What is Advertising?
Advertising is the act of making goods known to the public — spreading information and awareness about a product’s existence at a particular time. It arouses consumer interest, informs people how to use a product, and raises awareness of new or existing products and their prices, ultimately increasing sales, introducing new products, spreading brand names, and improving a company’s image.
Types of Advertisement
- Persuasive: tries to convince people to buy or use a product whether they need it or not, often using well-known personalities to prompt impulse purchases.
- Informative: creates awareness about a good or service, giving facts on its uses and where to find it.
- Competitive/comparative: aims to grow market share at the expense of close substitutes, stating the product is better than rivals.
- Mass/generic: a joint advertisement by producers and distributors of similar products, to cut costs and reduce waste of resources.
Direct vs Indirect Advertising
| Direct Advertising | Indirect Advertising |
|---|---|
| Very expensive | Less expensive |
| Targets a small group (e.g. direct mail, door-to-door) | Targets a large mass audience (e.g. TV, radio) |
| Has a targeted audience | Has no targeted audience |
| Less time-consuming | More time-consuming |
Advantages and Disadvantages of Advertising
Advantages: lets consumers choose from a wider variety, helps them find quality or cheap goods, educates on product use, helps firms launch new products, and raises sales and profit.
Disadvantages: consumers may end up buying expired goods, prices may rise if a campaign fails, consumers may be persuaded to buy what they don’t need, it can be expensive for the producer, and can waste economic resources if it doesn’t increase sales.
Choosing an Advertising Medium
Media can be “above-the-line” (paid commission, e.g. TV, press, radio, posters, internet, billboards) or “below-the-line” (no commission). The choice depends on the cost, the target age group, the audience the medium can reach, its circulation, and what competitors are using.
