ADVERTISING

Macroeconomic Impact of Advertising
1. Impact on the product and medium
2. Impact on the company
3. Impact on competitors
4. Impact on customers
5. Impact on the business community

Macroeconomic View of Advertising
1. Importance of mass distribution
2. Effect of advertising on competition
3. Effect of advertising on the value of products
4. Effect of advertising on prices
5. Effect of advertising on consumer demand
6. Effect of advertising on consumer choice
7. Effect of advertising of the business cycle

Economic Impact of Advertising in Perspective
For the consumer, advertising costs less than most people believe. The various media that carry the advertisements we see are amazingly efficient. A bottle of Coke contains about a penny’s worth of advertising. An automobile that costs $7,000 includes an advertising cost of less than $100.
To the economy as a whole the importance of advertising may best be demonstrated by the abundance principle. This states that in an economy that produces more goods and services than can be consumed, advertising servers two important purposes: (1) it keeps consumers informed of their selection alternatives, and (2) it allows companies to compete more effectively for consumer dollars.
As advertising has stimulated a healthy economy, it has also stimulated a financially healthy consumer who is more informed, better educated, and more demanding. And one of these demands has been for accountability by manufacturers and advertising, thus leading to an unprecedented level of social and legal regulation.
(Book Reference: Contemporary Advertising Hal. 25-36)