Contemporary advertising 11e chapter 3

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  • 1. Chapter chapter 3 Economic, Social, and Regulatory Aspects of Advertising Identifies and explains economic, social, ethical, and legal issues advertisers must considerMcGraw-Hill/IrwinContemporary Advertising, 11e Copyright © 2008 by the McGraw-Hill Companies, Inc. All rights reserved.
  • 2. 3-3 Chapter 3 ObjectivesClassify two main types Employ an economic of social criticisms model to discuss effects Explain social Understand howresponsibility and ethics governments regulate here and abroadDiscuss court rulings that Define the regulatoryaffect freedom of speech roles of state and local governments Describe how federal agencies regulate Discuss self-regulation
  • 3. 3-4 Controversies Does advertising . . . Economic Societalaffect product value? influence consumer choice? make us buy things we don’t need? make us more materialistic?affect us subliminally? discourage increase prices? competition? debase language? affect art? affect demand?
  • 4. Economic Impact: 3-5 Principles CompleteSelf-interest informationMany buyers Absence of & sellers externalities
  • 5. Economic Impact: 3-6 GlobalBleustein-Blanchet: Insert ex. 3-1, p. 58Advertising Per capita ad spendingexpenditure isdirectly Position = 2.9” horiz.,proportional to 1.5 verticalstandard of living Size = 4.6” TALL Resolution: 300 dpi
  • 6. Economic Impact: 3-7 Billiards ModelInsert ex. 3-2, p. 59, Advertising billiardsPosition = centered horiz., 1.5” verticalSize = 4.6” TALLResolution: 300 dpi
  • 7. Economic Impact: 3-8 Four Affected Areas Product Value-Communicates brand image-Educates customers-Associates w/ desirable image
  • 8. Economic Impact: 3-9 Four Affected Areas Product Prices & Value Competition-Communicates Increase: brand image -Branding-Educates -Ad costs customers Decrease:-Associates w/ desirable image -Competition -Efficiency
  • 9. Economic Impact: 3-10 Four Affected Areas Product Prices & Consumer Value Competition Demand-Communicates Increase: Primary: brand image -Branding -Product-Educates Category -Ad costs customers Secondary: Decrease:-Associates w/ -Particular desirable image -Competition Brand -Efficiency
  • 10. Economic Impact: 3-11 Four Affected Areas Product Prices & Consumer Consumer Value Competition Demand Choice-Communicates Increase: Primary: Product brand image -Branding -Product differentiation-Educates Category -Ad costs customers Secondary: Decrease:-Associates w/ -Particular desirable image -Competition Brand -Efficiency
  • 11. Economic Impact: 3-12 Abundance Principle In an economy that produces more goods & services than can be consumed, advertising:Allows more- Keeps Complete effective Self-interest consumers informationcompetition informed Self-Stimulates Many buyers Absence of regulates tocompetition & sellers externalities keep market free & open
  • 12. Social Impact: 3-13 Two Types of Criticism Short-term manipulative arguments Deception: Subliminal puffery, nonproduct facts, bias, inaccuracy myth Long-term macro argumentsProliferation Stereotyping Offensive Social impact Impacts values
  • 13. 3-14 Social Responsibility and EthicsPublic service Insert photo 3.9, p.66announcementfrom Abbott “Think! Slow down” PSAMead VickersBDDO Position = 2.7” horiz., 1.5” vertical Size = 4.6” TALL Resolution = 300 dpi
  • 14. 3-15 Social Responsibility and Ethics Ethical: Socially Responsible: morally right what society views as best Responsible PromotePromotewell-being advertising harmony & stability can . . . Draw Influence crowds to elections events
  • 15. 3-16 Social Responsibility and EthicsPublic serviceannouncement Insert photo 3.13, p. 71from the Brain Towel snowboarding adInjuryAssociation of Position = 2.9” horizontal, 1.5” verticalAmerica Size = 5.7” WIDE Resolution = 300 dpi
  • 16. 3-17 Ethics of AdvertisingInsert ex. 3.3, p. 73Levels of Ethical ResponsibilityPosition = 0.4” horizontal, 1.5 verticalSize = 8.2” WIDEResolution = 300 dpi
  • 17. 3-18How Government Regulates National: Legislative, Executive, Judiciary State: Municipal: governor, mayor, attorney general, city manager, departments police chief
  • 18. 3-19 International RegulationAd from Air Insert photo 3.14, p. 77Tahiti Nui Air Tahiti line drawing ad Position = 2.9“ horizontal, 1.5“ vertical Size = 5.7” WIDE Resolution = 300 dpi
  • 19. Current U.S. 3-20 Regulatory IssuesSupreme Court: “speech” or“commercial speech” Tobacco Controversy Consumer Privacy Advertising to Children
  • 20. Federal Regulation: 3-21 Agencies Patent & Library of FTC FDA FCC Trademark Congress Office Deceptive, Nutritional Broadcast Copyrights unfair, & Labeling & Intellectual media “works ofcomparative Education property licensing authorship” ads Act (NLEA)
  • 21. Federal Regulation: 3-22 FDA DisclosureThis ad for Insert photo 3.19b Insert photo 3.19aRevolution, atopical Relpax woman Relpax disclosureParasiticide for Position = 2.8” Position: 5.9”Dogs and Cats, horiz., 1.5” vertical: horiz., 1.5” verticalhas a longdisclosure Size = 2.75 WIDE Resolution = 300 Size = 2.75 WIDE dpi Res = 300 dpi
  • 22. State & Local 3-23 Regulation“Little FTC” consumer protection acts National marketers comply with states’ laws Local govt. regulation:city & county consumer protection agencies
  • 23. Nongovernment 3-24 Regulation Better Business Bureau (BBB) National Advertising Review Council (NARC)  National Advertising Division (NAD)  National Advertising Review Board (NARB) Regulation by the media Regulation by consumer groups
  • 24. Self-Regulation: 3-25 Agencies & Associations Research and verify claims & comparative data before use Agency Liable for misleading or fraudulent claimsResponsibilities Some maintain in-house legal counsel American Association of Advertising Agencies (AAAA)Industry-Wide American Advertising Federation (AAF) Associations Association of National Advertisers (ANA)
  • 25. Self-Regulation: 3-26 AAF PrinciplesInsert ex. 3-6, p. 93, AAF Advertising PrinciplesPosition = 0.4” horizontal, 1.5” verticalSize = 8.2” WIDEResolution = 300 dpi