Advertising :: essays papers

Advertising Nowadays, advertizing is a very big business. Very often is the major heart of competing among firms. Furthermore, supporters of publicise claim that it brings specific benefits for consumers. First off all, they claim that advertising provide selective information to consumers intimately the quality or the availability of some(prenominal) products. This is very important for consumers because they do not waste time for trenchant (search costs). If we suppose, that consumers want to shop at the lowest price shop but, they do not know which is the store with the lowest prices, then they gather information by reading and watching furtherments and TV commercials respectively or by visiting some(prenominal) stores. This action of consumers makes prices to fall, but only if consumers stick out the assume information. Otherwise the prices may rise. Supporters of advertising withal claim that advertising may encourage price competition among the firms, if p rices feature significantly in the crusadement. In addition to this, by increasing sales through advertising, firms can increase economies of scale, which means that it will help to keep prices down. As we can assure information is very essential for consumers, not only because it lowers the prices, but also because it improves the quality of several products. The problem here is that it is unlikely for all the consumers to have perfect information. This means that the information is either imperfect or asymmetric. liberalist information, as well as asymmetric information, lowers quality. Advertising may compute this problem in most cases. Consumers can gather information for several products through advertisements and because of this, producers must improve the quality of their products. But why firms advertise so much? As I noted above advertising increases consumers information. So we can suppose that a firm which advertise much, has high quality products. A very e xpensive advertising test is something like a signal to potential consumers, that the firm believes that its product has frank quality. Furthermore the company believes that because of its good quality products, is going to make echo sales for a long time in order to deduct the fixed costs of initial advertising. On the other hand, firms with myopic quality products that know that consumers will soon discover they have been misled about quality, do not invest much in advertising.