Question
What is the importance of advertising in a business?
Answer
Advertising is a fundamental component of a company’s marketing efforts.
It forms part of the 4Ps (which has been updated in recent years to 7Ps, or more) which are the fundamental ‘marketing mix’ of a business.
The ‘P’ in question is promotion. It is vital for a business to promote its products so that it can raise awareness in the market. An excellent product that offers great value to customers will not generate sales if no one in the market is aware of it. In this sense, some form of promotion is crucial, and the most common form of promotion is advertising.
Advertising can be defined to include any communication sent by a company to the market that offers information. So this can include any traditional advertising medium such as newspaper, TV and radio alongside recent additions such as websites and social media. With increasing consumer interaction occurring through online channels verbal advertising occurring through discussions on sites such as Facebook and Twitter are increasingly important.
Good advertising can help to generate interest in the product and the company in general, but can also set customers’ expectations. The difference between expectation and perception of a product once it is purchased is a determinant of customer satisfaction and perceived quality.
By managing the customer’s expectations, such as in moderating expectations, advertising can make customers have a better impression of the product and the company.
Many companies invest a great deal of time and money into advertising as a means of competing with rivals, and to create differentiation between the companies and products. For example, Apple advertises its products as being high quality, luxury and innovative in order to try to differentiate from cheaper competitors. In this way advertising is crucial in developing branding. When conducted very well, advertising can even form a source of competitive advantage.
