Super Bowl commercials are watched at least as closely as the football game itse

Question

Super Bowl commercials are watched at least as closely as the football game itself. Fans love these usually creative and comedic ads. But economists pay close attention for different reasons. Who's advertising and what does it say about those industries? Are the ads money well spent, or do they increase business costs without making a noticeable difference in profits? Here we examine advertising over ten recent Super Bowls.
Refer to the Snapshot infographic on page 371 in Chapter 12.
Discussion Questions:
(1) Draw what happens to a brand's demand curve when it successfully achieves product differentiation through advertising. (2) Describe the risks and rewards of advertising from the perspective of both the brand and the consumer. Super Bowl commercials are watched at least as closely as the football game itself. Fans love these usually creative and comedic ads. But economists pay close attention for different reasons. Who's advertising and what does it say about those industries? Are the ads money well spent, or do they increase business costs without making a noticeable difference in profits? Here we examine advertising over ten recent Super Bowls.
Refer to the Snapshot infographic on page 371 in Chapter 12.
Discussion Questions:
(1) Draw what happens to a brand's demand curve when it successfully achieves product differentiation through advertising. (2) Describe the risks and rewards of advertising from the perspective of both the brand and the consumer. Super Bowl commercials are watched at least as closely as the football game itself. Fans love these usually creative and comedic ads. But economists pay close attention for different reasons. Who's advertising and what does it say about those industries? Are the ads money well spent, or do they increase business costs without making a noticeable difference in profits? Here we examine advertising over ten recent Super Bowls.
Refer to the Snapshot infographic on page 371 in Chapter 12.
Discussion Questions:
(1) Draw what happens to a brand's demand curve when it successfully achieves product differentiation through advertising. (2) Describe the risks and rewards of advertising from the perspective of both the brand and the consumer.

Explanation / Answer

(1) Draw what happens to a brand's demand curve when it successfully achieves product differentiation through advertising.

It can affect the firm in two ways. When people starts buying more of its products, they become more willing to pay for the same demand so demand becomes more inelastic. In both cases it is able to increase its sales through a higher price and higher profits

(2) Describe the risks and rewards of advertising from the perspective of both the brand and the consumer

Consumer might face a higher price and so their surplus might reduce. There may be retaliation from rival firms who attempt to devise measures such as offering lower price for their products to sell more and increase their sales.

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