Final answer:
Effective advertising leads to six responses: Awareness, Consideration, Trial, Purchase, Loyalty, and Advocacy. This progression helps firms differentiate their products, leading to greater profitability either through increased sales volume or higher pricing.
Step-by-step explanation:
Effective advertising can elicit a range of responses from consumers, ultimately leading to brand success in the market. The six types of consumer responses are Awareness, Consideration, Trial, Purchase, Loyalty, and Advocacy.
Awareness is the initial stage where the consumer becomes familiar with the product or brand. Consideration follows, where the consumer thinks about the possibility of purchasing the product. The Trial phase occurs when the consumer attempts to use the product for the first time, leading to the Purchase phase if the trial is positive. Loyalty develops when a consumer repeatedly chooses the same brand over competitors. Finally, Advocacy occurs when loyal customers recommend the product to others, completing the cycle of consumer responses.
Advertising in the framework of monopolistic competition either makes a firm's perceived demand curve more inelastic or increases demand for the firm's product. This drives profitability through greater sales volume or the ability to charge higher prices.