advertising, promotion and other aspects of integrated marketing communication

© 2010 South-Western, a part of Cengage Learning
All rights reserved.
PowerPoint Presentation by Charlie Cook
The University of West Alabama
Eighth Edition
Ethical, Regulatory, and
Environmental Issues
CHAPTER
21
1. Appreciate the ethical issues associated with
advertising, sales promotions, and other marcom
practices.
2. Understand why the targeting of marketing
communications toward vulnerable groups is a
heatedly debated practice.
3. Explain the role and importance of governmental
efforts to regulate marketing communications.
4. Be familiar with deceptive advertising and the
elements that guide the determination of whether a
particular advertisement is deceptive.
Chapter Objectives
After reading this chapter you should be able to:
© 2010 South-Western, a part of Cengage Learning. All rights reserved. 21–2
5. Be acquainted with the regulation of unfair business
practices and the major areas where the unfairness
doctrine is applied.
6. Know the process of advertising self-regulation.
7. Appreciate the role of marketing communications in
environmental (green) marketing.
8. Recognize the principles that apply to all green
marcom efforts.

Chapter Objectives (cont’d)
After reading this chapter you should be able to:
© 2010 South-Western, a part of Cengage Learning. All rights reserved. 21–3
© 2010 South-Western, a part of
Cengage Learning. All rights
reserved. 21–4
Ethical Issues in Marketing Communications
Ethical Issues in Marketing Communications
•
Ethics in Marcom
Ethics in Marcom

Involves matters of right and wrong, or
Involves matters of right and wrong, or
moral
moral
, conduct
, conduct
pertaining to any aspect of marketing communications
pertaining to any aspect of marketing communications

Honesty, honor, virtue, integrity
Honesty, honor, virtue, integrity
•
Ethical Conduct
Ethical Conduct

Lack of consensus about what it is
Lack of consensus about what it is


Ethical lapses and moral indiscretions occur under
Ethical lapses and moral indiscretions occur under
pressures of trying to meet business goals and
pressures of trying to meet business goals and
attempting to satisfy the demands of the financial
attempting to satisfy the demands of the financial
community
community
© 2010 South-Western, a part of
Cengage Learning. All rights
reserved. 21–5
Sources of Ethical Issues
Sources of Ethical Issues
Ethical Issues in
Marketing Activities and
Communications
Advertising
Targeting Marcom
Public Relations
Internet Marketing
Sales Promotions
Packaging
Communications
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reserved. 21–6
The Ethics of Targeting
The Ethics of Targeting
•
Ethical Debate

Ethical Debate

Is it ethical to target products
Is it ethical to target products
and communications efforts to
and communications efforts to
segments that vulnerable or
segments that vulnerable or
put at risk by these actions?
put at risk by these actions?
•
Is Targeting Unethical or
Is Targeting Unethical or
Just Good Marketing?
Just Good Marketing?

When does a good targeting
When does a good targeting
strategy become a method of
strategy become a method of
unfair (unethical) advantage?
unfair (unethical) advantage?
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reserved. 21–7
Is Targeting Unethical or
Is Targeting Unethical or
Just Good Marketing?
Just Good Marketing?
•

Positive
Positive

Targeting benefits
Targeting benefits
rather than harms
rather than harms
consumers—providing
consumers—providing
them with products
them with products
best suited to their
best suited to their
particular needs and
particular needs and
wants
wants
•
Negative
Negative

Targeting is not
Targeting is not
concerned with fulfilling
concerned with fulfilling
consumers’ needs and
consumers’ needs and
wants, but rather with
wants, but rather with
exploiting consumer

exploiting consumer
vulnerabilities
vulnerabilities
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reserved. 21–8
The Ethics of Targeting
The Ethics of Targeting
Targeting Food and
Beverage Products
Targeting Tobacco and
Alcohol Products
Targeting Miscellaneous
Products
Ethical Issues in
Targeting Children
and Teens
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reserved. 21–9
Targeting to Children and Teens
Targeting to Children and Teens
•
Negative Targeting Outcomes
Negative Targeting Outcomes

Products targeted to kids are unnecessary and the
Products targeted to kids are unnecessary and the
communications involved are exploitative
communications involved are exploitative


Posters, book covers, free magazines, advertising, and other
Posters, book covers, free magazines, advertising, and other
so-called learning tools that are ads for products
so-called learning tools that are ads for products

Movies with tie-in merchandise programs
Movies with tie-in merchandise programs

Targeting adult products (e.g., beer) to pre-adults
Targeting adult products (e.g., beer) to pre-adults

Using unacceptable cartoon-like images (e.g., Joe Camel)
Using unacceptable cartoon-like images (e.g., Joe Camel)

Promoting adult-oriented entertainment (e.g., violent films,
Promoting adult-oriented entertainment (e.g., violent films,
video games, and music products) to children and teens
video games, and music products) to children and teens

Marketing food products (e.g., high-fat, high-calorie snacks)
Marketing food products (e.g., high-fat, high-calorie snacks)
that contribute to childhood obesity
that contribute to childhood obesity
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reserved. 21–10
Targeting to Economically Disadvantaged
Targeting to Economically Disadvantaged
Consumers

Consumers
•
Billboards advertising tobacco and alcohol
Billboards advertising tobacco and alcohol
disproportionately appear in inner-city areas
disproportionately appear in inner-city areas
•
Examples:
Examples:

R.J. Reynolds attempt to market new brands
R.J. Reynolds attempt to market new brands
cigarettes to African-Americans and downscale young
cigarettes to African-Americans and downscale young
women
women

Heileman Brewing Company’s targeting of “Power
Heileman Brewing Company’s targeting of “Power
Master” high-alcohol malt liquor to inner-city
Master” high-alcohol malt liquor to inner-city
neighborhoods
neighborhoods
© 2010 South-Western, a part of
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reserved. 21–11
Targeting
Tobacco
Products
Figure 21.1

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Ethical Issues in Advertising
Ethical Issues in Advertising
Advertising Creates and
Perpetuates
Stereotypes
Advertising Persuades
People to Buy Things
They Do Not Need
Advertising Plays on
People’s Fears and
Insecurities
Criticisms of
Advertising
Advertising Is Untruthful
and Deceptive
Advertising Is
Manipulative
Advertising Is Offensive
and in Bad Taste
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reserved. 21–13
American Association of Advertising
American Association of Advertising
Agencies’ Code of Ethical Standards
Agencies’ Code of Ethical Standards
•

Ethical Code and
Ethical Code and
Standards of Practice
Standards of Practice

Set lofty goals for the
Set lofty goals for the
advertising industry and
advertising industry and
provides a framework for
provides a framework for
evaluating whether or not
evaluating whether or not
ads meet the high
ads meet the high
standards specified
standards specified
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reserved. 21–14
Ethical Issues in Public Relations
Ethical Issues in Public Relations
•
Publicity
Publicity

Involves disseminating positive information about a
Involves disseminating positive information about a
firm and its products and handling negative publicity
firm and its products and handling negative publicity


Like advertising—the same ethical issues apply
Like advertising—the same ethical issues apply
•
Negative Publicity
Negative Publicity

When firms confess to product shortcomings and
When firms confess to product shortcomings and
acknowledge problems or, instead, attempt to cover
acknowledge problems or, instead, attempt to cover
up the problems
up the problems
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Ethical Issues in Packaging and Branding
Ethical Issues in Packaging and Branding
Label Information
Packaging Safety
Packaging Graphics
Environmental
Implications
Packaging and
Branding
Ethical Issues
Brand Naming and
Brand Name Theft
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reserved. 21–16
Ethical Issues in Sales Promotions
Ethical Issues in Sales Promotions
•
Sales Promotions
Sales Promotions

Manufacturer promotions directed at wholesalers and
Manufacturer promotions directed at wholesalers and
retailers and to consumers
retailers and to consumers
•
Slotting Allowances
Slotting Allowances

Manufacturers have to pay retailers to handle a new
Manufacturers have to pay retailers to handle a new
product—Is this a form of bribery and is it unethical?
product—Is this a form of bribery and is it unethical?
•
Consumer-Oriented Sales Promotions
Consumer-Oriented Sales Promotions

A promoter offers a reward for a consumer’s behavior
A promoter offers a reward for a consumer’s behavior
that not delivered or lies about the odds of winning
that not delivered or lies about the odds of winning

Consumers who make false claims for coupon
Consumers who make false claims for coupon

redemptions and refunds
redemptions and refunds
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Ethical Issues in Online Marketing
Ethical Issues in Online Marketing
•
Consumer Privacy Issues
Consumer Privacy Issues

Consumer’s privacy rights to personal information and
Consumer’s privacy rights to personal information and
shopping behaviors collected by online marketers
shopping behaviors collected by online marketers

Security of personal information collected online
Security of personal information collected online

Selling of personal information to other parties without
Selling of personal information to other parties without
consent of consumer
consent of consumer

Bogus positive product evaluations and blogs
Bogus positive product evaluations and blogs
deceptively extolling products
deceptively extolling products
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reserved. 21–18
Fostering Ethical Marketing Communications
Fostering Ethical Marketing Communications
The Professional
The Professional
Ethics Test
Ethics Test
Take only actions that would be viewed as proper by
an objective panel of your professional colleagues
The Golden Rule
The Golden Rule
Act in a way that you would want others to act
toward you
The TV test
The TV test
Would l feel comfortable explaining this action on
television to the general public?”
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Regulation of Marketing Communications
Regulation of Marketing Communications
•
Justifications for Regulation
Justifications for Regulation

When consumer decisions are based on false or limited
When consumer decisions are based on false or limited
information
information


When benefits realized exceed the costs
When benefits realized exceed the costs
•
Benefits of Regulation
Benefits of Regulation

Improved consumer choices
Improved consumer choices

Improved product quality
Improved product quality

Reduction in prices
Reduction in prices
•
Costs
Costs

Regulatory compliance
Regulatory compliance

Enforcement costs
Enforcement costs

Unintended side effects
Unintended side effects
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Regulation by Federal Agencies
Regulation by Federal Agencies
Deceptive
Advertising
Unfair
Practices
Information
Regulation
Federal Trade
Commission (FTC)
Regulatory Authority
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Regulation by Federal Agencies (cont’d)
Regulation by Federal Agencies (cont’d)
Misleading
Misrepresentation
or Omission
Reasonable
Consumer Test
Material
Misrepresentation
Elements of the FTC’s
Deception Policy
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reserved. 21–22
Regulation of Unfair Practices
Regulation of Unfair Practices

•
Unfair Advertising
Unfair Advertising

Acts or practices that cause or are likely to cause
Acts or practices that cause or are likely to cause
substantial injury to consumers
substantial injury to consumers
, which is
, which is
not
not
reasonably avoidable
reasonably avoidable
by consumers themselves and
by consumers themselves and
not outweighed by countervailing benefits
not outweighed by countervailing benefits
to
to
consumers or competition (emphasis added)
consumers or competition (emphasis added)
•
FTC’s Criteria for Unfair Business Acts
FTC’s Criteria for Unfair Business Acts

Act offends public policy established by statutes
Act offends public policy established by statutes

Act is immoral, unethical, oppressive, or unscrupulous

Act is immoral, unethical, oppressive, or unscrupulous

Act causes substantial injury to consumers,
Act causes substantial injury to consumers,
competitors, or other businesses
competitors, or other businesses
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Regulation by Federal Agencies (cont’d)
Regulation by Federal Agencies (cont’d)
•
FTC’s Corrective Advertising Program
FTC’s Corrective Advertising Program

Requires a firm that misleads consumers to use
Requires a firm that misleads consumers to use
future advertisements to rectify any deceptive
future advertisements to rectify any deceptive
impressions it has created in consumers’ minds
impressions it has created in consumers’ minds
•
Food and Drug Administration (FDA)’s
Food and Drug Administration (FDA)’s
Regulation of Product Labeling
Regulation of Product Labeling

Responsible for regulating information on the
Responsible for regulating information on the
packages of food and drug products

packages of food and drug products

Requires advertisers to present a balanced
Requires advertisers to present a balanced
perspective when advertising drugs
perspective when advertising drugs
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Regulation by Federal Agencies (cont’d)
Regulation by Federal Agencies (cont’d)
•
Drug Advertising
Drug Advertising

FTC regulates deceptive and unfair
FTC regulates deceptive and unfair
advertising for over-the-counter
advertising for over-the-counter
(OTC) drugs
(OTC) drugs

FDA regulates advertisements for
FDA regulates advertisements for
prescription drugs in requiring
prescription drugs in requiring
advertisers to present a balanced
advertisers to present a balanced
perspective when advertising drugs
perspective when advertising drugs

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Regulation of Marketing Communications
Regulation of Marketing Communications
•
Regulation by State Agencies
Regulation by State Agencies

Most, if not all, states have departments of
Most, if not all, states have departments of
consumer affairs or consumer protection
consumer affairs or consumer protection
•
Advertising Self-Regulation
Advertising Self-Regulation

Is undertaken by the advertising community itself
Is undertaken by the advertising community itself
(i.e., advertisers, industry trade associations, and
(i.e., advertisers, industry trade associations, and
ad media) rather than by governmental bodies.
ad media) rather than by governmental bodies.