What Factors Determine The Level Of Advertising In An Industry?

Essay by sam_spadeUniversity, Bachelor'sC+, April 2004

download word file, 6 pages 4.6

Over the past one hundred years advertising has become an increasingly important aspect of business as the rise of mass media has allowed companies to reach larger audiences through such means as, radio, magazines, television, the internet, as well as other methods. The level of advertising varies from industry to industry due to various factors.

One factor that heavily in influences the level of advertising is the type of product being sold, the main difference being between whether a product is a consumer or producer good, ergo whether a product is bought by the general public or businesses. Generally consumer goods are advertised more heavily than producer goods, for example "In the UK in the1980's manufacturers of consumer goods spent twice as much on advertising (relative to sales as manufacturers of industrial goods did)" . This occurs for a number of reasons, one of the main ones being that of the information that the customers hold.

Businesses are generally better informed about products that are available, and if a business does require information on a product, an advert through mass media like television, radio etc.. will probably not provide all the information the company requires. Companies selling producer goods might find a salesman going to businesses in person to inform them about products more effective. Another factor that differentiates the market for consumer and producer goods is the size of the market, with that for consumer goods usually being much larger and spread wider geographically. These factors favour companies selling consumer goods to have higher levels of advertising than companies selling producer goods.

Levels of advertising for consumer goods are also affected by whether a product is durable or non-durable, or as Porter (1974) referred to them "shopping" and "convenience" goods. Convenience goods tend to...