Economical aspects of Advertising
Economic role of Advertising
Value of Products:
The advertised products are not
always the best products in the market. There are some unadvertised products
also present which are good enough. But advertising helps increase value for
the products by showing the positive image of the product which in turn helps
convincing customers to buy it. Advertising educates consumers about the uses
of the products hence increasing its value in minds of the consumers. For e.g.
mobile phones were first considered as necessity but nowadays the cell phones
come with number of features which makes them mode of convenience for
consumers.
Effect on Prices:
Some advertised products do cost
more than unadvertised products but the vice versa is also true. But if there
is more competition in the market for those products, the prices have to come
down, for e.g., canned juices from various brands. Thus some professional like
chartered accountants and doctors are not allowed to advertise.
But some products do not
advertise much, and they don’t need much of it and even their prices are high
but they are still the leaders in market as they have their brand name. e.g.,
Porsche cars
Effect on consumer demand and choices:
Even if the product is heavily
advertised, it does not mean that the demand or say consumption rates will also
increase. The product has to be different with better quality, and more variety
than others. For E.g., Kellogg’s cornflakes have variety of flavors with
different ranges to offer for different age groups and now also for people who
want to loose weight thus giving consumers different choices to select from.
Effect on business cycle:
Advertising no doubt helps in
employing more number of people. It increases the pay rolls of people working
in this field. It helps collecting more revenues for sellers which they use for
betterment of product and services. But there are some bad effects of
advertisements on business cycle also. Sometimes, consumer may find the foreign
product better than going for the national brand. This will definitely effect
the production which may in turn affect the GDP of the country.
The economic aspects are
supported by the Abundance Principle which says producing more products and
services than the consumption rate which helps firstly keeping consumers
informed about the options they have and secondly helps sellers for playing in
healthy and competitive atmosphere with their self interest.
Post a Comment