1. Ethical, Regulatory, and Environmental Issues
INTEGRATED MARKETING
COMMUNICATIONS
IN ADVERTISING AND PROMOTION
CHAPTER 21
Ethical, Regulatory, and Environmental Issues
© 2010 South-Western, a part of Cengage Learning All rights reserved.

2. Chapter Objectives After reading this chapter you should be able to:
Appreciate the ethical issues associated with advertising, sales promotions, and other marcom practices.
Understand why the targeting of marketing communications toward vulnerable groups is a heatedly debated practice.
Explain the role and importance of governmental efforts to regulate marketing communications.
Be familiar with deceptive advertising and the elements that guide the determination of whether a particular advertisement is deceptive.
© 2010 South-Western, a part of Cengage Learning. All rights reserved.
21–2

3. Chapter Objectives (cont’d) After reading this chapter you should be able to:
Be acquainted with the regulation of unfair business practices and the major areas where the unfairness doctrine is applied.
Know the process of advertising self-regulation.
Appreciate the role of marketing communications in environmental (green) marketing.
Recognize the principles that apply to all green marcom efforts.
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21–3

4. Ethical Issues in Marketing Communications
Ethics in Marcom
Involves matters of right and wrong, or moral, conduct pertaining to any aspect of marketing communications
Honesty, honor, virtue, integrity
Ethical Conduct
Lack of consensus about what it is
Ethical lapses and moral indiscretions occur under pressures of trying to meet business goals and attempting to satisfy the demands of the financial community
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5. 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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6. The Ethics of Targeting
Ethical Debate
Is it ethical to target products and communications efforts to segments that vulnerable or put at risk by these actions?
Is Targeting Unethical or Just Good Marketing?
When does a good targeting strategy become a method of unfair (unethical) advantage?
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7. Is Targeting Unethical or Just Good Marketing?
Positive
Targeting benefits rather than harms consumers—providing them with products best suited to their particular needs and wants
Negative
Targeting is not concerned with fulfilling consumers’ needs and wants, but rather with exploiting consumer vulnerabilities
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8. 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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9. Targeting to Children and Teens
Negative Targeting Outcomes
Products targeted to kids are unnecessary and the communications involved are exploitative
Posters, book covers, free magazines, advertising, and other so-called learning tools that are ads for products
Movies with tie-in merchandise programs
Targeting adult products (e.g., beer) to pre-adults
Using unacceptable cartoon-like images (e.g., Joe Camel)
Promoting adult-oriented entertainment (e.g., violent films, video games, and music products) to children and teens
Marketing food products (e.g., high-fat, high-calorie snacks) that contribute to childhood obesity
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10. Targeting to Economically Disadvantaged Consumers
Billboards advertising tobacco and alcohol disproportionately appear in inner-city areas
Examples:
R.J. Reynolds attempt to market new brands cigarettes to African-Americans and downscale young women
Heileman Brewing Company’s targeting of “Power Master” high-alcohol malt liquor to inner-city neighborhoods
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11. Targeting Tobacco Products
Figure 21.1
Targeting Tobacco Products
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12. 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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13. American Association of Advertising Agencies’ Code of Ethical Standards
Ethical Code and Standards of Practice
Set lofty goals for the advertising industry and provides a framework for evaluating whether or not ads meet the high standards specified
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14. Ethical Issues in Public Relations
Publicity
Involves disseminating positive information about a firm and its products and handling negative publicity
Like advertising—the same ethical issues apply
Negative Publicity
When firms confess to product shortcomings and acknowledge problems or, instead, attempt to cover up the problems
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15. 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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16. Ethical Issues in Sales Promotions
Manufacturer promotions directed at wholesalers and retailers and to consumers
Slotting Allowances
Manufacturers have to pay retailers to handle a new product—Is this a form of bribery and is it unethical?
Consumer-Oriented Sales Promotions
A promoter offers a reward for a consumer’s behavior that not delivered or lies about the odds of winning
Consumers who make false claims for coupon redemptions and refunds
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17. Ethical Issues in Online Marketing
Consumer Privacy Issues
Consumer’s privacy rights to personal information and shopping behaviors collected by online marketers
Security of personal information collected online
Selling of personal information to other parties without consent of consumer
Bogus positive product evaluations and blogs deceptively extolling products
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18. Fostering Ethical Marketing Communications
The Golden Rule
Act in a way that you would want others to act toward you
The Professional Ethics Test
Take only actions that would be viewed as proper by an objective panel of your professional colleagues
The TV test
Would l feel comfortable explaining this action on television to the general public?”
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19. Regulation of Marketing Communications
Justifications for Regulation
When consumer decisions are based on false or limited information
When benefits realized exceed the costs
Benefits of Regulation
Improved consumer choices
Improved product quality
Reduction in prices
Costs
Regulatory compliance
Enforcement costs
Unintended side effects
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20. Regulation by Federal Agencies
Deceptive Advertising
Unfair Practices
Information Regulation
Federal Trade Commission (FTC) Regulatory Authority
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21. 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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22. Regulation of Unfair Practices
Unfair Advertising
Acts or practices that cause or are likely to cause substantial injury to consumers, which is not reasonably avoidable by consumers themselves and not outweighed by countervailing benefits to consumers or competition (emphasis added)
FTC’s Criteria for Unfair Business Acts
Act offends public policy established by statutes
Act is immoral, unethical, oppressive, or unscrupulous
Act causes substantial injury to consumers, competitors, or other businesses
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23. Regulation by Federal Agencies (cont’d)
FTC’s Corrective Advertising Program
Requires a firm that misleads consumers to use future advertisements to rectify any deceptive impressions it has created in consumers’ minds
Food and Drug Administration (FDA)’s Regulation of Product Labeling
Responsible for regulating information on the packages of food and drug products
Requires advertisers to present a balanced perspective when advertising drugs
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24. Regulation by Federal Agencies (cont’d)
Drug Advertising
FTC regulates deceptive and unfair advertising for over-the-counter (OTC) drugs
FDA regulates advertisements for prescription drugs in requiring advertisers to present a balanced perspective when advertising drugs
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25. Regulation of Marketing Communications
Regulation by State Agencies
Most, if not all, states have departments of consumer affairs or consumer protection
Advertising Self-Regulation
Is undertaken by the advertising community itself (i.e., advertisers, industry trade associations, and ad media) rather than by governmental bodies.
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26. Advertising Self-Regulation
Advertising Clearance Process
Advertising agency clearance
Approval from the advertiser’s legal department and perhaps also from an independent law firm
Media approval
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27. The National Advertising Review Council
National Advertising Review Council (NARC)
Responsible for receiving or initiating, evaluating, investing, analyzing and holding initial negotiations with an advertiser on complaints or questions from any source involving truth or accuracy of national advertising
NARC Organizational Units
The Children’s Advertising Review Unit (CARU)
National Advertising Review Board (NARB)
Council of Better Business Bureau’s National Advertising Division (NAD)
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28. Environmental Marketing Communications
Legitimate Green Marketing
Is a firm’s introduction of environmentally oriented products and its undertaking of marcom programs to promote them
Seeks to accomplish two objectives:
Improve environmental quality
Satisfy customers
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29. Green Marketing Initiatives
Green Marketing Communications
Advertisements that promote green products
Environmentally friendly packaging
Seal-of-approval programs promoting green products
Cause- and event-oriented marcom efforts that support environmental consciousness
Point-of-purchase display materials that are environmentally efficacious
Direct marketing programs that reduce resource usage by developing more efficient solicitations
Outdoor advertising efforts that reduce the usage of environmentally damaging materials.
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30. Green Advertising Addressing the Biophysical Environment
Figure 21.2
Green Advertising Addressing the Biophysical Environment
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31. Guidelines for Green Marketing
FTC’s Green Guides
Qualifications and disclosures should be sufficiently clear and prominent to prevent deception
Claims should make clear whether they apply to the product, the package, or a component of either
Claims should not overstate an environmental attribute or benefit, either expressly or by implication
Comparative claims should be presented in a manner that makes the basis for the comparison sufficiently clear to avoid consumer deception
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32. Green Advertising Presenting an Image of Environmental Responsibility
Figure 21.4
Green Advertising Presenting an Image of Environmental Responsibility
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33. Guidelines for Green Marketing
Make Specific Claims
Reflect Current Disposal Options
Make Substantive Claims
Make Supportable Claims
General Recommendations for Environmental Claims
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34. Green Advertising Promoting a Green Lifestyle
Figure 21.3
Green Advertising Promoting a Green Lifestyle
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