the idea behind advertising is to tell the people that certain things with certain characteristics are available for sale. There are many ways to advertise a product. New methods and mediums of advertising are being introduced and developed as the communication technology progresses.
The purposes of advertising
Providing information – The purpose of advertising a product is to attract people to buy the product and thus to increase sales and the profit of the business. The product being advertised may be a new product that is being launched, the advertisement maybe to promote a product that is already being sold in the market.
Advertising is also used to inform the public about important changes such as change of location of the business or changes to the product itself.
Establishing brand loyalty – One of the important purposes of advertising is to establish brand name and to develop brand loyalty. An advertiser needs to keep the attention of the customer such that the customer does not move to the brands of the competitors.
Public image of the business as a whole – This is known as corporate advertising or institutional advertising. Customers often trust and buy the products of those companies which has a public reputation of producing reliable products. So the purpose of this aspect of advertising is to promote the business as a whole to the public and to improve its public image.
The Benefits of Advertising
Benefits to the customer
- Advertising provides information on the products and services to the consumers. Information about the availability of the products and their characteristics helps the consumers to make a more informed choice about what is best for them.
- Because of the competition and advertising, the customers have better information and thus the manufacturers have to improve the quality of their brand and even lower the prices.
- Advertising can also lower the prices if the increased demand for the product due to advertising enables the companies to produce the products in large quantities and thus enjoy economies of scale. Economies of scale means reduced costs due to increased scale of production. This could be due to the use of modern automation and technology and other benefits of mass production
Benefits to the manufacturer or retailer
- Let us collectively call manufacturers and retailers as ‘suppliers’ or ‘sellers’. Advertising increases sales and thus the profit for the sellers. Increase in sales also enables them to do mass production which helps to reduce cost, as mentioned earlier in this tutorial.
- Advertisement is very important when launching new products. Without advertising the customers will not get to know about the product and therefore the producers may not be able to sell enough quantities to break-even.
Advertisement can also be used to revive the demand for an already existing product in the market which has started to decline in sales. Without advertising, the suppliers may have no choice but to remove the product from the market.
- Advertising also helps the businesses to establish their image and a particular name of a brand for itself.
Social aspects of advertising
Advertising helps the society in many ways. Here we will look at the social benefits of advertising. Apart from generating revenue and increasing demand for the advertisers, there are many benefits that the society enjoys because of advertising.
Creation of jobs – Advertisement has become such a big business that it provides employment for many people in the advertisement industry. Skilled workers such as graphic designers, web programmer, and video and animation creators are needed for the industry.
If the advertisement creates more sales for the advertiser, further jobs will be created to keep up with the increased demand.
Funding for special events, newspapers and TV Channels – Advertisements provide funds for the newspapers and magazines. Some magazines can be given away for free since the advertisements cover the cost of running the magazine. Many social and sporting events are sponsored by the companies to advertise the company or its products. Without such sponsorships, the social events may not be possible.
Dangers of Advertising
- Increases costs – It is because of the extent to which advertisement industry has reached, that without advertising, it is difficult to successfully sell in the market. This is true for new products especially. Therefore, firms spend huge amounts for advertising campaigns that it has become a significant cost item for them. This is in turn reflected in the price.
- Wastage of resources – Sometimes advertisements are done in situations where it is not necessary. This is the case of there are only few main producers or if the products are considered as essential products with only few suppliers. For example gasoline and diesel. The money spent on such products can be better utilised elsewhere.
- Unnecessary demand – Advertisements can make people want to buy things that they don’t really need. By appealing to emotions, advertisements can place undue stress on material possessions.
- Misleading information – Advertisements are sometimes thought to be deceptive and give wrong information on the products or services. For example, the advertisement may over-emphasize on the good product or a service and may never mention the the drawbacks.
Some advertisements may also give unethical or harmful message to consumers. These types of advertisements are unlawful and prosecuted under Trade Description Act for misleading people.
- Reduced competition – larger firms can use all the successful methods with a big advertisement budget, forcing smaller firms to go out of business. This could reduce the necessary health of the competition to keep the prices low and to keep the market efficient.
- Repetitive and intrusive advertisements – Advertisements on certain television channels are accused of being repetitive and intrusive. This is true for most of the Indian entertainment channels, where advertisements may be given more airtime than the actual content programmes.
TYPES OF ADVERTISEMENTS
In this type the advertiser tries to persuade the public to buy his product, by explaining the various good qualities that the product possesses over other products.
This is carried out by different producers of different brands of the same product. Each producer tries to compete with other producers in trying to capture the market. The advertiser uses techniques that are persuasive and aggressive to achieve his target. Example, the advertiser claims that his product is best in terms of quality/performance/durability.
Example: Biggs Butter is best.
In this type information is passed on to the consumers about availability of products, changes in fashion and how to use the products. Under informative advertising the following goods and services are advertised:
- Advertising in Trade and Technical Journals: These advertisements contain technical information about goods.
- Advertising of Particular Events: Trade fairs, exhibitions, concerts and sporting activities are examples of such advertising. In this type people are informed about such events and are persuaded to attend such events.
- Advertising of Employment Opportunities: In this type people come to know about the various employment opportunities available.
Generic Advertising (Collective)
When all the producers in one industry combine to advertise their product, it is called generic advertising. These advertisements are usually sponsored by trade associations. The producers group together to share the costs and to promote the product, hoping to increase the overall sales of the product.
Example: Drink more tea.