The Role of Advertisement in Sales

The Role of Advertising in Sales Growth and Promotion: A Case Study of Hamadan Province Insurance Firms

The Role of Advertising in Sales Growth and Promotion: A Case Study of Hamadan Province Insurance Firms examines the impact of advertising on competitiveness among Hamadan provincial insurance companies. The paper investigates the influence of advertising on insurance sales in the region. The article divides publication into two types.

Enhancing Sales and Decreasing Consumer Welfare

For starters, advertisements have been shown to enhance sales while decreasing consumer welfare through product differentiation. The second part of advertising is instructional, which enhances market competitiveness while decreasing product revenues. The second issue of advertisement is utilized to tell consumers about the existence of a product. Competition in the insurance industry has given customers the variety of insurance to choose. Companies have come up with strategies that allow them to have a competitive advantage over their competitors mostly by making use of advertisement as a sales promotion procedure. The advertisement has been considered as the modern way of making customers buy products from most companies. There are various forms of publication used by businesses. They include the use of print media, use of televisions, and radio transmitters. All these modes of publication have both negative and positive effects on competition.

The Importance of Understanding Customer Needs in Marketing

Marketing requires that the marketing manager understands the customer needs in product development and the ability of the service or product to satisfy that need (Yousefi, 2016). Advertisement is a measure of creating awareness in marketing, although it is an expense to the advertising enterprises. The article identifies advertisement as a tool for increasing revenues in a competitive market environment. Research provided in the article relates to the study of economics, especially in the study of the role of sales promotion in a competitive market.

Positive and Negative Effects of Advertising on Competition

Field of advertisement exploits various aspects of psychology and culture in making advertisement useful (Colitti, 2016). It is recommended that a balance between public relations and advertisement be implemented when addressing sales promotion procedures. Economic effects of advertisement have been researched on with a little emphasis on competition among companies. Correlation between advertising and aggregate demand has been identified. More advertisement increases aggregate demand, thereby increasing competition among firms. However, it is shown that publication depends on other factors in influencing the consumer’s decision. There is a strong correlation between advertisement and sales volume. The more companies advertise, the higher the amount of revenue is obtained from sales.

Effects of Advertising on Competition in the Market

Competition in the market is one of the reasons that most companies keep on advertising. Advertising has both negative and positive effects on competition. Although various companies utilize different forms of advertisement, most ads influence the level of competition by either creating a healthy market environment or by disrupting the market. The traditional advertisement offers social benefits by providing education on the use of a product or by promoting talent like free speech. The recent publication is a bit different and mainly focuses on increasing the amount of revenue from a given product. In addition to encouraging consumers to make product choices, advertisement equips customers with knowledge of the variety of lifestyle choices they can choose from. Advertisement differentiates a product from that of competitors. Competition creates an environment where companies aim at making better products for their customers. Although most consumers may focus on the price of products in the market, a good number focus on the quality of the service or good. Advertisement positively affects competition in that more products are availed in the market for the consumer. With more products in the market, competition is increased, and the variety of goods are availed. Second, advertisement creates channels for increased competition among the concerned firms. The high rate of competition allows businesses to improve the quality of products, thus ensuring that consumers only get quality products (Yousefi, 2016). In a competitive market, companies which use intermediate products can identify, through an advertisement, the best firm for their raw materials. Promotional programs like advertisement intensify competition among different industries, and this makes the best company record the highest sales.

Adverse Effects of Advertising on Competition

Adverse effects of advertisement on competition include offsetting competitors from the market, provision of low-quality products, low returns as more resources are channeled to an advertisement, and reducing marketing accessibility for new companies. Sales promotion procedures can be intended to offset competitors' marketing strategies directly. This is an adverse effect on competition since the goal of the advertisement is on sales rather than putting away the competitors. The negative effect of publication on competition, such as retaliating from an advertisement, is a problem. In such cases, competitors use information that is intended to hurt the consumption of a product. The consequence is reduced sales in the market. When people focus on advertisement in a competitive market, they end up using quality material and deliver low-quality products. Also, a firm that is mainly focused on advertisement delivers poor services to the customers because fewer resources are available for employing manpower.

Conclusion

The advertisement is a strategy employed by companies in a competitive market to differentiate their products from others. The advertisement has both negative and positive effects on competition. On the positive side, advertisement informs the consumers on product availability while differentiating one brand from another. On the negative aspect, advertisement results in low returns as much revenue is channeled into the advertisement.

References

Colitti, K. (2016). Countervailing buyer power and its role in competition analysis. European Competition Journal, 12(2-3), 361-386. http://dx.doi.org/10.1080/17441056.2017.1286877

Yousefi, A. (2016). The Role of Advertisement in Sales Increase and Promotion: A Case Study of Hamadan Province Insurance Companies. International Journal of Innovative Research in Science, Engineering and Technology, 5(4), 1-8. Retrieved from https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=7&ved=0ahUKEwi4lcTJyKHTAhUIRI8KHYrpCgYQFghKMAY&url=https%3A%2F%2Fwww.ijirset.com%2Fupload%2F2016%2Fapril%2F231_The.pdf&usg=AFQjCNHhRoHaSW977FLnsd4sM1b1fxP6Pg&sig2=OGRdz_VNHPLbyro9BG9Arw&bvm=bv.152180690,d.c2I&cad=rja