Economics of Advertising - Essay Example

Economics of Advertisement This paper investigates the viability of sales acceleration based on an advertisement. It assesses the relevant ancillary aspect of commercial venture. The aim of the project is to use the Economics of Advertising literature discussed throughout the course to help understand the possible motivation(s) for the advertising campaign. It has been categorized as a domestic product, under examination; the likely motives for the advertisements; and predict the effects of the advertising, for example on profits, sales, welfare, price and competitors' strategies, using relevant existing literature. Order#: 195998 Deadline: 2007-12-14 06:50 Style: Harvard Language Style: English UK Pages: 9 Sources: 10 Writer ID: 6746 INTRODUCTION: THE ESSENCE OF ADVERTISEMENT What will happen if one does not know he has all the attributive qualities of a modeling giant Certainly, people around him would make him aware about it. Similarly, a product is launched and an effort is made to popularize the item and get its brand approval amongst the consumers. Thus, advertisement plays a vital role in marketing. Advertising is a one-way communication whose purpose is to inform potential customers about products and services and how to obtain them. Every major medium is used to deliver these messages, including television, radio, movies, magazines, newspapers, video games, the Internet and billboards. We need to take care which media to use as per the demand of the product and the expected response from the consumers. Advertising is often placed by an advertising agency on behalf of a company. Advertisements can also be seen on the seats of grocery carts, on the walls of an airport walkway, on the sides of buses, heard in telephone hold messages and in-store public address systems. Advertisements are usually placed anywhere an audience can easily and frequently access visuals and audio. THE GROWING WORLD OF ADVERTISEMNT: A REVIEW No company can imagine economic growth without this strong tool called advertisement. Even non-profit organizations and public authorities to promote national programmes such as health campaign, anti drug campaign, literacy drive, cultural mission etc use this vehicle to reach their people. Some organizations which frequently spend large sums of money on advertising but do not strictly sell a product or service to the public, include political parties, interest groups, religion-supporting organizations, and militaries looking for new recruits. Additionally, some non-profit organizations are not typical advertising clients and rely upon free channels, such as public service announcements. The advertising industry is large and growing. In the United States alone in 2005, spending on advertising reached $144.32 billion, reported TNS Media Intelligence. That same year, according to a report titled Global Entertainment and Media Outlook: 2006-2010 issued by global accounting firm PricewaterhouseCoopers, worldwide advertising spending was $385 billion. The accounting firm's report projected worldwide advertisement spending to exceed half-a-trillion dollars by 2010. Nowadays, advertisement has become the common medium of commercial interaction in competitive bids. Advertising has gone through five major stages of development: domestic, export, international, multi-national, and global. For global advertisers, there are four, potentially competing, business objectives that must be balanced when developing worldwide advertising: building a brand while speaking with one voice, developing economies of scale in the creative process, maximizing local effectiveness of ads, and increasing the company's speed of implementation. Born from the evolutionary stages of global marketing are the three primary and fundamentally different approaches to the development of global advertising executions: exporting executions, producing local executions, and importing ideas that travel. (Global marketing Management, 2004, pg 13-18) MERITS OF ADVERTISEMENTS If a vehicle runs with an engine or a living, being performs action with its soul, any business of either small-scale industry or corporate house functions due to the life giving soul of advertising. It helps the entrepreneurs to reach the consumers bring all the awareness and the potential benefits meant for consumption. It helps to increase the pace of business. The present scenario of advertisement primarily focuses on electronic media. Another type of advertisement shown more and more, mostly for advertising TV shows on the same channel, is where the ad overlays the bottom of the TV screen, blocking out some of the picture. Media companies as Secondary Events refer to banners or Logo Bugs. This is done in much the same way as a severe weather warning is done, only these happen a lot more often. Sometimes these take up only 5-10% of the screen, but in the extreme, can take up as much as 25% of the viewing area. Some even make noise or move across the screen. Google's Eric Schmidt has announced plans to enter the televisions ad delivery and optimization business. This is despite the fact that Google only has a text advertising business model at present. There are few details in place about how this may occur, but some have speculated that they will take a tack similar to that of their business strategy directed at radio broadcast, which included the acquisition of operations system support provider. Online video directories are an emerging form of interactive advertising, which help in recalling and responding to advertising produced primarily for television. These directories also have the potential to offer other value-added services, such as response sheets and click-to-call, which greatly enhance the scope of the interaction with the brand DEMERITS OF ADVERTISEMENTS Despite the fact, there are enormous benefits of advertisement, there is allegation that advertisement befools ignorant consumers through it clever tactics. On the other hand, while advertising can be seen as necessary for economic growth, it is not without social costs. Economists wonder why established firms that had already a brand name spend billions of dollars on advertisement in order to sustain their good will. Nevertheless, economists again assume they add remarkable amount in the cost of production leading to increase in price for the expenses made for advertisement. Similarly, unsolicited Commercial Email and other forms of spam have become so prevalent as to have become a major nuisance to users of these services, as well as being a financial burden on internet service providers. Advertising is increasingly invading public spaces, such as schools, which some critics argue is a form of child exploitation. Many allege that advertisement spoil the generation towards consumerism and making the young lads into idle chimps. They also carve the liberty of women in the name of freedom of speech- advertisement commercialized women. There is an increasing efforts to protect the public interest by regulating the content and the influence of advertising. The ban on television tobacco advertising imposed in many countries, and the total ban of advertising to children under twelve imposed by the Swedish government in 1991 are a few for instance. Though that regulation continues in effect for broadcasts originating within the country, it has been weakened by the European Court of Justice, which had found that Sweden was obliged to accept foreign programming, including those from neighboring countries or via satellite. In Europe and elsewhere, there is a vigorous debate on whether advertising to children should be regulated. This debate was exacerbated by a report released by the Kaiser Family Foundation in February 2004, which suggested that food advertising targeting children was an important factor in the epidemic of childhood obesity in the United States of America. In many countries - namely New Zealand, South Africa, Canada, and many European countries - the advertising industry operates a system of self-regulation. Advertisers, advertising agencies and the media agree on a code of advertising standards that they attempt to uphold. The general aim of such codes is to ensure that any advertising is 'legal, decent, honest and truthful'. Some self-regulatory organizations are funded by the industry, but remain independent, with the intent of upholding the standards or codes like the Advertising Standards Authority in the UK. In the UK most forms of outdoor advertising such as the display of billboards is regulated by the UK Town and County Planning system. Currently the display of an advertisement without consent from the Planning Authority is a criminal offence liable to a fine of 2500 per offence. All of the major outdoor billboard companies in the UK have convictions of this nature. APHS; ALL PURPOSE HEALTHY SPICE You need spice to make tea in the morning You need spice to flavor you dish during meals You need spice to fragrant your snacks hours APHS can meet your lavish demand With its exotic, healthy and powerful spice pouch. Introduction of the product: literature It is a combination of nine planetary power of traditional herbs and modern blends of medication. First, is the turmeric.We all know turmeric spice turns food the color of a bright Halloween, but did you know this seasoning is also great for your body It kicks your health up a notch with turmeric seasoning. Dried and powdered herbs make wonderful spices. Fresh herbs are also great in cooking. The best part about herbs and spices is you can grow them with ease. Therefore, the herbal power collected from more than seven rare roots and exotic leaves add the name. Thirdly, Ginger is delicious and a staple in Chinese and Indian cooking. In this article, learn why this herb is more than a mere spice. We include ginger power here. Then, fourthly it's not really a spice or a seasoning, more of an extract. However, Boswellia has been around for a long time. Learn all about its properties and what it has been used for traditionally and in modern times. Fifthly, Cinnamon goes great on so many things. But it has some health benefits too. I bet you didn't know that about cinnamon. Sixth, one, Black pepper is on everyone's table. More than Just Salt's Buddy. Next to salt, pepper is the most used seasoning or condiment in the western world. But did you know pepper might be good for you too Eventually, the Italian food is rich in the herb basil. But did you know basil has high levels of vitamin A and beta carotene This spice is an excellent addition to most foods. All the properties of the spices we blend in our precious packet, hygienically packed after years of research and consumers surveys. The medicinal value and the finger licking taste would definitely force you to buy more and more. SUMMARY: THE BACKGROUND WORK Communication has always provided the symbolic resources and medium for the construction of identity. We are now more sensitive to the way that the growth of commercial symbols such as brands has added richness to the choice of symbols we might use to build and communicate identities and ideas. Integrating marketing communications is not straightforward, for this includes non-integrated management of communications, different types of language and mindset for different types of promotional activities and the complex nature of many organizations. Marketers need to write messages, transmit those messages and those messages, to a greater or lesser degree, and have the intended effect on the readers and viewers. The dominant way of thinking about communications is as an encoding and decoding process, where messages are encoded, sent through some channel and the decoded. In English, talk about communications refers to a conduit metaphor, for instance the medium through which the encoded message works. Communications and thought are inextricably intertwined (Katz et al., 1998; Turner, 1987).moreover in our highly mediated lives, communication often 'creates' the reality of the world beyond our direct experience (Mickey, 1997). Following from the preceding, communication creates and maintains all sorts of intangible structures in society, such as hierarchies, status and prestige (Hodge and Kress, 1993). Following from the above, understanding what meaning consumers give to advertising is an important task for students of marketing communications, irrespective of whether or not they believe communication to be an exchange or transfer of meaning or the stimulus of meaning creation. Advertising and the choice of media There are two broad issues to examine when considering advertising. First, how do we choose where to put our advertisement Second, how do we know what advertisement to put there In case of print media, it is primarily concerns about the editorial concern. For instance, we watch the news or a movie on TV, listen to music on the radio, and read about fashion or sports in a magazine. The content draws us to the medium and our response to the included advertisements pays for it. Usually we design content to attract particular audiences such in the broad target markets for more homogenous the readership. These media might be places for explicit advertising, such as print advertising in newspapers and magazines, radio, television, outdoor, point of sales, taxies and busses. The advertising might also be less explicit, such as in-film product placements, in-flight magazines, celebrity product usage, advertorial and so on. Choosing an appropriate medium is then a matter of identifying the medium that has a readership closest to the target market for our product or service. The prime most important thing of a successful public campaign is to link between advertising and sales. Recall and recognition may enhance by repetition, with uncluttered and uninterrupted exposures leading to better recall and recognition. The more processing that occurs prior to a recall or recognition request the less processing is required to access the relevant memory with emotional values. Sales promotions use leaflets, coupons, rebates and other methods to encourage sales. Though we never conduct public campaign for monetary benefits, we still focus on sales promotion. Here sales stand for reaching to the public with positive response. Public relations such as lobbying activities, such as attempts to influence public servants or politicians to increase the likelihood of big government campaign or to influence legislative agenda in a favorable way. In selling, communication occurs between as sales person and customer or potential customer. This, of course, provides a chance for the most natural communication with all the multidimensional richness that face-to-face communication can provide. This has a direct effect to the consumers when surveyed data personally. REFERENCES: 1. The Cost Management Toolbox : A Manager's Guide to Controlling Costs and Boosting Profits, by Oliver, Lianabel. Publication: New York AMACOM Books, 2000. 2. Marketing On a Tight Budget : An Action Guide to Low Cost Business Growth, by Forsyth, Patrick. Publication: London ; Dover, N.H. Kogan 3. The Changing Shape of the Culture Industry; or, How Did Electronica Music Get into Television Commercials, Timothy D. Taylor, University of California, Los Angeles, Television & New Media, Vol. 8, No. 3, 235-258 (2007). 4. Bhatia, Tej K. 2000. Advertising in Rural India: Language, Marketing Communication, and Consumerism. Institute for the Study of Languages and Cultures of Asia and Africa. Tokyo University of Foreign Studies. Tokyo Press: Japan. ISBN 4-87297-782-3 5. Graydon, Shari (2003) "Made You Look - How Advertising Works and Why You Should Know", Toronto: Annick Press, ISBN 1-55037-814-7 6. Johnson, J. Douglas, "Advertising Today", Chicago: Science Research Associates, 1978. ISBN 0-574-19355-3 7. G. Butters (1977) 'Equilibrium Distributions of Sales and Advertising Prices', Review of Economic Studies', vol.44, pp.465-491. 8. Dixit, A. and Norman, V. (1978) 'Advertising and Welfare', Bell Journal of Economics, vol.9, pp.1-17. 9. Martin, S. (2002) Advanced Industrial Economics, second edition, ch.9, 9.2, pub. Blackwell. 10. Dukes, A. (2004) 'The Advertising Market in a Product Oligopoly', Journal of Industrial Economics, vol.52, pp.327-348. Read More