SelLING COSTS

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SelLING COSTS
Meaning of Selling Costs The costs incurred on advertising, publicity and salesmanship arc known a~ selling costs, Selling costs have been defined “as the costs necessary to persuade a buyer to buy one product rather than another or to buy from one seller rather than another.” Obviously, if the markets were perfect, i.e., if the buyers were well informed about the prices and quantity, advertising will be a waste. II will not win over any buyer. Advertising will also be unnecessary in a purely competitive market dealing in standardised products. Monopolist also need not spend on advertisement, for there are no rivals. Actually, however, perfect competition and perfect monopoly arc rare. Few buyers can be considered connoisseurs of quality or fully acquainted with market conditions. There is a very large number of brands .corn casting for a buyer’s choice. This creates a large scope fur advertisement either to herald a new product or to remind the customers that an old product is still going ‘strong. Advertisement may be promotion which gives general information about the industry and promotes its sales. This advertisement is on behalf of the entire industry say, cement industry or life insurance. The advertisement may be competitive when it seeks \0 push the products of line firm against another. Selling costs are thus, specially associated with imperfect markets or monopolistic competition, Product differentiation necessitates selling effort.

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SelLING COSTS