In order to effectively perform its economic functions, advertising as a method of non-price competition must meet several principles, such as: focus, targeting, consistency and formal truthfulness.
Advertising helps to expand sales, inform the buyer and identify his needs. It certainly helps to finance non-commercial information flows and increases the overall efficiency of the enterprise. But advertising activity has also a number of negative sides. For example, advertising imposes on the consumer goods and services for which there is no need in principle, and also increases costs (and advertising costs are included in the cost of goods), leading to an increase in consumer prices, which has a negative impact on demand.
Of course, advertising can be inefficient and there are many reasons for this. For example, ill-conceived advertising can give rise to an increase in demand for competitors' products, rather than promoted products. It is also not uncommon that even new firms have been penetrated into the industry. That is why one should not be surprised that in the long run the demand for the products of this company may decrease, and the profit (taking into account the entire list of increased costs) will be less or even zero. In addition, it is necessary to pay attention to such a phenomenon, which is quite common in advertising activities, as the effect of advertising self-neutralization. It takes place in cases where many different manufacturers almost simultaneously advertise a number of similar products.
This often leads not to an increase in sales, but to disorientation of the consumer and, accordingly, to their reduction. The consumer simply does not know which of the advertised goods is actually better, and therefore ceases to pay attention to all the advertising information. In case of occurrence of the given effect in advertising activity the expenses for an advertising campaign the manufacturer bears, and level of sales of its goods does not grow. Another controversial point regarding advertising is the assessment of its consequences for society. On the one hand, it contributes to the expansion of consumer knowledge about goods and prices for them, and, of course, economic growth effectively and competently working organizations. However, on the other hand, it is a clear threat to the sovereignty of consumer tastes, as well as the cause of price harshness and a source of long-term price inflation. This is possible due to its psychological impact on the consumer.
It is not a secret that advertising is not only a source of any information about a product, but also a direct and effective impact on the minds of consumers, which is what drives them to buy the product. The mechanism of influence is quite simple. Competently constructed advertising message causes positive emotions in the consumer, which he connects only with the image of the promoted product. At visual contact with the goods on a shelf of shops the consumer at subconscious level "activates" the positive emotions put by advertising earlier, and makes purchase. Thus, we can conclude that advertising works on two fronts. It logically proves the superiority of the product over other similar products-competitors. Advertising provides the formation of positive emotional images in the minds of target groups, which, of course, can not but affect the level of sales. The ability to use the full range of weaknesses and psychological features of the person, the ability to play on his desires, dreams and illusory models of life allows advertising to be one of the most powerful economic weapons and effective methods of non-price competition, respectively. However, do not forget that, designed to differentiate the products of firms in the eyes of buyers, advertising is only part of the market process of differentiation of goods and services and bringing them to consumers.