r/explainlikeimfive • u/bigdubsy • Dec 16 '12
ELI5: Why does Coca-cola still advertise? Explained
Why do companies that have seemingly maxed out on brand recognition still spend so much money on advertising? There is not a person watching TV who doesn't know about Pepsi/Coke. So it occurs to me that they cannot increase the awareness of their product or bring new customers to the product. Without creating new customers, isn't advertisement a waste of money?
I understand that they need to advertise new products, but oftentimes, it's not a new product featured in a TV commercial.
The big soda companies are the best example I can think of.
Edit: Answered. Thanks everyone!
Edit 2: Thanks again to everybody for the discussions! I learned alot more than I expected. If we weren't all strangers on the internet, I'd buy everyone a Pepsi.
2
u/nil_von_9wo Dec 17 '12
About a decade ago, I took an introduction to media course.
The professor had a much more cynical theory (which I personally feel is more plausible).
According to him, there has never been any conclusive studies proving that advertising is truly effective beyond creating brand recognition, which is of itself important since many people will pay more for a brand they heard of over an otherwise equal product which they never heard of.
But, according to him, the companies advertising generally have a more important objective: to control the media. This is what limits (or entirely discourages) the media from discussing how your favourite brands are being made overseas in unsafe sweat-shops for pennies a day, while the corporate owners rake in the profits without actually passing on much savings to the consumers. Or how little farmers are paid for your coffee and cigarettes while the IMF and World Bank apply thumbscrews essentially forcing third world nations to grow cash cops instead of subsistence crops.
The press may still be "free", but let's see how many editors are willing to run a story which will blow a multi-million dollar advertising deal; and then still have a job the next morning.