Advertising & IMC, Business Economics Exam Insights

Posted on Mar 5, 2025 in Economy

Advertising & IMC Exam Insights

Q.1 (A) True or False:

  1. False – Salesmanship is personal communication, not mass communication.
  2. False – Regional channels primarily target regional audiences, not national ones.
  3. True – Accreditation is crucial for advertising agencies.
  4. True – Commission is a traditional agency compensation method.
  5. False – Advertising is not a production cost; it is a marketing expense.
  6. True – Self-regulation ensures ethical advertising practices.

Q.1 (B) Match the Columns:

  1. Publicity – (e) Form of mass communication
  2. Creativity – (d) New idea generation
  3. Agency Compensation – (f) Commission method
  4. Creative Pitch – (c) Agency presentation
  5. Pro-Bono – (b) Public service advertising
  6. Client Turnover – (a) Shifting of an agency

Q.2 (Answer any one)

(a) Meaning and Features of IMC

Integrated Marketing Communication (IMC) is a strategy that integrates various marketing and promotional tools to ensure a unified brand message.

Features of IMC:

  • Consistency – Ensures uniform messaging across platforms.
  • Multiple Channels – Uses advertising, PR, digital media, and sales promotions.
  • Customer-Centric Approach – Focuses on engaging customers effectively.
  • Cost-Effectiveness – Reduces redundancy and optimizes the budget.

(b) Classification of Advertising

By Area:

  • Local Advertising – Targets specific geographic regions.
  • National Advertising – Targets a country-wide audience.
  • International Advertising – Targets multiple countries.

By Function:

  • Informative Advertising – Provides product information.
  • Persuasive Advertising – Influences consumer behavior.
  • Reminder Advertising – Reinforces brand awareness.

Q.3 (Answer any one)

(a) Services of Advertising Agencies

  • Market Research – Understanding consumer needs.
  • Creative Development – Designing ad campaigns.
  • Media Planning & Buying – Selecting the best platforms.
  • Brand Strategy – Positioning and brand messaging.
  • Public Relations – Managing public perception.

(b) Client Turnover and Reasons

Client Turnover refers to a company changing its advertising agency.

Reasons:

  • Poor Performance – Ineffective ad campaigns.
  • Cost Issues – Budget constraints.
  • Strategic Shift – Change in marketing direction.
  • Relationship Issues – Miscommunication with the agency.

Q.4 (Answer any one)

(a) Pro-Bono Advertising & DAVP’s Role

Pro-Bono Advertising is free advertising for social causes.

DAVP (Directorate of Advertising & Visual Publicity) promotes government initiatives, such as:

  • Public health awareness
  • Environmental conservation
  • Social welfare campaigns

(b) Ethics in Advertising & Untruthful Forms

Ethics in Advertising means ensuring honesty and fairness.

Forms of Untruthful Advertising:

  • False Claims – Misrepresenting product benefits.
  • Misleading Comparisons – Unfairly attacking competitors.
  • Exaggeration – Overstating effectiveness.
  • Stereotyping – Reinforcing negative biases.

Business Economics Exam Insights

Q.1 (Attempt any two)

(a) Circular Flow of Income in an Open Economy

Explains how money moves between households, businesses, government, and foreign sectors.

Involves exports, imports, and government interventions.

Diagram should include: households, firms, government, and international trade.

(b) Phases of Trade Cycles

  • Expansion – Economic growth and rising demand.
  • Peak – Maximum economic activity.
  • Recession – Declining demand and production.
  • Depression – Lowest economic activity.
  • Recovery – Economy starts growing again.

(c) Pillars of Happiness Index

  • Economic Well-being
  • Social Support
  • Health and Life Expectancy
  • Freedom of Choice
  • Trust in Government

Q.2 (Attempt any two)

(a) Consumption Function

Shows the relationship between income and consumption.

Diagram: Must show a positive slope where higher income leads to higher consumption.

(b) Marginal Efficiency of Capital (MEC)

Represents the rate of return on an additional unit of capital.

Influences investment decisions in an economy.

(c) Investment Multiplier & Leakages

Investment Multiplier: Measures the effect of investment on income.

Leakages: Savings, taxes, and imports reduce the multiplier effect.

Q.3 (Attempt any two)

(a) Features of New Keynesian Economics

  • Sticky Prices & Wages – Prices do not adjust quickly.
  • Imperfect Competition – Markets are not perfectly competitive.
  • Microeconomic Foundations – Analyzes individual behavior.
  • Government Role – Supports intervention in recessions.

(b) Sticky Prices

Prices do not change immediately due to contracts, menu costs, and wage rigidity.

Leads to short-term unemployment and inefficiencies.

(c) Policy Implications of New Keynesian Economics

Suggests government policies for demand stimulation.

Supports monetary and fiscal interventions.

Q.4 (Attempt any two)

(a) Components of Money Supply

  • M1 – Currency in circulation and demand deposits.
  • M2 – M1 + Savings accounts.
  • M3 – M2 + Fixed deposits.
  • M4 – M3 + Post office deposits.

(b) Keynesian Approach: Speculative Demand for Money

People hold money for speculative purposes based on interest rates.

Higher interest rates → Lower money holding.

Lower interest rates → Higher money holding.

(c) Causes of Inflation in India

  • Demand-Pull Inflation – Excess demand over supply.
  • Cost-Push Inflation – Rising production costs.
  • Monetary Factors – Excess money supply.
  • Structural Issues – Supply chain inefficiencies