What is the role of advertising in economic development?

Answer 1

From an economics standpoint, advertising is a means of reducing research costs and building demand.

Research costs are a tricky issue in economics since most models assume that it takes no time/money to look for a good or service, and make a decision on which one to buy. They also assume that people have access to valid information about a product.

In the real world, people need to do research to find out about products and services, and to figure out which one will be the best fit for them. For that, we have magazines like Consumer Reports. There are also questions of safety and reliability that consumers cannot answer on their own, and they may need to rely on outside experts like the United Laboratories, and the Good Housekeeping Seal of Approval.

Advertising is a way of telling consumers about a product, what it costs and how it will meet their needs, thus reducing research costs.

Advertising also creates demand by letting people know that a product exists (thus creating a demand where none existed before,) and by increasing the perceived value of the product to certain market segments. For example, soda companies often target specific segments of the teenage audience by associating their product strongly with a certain group of athletes or celebrities. Kids who want to be like those celebrities will perceive that the soda is more valuable to them than other sodas, thus boosting demand.

Answer 2

convincing people to partr with their money to put money into the economy