fixed-fee system, is based on a single fee charged for a project. Unless the agency and client agree precisely as to what services are covered by the fee, serious rifts can result.

Recently many advertisers and agencies alike have been working on compensation programs called pay-for-results that base the agency’s fee on the achievement of agreed-upon results.

DIF: Moderate REF: p. 65 OBJ: 2-3 TYP: Knowledge

Chapter 4 – Social, Ethical, and Regulatory Aspects of Advertising and Promotion

TRUE/FALSE

Consumer advocates believe that the good that might come from “data mining” to contact consumers after they respond to a promotion is outweighed by their annoyance and frustration with the ensuing avalanche of offers that plague them.

ANS: T DIF: Moderate REF: p. 111 OBJ: 4-1

TYP: Comprehension

A common statement among advertising supporters is that it reduces consumers’ search time for products they want or need.

ANS: T DIF: Easy REF: p. 112 OBJ: 4-1

TYP: Comprehension

Critics of advertising maintain that society is not better off with advertising because it “shuffles existing total demand” rather than expanding total demand that would stimulate the economy.

ANS: T DIF: Moderate REF: p. 115 OBJ: 4-1

TYP: Comprehension

According to critics of advertising, advertising educates consumers and informs them of the choices they have including product features and benefits and is helpful in comparing one product to another.

ANS: F DIF: Moderate REF: p. 112 OBJ: 4-1

TYP: Comprehension

There is much confusion about subliminal advertising, but research has shown that while people do process some information subliminally, there is no proof that subliminal messages persuade anyone to do anything.

ANS: T DIF: Easy REF: p. 122 OBJ: 4-1

TYP: Knowledge

Those who argue that advertising promotes conformity and status seeking consumption behavior are rebutted by those who assert that advertising reflects, not causes, America’s age of consumption.

ANS: T DIF: Moderate REF: p. 117 OBJ: 4-1

TYP: Comprehension

Critics of advertising claim that advertising carries little if any good product information and that most advertising is biased, limited and inherently deceptive.

ANS: T DIF: Easy REF: p. 113 OBJ: 4-1

TYP: Knowledge

Some argue that one of the best aspects of advertising is its contribution to the society’s art and culture, sometimes critiquing it and sometimes celebrating it.

ANS: T DIF: Difficult REF: p. 121 OBJ: 4-1

TYP: Comprehension

While truth in advertising is a key legal issue, the public and the government seem not to concerned with the ethical dimensions and virtually ignore the issue of deception.

ANS: F DIF: Moderate REF: p. 123 OBJ: 4-2

TYP: Application

An example of puffery is the superlative statement, “We Serve the Best Pizzas in the World, ” which is completely legal.

ANS: T DIF: Moderate REF: p. 123 OBJ: 4-2

TYP: Application

Television programs like the Smurfs and the Muppets have been banned by the U.S. government because they constitute program-like advertisements to children.

ANS: F DIF: Difficult REF: p. 124 OBJ: 4-2

TYP: Application

Medical research journals have published articles claiming survey data indicate that advertising “caused” young consumers to begin smoking, but all assessments by the FTC from the 1950s to the present indicate that the primary influences on the decision to smoke are family and peers.

ANS: T DIF: Difficult REF: p. 125 OBJ: 4-2

TYP: Application

Consumer and industry groups shape and restrict the process as much as the government does, only they go about it differently.

ANS: T DIF: Moderate REF: p. 127 OBJ: 4-3

TYP: Comprehension

One critical point in the FTC’s regulations regarding deception is that they not only include false or deceiving claims but also include missing information that may deceive.

ANS: T DIF: Difficult REF: p. 127 OBJ: 4-3

TYP: Application

An advertisement for Ziploc freezer bags that compares this Johnson Family of Companies product with a competing product that is factual is viewed as illegal.

ANS: F DIF: Moderate REF: p. 128 OBJ: 4-3

TYP: Application

To judge whether a particular instance of vertical cooperative advertising is a form of unfair competition, you must know if the advertising allowances involved represent hidden price concessions.

ANS: T DIF: Difficult REF: p. 128 OBJ: 4-3

TYP: Application

Horizontal cooperative advertising is an advertising technique whereby a manufacturer and dealer share the expense of advertising.

ANS: F DIF: Easy REF: p. 128 OBJ: 4-3

TYP: Knowledge

The 4A’s is a government agency that has issued a set of guidelines regarding the use of comparison ads.

ANS: F DIF: Easy REF: p. 128 OBJ: 4-3

TYP: Knowledge

The FTC has been more successful than consumer groups in restricting children’s advertising.

ANS: F DIF: Easy REF: p. 129 OBJ: 4-3

TYP: Knowledge

If supermodel Kate Moss endorses a line of Kmart clothing, the FTC requires that she actually use the product.

ANS: T DIF: Difficult REF: p. 133 OBJ: 4-3

TYP: Application

One of the basic remedies used by the FTC in dealing with unfair advertising is a consent order, where an advertiser accused of running deceptive advertising agrees to stop without admitting guilt.

ANS: T DIF: Moderate REF: p. 132 OBJ: 4-3

TYP: Comprehension

The FTC is a relatively recent agency whose purpose is to supercede the jurisdiction of the FCC regarding commercial communications.

ANS: F DIF: Moderate REF: p. 130-131 OBJ: 4-4

TYP: Application

The NARB is a government agency that has the power to enforce government regulations and create new federal standards regarding unfair or deceptive advertising practices.

ANS: F DIF: Moderate REF: p. 134 OBJ: 4-4

TYP: Comprehension

The National Advertising Review Board (NARB) and the National Advertising Division (NAD) ability to regulate advertisers depends on the cooperation of members.

ANS: T DIF: Moderate REF: p. 135 OBJ: 4-4

TYP: Knowledge

The Global Business dialog on Electronic Commerce (GBDe) is a voluntary industry organization attempting to establish internet advertising guidelines and includes some big companies like Amazon.com and Yahoo! among its members.

ANS: F DIF: Moderate REF: p. 137 OBJ: 4-4

TYP: Application

MULTIPLE CHOICE

Which of the following is a stated benefit of advertising?

a.	increases the probability that new products will succeed
b.	helps reduce consumer search time
c.	allows consumers to more easily assess the value of products in the marketplace
d.	all of these

ANS: D DIF: Moderate REF: p. 115 OBJ: 4-1

TYP: Knowledge

The argument that “advertising educates consumers” is supported by the claim(s) that

a.	advertising provides information consumers need to make informed decisions.
b.	by regularly assessing advertising claims, consumers become more educated regarding the features, benefits and functions, and values of products.
c.	consumers become more aware of their own tendencies toward being persuaded by certain types of product information.
d.	all of these are offered as arguments that advertising educates consumers.

ANS: D DIF: Moderate REF: p. 112 OBJ: 4-1

TYP: Application

When critics argue that advertising is superficial, the main criticism is that

a.	there is too much product information for consumers to process.
b.	the product performance information is too complex to understand.
c.	ads do not contain enough information on functional features and performance results.
d.	when ads highlight the emotionally satisfying features of products they ignore value

ANS: C DIF: Moderate REF: p. 113 OBJ: 4-1

TYP: Comprehension

Critics of advertising maintain that advertising provides very little in the way of actual information about product features. Proponents of advertising respond that

a.	it is impossible to include all the relevant functional information about a product in a single advertisement.
b.	all that people usually remember from an advertisement is the brand name.
c.	most advertising is packed with utilitarian information.
d.	functional features of a brand may be secondary in importance to consumers after emotional significance of the brand

ANS: D DIF: Moderate REF: p. 113 OBJ: 4-1

TYP: Comprehension

A Planetfeedback.com survey found

a.	30% of consumers gladly substitute internet shopping for all other forms
b.	95 % of consumers consider themselves “furious” over spam and pop-up ads
c.	82% appreciate being individually targeted by advertisers with personalized ads
d.	Only 10% have installed spam blockers on their laptops

ANS: B DIF: Difficult REF: p. 113 OBJ: 4-1

TYP: Application

Which of the following is considered by advertising critics to be a con of advertising in society today?

a.	advertising provides too much information
b.	advertising lowers cost of products
c.	advertising creates needs
d.	advertising reflects society’s desires

ANS: C DIF: Moderate REF: p. 116 OBJ: 4-1

TYP: Comprehension

Which one of the following would not be offered as support for the argument that advertising benefits consumers?

a.	The desire to have products that are supported by advertising encourages companies to offer improved products.
b.	Advertising increases the probability of the success of a new product, so it increases the variety of products.
c.	The speed and reach of advertising allows for quicker diffusion of innovations.
d.	Advertising is a remarkably efficient system for moving demand from one brand to another.

ANS: D DIF: Difficult REF: p. 115 OBJ: 4-1

TYP: Application

According to Maslow, when Clorox wipes highlight the germ-harboring aspect of conventional sponges, it is addressing

a.	the self-actualizing level of needs
b.	the need for love and belonging
c.	physiological need for health
d.	the esteem need that accompanies keeping a clean house

ANS: C DIF: Moderate REF: p. 116 OBJ: 4-1

TYP: Comprehension

Stephen Fox, chronicler of advertising history, maintains that

a.	advertising didn’t cause America’s consumption culture; it’s just a very visible manifestation of that culture.
b.	America’s rush to progress and advertising emerged at the same time, so it’s impossible to prove that advertising caused it.
c.	in portraying brands as symbols of success, advertising creates wants and aspirations that are artificial and selfish
d.	advertising created America’s consumer culture, and for that, it should be praised.

ANS: A DIF: Difficult REF: p. 117 OBJ: 4-1

TYP: Application

Advertising critics argue that it contributes to many problems in society. Which of the following is typically given by proponents as a positive aspect of today’s advertising?

a.	advertisers are showing more sensitivity as consumers have raised their awareness of issues that offend them
b.	advertising now recognizes that stereotypes are often unfair and disrespectful
c.	advertising is a democratic form of art
d.	all of these

ANS: D DIF: Moderate REF: p. 118-120 OBJ: 4-1

TYP: Comprehension

Over the past few years, more and more women, elderly persons, and ethnic minorities have started appearing in advertisements. Critics of advertising would respond that

a.	until every ad features this kind of diversity, it’s still not enough.
b.	it’s just a more modern form of stereotyping.
c.	people of any type should not appear in advertisements.
d.	now young white males are the victims of stereotyping.

ANS: B DIF: Difficult REF: p. 118 OBJ: 4-1

TYP: Application

One viewpoint holds that advertising is a way for customers to become aware of products and services, and their features and cultural significance; therefore they can:

a.	make more informed purchase decisions.
b.	seek government regulation.
c.	only exist in an utopian society.
d.	purchase only through socialistic consumption.

ANS: A DIF: Moderate REF: p. 112 OBJ: 4-1

TYP: Application

Some argue that a “pro” of advertising is that it fosters a diverse and affordable mass media; if so, which of the following is (are) true?

a.	newspapers, magazines, TV and Radio stations are supported by advertising – which ensures an informed democracy
b.	advertising forces materialistic consumption that should be appreciated and encouraged.
c.	ads themselves are more crass and offensive than in earlier times with fewer media.
d.	addresses animalistic needs to a greater degree than before

ANS: A DIF: Difficult REF: p. 121 OBJ: 4-1

TYP: Application

Some advertising critics suggest that advertising can communicate below the threshold of consciousness. Which of the following cons of advertising does this issue most closely relate to?

a.	advertising affects programming
b.	advertisers deceive via subliminal stimulation
c.	advertising is often offensive
d.	advertising perpetuates stereotypes

ANS: B DIF: Moderate REF: p. 122 OBJ: 4-1

TYP: Comprehension

The most fundamental ethical issue of advertising concerns

a.	truth, which also is a key legal issue
b.	protection of children from exposure to materialism
c.	deception – making false or misleading statements
d.	hyperbole and puffery

ANS: C DIF: Moderate REF: p. 123 OBJ: 4-2

TYP: Comprehension

In terms of advertising to children, which are areas of great concern?

a.	children are inexperienced consumers and therefore more naively persuadable
b.	creating demand in children leads to parent-child conflicts
c.	many kids programs featuring commercial products are simply long advertisements
d.	all of these are areas of great concern

ANS: D DIF: Moderate REF: p. 124 OBJ: 4-2

TYP: Application

Critics of advertising charge that alcohol and tobacco firms are targeting adolescents with ads that make dangerous and addictive products appealing; which of the following is true

a.	medical journals have proved that advertising makes adolescents start smoking
b.	beer and alcohol makers are oblivious to these concerns
c.	repeated research studies since the 1950s have shown that family, friends and peers are the strongest influences on the use of tobacco and alcohol products
d.	use of tobacco and alcohol is hereditary

ANS: C DIF: Moderate REF: p. 124 OBJ: 4-1

TYP: Comprehension

Ethics is defined as

a.	that which can be shown to be truthful.
b.	the moral standards and principles by which behavior is judged.
c.	the legal limits placed on personal practices.
d.	the timeless, unwavering standard of what is good.

ANS: B DIF: Easy REF: p. 123 OBJ: 4-2

TYP: Knowledge

Determining what is ethical or unethical in advertising

a.	can be determined specifically from the advertiser’s code of ethics.
b.	is subject to absolute rules of right and wrong.
c.	is an easy question since all advertising is unethical.
d.	comes down to personal judgment.

ANS: D DIF: Moderate REF: p. 123 OBJ: 4-2

TYP: Comprehension

While it is legal, the use of superlatives (“Number One” or “Best in the World”) in advertising is often called ____.

a.	unethical
b.	illegal
c.	deception
d.	puffery
e.	none of these

ANS: D DIF: Easy REF: p. 123 OBJ: 4-2

TYP: Knowledge

Why doesn’t advertising cause people to smoke and drink?

a.	it is not that powerful
b.	tobacco and alcohol are mature product categories and advertising cannot create primary demand in mature categories
c.	consumers, even very young consumers, know what advertising is trying to do and resist
d.	brands in these categories don’t spend enough to influence consumers

ANS: B DIF: Difficult REF: p. 125 OBJ: 4-2

TYP: Application

Which one of the following is a controversial product other than tobacco or alcohol

a.	automobiles because auto accidents kill so many each year
b.	fast food because critics claim it causes obesity
c.	prescription medicines because they are overused
d.	low fat products because they lull consumers into complacency about their cholesterol

ANS: B DIF: Difficult REF: p. 126 OBJ: 4-2

TYP: Application

Which of the following is a claim that demonstrates “puffery” in advertising?

a.	“Chevrolet Trucks Win Pikes Peak Hill Climb!”
b.	“Chevrolet Trucks Are Number One!”
c.	“Chevrolet Trucks Outsell Ford 5th Year in a Row!”
d.	“Chevrolet Trucks Have Largest Engine in Class!”

ANS: B DIF: Difficult REF: p. 123 OBJ: 4-2

TYP: Application

The desire to restrict advertising to children is based on the concern that

a.	advertising promotes superficiality.
b.	advertising promotes values founded in material goods and consumption.
c.	children are inexperienced consumers and are easy prey for the sophisticated persuasions of advertisers.
d.	all of these.

ANS: D DIF: Moderate REF: p. 124 OBJ: 4-2

TYP: Comprehension

It is not easy to make definitive statements about ethics because:

a.	advertisers should not have to pay to have their messages heard.
b.	all advertisers are bound by ethical behavior based on government contracts.
c.	advertising is non-personal.
d.	ethics will always be a matter for personal values and personal interpretation.

ANS: D DIF: Easy REF: p. 126 OBJ: 4-2

TYP: Knowledge

With regard to deception in advertising, the FTC and various court decisions have concluded that

a.	there must be a representation, omission or practice that is likely to mislead the consumer
b.	the representation, omission or practice must be judged from the perspective of the consumer
c.	the representation, omission or practice must be a “material” one
d.	all of these are the essential elements in declaring an ad deceptive

ANS: D DIF: Difficult REF: p. 127 OBJ: 4-3

TYP: Comprehension

You have been asked to determine whether an advertisement is deceptive or not. It is important to remember that

a.	puffery is acceptable only if the claims made are provable.
b.	claims that are literally true still may be deceptive.
c.	just because a fact is misrepresented does not mean the advertisement is deceptive.
d.	actual deception must occur for an advertisement to be considered deceptive.

ANS: B DIF: Difficult REF: p. 127 OBJ: 4-3

TYP: Application

Vertical cooperative advertising is usually legal, except when

a.	there is a representation, omission, or practice that is likely to mislead.
b.	bogus advertising allowances are given, amounting to hidden price concessions
c.	large mega-retailers are involved
d.	all of these are correct

ANS: B DIF: Difficult REF: p. 128 OBJ: 4-3

TYP: Comprehension

____ advertising occurs when a manufacturer and a dealer share the expense of advertising a product.

a.	Unfair
b.	Monopoly
c.	Comparison
d.	Vertical cooperative

ANS: D DIF: Easy REF: p. 128 OBJ: 4-3

TYP: Knowledge

In using comparison advertisements,

a.	it is illegal to mention a competitor by name.
b.	manufacturers and a dealer share the cost of advertising.
c.	the FTC may require a firm using comparison to substantiate claims made in the ad.
d.	the American Association of Advertising Agencies recommends never using comparison ads.

ANS: C DIF: Moderate REF: p. 128 OBJ: 4-3

TYP: Comprehension

The FTC holds a degree of regulatory power over advertising aimed at children. In general, its efforts have been

a.	more successful than the efforts of industry groups and consumer groups.
b.	more successful than the efforts of industry groups, but not as successful as those of consumer groups.
c.	more successful than the efforts of consumer groups, but not as successful as those of industry groups.
d.	not as successful as the efforts of industry groups and consumer groups.

ANS: D DIF: Difficult REF: p. 129 OBJ: 4-3

TYP: Application

Which of the following government agencies is responsible for regulating direct mail advertising?

a.	The Federal Trade Commission
b.	The Federal Communications Commission
c.	The Food and Drug Administration
d.	The U.S. Postal Service

ANS: D DIF: Easy REF: p. 131 OBJ: 4-3

TYP: Knowledge

One agency has authority over fraud and obscenity on radio and television. The harshest penalty it can levy is to deny or revoke a broadcast license. This agency is the

a.	FDA.
b.	FCC.
c.	SEC.
d.	FTC.

ANS: B DIF: Easy REF: p. 131 OBJ: 4-3

TYP: Knowledge

The passage of the Wheeler-Lea Amendment in 1938 had a substantial impact on advertising regulation in the United States. The passage of the amendment

a.	established the Federal Trade Commission.
b.	granted the FTC control over the effects of advertising on competition.
c.	allowed the FTC to regulate practices that it considered misleading to consumers.
d.	granted industries the right to form self-regulatory organizations.

ANS: C DIF: Difficult REF: p. 131 OBJ: 4-3

TYP: Application

A company you work for is under investigation by the FTC for claims that it has made in its advertising. If you are found guilty of running misleading advertising, the most severe penalty the FTC could issue is

a.	ordering advertising substantiation.
b.	issuing a cease and desist order.
c.	ordering corrective advertising.
d.	dissolving your corporation.

ANS: C DIF: Moderate REF: p. 132 OBJ: 4-3

TYP: Comprehension

Which of the following is true of consumerism

a.	Can be traced to 17th-century England
b.	Comes from the fact that consumers want a greater voice in the process of product development, distribution and information dissemination
c.	Consumers create pressures on firms through boycotts of brands as well as organizing to bring about regulation
d.	All of these are aspects of consumerism

ANS: D DIF: Moderate REF: p. 137 OBJ: 4-4

TYP: Comprehension

Which one of the following is not a possible outcome of an advertisement that has been submitted to the National Advertising Review Board?

a.	The NARB dismisses the case.
b.	The NARB convinces the advertiser to change the advertisement.
c.	The NARB publicly identifies the advertiser, the complaint against the advertiser, and the panel’s findings.
d.	The NARB assesses a fine not to exceed $10,000.

ANS: D DIF: Moderate REF: p. 135 OBJ: 4-4

TYP: Comprehension

Which of the following are regulatory issues in PR, direct marketing and e-commerce?

a.	privacy, spam, sweepstakes and telemarketing practices
b.	premium offers, trade allowances and product/brand placement
c.	image appropriation, copyright infringement, defamation, slander and libel
d.	all of these are part of regulatory issues in direct marketing, PR and e-commerce

ANS: D DIF: Moderate REF: p. 143-44 OBJ: 4-5

TYP: Knowledge

A claim in an advertisement is judged to be misleading. The ____ will be held responsible for the misleading content.

a.	advertiser
b.	advertising agency
c.	media vehicle
d.	government regulatory commission

ANS: B DIF: Difficult REF: p. 136 OBJ: 4-4

TYP: Application

This act does not outlaw all unsolicited e-mail, but rather targets fraudulent, deceptive, and pornographic messages, which is estimated to make up about two-thirds of all commercial unsolicited e-mail. Violators face jail time and fines up to $1 million.

a.	Regulatory Reference Act
b.	The Wheeler Lea Act
c.	Can Spam Act
d.	Free Trade Act

ANS: C DIF: Easy REF: p. 141 OBJ: 4-5

TYP: Knowledge

Scenario 4-1

A group that calls itself Adbusters has a site on the World Wide Web. The site contains many pages that address issues of consumption and culture, media practices and corporate responsibilities. For example, “the momentum has clearly accelerated. By some measures humans have used more physical resources since World War II than in all of history before it. It’s now taking a toll beyond anything we could ever have imagined. What does it mean when one-sixth of the world’s population consumes without any real restraint?”

Throughout the Web site, there are many references to advertising’s role in creating and maintaining this situation. Not surprisingly, virtually all of the references to the practice of advertising are negative. (http://www.adbusters.org/home/)

(Scenario 4-1) Adbusters sees advertising as superficial. By this, it means that advertising

a.	ignores the hedonic aspects of a product.
b.	doesn’t contain enough functional, performance-oriented information.
c.	cannot increase demand for specific brands of products.
d.	is not entertaining.

ANS: B DIF: Moderate REF: p. 113 OBJ: 4-1

TYP: Comprehension

(Scenario 4-1) Some of the statements made by Adbusters echo the words of advertising historian Stephen Fox when he wrote, “One may build a compelling case that American culture is–beyond redemption–money-mad, hedonistic, superficial and rushing needlessly down a track called Progress.” Fox concluded that

a.	advertising must be held accountable for its transgressions.
b.	all cultures are as consumption oriented as America.
c.	terms like money-mad, hedonistic, and superficial were used to describe America before the dawn of national advertising.
d.	advertisers are hidden persuaders who serve a malevolent purpose.

ANS: C DIF: Moderate REF: p. 117 OBJ: 4-1

TYP: Application

(Scenario 4-1) Adbusters faults cigarette companies for targeting billboard campaigns at ethnic and minority groups. In the same vein, advertisers are criticized as portraying women:

a.	as superior to men
b.	as homemakers or objects of desire.
c.	as the head of government agencies.
d.	as intermediate formularies for agencies.

ANS: B DIF: Moderate REF: p. 118 OBJ: 4-1

TYP: Application

(Scenario 4-1) Organizations like “Adbusters” encourage consumers to be proactive and contact government agencies to enforce regulations. This organization would want you to contact the FCC, because it:

a.	is the most powerful government agency regulating advertising.
b.	possesses the power to revoke licenses of stations that don’t follow its guidelines.
c.	is a crucial participant in advertising self-regulation.
d.	has been granted legislative control over broadcast, print, and outdoor advertising.

ANS: B DIF: Moderate REF: p. 131 OBJ: 4-3

TYP: Application

(Scenario 4-1) In the past, Adbusters cited 12 magazines that it said are responsible for pushing “a clean, exciting image for one of the dirtiest products around: tobacco.” They suggested that Americans cancel their subscriptions to these magazines until the magazines stopped accepting this advertising. This is an example of

a.	a yet-to-be-proved-effective tool called a boycott.
b.	the activities of one of the three most powerful consumer organizations in the United States.
c.	a group of consumers functioning as a regulatory agent.
d.	a recently emerging phenomenon called consumerism.

ANS: D DIF: Moderate REF: p. 137 OBJ: 4-4

TYP: Comprehension

Scenario 4-2

When the Rally’s hamburger chain’s Big Buford ad campaign — “It’s not the size; it’s the taste” — began running a few years ago, Louisville’s Southeast Christian Church’s weekly newspaper, The Southeast Outlook, quickly responded with a series of columns and editorials, all vehemently denouncing the ads as obscene and urging a boycott of Rally’s. They included the telephone numbers of Rally’s corporate offices and of local television stations. The Outlook later reported that each station received several hundred calls and that Rally’s prematurely ended the campaign. (Henry Hoenig, “The Gospel of Growth”, Louisville.com, http://www.louisville.com/loumag/oct98/sec.shtml, 01/08/05).

(Scenario 4-2) The Big Buford example is evidence that

a.	taste is not a personal and subjective evaluation.
b.	fast food must be considered a highly controversial product category.
c.	small segments of the population can cause considerable controversy over matters of taste.
d.	the concept of political correctness has not been embraced by franchise owners.

ANS: C DIF: Moderate REF: p. 137 OBJ: 4-4

TYP: Application

(Scenario 4-2) A majority of complaints against advertisers have to do with the content of advertisements. There are two main content issues that involve advertising regulation. The first concerns matters of poor taste and is exemplified by the Rally’s scenario. The second content issue concerns

a.	matters of deception and unfairness.
b.	advertising as a resource-wasting industry.
c.	matters of advertising stereotypes.
d.	emotional versus functional appeals.

ANS: A DIF: Difficult REF: p. 127 OBJ: 4-3

TYP: Application

(Scenario 4-2) If the church goers wanted to launch a complaint with a government agency stating that the Big Buford ads are obscene, they would contact

a.	the Consumer Federation of America.
b.	the Federal Communications Commission.
c.	the National Advertising Division of the Better Business Bureau.
d.	the National Advertising Review Board of the Better Business Bureau.

ANS: B DIF: Moderate REF: p. 131 OBJ: 4-3

TYP: Comprehension

(Scenario 4-2) The FCC could conceivably become involved in the complaint. Although it would never do so on the basis of a single controversial advertising campaign, the harshest action that the FCC is empowered to take is to

a.	require that Rally’s run corrective advertising.
b.	issue a cease and desist order.
c.	revoke McCabe & Company’s membership in the 4As.
d.	revoke the licenses of the stations running the ads.

ANS: D DIF: Moderate REF: p. 131 OBJ: 4-3

TYP: Comprehension

(Scenario 4-2) The editors of the newspaper have asked individual local radio stations to boycott the advertisements. They also have the option of working with a media self regulatory organization. If they wish to work with a media self-regulatory organization, they should contact the ____ with any concerns over issues of truth, fairness, or good taste.

a.	NAB’s Code Authority
b.	American Association of Advertising Agencies
c.	Better Business Bureau
d.	Federal Trade Commission

ANS: A DIF: Moderate REF: p. 135 OBJ: 4-3

TYP: Application

Scenario 4-3

“Consumerism is a pattern of behavior that helps to destroy our environment, personal financial health, the common good of individuals and human institutions” begins the first page on a World Wide Web site entitled “Overcoming Consumerism.” It continues, “This site details ways that you can help defeat consumerism, save money, work less and lead a more satisfying and environmentally benign life while helping to restore the self-sufficiency of your community.” (http://www.verdant.net/)

As one travels from page to page in the site, advertising is often implicated as a source of the movement toward consumerism. Many of the same criticisms of advertising found in the site were outlined in the textbook.

(Scenario 4-3) One quote from the site reads, “Time, the shrinking commodity of our lives, is exchanged for money to buy things that there is usually little time to enjoy. What’s left over is often devoured by television, basically a series of ever-more mediocre filler programs between ever-more spectacular commercials whose sole purpose is to stoke further desire for more things.” To respond to the implication that advertising robs people of time, a proponent of advertising may logically argue that

a.	advertising actually saves time, because people don’t have to search as hard to find information about products they desire.
b.	the extra time spent processing advertising is offset by increased enjoyment of the products purchased.
c.	most television advertisements contain a great deal of functional information.
d.	people go out of their way to see advertising; therefore, it must play a positive role in their lives.

ANS: A DIF: Moderate REF: p. 115 OBJ: 4-1

TYP: Comprehension

(Scenario 4-3) The writers of “Overcoming Consumerism” believe that as consumerism grows, people will buy anything and everything. This reduces the incentive for companies to manufacture quality, long-lasting products. On the other hand, according to the textbook, a proponent of advertising might argue that

a.	the need for long-lasting, high-quality products no longer exists in today’s fast-paced world.
b.	research has shown that personal happiness increases along with consumption.
c.	advertising is not creating a materialistic culture; it is a manifestation of that culture
d.	this wrongly assumes that America is a highly consumption-oriented culture.

ANS: C DIF: Difficult REF: p. 115 OBJ: 4-1

TYP: Application

(Scenario 4-3) A quote from the site states, “Consumerism encourages people to buy for the sake of buying, with little regard for the true utility of what is bought.” Which one of the following is not representative of the point of view of the writer?

a.	Advertising creates false needs instead of fulfilling existing needs.
b.	The emotional benefit one receives from a product is sometimes more important to the consumer than functional attributes
c.	Only functional benefits of a product are meaningful.
d.	Consumers are relatively easy to seduce into buying things they don’t need.

ANS: B DIF: Moderate REF: p. 113 OBJ: 4-1

TYP: Comprehension

(Scenario 4-3) One page in the site maintains that advertising seduces children into believing that “their self-worth is based on $100 inflatable, illuminated sneakers.” Besides this concern that advertising causes superficiality, the textbook outlines two other main areas of concern in regard to advertising’s effect on children. One of these two concerns is that

a.	advertising causes children to acquire adult consumption skills at too young an age.
b.	overly entertaining advertising causes children to become dissatisfied with the actual programming.
c.	because of the First Amendment, there are no government organizations with the power to regulate advertising aimed at children.
d.	advertising causes conflict between parents and children.

ANS: D DIF: Difficult REF: p. 124 OBJ: 4-2

TYP: Application

(Scenario 4-3) The site urges people to buy the goods that they need at small businesses and from small manufacturers. This practice

a.	reduces the effectiveness of emotional appeals in advertising.
b.	undermines the presumed monopoly power that big businesses with big ad budgets acquire through advertising is
c.	eliminates the need for advertising regulation.
d.	expands existing demand, rather than shuffling it.

ANS: B DIF: Difficult REF: p. 137-138 OBJ: 4-4

TYP: Application

Scenario 4-4

The Lightning Rod is a fishing rod being introduced by Castaway Sports. At a preliminary meeting with its agency, the president of Castaway Sports mentions that the rod can improve casting distance for an average individual by more than 20 percent. The account executive asks if the president has data to support this. The president replies yes. The agency proceeds to produce a series of television spots featuring the endorsement of a well-known celebrity. The spots run on network television and trumpet the improved casting distance that the rod provides. The slogan of the spots is “Lightning Rods–the finest rod ever cast.” After about a week, a competitor questions whether the rods really offer the improved performance Castaway Sports claims. The competitor files a complaint with the FTC.

(Scenario 4-4) The slogan for the spot, “Lightning Rods–the finest rods ever cast,” would most likely be considered by courts in the United States as

a.	false and misleading.
b.	a superlative, and therefore it must be provable.
c.	puffery, and therefore it doesn’t need to be proved or disproved.
d.	unethical.

ANS: C DIF: Moderate REF: p. 123 OBJ: 4-2

TYP: Comprehension

(Scenario 4-4) In relation to the Lightning Rod spots,

a.	actual deception in the marketplace does not have to be proved for the spots to be considered deceptive.
b.	failure to disclose important facts cannot be the basis for finding the spots deceptive.
c.	misrepresentation of fact, in and of itself, is not enough for the spots to be considered deceptive.
d.	if the claims are literally true, the spots cannot be ruled deceptive.

ANS: A DIF: Difficult REF: p. 127 OBJ: 4-3

TYP: Application

(Scenario 4-4) The FTC investigates the claim of 20 percent more casting distance. Castaway Sports admits that it has no actual data to support the claim but believes it to be true. However, to avoid the bad press associated with a prolonged investigation, the company agrees to an FTC order that requires it to stop running the ads. This is an example of

a.	a consent order.
b.	a cease and desist order.
c.	an affirmative disclosure order.
d.	corrective advertising.

ANS: A DIF: Moderate REF: p. 132 OBJ: 4-3

TYP: Application

(Scenario 4-4) To meet FTC standards for the use of a celebrity endorser,

a.	the celebrity must be considered an expert in the field.
b.	the celebrity must actually use the product.
c.	the FTC must approve the spots before they are run.
d.	the celebrity must actually write the statements he or she makes within the advertisement.

ANS: B DIF: Moderate REF: p. 133 OBJ: 4-3

TYP: Application

(Scenario 4-4) The claim of 20 percent extra casting distance proves to be unsubstantiated. Who is held responsible for making that claim?

a.	The president of Castaway Sports
b.	The corporation that manufactures the Lightning Rod
c.	The agency that produced the spots
d.	The celebrity who made the claim in the spots

ANS: C DIF: Easy REF: p. 1386 OBJ: 4-4

TYP: Comprehension

Scenario 4-5

Joe Rowan walked into Pederson Toyota one day and began looking at price stickers on Toyota Camrys. He was interested in that model because he had seen a number of television and magazine ads describing the car’s features and reputation for reliability. After closely examining the stickers, Joe noticed a line that said “Dealer Promotion Allowance – $125.00.” Joe asked a salesperson what that meant. The reply was that it was a charge that helped the dealership pay for local advertising to encourage consumers to shop at that particular dealer. After further discussion, Joe learned that almost 5% of the cost of the vehicle comes from expense for national and local advertising.

(Scenario 4-5) Joe Rowan was frustrated to learn that such a large percentage of the price of a car came from advertising expenses. He said to the dealer spokesperson, “If you would stop advertising so much, I could save money on this car. Heck, I would be willing to spend hundreds of my own money to do a complete search on the Internet and other literature to find the best car for me. I don’t need you guys to do that for me with all your advertising!” Which criticism of advertising is most disconcerting to Joe at this moment?

a.	advertising is superficial
b.	advertising is the method Toyota chose to inform him about this car option
c.	advertising wastes resources
d.	advertising is often offensive

ANS: B DIF: Difficult REF: p. 112 OBJ: 4-1

TYP: Application

(Scenario 4-5) After the comments in the above question were made, the salesperson replied, “If our industry didn’t do so much advertising you probably couldn’t afford to buy that computer to do your own research.” Which of the following pros of advertising is the salesperson likely using to support his comment?

a.	advertising fosters a diverse and affordable mass media
b.	advertising is very artistic in its nature
c.	advertising reflects the priorities of a society
d.	advertising fosters more rapid new product success, thus lowering the cost

ANS: D DIF: Moderate REF: p. 115 OBJ: 4-1

TYP: Application

(Scenario 4-5) Joe Rowan saw a television ad that stated the Toyota Camry was “The world’s best car for reliability.” Some critics of advertising argue that the use of such absolute superlatives in advertising is ____.

a.	unethical
b.	illegal
c.	deception
d.	puffery

ANS: D DIF: Moderate REF: p. 123 OBJ: 4-2

TYP: Application

(Scenario 4-5) The Pederson dealership and Toyota share the expense of local advertising in this market. This advertising technique is known as ____ advertising.

a.	unfair
b.	monopoly
c.	comparison
d.	vertical cooperative

ANS: D DIF: Easy REF: p. 128 OBJ: 4-3

TYP: Application

(Scenario 4-5) Which of the following government agencies would be most appropriate to contact if Jow Rowan felt like he should file a complaint about advertising in the automotive industry?

a.	The Federal Trade Commission
b.	The Federal Communications Commission
c.	The Food and Drug Administration
d.	The Securities and Exchange Commission

ANS: A DIF: Moderate REF: p. 131 OBJ: 4-3

TYP: Application

Scenario 4-6

Students from several organizations on campus sponsored a forum to debate the pros and cons of advertising. Student organizations representing consumers, journalists, marketers, entrepreneurs, and political scientists all had members in attendance. Following are some of the comments made at the forum.

(Scenario 4-6) One student said, “I am sick and tired of seeing nothing but supermodels advertising women’s clothes. Nobody I know looks like that! They don’t give me any indication of how I might look in their clothes.” Which of the following cons of advertising is this comment most likely based on?

a.	advertising often perpetuates stereotypes
b.	advertising wastes resources
c.	advertising creates needs
d.	advertising is superficial

ANS: D DIF: Difficult REF: p. 113 OBJ: 4-1

TYP: Application

(Scenario 4-6) Another student said, “Hey, I don’t like television advertising anymore than anyone else. But if I don’t want advertising on my TV programming, I have to go out and rent a video or buy a pay-per-view program. I just can’t afford to do that everyday.” Which of the following pros of advertising is this comment most likely based on?

a.	advertising lowers the cost of products
b.	advertising fosters a diverse and affordable mass media
c.	advertising reflects society’s priorities
d.	advertising is a source of fulfillment

ANS: B DIF: Moderate REF: p. 121 OBJ: 4-1

TYP: Application

(Scenario 4-6) Several students commented after the forum that, “Advertising is taking too much blame for some of society’s problems that Advertisers adjust to changes in the way of life that today’s consumer wants.” Which of the following arguments in favor of advertising best supports these students comments?

a.	advertising addresses a variety of human needs
b.	advertising lowers the cost of many products
c.	advertising reflects society’s priorities
d.	advertisers are showing much more sensitivity

ANS: D DIF: Moderate REF: p. 118 OBJ: 4-1

TYP: Application

(Scenario 4-6) One student stood up at the forum and said, “I bought a bike because the ads for this brand always said that it was the best in the world. I just don’t think that is true. I’ve had quite a few problems with this bike compared to other brands that some of my friends own.” When an advertiser uses absolute superlatives in ads it is typically known as ____.

a.	puffery
b.	monopoly advertising
c.	cooperative advertising
d.	comparative advertising

ANS: A DIF: Moderate REF: p. 123 OBJ: 4-2

TYP: Application

(Scenario 4-6) Near the end of the forum, one student stated, “I recently received a direct mail advertisement for a new type of fishing lure. I sent off my money and now, three months later, I have still not received anything. The ad was credible and when I called the company, they said they wouldn’t help. Is there a government agency that I could ask for help?” Which of the following agencies should this student be referred to?

a.	The Federal Trade Commission
b.	The Bureau of Alcohol, Tobacco, and Firearms
c.	The U.S. Postal Service
d.	The Federal Communications Commission

ANS: C DIF: Moderate REF: p. 131 OBJ: 4-3

TYP: Application

Defamation that occurs in print and would relate to magazine, newspaper, direct mail, or Internet reports is known as:

a.	Defamation
b.	Internalization
c.	Libel
d.	Slander

ANS: C DIF: Difficult REF: p. 144 OBJ: 4-5

TYP: Knowledge

ESSAY

Some people believe that advertising serves as a tool of education. Others believe it serves only to confuse and entice. Choose an advertisement that you have seen recently and use it to make a convincing argument for the pro-advertising position. Be sure to explain how the advertisement can affect an individual consumer. Choose another advertisement that you have seen recently and use it to make a convincing argument for the con-advertising position. Again, be sure to explain how the advertisement can affect an individual consumer.

ANS:

The pro-advertising argument should include the concept that advertising equips consumers to make informed purchase decisions. Better-educated consumers enhance their lifestyles and economic well-being through smart marketplace decision making. In addition, advertising can reduce search time for desired products. The argument may also make the point that the emotional benefits that the product offers are as important as functional benefits.

The con-advertising argument should include the concept that much of what tries to pass as information in advertising is shallow and meaningless. The argument should focus on the lack of discussion of functional benefits. It may also include the concept that advertising creates needs for unnecessary products.

DIF: Moderate REF: p. 112-113 OBJ: 4-1 TYP: Comprehension

It has been said on many occasions that advertising promotes materialism. Do you agree or disagree with this statement? Support your position.

ANS:

Support for this statement should include the following points: individuals’ wants and aspirations are artificial and self-centered as a result of advertising; in societies characterized by heavy advertising, there is a tendency for conformity and status-seeking behavior; and an overemphasis on the production of private goods takes away from the production of goods that serve the public.

Arguments against this position should include the following points: although advertising is undeniably in the business of promoting the good life, it did not create the American emphasis on materialism; advertising reflects society’s priorities; and goods and possessions were used by many cultures to mark special events long before advertising.

DIF: Moderate REF: p. 113 OBJ: 4-1 TYP: Comprehension

Disney’s Dave the Barbarian and Lizzie McGuire are a popular television shows which are featured as McDonald’s Happy Meal toys hat are popular among boys and girls. Products featuring characters from movies and television are heavily advertised on television to this audience. Outline the concerns that a critic of advertising would have about this practice.

ANS:

Advertising to children promotes superficiality and materialistic values. Children are easy prey for advertisers. Advertising to children promotes conflicts between children asking for products and parents having to say no. An additional, important final concern is that the television show is nothing more than a 30-minute commercial.

DIF: Moderate REF: p. 124 OBJ: 4-2 TYP: Application

A complaint concerning an allegedly misleading advertising practice is filed with a local Better Business Bureau and eventually ends up at the FTC. Outline the path the complaint would take to get there. Specifically, list the organizations it would pass through, and in general terms, the actions that would need to be taken by each organization for the complaint to end up at the FTC. Finally, describe three possible outcomes at the FTC level.

ANS:

The local BBB forwards the complaint to the National Advertising Division (NAD) of the Council of Better Business Bureaus. If the NAD staff cannot resolve the complaint with the advertiser, the complaint is passed along to the National Advertising Review Board. If the review panel does not either dismiss the complaint or convince the advertiser to change the advertising, the complaint can be forwarded to the FTC.

The FTC can require affirmative disclosure in future advertising; issue a consent order, where the advertiser agrees to stop running the ad without admitting guilt; issue a cease and desist order, which requires that the advertising be stopped within 30 days so the FTC can hold a hearing; or order corrective advertising.

DIF: Difficult REF: p. 132-133 OBJ: 4-3 TYP: Comprehension

Give two reasons why it is in the best interests of advertising agencies and the advertising industry to engage in self-regulation.

ANS:

First, if a claim in an advertisement is found to be misleading, the individual agency making the claim is held responsible. This is regardless of whether the client directed the agency to make the claim. Second, if advertising in general is perceived as unethical and untrustworthy, it will lose its effectiveness, and the entire industry will suffer.

DIF: Difficult REF: p. 133-135 OBJ: 4-4 TYP: Application

The concept of “privacy” as it relates to online e-commerce is emerging as a critical concern for advertisers, regulators and consumers. Explain how this problem is currently being addressed.

ANS:

Congress and the FTC are carefully scrutinizing the mergers of firms that would cerate online databases. Advertisers place online privacy notices on websites (but a vast majority of consumers never read these notices.) Consumers are becoming more concerned about the use of their private information and the selling of the information from the company that collects it to other companies.

Technology has increased the potential for the exchange of personal data.

DIF: Difficult REF: p. 138-139 OBJ: 4-5 TYP: Application

Eazyquizes

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