Final answer:
Comparative advertising is employed by Progressive to highlight their price advantage over competitors, aiming to influence the demand curve to increase sales or prices for better profits.
Step-by-step explanation:
A Progressive insurance ad encouraging customers to compare its prices to those of other providers is an example of comparative advertising. This type of advertising is designed to show how one firm's products or services are different and possibly better than those of a competitor. In the context of monopolistic competition, advertisements can either make a firm's perceived demand curve steeper, indicating a more inelastic demand, or shift the demand curve to the right, signifying an increase in demand. A successful advertisement, therefore, has the potential to enhance a firm's sales volume or allow the firm to price its products higher—or both—thus leading to greater profits.
Companies craft such ads by relying on tactics like the bandwagon fallacy, where the advertisement creates an impression that everyone is choosing a particular product, prompting others to follow suit. Cross-platform advertising synergy is another strategy, ensuring that the same marketing message reaches consumers from various sources and devices, thereby reinforcing the brand image and increasing consumer familiarity.