Issues in Advertising: The Economics of Persuasion

By David G. Tuerck | Go to book overview

COMMENTARIES

David M. Blank

I think both papers are very stimulating and suggestive, and I have only a few brief observations. First, on Dr. Porter's paper, I have the impression that the appropriate line of demarcation is between television and print rather than between national media (network television and magazines) and local media (spot television and newspapers). Dr. Porter stresses the opposite conclusion, but I defer to the reader to determine whether my impression is correct, that is, whether most of the variables work rather differently for the television media than they do for the print media.

Turning to Dr. Telser's paper, there are two comments I would like to make. First, Dr. Telser suggests at several points that those who buy the products advertised pay for the advertising. This is an old and in my view unsatisfactory idea.

Let me refer, for a moment, to the Steiner study; it is a singularly good example of the point I am trying to make. Steiner reported that toy manufacturers discovered that national advertising, particularly on Saturday morning network television, provided an extraordinarily efficient way to increase sales.1 The result of that advertising and of the preselling of toys, was the introduction of a new kind of retail operation, in which retail margins and prices were aggressively slashed. Now, I do not know how the people who bought those toys after the advertising was introduced by the industry paid for the advertising. Indeed, it appears that if there had been no advertising, they would have paid more.

Second, Dr. Telser not only discusses and concerns himself with various relationships within the advertising market, but extends his analysis to the relationship between the advertising market and the entertainment market. He goes even further by strongly suggesting that it is the demands or needs of the advertising marketplace that bring about certain kinds of TV programs and certain kinds of magazines and magazine articles.

I think that stretches things a little far. I think that advertising has a profound and significant role to play in the economic marketplace,

____________________
1
Robert L. Steiner, "Does Advertising Lower Consumer Prices?" Journal of Marketing, vol. 37, no. 4 ( October 1973), pp. 19-26.

-115-

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Issues in Advertising: The Economics of Persuasion
Table of contents

Table of contents

  • Title Page iii
  • Major Contributors v
  • Contents ix
  • Introduction 1
  • Acknowledgments 11
  • Part One Issues in Regulation 13
  • Advertising and Legal Theory 15
  • Advertising Regulation and the Consumer Movement 27
  • Commentaries 45
  • Part Two Advertising and the Firm 69
  • Towards a Theory of the Economics of Advertising 71
  • Introduction 71
  • Optimal Advertising: An Intra-Industry Approach 91
  • Conclusion 111
  • Technical Appendix 112
  • Commentaries 115
  • Part Three Advertising as Information 131
  • Advertising as Information Once More 133
  • Appendix A: Derivation of the Relationship Between a and P 156
  • Appendix B: Data Sources 158
  • Advertising, Information, and Product Differentiation 184
  • Commentaries 193
  • Four Part Advertising, Concentration, and Profits 215
  • Advertising Intensity and Industrial Concentration- an Empirical Inquiry, 1947-1967 217
  • Conclusions 249
  • Advertising and Oligopoly: Correlations in Search of Understanding 253
  • Appendix A 262
  • Appendix B 263
  • Commentaries 267
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