Does #Advertising Really Make Consumers Less Price-Sensitive?
To answer this we need to consider the two opposing perspectives
✨ The Information View: Ads inform #consumers about different brand choices & substitutes, leading to more price competition and potentially lower prices.
✨The Market View: Ads differentiate brands, increasing #loyalty allowing for higher prices and better margins.
Advertising differentiates a #brand, leading to higher brand recognition and perceived value relative to competiton. Customers’ loyalty increases and their willingness to pay higher prices.
On the other hand, advertising also drives growth and sales by bringing in & attracting new price-sensitive consumers.
So, Ads have a dual effect in that it can do both!
The relationship between advertising and prices is not straightforward but generally brands that advertise have higher demand, more loyal customers that are willing to pay higher prices. But also bringing in a new customer segment with higher price sensitivity.
I have to admit this was a hard paper to digest.
#marketing #thoughts
Director - Mavyn, Chetak Foundation. An Author, Communications, CSR, Professional Trainer, Member - Board of Studies Gati Shakti Vishwavidyalaya. Visiting faculty - Business Communication, CSR, Public Policy
2moWow, well said Mohit....