IAI Actuarial Core Principles · Business Economics · Impact of advertising on sales and demand
A life insurer runs television commercials that mainly provide factual details of a new term plan's features, eligibility and premium bands so that buyers can compare it with rival plans. How is this advertising best classified?
It is informative advertising, because its main purpose is to give consumers factual details about features, eligibility and premiums so they can compare options. It does not rely on emotional appeal or brand image, which would make it persuasive, nor does it attack named competitors.
- AInformative advertisingCorrect
- BPersuasive advertising
- CDefensive advertising
- DGeneric advertising
- Comparative advertising
Explanation
Advertising that mainly supplies factual information on features, eligibility and price helps consumers make choices and is called informative. Persuasive advertising instead tries to build brand image or emotional attachment, which is not the main aim here. The advert does not name rivals, so it is not comparative.
Did you get it right without looking?
One question tells you little. A timed set on Impact of advertising on sales and demand shows your real accuracy, how long you take and where you lose marks.
More Impact of advertising on sales and demand questions
- A Bengaluru bank's credit card division has price elasticity of demand of -2 and advertising elasticity of demand of 0.5. Using the Dorfman-…
- Which of the following is the most likely reason that informative advertising by a new digital insurance platform shifts its demand curve to…
- An Indian mutual fund house adverts show its fund's returns directly against those of two named competing funds over the same period. This t…
- A general insurer's advertising raised sales by 6% in the year of a campaign, but advertising elasticity measured one year later shows a fur…
- A mutual fund company with monopoly power sets price where marginal revenue equals marginal cost. Its advertising raises the quantity demand…
- A life insurer finds that a 10% increase in its advertising spend is followed by a 3% rise in policy sales, other factors unchanged. What is…