This chapter discusses ethical issues in advertising. It covers the role of advertising in modern business, including its economic, social and psychological functions. Advertising plays an important role in business by communicating information about products and services. It also influences culture and consumer behavior. However, there are ethical standards that advertising should follow to avoid misleading consumers or using offensive content. Guidelines regulate truthfulness in advertising and respect for public decency and social norms. Common ethical issues include misleading claims, stereotypes, and advertising controversial products like alcohol.

1. Chapter 2
Ethical Issues in Advertising

2. INTRODUCTION
• There is no doubt that advertising attracts all of us in number of
ways, but
• there are also number of controversy associated with
advertising
• Generally, these controversies are concerned about the impact
of advertising on economy, society and ethics

3. ROLE OF ADVERTISING IN
MODERN BUSINESS WORLD
Advertising is primarily a means by which sellers communicate to
prospective buyers.
What they communicate?
“The worth of their goods and services”
Contd…

4. ROLE OF ADVERTISING IN MODERN
BUSINESS WORLD
1. Economic function
2. Social function
3. Psychological function

5. ROLE OF ADVERTISING IN MODERN
BUSINESS WORLD
Economic function
• Advertising communicates the message in persuasive language
• It create wide markets as the information is delivered to people far and wide
• It inclines people favorably to the products and affect our attitudes
• Therefore, advertising performs an economic function by being an art of
persuasion
• Advertising is also an economic process—it helps the product to become
known and it facilitates exchange between those who need the product and
those who can satisfy the need
• Provides employment opportunities (in advertising industry)

6. ROLE OF ADVERTISING IN MODERN
BUSINESS WORLD
Social function
• Advertising affects the core cultural values and subsidiary cultural values
• Advertising is a mirror to the society in which it operates…it reflects the
cultural values of that society
• Advertising can also transfer some cultural values of one society to other
• Advertising has improved our standard of living
e.g. we buy TV, AC, Computers, Cars etc after getting interested in these products through
advertising
We have accepted new ideas such as microwave, electric shaving, detergents etc through
advertising

7. ROLE OF ADVERTISING IN MODERN
BUSINESS WORLD
Social function
• Advertising protects the consumer by educating them and by forcing the
manufacturers to maintain quality and to be fair
Therefore…..
Advertising brings about consumer welfare in two ways:
a. By improving standard of living
b. By improving product quality

8. ROLE OF ADVERTISING IN MODERN
BUSINESS WORLD
Psychological function
• Advertising is closely linked to consumer behavior, therefore,
• it affects personality of consumer, his concept of self, his
attitudes, beliefs, opinions, his life-style etc
• Advertising appeals to our physiological and psychological
motives

9. ADVERTISING AND SOCIETY
• Advertisements are not just the sellers
• They reflect the society
• Whatever is used in society is reflected in advertising
e.g.
o Pakistani society is highly family oriented (example ads: savings for
children, daughter’s marriage)
o Pakistani society is people-oriented, and not self-oriented
o For the sake of our family and others, we Pakistani can postpone our
own gratification
o We are also fun loving (example ads: Lux, Pepsi, Jeans etc)

10. ETHICS IN ADVERTISING
• Should not mislead the consumer
• What it promises must be there in the performance of products
• Ad should not be indecent and obscene
• As advertising is also a social process, it must honor the norms
of social behavior, and should not offend our moral sense
• PAS (Pakistan Advertisers' Society) regulates the advertising 
has the set guidelines

11. GUIDELINES
• To ensure the truthfulness and honesty of representations and claims
made by advertisements and to safeguard against misleading
advertising.
• To ensure that advertisements are not offensive to generally accepted
standards of public decency.
• To safeguard against indiscriminate use of advertising for promotion of
products which are regarded as hazardous to society or to individuals to
a degree or of a type which is unacceptable to society in large.
• To ensure that advertisements observe fairness in competition so that
consumers need to be informed on choices in the market place and the
canons of generally accepted competitive behavior in business are both
served.

12. ETHICAL ISSUES IN ADVERTISING
Advertising is a highly visible business activity and any lapse in
ethical standards can often be risky for the company.
Some of the common examples of ethical issues in advertising are
give below:
• Vulgarity/Obscenity used to gain consumers’ attention
• Misleading information and deception
• Puffery
• Stereotypes
• Racial issues
• Controversial products (e.g. alcohol, gambling, tobacco etc)

13. Basic Tenets of the Code
• It is held that the responsibility of advertisers, advertising
agencies, media and other associated companies is a
constructive force in business. To fulfill this responsibility,
it is essential that the parties recognise their obligation to
themselves and to each other.
• As a business the industry must operate in the spirit of
vigorous competition honestly conducted.
• It is recognized that unethical competitive practices in the
advertising business lead to financial waste, loss of
prestige and to the weakening of public confidence, in
both, the advertisements and the industry.

14. Conti……..
• The right of advertising is a responsibility towards the
consumers and the society at large. Specifically the
society members will not create advertising that is:
– False or misleading visually or verbally.
– Claims insufficiently supported that distort the true meaning
or practicable application of statements made by
professional or scientific authority.
– Testimonials that do not reflect the real opinions of
individuals involved.
– Price claims that are misleading.
– Statements, suggestions or pictures offensive to public
decency or minority segments of the population.

15. Prepare Yourself For Quiz….