1. © 2007 by Prentice Hall 12-1 E-Bay What has made e-Bay successful? Have you purchased or sold anything on e-Bay? Should companies like e-Bay and VISA become involved in causes like Auction for America? What are your thoughts about sponsorships and naming of sports stadiums? Are your purchases impacted by sponsorships and/or causes companies support? 12 Discussion Slide

2. © 2007 by Prentice Hall 12-2 Public Relations, Sponsorship Programs, and Regulations 12 Public relations –Role of public relations –Assessing corporate reputation –Social responsibility –Damage control Sponsorship and event marketing Regulating marketing communication –Federal Trade Commission –Industry regulations Chapter Overview

3. © 2007 by Prentice Hall 12-3 Public Relations Events Public relations department Separate entity Part of marketing department Department of Communications External agency Goal of public relations Hits Positive/negative stories Reinforce IMC plan

4. © 2007 by Prentice Hall 12-4 Identify internal and external stakeholders Assess the corporate reputation Audit corporate social responsibility Create positive image-building activities Prevent or reduce image damage F I G U R E 1 2. 1 Public Relations Functions

5. © 2007 by Prentice Hall 12-5 Employees Unions Shareholders Channel members Customers Media Local community Financial community Government Special-interest groups F I G U R E 1 2. 2 Stakeholders

6. © 2007 by Prentice Hall 12-6 Employees need to be aware of what is being said in advertisements and on the Internet. Motorola’s Web site Http://www.motorola.com Internal Stakeholders

7. © 2007 by Prentice Hall 12-7 oDiscrimination oHarassment oPollution oMisleading communications oDeceptive communications oOffensive communications oEmpowerment of employees oCharitable contributions oSponsoring local events oSelling environmentally safe products oOutplacement programs oSupport community events Image Destroying Activities Image Building Activities F I G U R E 1 2. 3 Examples of Activities that Affect a Company’s Image Corporate Social Responsibility Audit

8. © 2007 by Prentice Hall 12-8 Corporate Social Responsibility Audit Undertaken by management Organizations need Ethical guidelines for all employees Code of ethics Ethical hotline

9. © 2007 by Prentice Hall 12-9 Creating a Positive Image Cause-related marketing Green marketing Pro-environment

10. © 2007 by Prentice Hall 12-10 Cause-Related Marketing Businesses pay over $600 million in cause-related marketing Consumer studies: Nearly 50% switch brands, increase usage, try new brand 46% felt better about using product when company supported a particular cause Cause liked by one – disliked by another

11. © 2007 by Prentice Hall 12-11 Salvation Army Click on speaker to play ad. A radio advertisement encouraging support of the Salvation Army.

12. © 2007 by Prentice Hall 12-12 YWCA Web site: http://www.ywca.org http://www.ywca.org Improve public schools (52%) Dropout prevention (34%) Scholarships (28%) Clean-up environment (27%) Community health education (25%) F I G U R E 12.4 Causes Consumers Prefer

13. © 2007 by Prentice Hall 12-13 McDonald’s reminded the public of its support for the Olympics with a series of advertisements.

14. © 2007 by Prentice Hall 12-14 Cause-Related Marketing Cause should relate to firm’s business Good fit important Benefits not-for-profit organization Not-for-profit organizations compete for dollars Publicizing causes Public recognizes companies need to benefit Should publicize, but not significant amount

15. © 2007 by Prentice Hall 12-15 Green Marketing Survey concerning green marketing Try to save electricity (58%) Recycle newspapers (46%) Return bottles and cans (45%) Buy products –recycled materials (23%) Consumers not willing to sacrifice Price Quality Convenience Availability Performance

16. © 2007 by Prentice Hall 12-16 F I G U R E 1 2. 5 U.S. Consumer’s Segmented on Their Attitudes Toward Support of Green Marketing True Blue Green (9%) – Have strong environmental values and are politically active in environmental issues. Heavy users of green products. Greenback Greens (6%) – Have strong environmental values, but are not politically active. Heavy users of green products. Sprouts (31%) – Believe in green products in theory, but not in practice. Will buy green products, but only if equal to or superior to non-green products. Grousers (19%) – Are uneducated about environmental issues and cynical about their ability to effect change. Believe green products are too expensive and inferior. Basic Browns (33%) – Do not care about environmental issues or social issues. Source: Jill Meredith Ginsberg and Paul N. Bloom, “Choosing the Right Green Marketing Strategy,” MIT Sloan Management Review, Vol. 46, No. 1 (Fall 2004), pp. 79-84.

17. © 2007 by Prentice Hall 12-17 Green Marketing Strategy? 1)What percentage of customers fits into green segments? 2)Can brand or company be differentiated based on green lines and become a competitive advantage? 3)Will current target market be alienated with green marketing approach?

18. © 2007 by Prentice Hall 12-18 Pro-Environment Activities Low-key approach Coca-Cola Publicize product first, pro-environment second Prius Promote pro-environment The Body Shop Patagonia Honest Tea

19. © 2007 by Prentice Hall 12-19 Proactive Strategies Entitling Enhancements Reactive Strategies Internet interventions Crisis management programs Impression management techniques F I G U R E 1 2. 6 Damage-Control Strategies

20. © 2007 by Prentice Hall 12-20 1.An expression of guilt, embarrassment, or regret. 2.Statement recognizing inappropriate behavior and acceptance of sanctions because of wrong behavior. 3.Rejection of the inappropriate behavior. 4.Approval of the appropriate behavior and a promise not to engage in the inappropriate behavior again. 5.An offer of compensation or penance to correct the wrong. F I G U R E 1 2. 7 Elements of an Apology Strategy A Crisis Management Technique

21. © 2007 by Prentice Hall 12-21 Impression Management Conscious or unconscious attempt to control image Remedial tactics Expression of innocence Excuses Justifications Other explanations

22. © 2007 by Prentice Hall 12-22 Intel’s Response to a Crisis In 1994, a glitch in Intel’s microprocessors was made public. Not only did Intel avoid a crisis, they actually benefited from the glitch. After listening to Dennis Carter, discuss why you think Intel was able to benefit from this crises rather than suffer damage to their brand. Discussion Slide Click icon for video.

23. © 2007 by Prentice Hall 12-23 Sponsorships and Event Marketing United States Source: “Events & Sponsorships,” Marketing News, Vol. 38, No. 2 (July 15, 2004), p. 18.

24. © 2007 by Prentice Hall 12-24 Event Marketing and Sponsorships Canada Source: “How Big Is the Canadian Sponsorship Pie?” The Sponsorship Report (Http://www.sponsorship.ca/p-issues-howbig.html)Http://www.sponsorship.ca/p-issues-howbig.html Sports (45%) Cultural Events (20%) Education (10%) Health (10%) Humanitarian (10%) Environment (2.5%)

25. © 2007 by Prentice Hall 12-25 What is the likelihood that a fan will buy a sponsor’s product? NASCAR72% Tennis52% Golf47% NBA38% NFL36% Source: “Event Marketing/Sponsorships,” Public Relations Society of America (Http://www.prsa.org/ppc/68022.html)Http://www.prsa.org/ppc/68022.html

26. © 2007 by Prentice Hall 12-26 Sponsorship Marketing Objectives Enhance company image. Increase firm visibility. Differentiate a company or brand. Showcase specific goods or services. Develop a closer relationship with current and prospective customers. Unload excess inventory.

27. © 2007 by Prentice Hall 12-27 Sponsoring Individuals Name recognition68% Current popularity56% Overall image53% Character51% Source: “Event Marketing/Sponsorships,” Public Relations Society of America What attributes do sponsors look for in endorsing an individual such as Tiger Woods?

28. © 2007 by Prentice Hall 12-28 To Maximize Event Marketing Determine objective. Match event with customers, vendors, and employees. Cross-promote event. Include company in all event advertising and brochures. Track results. Evaluate the investment following the event.

29. © 2007 by Prentice Hall 12-29 Regulating Marketing Communications Unfair and deceptive marketing practices Wheeler-Lea Amendment (1938) to Section 5 of the Federal Trade Commission Act An advertisement or communication is deceptive or misleading if: A substantial number of people or typical person is left with false impression or misrepresentation. The misrepresentation induces people or the typical person to make a purchase.

30. © 2007 by Prentice Hall 12-30 Claims versus Puffery Puffery not factual statement Claim is a factual statement Puffery statements include Best, greatest, and finest Better – puffery or claim Papa John’s – “Better ingredients, better pizza” Hunt’s – “Only the best tomatoes grow up to be Hunt’s” Progresso – “Discover the better taste of Progresso”

31. © 2007 by Prentice Hall 12-31 Claims versus Puffery Ad making a claim.Ad using puffery.

32. © 2007 by Prentice Hall 12-32 Federal Trade Commission (FTC) Food & Drug Administration (FDA) Federal Communications Commission (FCC) US Postal Service (USPS) Bureau of Alcohol, Tobacco, and Firearms (ATF) F I G U R E 1 2. 9 Governmental Regulatory Agencies

33. © 2007 by Prentice Hall 12-33 Federal Trade Commission (FTC) Created in 1914 by passage of Federal Trade Commission Act. Original intent was to enforce anti-trust laws. FTC authority expanded in 1938 with Wheeler-Lea Amendment. Given power to stop unfair and deceptive advertising practices. Granted FTC access to courts to enforce their decisions.

34. © 2007 by Prentice Hall 12-34 How an FTC Investigation Begins Consumers Businesses Congress Media Complaints can be lodged by any of the following

35. © 2007 by Prentice Hall 12-35 FTC Actions Consent order Administrative complaint Cease and desist order Full commission hearing Appeal to U.S. Court of Appeals Corrective advertising order Trade regulation ruling

36. © 2007 by Prentice Hall 12-36 FTC Alternative Actions FTC uses court system to stop unfair and deceptive practices Company violates a cease and desist order Actions of company so severe immediate action is needed FTC works with other agencies to stop unfair and deceptive practices

37. © 2007 by Prentice Hall 12-37 Substantiation of Claims Is the typical person misled by the marketing communication? Does the marketing communication lead the typical person to make a purchase or pursue some other type of activity? Is the claim mere puffery or does it have to be substantiated? Is the claim substantiated by competent or reliable evidence?

38. © 2007 by Prentice Hall 12-38 To substantiate its claim that Kleenex is softer the company conducted touch tests involving consumers. Substantiating that Kleenex is “made with 24% more cottony, soft fiber,” as the ad claims, would require some type of lab test. Click image to enlarge.

39. © 2007 by Prentice Hall 12-39 Substantiation of Claims Principles Used by FTC and Courts Assumes consumers read ads broadly Evidence must test actual product Evidence must be accepted by experts in the field Totality of evidence considered

40. © 2007 by Prentice Hall 12-40 FTC Web Site Http://www.ftc.gov

41. © 2007 by Prentice Hall 12-41 Better Business Bureau National Advertising Division (NAD) National Advertising Review Board (NARB) F I G U R E 1 2. 10 Industry Regulation