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PURPOSES OF ADVERTISING

To in form
1. Advertising serves to inform the public of the availability of a new product or service which
is being sold in the market, e.g. advertising a new brand of toilet soap or announcing the
opening of a new hairdressing salon.
2. This is aimed at creating a demand for the new product. The new product has to be made
known to the public before the goods are actually available for sale. The advertisement also
serves to induce the wholesalers and the retailers to stock up the new goods.
3. This type of advertising is called informative advertising. It is not only restricted to new
products but is also used to inform people of new uses of a product, of how a product works,
of new price changes, of names and addresses of retailers selling a certain product, or even
of a new bus timetable.
4. What is important is that it makes no attempt to persuade but merely informs the public of
the availability of the product, its uses and advantages, price, quality, terms of sale, etc.
5. under informative advertising the following goods and services are advertised:
- Advertising in Trade and Technical Journals: These advertisements contain technical
information about goods.
- Advertising of Particular Events: Trade fairs, exhibitions, concerts and sporting activities are
examples of such advertising. In this type people are informed about such events and are
persuaded to attend such events.
- Advertising of Employment Opportunities: In this type people come to know about the
various employment opportunities available.

To persuade
1. Advertising also serves to persuade the public to buy some goods or services, e.g. a
company seeks to induce the public to buy its particular brand of detergent in preference to
others or a travel agency advertises the better quality of service it can provide to its
customers.
2. This type of advertising is called persuasive advertising. It not only informs but also
persuades the public into purchasing the advertised product by using subtle techniques. It
aims at extending the demand for the good or service advertised. In other words, an
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advertiser aims to increase the sale of its product. By selling more, a firm increases its
revenue and might pay a lower unit cost as goods are produced on a larger scale. The net
profit of the firm would then increase if these benefits are greater than the costs of
advertising.

To remind
1. Advertising also serves to remind consumers of existing products; that the product may be
needed in the near future and where the product can be bought.
2. It is necessary for the advertiser to draw the attention of consumers to his product
constantly and to keep away from other competitive brands which may be heavily advertised.
3. It aims to keep the name of the product before the public. For example, a newspaper
advertisement may carry a picture of a bottle drink or a bus may carry the name of a firm.
They say nothing but serve a useful purpose in reminding the public of the name of the
product or service. Many products are branded to distinguish them from similar products.
Brand names are registered so other competitors cannot copy them. Some brand names are
so well known that advertisements often show only the brand name and the product itself is
not mentioned.
4. This type of advertising is called reminder advertising. A related form of advertising is
reinforcement advertising which seeks to assure current purchasers that they made the right
choice.
5. Reminder advertising aims at sustaining the demand for the good or service advertised.

BENEFITS OF ADVERTISING

1. Advertising increases profits and therefore the producer can lower the price of his
goods.
2. Advertising helps in providing information to the customer of a particular product.
3. Advertising helps in launching new products.
4. Advertising helps to introduce new products, thus improving the standard of living.
5. It is believed that advertised goods are of better quality than other goods.
6. Advertising maintains the price of newspapers at a reasonable level.
7. It helps to increase sales.
8. It provides employment opportunities.
9. It helps to create goodwill for the firm.
10. It gives wide choice to customer.
11. It helps the salesman in their efforts of promoting sale.
12. New product can find market only through advertising
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13. Advertising provides employment opportunities


SOCIAL ASPECT OF ADVERTISING

Positive:
1. It generates employment.
2. It yields revenue for the public media which is indirectly an income for the government.
3. It educates the society.

Negative:
1. Ads can mislead the customers to try out the lice goods.
2. Ads can turn the society towards flair for sex, and violence.
3. Ads can lead to waste of resources.

DANGERS OF ADVERTISING:

To consumer:
1. Consumers are misled by advertisements.
2. Customers may have difficulty in choosing a brand.
3. Customers may make unnecessary purchase.
4. Customers may be irrational in buying.

To producer:
1. Production costs increase.
2. The expenditure may not be justifiable.
3. The manufacturer may incur financial loss, if he engages in competitive advertising.

Reasons why consumers need protection against some forms of advertising:

• Advertisements may be misleading.


• Advertisements may contain false information.
• Goods may be incorrectly labeled.
• Some advertisements may be dirty and unsuitable.
• Some adult advertisements may be shown at inappropriate timings.

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TYPES OF ADVERTISEMENTS

Persuasive Advertising
In this type the advertiser tries to persuade the public to buy his product, by explaining the
various good qualities that the product possesses over other products.

Competitive Advertising
This is carried out by different producers of different brands of the same product. Each
producer tries to compete with other producers in trying to capture the market. The advertiser
uses techniques that are persuasive and aggressive to achieve his target. Example, the
advertiser claims that his product is best in terms of quality/performance/durability.
Example: Biggs Butter is best.

Informative Advertising
In this type information is passed on to the consumers about availability of products, changes
in fashion and how to use the products. Under informative advertising the following goods
and services are advertised:
- Advertising in Trade and Technical Journals: These advertisements contain
technical information about goods.
- Advertising of Particular Events: Trade fairs, exhibitions, concerts and sporting
activities are examples of such advertising. In this type people are informed
about such events and are persuaded to attend such events.
- Advertising of Employment Opportunities: In this type people come to know
about the various employment opportunities available.

Generic Advertising (Collective)


When all the producers in one industry combine to advertise their product, it is called generic
advertising. These advertisements are usually sponsored by trade associations. The
producers group together to share the costs and to promote the product hoping to increase
the overall sales of the product.
Example: Drink more tea.

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ADVERTISING MEDIA:

Type of medium Advantage Disadvantage


(a) Newspaper 1. There is a wide target audience. It 1. It has a short life span
is read by many people. 2. The advertisements have to compete
2. Circulation cost per exposure is with other advertisements for the
low. It is one of the cheapest media of readers attentions.
reaching a large number of 3. The written advertisement message
prospective buyers. can reach only the literates.
3. It is suitable for products or 4. Advertisements are many and varied
services in general demand, e.g. such that it takes effort to find
films, electrical appliances. advertisement one is looking for.
4. It enables the advertiser to present 5. The paper quality is low compared
the products in some details, e.g. with those used for magazine.
technical details about a car. 6. As an advertising medium the
5. The advertiser can have the choice newspaper doesn’t have the same
of national or regional coverage. impact as the television.
6. Unlike advertisement in the
magazine which must be submitted
weeks ahead, advertisements in the
newspaper can be inserted or
cancelled at shorter notice.
7. The advertiser can obtain response
from the readers by providing
telephone numbers or by means of
coupons or contest.
8. Newspapers have the capacity to
accept a large number of
advertisements compared with the
limited time on television.
(b) Magazine 1. The paper quality is better 1. It is inflexible, as advertisements
compared with that used for the must be placed weeks before the date
newspaper. of the publication.
2. An advertisement in the magazine 2. There is limited readership as the
enjoys a longer life span than that in readers are specific.
the newspaper. 3. It is infrequent as the magazine is
3. The targeted audience of the published only periodically.

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advertisement can be reached mare 4. As an advertising medium, it doesn’t


easily. E.g. a firm selling computer have same impact as television.
software could advertise in a
computer magazine or a firm selling
cash register can advertise in a trade
journal.
4. As the advertising message is
directed at the intended audience
there will be less wasteful circulation.
5. It is suitable for advertising
messages which are long and have to
be read in a leisurely manner.
(c) Radio 1. The advertising message can be 1. There is lack of visual elements and
reached large number of people even as such, they are less effective when
in remote areas. visual impact is needed.
2. It is much cheaper to produce 2. Its life span is very short compared
advertisements of this medium than a with the newspaper and the magazine.
television commercial. 3. Audience attention is low when
3. The use of sound such as music broadcasting is being used to provide a
and oral makes radio a livelier background for other activities.
advertising medium than static
medium such as newspaper and
magazine.
4. The advertising message can reach
the target market effectively through
special interest programme such as
children’s or women’s programmes.
5. With radio sets that are portable or
fitted in motor vehicles, radio
message can be received widely.
(d) Television 1. The advertiser can demonstrate the 1. It is not suitable when detail
product with realistic sound s, colors information is required. The newspaper
and movements because of effects. and the magazine are better advertising
The television is one of those media media if more information is required by
that have high persuasive impact i.e. the prospective buyers.
the ability to stimulate consumers. 2. It is not suitable if the target audience
2. The television commercials can is small due to high cost.
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reach a large number of viewers as 3. There is high absolute cost – the cost
they have wide exposure. in producing an airing television
3. Advertisements can be repeated to commercial is very high and requires
the point where a large number of big budget.
viewers have seen the advertisements 4. The life span of a given advertising
to create an effective and lasting message is short unless it is recorded.
impact. 5. There is less audience selectively as
4. The advertisement can be directed television commercials tend to reach
at national or regional audience. mass audience, whereas the magazine
5. The time chosen for airing an can be more selective.
advertisement can suite the target
audience, e.g. Toys can be advertised
during children’s programme.
6. There is high audience attention
and personal impact.
7. The use of the product can be
demonstrated and explained.
8. The viewers can be invited to
respond immediately by dialing a
telephone number.

(e) Cinema 1. High audience attention is received 1. There is limited coverage as it is


as there are fewer distractions limited to film goers.
compared with house viewing of 2. It is less popular with the event of
television. videotapes, which are used to
2. Its wide screen gives extra scope demonstrate and advertise the use of
for more dramatic and realistic impact household products at shopping
compared to television. centers.
3. Advertisements on films make full 3. It is a non-interactive medium, as the
use of the audiovisual effects with audience cannot respond immediately.
movements and colors.
(f) Direct mail 1. Audience selectively is practiced as 1. It is limited only to the literate.
the advertising message will be 2. It is limited to the mailing list the firm
mailed only to selected target groups. can secure.
2. Flexibility can be exercised. 3. Cost of direct mail per prospective
3. There is no competition with the client is relatively high. It suffers from
same medium. the stigma of being classified as ‘junk
4. Wasteful circulation is kept to a mail’.
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minimum as it reaches only the


market it is intended for.
(g) Outdoor 1. There is an impact of large size and 1. There is no audience selectivity.
hoarding and colors. 2. There are creative limitations as
sign e.g. 2. Flexibility can be exercised. messages are limited to simple, short
signboard, neon 3. There is high repeat exposure. and clear statements.
lights, poster 4. It is a low cost medium. 3. No audio- kinetic impact can be
5. Low competition is expected. made.
6. The advertising message can reach 4. It is open to vandalism, especially the
a large number of people. posters.
(h) Pamphlet 1. There is intensity of market 1. It may fall into the hands of those not
and sample coverage within a certain area. interested in the product.
2. There is an advantage of personal 2. There is limited circulation as they
impact. have to be handed to person to person.
3. Advise and explanation can be
given when necessary.
(i) Traveling 1. It is effective because it brings 1. The coverage is limited to certain
salesman products to the homes of consumers. areas.
2. Salesmen can demonstrate the 2. Salesman may not be welcome in by
uses of the product to the consumers. home owners.
3. High cost of employing sales
personal can be incurred.
(j) Window 1. It is attractive to shoppers and 1. It can reach only shoppers and
display and exhibition visitors. exhibition visitors.
exhibition 2. Uses and advantages of product 2. The frequency of holding an
can be explained and demonstrated. exhibition is not high.
3. Products can be shown to targeted
audience
4. can give further information
5. Products can actually be seen and
examined

(k) The internet 1. It is an interactive medium where 1. The coverage is limited only to those
the user can key in input and obtain who surf the internet and visit the
response immediately. website.
2. The medium uses multimedia to 2. The advertising message placed has
create realism in advertisements. to compete with many other messages
3. The advertiser can place the for attentions.
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advertisements in a popular website


or he can create his own home page.
4. The advertising message has
longer life span than a television
commercial or a radio message as the
user can always go back to the
website previously visited.
5. The advertising message can reach
selected target groups.
6. The cost of advertising in this
medium is relatively low compared
with the television.
Catalogues 1. can give full details 1. maybe expensive to
2. can be shown in colors produce/circulate
3. can show all the products in one 2. may reach only a selected group
catalogue 3. limited to the literate
4. can be referred to repeatedly

FACTORS AFFECTING THE CHOICE OF MEDIA


The choice of advertising media depends on the following factors:

Nature of the product or service


1. The medium chosen must fit the product or the service to be advertised. Goods, especially
new ones that require explanations and demonstrations are best advertised at trade fairs and
exhibitions. Alternatively, salesmen can visit homes to demonstrate the use of household
appliances, etc. Women's clothes are best shown in fashion shows or women's magazines.
Services such as self-service petrol kiosks and Automated Teller machine (ATM) services are
best demonstrated over the television network as television commercials combine sight,
sound and movement which can create a more dramatic impact than the other media.
Besides, television commercials can reach a large number of viewers.

Target market
1. Target market refers to the group of people that the advertisement is aimed at. Groups of
people may differ in terms of income, age or sex. The medium chosen must fit the target
group, i.e. the group of people who will likely buy the product or service. For example, if you
are trying to reach the female market, then women's magazines may be appropriate. If you

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are trying to reach to children, then you may select television as the medium especially
during children's programmes.

Extent of market: Local, national, international


1. If wide coverage is needed for a certain advertisement, the national newspaper will be a
more appropriate medium than the local newspaper. However, the local newspaper will be
useful for tapping the local market, e.g. selling used car or renting a room or a house.
Television is probably the most popular medium for disseminating any advertising message
to the mass market which includes both the literate and the illiterate. For example,
advertisers can reach the world market through live telecast of football or boxing which has
international appeal.

Cost
1. The cost of using the medium should be considered in relation to the budget or the
amount of funds available and the circulation of the medium. For example, a small firm
intends to advertise the sale of used cars but it has allocated a small budget for this purpose.
As such, we can rule out television as a choice as the cost of advertising on television is very
high. Instead, the firm may put a small advertisement in the newspaper.
2. The advertiser should also weigh the relative benefits of the media with their relative costs
when making a choice. Although the cost of advertising on television may be high, the size of
the audience it will reach is great, resulting in lower cost per exposure.
3. The standard criterion for comparing media is cost per thousand, i.e. the cost of reaching
1000 members of the target audience. Cost per thousand enables the advertiser to compare
the cost of different media, such as television versus radio or magazine versus newspaper.

Flexibility
1. Flexibility refers to the ease with which the advertiser can change the advertisement so as
to adapt to different conditions and circumstances. As a medium, the magazine generally
has less flexibility than the newspaper. As the former requires the finalized layout weeks
before publication, the advertisement in the magazine cannot be changed easily, whereas
the advertisement in a newspaper can be changed days before its publication. Radio
provides greater flexibility as the advertiser can change the advertisement more easily, even
on the day the advertisement is aired.

Noise
1. The 'noise level' refers to the level of distraction for the targeted audience. The noise level
for an advertisement in the newspaper is great, meaning that other advertisements in the
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newspaper as well as news reports distract the reader's attention from the advertising
message. On the other hand, television commercials encounter a lower level of distraction
because the commercials are aired one at a time and can capture the viewers' attention.
Compared with the newspaper and the television, the cinema encounters the lowest level of
distraction as a medium - an advertising message can capture the full attention of the
audience in a cinema.

Lifespan
The lifespan of an advertisement refers to the length of time an advertisement will be on
display. Different media have different life spans. For example, a radio or a television
commercial has short lifespan - it will last only for a few seconds. Listeners cannot replay the
commercial unless they record the programme. On the other hand, an advertisement in the
newspaper or the magazine has a longer lifespan as the advertisement can be read and re-
read several times. It can also be filed and passed on to other people.

ANALYSIS OF GIVEN SITUATIONS IN THE CHOICE OF ADVERTISING MEDIA

1. Natro is an established company. It intends to market a new brand of instant noodle,


Ramee, to people of all walks of life and at national level. The company has found out that a
significant proportion of the target group consists of the illiterate and that watching television
is more popular than listening to radio among the target audience. The company has
allocated a big budget for this purpose. State, with reasons, which advertising medium you
would recommend.

Natro could use the television as the advertising medium.

Reasons for choice


(a) Since the target audience consists of people of all walks of life, the medium chosen
should be able to reach mass target group. With this point in mind, we can rule out the
magazine, the direct mail and the other media that can reach only a small number of people.
(b) However, it has been pointed out that a significant proportion of the target group consists
of the illiterate. As such, an advertising message in the newspaper may not reach this group
of audience.
(c) It has been found that watching television is a more popular pastime than listening to
radio. We can assume that television commercials will be able to reach a bigger target
audience than radio commercials.
(d) Natro is an established company and it has allocated a big budget for the purpose of
marketing this new brand of instant noodle. Assuming that the company can bear the cost of

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advertising Ramee on television, the following are the advantages of advertising on television
over the other media:
(i) Instant noodle is a product of general demand as it is likely to be consumed by most
people. Television represents the best choice as it can reach a large number of audience
including children, the illiterate and those who do not read the newspaper.
(ii) Television commercials combine sight, sound and movements which can create a more
dramatic impact than the other media.
(iii) Advertisements of Ramee on television can be repeated to the point where a sufficient
number of viewers have seen the advertisements to create an effective and lasting impact.
(iv) The advertisements can be aired at the national level.
(v) There is high audience attention.
(vi)The time chosen for airing the advertisement for Ramee can suit the target audience, e.g.
during snack or meal times.
2. An established company intends to market an expensive camera. The prospective buyers
are likely to be photograph enthusiasts. The general public is probably not interested in this
product due to its high price and the use of this camera requires high level of competency.
The camera has several new features which need to be explained to the prospective buyers.
State, with reasons, which advertising medium you would recommend. The company could
use an up-market magazine, a popular photography magazine or a journal/magazine
subscribed by photography enthusiasts as the advertising medium.

Reasons for choice


(a) Since the target group is exclusively limited to those who are rich and are very interested
in photography, radio, television and other media that can reach mass audience can be ruled
out, or it will be a waste.
(b) As the new features need to be explained to the prospective buyers, radio and television
can be ruled out. On the other hand, print media such as the newspaper or the magazine
may be more suitable as the media allow the features to be explained in great detail.
Advertisement in a magazine can be directed more specifically to the target audience, i.e.
photography enthusiasts who can afford to buy the expensive camera whereas
advertisement in a newspaper is directed to mass audience. As the advertising message is
directed at the intended audience, there will be less waste.
(c) The up-market magazine will be able to address to those people who have sophisticated
and expensive tastes.
(d) The high quality of production in the magazine will enable the advertisement to bring out
the outstanding features of the camera.

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(e) An advertisement in the magazine enjoys a longer life span than the newspaper.
(f) The advertising message in the magazine can be read in a leisurely manner. It can be
read and re-read. It can also be filed for future reference.

3. Miss Wong Meilin intends to advertise for the sale of her used car a three-year old Honda
Civic. She thinks the prospective buyers will probably be those in the same town that she is
staying now. She does not intend to spend a lot of money on the advertisement Can you
advise her on the medium she should choose to place the advertisement? State the reasons
for your choice of the medium.
Miss Wong Meilin could use the 'Classified Ad' column in a local newspaper as the
advertising medium.

Reasons for choice


(a) The cost of advertising in a local 'Classified Ad' column is very low compared with other
media.
(b) The target market is focused as those who are interested to buy used cars will look up the
'Classified Ad' column.
(c) The advertisement in a newspaper can reach a large number of target audiences.
(d) Advertising in a local newspaper is generally cheaper than in a national newspaper.
(e) The target audience is likely to be those living in the same town as Miss Wong.

4. Mr. Ramasamy intends to sell Indian shawls at a special price by post. A shawl is a large
piece of woolen cloth which is worn by women over their shoulders or head, or which is
wrapped around a baby to keep it warm. Mr. Ramasamy thinks that the prospective buyers
are largely Indian women and he has obtained a list of names and addresses of those Indian
women who will likely buy this product. If you were Mr. Ramasamy, which medium will you
choose to market your special offer Indian shawls? State your reasons for the choice.
Mr. Ramasamy could use the direct mail as the advertising medium.

Reasons for choice


(a) As the product is demanded only by a specific group of people, the media chosen must
address only an exclusive group. So, media such as radio and television which address
mass audience will be a waste. On the other hand, as direct mail reaches selectively, i.e. the
prospective buyers and not the general public, this medium will have minimum waste.
(b) As Mr Ramasamy has already obtained the list of names and addresses of those who will
likely buy the product, this list will facilitate in the use of the direct mail, i.e. information about
the product can be sent to those on the list and order can be obtained by post, phone or

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facsimile transmission.
(c) There is no competition for the same medium.
(d) As the product is a special offer item, Mr. Ramasamy is not prepared to spend a lot of
money on advertising through other more expensive media.

METHODS OF APPEAL
Devices and methods of appeal e.g. music, colours, famous people and emotions.
“SEARCHE”

Social acceptance:
A consumer could make more friends if a particular brand of deodorant is used.
Economy:
Bike manufacturers advertise their products highlighting the less fuel
consumption and more mileage.
Ambition and success:
The customer can be persuaded that if he buys a particular brand of
cloths he could get a better job.
Romance:
If a woman buys a particular cream she could become more beautiful
and attractive.
Comedy:
If an advertisement is amusing the product shown will be remembered
by the consumers and therefore they might buy it.
Hero worship:
A well-known personality can be used to advertise the product. It is
hoped that consumer will buy the product because of the appeal of the
p e r s o n a l i t y.
Easy life:
Buying a new brand of washing machine will give the consumer more
leisure.

SALES PROMORTION

Sales Promotion, element of the marketing process that can close the sale of good or
services to a potential customer by providing the incentive to buy. Sales promotion,
advertising, and salesmanship are the major techniques used in merchandising products to
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the public. Salesmanship often takes the form of a face-to-face encounter between the buyer
and seller; the presentation is set up to convince customers that the product on sales is
essential to their satisfaction. The lack of personal feedback between buyer and seller is
sometimes considered a drawback of the advertising approach. Selling by telephone,
although it is significantly less effective than selling, is still considered an important method of
merchandising. Since the 1980s, a growing promotional technique has been use in-home
shopping programs on cable television channels and computer networks.

DISTINCTION BETWEEN ADVERTISING AND SALES PROMOTION

Advertising aims at persuading customers whereas sales promotion aims at promoting sales.
Advertising is done through indoor and outdoor advertising media whereas sales promotion
is done through gifts, price reductions, special offers, point of sale, offers, sponsorship and
trade fairs and exhibitions. Sales promotion might be carried out for a specific period
whereas advertising needs to be carried out through out the life of the product.

METHODS OF SALES PROMOTION


Free samples

This is the best way of introducing a product. It is very expensive as samples are given to
every household.

Price reduction

Customers often expect household articles to be offered at reduced prices. Some producers
distribute coupons to customers. The customer can use these coupons for part payments.

Competition

Sometimes competitions are held. Customers have to purchase several packets of the
producer’s goods to enter the competition.

Free gifts

Gifts such as glasses, caps or cups may be given to customers if they buy the producer’s
goods.

Point of sales

In a trade fair or exhibitions, the producer of a product has a stall where the salesmen do a
free product demonstration and at the spot, sale is done with offers and gifts.

Sponsorship

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The manufacturer or a wholesaler or a large scale retailer come forward to sponsor a musical
programme, or a film, or a drama, or a sport event on a public media like TV, Radio, National
daily etc., by incurring all the expenditure to conduct the programmes. The manufacturer or a
wholesaler or a large scale retailer advertise their product/service while a film, or a drama, or
a sport event on a public media like TV, Radio, are either telecast or broadcast so that they
can draw public attention.
Special offers
During festivals many traders announce special offers. These offers carry a special discount
or a free service during a specific period of time. Customers tend to buy more when there are
offers. Example, during New Year eve, manufacturers announce 20 – 30% special offers on
certain range of consumer goods like home appliances, consumer durables and fabric items.

TRENDS IN ADVERTISING

DIGITAL BILLBOARDS

This is an advertising media. In this media, very large screens are used to display the
advertisement. Digital billboards are placed in busy streets so that the advertised messages
can be reached to large number of people. The information about the product is given orally
to passersby.

Internet

This is the recent development in communication. Through World Wide Web, information can
be browsed. Nowadays, advertisers wish do advertise through Internet as ads can be seen
by millions through out the world.
The internet 1. It is an interactive medium 1. The coverage is limited only to
where the user can key in input those who surf the internet and
and obtain response visit the website.
immediately. 2. The advertising message
2. The medium uses multimedia placed has to compete with many
to create realism in other messages for attentions.
advertisements.
3. The advertiser can place the
advertisements in a popular
website or he can create his own
home page.

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4. The advertising message has


longer life span than a television
commercial or a radio message
as the user can always go back
to the website previously visited.
5. The advertising message can
reach selected target groups.
6. The cost of advertising in this
medium is relatively low
compared with the television.

E-COMMERCE
E-Commerce, abbreviation for electronic commerce, usually defined as the conduct of
business online, via the internet. Until recently, e-commerce was limited mainly to large
companies and their suppliers, who connected their computer together to speed up ordering
and payment system. Today, millions of people are involved in e-commerce on the internet
when, for example, they visit World Wide Web sites to buy books or CDs, order flowers or
pizzas, or check their bank accounts.

In the narrow definition of e-commerce, the term covers the buying and selling of goods and
services using computer communications.

Successful e-commerce ultimately leads to some form of payment, and ideally this will
involve “electronic fund transfer” (EFT): in other word, the payment will be made via an
electronic message, not in physical form such as cash or a cheque.

Advantages of E-commerce to the customers


1. Online catalogues can be viewed
2. Their is much bigger choice for products
3. Products review can be obtained before we buy the goods
4. Orders can be placed 24 hours a day
5. Goods or services are usually cheaper on internet as the middlemen are cut
6. Once the customer has placed an initial order, the customer details are stored and
makes shopping online very fast
7. You can buy goods and services from anywhere in the world

17
Commerce – Students’ Guide
Department of Business and Computing

Advantages to the traders


1. Global marketing is easy
2. Can offer goods at highly competitive price
3. Payments can be collected easily and fast through online
4. Middlemen are not required so the selling cost can be cut down
5. Traders can provide or demonstrate any product information through online

Disadvantages to the customers


1. The product seen on online may not be matching with the product specification
2. No customer and trader direct dealing

Disadvantages to traders
1. Increase through sales is too difficult as the accessibility to internet for the customer
is too narrow
2. Absence of customer personal service can discourage online shopping
3. The sales cost through online shopping can be more when compared to direct
4. selling

18 Prepared By: Emmanuel George

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