What are the social costs and benefits of advertising?

Expert Solution

Advertising is a form of communication needed to pursuade viewers, readers and listeners to action. It can have both benefits and disadvantages

Social benefits

i) Adveritising creates awareness: It creates awareness regarding new products and services available in the market , making people aware of the different variety and choices they have.

ii) Advertising educates and initiates change: Marketing and advertising can promote health and social issues and bring about a change in the mindset of the people and a positive behaviour change. Such tools are particularly adopted by NGO's such as CRY, CARE etc

iii) Advertising help improve economic activity:

Advertising not only improves the GDP via creating demand, but also help businesses earn huge revenues, which is beneficial for further investments and growth.

Social costs

i) Advertising is a costly affair:

Advertising adds to the indirect costs of the firm, thus acting as a burden and may reduce the profitability of businesses

ii) Higher prices:

The burden of advertising costs may fall on the consumers since producers may choose to not transfer the reduced costs in terms of reduced prices.

iii) Limited access to small businesses:

Small businesses may not be able to advertise due to limited resources. This makes it impossible for small businesses to compete, and they thus disappear from the market.

Rahul Sunny answered 2 years ago

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