Advertising increases value for consumers

By allowing companies to differentiate themselves and highlight their unique selling points, advertising stimulates competition in the marketplace.

C&A Belgium Father's day buy one get one free. Courtesy of CMDglobal.com

Competition, in turn, means companies need to keep improving the value of their products for their consumers: pushing down prices and pushing up quality.

Just think how competition among TV manufacturers has brought about a steep fall in the price of flat-screen televisions while simultaneously increasing both their image quality and their size.

The link between advertising, competition and consumer value is immediate: when bans on advertising were lifted in some US states, the prices of spectacles fell by 30-40% thanks to increased public awareness and competition.1


1Carlton, Dennis & Jeffrey Perloff. Modern Industrial Organization, 1989