In this blog post, we will examine how advertising goes beyond a simple sales strategy to promote market competition, change consumer culture, and shape social values.
Advertising is planned as a means for advertisers to pursue profits, but it can also influence the market regardless of the advertiser’s intentions. First, advertising can promote competition among sellers in a monopolistic market. This effect occurs when buyers who are exposed to product information through advertising become sensitive to product quality and price. In particular, if buyers change their demand in response to price changes, sellers will become more sensitive to the prices of competing products and engage in price competition. Competition is also promoted by advertising, which allows new sellers to easily promote new products and enter the market. When more sellers compete in the market, the monopoly position of each seller weakens, and buyers can purchase a wider variety of products at lower prices.
Advertising also provides buyers with new information and ideas, diversifying their purchasing choices. Through advertising, consumers can compare the characteristics and benefits of various products, which ultimately helps them make better purchasing decisions. For example, advertising that a particular product is environmentally friendly or has undergone a socially responsible manufacturing process allows consumers to choose products that align with their values. This encourages companies to move beyond simple price competition to quality and ethical competition, leading to an overall improvement in the quality of the market.
Advertising also has an impact on the economy and society as a whole, beyond the exclusive competitive market for specific products. When the effect of individual advertisements on stimulating the latent needs and desires of buyers is combined with the effect of promoting consumption of the target products, a virtuous cycle can be expected for the economy as a whole. Compared to a situation where there is no advertising in the economy, advertising can increase consumption by strengthening consumers’ desire to replace existing products with new ones and shortening the cycle of popularity of new products. Increased consumption stimulates production activities. The production of goods requires labor and production factors such as machinery and equipment, so an increase in production activities leads to an increase in employment and investment. Increased employment and investment can increase the income of workers and investors. The extent to which consumption increases when overall income in the economy increases is called the marginal propensity to consume. The marginal propensity to consume is a positive value, so when the overall income level in the economy improves, consumption increases.
However, the consumption-promoting effect of advertising is sometimes criticized by people who are concerned about environmental pollution. This is because environmental pollution occurs not only from consumption but also from production activities promoted by consumption. It is unlikely that sellers and buyers will pay enough to reduce environmental pollution to an acceptable level, so in most cases, environmental pollution is inevitable.
The social impact of advertising goes beyond simple economic effects and brings about major changes in society and culture. Advertising often highlights specific lifestyles or cultural trends, shaping public perceptions and bringing about change. For example, advertisements that emphasize healthy lifestyles can raise awareness about health, and advertisements that promote sustainable products can contribute to the creation of an eco-friendly consumer culture. Therefore, advertising goes beyond a simple sales tool and acts as an important factor that deeply influences the values and culture of society as a whole.
In conclusion, advertising is not only a means for sellers to pursue profits, but also plays an important role in various aspects, such as promoting market competition, diversifying consumer choices, inducing a virtuous cycle in the overall economy, and changing social values and culture. Therefore, continuous research and policy efforts are necessary to maximize the positive effects of advertising and minimize its negative effects.
