Economic and Social Aspects of Advertising: Impact on Costs and Distribution
Explore the economic and social aspects of advertising and delve into the impact of advertising on selling and distribution costs. Learn about the implications on financial statements and the direct effects on pricing strategies.
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Presentation Transcript
Welcome to all for the Advertising Online lecture Chapter 3- Economic and Social aspect of adverting By dr. Dhiraj Ovhal HOD of Commerce
Write Meaning, Definition and Features of Advertising Meaning:- The word advertising comes from Latin word Advertere which means to turn the mind towards . The primary goal of advertising is to attract attention of audience and induce them to purchase advertising products and services. Definition AMA defines (American Marketing Definition:- Association) Any paid form of Non personal presentation, Promotion of ideas, goods and service by an indentified sponsor.
Q.3 Impact of advertising on Selling and Distribution cost with Illustration? Normally the Selling and Distribution cost consists of Advertising, Sales expenses, Other Distribution cost, Advertising Expenses SALES expenses Other distribution expenses
Q.3 Impact of advertising on Selling and Distribution cost with Illustration? Trading Account / Manufacturing Account/ Production Account. Profit and Loss A/C:- Advertising Expenses
Q.3 Impact of advertising on Selling and Distribution cost with Illustration? Assumption :-The above table is based on the following 1) By spending 1,000 on advertising, the firm is in a position to generate demand for additional 5.000 units 2 ) To sell the additional 5,000 units, no extra salesman is required However, additional incentives of 300 is provided to the sales force. In case the in part or lower price (3) The other selling/distribution costs do not increase in the same proportion as the number of units distributed
Q. 3 Impact of advertising on Selling and Distribution cost with Illustration? Advertising has Direct impact on Selling and Distribution cost which is reduced the price from rupees 0.50 to 0.40 paisa.
Conclusion Saving Advertising Nil 1000 -1000 Expenses SALES 2000 2300 1700 expenses Other 500 700 300 distribution expenses
Conclusion The benefit of large scale distribution is calculated as follows: Salesmen salaries would have been 4.000. if the salaries increased in the same proportion of units distributed. Thus, there is a saving of 1.700 (4,000 - 2300) Other Distribution Expenses would have been 1000 if the expenses increased in the same proportion of units distributed So there is a saving of 300 (1.000 - 700 )
Conclusion Thus from the above table it is clear that the distribution cost per unit is reduced from 0.50 to 0.40. This is possible due to the benefit of large sale distribution
Conclusion Advertising has Indirect impact on Production Cost Advertising has direct impact on Selling and Distribution Cost
Attendance Link https://forms.gle/U4Da9ykpniL3tpCdA (Mention date at last point)
