MCOM 341Week 2 Summary

KEY TERMS:

Added value: The increase in worth of a product or service as a result of a particular activity. In the context of advertising, the added value is provided by the communication of benefits over and above those offered by the product itself.

Comparative advertising: Advertising that claims superiority to competitors in some aspect.

Copyright: An exclusive right granted by the Copyright Act to authors and artists to protect their original work from being plagiarized, sold, or used by another without their express consent.

Corrective advertising: May be required by the FTC for a period of time to explain and correct offending ads.

Gross Domestic Product (GDP): the total market value of goods and services produced by workers and capital within a nation's borders

Intellectual property: Something produced by the mind, such as original works of authorship including literary, dramatic, musical, artistic, and certain other "intellectual" works, which may be legally protected by copyright, patent, or trademark.

Puffery: Exaggerated, subjective claims that can't be proven true or false such as "the best," "premier," or "the only way to fly."

Primary Demand: Consumer demand for an entire industry or product class.

Secondary Demand: Consumer demand for the particular advantages of one brand over another.

Trademark: Any word, name, symbol, device, or any combination thereof adopted and used by manufacturers or merchants to identify their goods and distinguish them from those manufactured or sold by others.

OTHER KEY CONCEPTS:

Advertising can impact the economy in 4 key areas:• Product values• Prices & competition• Consumer demand• Consumer choice

The abundance principle states that an economy produces more goods and services than can be consumed. In such an economy, advertising serves two important purposes: It keeps consumers informed of their alternatives, and it allows companies to compete more effectively for consumer dollars.

Government regulatory agencies: Federal Trade Commission (FTC): Regulates all commerce between the states. Formed in 1914, the

FTC is the leading federal regulatory agency for advertising practices and the subject of much criticism by the advertising profession.

Food and Drug Administration (FDA): Has authority over the advertising, labeling, packaging, and branding of all packaged goods and therapeutic devices. The FDA requires full disclosure labels, regulates the use of descriptive words on packages, and has jurisdiction over the packaging of poisonous or otherwise hazardous products.

Federal Communications Commission (FCC): Formed by the Communications Act of 1934, the FCC has jurisdiction over the radio, TV, telephone, and telegraph industries. It maintains indi- rect control over advertising through its authority to license or revoke the license of all broadcast stations.

Patent and Trademark Office: Regulates registration of patents and trademarks. It enforces the Trade-Mark Act of 1947.

Library of Congress: Registers and protects all copyright material including ads, music, books, booklets, computer software, and other creative material.

Non-government regulatory organizations: Children’s Advertising Review Unit (CARU): Reviews and evaluates all child-directed advertising in

media. Better Business Bureau (BBB): Comprised of more than 100,000 member companies, the BBB

operates at the local level to protect consumers against fraudulent and deceptive advertising and sales practices.

National Advertising Review Council (NARC): Organization whose purpose is to promote and enforce standards of truth, accuracy, taste, morality and social responsibility in advertising. It is made up of 2 operating arms:

1. National Advertising Division (NAD) : Monitors advertising practices and reviews complaints about advertising from consumers and consumer groups, brand competitors, local BBB’s, trade associations and others.

2. National Advertising Review Board (NARB) : The appeals board for the NAD, consisting of a chairperson and 70 volunteer members (39 national advertisers, 21 agency representatives, and 10 laypeople).

Advertising industry self-regulators: American Association of Advertising Agencies (AAAA): an association of the largest ad agencies American Advertising Federation (AAF): helped establish the FTC, forerunners of the BBB Association of National Advertisers (ANA): consists of 400 major manufacturing and service

businesses that are clients of the agencies in the AAAA.