FUNCTION OF ADVERTISING

Otago Daily Times, Issue 22630, 23 July 1935, Page 18

FUNCTION OF ADVERTISING

A STIMULUS TO DEMAND LORD LUKE’S ANALYSIS. The problems of distribution, the competition between road and rail, and the agreement on the control of mercantile tonnage were among the questions discussed at the congress of the International Chamber of Commerce in Paris at the end of last month.

“ The Function of Advertising in the Distribution of Goods ” was the subject o: a paper by Lord Luke. In his absence it was read by Mr C. S. Kent, the assistant manager of The Times.

Advertising, it was pointed out, was really one of the most economical as well as one of the most effective means of obtaining adequate distribution. It had been estimated that the total retail trade in Great Britain amounted to £2,361,000,000 in a year and that the total amount spent in advertising was about £70,000,000 a year, or about 3 per cent. Advertising covered a very great proportion of the total retail trade, and where the percentage of advertising was higher than the average there was often a proportionate reduction in the costs of distribution. Selling costs could be kept much lower. The success of some of the combined advertising campaigns, such as the “ eat more fish ” and “ eat more fruit ” campaigns, had been notable in securing greater distribution and more effective consumption of goods by the public. Government departments, too, were learning that silence was not golden in the market place, and where they had services to offer they were finding it profitable to advertise judiciously. The Post Office telephone was a case in point. The Postmaster-general had several times in the last year stated publicly his belief in advertising for this purpose and hi. conviction that the advertising which was being done on behalf of his depaitment had been productive of real results. MARKETING BOARDS. Advertising was also being started on behalf of some of the marketing boards set up to encourage the distribution _of primary agricultural products. With regard to the distribution of manufactured articles and branded goods, it was to be observed that certain products launched in quite a small way within the last 10 years were already leaders in their own particular fields, and there was no evidence that they were losing their popularity, since well-established lines realised the importance_ of advertising in maintaining their distribution and stability of sales. A falling-off in public demand, unstimulated by advertising, eventually meant loss of distribution. Where advertising was employed to stimulate public demand the channels of distribution remained freer and more open. With the intensity of competition prevailing in many sections of the retail trade once a manufacturer lost his footing with the retail trade he found it very difficult to regain it. How was it that, with the help of advertising, branded goods were able to hold their own against cheaper substitutes? The answer lay in the fundamental fact which was at the root of all successful advertising —that no amount of advertising, however intelligent and ingenious, would continue to sell goods which did not give value to the consumer. The public had come to realise that the advertising of a product was in fact a guarantee of its quality. The consuming public changed every year, and its habits changed also. If advertising was a necessary part of the distribution plan of any established manufacturer, how much more was it needed in the introduction of a new product! He knew of no outstanding success among new products which had not made intelligent use of advertising. SCRAPPING OF SHIPS.

In a discussion of the international scheme for the laying up and scrapping of tonnage, Lord Esscndon said the scheme was based on the principle of attraction by means of a compulsory timnage due to form a pool out of which° compensation would be paid to owners for laying up and scrapping ships. It was proposed to create a corporation which in effect would be the international shipping conference clothed in legal form whose functions would_ be to° determine on the basis, of practical business experience what the general

state of the world freight market was in any period in relation to supply and demand, and what compensation would suffice to induce owners to withdraw sufficient tonnage to adjust supply to demand. On that basis a due would be fixed and collected from all vessels through the machinery of Governments. The money thus obtained would be paid into an international pool, from which the compensation to individual shipowners laying up or scrapping would be paid. The principle of attraction adopted in the scheme had already been adopted with success in the more limited sphere of the tanker trade, where it had succeeded in eliminating surplus tonnage and restoring the companies concerned to a state of reasonable prosperity.