How Advertising May Be Used as Barrier to Entry of New Firms into an Industry - Coursework Example

Explain How Advertising may be used as Barrier to Entry of New firms Into an Industry? “Advertising is defined as reaching out to people who would make use of a product or service in the mind”. It is quite possible that advertising at times is done for brands where the brands are not even available at the retail shelves or sometimes not even manufactured. The need is to comprehend where advertising can fit in within such quarters and how it is able to make its mark under the sales umbrella. Another definition of advertising is “to make use of brand recall, awareness and sales to solicit a response from the intended target audience or the potential one”. Now both these definitions focus on how advertising is seen as a significant metaphor for marketing a product or service which holds importance within the realms of an organization (Starbuck, 2010:49). This paper discusses how advertising has been used as a barrier towards entry of new firms within an industry which can even span another country or region for that matter. The need is to understand how different sorts of advertising exist within the world of marketing. These could be comprised under the product advertising, service level advertising, consumer advertising, business to business (or trade) advertising, digital advertising, experiential advertising and a number of other tenets that are given significance. Essentially speaking, all forms of advertising look to address where the customer is headed and how to draw his attention which shall eventually make a sale if he feels interested (Molho, 1994:66). Advertising allows him to feel interested, get away from the competing products or services that stand in the way of this product or service which is being advertised, and so on. Advertising can be used for a number of reasons and when the need is to act as a barrier to entry of new firms within an industry, its objective becomes different. This is because advertising aims to make a sale but if the end goal is to disallow others to come forward and avoid their sales process, then perhaps this form of marketing communication is playing a somewhat distinctive role in entirety (Zottola & Parr, 2014). Advertising has changed its shape and form with the passage of time. Now the big players are doing their utmost to forbid others from entering their respective line of business. Bigger brands are doing it all the time (Tremblay, 2001:145). They are enacting strategies that shall make this happen in one way or the other. However, what must be comprehended here is the reason as to why advertising is being used as a barrier to entry and especially for the new firms within a related industry. Perhaps it is because they break down the chain of customers and potential ones that are found in an industry (Hoppe, 2000:56). When certain products are marketed in such a manner to avoid sales of a product offered by a new firm, then this means that the competition is being cut down. It is considered unethical within business domains to cut someones communication but then again it keeps on happening as far as advertising realms are concerned (Lipczynski & Wilson, 2001). Advertising is therefore used as a metaphor in order to disallow the newer entrants from making it big within an industry which may or may not be the acceptable norm (Skeath, 1992:29). This is so needed because it reaps results for the bigger players since they have made use of a tool by the name of advertising. Barriers to entry of new firms within an industry can be seen within the domains of advertising especially when there is onus on setting things in a peculiar direction (Michaelidou, Siamagka & Christodoulides, 2011). This means that advertising has both positive as well as drastically negative effects for the businesses that are expanding within varied markets. The need is to know where to draw the line and how to go about doing things the most ethically appropriate way (Schumacher, 2012). What this also implies is the manner under which advertising is able to make its mark at uplifting an organization’s role within the relevant industrial settings, which essentially means that the competitor’s role is somewhat subsidized (Thampapillai, 2010:79). This is an important facet of finding out where anomalies can be deciphered and how these are subject to understanding the competitive spirit from a very meticulous aspect. The kind of markets where advertising seems to work is also a quintessential aspect that should be focused upon here in entirety. These markets include the perfect competitive market, the oligopolistic market and the monopolistic market (Carlton, 2005:91). The need is to define each one of these and find out the most appropriate one where advertising can be used for attaining best results for the sake of a new firm that is entering an industry while stopping another one to explore much the same (Reinartz & Saffert, 2013:106-112). Essentially speaking, within a perfectly competitive market, each firm has an equal advantage over the other one while there is more room to grow and develop for firms as far as their pertinent products and services are related. This is a market scenario where firms are doing their best to get out of the rut that would in essence be present within the oligopolistic and monopolistic markets (Rickard, 2001). Under the oligopolistic market situation, a small number of sellers or oligopolists dominate the market which means that there is less competition and hence more room for the major players to grow and develop beyond their own means. However, within monopolistic market settings, one player is in the lead and seems to rule the roost over the others (Jones, 2004: 219-239). The fact remains that either it is an oligopolistic setting or a monopolistic one, there is significance attached with the barriers to entry for firms upon which advertising has been used either once or time and again to convince that they would not be able to make it far within newer territories (Zhang, 2006:31). This is an important facet that warrants much attention on the part of the business concerns because ultimately they are the ones who shall decide the future course of action for their business regimes. How advertising is able to make headway within such realms is somewhat of a confusing situation since it aims to resolve quandaries which keep coming up every now and then. It is also a well-known dictum that advertising can play a major role at either helping a company secure a new territory or forbidding another one to completely make its way in a new country (Wilding, 2004:103). The barriers to entry remain quite a few and if these are understood properly, then much headway can be made within these quarters. Advertising does bring in many advantages for companies that are big as well as the ones which are small yet doing their best to make their relevant mark within the specified domains. It is also true that advertising needs to be given credit for a number of issues and factors which arise in the wake of the changing business scenarios, and especially so in the time and age of today (Murray, 2007:72). Present day advertising scene is therefore dependent on quite a few issues, most significant of which remain the manner under which newer markets are explored and how competitors make their mark within those very market territories. Hence all said and done, it is pertinent to note that advertising can allow or disallow any firm from entering a new market setting. The need is to know how this happens within quantifiable proportions and correct capacities. Bibliography Carlton, D., 2005. Competition, Monopoly and AfterMarkets, p. 91 Hoppe, H., 2000. A strategic search model of technology adoption and policy. Advances in Applied Microeconomics 9, p. 56 Jones, T., 2004. Chapter 11, pp. 219-239 Lipczynski, J. & Wilson, J., 2001. Industry Organization: An analysis of competitive markets. Sloman, Hinda & Garratt Economics of Business Chapter 8 Michaelidou, N., Siamagka, N. T., & Christodoulides, G. (2011). 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