FUNDAMENTALS OF ADVERTISING 1. Purpose of advertising.—The advantages of advertising are succinctly put in a statement made by the president of one of the largest companies of its kind in the United States which manufactures a prod uct of staple use no longer protected by any patent: Our gross sales are in the neighborhood of sev enty-five million a year. We are oversold and our factories are driven to the limit of their capacity. We have been so for three years.
We advertise extensively for the insurance of our investment, our good-will and the future volume of our business.
I find also that it is a direct economy thru saving the time of my salesmen on the road, and the in creased percentage of sales on the better grades.
Perhaps this short statement sums up the best rea sons for the tremendous amount of advertising done by concerns whose strength in their fields might lead to an assumption that further publicity or educational sales effort is unnecessary.
The executive quoted here realizes that the value of his business lay not so much in his fine plant and excellent manufacturing processes, as in the good will of the public toward his product. For the maintenance of this good-will he was willing to pay a substantial insurance, and was pleased to find that it was more than repaid to him by direct facilitation of sales, and the economy of expenditure in sales effort. There are in all five results which may be secured by advertising.
2. Advertising as insurance of good-will as a measurable asset of the company to . be protected from destruction just as plant, raw ma terials and product should be protected from fire, is an idea which has not yet found definite form in the minds of many who regard advertising merely as a means for publicity and advance sales in the evasion of competitive markets.
The most progressive manufacturers now budget the advertising appropriation to be attributed to in surance. They base this budget on a definite knowl edge of the current value of the good-will of the bus iness.
3. Advertising reduces selling the ad vertising done as insurance had more than repaid it self thru economy of sales effort, was of incidental in terest to the manufacturer quoted at the beginning of this chapter. This fact, however, is one of vast
importance to every distributor of goods. Aggres sive advertising cuts down the cost of selling, thereby reducing the marketing expense.
Practically no article can be sold to the public generally unless there has been some recent review of its merits, its claims to usefulness and notice of its presence upon the market. If this work, informative and educational, is not done thru advertising, it must be done thru personal efforts of salesmen—a vastly more expensive process.
4. Raising price by producers whose plants are at "capacity," as well as many who offer products with interesting or unique qualities (such as motion pictures of highest grade), have found that sound profits on the old prices are impos sible with rising costs of raw materials, transportation. labor or direct selling. They have accordingly em ployed intensive advertising as a means of increasing gross receipts thru the raising of the price without loss of sales. This experience, altho by no means general, is encountered in a surprisingly large number of cases.
5. Increasing volume of owner of a plant susceptible of enlargement, the product of which caters to a growing market, finds advertising of the greatest value. For such a producer advertis ing renders the same service which it can render to the plant running at capacity and the further service of stimulating public interest and educating public taste.
Intelligent advertising does the missionary work for the salesman who is sent out to enlarge markets by cultivating the established trade or by sales to new customers. The rapid sales work so essential to the development of new lines in competitive markets, can only be accomplished when the salesman has been properly and effectively introduced, and a public de mand for the goods created in advance of his coming.