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© 2009 South-Western, a part of Cengage Learning

Chapter 4

Social, Ethical, and Regulatory Aspects of Advertising and

Promotion

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Social Aspects of Advertising

Advertising Educates Consumers– Pro: Advertising informs– Con: Advertising is superficial and intrusive

Advertising improves living standards– Pro: Ads lower the costs of products– Con: Ads are wasteful and help only some

Is there “information” in

this ad?

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Critics of advertising feel that advertising is superficial because many ads carry little actual product information. Do you think advertising is superficial?

Critics of advertising feel that advertising is superficial because many ads carry little actual product information. Do you think advertising is superficial?

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Ad in Context Example

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Social Aspects of Advertising

Advertising Affects Happiness and Well-Being– Con: Ads create needs– Pro: Ads address a wide variety of

basic human needs

– Con: Ads promote materialism– Pro: Ads reflect society’s priorities

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Critics feel advertising promotes materialism.

Critics feel advertising promotes materialism.

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Ad in Context Example

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Advertising: Demeaning and deceitful, or liberating and artful?– Con: Ads perpetuate stereotypes– Pro: Advertisers are more sensitive now

– Con: Ads are often offensive– Pro: Ads are a source of liberation

– Con: Ads deceive via subliminal stimulation– Pro: Advertising is art

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Social Aspects of Advertising

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Do you think this ad perpetuates stereotypes?

Do you think this ad perpetuates stereotypes?

Ad in Context Example

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Do you think this ad perpetuates stereotypes?

Do you think this ad perpetuates stereotypes?

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Ad in Context Example

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Social Aspects of Advertising

Advertising has a Powerful Effect on the Mass Media– 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.

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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

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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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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 What does the literature say about kid’s abilities to process

persuasive information?

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Ethical Aspects of Advertising

Advertising Controversial Products

Critics question “targeting” minorities 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?

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Regulatory Aspects of Advertising

Areas of advertising regulation: Deception and unfairness

– Representation or omission that can mislead

– Judged from perspective of consumer

Competitive issues– Vertical cooperative advertising

– Comparison advertising

– Monopoly power

Advertising to children

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Key Regulatory Agents

Government Regulation

Federal Trade Commission (FTC)– Wide range of regulatory programs and remedies

Federal Communications Commission (FCC)

Food and Drug Administration (FDA)

U.S. Postal Service

Bureau of Alcohol, Tobacco, and Firearms

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Key Regulatory Agents--FTC

FTC Programs and Remedies Advertising Substantiation Program

Affirmative Disclosure

Consent Order– Cease and Desist Order– Affirmative Disclosure

Corrective Advertising

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Key Regulatory Agents (con’t)

Industry Self-Regulation

National Advertising Review Board (NARB)

State and Local Better Business Bureaus

Ad Agencies and Associations

Media Organizations

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Key Regulatory Agents (con’t)

Internet Self-Regulation

No industry-wide trade association has emerged to date

Global Dialogue on Electronic Commerce (GBDe) is emerging as a governing body

Little progress has been made to address consumers’ complaints

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Key Regulatory Agents (con’t)

Consumers as Regulatory agents

Consumerism: Grass roots consumer movements

Consumers Organizations– Consumer Federation of America– Consumers Union– Consumer Alert– Commercial Alert

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Regulation of Other Promotional Tools

Direct Marketing and e-Commerce Privacy, Contests, Telemarketing Spam=30 million messages/minute, 50 billion/day

worldwide “Phishing” as insidious spam

Sales Promotion Premiums, Trade Allowances, Contests/Sweepstakes

Public Relations Privacy, Copyright Infringement, Defamation (slander and libel)

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