Tue, Dec

Socio-Economic Aspects of Advertising


Advertising is both applauded and criticized not only for its role in selling products but also for its influence on the economy and on society. Advertising isn’t journalism, education, or entertainment, although it often performs the tasks of all three. Advertising has positive as well as negative, social and economic impacts on our society. Most important aspects are discussed below:

Economic Aspects of Advertising:

Effect on value:

Advertising gives added value to a brand by promoting its positive image. There might be other good unadvertised products available in the market but people choose those which have a positive image or are presented in a better way. People prefer to have Coca-Cola or Pepsi over other regional drinks because of the publicity over its taste. Similarly people prefer to have branded garments like Oxford, Bonanza, Gull Ahmed etc because of the good quality or style shown in their advertisements.

Effect on Prices:

There is a very wrong perception that every advertised product’s price is always higher than the unadvertised ones. It might be, but is not necessary every time. Advertising plays a very important role in maintaining competition and mass production which helps in keeping the prices down. Various call, sms packages and “Sim lagao offer” (Switch on your unused sim) presented in ads by companies like Mobilink, telenor, Warid, Zong can be seen on various TV channels. Its like they are asking us to buy their products almost for free. Those companies which focus more on their qualities in its advertisements which distinguishes them from others in the market justify their high prices.

Effect on competition:

Although intense competition makes it hard for new entrants to occupy the market but it is also true that advertising encourages more sellers to enter into the market resulting in increased competition. Take the example of Tarang & Olpers Milkpack, despite huge market of “Haleeb” and “Nestle”, they have made their own place in the market. In fact, many unadvertised or little advertised products are seen competing highly advertised products in some areas particularly rural areas. Plethora of telecom ads shown on tv is also a classic example of increased competition between them.

Effect on consumer demand:

Depending on the market situation, advertising also plays an important role in making demand for a particular product especially in declining markets. When milkpack prices started getting higher in Pakistan, a demand for reduced price was felt. Engro foods introduced Tarang Milkpack with lower price and good quality. With massive advertising campaign, demand for it rose every passing day and now it has almost occupied most of the market in rural and urban areas. In growing markets, the phenomenon is a little bit different. Advertisers compete for the share of growth in growing markets.

Effect on consumer choice: 

Advertising gives people wider choice to select among the wide range of products available in the market. The freedom to advertise gives companies a chance to introduce new brands and improve the old ones. The wide range of cars, smart-phones, telecom service providing companies, internet service providers and many more advertised has given consumer a wide choice range.

Effect on business cycle:

Advertising provides revenue for commercial mediums which would otherwise need to be funded by the actual consumer of these mediums. It has created a lot of jobs and separate infrastructure. Take the example of newspapers or electronic media TV channels. We get news for free on news TV channels because of the advertisements on it. The price of the newspapers is less because of the money it makes from the advertisements placed in it. We watch entertainment channels and other business channels for free because they make ample amount of revenue from the advertisements.

In an economy where more goods or services are produced than can be consumed (abundance principle), advertisements serves two important purposes; first, it keeps consumer informed about the product alternatives and secondly it encourages competition in a healthy environment which serves self interest as well.

However, it should be kept in mind that no amount of advertising can achieve long-term acceptance for products that do not meet consumer approval.

Social Impact of Advertising:

There are some positive as well as negative aspects of advertising. They are as follows:

Deception in Advertising:

Unfortunately, the advertisements shown nowadays make exaggerated claims in favor of their product / service or brand. Consumer always expects that whatever is shown in ads would be true but when he uses the product, he comes to know that most of the claims were just an exaggeration and nothing else. This adds to the bad name of company and consumer loses interest and confidence in advertisers and advertisements as well. Words such as “the best”, “the only”, “premier” etc should be avoided.

Psychological targeting / Subliminal Advertising:

Some of the advertisements try to add hidden sexual appeal messages which have a bad impact on children especially if they are watching the ads as well. Prominent among such advertisements are the Body Spray, Deodorant ads or even motor bike or car ads. Nowadays the opposite gender thing is very in e.g. in most of the ads, it is shown that if you use this particular product like mobile, bike, garments etc girls will get impressed and would come after you. Such advertisements should be discouraged.

Lavish spending:

Another negative impact of advertising mostly argued is that it encourages us to buy things that we do not need or forces us to spend lavishly. It results in a life of pomp and show. Advertisers use celebrities and other emotional tactics to sell their brand which results in promotion of unnecessary desires.

Offensiveness in Advertising:

There are some ads which are considered offensive by people. Although there is no fix threshold as from where does offense start but still people object according to their thinking. For example, when deodorants for armpits were advertised in 1927 for the first time in a monthly journal, it was severely criticized but nowadays, a very little portion of public oppose it. But some ads cross the threshold by showing semi nude ladies or refer to some sexual content in indirect way. Example of Calvin Klein, Denim Jeans, Axe Body Spray & Deodorants can be quoted here which were severely criticized for various reasons related to nudity.

Although there are many negative aspects of advertising but it has some good aspects aswell.

Improved Standard of Living:

Advertising is a source of facilitation for the general public which keeps people aware of the latest fashion trends and latest technologies. This thus leads to higher living standard.

Increased choice for consumers:

As advertising keeps people aware of various products of same domain, this gives them a wide choice of choosing among these products. This also encourages competition among companies.

Public Service messages:

There are some advertisements in which the purpose is not to tell about a product or brand but to tell people and make people aware of some important social or health issues. Such messages may be related to creating awareness for Hepatitis, AIDS, Dengue fever, pregnancy issues, education, child labor etc.

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