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Extra info for Advertising: Its Place in Political and Managerial Economics

Example text

G. ). The profit-maximising manager will want to reach as many potential customers as possible, to do so in the most effective manner and at the lowest practicable cost. The charges which the various media set are readily available from the appropriate rate cards. ) In newspapers and magazines the rate will vary with size of advert, use of colour, whether or not a preferred position is required, and whether or not the campaign will be a single shot, or will go on for a series of issues in the same publication- in which case quantity rates might well be quoted.

There is also the additional advantage that, with new products in particular, editorial interest may be aroused, and so the product brought to the readers' attention in a leading article. The main disadvantage with magazines vis-0-vis newspapers is that regional flexibility is lost, so message content must be generalized to be meaningful to all readers. Local information cannot be provided nor regional appeals used. g. ) Television This is the single most important medium in Britain. It has the obvious advantages of sight, sound and colour right in the living-rooms of potential customers.

The various price and cost line combinations can then be summarised on what Verdoorn calls a 'recapitulation diagram', as in Fig. 3. The overall point of maximum profit can then be readily found, and the appropriate choice made as to price, channel, product quality and advertising. Clearly, since only the plotted points on the diagram are practical possibilities, maximum profits will not simply be at the greatest vertical distance between any pair of cost and revenue lines. Rather, they will occur at that plotted point on the diagram closest to this hypothetical distance.

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