Final answer:
The purpose of a reminder advertisement is to keep a product or service in the public's mind, supporting a firm's efforts to differentiate its offerings and potentially increasing its profits by making demand more inelastic or expanded.
Step-by-step explanation:
The purpose of a reminder advertisement is to remind customers about a previously viewed product or service. This type of advertising capitalizes on the effects of repetition to keep the product or service fresh in consumers' minds. It's part of the landscape of advertising techniques that play a crucial role in competitive markets where the differentiation of one firm's products from another's is vital for gaining and maintaining market share.
In the context of monopolistic competition, effective reminder advertising might make a firm's perceived demand curve steeper, indicating a more inelastic demand for their products, or shift the demand curve to the right, showing an increase in demand. Both outcomes ultimately aim to increase a company's profits by allowing it to sell more products, charge higher prices, or both, by ensuring that their brand remains top-of-mind among consumers.