"Advertising reduces the overall cost of selling in case of large majority of products and services". Comment on this statement and explain the benefits of advertising.
So here are ur Answers -
Advertisement reduces the cost of products: Advertisement increase the demand of the products. Increase in demand means increase in production and thus the scale of production goes on increasing.
Increasing sale of production reduces the cost of production by Bringing many internal as well as external economics.
Advertisement reduces selling expenses: Advertisement creates demand for the products, creates a desire in the minds of consumers to buy the advertised products, convinces consumers that only the advertised product is the best product available in the market and that it is the best product that their money can buy. Thus, it creates the situation that the consumers ask for the advertised goods. Increase in demand increases the sales and profits of the enterprise. Thus, the results of advertisement are sweeter than its cost.
Benefits of Advertisement
(1) Advantages to Producer.
Advantages of advertisement to producers may by enumerated as follows:
1. Creation of Demand for new products: Whenever a producer produces a new product, advertisement helps him in creating demand for his product, because it is the advertisement through which a producer explains the merits of his products to the consumers. It is also the advertisement through which a producer proves the superiority of his products in comparison to the similar products of competitors.
2. Increase in Demand for existing products: Advertisement helps in increasing the demand for existing products because advertisement reminds the consumers of a product again and again.
3. Stability: Advertisement helps in stabilizing the demand for a product in all the seasons and at all the time. It is only because of advertisement that people like to consume eggs, tea, coffee etc. in summer also.
4. Increase in Sales: By creating the demand for new products, increasing the demand for existing products and maintaining the demand of product in all the seasons and at all the times, advertisement helps in increasing the sales of an enterprise.
5. Increase in Profits: Increase in sales results in increase in profits also, and thus, the enterprise achieves the object of maximizing profits.
6. Increase in Goodwill: Advertisement helps in increasing the goodwill of an enterprise. As it increases the sales and increase in sales means the increase in number of customers which is apparently the result of increase in goodwill.
7. Advantages of Large Sales Operation : As the sales of an enterprise increase with the help of advertisement, the scale of operation of the enterprise increases and the enterprise gets all the advantages of large scale operation.
8. Helpful in facing Competition Advertisement helps the producers in facing the competition successfully. It introduces their products into the market and creates the demand for these products.
9. Helpful in getting efficient and experienced Middlemen: As the advertisement creates, maintains and increases the demand of products and middlemen like to maintain the stock of running items, it helps producers in getting a team of efficient and experienced middlemen.
10. Helpful in establishing direct relations between Manufacturers and Consumers: Manufacturers communicate their message direct to the consumers with the help of advertisement. Thus, advertisement helps in establishing direct relations between manufacturers and consumers. (II) Advantages to Middlemen
Advertisement is very useful for the middlemen also. Main advantages of advertisement available to the middlemen are as under: 1. Convenient in selling: Middlemen feel it convenient to sell the advertised goods because for selling such goods, middlemen have
not to put any special efforts. Customers ask these goods by name
because they are well convinced of such goods.
2. Increase in sales Advertisement increases the sales of middlemen and maintain the stock of the goods for which the advertisement is made by the manufacturers and demand for such goods is already high.
3. Stability in sales and profits: As the advertisement helps in maintaining the demand in all the seasons and at all the times, it helps middlemen also in getting stability in their sales. Stability in sales brings stability in profits.
4. Increase in Goodwill: Dealing in standard and quality goods increase the goodwill of middlemen. It also wins the faith and favour of customers.
5. Economy in Selling Advertisement by producers provide many types of advantages to the middlemen. It saves their selling overheads considerably. As they share the reputation created by manufacturers, they need not spend anything for the advertisements.
Advantages of advertisement available to consumers may be summarized as follows:
1. Knowledge of new products: Whenever a new product is introduced into the market by a manufacturer, it is widely advertised through various media of advertisement. As a result of it, consumer come to know of the new products.
2. Convenient in purchasing Advertisement makes it very convenient for the consumers to make their purchases because they take, the decision well in advance about the commodity to purchase.
3. Saving of time and labour : Advertisement helps in saving the time and labour also of customers in making their purchases because through advertisement message, they decide about the commodity to purchase and the place from where to purchase and they have not to move from here to there for making such purchases.
4. No Possibility of cheating by sellers: Advertisement protects the customers from being cheated by sellers because through advertisement message, the customers come to know about the weight, packing, price, discount, special scheme etc., for a product, and thus, they purchase the goods according to these specifications only.
5. Knowledge of alternative uses of products: Through advertisement message, consumers come to know about the alternative uses of a product because the manufacturers develop new and alternative uses of their products and widely advertise these uses.
6. Increase in Knowledge: Advertisement is a great source of knowledge for the consumers because through advertisement, they come to know about new products, their new uses and the changes made in the products. It increases their knowledge about the market and the i products available in the market.
7. Increase in the standard of living: Standard of living of consumers has drastically changed during recent years. A great credit of it goes to advertisements because advertisements inform the consumers about various products available in the market and encourage them to use these
new products (IV) Advantages to Society Advantages of advertisement available to the society in general
may be explained as under: these days. It provides handsome employment to a very large number of 1. Employment Opportunity: Advertisement has become an industry
persons directly and indirectly.
2. Increase in standard of living: Advertisement increases the standard of living of the society. It provides new goods and commodities to the society. It also helps in developing new uses of the goods. It
3. Encouragement to health competition: A great advantage of advertisement is that it encourages healthy competition among manufacturers. All the manufacturers want to develop new products and new uses of the products so that they may attract more and more customers,
4. Encouragement to research and development: As all the manufacturers wants to win the race of competition and to produce or present something new, it encourages research and development. This is all due to advertisement.
5. Industrial progress and prosperity: As advertisement increases the sales of products in the market, it helps in increasing the scale of production. High scale of production brings industrial progress and prosperity.
6. Help to Press: Advertisement is a boon for the development of newspapers and magazines. Newspapers and magazines would not have become so pular and cheap in the absence of advertisement. Advertisement yields revenue for these newspapers and magazines and it only keeps them alive.
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