COMMERCE As LEVEL(FORM FIVE) NOTES – ADVERTISING

ADVERTISING

(a) − Advertising is the process of spreading information to customers about the availability of a product, persuading them to buy. It is both informative and persuasive.

(b) − It is the art of making goods and services known to the public.

TYPES OF ADVERTISING

I. Informative advertising

This type of advertising is mainly intended to inform the consumer about the availability of the product. Its aim is to announce old or new goods and services to make them known to the public.

e.g.

• “Bread is sold here”
• “We sell motor vehicle spare parts”
• “Buy your animal food from Rajab and Colt”
• Employment opportunities.
• Sporting activities.

This type of advertising is designed to convey information to the public about available products in the market or inform the public about particular events.

II. Persuasive advertising / competitive advertising

This form of advertising aims at persuading the public that a certain commodity or service is different from or superior to others.

e.g.

“Omo removes dirt and stains ordinary powder leaves behind.”

III. Competitive advertising

This is designed to provide information or sales of one’s own product at the expense of competitors. It is used to convince a potential market that product X is of superior form or quality than product Y.

FUNCTIONS OF ADVERTISING

The functions of advertising can be analyzed under the following headings:

1. Conveying information. Advertising enables the consumer to know the availability of goods and all the features of production. A person who wants to buy a product would certainly want to get as much information as possible before buying.
2. Persuading the consumers. Advertising aims at creating an inclination in the minds of the consumer towards a particular product. For example, when manufacturers say a drink is the most refreshing, they are convincing consumers that they will get their money’s worth.
3. Creating the public image. Advertising may create a public image for the firm which helps in commercial relationships and retaining the market. The aim is not only to create the market for a product but also to maintain it.
4. Bridging the gap. Advertising creates a link between the producer and the consumer. Through advertisement, the producer establishes contact with the ultimate users.

ADVANTAGES OF ADVERTISING

• It makes the consumer aware of the availability of goods and services in the market.
• It quickens turnover (increases sales). Advertisement increases the sales of a particular product advertised.
• It ensures better quality of products. Every competitor seeks to advertise his product as of standard quality, assuring quality guarantee.
• Creates goodwill. Advertising makes a good name for the manufacturer and his product everywhere.
• It is educative. Facts, figures, stories, tables, etc., used as illustrations in advertisements increase the knowledge of customers.
• It gives a wide choice to customers. Advertisement of different varieties of products enables consumers to make comparative assessments and select varieties that suit them.

DISADVANTAGES OF ADVERTISING

• Advertising may increase the cost of production and thus increase the selling price.
• If advertisements are deceptive, they may mislead consumers to buy poor-quality products.
• It increases the price of products due to the high cost of advertising.
• It encourages impulse or irrational buying, even of unnecessary products.
• Advertising can lead to monopoly. Only a few firms that can afford heavy advertising expenses remain competitive and may exploit consumers by fixing high prices.

WHY ADVERTISING (Reasons for Advertising)

Objectives of advertising are:

• Creation of demand for a new product.
• Creating goodwill by ensuring guaranteed standard quality and providing quick and honest services to customers.
• To educate the public on the use of the product.
• Retention of the market of the product already captured (maintaining the existence of the market).
• To extend/expand the market of the established product by repeated emphasis on its selling points.
• To inform and persuade the public to buy the product.

ADVANTAGES OF ADVERTISING TO CONSUMERS

1. It educates consumers by informing them about what is available and the uses of a product.
2. It helps consumers know what to buy and where to buy.
3. It informs about price, quality, and other features of products.
4. It exposes consumers to a wide choice and variety of products.
5. It enables consumers to compare prices and other features of products.

ADVANTAGES OF ADVERTISING TO PRODUCERS

1. It creates awareness of the product to buyers.
2. It makes possible mass sales which lead to increased profit for the firm.
3. It improves the quality of goods advertised because of competition.
4. It may result in frequent use of the product.
5. It increases production as sales volume increases due to effective advertising.

ADVERTISING MEDIA (MEDIUM)

Advertising media is the means through which an advertising message is conveyed to the public.

The following are types of advertising media:

1. Press advertising
   Press advertising uses newspapers, magazines, and trade journals (e.g., Daily News, The Guardian, Majira). It is the most popular and important form of advertisement in Africa and Tanzania.
   Advantages:
   • Covers selected areas extensively.
   • Good for local advertising.
   • Flexible and timely.
   • Gives intense coverage of local markets because many people read newspapers.
   • Circulation costs are low.
   • A large amount of information can be given.

   Disadvantages:

   • The life of newspaper advertisements is very short.
   • Not everyone who reads newspapers is interested in the advertised product.
   • Not suitable for those who cannot read.
   • Language used may be a problem for some.
2. Television advertising
   Television transmits facts visually and in words about products, including benefits, usage, and contents. It reaches different areas through pictures, dialogue, and speech.
   Advantages:
   • Combination of sound, vision, color, and movement facilitates effective communication.
   • Large market segment can be reached.
   • Repetition of advertising messages is possible.
   • Best for advertising consumer goods.
   • Products can be demonstrated and explained.
   • Possible to cover wide geographical markets and time slots.

   Disadvantages:

   • Expensive.
   • Messages are not permanently recorded.
   • Advertising must create its audience.
3. Radio advertising
   Radio transmits advertisement messages by sound. Advertisements are broadcast from stations to listeners in different areas, often accompanied by light music.
   Advantages:
   • Local markets can be easily reached.
   • Costs are relatively low.
   • Repetition is facilitated.
   • Can use any language to convey messages.
   • Effective during daylight hours.
   • Can reach every class of people.

   Disadvantages:

   • Radio creates only an audio impression.
   • The life of a radio message is short.
   • Audience attention is often low.
4. Cinema
   Cinema is used to transmit visual and sound messages about products before, during intervals, and after shows. This is done in cinema theatres and mobile cinema shows common in rural areas.
5. Posters
   Posters are usually stuck on walls of shopping areas, bus stands, near cinema halls, and other places with high population. Only products of low prices and interest to low-income people are advertised through this medium.
6. Neon signs
   Neon signs are electrical signs placed on buildings to advertise products. They are attractive, especially at night, due to their color and brightness.
7. Window display
   This method is used at points of sale where goods are nicely displayed to help consumers make choices easily. Neatly arranged goods create a powerful image in the consumer’s mind.
8. Exhibition and trade fairs
   Exhibitions and trade fairs are effective for spreading information about available products. Manufacturers from different countries display their goods during these events.
9. Outdoor advertising
   This involves displaying advertisements at street corners, railway stations, bus stops, and on moving vehicles to attract passersby.
10. Direct mail
    This method communicates directly with consumers and retailers by sending circulars, pamphlets, catalogues, etc., by post. It is especially important when introducing a product for the first time.

FACTORS TO CONSIDER WHEN SELECTING ADVERTISING MEDIA

It is important to choose the right medium before advertising because misdirected advertisements cannot serve their purpose. Factors influencing the choice of advertising media include:

1. The age group the medium appeals to: Some media appeal to the young, others to middle-aged or old people. Selection depends on the target audience.
2. Geographical coverage: The choice depends on the area the advertisement will cover. Newspapers, radio, and TV have countrywide appeal, while posters, neon signs, and cinema have local appeal.
3. The cost of the medium: Some media are expensive (e.g., TV), others are cheaper (e.g., radio). Expensive commodities can be advertised through more expensive media.
4. The number of people reached: Newspapers reach more people than magazines; radio reaches more people than television or cinema.
5. Social class/status: Consider the class of people the message targets. Newspapers and posters appeal to ordinary people, while TV appeals to better-off people.
6. The economic group the medium appeals to: Some products interest specific groups only (e.g., machinery advertised in medical or engineering journals).

ADVERTISING AGENCY

An advertising agency is an independent company set up to provide specialized services in advertising and marketing. Many producers use advertising agencies to handle some or all of their advertising.

FUNCTIONS OF ADVERTISING AGENCY

1. Creating the advertisement: They use information provided by the advertiser about the product’s nature, strengths, and weaknesses in the market.
2. Placing the advertisement: The agency decides which advertising media to use, books advertising time or space, and places the advertisements.
3. Producing the advertisement: The agency’s production department creates drafts of posters and films in their studio or on location.
4. Market research advertising: Provides information about the product’s market. Research is carried out before creating advertisements to ensure they are targeted effectively.
5. Advice: Agencies advise on product presentation, naming, packaging, color, and the best media for advertising.

SERVICES OFFERED BY ADVERTISING AGENCIES

• Offer expert advice on the media to be used.
• Arrange for publication or broadcasting of advertisements at short notice and competitive prices due to contacts with newspapers, magazines, radios, and TV companies.
• Have art sections that design advertising materials such as newspaper advertisements, pamphlets, and catalogues.
• Contract with printing presses and arrange printing of posters and leaflets.
• Design and produce cinema and TV slides.

E-COMMERCE / ECOMMERCE

This refers to business activities that take place electronically using networks and the internet. It is the process of buying and selling commodities and passing information via computer networks. It is also termed the “revolution in merchandise.”

IMPORTANCE OF E-COMMERCE

The fundamental benefit of electronic commerce is enhanced communication, which allows for simplicity, flexibility, and new approaches to doing business. The benefits of e-commerce are as follows:

TO ORGANIZATIONS

• Electronic procurement systems are cheaper, reducing costs of negotiating, ordering, searching, and delivering goods between companies.
• Reduces inventories and overhead costs through electronic transactions.
• Expands markets by overcoming traditional geographical and time limitations.
• Lower telecommunication costs due to fast and cheap internet use.
• Increases productivity and efficiency by improving customer service and production of quality goods.

TO CONSUMERS

The main benefits of e-commerce are as follows:

• Larger choices. E-commerce provides customers with wide selections of goods and services at competitive rates.
• Quick information. Customers can get full information quickly about commodity availability in international markets.
• Twenty-four-hour service. E-commerce allows consumers to transact business 24 hours a day, all over the world, throughout the year.
• Interaction between sellers and buyers. E-commerce enables customers and producers to interact in business dealings.

TO SOCIETY / PUBLIC

• Sales of goods at lower prices due to stiff competition in electronic markets, forcing producers to sell at lower prices.
• Access to education. E-commerce enables people living in distant areas to get professional education and earn college degrees.
• Saves customers from the burden of visiting shops during purchases.

LIMITATIONS OF E-COMMERCE

• Insufficient telecommunication facilities in most LDCs like Tanzania.
• No ability to touch and see the product; online images are sometimes exaggerated.
• High cost of installation and maintenance of internet networks.
• Many customers do not trust unknown faceless sellers and paperless electronic money transactions.
• Breakdown of personal contact between buyers and sellers.

TYPES OF E-COMMERCE

• B2B (Business-to-Business)
  Companies doing business with each other, such as manufacturers selling to distributors and wholesalers selling to retailers. Pricing is based on quantity of order and is often negotiable.
• B2C (Business-to-Consumer)
  Businesses selling to the general public, typically through catalogs utilizing shopping cart software. By dollar volume, B2B dominates, but B2C is what the average consumer thinks of regarding e-commerce.
• C2B (Consumer-to-Business)
  A consumer posts a project with a set budget online, and companies review the requirements and bid on the project. The consumer selects the company to complete the project. Platforms like Elance empower consumers worldwide.
• C2C (Consumer-to-Consumer)
  Many sites offer free classifieds, auctions, and forums where individuals can buy and sell using online payment systems like PayPal. eBay’s auction service is a prime example of person-to-person transactions.

Likewise, if we consider Government as a separate entity, as well as Citizens, we can identify more types of e-commerce: B2G (Business to Government), G2B (Government to Business), G2E (Government to Employee), G2G (Government to Government), G2C (Government to Citizen), C2G (Citizen to Government).