International Trade Blog

I have always been somewhat skeptical towards advertising. Does it really work and if yes how effective it is? I have never been fully convinced that consumers buy goods due to advertisements and that investing money into advertising is foolish and ineffective. A waste of money so to say!

Let’s face it most consumers only buy what they really need and only a small percentage buy just for fun. This of course depends of the wealth of an individual. If the product is good then the quality will speak for itself and the need for advertising is only required in the initial phase when a new product enters a market. When the product has established itself in the market and aggressive advertising campaign can do more harm than good. People get bored or even offended with too aggressive advertising campaigns and may not buy the product in spite. At least that is how I react to overaggressive advertisements. If a product has established a solid consumer base in a market more advertising will not drastically expand the consumer base. Granted it may grow, but the growth might be quite slow and will not cover the extra costs of advertising. Generally more important than advertising is reputation. If a product acquires a positive reputation it is probable that it will establish itself as the market leader because most consumers still mostly rely on mouth to mouth propaganda. The most excellent advertising campaign cannot rival with an excellent reputation. While it may experience temporary success in the ling term the consumers will return to the product with the best reputation.

Of course the role of advertising is important in international trade, but it is somewhat over hyped in my opinion. A good advertising campaign will not save a bad product no matter how much money you spend. None the less advertising can be used as a tool to establish the needed reputation of a product.