Question

Cemex is a cement industry.

1. "Cemex also spends a lot to promote its brand as if it were soap or soda pop. In addition to its neighborhood block parties and airport greeters, the company puts its name on professional soccer jerseys and emblazons its Tolteca brand on T-shirts handed out to religious pilgrims."

Can anyone help me economically explain and elaborate on how Cemex has used advertisement to increase its monopolistic/market power?

Answer 1

Advertisement is a paid form of media used to inform customers and induce them to buy. Advertisement is used to inform as well as create brand equity and brand loyalty. A firm using advertisement effectively can create a strong brand identity, have a base of loyal customers, and can can charge a higher price and still induce buyers to make a purchase.

Cemex uses advertisement to create a strong brand identity with its customers so that they become loyal to the brand. This helps Cemex gain more market power through brand loyalty, brand recognition and brand equity.