The role of advertising in the Indian Economy

6 June 2016

More of the people from the richest to the poor will participate in the world’s capital through global Trading. The emerging global economy will bring us into worldwide competition with significant advantages for both marketers and consumers. With satellite communications and global companies consumers are demanding an ever expanding Variety of goods.

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Indian economy had been forced and shaped by policies of import replacement and an dislike to free trader. Real competition was eliminated through import ban and prohibitive tariffs and foreign competition. Industry was so completely regarded that those with proper license would count on a specific share of the market. Now however times have changed and India has embarked on a transformation. Indian economy grew dramatically and is among the Big Emerging Markets. It has a large middle class about more than 300 million (the size of USA).

Among them are college graduates, 40% with degree in science and engineering. India has a diverse industrial base and is developing as a center for computer software. These advantages give India’s reform programmes enormous potential .

India has a weak infrastructure but the Indian government plans to address these deficiencies. The private sector has been allowed entry into power generation, oil and gas exploration, Telecommunication and civil aviation. An estimate 100 to 300 million Indian posses sufficient disposable income to form an expanding consumer class.

As India is developing, incomes change, expectations for a better life adjust to higher standards and social capital investments are made, market behaviour changes and eventually groups of consumers with common tastes and needs arise. With the rise of incomes, new demand is generated at all income levels for everything from soap to automobiles.

The poorest slums in Kolkata are home to 1,00,000 TVS and video facilities. More household money goes for food in emerging markets than in developed markets then the next category of expenditure is for appliances and other durables.

The role of advertising

Establishing a brand image in emerging markets is an important strategy. Intense competition and increasing sophistication has led to a need for more sophistication in advertising strategies. Advertisers have to function at the highest creative level. Of course boundaries are placed on creativity by legal, language, culture, media, product and cost limitations. Sales promotion efforts are used to supplement advertising and personal selling; This is to stimulate consumer purchases and improve retailer effectiveness and co-operation.

Local ad agencies have expanded as the demand for advertising services by MNCs have grown Liberalisation policies of the Indian government have resulted in changes in life styles, changes in needs and wants of consumers. The bargaining power of consumers, of suppliers, threat of new entrants with substitute products and ‘jockeying’ among players in the market can be witnessed today. Breaking up of market segments, products and brand launches, niche marketing and positioning are some of the strategies widely used by Indian advertisers.

The rural market has opened up new vistas for advertisers selling consumer products. Tetra packs, Sachets, synthetic bottles have had a revolutionary impact on packaging aspects , leisure and luxury products have thrown open new markets. (health, beauty parlours, credit cards etc.) Brands are vying with one another to obtain a favourable perception of consumers. Advertisers are trying to create brand personalities entity which consumers can emotionally associate themselves. Advertisers are depicting products with new psychological perspectives, wrist watches, designer wear, two wheelers, chocolates and now the Nano, are being given a symbolic orientation by advertisers.

The social benefits of the increased advertising are;
The increase in employment which in turn generated income and results in the per capita income. More product innovation take place. Society is better informed and has a wider and wiser choice. The awareness level increases. Social activists instil a civic sense and competition ensures better quality products. This leads to higher standard of living.

Advertising supports 60% of media costs
It can be concluded the effects of advertising upon society, come in mixed forms, depending on the purpose and execution of various campaigns. However, society as we know it is based very heavily upon advertising, and the negative social and economic impact are not serious enough to outweigh the many positive social and economic effects on our society. No one can predict what new forms advertising will take in the future. However the rapidly increasing cost of acquiring new customers makes one thing certain.

Advertisers will seek to hold onto the current customers by forming closer relationships with them and by tailoring products, services and advertising messages to meet their individual needs. So while advertising will continue to encourage people to consume, it will also help provide them with products and services which are more likely to satisfy their needs. The field of advertising contributes different benefits to different fields of activities and to different segments of the market, Consumers ads provide basic communication to inform them about products. Ads motivate consumers by various appeals. The welfare role of ads is also important.

Ads generate an increase of sales, help build brands, enhance the institutional image and help the growth of the economy. The social responsibility of advertising has increased. It sustains the media.

The role of advertising can broadly said to be
-distribution role
-employer role
-life style enhancing role
-consumer choice provider role
-consumer welfare role
-price reducer role through increase in demand and providing economies of scale

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