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Business to be successful must put more money in advertising?

In general I agree with the statement that the more money put in advertising the higher possibility to be successful. They need to make their products recognizable and thus trustworthy to customers; they need to point out what makes their products unique; and they need to crease an alluring demand for their product.

In the real life, people will stand in the supermarket, and face more 10 kinds of similar products except their different brand name. This situation is usually happened in our daily life. In fact, most people will choose the brand which noticed from the advertisement before, because people will doubt the quality and reputation of the unknown brand, especially for food products. Nowadays, the safety of food products is really a serious problem, most customers cannot identify the real differences between products from the package, but only the brand name. Therefore the reputation and the recognizable of the brand or even the product is much important than anything else. In conclude, good advertisements and promotions could help the company to build the reputation.

Moreover, in terms of the economic theory about the perfect market. In theory, most markets about products in our daily life should be concluded as perfect market, in other words, these products are homogenous items without clearly differences. Thus the price of the indifference products should be the same, and companies cannot charge higher price for higher profits. But the advertisements and promotions will try to point out an idea that our products are the best than any others. If customers noticed the advertisement and agreed with the content, the company has more power the set a higher price than others, following by higher profit/revenue ratio.

Furthermore, advertisements can not only give products more reputation, but also create demands for them. It is common to see sales stand in the super market and separate gift to customers, especially new soft drink, for example Coco-Cola. This kind of promotion is aimed to build up the potential customer group. When more and more people try it and love it, the market for this product is higher. Thus companies could increase their sales revenue and profits.