Following points describe the importance of advertising:
Importance for Manufacturers
“It pays to advertise”, is quite a rational statement as advertising is beneficial for manufactures in many ways:
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.
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 pattern.
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.
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.
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.
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).
Encouragement to Better performance: Advertising Of the products manufactured by the organisation gives a proud feeling and sense of self-esteem to the employees of that organisation 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 organisation.
Creation of Goodwill: The advertising benefits the manufacturer by establishing a good reputation for it. It makes the organisation a producer who has developed a positive image of delivering quality products to the society.
Importance for Consumers
Following points highlight the importance of advertising for consumers:
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 audience that the product offered is not excessively priced, thus, making the customer comfortable while finalising their choice.
Improvement in Quality: Usually, organisations promote their products under the 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 organisation can expect regular orders from the customer if he gets the anticipated benefit from the product. If not, the organisation may experience a Steep fall in the sales, once the anticipated quality is not received by the custorner.
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.
Consumer’s Surplus: Many people discover the value of products through advertisements, as it results in increased utility of available products. In case of products with higher utility rate, 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.
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 behavioural pattern and embrace modern lifestyle. Hence, it leads the customers to a superior standard of living.