Economic Effects Of Advertising Essay

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3.1. Economic effects of advertisement:- As Marcel Bleustein Blanchet, the father of modern French advertising, pointed out, it’s no coincidence that the level of advertising investment in a country is directly proportional to its standard of living. Advertisement create major impact on economic. As companies start advertising their product it sets off a chain reaction of economic events. Advertisement is an important factor for the development of economy of country. Especially in U.S.A where advertisement change economy itself, culture, social and political system. The stimulation for the demand of products and services helps the economy grow stronger and stronger. New inventions become known much faster and can establish their spot in the…show more content…
A style of evidence suggests that heavily marketed manufacturers are extra expensive for final customers than are much less-advertised goods inside the same product category. Retail margins may fall for two reasons. First, when a brand is heavily advertised, retailers are more attracted to a reduced retail price for the brand. Intuitively, a heavily advertised brand is “identifiable” and serves as a benchmark by which consumers may compare prices across retailers; thus, a retailer’s reputation for low pricing is particularly sensitive to the price that it sets for the advertised brand. Extending this argument, a retailer may regard a heavily advertised brand as an especially attractive candidate for “specials” and loss-leader promotions. Second, when a brand is heavily advertised and thus of particular value to retailers, the manufacturer may be tempted to raise the wholesale price. For these reasons, a negative relationship between manufacturer advertising and retail margins is implied. The overall effect of manufacturer advertising on the final retail price is less clear and depends on the extent to which the manufacturer raises its wholesale price. Retailers set a lower retail price on the advertised brand if any increase in the wholesale price is
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