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Regulatory, Ethical, and “Green” Issues in Marketing Communications
Chapter Twenty Regulatory, Ethical, and “Green” Issues in Marketing Communications
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Chapter Twenty Objectives
Explain the role and importance of governmental efforts to regulate marketing communications Understand deceptive advertising and the three elements that guide the determination of whether a particular advertisement is potentially deceptive
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Chapter Twenty Objectives
Explain the regulation of unfair business practices and the three major areas where the unfairness doctrine is applied Understand the role that states perform in regulating unfair or deceptive marketing communications practices Understand the process of advertising self-regulation
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Chapter Twenty Objectives
Appreciate the ethical issues in marketing communications Explain why the targeting of products and marketing communications is a heatedly debated practice Appreciate the role marketing communications play in “green” marketing Understand the four general principles that apply to all environmental marketing efforts
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When is Regulation Justified
Certain Circumstances—needed most when consumer decisions are based on false or limited information Justified if the benefits realized exceed the costs
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When is Regulation Justified - Benefits
Consumer choice among alternatives is improved when consumers are better informed Product quality tends to improve in response to consumers’ changing needs and preferences Reduced prices resulting from a reduction in a seller’s “informational market power”
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When is Regulation Justified - Costs
Companies incur the cost of complying with a regulatory remedy Enforcement costs incurred by regulatory agencies and paid for by taxpayers Unintended side effects result from regulations at a cost to both buyers and sellers
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Federal and State Regulation
Federal Regulation State Regulation Marketing Communications
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Federal Regulation Regulation of deceptive advertising
Regulation of unfair practices Information regulation Regulation of product labeling Regulation of prescription drug advertising
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Regulation of Deceptive Advertising
FTC will find a business practice deceptive “if there is a representation, omission or practice that is likely to mislead the consumer acting reasonably in the circumstances, to the consumer’s detriment.”
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Elements of Deception Misleading Reasonable consumer Material
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Misleading? Misleading Reasonable consumer Material
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Regulation of Unfair Practices
Three major areas Advertising substantiation Promotional practices directed to children Trade regulation rules
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Advertising Substantiation
Promotional practices directed to children Trade regulation rules
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Information Regulation
Corrective advertising A firm that misleads consumers should have to use future advertisements to rectify any deceptive impressions it has created in consumers’ minds
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Proactive Correction Response prior to corrective advertising
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Regulation of Product Labeling
Food and Drug Administration (FDA) Responsible for regulating information on the packages of food and drug products
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Regulation of Prescription Drug Advertising
Food and Drug Administration (FDA) Responsible for regulating advertisements for prescription drugs
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Advertising Self-Regulation
Advertising associations e.g., American Association of Advertising Agencies, Association of National Advertisers Special industry groups e.g., the Council of Better Business Bureaus Media associations Trade associations
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The National Advertising Review Council
Council of Better Business Bureaus’ 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
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NAD/NARB Complaint Resolution Process
Complaint Screening and Case Selection Initial NAD Evaluation Advertiser’s Initial Response NAD’s Final Evaluation Advertiser’s Final Response
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Ethical issues in marketing Communications
Ethics in our context involves matters of right and wrong, or moral, conduct pertaining to any aspect of marketing communications
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The Ethics of Targeting
Ethical debate—practice of targeting products and communications efforts to segments that, for various psychosocial and economic reasons, are vulnerable to marketing communications
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Targeting to Children and Teens
Products targeted to kids are unnecessary and the communications involved are exploitative Use of posters, book covers, free magazines, advertising, and other so- called learning tools Placing products in movies with tie-in merchandise programs Magazine use of Advertorials—ads disguised as editorial opinions
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Targeting to Children and Teens
Targeting adult products to preadults—Miller Brewing Company-- “bolder” beer Marketing of adult-oriented entertainment products to children and teens: Violent films, video games, and music Use of acceptable images—cartoons—greatest controversy of recent is Joe Camel and Camel cigarettes
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Ethical Targeting to Youth?
Example of Controversial Advertising - Camel’s “Joe camel”
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Targeting to Economically Disadvantaged Consumers
Billboards advertising tobacco (and alcohol) were disproportionately more likely to appear in inner-city areas
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Is Targeting Unethical or Just Good Marketing
Two arguments: Targeting benefits rather than harms consumers—provide consumer with products best suited to their particular needs and wants Concerned not with fulfilling consumers’ needs and wants, but rather with exploiting consumer vulnerabilities
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Criticisms of Advertising
Advertising is untruthful and deceptive Advertising is manipulative Advertising is offensive and in bad taste Advertising creates and perpetuates stereotypes People buy things they do not really need Advertising plays upon people’s fears and insecurities
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Ethical Issues in Public Relations
Publicity involves disseminating positive info about a company and its products and handling negative publicity Like advertising—same ethical issues apply The difference is negative publicity—firms confess to product shortcomings and acknowledge problems or, instead, attempt to cover up the problems
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Ethical Issues in Packaging
Four Aspects: 1) Label information—can mislead consumers about the contents 2) Packaging graphics—picture on the package differs from the actual product
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Ethical Issues in Packaging
3) Packaging safety—dangerous products that are unsafe to children—not tamper-proof 4) Environmental implications—suggest environmental benefits but cannot deliver
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Ethical Issues in Sales Promotions
Sales promotions—manufacturer promotions directed at the trade and to consumers Slotting allowances—manufactures pay retailers for their willingness to handle a new product—a form of bribery and therefore unethical Consumer-oriented sales promotions—promoter offers a reward for consumers behavior that is never delivered or lying about the odds of winning
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Ethical Issues in Online Marketing
Overlap with ethics on advertising and promotions Privacy is the most important ethical issue with online marketing Invade individual’s privacy rights by selling information to other sources without the consumer’s consent
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Enhancing Ethical Behavior
The Golden Rule Act in a way that you would want Take only actions that would be viewed as proper by an objective panel of your professional colleagues The Professional Ethics The TV test “Would l feel comfortable explaining this action on television to the general public?”
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Response to Environmental Problems
Green advertising Packaging response Seal-of-Approval programs Cause-Oriented Programs Point-of-Purchase
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Green Advertising Relationship between product and environment
Promote a green lifestyle Corporate responsibility
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Green Advertising Relationship between product and environment
Promote a green lifestyle Corporate responsibility
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Green Advertising Green Advertising Addressing the Biophysical
Environment
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Green Advertising Green Advertising Promoting an Image of
Environmental Responsibility
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Green Advertising Green Advertising Promoting an Image of
Environmental Responsibility
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Green Advertising Concentrated refill packs allow for less waste
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Green Advertising Corporate Responsibility
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Response to Environmental Problems
Green advertising Packaging response Seal-of-Approval programs Cause-Oriented Programs Point-of-Purchase
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Package Response Recyclable bottles Polystyrene to paperboard
Plastic to cardboard Smaller packages
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Response to Environmental Problems
Green advertising Packaging response Seal-of-Approval programs Cause-Oriented Programs Point-of-Purchase
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Seal-of-Approval Programs
Designed to assist consumers in identifying environmentally friendly products and brands Green Seal of Approval “Chasing arrows logo”
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Response to Environmental Problems
Green advertising Packaging response Seal-of-Approval programs Cause-Oriented Programs Point-of-Purchase
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Cause-Oriented Programs
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Response to Environmental Problems
Green advertising Packaging response Seal-of-Approval programs Cause-Oriented Programs Point-of-Purchase
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Point-of-Purchase Programs
Use the point-of-purchase as a vehicle for promoting a brand’s environmental virtues
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Guidelines for Green Marketing
Federal Trade Commission (FTC) The U.S. government agency that has primary responsibility for regulating matters such as deceptive and unfair business practices
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Guidelines for Green Marketing
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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Appropriate Environmental Claims
Make specific claims Reflect current disposal options Make substantive claims Make supportable claims
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