Ch04 oguinn

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Ch04 oguinn

  1. 1. Chapter 4 Social, Ethical, and Regulatory Aspects of Advertising© 2006 Thomson/South-Western Social Aspects of Advertising • Advertising Educates Consumers – Pro: Advertising informs – Con: Advertising is superficial • Advertising improves living standards – Pro: Ads lower the costs of products – Con: Ads are wasteful and help only some© 2006 Thomson/South-Western Ch 4: Ethics & Regulation 2 Critics of advertising feel that advertising is superficial because many ads carry little actual product information. Do you think advertising is superficial?© 2006 Thomson/South-Western 1
  2. 2. Advertising Affects Happiness and Well-Being Con: Ads create needs Pro: Ads address a wide variety of basic human needs Con: Ads promote materialism Pro: Ads reflect society’s priorities© 2006 Thomson/South-Western Ch 4: Ethics & Regulation 4 Critics feel advertising promotes materialism© 2006 Thomson/South-Western 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 Con: Ads deceive via subliminal stimulation Pro: Advertising is art© 2006 Thomson/South-Western Ch 4: Ethics & Regulation 6 2
  3. 3. Do you think this ad perpetuates stereotypes?© 2006 Thomson/South-Western Advertising has a powerful effect on mass media Pro: Ads foster a diverse and affordable mass media that provides information Con: Advertising affects and controls programming. “Advertainment” has made matters worse© 2006 Thomson/South-Western Ch 4: Ethics & Regulation 8 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© 2006 Thomson/South-Western Ch 4: Ethics & Regulation 9 3
  4. 4. 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© 2006 Thomson/South-Western Ch 4: Ethics & Regulation 10 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 • What does the literature say about kid’s abilities to process persuasive information?© 2006 Thomson/South-Western Ch 4: Ethics & Regulation 11 Ethical Aspects of Advertising Advertising Controversial Products • Critics question “targeting” minorities • 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?© 2006 Thomson/South-Western Ch 4: Ethics & Regulation 12 4
  5. 5. Regulatory Aspects of Advertising Areas of advertising regulation: • Deception and unfairness • Competitive issues – Vertical cooperative advertising – Comparison advertising – Monopoly power • Advertising to children© 2006 Thomson/South-Western Ch 4: Ethics & Regulation 13 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© 2006 Thomson/South-Western Ch 4: Ethics & Regulation 14 Key Regulatory Agents--FTC FTC Programs and Remedies • Advertising Substantiation Program • Consent Order • Cease and Desist Order • Affirmative Disclosure • Corrective Advertising • Control of Celebrity Endorsements© 2006 Thomson/South-Western Ch 4: Ethics & Regulation 15 5
  6. 6. 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© 2006 Thomson/South-Western Ch 4: Ethics & Regulation 16 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© 2006 Thomson/South-Western Ch 4: Ethics & Regulation 17 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© 2006 Thomson/South-Western Ch 4: Ethics & Regulation 18 6
  7. 7. Regulation of Other Promotional Tools • Direct Marketing and e-Commerce – Privacy, Contests, Telemarketing – Spam=10 million messages/minute worldwide • Sales Promotion – Premiums, Trade Allowances, Contests • Public Relations – Privacy, Copyright Infringement, Defamation (slander and libel)© 2006 Thomson/South-Western Ch 4: Ethics & Regulation 19 7

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