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Study guide

by: Taylor Wall

Study guide CA 1341

Taylor Wall
Texas State
GPA 3.06

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These notes cover advertising, consumers in the marketplace, and important eras of marketing.
Consumers in the Marketplace
Judy L Allen
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This 5 page Study Guide was uploaded by Taylor Wall on Sunday September 25, 2016. The Study Guide belongs to CA 1341 at Texas State University taught by Judy L Allen in Fall 2016. Since its upload, it has received 5 views.

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Date Created: 09/25/16
Test I REVIEW—Part A CA 1341 Fall 2016 ECONOMIC SYSTEMS What is the basic purpose of any economic system?  An economic system is a system of production and exchange of goods and services as  well as allocation of resources in a society. What are the three questions any economic system must answer?  What to produce  How to produce it  What consumers get it What three entities that can answer the above questions?  In the United States, who answers the  three questions? What is the difference between an economic system that is classified as a “Market System” vs.  an economic system classified as “Central Planning”? How is the U.S. classified?  Market planning­ producers, buyers and consumers who drive economic activity in the  market. (U.S.)  Central Planning­ decisions on what to produce, how to produce it, and who to produce it  for are decided by the government: usually associated with a Communist society. What does Consumer Sovereignty mean?  The desires and needs of consumers control the output of producers. What are the 4 possible categories that businesses (in the U.S.) could be classified in?  What are  the characteristics of each category (how do they differ)?  Does competition differ depending on  the category (how)?  How are U.S. businesses/producers distributed among the categories?  Be  able to complete/explain the following chart: Market Type Number of  Type of  Entry  Price  producers Product Condition Comparison Oligopoly 2­4 Similar  Difficult but  2 products not impossible  because market  is dominated Pure Monopoly 1 Unique  Impossible 1 products from 1 producer  Monopolistic/  Many Similar  Easy 3 Competitive products like  fast food Pure  Many ++ Standard  Very easy 4 Competition products How does competition affect the price of a product?  The more competition for one type of product, the more competitive the prices must be.  (all within same range)  No one will pay $20 for one brand of toilet paper when every other brand of toilet paper  is around $12.  CONSUMER MOVEMENT For each of the 3 major Consumer Eras:  Era 1: 1880­1917  Era 2:1929­1940  Era 3: late 1950’s­1980 o What were the major safety issues?   ERA 1: food and drug industry, protecting food supply and labeling food,  The Jungle was written by Upton Sinclair discussing regulations on food;  Meat inspection Act in 1906.  ERA 2: Elixir Sulfanilamide (drug problem from cough medicine),  cosmetics scandal (Cosmetics Act)  ERA 3: Cranberry scare, Thalidomide (morning sickness pill that caused  disabilities in babies) o Identify the President and/or Consumer Advocates and/or the media that  influenced the era  ERA 1: DR. Harvey Wiley (father of consumerism, first person to work  for consumer safety). Upton Sinclair (wrote The Jungle­ first book on food regulations)  ERA 2: F.J. Schlink (One Million Guinea Pigs; testing food and products  on consumers without their knowledge). Colton Warne (co­founder of  Consumers Union). President Roosevelt.  ERA 3: Vance Packard (The Hidden Persuaders; first book that took a  look at marketing; influence of advertising on consumers). Ralph Nader  (Unsafe at any Speed; book about automobile safety). Senators Douglas  and Hart. Presidents Kennedy, Johnson, Ford and Carter. o Identify consumer legislation passed during era  ERA 1: 1906 Meat Inspection Act (protection during processing). 1906  Food and Drug Act (protection during transportation and sale of  food/drugs)  ERA 2: 1938 Food, Drug and Cosmetic Act  ERA 3: Magnuson/Moss Warranty Law (2 senators made companies stay  true to their warranties on their products). Airline bumping rules; Fair  credit reporting act; Equal Credit Opportunity Act. o How did the legislation that was passed change emphasis from Era 1 to Era 3 o o Know what caused the end to each era  ERA 1: WW1 ended era followed by prosperity in 1920’s  ERA 2: stock market crash and WW2   ERA 3: Defeat of Consumer Protection Agency; US becoming more  conservative; Election of President Reagan. Are all the elements required for an Era #4 Consumer Movement available in the U.S. now  (2016).  If no, what is missing?  Possibly, but we have too weak of an economy and significant safety problems. What were the first four Consumer Rights?  Who identified/outlined them?  Be able to  identify/explain the rights.   President Kennedy o Right to be safe o Right to be informed  o Right to choose o Right to be heard What were the additional Consumer Rights identified in addition to the first four.  Be able to  explain.  President Johnson o Right to decent environment  President Ford o Right to consumer education  Consumer Representatives o Right to redress (rights for a consumer to exchange a product if they need  to) Why are Consumer Responsibilities important?   Be able to discuss/explain responsibilities  discussed in text and in class.  What problems might we encounter while trying to fulfill them?  To be aware of role and function in economy  To perform role effectively  o To be an alert, informed, responsible consumer o To exercise independence of judgment, action and manufacture  To avoid wasting resources  To avoid exploitation of workers  To be honest in dealings  To protest when appropriate o To report wrongs incurred in consumer dealings  To communicate with producers and businesses  To accept consequences of consumer decisions  To report defective goods to both the seller and manufacturer ADVERTISING What is the purpose of advertising?  To provide new info about products Who ultimately pays for advertising?  How?  Consumers by buying the products we see in advertisements The top 10 national advertisers primarily could be categorized as what type of business (from  Economic Systems discussion)  Oligopolies  What are the three categories/classifications of advertisements?  Be able to explain each.  Which  type of advertisements do we see most frequently?  Informative­ 3  most common type of ad nd  Comparative­ 2  most common type of ad  Defensive or Competitive­ most common type of ad Do advertisements stimulate competition or reduce competition (national vs. local level)?  National­ reduce competition   Local­ stimulate competition  Discuss the relationship of advertisers and the “content” of the media in which they are  advertising.  Be able to name some “types” of deceptive advertising and be able to explain why they may be  deceptive.  Bait and Switch­ getting consumers to come into the store to buy one thing and  then revealing that the original product isn’t what they expected, in turn showing  them a better product.   Misleading statements­ insinuating something about a product that isn’t  necessarily true  Puffery­ sugar coating something; red bull gives you wings What is “bait and switch” advertising? Legal or illegal?  getting consumers to come into the store to buy one thing and then revealing that  the original product isn’t what they expected, in turn showing them a better  product.   Legal  What is “puffery”? Legal or illegal?  Using hyperbole or exaggeration to advertise; legal Which federal agency has control over advertising?  What power do they have?  Are ads  reviewed/checked prior to being released?  Do they control the price of the advertisings?  Federal Trade Commission  Yes they review ads before they are released  Depending on the channel, length of ad and timing; makes price higher What is corrective advertising?  How successful has it been?  Admitting mistakes; pretty successful What are celebrity endorsements/testimonials?  Are they effective?  What rules apply to celebrity endorsements/testimonials?   Yes they are successful What is the definition of a “deceptive ad”?  Using false or misleading information to persuade a customer; most government agencies have regulations about using inherently false information versus just making an honest  mistake; most deceptive ads claim to add health benefits from using a product. What is the purpose of “marketing research” and “motivational research”?   How are they similar and how are they different?  Marketing research asks customers questions   Motivational research does research on things that appeal to something within  consumers; emotional type appeals. What is subliminal advertising?  Using an underlying message to persuade someone to buy something. 


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