A promotional tool, which stimulates the prospective customers to take or continue a particular decision, with the help of a commercial offering, is called Advertising. The title ‘advertising’ is taken from a Latin word advertere’ meaning ‘to turn toward’. The advertisements are capable of diverting the attention of the viewers, listeners, readers, or the onlookers towards a particular brand, product, service, or idea. Thus, any piece of information that diverts the attention of the target customers towards a brand/product/service/idea, can be called ‘advertising’.
According to the American Marketing Association, “Advertising is any paid form of non-personal presentation of ideas, goods or services by an identified sponsor”.
According to Wheeler, “Advertising is any form of paid non-personal presentation of ideas, goods or services for the purpose of inducing people to buy”.
Advertisements, being the vital element of promotion, are public notices, introduced by organizations, to make the target customers informed and stimulated towards their offerings. Altering the buying behavior or the thought process of the target customers and making them convinced to take a certain course of action (desired by the organizations), is the main purpose of advertising. When advertisements are circulated through radio or television, they are called ‘commercials’. With the advent of television, different types of products, services, or ideas, have been promoted through different commercials.
Importance of Advertising
Following points describe the importance of advertising:
1) Importance for Manufacturers:
“It pays to advertise”, is quite a rational statement as advertising is beneficial for manufacturers in many ways:
i) Increased Sales:
The primary purpose of every producer engaged in advertisement of the products manufactured is to stimulate and increase sales of the product. Goods manufactured on a large scale are marketed by advertising, which is a common influential method. Advertising assists in increasing the sales figures. Frequent and persistent broadcasting of an advertisement will help the producer, to grab attention of more customers and increase its market coverage apart from the current markets. It helps in indicating additional benefits of the product to potential customers.
ii) Steady Demand:
Seasonal fluctuations cause decrease in demand of the product. But advertising regularises these variations in demand for various products. Producers are always searching for new benefits and features of a seasonal product, to advertise and attract new customers. For example, new and innovative products like cold coffee and ice-tea have become popular beverages in the month of summer. These beverages are preferred by customers thus increasing the demand. Refrigerator can be considered as another example which has similar demand patterns.
iii) Lower Costs:
Advertising acts as a motivator for sales and an enormous increase in the turnover ratio is observed. This is beneficial in two ways, i.e., firstly, advertising expenses (included in the total selling costs) get evenly distributed over huge sales volume, which ultimately reduces per unit selling cost. And secondly, the per-unit production cost is reduced due to increase in production levels initiated by increase in turnover ratio.
iv) Greater Dealer Interest:
Retailers receive a considerable amount of help, while performing their task of selling goods (which are being advertised by the manufacturers). Retailers are always interested in selling advertised goods, because advertising creates demand for such goods in the market and hence, they are never concerned about increasing sales of such goods.
v) Quick Turnover and Smaller Inventories:
A well-regulated and efficient advertising campaign enables expeditious turnover of products due to creation of a highly reactive market. It also decreases the inventory cost due to constant demand.
vi) Supplementing Salesmanship:
The most essential premise for selling a product is done by advertising. Advertising simplifies the job of a salesman. It supplements the work of the salesman as he has to only suggest the product which the prospective buyer is already acquainted with (by way of advertisements).
vii) Encouragement to Better Performance:
Advertising of the products manufactured by the organization gives a proud feeling and sense of self-esteem to the employees of that organization as they are part of the whole process. It increases efficiency levels of employees and workers and also motivates them to increase their efforts. This raises the team spirit and confidence of the employees of the organization.
viii) Creation of Goodwill:
The advertising benefits the manufacturer by establishing a good reputation for it. It makes the organization a producer who has developed a positive image of delivering quality products to the society.
2) Importance for Consumers:
Following points highlight the importance of advertising for consumers:
i) The facility of Purchasing:
The shopping experience of customers is simplified due to advertising, because the re-sale value of products sold by retailers is predetermined, which is mentioned in the ads. An explicit and absolute commitment is given by an advertisement to target the audience that the product offered is not excessively priced, thus, making the customer comfortable while finalizing their choice.
ii) Improvement in Quality:
Usually, organizations promote their products under their respective brand names. Thus, when a customer decides to buy a product after watching the advertisement, it is the brand assurance which helps him to prefer the product over other similar options available under different brand names. The organization can expect regular orders from the customer if he gets the anticipated benefit from the product. If not, the organization may experience a steep fall in the sales, once the anticipated quality is not received by the customer.
iii) Elimination of Unnecessary Intermediaries:
Advertising builds up a direct link between the producer and the consumer. This association can help to reduce the price of the product which has been increased due to middlemen margins and subsequently increase the profit margin of the producer. It implies that consumers are being offered products at low rates and huge earnings are generated by the producer.
iv) Consumer’s Surplus:
Many people discover the value of products through advertisements, as it results in the increased utilization of available products. In the case of products with higher utility rates, advertising adds more points to their popularity. It will lead to consumer’s surplus with reference to the additional satisfaction obtained from the products if these products are made available at cheaper rates.
v) Education of Consumers:
Advertising is a powerful and informative concept. It is a medium to inform and educate the consumers about various innovative products being launched in the market and their uses and benefits. Thus, it induces them to shun their old behavioral pattern and embrace the modern lifestyle. Hence, it leads the customers to a superior standard of living.