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Advertising

 

World wide, 400 billion dollars are spent on advertising each year. With only one single objective: to influence the consumer.

 

Associative economy

 

The task of an economy is to produce goods and services which consumers need, and to do this as efficiently as possible. In an optimally functioning economy, a so-called ‘associative dialogue’ exists between all parties involved: producers, traders, retailers and consumers. Consumers can use this platform to make known what they do and don’t want.  On the other hand, producers can make clear what is and what is not possible in terms of production, and what the corresponding price tag will be. When producers and consumers come to an agreement, production can start.

 

In our economy, this kind of continuous and coordinated consultation process is usually absent. Producers simply make an educated guess as to which type and volume of products to make. Then they try to seduce and persuade consumers into buying them. For this, advertising is the most important tool. If there was better communication between producers and consumers, there would be less or no need for advertising. This would be a good thing, because advertising has several undesirable effects.

 

Effects of advertising

 

Firstly, advertising creates artificial needs in consumers. This is evident from the use of advertising techniques deliberately targeting unconscious parts of the human mind and senses. Advertising as the ‘art of seducing the consumer’ does not address the real needs of these consumers. It’s through dialogue and consultation that these real needs can be determined.

 

Secondly, advertising leads to higher prices. Companies pass all their marketing and advertising costs on to the consumer. For example: Ford is known to have spent 14% of the price of a new car on marketing and advertising. In other words, a Ford car priced at 20,000 euro incorporated unnecessary costs to the tune of 2,800 euro. Wouldn’t consumers have preferred to buy that same car for 17,200 euro?

 

In summary, the advertising industry adds little value to the real economy: it does not deliver products or services that meet consumers’ real needs. In an associative economy, there would be little or no need for advertising, and companies would focus on their core task: producing goods that meet real demand. By reducing or eliminating advertising budgets, prices would go down. 

 

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