Advertising regulation.


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Advertising Management- Advertising Regulation-
Topics covered- Federal Trade Comission Act - Deceptive Advertising - Puffery- Remedies.

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Advertising regulation.

  1. 1. ADVERTISING MANAGEMENT ADVERTISING REGULATION Presentation by : Dhaval Gurnani K.S.School of Business Management,Ahmedabad
  2. 2. Federal Trade Commission Act In 1914,FTC Act was passed. Primary Responsibility- Regualtion of advertising. In beginning, FTC Act was more concerned about competition in commerce. As deceptive advt. has negative impact on commerce, it focused more on Advertising.
  3. 3. What is Deceptive Advertising? Deception exists when an advertisement is introduced into the perceptual process of some audience and the output of that perceptual process. 1.Differs from the reality of the situation 2.Affects buying behavior to the detriment of consumer.
  4. 4. Deceptive- A Definition As per FTCA, Deception is found if: 1.There is misrepresentation, omission, or practice likely to be mislead. 2.The consumer is acting responsibly(or reasonably) in the circumstances. 3.The practice is material and consumer injury is possible because consumers are likely to have chosen differently if there was no deception.
  5. 5. Misrepresentation or Omission 13 Ways in which misrepresentations can occur: 1.Suggesting that a small difference is important. -- Lowest level of tar & nicotine 2.Artificial product demonstrations. --Artificial product to show superiority over others. 3.Using an unambiguous or easily confused phrase. --Fights Decay shows complete protection, hence deceptive. 4.Implying a benefit that does not fully or partially exist. --GE Case. Low cost bulb produce high wattage light. 5.Implying that a product benefit is unique to a brand. 6.Implying that a benefit is needed or that a product will fulfill a benefit when it will not.
  6. 6. Misrepresentation or Omission 5.Implying that a product benefit is unique to a brand. --Low Alcohol Beer. 6.Implying that a benefit is needed or that a product will fulfill a benefit when it will not. --Environmental friendly products cannot show the benefit unless it can prove 7.Incorrectly implying that an endorser uses and advocates the brand. --P&G had claimed that Washing Machine co.’s distributed P&G Detergents to endorse the,. However ,P&G had paid companies to distribute 8.Omitting a needed qualification. --Possible unsafe aspects of using plastic toys.
  7. 7. Misrepresentation or Omission 9.Making a claim without substantiation. --Claims on safety, performance,quality-when such claims rely on by a consumer who lacks ability or knowledge. 10.Bait and switch. --Govt. auction of automobiles, by dialing 900-900. Calling charge Rs.2. After you call,they say Call on 800-800. Thus,charging wrongly. 11.Identifying the advertising. 12.Telemarketing. 13.Intellectual property.
  8. 8. PUFFERY Puffing takes two general forms: i. Subjective Statement. Eg.: ‘Best or greatest’ ii.Exaggeration Eg.: TVS Sky Shop Advt.
  9. 9. Exaggeration
  10. 10. Determining Deception using Advertising Research
  11. 11. Determining Deception using Advertising Research We consider 1.The type of claim 2.The type of product 3.The benefits of a truthful claim. 4.The consequences of a false claim. 5.The cost of developing substantiation. 6.The amount of substantiation experts in the field believe is reasonable.
  12. 12. Remedies Cease & Desist orders Prohibits the respondent from engaging further in the deceptive practice. Restitution Consumer is compensated for any damange. Affirmative Disclosures If something is omitted, ‘a clear & affirmative’ disclosure should be made.(Health & Safety issues) Corrective Advertising Advertisers to rectify past mistakes by making suitable statements in future commercials.
  13. 13. Reebok- Suffers..!! Sportswear giant Reebok has been ordered by the US Federal Trade Commission to pay out $25 million. For “deceptively advertising” that a line of running shoes would tone the wearer’s buttock muscles. The settlement also prohibits Reebok from making “unsupported claims” that its ‘toning shoes’ strengthen or tone muscles.
  14. 14. Company Lawsuits
  15. 15. Competitor Lawsuits Firms charge that false advertising company, that has caused them damage. General verdicts are: To stop the offending practice. Pay Compensation.
  16. 16. Book Referred: Advertising Management -Batra,Myers & Aaker. Publisher:Pearson. Example Credits: Mc.Donalds– Dermitage—Gillette—Aquafresh— Reebok