Advertising is the art of promoting the sales of goods or services based on a market selection. It is affected through various media, particularly through newspapers, magazines, radios and T.V. services and bill boards along the highways. Advertising affects the market in one way or another. Expenditures on advertisements amount to large sums of money and they are rising every year.
The fact that expenditures on advertising are increasing from year to year indicates that advertising is important to market a product or services. As a country becomes more industrialized and as competition in business becomes keener for the firms, marketing strategy through advertising will become more important and expenditures on advertising will rise.
Advertising is regarded as “the life-blood of marketing” simply because it gives information to prospective consumers of the goods or services which are made available in the market. It tells a group of selected market of the existence of a new product or of new uses for or new or better qualities of an existing product, or reminds a market of the existence of a product. Without such information given through the various advertising media, the prospective market may not be aware of the existence or the uses of a product and the producer may not be able to sell it. A product that is not sold or cannot be sold is of no value to the producer and to the selected market. Therefore, it is obvious that informative advertising is very important to a firm or to an industry and is also important to consumers and the market at large.
Generally, advertising as practiced by most firms is competitive rather than informative in motive. This is particularly true where there is a great deal of product differentiation brought about by the practice of branding a product. A firm advertizes mainly because it wants to push the sales of its products. When its products are differentiated from the products of other firms by just its brand, then it hopes to increase the sales of its branded products to their selected markets. It can do so by marketing, through advertising techniques, to create a special image for its brand of products and to build up brand loyalty for its products to a given markets.
Once customers’ loyalty for its brand of products is established, the demand for its products will be less price-elastic and it is able to make some monopoly profits to a given specified markets. Competitive advertising, as we can see, is wasteful. Experts may tell us that there is no real difference, physically or chemically, between different brands of a product.
Whatever difference there may be between two brands is strictly psychological in nature built up through large sums of money spent on marketing through advertising campaigns. It can, therefore, be argued that the consumers would benefit more if firms spent less on competitive advertising and passed on their savings to consumers in the form of lower prices or in the form of genuinely better quality products obtained through more research which could be made possible with savings from unnecessary marketing activities.
However, it can be counter-argued that competitive advertising may not be a waste after all, because very often a consumer derives extra satisfaction from owning or consuming a widely-advertized product. Since he obtains more satisfaction, the higher price which he has to pay for the product because of the advertising is, therefore, justified.
Further, it can be pointed out that because of the large amount of revenue from marketing activities through advertising, newspapers and magazines are sold more cheaply to readers and they are within the reach of more people and, further, radio and T.V. stations are able to produce or buy better or more programs. Also, the advertising industry itself gains with more jobs created for the market community.
In conclusion, it can be said that one cannot deny that marketing trough advertising is the life-blood of industry. But it is really difficult to conclude that it is a waste of economic resources because much depends on one’s judgment of what is good or bad for the society.