The role of producers and marketers through advertising Producers typically convey information to consumers through marketing and advertising efforts. The effectiveness of producer-provided information is highlighted in a study by Alan Mathios. Mathios shows how producers in the U.S. were effective in providing information on the links between diet and disease to promote healthier food products. Producers were able to educate the public by using a variety of media to target specific markets and seemingly alter consumer behaviour towards their diet. Government advertising, on the other hand, which was not product-specific and tended to appear in the print media, did not reach all segments of the public.
Firms also know the importance of developing a good reputation with consumers.
Andrew Kleit shows how pharmaceutical firms invest heavily in their brand names, promoting recognition and demonstrating to consumers a willingness to stand behind their products. If firms renege on their implicit promise of quality, consumers punish them by refusing to buy their products. As a result, clear and strong links between information on products and company names create a positive impression that can allay consumer misgivings about product safety and quality. It is argued that advertising can also create product differentiations that provide no real benefit to consumers. Seen from this perspective, advertising reduces product competition and introduces barriers to the entry of new products and companies.