5 Ethics Regulation

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Regulatory & Ethical Aspects of Marketing CommunicationsRegulatory & Ethical Aspects of Marketing Communications

5



Should this be allowed?



What about this?



Not all issues canbe regulated

A marketing orpromotion actionmay be legal but

not consideredethical

Marketers mustmake decisionsregarding the

appropriatenessof their actions

A marketing orpromotion actionmay be legal but

not consideredethical

Not all issues canbe regulated

Ethics in Advertising and Promotion

Ethics: Moral principles and values thatgovern the actions of an individual or group.



Is this ethical?



Many people found Benetton¶s ³Death Row´ adcampaign offensive



Creates needs andwants amongconsumers

Promotesmaterialism,

insecurity and

greed

Is morepropaganda

than information

Providesinformation

Creates jobs andhelps new firmsenter a market

Encourages

a higher standardof living

Promotes

competition inthe marketplace

Is morepropaganda

than information

Creates needs andwants amongconsumers

Creates jobs andhelps new firmsenter a market

Encourages

a higher standardof living

Providesinformation

Advertising and Promotion: Two Viewpoints

Proponents argue thatadvertising and promotion:

Critics argue that advertising and

promotion

Promotes

competition inthe marketplace



Does advertising makepeople buy things

they don¶t need?

Does advertisingencourage materialism?

Does advertisingencourage materialism?

Does advertising makepeople buy things

they don¶t need?

Social and Cultural Consequencesof Advertising

Is advertising justa reflection of society?



Social and Cultural Consequences of Advertising

Does advertisingDoes advertising encourage consumptionencourage consumption, , or or merely merely reflect reflect our society¶s need for it? our society¶s need for it?

³ ³ Advertising and its related arts thus help develop the kind of man

the goals of the industrial system require²one that reliably spends

his income and works reliably because he is always in need of more«´

John Kenneth Galbraith

³To blame advertising now for those most basic tendencies in

American history is to miss the point«The people who have created modern advertising are not hidden persuaders pushing our

buttons«they are just producing an especially visible manifestation,

good and bad, of the American way of life.´

Stephen Fox The Mirror Makers: A History of American Advertising and Its Creators



Dove¶s ³Campaign for Real Beauty´



General mistrust of advertising andamong consumers. Many do not

perceive ads as honest or believable

General mistrust of advertising andamong consumers. Many do not

perceive ads as honest or believable

Abuses involving sales promotions suchas contests, prize draws, premium

offers

Unethical and/or deceptive practices

involving mail order, telemarketing andother forms of direct marketing

Internet scams and abuses

Abuses involving sales promotions suchas contests, prize draws, premium

offers

Unethical and/or deceptive practices

involving mail order, telemarketing andother forms of direct marketing

Advertising and Promotion as Untruthful orDeceptive



Regulation: Advertising Standards Authority

Advertisements should be - "Legal,

Decent, Honest and Truthful".

ASA code updated March 2003. One

unified code: 'British Code of Advertising,

Sales Promotion and Direct Marketing'.

Known as 'the CAP code' for short.

http://www.cap.org.uk/index.asp

CAP covers ALL promotional tools.

Legal force growing: EU, Trades

Description, OFT etc.



Advertising Principles

1. Truth

Advertising shall reveal the truth, and shall reveal significantfacts, the omission of which would mislead the public.

2. Substantiation

Advertising claims shall be substantiated by evidence inpossession of the advertiser and the advertising agency priorto making such claims.

3. Comparisons

Advertising shall refrain from making false, misleading, orunsubstantiated statements or claims about a competitor or

his products or service.4. Bait advertising

Advertising shall not offer products or services for saleunless such offer constitutes a bona fide effort to sell theadvertised products or services and is not a device to switchconsumers to other goods or services, usually higher priced.



Advertising Principles

5. Guarantees and warrantiesAdvertising of guarantees and warranties shall be explicit, withsufficient information to apprise consumers of their principalterms and limitations or, when space or time restrictionspreclude such disclosures, the advertisement shall clearly revealwhere the full text of the guarantee or warranty can beexamined before purchase.

6. Price claims

Advertising shall avoid price claims that are false or misleading,or savings claims that do not offer provable savings.

7. Testimonials

Advertising containing testimonials shall be limited to those of competent witnesses who are reflecting a real and honestopinion or experience.

8. Taste and decency

Advertising shall be free of statements, illustrations, orimplications that are offensive to good taste or public decency.



Portrayal of women toreflect their changing role

in society

Portrayal of women assex objects

Ethnicstereotyping/

representation of minorities

Ethnicstereotyping/

representation of minorities

Portrayal of women assex objects

Genderstereotyping

Genderstereotyping

Portrayal of women toreflect their changing role

in society

Advertising and Stereotyping

Portrayal of the elderly

Criticisms of Advertising

With R egard to Stereotyping



Exploitation? Dove Challenges the StereotypicalPerspective of Beauty



Is this woman portrayed asa sex object?

Does this ad containcues that are sexually

suggestive?

Does this ad present animage of sexualsubmissiveness?

Does this ad containcues that are sexually

suggestive?

Is this woman portrayed asa sex object?

What is your opinion of this ad?



Use of sexualappeals and/or

nudity

Objections toadvertising

of certain products

Objections toadvertising

of certain products

Use of sexualappeals and/or

nudity

Advertising as Offensive or in Bad Taste

Use of shockads



Which is more offensive?



Which is more offensive?



Is shock OK in a µgood cause¶?



Advertising and Children

Children's TV

Watching Behaviour

Children between ages2-11 watch on average22 hours of TV per week and may see

40,000 commercials per year

Approximately 80% of

all advertising targeted

to children falls in four

product categories:Toys, cereals, sweets &

fast food restaurants



Advertising and Children

S ome studies have shown«S ome studies have shown«

Children lack experience and knowledge to evaluate

advertising critically

They can not differentiate between commercials and

programme (fantasy vs. reality)

Children are vulnerable to advertising

«while other studies argue«while other studies argue

Children must learn through the consumer

socialisation process; need to acquire skills to functionin the marketplace

Acquired skills have helped teens evaluate ads and

recognise persuasion techniques



They lack theknowledge and

skills to criticallyevaluate

advertising claims

They cannotdifferentiate

betweenprogrammes and

commercials

Children must learnthrough thesocialisation

process

Children must learnthrough thesocialisation

process

They cannotdifferentiate

betweenprogrammes and

commercials

They lack theknowledge and

skills to criticallyevaluate

advertising claims

Perspectives on Advertising to Children

Need to acquireskills needed

to function in themarketplace

Consumer Advocates Argue That

Children Are Vulnerable to Advertising Because:

While Marketers Argue That:



Appeals to kids = Pester Power?



Should emotional/shock appeal be allowed?



Emotion 2



Advertising is the primary sourceof revenue for newspapers,

magazines, and television andradio networks and stations

Advertisers may exert controlover the media by biasingeditorial content, limiting

coverage of certain issues orinfluencing program content

The media¶s dependence onadvertising for revenue makesthem vulnerable to control by

advertisers

Advertising is the primary sourceof revenue for newspapers,

magazines, and television andradio networks and stations

The media¶s dependence onadvertising for revenue makesthem vulnerable to control by

advertisers

Do Advertisers Control the Media?



They must report the newsfairly and accurately to retain

public confidence

Advertisers need the mediamore than the media need any

one advertiser

Advertisers need the mediamore than the media need any

one advertiser

They must report the newsfairly and accurately to retain

public confidence

Do Advertisers Control the Media?

The media maintain separationbetween news and businessdepartments ³Chinese Walls´



Making consumers aware of products and services

Providing consumers withinformation to use to make

purchase decisions

Providing consumers withinformation to use to make

purchase decisions

Making consumers aware of products and services

Role of Advertising in the Economy

Encouraging consumptionand fostering economic

growth



Effects on Consumer Choice Differentiation Brand Loyalty

Effects on Product Costs and Prices Advertising as an expense that

increases the cost of products Increased differentiation

Effects on Competition Barriers to entry Economies of scale

Effects on Consumer Choice Differentiation Brand Loyalty

Effects on Competition Barriers to entry Economies of scale

Economic Impact of Advertising



AdvertisingAdvertising

What is Advertising¶s Role in the Economy?

Advertising affectsconsumer preferences andtastes, changes productattributes, anddifferentiates the product

from competitive offerings.

Advertising informsconsumers aboutproduct attributes butdoes not change the

way they value thoseattributes.

Advertising = Market Power Advertising = Information



Consumer Buying BehaviourConsumer Buying Behaviour


Consumers becomebrand loyal and less pricesensitive and perceivefewer substitutes foradvertised brands.

Consumers becomemore price sensitiveand buy best ³value.´Only the relationshipbetween price andquality affects elasticityfor a given product.





Potential entrants mustovercome established brandloyalty and spend relativelymore on advertising.

Advertising makes entrypossible for new brandsbecause it cancommunicate productattributes to consumers.


Barriers to entryBarriers to entry

d h l h h



Advertising helps companies change theirfortunes




Firms are insulated frommarket competition andpotential rivals;concentration increases,leaving firms with more

discretionary power.

Consumers can comparecompetitive offerings easilyand competitive rivalryincreases. Efficient firmsremain, and as the inefficientleave, new entrants appear;

the effect on concentration isambiguous.


Industry structure and market powerIndustry structure and market power




Firms can chargehigher prices and arenot as likely tocompete on quality orprice dimensions.Innovation may bereduced.

More informedconsumers pressurefirms to lower pricesand improve quality;new entrants

facilitate innovation.


Market conductMarket conduct




High prices and excessiveprofits accrue to advertisersand give them even moreincentive to advertise theirproducts. Output is restricted

compared with conditions of perfect competition.

Industry prices decrease.The effect on profits dueto increased competitionand increased efficiency

is ambiguous.

Advertising=Market Power Advertising=Information

Market performanceMarket performance



Promoting the value of advertising



Do You Agree With Leo Burnett?

³I t must be said that without

advertising we would have a far

different nation, and one that

would be much the poorer-not

merely in material commodities,

but in the life of the spirit.´

These excerpts are from a speech given by Leo Burnett on the American

Association or Advertising Agencies¶ 50th anniversary, April 20,1967

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5 Ethics Regulation

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