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  1. 1. Evaluating the Social, Ethical , and Economic Aspects of Advertising and Promotion 22 McGraw-Hill/Irwin Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved.
  2. 2. Advertising and Promotion Viewpoints Creates consumer needs, wants Promotes materialism, insecurity, and greed More propaganda than information Provides information Creates jobs Encourages higher standard of living Promotes competition Proponent arguments Critic arguments Helps new firms enter a market
  3. 3. Ethics in Advertising and Promotion Ethics: Moral principles and values that govern the actions and decisions of an individual or group. Not all issues can be regulated A marketing or promotion action may be legal but not ethical Marketers must decide the appropriateness of their actions
  4. 4. Promoting Responsible Drinking
  5. 5. Benetton’s “Death Row” Ad Offensive
  6. 6. Advertising and Untruthful or Deceptive General mistrust of advertising among consumers. Many do not perceive ads as honest or believable Abuses involving sales promotions such as contests, sweepstakes, premium offers Unethical and/or deceptive practices involving mail order, telemarketing and other forms of direct marketing Internet scams and abuses
  7. 7. Advertising as Offensive or in Bad Taste Sexual appeals Objectionable products Shock ads
  8. 8. Test Your Knowledge Advertisers are using shock advertising to: A) Test their First Amendment rights B) Get ads noticed in the midst of clutter C) Make a statement against self-regulation D) Test the ethics of the advertising industry E) Act as advocacy ads for company management
  9. 9. Advertising and Children Children's TV Watching Behavior Children ages 2-11 watch an average of 22 hours of TV per week and see 30,000 commercials per year 80% of all advertising targeted to children falls in four product categories: Toys, cereal, candy & fast food restaurants
  10. 10. Perspectives on Ads for Children Advocates Argue That Children: Marketers Argue Children: Lack the knowledge and skills to evaluate advertising claims Cannot differentiate between programs and commercials Must learn through socialization Must acquire skills needed to function in the marketplace
  11. 11. Do TV Networks Have a Double Standard ?
  12. 12. Social and Cultural Consequences Does advertising encourage materialism? Does advertising make people buy things they don’t need? Is advertising just a reflection of society?
  13. 13. Does advertising affect Society?
  14. 14. Advertising and Stereotyping Criticisms of Advertising With Regard to Stereotyping Portrayal of women to reflect their changing role in society Portrayal of women as sex objects Ethnic stereotyping/ representation Gender stereotyping Sexual orientation
  15. 15. What is your opinion of this ad? Is this woman portrayed as a sex object? Does this ad contain cues that are sexually suggestive? Does this ad present an image of sexual submissiveness?
  16. 16. Dove Challenges the Norms of Beauty
  17. 17. Test Your Knowledge Groups such as the National Organization for Women (NOW) are critical of advertising that: A) Portrays women in traditional sexist roles B) Contributes to violence against women C) Is insulting to women D) Stereotypes women E) Does any of the above
  18. 18. Advertising Can Address Social Problems *Click outside of the video screen to advance to the next slide
  19. 19. Do Advertisers Control the Media? Advertising is the primary source of revenue for newspapers, magazines, television and radio Advertisers may exert control over the media by biasing editorial content, limiting coverage of certain issues, or influencing program content Media’s dependence on advertising for revenue makes them vulnerable to control by advertisers
  20. 20. Do Advertisers Control the Media? They must report the news fairly and accurately to retain public confidence Advertisers need the media more than the media need any one advertiser Media maintain separation between news and business departments “The Wall”
  21. 21. U.S. Government Discourages Drug Use
  22. 22. Role of Advertising in the Economy Makes consumers aware of products and services Provides consumers with information to use to make purchase decisions Encourages consumption, fosters economic growth
  23. 23. Economic Impact of Advertising <ul><li>Effects on Consumer Choice </li></ul><ul><li>Differentiation </li></ul><ul><li>Brand Loyalty </li></ul><ul><li>Effects on Product Costs and Prices </li></ul><ul><li>Advertising as an expense that increases the cost of products </li></ul><ul><li>Increased differentiation </li></ul><ul><li>Effects on Competition </li></ul><ul><li>Barriers to entry </li></ul><ul><li>Economies of scale </li></ul>
  24. 24. Test Your Knowledge From an economic perspective, advertising might lower the cost of a product by: A) Creating barriers to entry for less efficient firms B) Moving consumers to the consumer socialization stage of the buying process C) Making it possible for firms to realize economies of scale through expansion of sales volume D) Allowing firms to advertise at high levels along with competitors E) Doing none of the above
  25. 25. The Economic Value of Advertising *Click outside of the video screen to advance to the next slide
  26. 26. Summarizing Economic Effects Change consumers’ tastes Reduces competition Lowers sensitivity to price Builds brand loyalty Advertising Equals Market Power Leads to higher prices Leads to fewer choices Results in higher profits
  27. 27. Summarizing Economic Effects Provides useful information Pressure for lower prices Increases price sensitivity Increases competition Advertising Equals Information Forces inefficient firms out Pressure for high quality
  28. 28. Do you agree with Leo Burnett? “ It 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.” Excerpters is from a speech given by Leo Burnett on the American Association or Advertising Agencies’ 50th anniversary, April 20,1967