Advertising : Beneficial or burden on wallets.

This has always remained a great topic of discussion among all the customers while having a cup of tea on tea stall among their groups. According to most of the customers, apart from the government fiscal policies, advertisements are also the important factors which are liable for price hikes on products and commodities worldwide. As per their opinions, advertising on television, radios, newspapers and magazines are very costly. The advertising cost incurred by the companies are collected by the companies after rising prices of the products. This is assumed that any product which is produced or manufactured costs, 30% - 40% of their MRP.

 Now if a product MRP is Rs 10, it means it would have been produced at a cost of Rs 3 - 4 (30% - 40% of the MRP). Then why a customers pays Rs 10. As it would be very much difficult for customers to buy their products direct from the manufacturing units, due to a great distance. So the distribution network of distributors and retailers are acceptable and necessary. The distribution network help a customer to get products on comforts. It means if this chain comes after the production and profit margin of the company, the products should cost not more than 60% - 30% of the MRP.

Then why we are paying 100%. This is because a major portion of the MRP includes advertising expenses incurred by the companies in promotion of their products & services. This was what most of the customers think. They think advertising is an extra burden on their wallets. Is this true ?