Is Advertising Socially Extravagant Or Socially Enviable?

By P Alli:

Corporate sector of every economy rests on advertising and India is no exception to it. In a rigorous empirical study conducted by the author it was found that the advertising expenditure of almost all the sample firms of the food processing industry witnessed a continuous increase. This obviously raises important questions for decision-makers in both the private and the public sectors of India. Almost all the firms in the consumer goods industry are very much concerned with establishing the level of advertising which is optimal from the viewpoint of firm strategy and their overall marketing mix. And so is the case with the sample firms also. Advertising is no doubt essential in the creative economy, as it is said to reduce the search costs of the consumers. It should be borne in mind, that it is the consumers who decide the fate of every firm. And the firms advertise and bring about cosmetic differences in the products so as to lure consumers. That is, they expect the consumers to be loyal to their respective products. In the same way, the firms should also see to it they do not deceit the consumers by manipulative advertising, and should be in turn loyal to the consumers. The advertising should in turn help the consumers in choosing the right product.

But, the sample firms are found to be aggressively enhancing their advertising expenditure of the processed food products year by year and making the consumers adapted to those products which actually come from the developed countries. It can be argued that processed food (not all) possesses additional nutritional values, and hence may add to the nutritional level of every consumer. But it is to be noted that about 30 per cent of the population is not having access even to the basic food. The heavy advertising activity undertaken by these firms is a clear indication that the state is providing a helping hand to meet the demand of a few elite consumerist rich classes of people. This preference, in turn, is believed to create continuing dependence of the country on imported technology and goods. This is a matter of concern and there is an urgent need to curb such an excessive advertising which is indeed harmful for a society like India, where economic growth is usually constrained by supply conditions rather than by aggregate demand. And resources devoted to advertising can be viewed to be as socially wasteful, at a time when the country is holding the following dubious distinction: the world’s second largest exporter of rice is witnessing ‘crop holiday’ observed by thousands of paddy farmers of Andhra Pradesh; where about 300 million people go hungry everyday; where the child malnutrition rate is 46 per cent (as per the last round of the Family Health Survey, 2006), a country which is among the 29 countries with the highest level of hunger, stunted children and poorly fed women in the world (International Food Policy Research Institute’s Global Hunger Index, 2010). India is a country which is the largest producer of fruits, vegetables, milk and edible oils, and second largest producer of wheat and sugar; but millions are languishing to access the basic foods in its raw form.

The large firms in the study are found to be leading advertiser in the Indian FPI during the study period. The small, big and medium firms are also compelled to increase their advertising expenditure so as to survive and compete with the large firms. No doubt, profit is the motto of the corporate sector, but not at the cost of making the teeming millions starves! So, if instead, the large firms help the state by spending a part of its huge resources in making the basic food available to the 300 million hungry people, then the other firms will definitely follow the large firms. This is also a part of the corporate social responsibility (CSR) that the firms ought to take. However, in the name of CSR most of the firms are seen to be involved in the construction of business oriented schools, hospitals etc., when the people are not entitled to access the basic food.

Heavy taxes should be imposed on those firms which advertise excessively. This particular step will cripple the firms from enhancing their advertising expenditure more and more each year. So far no attempt has been taken towards this, simply because the survival of every print media and electronic media rests on the advertisements by these firms. In fact, the whole of the corporate sector survives on the advertising activity. And an act of heavily taxing the highly advertised firms may bring the corporate sector into crumbles.

So don’t we need to think seriously about this?

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