Final answer:
Comparative advertising is when a company directly or indirectly compares its brand to competing brands, moving beyond general persuasive advertising to emphasize specific advantages. This technique is significant in monopolistic competition and is embraced particularly when firms aim to establish strong brand recognition.
Step-by-step explanation:
Persuasive advertising becomes comparative advertising when a company directly or indirectly compares its brand to others. This is a strategic approach often utilized when firms operate under conditions of monopolistic competition, where the differentiation of the products and brand recognition play crucial roles in attracting consumers. While persuasive advertising seeks to influence consumer behaviour to choose a specific brand through various persuasive tactics, comparative advertising goes a step further by placing the advertised product in direct comparison with competing brands, highlighting the advantages and benefits over others.
In monopolistic competition, advertising can cause the perceived demand curve for a firm's product to become more inelastic, translating to a steeper curve or an increased overall demand causing a shift to the right. A substantial advertising campaign can result in the firm selling more products or charging a higher price. When multiple firms attempt to establish a recognizable brand name, especially in sectors with oligopoly tendencies, comparative advertising becomes significant. It's not just about the technological capability to produce but also about the arduous task of creating a marketing campaign capable of matching established brand giants like Coca-Cola or Pepsi.