Chapter 4

Social, Ethical, and
Regulatory Aspects of
Advertising and Promotion
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©2012
©2012
Cengage
Cengage
Learning.
Learning.
All Rights
All Rights
Reserved.
Reserved.
MayMay
not not
be scanned,
be scanned,
copied
copied
or duplicated,
or duplicated,
or posted
or posted
to atopublicly
a publicly
accessible
accessible
website,
website,
in whole
in whole
or inorpart.
in part.
Social Aspects of Advertising
PRO
CON
Advertising informs
Advertising is superficial
and intrusive
Advertising improves
living standards
PRO
CON
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Ads lower the costs
Is there
of products (How can this be?) “information”
in this ad?
Ads are wasteful and help
only some
©2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
© Courtesy Apple Computers Inc.; Ad
Agency TBWA Chiat Day,LA; Photographer:
Matthew Welch, Model Emory Livers/LA
Models
Advertising Educates Consumers
Do you think
advertising is
superficial?
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Courtesy, Sketchers USA, Inc.
Critics of
advertising feel
that advertising is
superficial
because many
ads carry little
actual product
information.
©2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Social Aspects of Advertising
Advertising Affects Happiness
and Well-Being
CON
PRO
CON
PRO
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Ads create needs
Ads address a wide variety of basic
human needs
Ads promote materialism
Ads reflect society’s priorities
©2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Reprinted with permission from Hidesign
Critics feel advertising promotes
materialism.
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©2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Social Aspects of Advertising
Advertising: Demeaning and
deceitful, or liberating and artful?
CON
PRO
CON
PRO
CON
PRO
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Ads perpetuate stereotypes
Advertisers are more sensitive now
Ads are often offensive
Ads are a source of liberation
Ads deceive via subliminal stimulation
Advertising is art
©2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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©2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
© 1995 Lever Brothers Company "ALL" Laundry Detergent. Courtesy of
Lever Brothers Company.
Do you think
this ad
perpetuates
stereotypes?
Do you think
this ad
perpetuates
stereotypes?
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©Courtesy of Lachman Imports
Or is this advertising
as art?
©2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Social Aspects of Advertising
Advertising has a Powerful Effect
on the Mass Media
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PRO
Ads foster a diverse and affordable mass
media that provides information and
exposure on important issues.
CON
Advertising affects and controls
programming. “Branded Entertainment”
blurs entertainment and persuasion.
And, controversial issues do not attract
advertisers.
©2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Ethical Aspects of Advertising
Ethics are the moral standards against which
behavior is judged. Key areas of debate regarding
ethics and advertising are:
• Truth in advertising
• Advertising to children
• Advertising controversial products
– Remember “primary demand?” (Chapter 1)
– How has food become a “controversial
product” in advertising?
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©2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Ethical Aspects of Advertising
Truth in Advertising
• Deception is making false or
misleading statements, but puffery
(commercial exaggeration) is legal.
• Cannot legislate against emotional
appeals
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©2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Ethical Aspects of Advertising
Advertising to Children – Issues
• Advertising promotes superficiality
and materialism in children
• Children are inexperienced and easy prey
• Persuasion to children creates
child-parent conflicts
• But, what does the literature say about
kid’s abilities to process persuasive
information relative to the claims above?
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©2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Ethical Aspects of Advertising
Advertising Controversial Products
• Critics question “targeting” minorities
– Aren’t there positive aspects of targeting?
• Tobacco, alcohol, gambling and
lotteries are product categories of
greatest concern
– How does the concept of “primary demand”
provide insights here?
– What does the literature say about advertising’s
impact on these product categories?
– Doesn’t the government advertise gambling
through state lotteries?
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©2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Regulatory Aspects of
Advertising
Areas of advertising regulation:
• Deception and unfairness
Representation or omission that can mislead
o Judged from perspective of consumer
o Misrepresentation must be “material”
o
• Competitive issues
o
o
o
Vertical cooperative advertising
Comparison advertising
Monopoly power
• Advertising to children
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©2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Key Regulatory Agents
Government Regulation
• Federal Trade Commission (FTC)
– Wide range of regulatory programs and
remedies
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• Federal Communications
Commission (FCC)
• Food and Drug Administration
(FDA)
• U.S. Postal Service
• Bureau of Alcohol, Tobacco, and
Firearms
©2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Key Regulatory Agents
Government: FTC Programs and
Remedies
•
•
•
•
•
•
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Advertising Substantiation Program
Consent Order
Cease and Desist Order
Affirmative Disclosure
Corrective Advertising
Control of celebrity endorsements,
testimonials, and now blogging
©2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Key Regulatory Agents
Government: State Regulation
• No extensive policing powers
• Most ads and promotions are
“inter-state” not “intra-state”
• State Attorney Generals office is
main office for regulation
• States rely mainly on federal agencies
for regulation of advertising and
promotion
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©2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Key Regulatory Agents
Industry Self-Regulation
•
•
•
•
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National Advertising Review Board (NARB)
State and Local Better Business Bureaus
Ad Agencies and Associations
Media Organizations
©2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Key Regulatory Agents
Internet Self-Regulation
• No industry-wide trade association has
emerged to date, exceptions:
• Anti-spam
• COPPA
• Some international organizations
• Global Business Dialogue on Electronic
Commerce (GBDe) is emerging as a
governing body
• Little progress has been made to
address consumers’ complaints on
on privacy (e.g. Facebook)
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©2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Key Regulatory Agents
Consumers as Regulatory agents
• Consumerism: Grass roots consumer
movements
• Consumers Organizations
Consumer Federation of America
o Consumers Union
o Consumer Alert
o Commercial Alert
o
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©2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Regulation of Other Promotional Tools
Direct/Mobile Marketing and e-Commerce
• Privacy
– Behavioral targeting, GPS tracking
• Spam = 30 million messages/minute, 100 billion/day worldwide
– “Phishing” as insidious spam
• Contests/Sweepstakes
• Telemarketing
Sales Promotion
• Premiums, Trade Allowances
• Contests/Sweepstakes
• Product/Brand Placement
Public Relations
• Privacy
• Copyright Infringement
• Defamation (slander and libel)
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Check Your Understanding
An established cereal manufacturer is being
investigated by the FTC for claims that its
oatmeal can repair damaged arteries and
prevent heart disease. Its executives are
aware that if the claims are found to be false,
the firm may receive the FTC’s most severe
penalty, which involves
a. ordering corrective advertising.
b. issuing a cease-and-desist order.
c. ruling on advertising substantiation.
d. dissolving the corporation.
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©2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Check Your Understanding
Which of the following claims
demonstrates puffery in advertising?
a. "Only Crest Earns the Dental Seal of
Approval Among All Major Brands!"
b. "Ford Trucks Have Lower MPG than
Chevy Trucks!"
c. "Tide Beats Cheer in Sales 8th Year in
a Row!"
d. "World’s Best Cup of Coffee Served
with a Smile Here!"
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©2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

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