advertising, promotion and other aspects of integrated marketing communication

Appreciate the ethical issues associated with advertising, sales promotions, and other marcom practices.. Explain the role and importance of governmental efforts to regulate marketing co

Ethical, Regulatory, and Environmental Issues

Ethical, Regulatory, and Environmental Issues

CHAPTER 21

CHAPTER 21

1 Appreciate the ethical issues associated with

advertising, sales promotions, and other marcom

practices

2 Understand why the targeting of marketing

communications toward vulnerable groups is a

heatedly debated practice

3 Explain the role and importance of governmental

efforts to regulate marketing communications

4 Be familiar with deceptive advertising and the

advertising, sales promotions, and other marcom

practices

communications toward vulnerable groups is a

heatedly debated practice

efforts to regulate marketing communications

5 Be acquainted with the regulation of unfair business

practices and the major areas where the unfairness

doctrine is applied

6 Know the process of advertising self-regulation

7 Appreciate the role of marketing communications in

environmental (green) marketing

8 Recognize the principles that apply to all green

marcom efforts

practices and the major areas where the unfairness

doctrine is applied

environmental (green) marketing

marcom efforts

Chapter Objectives (cont’d)

After reading this chapter you should be able to:

Chapter Objectives (cont’d)

After reading this chapter you should be able to:

Ethical Issues in Marketing Communications

 Lack of consensus about what it is

 Ethical lapses and moral indiscretions occur under

pressures of trying to meet business goals and

attempting to satisfy the demands of the financial

community

Sources of Ethical Issues

Ethical Issues in Marketing Activities and Communications

Communications

The Ethics of Targeting

• Ethical Debate

 Is it ethical to target products

and communications efforts to

segments that vulnerable or

put at risk by these actions?

• Is Targeting Unethical or

Just Good Marketing?

 When does a good targeting

strategy become a method of

unfair (unethical) advantage?

Is Targeting Unethical or Just Good Marketing?

• Positive

 Targeting benefits

rather than harms

consumers—providing

them with products

best suited to their

particular needs and

wants

• Negative

 Targeting is not concerned with fulfilling consumers’ needs and wants, but rather with exploiting consumer vulnerabilities

The Ethics of Targeting

Targeting Food and

and Teens

Targeting to Children and Teens

• Negative Targeting Outcomes

 Products targeted to kids are unnecessary and the

communications involved are exploitative

 Posters, book covers, free magazines, advertising, and other so-called learning tools that are ads for products

 Movies with tie-in merchandise programs

 Targeting adult products (e.g., beer) to pre-adults

 Using unacceptable cartoon-like images (e.g., Joe Camel)

 Promoting adult-oriented entertainment (e.g., violent films, video games, and music products) to children and teens

 Marketing food products (e.g., high-fat, high-calorie snacks) that contribute to childhood obesity

Targeting to Economically Disadvantaged Consumers

• Billboards advertising tobacco and alcohol

disproportionately appear in inner-city areas

• Examples:

 R.J Reynolds attempt to market new brands

cigarettes to African-Americans and downscale young women

 Heileman Brewing Company’s targeting of “Power

Master” high-alcohol malt liquor to inner-city

neighborhoods

Targeting

Tobacco

Products

Figure 21.1

Ethical Issues in Advertising

Advertising Creates and Perpetuates Stereotypes

Advertising Persuades People to Buy Things They Do Not Need

Advertising Plays on People’s Fears and Insecurities

Criticisms of Advertising

American Association of Advertising

Agencies’ Code of Ethical Standards

• Ethical Code and

Standards of Practice

 Set lofty goals for the

advertising industry and

provides a framework for

evaluating whether or not

ads meet the high

standards specified

Ethical Issues in Public Relations

 When firms confess to product shortcomings and

acknowledge problems or, instead, attempt to cover

up the problems

Ethical Issues in Packaging and Branding

Label Information

Packaging Safety Packaging Graphics

Environmental Implications

Packaging and Branding Ethical Issues

Brand Naming and Brand Name Theft

Ethical Issues in Sales Promotions

• Consumer-Oriented Sales Promotions

 A promoter offers a reward for a consumer’s behavior that not delivered or lies about the odds of winning

 Consumers who make false claims for coupon

Ethical Issues in Online Marketing

• Consumer Privacy Issues

 Consumer’s privacy rights to personal information and shopping behaviors collected by online marketers

 Security of personal information collected online

 Selling of personal information to other parties without consent of consumer

 Bogus positive product evaluations and blogs

deceptively extolling products

Fostering Ethical Marketing Communications

The Professional

Ethics Test

Take only actions that would be viewed as proper by

an objective panel of your professional colleagues

The Golden Rule Act in a way that you would want others to act toward you

The TV test Would l feel comfortable explaining this action on television to the general public?”

Regulation of Marketing Communications

• Justifications for Regulation

 When consumer decisions are based on false or limited

information

 When benefits realized exceed the costs

• Benefits of Regulation

 Improved consumer choices

 Improved product quality

Regulation by Federal Agencies

Deceptive

Advertising

Unfair Practices

Information Regulation

Federal Trade Commission (FTC) Regulatory Authority

Regulation by Federal Agencies (cont’d)

Misleading

Misrepresentation

or Omission

Reasonable Consumer Test

Material Misrepresentation Elements of the FTC’s

Deception Policy

Regulation of Unfair Practices

• Unfair Advertising

 Acts or practices that cause or are likely to cause

substantial injury to consumers, which is not

reasonably avoidable by consumers themselves and not outweighed by countervailing benefits to

consumers or competition (emphasis added)

• FTC’s Criteria for Unfair Business Acts

 Act offends public policy established by statutes

 Act is immoral, unethical, oppressive, or unscrupulous

 Act causes substantial injury to consumers,

Regulation by Federal Agencies (cont’d)

• FTC’s Corrective Advertising Program

 Requires a firm that misleads consumers to use

future advertisements to rectify any deceptive

impressions it has created in consumers’ minds

• Food and Drug Administration (FDA)’s

Regulation of Product Labeling

 Responsible for regulating information on the

packages of food and drug products

 Requires advertisers to present a balanced

perspective when advertising drugs

Regulation by Federal Agencies (cont’d)

• Drug Advertising

 FTC regulates deceptive and unfair

advertising for over-the-counter

(OTC) drugs

 FDA regulates advertisements for

prescription drugs in requiring

advertisers to present a balanced

perspective when advertising drugs

Regulation of Marketing Communications

• Regulation by State Agencies

 Most, if not all, states have departments of

consumer affairs or consumer protection

• Advertising Self-Regulation

 Is undertaken by the advertising community itself

(i.e., advertisers, industry trade associations, and

ad media) rather than by governmental bodies

Advertising Self-Regulation

• Advertising Clearance Process

1. Advertising agency clearance

2. Approval from the advertiser’s legal department and

perhaps also from an independent law firm

3. Media approval

The National Advertising Review Council

• National Advertising Review Council (NARC)

 Responsible for receiving or initiating, evaluating,

investing, analyzing and holding initial negotiations

with an advertiser on complaints or questions from

any source involving truth or accuracy of national

advertising

• NARC Organizational Units

 The Children’s Advertising Review Unit (CARU)

 National Advertising Review Board (NARB)

 Council of Better Business Bureau’s National

Advertising Division (NAD)

Environmental Marketing Communications

• Legitimate Green Marketing

 Is a firm’s introduction of environmentally oriented

products and its undertaking of marcom programs to promote them

 Seeks to accomplish two objectives:

 Improve environmental quality

 Satisfy customers

Green Marketing Initiatives

• Green Marketing Communications

 Advertisements that promote green products

 Environmentally friendly packaging

 Seal-of-approval programs promoting green products

 Cause- and event-oriented marcom efforts that

support environmental consciousness

 Point-of-purchase display materials that are

environmentally efficacious

 Direct marketing programs that reduce resource

usage by developing more efficient solicitations

 Outdoor advertising efforts that reduce the usage of

Guidelines for Green Marketing

 Claims should not overstate an environmental

attribute or benefit, either expressly or by implication

 Comparative claims should be presented in a manner that makes the basis for the comparison sufficiently clear to avoid consumer deception

Guidelines for Green Marketing

Make

Specific

Claims

Reflect Current Disposal Options

Make Substantive Claims

Make Supportable Claims General Recommendations

for Environmental Claims

Green Advertising

Promoting a Green

Lifestyle

Figure 21.3