Musings about the role of advertising in industries classified as oligopolistic/monopolistic competition...
Can advertising make markets either more or less competitive? How?
Absolutely! Think about the campaign ads for Coke or Pepsi. Those two have been battling it out for decades when it comes to advertising. Pepsi is currently using Beyonce in their ad campaign to get people to buy their soda. A slogan of theirs is "Pepsi: The New Generation"which always seems to have the most popular and current celebrities hocking their product. Celebrities such as Britney Spears, Bob Dole, Shaquille O'Neil and David Bowie have all been celebrity endorsers of Pepsi. Who could forget Michael Jackson's infamous Pepsi commercial shoot where his hair caught on fire?!
Not to be outdone, Coke has had many famous commercials that are a part of television history. Think about the "I'd Like to Buy the World a Coke" commercial or the Mean Joe Green commercial. Coke has recently used country music star Taylor Swift in their Diet Coke ads. Other celebrity endorsers of Coke include: Bill Cosby, Olympic ice skater Michelle Kwan, Jennifer Lopez and a host of others.
Commercials create a buzz, why do you think those coveted spots during the Super Bowl go for millions of dollars? It's all about competition!
Print ads also have a way of creating a more competitive market. If I think about the cigarette/tobacco market the first companies that come to mind when thinking about their ads is Marlboro and Camel. The Marlboro Man was portrayed as this rugged, handsome, hardworking cowboy. Joe Camel was the face of Camel brand cigarettes which showed a fun-loving, cool, hip camel who was always shown with the slogan "Smooth Character." In a New York Times article from 1997 Eric Solberg, the executive director of Doctors Ought to Care, said that, ''Joe Camel represented an icon that refueled the moral outrage of the anti-smoking movement." Camel was trying to compete with Marlboro to take the top spot in cigarette sales.
Not to be outdone, Coke has had many famous commercials that are a part of television history. Think about the "I'd Like to Buy the World a Coke" commercial or the Mean Joe Green commercial. Coke has recently used country music star Taylor Swift in their Diet Coke ads. Other celebrity endorsers of Coke include: Bill Cosby, Olympic ice skater Michelle Kwan, Jennifer Lopez and a host of others.
Commercials create a buzz, why do you think those coveted spots during the Super Bowl go for millions of dollars? It's all about competition!
Print ads also have a way of creating a more competitive market. If I think about the cigarette/tobacco market the first companies that come to mind when thinking about their ads is Marlboro and Camel. The Marlboro Man was portrayed as this rugged, handsome, hardworking cowboy. Joe Camel was the face of Camel brand cigarettes which showed a fun-loving, cool, hip camel who was always shown with the slogan "Smooth Character." In a New York Times article from 1997 Eric Solberg, the executive director of Doctors Ought to Care, said that, ''Joe Camel represented an icon that refueled the moral outrage of the anti-smoking movement." Camel was trying to compete with Marlboro to take the top spot in cigarette sales.
The most interesting thing I learned in this chapter...
The idea that firms can be both monopolistic and competitive. This is a market where many firms sell products that are similar but not identical (Mankiw, 330). Example are: DVD's, computer games, restaurants, and books.
Characteristics of monopolistic competitive firms:
Mankiw, N. Gregory. Principles of Microeconomics. 6th Edition. Ohio: Cenage Learning. 2012. Print.
Characteristics of monopolistic competitive firms:
- Have many sellers competing for the same customers.
- A product that is slightly different than than its competition.
- Are free to move into or out of the market without any restrictions.
Mankiw, N. Gregory. Principles of Microeconomics. 6th Edition. Ohio: Cenage Learning. 2012. Print.
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