One of the hallmarks of modern capitalism, advertising helps fuel the economy by motivating buyers and supporting sellers. It is typically used in conjunction with other promotional tools, like personal selling, sales promotion and public relations, and is at the heart of marketing strategy for most consumer goods. Advertising influences people through education, persuasion and reassurance. It also influences the shopping experience, by making shopping simpler and helping to moderate the prices of advertised products.
Advertising is an effective means of communicating information about products and services to a large number of consumers at once. This information plays a key role in educating people about different brands' functions and features, like how they work, what they cost and where they can be purchased. Because the information in ads comes directly from the manufacturer, it is more likely than secondhand reports to be verifiable and reliable. This helps buyers make choices most likely to satisfy their needs and wants.
Using creative techniques like direct brand comparisons, advertising can persuade people that one product will be better than another in improving their lives or delivering benefits they seek. It can often motivate them to take immediate action, like trying a new brand, redeeming a coupon or requesting more information. By calling attention to different uses for a product, advertising also encourages people to buy in bigger volume and/or more frequently than they otherwise would.
Before a buyer completes her purchase, advertising can help her confirm that she is getting what she wants. Even after the transaction has been made, advertising plays a role by reminding a consumer why she spent her money and reassuring her that she made the right choice. This reassurance effect of advertising is especially important when the product was very expensive or the choice was risky. In other words, it helps to eliminate the psychological discomfort commonly known as "buyer's remorse."
By reducing a consumer's need to search for products or the stores that stock them, advertising makes shopping simpler and more time-efficient. It helps eliminate unnecessary risk-taking and facilitates easier decision-making at the point of purchase. Particularly in crowded product categories like snack foods, video games, toothpaste or shampoo, consumers rely heavily on advertising to weed out unsuitable alternatives and quickly steer them to the most promising goods.
In many product categories, like airlines and cars, advertising stimulates direct price competition. More generally, it reduces marketing and distribution expenses over time by keeping people informed, motivating them to buy, and encouraging high-volume and repeat purchases. Also, because a single advertisement can simultaneously influence millions of consumers, it is more cost-efficient than personal selling and other customized marketing tools. Over time, these cost reductions help firms hold down the prices they charge consumers.