Answer
Advantages of Advertising:
The advantages of advertising are to be analyzed in terms of its advantages which are as follows:
(i) From Viewpoint of Manufacturers:
A well-advertised product is easier to be sold by the salesman in the market. If a brand is popular and well-known, people respond favourably to the salesman’s efforts. It provides a support to salesmanship, as the audience understands the product and its uses more clearly through the advertisement and the salesman’s effort is reduced to convince the buyers.
(a) Increase in Sales:
The main object of the manufacturer in advertising his products is to promote the sale of his products. Goods produced on a mass scale are marketed by the method of mass persuasion through advertising.
Repetition of advertisements, the manufacturers are not only able to retain existing markets but are also able to expand the markets both by attracting more people to their products and also by suggesting new uses for them. Advertising is a helping hand to selling.
(b) Supplementing Salesmanship:
It creates a ground for the efforts of the salesmen. When a salesman meets its prospect, they have just to canvass for a product with which the consumer may already have been familiarised, through advertisements. Therefore, the salesman’s efforts are supplemented and his task is made easier by advertising.
(c) Lower Costs:
Sales turnover and encourage mass production of goods are enhanced by advertising that results in large scale production, average cost of production reduces and results in higher profits. At the same time, when the cost of advertising and selling costs gets distributed over a larger volume of sales, the average cost of selling also lowers down.
(d) Greater Dealer Interest:
Advertising creates demand by which every retailer gets an opportunity to share with others. Hence, the retailers who deal in advertised goods are materially assisted by advertising in the performance of their functions. The retailers have not to bother much about pushing-up the sale of such products. Therefore, they evidence more interest in advertised products.
(e) Quick Turnover and Smaller Inventories:
A highly responsive market is created by well-organised advertisement campaign thereby facilitating quick turnover of the goods. Resulting, in lower inventories in relation to sales and being carried-on by the manufacturers.
(f) Steady Demand:
Seasonal fluctuations on demands for products are smoothened by advertising generally the manufacturers tries to discover and advertise new possible uses of which a seasonal product maybe put. The innovation of cold tea and cold coffee for the use during summer has helped in increasing the demand for these beverages even in that season. The same maybe said for refrigeration.
(ii) From Viewpoint of Consumers:
(a) Improvement in Quality:
Usually, goods are advertised under brand names. When a person is moved by the advertisement to use the product, they proceeds on the hope that the contents of the particular brand will be better than the other brands of the same goods.
When his experience confirms his expectation, a repeat order can be expected. Or else, the sales may rise very high once but may drop down very low subsequently when the consumer’s confidence in the quality of the product fails.
(b) Facility of Purchasing:
Purchasing becomes easy for the consumers after advertising. Generally, the re-sale prices (prices at which the goods are to be sold by the retailers) are fixed and advertised. Thus, advertising offers a definite and positive assurance to the consumer that they will not be overcharged for the advertised product. The consumer can make his purchases with utmost ease and confidence.
(c) Consumer’s Surplus:
The utility of given commodities is increased by advertising for many people. It points-out and pays even more for certain products which appear to have higher utility to them. If these products are available at the original lower prices, there will naturally be a certain amount of consumer’s surplus in terms of increased satisfaction or pleasure derived from these products.
(d) Education of Consumers:
Being an educational and dynamic principle, the prime objective of advertising is to inform and educate the customers about new products, their features, prices and uses. It also convinces them to adopt new ways of life, giving up their old habits and inertia and have a better standard of living.
(iii) From the Viewpoint of Middleman:
(a) Retail Price Maintenance becomes Possible:
The consumers are quite keen on getting quality products at stable prices over a period of time. Each consumer has his or her own family budget where he or she tries hard to match the expenditure to the disposable income for a socially acceptable decent living.
In case the prices go on changing abruptly, these individual budgets are likely to be distorted to such an extent that the consumers will have to think of substitutes for the products they are enjoying at present.
(b) Acts as a Salesman:
What a travelling salesman does for this organisation is done by the advertising at least cost. This is the reason that most of the retail organisations do not employ large army of travelling salesman, rather they are willing to spend on advertising which attracts consumers to the sores where the counter salesmen cater to their needs.
(c) Ensures Quick Sales:
Every retailer having the stock of different producers needs a quick turnover. By bringing the wide range of these products to the notice of the consumers, advertising boosts up of sales.
Faster sales imply the specific advantages such as reduced capital look-up, reduction in losses of holding stock over longer period, increased profits even by reducing the profit margin per unit. Further, advertising gives much leeway and freedom to better serve the needs of the consumers.
(iv) From the Viewpoint of Society:
(a) Change in Motivation:
Radically advertising has changed the basis of human motivation. While people of earlier generations lived and worked mainly for bare necessities of life, the modern generation works harder to supply itself with the luxuries and semi-luxuries of life.
(b) Sustaining the Press:
For support and sustenance the newspapers, periodicals, journals, looks for advertisers, press, look to advertisements. In the absence of income from advertising, the newspapers have to be produced at a higher cost and may not be able to keep themselves free from its competitors.
(c) Encouragement to Artists:
Designing artists, writers to do creative work. They earn their living from preparing advertisements.
(d) Encouragement to Research:
When manufacturers are assured of sufficient profits. They undertake research and discover new products or new uses for existing products. Advertising puts forward this assurance and thereby encouraging industrial research with all its advantages.
(e) Glimpse of National Life:
A glimpse of national life is provided by national life.
Disadvantages of Advertising:
Advertising too have its own limitations. In some case it’s being misused by few people over looking their business interests.
i. Deferred Revenue Expenditure:
It is a deferred revenue expenditure, as the results are not immediate. As advertising occupies a substantial portion of the total budget of the organisation. Hence, investing a large sum in it does not necessarily yield immediate results thus limiting its utility.
ii. Misrepresentation of Facts:
A major drawback of advertising is misrepresentation of facts regarding products and services. Advertisers usually misrepresent unreal/false benefits of a product and make tall claims to excite people to indulge in actions leading to their benefit, but opposed to consumer’s self-interest.
iii. Consumer’s Deficit:
Advertising creates desires as consumers have low purchasing power. It leads to discontentment. Such discontent is obviously not very desirable from the point of view of society, particularly if it affects a large majority of people. But it is important if it acts as a spur to social change.
iv. Barriers to Entry:
Advertisements promote industrial concentration to a greater or lesser degree. The extent of such concentration may vary with the character of the individual trade, the advertisability of the product and the technical conditions of its production. Although, studies on this subject are not conclusive. The evidence of positive association between advertising and concentration is weaker than can be expected.
v. Wastage of National Resources:
It is objected that advertisement is that it is used to destroy the utility of goods before the end of their normal period of usefulness. Now models of automobiles with nominal improvements are, for example, advertised at such high pressure that the old models have to be discarded long before they become useless, not that merely, the most-advertised products are delicate, fragile, and brittle.
vi. Increased Cost:
It is much debated whether advertising induces additional cost upon a product which the community has to pay. In a sense, it is true since expenses on it form a part of the total cost of the product. But at the same time, it would be unjust to infer that if the advertising costs were cut down the goods would necessarily be cheaper. Advertising is, one of the items of costs but it is a cost which brings savings in its wake on the distribution side.
vii. Product Proliferation:
Critics state that advertising encourages unnecessary product proliferation. As it leads to the multiplication of products that are almost identical, resulting in wastage of resources which could otherwise have been used to produce other products.
viii. Multiplication of Needs:
Advertising compels people to buy things they do not need as it is human instincts, to possess, to be recognized in the society, etc., are provoked by advertiser in order to sell products. At times, various types of appeals are advanced to arouse interest in the product. Sentiments and emotions are played with to gain customers.
