Advertising is more than just a profit-seeking tool; it promotes market competition, changes consumer behavior, and influences society and culture at large.
While advertising is designed to make money for the advertiser, the seller, it also has an impact on the marketplace, regardless of the advertiser’s intentions. Advertising can change market structure and consumer behavior in a variety of ways. First, advertising can promote competition among sellers in monopolistically competitive markets. This effect occurs when buyers exposed to product information through advertising become sensitive to the quality or price of a product. If buyers change their quantity demanded in a price-sensitive manner, sellers become more price-conscious and enter into price competition.
Competition is also fostered by the ease with which new sellers can promote new products and enter the market through advertising. As more sellers compete in the market, each seller’s monopoly position is weakened, and buyers are able to purchase a wider variety of products at lower prices. This has the positive effect of providing consumers with more choices and increasing the efficiency of the market. For example, in the smartphone market, when a new brand enters the market by attracting attention through advertising, existing monopolistic brands are forced to compete by lowering prices or improving the quality of their products.
Beyond the monopolistic competitive market for a particular product, advertising can also have an impact on the economy and society as a whole. The combined effect of individual advertisements that trigger latent needs or desires in buyers and encourage them to consume the target product is a virtuous cycle. Compared to the absence of advertising in the economy, advertising can increase consumption by reinforcing consumers’ desire to replace old products with new ones and shortening the fad cycles in which new products become popular. Stimulated consumption stimulates production activity.
Since the production of goods involves factors of production, such as human labor, machinery, and equipment, an increase in production activity results in an increase in employment or investment. Increased employment and investment can increase the incomes of buyers who are either workers or investors. The degree to which consumption increases when the income of the economy as a whole increases is called the marginal propensity to consume, and the marginal propensity to consume is positive, meaning that consumption increases when the income level of the economy as a whole improves. This plays an important role in stimulating the overall economy.
Advertising also influences cultural and social values. When consumers are repeatedly exposed to certain lifestyles or values through advertising, they naturally adopt them. For example, more ads emphasizing health and wellness can encourage people to pursue healthy lifestyles, which can have a positive effect on improving the health levels of society as a whole. On the other hand, ads that promote excessive consumption and materialism can increase social inequality and increase economic burden. In this respect, advertising should be considered as a socially responsible media, not just a sales promotion tool.
However, the consumption-promoting effects of advertising are also criticized by those concerned about environmental pollution. This is because pollution is not only caused by consumption, but also by production activities that are fueled by consumption. It is unlikely that either the seller or the buyer will pay enough to reduce pollution to an appropriate level, so in most cases, pollution will remain high. To address these issues, efforts are needed to adopt environmentally friendly production methods and establish a culture of sustainable consumption. This will be more effective when government regulations are combined with voluntary efforts by companies.
Consumers also need to play their part in protecting the environment by choosing eco-friendly products and avoiding excessive consumption. Advertising can play an important role in spreading this social change and awareness. For example, an ad campaign highlighting eco-friendly products can remind consumers of the importance of protecting the environment and promote sustainable consumption behaviors. In the long run, this can also contribute to improving a company’s image and strengthen its position as a socially responsible business.
Advertising is therefore a tool with a complex set of economic, social, and environmental impacts. Advertisers, consumers, and society as a whole will need to work together to maximize its positive effects and minimize its negative ones. When advertising becomes more than just a commercial tool, but a culture of social responsibility and sustainability, we will be able to build a healthier and more sustainable society. This will require not only individual efforts, but also consensus and cooperation across society.
