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Four Fundamental Assumptions of the Free Market
1. Self Interest – want more for less
2. Many buyers and sellers3. Complete Information4. Absence of externalities (social
costs)
Ethical Concerns
Ethical lapses and moral indiscretions can occur under the pressures in today’s marketplace to generate profits.
In general, business people, students, customers know the difference between right and wrong!
Ethics in this course related to matters of right and wrong or moral conduct pertaining to marketing communications.
Criticisms of Advertising
Short-term manipulative argumentsFocusing on style of advertising
Targeting Kids, Teens and the ElderlyLong-term macro arguments
Focus on the social or environmental impact of advertisingComplete information
• Deception
Absence of externalities• Social costs
Targeting Kids and Teens
Concerns about realistic expectations and understanding advertising
Food and BeveragesChildhood Obesity – fat, sugar, caffeine
Surge and Coca Cola
Healthful Choices (McDonald’s)Media choices … Saturday morning TV
Ethics and Tobacco
Tobacco and Alcohol ProductsBudweiser – the “fur factor”Cigarette products such as Dakota, product
placement in movies and TV
Targeting the Elderly
Susceptible to Fear adsMortalityFinancial concernsIllness and Dependence
Is targeting unethical, good marketing or both??
Ethical Issues in Advertising
2/3 of Americans think advertising is often untruthful
Deceptive advertising harms consumersLabeling is a tool to help reduce potential deception
Advertising is Manipulative and Makes People BUY! Causes ‘wants’Encourages materialismSubliminal ads attempt to subvert conscious
decisions
Ethical Issues in Advertising
Advertising Plays on Fears and InsecuritiesElderly and illnessConsequences of NOT buying a product
(deodorant)
Advertising Creates and Perpetuates StereotypesIs advertising worse than society as a whole?
Ethical Issues in PR
Negative PublicityProduct Failure (real or perceived) Audi, Ford,
Firestone Product Side Effect - VioxxProduct Tampering - TylenolStatus Vulnerability – Uptown Cigarettes
Ethical Issues in Packaging and Branding
Label Information – suggests more of a nutritional item than actual (Hawaiian Punch)
Brand naming – name suggests product has features and benefits it does not possess i.e., powerglider
Ethical Issues in Packaging and BrandingSafety - Packaging graphics – toy appears bigger on
the box of cerealEnvironmental implications of packaging
Sales Promotion EthicsUnmailed rebatesConsumers using coupons for unpurchased
products
Deceptive Considerations
PufferyIf taken literallyExcluded from deception generally because it is
assumed consumers do not believe it anyway!Used to enhance images
Pepsi - the choice of the new generation
Pufferyadvertising or other sales
presentations which praise the product to be sold with subjective opinions, superlatives, exaggerations, or vaguely - generally stating no specific facts
Deceptive Considerations
Subliminal AdvertisingA message transmitted in such a way
that the receiver is not consciously aware of it.
ProblemsDistanceIndividual Differences (Perceptual
Thresholds)Effect of Recognizable Material
Deceptive Advertising* False Promises Incomplete Description
Stating some but not all of the product’s contents
Solid oak furniture (only desktop solid) Misleading Comparisons, visual distortions False Testimonials, false demos Partial Disclosures
Kraft cheese slices made with 5 oz. of milk but omit the processing loses about 2 oz. of the milk
Small-Print Qualifications Bait and Switch*as defined by the courts
Ethics vs. Social Responsibility
Ethical advertisingDoing what is the advertiser and
advertising peers believe is morally right in a given situation
Social responsibility
Doing what society views as best for the welfare of people in general
Style Considerations
Stereotypingpresenting one
group in an unvarying pattern that lacks individuality
Offensiveness in Advertising
Racial and Ethnic Stereotypes
Portrayals of groups insubservient or unflattering lights
ExampleSoutherners
portrayed as dumb or hicks
Offensiveness in Advertising
What is viewed in bad taste by some is quite acceptable to others … in other words, taste is subjective and individual ..
Taste is also affected by localeEuropean ideals of sexuality vs. U.S.Advertisements more overtly sexual in Europe
Advertising and the LawAgencies Involved
FTC, FCC, FDAProblem Areas
Deceptive AdvertisementsMisrepresent, mislead, omitBait AdvertisementsEndorsers
Unfair AdvertisingUnjustifiably injured or violate public policy
• Inadequacy of complete disclosure or other externality
Agency Roles
FDAMonitors drugs, cosmetics, food productsLabels, packaging, branding of these
products its domainSeeks complete information for consumersRequires warning labelsMonitors terms such as “low fat,” “fat-free,”
etc.Nutritional labels
Agency Roles - FCC
Maintains jurisdiction over radio, TV, telephone, satellite, the Internet and the cable industry
Indirect impact on advertising as it enforces cease and desist orders
Monitors profanity and obscenity issues
First Amendment Protections
There is a distinction between “speech” and “commercial” speech in the court system
Twenty year history favors significant protection for truthful advertising under free speech, hence use of advertising by professionals such as attorneys and physicians
Bait Advertising
Attractive but insincere effort to sell something
Example: See the Eckerd’s Sunday Flier for a great promotional price, not available when you get there.
Bait and Switch - not available and try to sell up!
Corrective AdvertisementsIf lingering effects known - cease
and desist or consent decree not sufficient or agreed upon
must correct the false impression made that consumers use for future purposes
Examples: Listerine, Ocean Spray
Guidelines to Ethical AdvertisingTruthfulSubstantiate ClaimsRefrain from False
Comparisonsno bait!explicit guaranteesno false price claimscompetent
witnessestasteful and decent
Arguments against advertising to children Arguments against advertising to children
Children, especially young ones, are vulnerable to advertising because they lack the necessary experience and knowledge to understand and evaluate the purpose of persuasive advertising appeals.
Children cannot differentiate between commercials and television programs, do not perceive the selling intent of commercials, and cannot distinguish between fantasy and reality.
Children must be able to understand how advertising works and develop a skeptical or critical attitude to defend themselves against it.
Advertising to children is inherently unfair or deceptive.
© The McGraw-Hill Companies, Inc., 1998Irwin/McGraw-Hill Slide 22-2
Arguments in favor of advertising to children:Arguments in favor of advertising to children:
Advertising is a part of life and children must learn to deal with it as part of the consumer socialization process of acquiring the skills needed to function in the marketplace.
Studies have shown that children are capable of perceiving persuasive intent and the inability to perceive such intent does not necessarily lead to incorrect beliefs about a product.
Parents should be involved in helping children interpret advertising and can refuse to purchase products they feel are undesirable for their children.
Advertisers have a right under the First Amendment to communicate with consumers who make up their primary target audience
© The McGraw-Hill Companies, Inc., 1998
Slide 22-3
Arguments For Advertiser Control of the MediaArguments For Advertiser Control of the MediaThe media's dependence on
advertising revenue can make them susceptible to advertisers because advertisers can influence the media by:
exerting control over editorial content
biasing editorial opinion limiting coverage of controversial issues
© The McGraw-Hill Companies, Inc., 1998Irwin/McGraw-Hill
Slide 22-6
Arguments Against Advertiser Control of the MediaArguments Against Advertiser Control of the Media
It is in the best self-interest of the media to report the news fairly and accurately and not be perceived as biased to retain public confidence.
It can be argued that advertisers need the media more than the media need any individual advertiser.
© The McGraw-Hill Companies, Inc., 1998Irwin/McGraw-Hill
Slide 22-7
Proposed Restrictions on Use of the World Wide WebBanning unsolicited e-mail that cannot
automatically be screened out.Disclosing fully and prominently both the
marketer’s identity and the use for which information is being gathered.
Giving consumers the right to bar marketers from selling or sharing any information collected from them and to review the personal information collected.
© The McGraw-Hill Companies, Inc., 1998Irwin/McGraw-Hill Slide 21-6