Đề tài The role of advertising in society





Part I : General knowledge of advertising

1. Some typical concepts of advertising

2. Classifications of advertising


Part II : The role of advertising in society

1. Economic effects of advertising

a. On governments

b. On citizens

c. On businesses

2. Social effects

a. Good effects

b. Bad ones


 Part III : The role of Vietnam’s advertising industry in the economy

1. Present situation and contributions of Vietnam’s advertising industry

2. The changing responses of Vietnamese towards advertising.






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nt out that consumers may purchase material things in the pursuit of nonmaterial goals. For example, a person may buy an expensive stereo system to enjoy music rather than simply to impress someone or acquire a material possession. Even if we assume materialism is undesirable, there is still the question of whether advertising is responsible for creating and encouraging it. While many critics argue that advertising is a major contributing force to materialistic values, others say advertising merely reflects the values of society rather than shaping them. They argue that consumers' values are defined by the society in which they live and are the results of extensive, long-term socialization or acculturation. Advertising does contribute to our materialism by portraying products and services as symbols of status, success, and achievement and by encouraging consumption. As one said, "While it may be true that advertising reflects cultural values, it does so on a very selective basis, echoing and reinforcing certain attitudes, behaviors, and values far more frequently than others." The extent to which advertising is responsible for materialism and the desirability of such values are deep philosophical issues that will continue to be part of the debate over the societal value and consequences of advertising. Furthermore, a common criticism of advertising is that it manipulates consumers into buying things they do not need. Many critics say advertising should just provide information useful in making purchase decisions and should not persuade. They view information advertising, which reports price, performance, and other objective criteria as desirable. Persuasive advertising, however, which plays on consumers' emotions, anxieties, and psychological needs and desires such as status, self-esteem, and attractiveness, is viewed as unacceptable. Persuasive advertising is criticized for fostering discontent among consumers and encouraging them to purchase products and services to solve deeper problems. Critics say advertising exploits consumers and persuades them to buy things they don't need. Defenders of advertising offer a number of rebuttals to these criticisms. First, they point out that a substantial amount of advertising is essentially informational in nature. Also, it is difficult to separate desirable informational advertising from undesirable persuasive advertising. If advertising critics really believe that persuasive advertising should not be permitted, they are actually proposing that no advertising be allowed, since the purpose of all advertising is to persuade. Defenders of advertising also take issue with the argument that it should limit itself to dealing with basic functional needs. In our society, most lower-level needs recognized in Maslow's hierarchy, such as the need for food, clothing, and shelter, are satisfied. It is natural for people to move from basic needs to higher-order ones such as self-esteem and status or self-actualization. Consumers are free to choose the degree to which they attempt to satisfy their desires, and wise advertisers associate their products and services with the satisfaction of higher-order needs. Proponents of advertising offer two other defenses against the charge that advertising makes people buy things they do not really need. First, this criticism attributes too much power to advertising and assumes consumers have no ability to defend themselves against advertising. Second, it ignores the fact that consumers have the freedom to make their own choices when confronted with persuasive advertising. While they readily admit the persuasive intent of their business, advertisers are quick to note it is extremely difficult to make consumers purchase a product they do not want or for which they do not see a personal benefit. If advertising were as powerful as the critics claims, we would not see products with multimillion-dollar advertising budgets failing in the marketplace. The reality is that consumers do have a choice, and they are not being forced to buy Consumers ignore ads for products and services they do not really need or that fail to interest them a..2. To the product costs and prices consumers have to pay. Critics argue that advertising increases the prices consumers pay for products and services. First, they say the large sums of money spent advertising a brand constitute an expense that must be covered, and the consumer ends up paying for it through higher prices. This is a common criticism from consumer advocates. Several studies show that firms with higher relative prices advertise their products more intensely than do those with lower relative prices. A second way advertising can result in higher prices is by increasing product differentiation and adding to the perceived value of the product in consumers' minds. The fundamental premise is that advertising increases the perceived differentiation of physically homogeneous products and enables advertised brands to command a premium price without an increase in quality. Critics of advertising generally point to the differences in prices between national brands and private-label brands that are physically similar, such as aspirin or tea bags, as evidence of the added value created by advertising. They see consumers' willingness to pay a higher price for heavily advertised national brands rather than purchasing the lower-priced, non-advertised brand as wasteful and irrational. However, consumers do not always buy for rational, functional reasons. The emotional, psychological, and social benefits derived from purchasing a national brand are important to many people. Unfortunately there seems to be no single way to measure product differentiation, let alone determine how much is excessive or attributable to the effects of advertising...both price insensitivity and brand loyalty could be created by a number of factors such as higher product quality, better packaging, favorable use experience and market position. They are probably related to each other but need not be the result of advertising. Proponents of advertising offer several other counterarguments to the claim that advertising increases prices. They acknowledge that advertising costs are at least partly paid for by consumers. But advertising may help lower the overall cost of a product more than enough to offset them. For example, advertising may help firms achieve economies of scale in production and distribution by providing information to and stimulating demand among mass markets. These economies of scale help cut the cost of producing and marketing a product, which can lead to lower prices-if the advertiser chooses to pass the cost savings on to the consumer. Advertising can also lower prices by making a market more competitive, which usually leads to greater price competition. Finally, advertising is a means to market entry rather than a deterrent and helps stimulate product innovation, which makes markets more competitive and helps keep prices down. Overall, it is difficult to reach any firm conclusions regarding the relationship between advertising and prices. In general, in the market-oriented economy nowadays, it can’t be denied that advertising plays an important role in society. Consumers can’t find what the market has without advertising’s help. Moreover, with the continuous development of science technology, consumers’ need vary much. Also, manufactures develop various products, which consumers feel free to choose to suit them best. Therefore, competition among manufacturers is getting more fierce and advertising plays a vital role in that competition. Another benefit that consumers gain from advertising is that it creates opportunities for them to actively decide whether that product suits them or not and save time looking for goods or services that they need. I myself think that advertising cannot increase the cost per unit of quality to consumers because if it did, consumers would not continue to respond positively to advertising. Advertising lowers the costs of information about brand qualities, leads to increases in brand quality, and lowers the average price per unit of quality. On businesses b.1. On businesses’ activities.in society Firstly, to businesses which have products advertised, advertising is considered the bridge between them and consumers. It is the major factor to bring their products to the public. Appearantly, advertising is an excellent marketing tool for businesses. Let’s take an example: many years ago, many products are still very new to Vietnamese especially products imported from abroad, now it is advertising that brings them closer to Vietnamese customers. For example, Tiger-Carlsberg, Cocacola-Pepsi are all competitors in the market and their products have been very well-known in Vietnam due to their very successful advertising campaign. Whenever you feel thirsty or need drinks for a party you immediately think of Cocacola, Pepsi, Tiger or Carlsberg... Secondly, to businesses which do advertising service, it is really a lucrative job. They gain millions of dollars from enterprises’ advertising budget every year. In Vietnam there is a growing trend of advertising expenditure now. The top ten advertisers in 2001 spent some 27.18m in the first five months compared to 30.14m during the same period this year, an increase of 10.9 percent. Of those advertisers the largest growth was experienced in the foodstuffs grouping, which grew at alarming 168 percent, followed by alcohol advertising spending (84 percent) and milk products (63 percent). The largest decrease in spending in the top ten was in the toiletries sector which experienced negative growth of 33.8 percent, followed by motorcycle/bicycle advertising spending which dropped by 26.5 percent. The growth of the industry is largely being generated by new entrants and smaller advertisers spending more on commercialising their goods and services. This is a very healthy sign for the advertising industry in general since it represents an organic growth curve and also identifies a trend in overall advertising spending becoming more and more broad in terms of sector growth. Newspapers and magazines receive nearly 70 percent of their revenue from advertising; commercial TV and radio derive virtually all their income from advertisers. Small, financially insecure newspapers, magazines, or broadcast stations are the most susceptible to pressure from advertisers, particularly companies that account for a large amount of the medium's advertising revenue. A local newspaper may be reluctant to print an unfavorable story about a car dealer or supermarket chain on whose advertising it depends. While larger, more financially stable media should be less susceptible to an advertiser's influence, they may still be reluctant to carry stories detrimental to companies that purchase large amounts of advertising time or space. For example, since cigarette commercials were taken off radio and TV in 1970, tobacco companies have allocated most of their budgets to the print media. The tobacco industry outspends all other national advertisers in newspapers, and cigarettes constitute the second largest category of magazine advertising (behind transportation). This has led to charges that magazines and newspapers avoid articles on the hazards of smoking to protect this important source of ad Revenue. Individual TV stations as well as the major networks also can be influenced by advertisers. Programming decisions are made largely on the basis of what shows will attract the most viewers and thus be most desirable to advertisers. Critics say this often results in lower-quality television, as educational, cultural, and informative programming is usually sacrificed for shows that get high ratings and appeal to the mass markets. Advertisers have also been accused of pressuring the networks to change their programming. Many advertisers have begun withdrawing commercials from programs that contain too much sex and violence, often in response to threatened boycotts of their products by consumers if they advertise on these shows. The commercial media's dependence on advertising means advertisers can exert influence on its character, content, and coverage of certain issues. However, media executives offer several reasons why advertisers do not exert undue influence over the media. First, they point out it is in the best interest of the media not to be influenced too much by advertisers. To retain public confidence, they must report the news fairly and accurately without showing bias or attempting to avoid controversial issues. Media executives point to the vast array of topics they cover and the investigative reporting they often do as evidence of their objectivity. It is in their best interest to build a large audience for their publications or stations so they can charge more for advertising space and time. Media executives also note that an advertiser needs the media more than they need any individual advertiser, particularly when the medium has a large audience or does a good job of reaching a specific market segment. Many publications and stations have a very broad base of advertising support and can afford to lose an advertiser that attempts to exert too much influence. This is particularly true for the larger, more established, and financially secure media. For example, a consumer products company would find it difficult to reach its target audience without network TV and could not afford to boycott a network because of disagreement over editorial policy or program content. Even the local advertiser in a small community may be dependent on the local newspaper, as it may be the most cost-effective media option available. The media in the United States are basically supported by advertising, which means we can enjoy them for free or for a fraction of what they would cost without advertising. The alternative to an advertiser-supported media system is support by users through higher subscription costs for the print media and a fee or pay-per-view system with TV. Another alternative is government-supported media like those in many other countries, but this runs counter to most people's desire for freedom of the press. Although not perfect, the system of advertising-supported media provides us with the best option for receiving information and entertainment. b.2. On competition among businesses. Some people say that power in the hands of large firms with huge advertising budgets creates a barrier to entry, which makes it difficult for other firms to enter the market. This results in less competition and higher prices. They note that smaller firms already in the market find it difficult to compete against the large advertising budgets of the industry leaders and are often driven out of business. For example, in the Vietnam’s detergent industry, there have been a fierce competition between OMO and TIDE, two biggest enterprises in the industry through their advertising campaign. OMO and TIDE take turns to appear on TV advertisements and there is nearly no rooms for other kinds of detergent such as VISO or DASO on TV. Large advertisers clearly enjoy certain competitive advantages. First, there are certain economies of scale in advertising, particularly with respect to factors such as media costs. Firms such as Procter & Gamble and Philip Morris, which spend over $2 billion a year on advertising and promotion, are able to make large media buys at a reduced rate and allocate them to their various products. Large advertisers usually sell more of a product or service, which means they may have lower production costs and can allocate more monies to advertising, so they can afford the costly but more efficient media like network television. Their large advertising outlays also give them more opportunity to differentiate their products and develop brand loyalty. To the extent that these factors occur, smaller competitors are at a disadvantage, and new competitors are deterred from entering the market. While advertising may have an anticompetitive effect on a market, there is no clear evidence that advertising alone reduces competition, creates barriers to entry, and thus increases market concentration. A famous economist noted that high levels of advertising are not always found in industries where firms have a large market share. He found an inverse relationship between product class advertising intensity and market share stability of the leading brands. These findings run contrary to many economists' position that industries controlled by a few firms have high advertising expenditures, which result in stable brand shares for market leaders. Defenders of advertising say it is unrealistic to attribute a firm's market dominance and barriers to entry solely to advertising. There are a number of other factors, such as price, product quality, distribution effectiveness, production efficiencies, and competitive strategies. For many years, some traditional products of Vietnam such as Thai Nguyen tea was dominant brand even though it was not advertised at all. Industry leaders often tend to dominate markets because of their superior product quality and because they have the best management and competitive strategies, not simply because of the size of their advertising budgets. While market entry against large, established competitors is difficult, companies with a quality product at a reasonable price often find a way to break in. Moreover, they usually find that advertising actually facilitates their market entry by making it possible to communicate the benefits and features of their new product or brand to consumers. For example, South Korea's Kia Motors Corp. entered the US automobile market in 1994 and used ads to tell consumers about the features of its low-priced compact cars. c. On governments In the world, advertising has long been considered profitable service, which contributes millions of dollars to the state budget every year. Moreover, advertising helps introduce the image of a country to the world through high quality products in effective advertising campaigns. The development of the industry also fosters the other industries in society, which contributes to the development of the economy as a whole. In Vietnam, spending for advertising is rather lower than that in the other countries, partly due to the limitation of means of communication and citizens’ perception. The most popular type of advertising is on TV. Following is the advertising price chart of some typical types of advertising. Type of ad Price (1000 USD) Number of audience (1000 people) Price per 1000 people (1000 USD) TV (30 seconds) 65 12 5.42 Full colour page of magazines 135 3.1 43.55 Daily,weekly magazines 31 0.5 60.31 World wide web 15 0.2 75 One of the most successful advertising firms in Vietnam is VINEXAD, which contributes much to the state budget every year. It is a state company which belongs to Ministry of Trade. It was founded in 1975, specialises in carrying out ad campaigns and trade fairs in Vietnam or abroad. Now, at the age of over 20, VINEXAD is on advancing impetus with many agents in Vietnam or abroad, 200 professional employees and a continuously improved infrastructure. Following is some achievements VINEXAD gained in 2001: Criteria Gained in 2001 (VND) Sales 1.718.589.280 Revenues 265.627.280 Panels design 9.200.000 Print advertising 152.727.740 Trade fair organizing 42.519.260 Other services 61.150.000 Pay taxes 29.495.061 Profit 34.785.138 Profit per sales 2% Profit per revenues 13.1% Criteria Planned (2001) (m VND) Gained (2001) (m VND) % accomplishment Target for 2002 (mVND) Pay to state budget 1858 2100 113 2250 Revenues tax 1250 1482 118 1800 Income tax 240 250 104 280 Return on investment 68 68 100 70 Other payments 300 300 100 50 Social insurance 50 50 100 50 Other criteria Total sales revenues 70.000 72.000 102 8.000 Trade fairs 9.000 10.200 113 13.000 Panels advertising 14.000 20.700 147 23.000 Publication 4.000 4.100 102 4.500 Other services 43.000 37.000 86 40.000 In general, there are two principal schools of thought, each of which makes different assumptions regarding the influence of advertising on the economy. Firstly, the belief that advertising equals market power reflects traditional economic thinking and views advertising as a way to change consumers' tastes, lower their sensitivity to price, and build brand loyalty among buyers of advertised brands. This results in higher profits and market power for large advertisers, reduces competition in the market, and leads to higher prices and fewer choices for consumers. Proponents of this viewpoint generally have negative attitudes regarding the economic impact of advertising. Secondly, the belief that advertising equals information takes a more positive view of advertising's economic effects. This model sees advertising as providing consumers with useful information, increasing their price sensitivity (which moves them toward lower-priced products), and increasing competition in the market. Advertising is viewed as a way to communicate with consumers and tell them about a product and its major features and attributes. More informed and knowledgeable consumers pressure companies to provide high-quality products at lower prices. Efficient firms remain in the market, whereas inefficient firms leave as new entrants appear. Proponents of this model believe the economic effects of advertising are favorable and think it contributes to more efficient and competitive markets. It is unlikely the debate over the economic effects and value of advertising will be resolved soon. Many economists will continue to take a negative view of advertising and its effects on the functioning of the economy, while advertisers will continue to view it as an efficient way for companies to communicate with their customers and an essential component of our economic system. Recently the debate over the economic effects of advertising have been argued in the context of a new issue, whether companies should be allowed to deduct advertising as a business expense and whether there should be a service or sales tax placed on advertising. 2. Social effects a. Good effects Ads have good social effects are those which aim at right objects with right contents and effectively affects to the whole society. For example, panels advertise for “green environment” with symbols of green trees, fresh water and factory’s chimney... have positive effects on citizens. From the old to the young, everyone is more conscious of protecting environment. Health ads such as anti-drug, anti-AIDS or national campaign of babies’ care are all positive ads. Last year, the Cocacola Chuong Duong Ltd company made many red plastic garbage basket with very clear white line “Cocacola” on, presented to many districts in Ho Chi Minh city and Dam Sen park. These baskets were placed everywhere in hospitals, schools and public areas... this helps conserve the environment, also advertise for Cocacola because Cocacola’s logo appears everywhere, directly affects to consumer’s perceptions. Cocacola not only contributes to environmental conservation but also carries out its very effective advertising campaign with a small budget. b. Bad ones b1. Untruthful or deceptive advertising One of the major complaints against advertising is that many ads are misleading or untruthful and deceive consumers. We noted that advertisers should have a reasonable basis for making a claim about product performance and may be required to provide evidence to support their claims. However, deception can occur more subtly as a result of how consumers perceive the ad and its impact on their beliefs. The difficulty of determining just what constitutes deception, along with the fact that advertisers have the right to use puffery and make subjective claims about their products, tends to complicate the issue. But a concern of many critics is the extent to which advertisers are deliberately untruthful or misleading. Sometimes advertisers have made overtly false or misleading claims or failed to award prizes promoted in a contest or sweepstakes. However, these cases usually involve smaller companies and represent a tiny portion of the hundreds of billions of dollars spent on advertising and promotion each year. Most advertisers do not design their messages with the intention of misleading or deceiving consumers or run sweepstakes with no intention of awarding prizes. Not only are such practices unethical, but the culprits would damage their reputation and risk prosecution by regulatory groups or government agencies. National advertisers in particular invest large sums of money to develop loyalty to, and enhanc

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