Advertising flourishes mainly in free-market, profit-oriented countries. It is one of the most important factors in accelerating the distribution of products and in helping to raise the standard of living.
Advertising has an important role in informing and influencing consumers. Virtually every individual in the United States is exposed to advertising. It has become one of the most important economic and social forces in society. Partly because of the influence of advertising, people have learned to want ever better products and services, to take better care of their health, and to improve their way of living.
The Role of Advertising in the United States
Advertising cannot turn a poor product or service into a good one. What advertising can do -and does- is to create an awareness about both old and new products and services.
It stimulates wants, indicates the differences among various products (and services), and shows how various needs and wants can be satisfied. Increasingly, advertising performs one of the main functions of a salesman, by providing some advance information about products and services to consumers before they reach the place of purchase.
Advertising is one of the most important techniques of modern business enterprise. A company's decisions about advertising affect its product development, packaging, pricing, distribution, and retailing. In tum, each of these activities affects advertising. Most important of all, a company's advertising affects consumers' decisions as to what to buy or not to buy.
Advertising is especially important in product development. In a competitive market, each manufacturer attempts to improve his products and to introduce new products to gain a sales advantage. Advertising enables a business firm to tell consumers about such improvements.
Magnitude of Advertising
Of the millions of business firms in the United States, practically all do some advertising. The great majority of smaller business firms do not use an advertising agency, but almost all large firms do. The advertising agency plans, prepares, and places advertising for advertisers.
However, advertising agencies account for only about 25 percent of all dollars invested in advertising in a given year.
The total dollar amount of all advertising roughly triples every 15-years, rising from $5.7 billion in 1950 to $15.25 billion in 1965. $53.5 billion in 1980. $162.9 billion in 1995. And $368 billion in 2010.
Of this amount, national advertising-for products and services throughout the United States accounted for about two thirds of the total.
Advertising Objectives and Communication
Advertising is essentially persuasive communication.
Thus, the goals set for advertising are communications tasks: to reach a defined audience, to a given extent, and during a given time period.
Consumers do not often change suddenly from uninterested individuals to convinced purchasers.
In many cases they go through several steps before buying a product. In general, they move from unawareness of the product or service to awareness and then to knowledge, liking, preference, acceptance (or conviction), and then to purchase of the product or service.
Objectives of Advertising
The three major objectives of advertising are:
(1) to produce awareness and knowledge about the product or service;
(2) to create liking and preference for it; and
(3) to stimulate thought and action about it.
These objectives vary with the maturity or life cycle of the product or service. As the product is introduced to the market, the major goal of advertising might be informational. Later, as the product progresses to rapid growth, emphasis might be placed on competitive appeals.
Later, as the product passes into a period of maturity, advertising might be aimed at keeping the name of the product or service before consumers.
In a sense, therefore, advertising management is a process of varying the advertising objectives for each product or service in accord with the specific goals of the advertiser. It is especially important for the advertiser to set clearly defined written objectives prior to the development of advertising campaigns. Only in this way can the promotional techniques employed be directly relevant to the objectives sought. Only in this way can the effectiveness of the campaign be determined.
Mail-order advertising provides a measure of effectiveness in terms of number of replies. But direct effects on sales of other types of advertising are difficult to separate from other sales determinants, such as product design, price, and personal selling.
That is why a goal such as "to increase sales" or "to increase profits" is not a measurable goal for advertising.