The fact that people buy heavily advertised products, at prices that support ads, over presumably cheaper alternatives implies that advertising provides consumer utility.
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Nike takes a shoe that normally sells for $50, pays Michael Jordan to endorse it, stitches his name on the side, and now sells the shoe for $100. If I buy the shoe, was I tricked or has Nike created (at least) $50 of additional utility?
Probably a mix, since your motives probably are. To the extent you're happy because you're a Jordan fan, it's utility of a sort. If it's because you think the shoe's better, you've been tricked.
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Same thing applies when people buy the luxury brand over the standard equivalent, e.g., Toyota v. Lexus or Chevy v. Cadillac... utility of brand identity
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It's not just that the shoe may be better, it's that there's a degree of certainty that it isn't low quality. With unbranded shoes, there's less knowledge. It reduces the stress over the purchase.
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PG but it‘s a mistake to think that the only way to create economic value is technological (i.e. a better shoe /“tricked”)
Perfume is perceived as better in a beautiful bottle, therefore it IS better (acc 2 us humans).
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Also, the tech to make a tshirt is pretty much done. Instead, you mess with the psychology not the technology. Which is how CK can sell expensive white tees. It’s a fallacy to think that value is only real if it’s in the tech. If it’s real in the mind of the user, it’s real.
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Most FMCG brands create psychological value! What pray is the difference between one detergent and another? Or one hand sanitizer and another?
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It’s at least a bit LESS than $50 of created utility - MJ got paid according to the hypo.
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Status is also utility - you probably care how other people perceive your choice.
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But if it convinced you to buy a shoe you would have loved at $50 but never would have bought without advertising (the endorsement), and you're thrilled with the purchase at $100, then the advertising provided utility.
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