Chapter 4Social, Ethical, and Regulatory Aspects of Advertising and Promotion 1 Social Aspects of Advertising Advertising Educates Consumers – Pro: Advertising informs – Con: Advertising is superficial and intrusive Is there “information” in this ad? Advertising improves living standards – Pro: Ads lower the costs of products – Con: Ads are wasteful and help only some 2 Ad in Context Example Critics of advertising feel that advertising is superficial because many ads carry little actual product information. 3 Critics of advertising complain that ads often carry little, if any, product information and would prefer that all advertising be rich in ―information‖ like the Toyota ad in Exhibit 4.3. Is the Honda ad in Exhibit 4.4 devoid of ―information‖? 4 Social Aspects of Advertising Advertising Affects Happiness and Well-Being – Con: – Pro: Ads create needs Ads address a wide variety of basic human needs Ads promote materialism Ads reflect society’s priorities – Con: – Pro: 4 Ad in Context Example Critics feel advertising promotes materialism. 6 Social Aspects of Advertising 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 7 Ad in Context Example Do you think this ad perpetuates stereotypes? 8 Ad in Context Example Do you think this ad perpetuates stereotypes? 9 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. 10 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 11 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 12 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 13 Ethical Aspects of Advertising Advertising Controversial Products 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? 14 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 15 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 16 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 17 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 18 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 19