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In older times the most common form of advertising was by word of mouth. However, commercial messages were found in the form of advertisements. As printing developed in the 15th and 16th century, the first steps towards modern advertising were taken. In the 17th century advertisements started to appear in weekly newspapers in England and within a century, advertising became very popular.
As the economy was expanding during the 19th century, the need for advertising grew at the same pace. The first advertising agency was established in 1843. At first the agencies were just brokers for ad space in newspapers, but in the 20th century, advertising agencies started to take over responsibility for the content as well.
Advertisement is any paid form of non-personal presentation and promotion of ideas, goods, or services by an identified sponsor. According to (IPA), that is the means of providing most persuasive selling message to the number of consumers.
Advertisement is a mass communicating of information intended to persuade buyers to buy products with a view to maximizing a company's profit. Advertising is the promotion of a company's products and services carried out primarily to drive sales of the products and services but also to build a brand identity and communicate changes or new product /services to the customers. Advertising has become an essential element of the corporate world and hence the companies allot a considerable amount of revenues as their advertising budget. There are several reasons for advertising some of which are as follows:
- Increasing the sales of the goods and services
- Creating and maintaining a brand image in the mind of consumer.
- Communicating a change in the existing product line to the customer.
- Introduction of a new product or service to the consumer by the way of advertisements.
- Increasing the value of the brand or the company
Elements of advertising
- It is a mass communication reaching a large group of customers
- It is a non-personal communication
- It is a commercial communication because it is used to help issue the advertiser of a business with the help of profitable sales
- It is very economical means to reach large group of people
- It is a paid form of ideas, goods and services.
- Each advertisement is a specific communication that must be effective, not for a single customer it is for a large group of buyers. Basic objectives are given below: -
- To communicate with customers
- To increase the sales with advertisement among former and present customers
- Advertisement is used to promote an overall image of respect and trust for an organization. This message is not only for consumers but also government.
Importance of advertisements
Generally advertisement is a relatively low-cost method of conveying the message about the product to the number of customers. Some time it is seeing that only advertisement is the mean to convey the message succeed and economically. Advertisement is used to stimulate market demand. Advertisement has become increasingly important to every business both large and small business. Non business have also same importance of advertising. Advertisement is a power full means to convey the message to the consumer and to increase the sales of the company with marginal profit. The production cost of per unit is leading to sales. In India approx 25 years ago only growing capacity is the mean of promotions and advertisement plays most important role in this process. Advertisement help to increase mass marketing while helps the consumer to choose the better product from variety of product
AIMS OF ADVERTISING
Shifting the demand curve to the right
Making demand less price elasticity
Types of Advertising
1. Product-related advertising
- Pioneer advertising
- Competitive advertising
- Retentive advertising
2. Public service advertising
3. Functional classification
a. Based on demand
- Primary demand
- Selective demand
b. Institutional advertising
c. Product advertising
- Informative advertising
- Persuasive advertising
- Reminder advertising
4. Ads based on PLC
- Consumer advertising
- Industrial advertising
- Retail advertising
- Wholesale advertising
6. Ads based on area
- Notional advertising
- Area advertising
- Regional advertising
Effect of Advertisement
We see that how advertisements demand for product increases, that is demand curve shift to the right. For our convenience I assumed that The new demand curves after successive increase in advertising expenditure is taken are parallel to the old one. However in this connection it is useful to consider whether when the demand increases and demand curve shift to the right side.
Effect of Advertisement on demand curve
Advertising and the long run
Advertising, profit margin and company growth
1. Cigarette advertising
Cigarette advertising, whether by one company or another, for one brand or another, or one advertising campaign or another, needs to be first understood as, simply, advertising. It is not necessary to examine the differences in approach and style of execution to understand the essence of what advertising does. basic question of what effects advertising has so that its role in consumers' purchase and use of cigarettes can be better understood.
ECONOMIC ASPECTS OF ADVERTISING
Organizations think about advertising as both an expense item and an investment. As an expense item, advertising represents an allocation of resources to a particular use that is justified against alternative uses of company resources. Instead of spending a certain amount of money on advertising, the firm could lower its price, provide added profit margins to retailers, and, in short, do any number of things to produce sales and profits. That's why advertising is viewed as one important component of the marketing mix. If expenditures for advertising could not be justified economically, firms would either spend the money on more productive activities or they would simply reduce expenses. But in simple words, advertising is expected to produce sales revenues, or the money would not be spent when advertising is thought of as an investment there is a more long- term view of its effects. A number of studies have indicated that some firms spend more on advertising than can be justified in terms of immediate sales since they know it has a carryover effect in subsequent years. Advertising is thought to build a consumer franchise in the sense of creating a favorable disposition toward both the company and its products. This favorable disposition represents a potential for purchase which is activated over time whenever needs for the A product become salient or product/company cues are strong enough. As with any other investment, companies have certain return-on-investment criteria. If resources are used for advertising this creates an opportunity cost, since the funds are not invested elsewhere. Hence, the investment in advertising is expected to “pay off” over time. This comes about primarily through increased sales. Regardless of whether the firm views advertising as an expense or an investment, advertising's economic role is the same. There is no way to produce sales revenues without convincing people to purchase the product. So, unlike other marketing expenditures which strictly push the product through the sales channel by making it more attractive for middlemen to sell the product, advertising is used to pull the product through the sales channel by directly affecting consumers' demand for the product.
Market Expansion and Brand Switching Effects
When the analysis of economic effects is expanded to an industry level, distinctions are sometimes made between advertising that “expands the market” and advertising that “promotes brand switching/defends against brand switching.” Such an analysis obscures a very important point. Even though the market in total may not be expanding (or may even be shrinking) customers who leave the market still are being replaced. Describing the competitive conditions of the cigarette industry as a' Â° mature market is more useful for marketing managers -- who must decide which elements of their marketing mix to emphasize -- than it is for understanding advertising effects in this market. Even assuming a lack of aggregate industry growth, cigarette. Industry advertising and promotional programs must be strong enough to replace the approximately 5% of cigarette users who leave the market each year merely to maintain sales at existing levels.
Advertising plays an important role in attracting new replacement customers. Without replacing people who no longer use the product, stable markets would be in decline and declining markets would be in ruin. The need to replace smokers who either quit smoking or are casualties of smoking has led many to question cigarette industry claims that their advertising is intended primarily to encourage brand switching. Some defend the economic value of brand switching by underscoring the profitability of cigarettes. However, the U.S. evidence indicates that the tobacco industry spends about $9 per person per day for advertising and promotion, and only 10%of smokers switch brands in an average year. Most consumers merely switch among brands of the same company.
Economic Studies of Advertising Effects
There have been frequent attempts to estimate the effects of industry- wide advertising on cigarette consumption. However, no statistical analysis can be safely generalized beyond the scope and sensitivity of the data on which it is based. Econometric studies essentially examine the effect of incremental year-to-year changes in advertising on sales. Such data are lacking in scope: there is no way to extrapolate from them to a ban on cigarette advertising and promotion and the cumulative effects such a ban is likely to have over time. It took many years to develop the cigarette market and to cultivate particular segments of the market (e.g., women). If analysts are really talking about the effects of advertising -- or the effects of a ban 41% on advertising -- on cigarette sales, the scope of the analysis cannot be limited to short duration effects. Bagozzi makes a similar point in his analysis of the facilitating role of advertising on the smoking behavior of We know that incremental changes in advertising expenditures are unlikely to alter the amount smoked for existing smokers (e.g., someone smoking a pack a day is not likely to move to one and a half packs a day). So, even substantial effects on smoking initiation would be swamped by the absence of effects on the larger group of existing smokers. Unless tobacco companies were willing to provide data which allowed statisticians to isolate the effects of advertising and promotion on first- time smokers and particular population subgroups (e.g., adoleicents), most econometric studies will be insensitive to the otherwise masked effects on smoking initiation. Despite the difficulty of isolating advertising effects on sales, a recent assessment of 21 econometric studies (which took advertising expenditures, tobacco price and personal income into account) concluded that 11 showed that, “advertising significantly affected national cigarette sales”.
2. Driving impulse purchases with POP Advertising
This article is taken from ADVERTISEMENTS journal written by Priyanka Rawal. This article is about the retail stores how they trying to grap their customer attention to their brand. An impulse purchase could push a brand into the shopping carts of customer provided the brand presence actually this article focused on the strategy of advertisements how it works that time when customer has to make decision about to buy the product.
In this article we discuss the about the Point of purchase advertising strategy and visibility of the product. In reality most of the consumers do not research extensively before making a final choice of a product which one they want to purchase. Most of them hardly take 15-20 seconds to make a decision to buy a product. That's why retail stores need to display the goods for highly eye-catching. An advertisement strategy where the final decision is taken for purchases is known as point of purchases. POP displays can boost the sales and enhance brand visibility at the time when customer is ready to buy the product. These displays are designed especially in that areas where population is more in that area promotion of the product is easy. According to Priyanka Rawal unplanned purchase made by stores are just over 90% and approximate 51% of the sales taken places in the aisles. Many Marketers feels that such customer can be more attentive when they are in the stores.
Essential of POP display
- By the way of POP display many new can be prompted to make the trial purchases seeking the display ads
- POP display is not so costly it is very close to radio advertising.
- It is more beneficial when any company launch a new product in the market
- Attractive colors and proper placement can easily obtain the high sales figures even at that time also when brand awareness is lacking in the mind of consumer or the market
- It has a uniqueness of display because it is done by expert creative agencies.
- POP display is the key of eye-catching it does not make for an individual it is made for a large number of consumers.
- It is a dramatic impact on the brand retention, recognition and sales can be created by an effective display
Benefit of POP display design
- POP displays are very economically
- Like other strategy it helps to increase the brand awareness in the mind of consumer
- It is a eye catching process which is more effective in the stores to take the attention of the consumers
- POP displays helping effectively targeting the shoppers moving into stores
- POP advertising provides a great platform for new product testing and brand switching
EFFORT TO MAKE EFFECTIVE
- Some of POP material needs to be lighter side for easy transportability where a other may require a higher degree of stability
- Use of ceiling Floors or walls to put the signage
- It needs to be more effective
- It must be understand to all the customers
- Retailer stores should have an ambience that persuades shopper to stay for a long duration in the store
- Strengthening your brand message on a consistent basis to attract customer attention in every location is the need of the hour.
- A research study has found that conversion level of regular users to a brand loyalist using POP displays goes up by 30-40%
A well known example is that of a Godrej retail store where such terminals are filtered in stores for consumers to help themselves. Banking organizations are implanting such devices so brand awareness and visibility is increased.
POP advertising has made its ways into food, retail, apparel, hospitality and almost any kind of store. POP has also adopted RFID (radio frequency identification technology) to display the product in stores.
POP ads are becoming the most important factor to display the things and to analyze the consumer behavior. This is important because this is more economically and better quality. With the cost cutting in ads budget POP is more beneficial for the company to increase the profit of the firm.
3. Advertising of services- ICICI BANK
This article is taken from magazine “ADVERTISEMENTS” written by Vikas Shrotriya. In this article basically we discuss some of aspects which is different advertising of services from that kind of product. In this we take the example of ICICI BANK
The service sector has gained prominence during the recent years and is contributing more than 60% to the GDP currently. With this phenomenal growth services providers are facing stiff competition and are resorting to various methods for promoting and advertising their services. Advertising of goods is comparability simple due to their tangibility feature.
Services have acquired an indispensable place in our economy. Services are grown faster than growth rate of Indian GDP. With the change in Indian Social Structure and financial resources services has shown their remarkable growth in the Indian Economy during the last few years. Now a day there are all indicators of rapid growth in the service industry. With the increase in number of corporate the competition is also increased in service industry. Advertising of any such product is not difficult due to their tangibility aspect. Only promotion and advertising of services become difficult due to the peculiar characteristics. In common words it is understood that service is that cannot be touched or seen. There are some specific difference between goods and services for example if one person (A) buys an Omni model from Maruti Udyog Limited, that mean he become a owner of the car but if one he utilize the service of a cab.
Comparison of goods and services
Advertising is an important tool of mass communication. It is an inevitable element of the promotional mix. Advertisements play an important role in the attitude formation of the prospective buyers. Advertisements have power to affect the consumer behavior. The main purpose of advertising is to attract buyers and thus increase the sales. Advertising aims is to increase the brand awareness in the mind of the consumer. Any advertisements regarding services focused on the different advantages offered by the services.
Suggestion to improve advertising services
- Focus on the benefit of the advertised service
- Candid and clear message
- Offer should be clear to every consumer
- Try to avoid amplification
- Celebrity endorsement
- Focus on positive effect
- Personal care.
4. Effect of soft drink advertisement on demand
In this case, we determine whether advertising of non-alcoholic beverages has any detectable effect on aggregate demand. Owing to the importance of demand interrelationships in determining profitability, special attention is given to spillover effects, i.e., whether advertising for one beverage affects the demand for related beverages. A secondary objective is to test whether structural change plays a role in the observed consumption pattern, particularly the rise in soft drink consumption between 2000 and 2004 from 24 to 52 gallons per person and the decline in milk consumption from 31 to 25 gallons per person.
The estimated advertising elasticities affirm the importance of spillover. Whereas only half of the own-advertising elasticities are significant, fully two-thirds of the cross elasticities are statistically significant. Moreover, many of the cross-advertising elasticities are larger in absolute value than the own-advertising elasticities, and in some cases exceed price and income elasticities. Overall, coffee and 14 tea appear to be the most affected by advertising of other commodities, and milk the least. Similarly, juice advertising appears to exert the largest influence within the beverage market, and milk advertising the least
Measuring advertisement effectiveness
- All advertising efforts are directed mainly to achievement of business, marketing and advertising objectives that is to increase the sales and to maximize the profit of the company. The advertiser spent thousands of rupees in advertising activity. Through the advertising an organization can easily attract customer towards their product. In order to measure the effectiveness of the advertising there are two types of test pre-test and post-test
- Pre-test are taken either at the time of creating a advertising or at the time of production stage. There are many steps in pre and post test by which an organization measure the effectiveness of the advertising: -
- By giving different addresses to the people
- News papers or magazines can also be selected for different kinds of advertising
- Questionnaire is the best source to collect the information from customer
Importance of measuring the effectiveness of advertising
- Advertising is a very convenient medium to give the information to the customer
- By the way of measuring the effectiveness the wastage of money can be avoided
- Evaluating advertising effectives help in estimating the result in order to avoid loss
- By evaluating investment can be justified in advertising
- To know the communication effect
- By Compare two market we can measure the effectiveness of advertising
Method of measuring advertising effectiveness
- The aim of advertising increasing the sales of the company there are two types of measuring the effectiveness of advertising
- Direct measures
- Indirect measures
1. Direct measures of advertising effectiveness
Under this method a relationship between ads and sales is established. In this comparison of two markets or two periods can be done for knowing the effectiveness of advertising.
Historical sales method: -
This method shows the relationship between advertising expenditure and the total sales of the product. This method would show how the changes in advertising expenditure have corresponding changes in the sales volume. This technique estimates the contribution that advertising has made to explaining in a co relational manner than a casual sale.
Experimental control: -
The next method measure of advertising effectiveness is experimental control when historical method is established it was quite costly than that. Moreover this can be done as a pre test to aid advertising in choosing between alternative creative designs.
2. Indirect measures: -
As it is very difficult to measure the direct effect of advertising on company's profits or sales most firms rely heavily on indirect measures. These measures do not evaluate the effect of advertisements directing on sales but other factors such as awareness, attitude or message effect on the sales or profit of the business indirectly. The most commonly used measure are: -
Exposure to advertisement
In order to be effective, the advertisement must gain exposure. The management is concerned about the number of target consumers who listen about the organization message by the advertisement. This number of consumer can be estimated by questionnaire from the consumers.
Attention of message content
This method is very important and wider in nature used to measure the effectiveness of advertising. Any advertisement cannot be said to be effective unless they easily attract the attention of their targeted consumers. In this there are two types of methods for evaluating the effectiveness of advertising. One is pre test and other is post test.
The employer who rely heavily on advertising can also measure its effectiveness by measuring the customer awareness about their product. It is assumed that there is a direct relationship between advertisements and awareness. This type of measure is also subject to limitation of the direct measures.
Every consumer used advertisements as a mean of obtaining information about the goods/services, brand/manufacturer.
Benefits of Advertising
Advertising help in spreading information about the firm, its product and place of its product etc. it helps to create non-personal link between the advertiser and the receiver of the message. The benefits of advertising to different parties are discussed in the following below: -
Benefit to the traders: -
- Advertising has become indispensable for the manufacturers and the distributors because it gives some advantages to traders
- Advertising help them to introduce/launch new products in the market.
- If the advertising is effective it can easily attract new customer for a product.
- Advertising assists to increase the sale of existing product by entering into new market and attracting new customers.
- It helps to create steady demand of the product
- It helps to compete with competition in the market
- Ad is used to increase the goodwill of a firm by giving good quality to their customers.
- Ads increase the morale of the employees of the firm.
- It facilitates direct distribution of the product through the retailers.
Benefits to the customers
- Advertising help the customers to know about the quality and price of the product. They can choose any goods which can easily satisfy their wants.
- Ads increased the utility of goods for many people adds to the amount of satisfaction
- Ad aware the people about the new products and their use.
- Advertising include the manufacturers to improve the quality of their products through research and development
Benefits to the society
- It provides employment to the skilled persons who are expert in writing, designing
- It promotes the standard of living of the people providing the variety and quality of goods/services.
- It educates the people about the uses of the product.
Difficulties faced by Researcher
- Sample given by the company are very less which is not according to the population.
- Some time, The response given by respondents are not accurate
- Research is a time consuming process but the time is very less.
- Some time it happens that respondents are not willing to fill up the questionnaire
Advertising is a very economical mean to convey the message to the consumers. In order to measure the effectiveness of advertisements there are two processes and both are most suitable. Generally every manager would like to know about the role of advertisements with their performance. A sale is a determining factor of company performance. To sum up I want to say communication measures are easy to follow in comparison sales measures. That why we can say that a manager has to maintain balance between the two approaches.
- Advertisements should be made with keeping the factor in the mind.
- Advertisements should be made according to the product and its related size group
- Advertisers should be give new ideas for the advertisement
- Advertisement should be give message to the consumers.
- from book managerial economics written by H.L.AHUJA
- Articles taken from advertisements express
- http://www.scribd.com/effect of advertisement
- personally asked from some person