Microeconomics 2011 Chapter 14 微观经济 教学课件.pptVIP

* * * * * * * * * * * * * F F T T T * F F T T T * 6. F 7. T 8. F 9. F 10. T * 11. T 12. F 13. F Using Advertising to Signal Quality Why do Coke and Pepsi spend millions of dollars a month advertising products that everyone knows? One answer is that these firms use advertising to signal the high quality of their products. A signal is an action taken by an informed person or firm to send a message to uninformed people. Product Development and Marketing Coke is a high quality cola, and Oke is a low quality cola. If Coke spends millions on advertising, people think “Coke must be good.” If it is truly good, when they try it, they will like it and keep buying it. If Oke spends millions on advertising, people think “Oke must be good.” If it is truly bad, when they try it, they will hate it and stop buying it. Product Development and Marketing So if Oke knows its product is bad, it will not bother to waste millions on advertising it. And if Coke knows its product is good, it will spend millions on advertising it. Consumers will read the signals and get the correct message. None of the ads need mention the product. They just need to be flashy and expensive. Product Development and Marketing Brand Names Why do firms spend millions of dollars to establish a brand name or image? Again, the answer is to provide information about quality and consistency. You’re more likely to overnight at a Holiday Inn than at Joe’s Motel because Holiday Inn has incurred the cost of establishing a brand name and you know what to expect if you stay there. Product Development and Marketing Efficiency of Advertising and Brand Names To the extent that advertising and selling costs provide consumers with information and services that they value more highly than their cost, these activities are efficient. Product Development and Marketing What Are the Coolest Three Brands in the World? ? Company/Brand Beijing % of Votes Shanghai % of Votes ? Nike 31.7 29.9 ? Sony 18.7 13.1 ? Adidas 18.6 11.5 ? BMW 10.