Final answer:
Smith is working with the frequency dynamic of media planning to decide how many times to air a TV ad for maximum customer exposure. Television networks provide demographic data to target advertising effectively, and a successful advertising strategy can shift demand curves in the firm's favor.
Step-by-step explanation:
In media planning, when Smith is deciding how often to air a television advertisement to maximize customer exposure, he is handling the frequency dynamic. This pertains to how many times the target audience sees a specific ad within a given time period. The goal of frequency is to reach the ideal balance where the message is seen enough to make an impact without oversaturating and annoying the audience. Sponsors can leverage sophisticated data from television networks to target their advertising for specific demographics, increasing the likelihood of reaching potential customers where they are most engaged.
Television advertising remains a powerful tool in connecting with consumers, with companies finding this medium irresistible due to its vast reach and the ability to segment audiences effectively. Media planning in this realm involves using demographic insights to tailor the frequency and messaging of ads, which is crucial in a landscape of monopolistic competition. The success of an advertising campaign is measured by its ability to either make the demand curve more inelastic or to increase overall demand for the product, thereby enhancing the firm's profitability through higher sales volume or the ability to command a higher price.