2. Ethics and Taste in Advertising Why should this be a significant issue of concern ?

3. Four Fundamental Assumptions of the Free Market 1. Self Interest – want more for less 2. Many buyers and sellers 3. Complete Information 4. Absence of externalities (social costs)

4. Ethical Concerns Ethical lapses and moral indiscretions can occur under the pressures in today’s marketplace to generate profits. In general, business people, students, customers know the difference between right and wrong! Ethics in this course are related to matters of right and wrong or moral conduct pertaining to marketing communications.

5. Central Issues of Ethics Advocacy Accuracy Acquisitiveness

6. Criticisms of Advertising Short-term manipulative arguments  Focusing on style of advertising; distasteful uses of sex and nudity Targeting Kids, Teens and the Elderly Long-term macro arguments  Focus on the social or environmental impact of advertising Complete information Deception Absence of externalities Social costs

7. Examples Calvin KleinDiesel Jeans

8. Illegal ?? CK Underage Models

9. Targeting Kids and Teens Concerns about realistic expectations and understanding advertising Food and Beverages  Childhood Obesity – fat, sugar, caffeine Surge and Coca Cola  Healthful Choices (McDonald’s)  Media choices Saturday morning TV Calvin Klein sales impacts?

10. Ethics and Tobacco Tobacco and Alcohol Products  Budweiser – the “fur factor”  Cigarette products such as Dakota, Uptown and product placement in movies and TV

11. Targeting the Elderly Susceptible to Fear ads  Mortality  Financial concerns  Illness and Dependence Is targeting unethical, good marketing or both??

12. Ethical Issues in Advertising 2/3 of Americans think advertising is often untruthful Deceptive advertising harms consumers  Labeling is a tool to help reduce potential deception Advertising is Manipulative and Makes People BUY!  Causes ‘wants’  Encourages materialism  Subliminal ads attempt to subvert conscious decisions

13. Ethical Issues in Advertising Advertising Plays on Fears and Insecurities  Elderly and illness  Consequences of NOT buying a product (deodorant) Advertising Creates and Perpetuates Stereotypes  Is advertising worse than society as a whole?

14. Ethical Issues in PR Negative Publicity  Product Failure (real or perceived) Audi, Ford, Firestone  Product Side Effect - Vioxx  Product Tampering - Tylenol  Status Vulnerability – Uptown Cigarettes Who is the SOURCE of the negative information?

15. Ethical Issues in Packaging and Branding Label Information – suggests more of a nutritional item than actual (Hawaiian Punch) Brand naming – name suggests product has features and benefits it does not possess i.e., Trim Spa

16. Ethical Issues in Packaging and Branding Safety – Protects the product from damage Packaging graphics – toy appears bigger on the box of cereal Environmental implications of packaging Sales Promotion Ethics  Unmailed rebates  Consumers using coupons for unpurchased products

17. Deceptive Considerations Puffery  If taken literally, can be perceived as deceptive  Generally non-product claim “Be all that you can be”  Excluded from deception generally because it is assumed consumers do not believe it anyway!  Used to enhance images Pepsi - the choice of the new generation

18. Puffery advertising or other sales presentations which praise the product to be sold with subjective opinions, superlatives, exaggerations, or vaguely - generally stating no specific facts

19. Puffery Example

20. Deceptive Considerations Subliminal Advertising A message transmitted in such a way that the receiver is not consciously aware of it. Problems  Distance  Individual Differences (Perceptual Thresholds)  Effect of Recognizable Material

21. Deceptive Advertising* False Promises Incomplete Description  Stating some but not all of the product’s contents  Solid oak furniture (only desktop solid) Misleading Comparisons, visual distortions False Testimonials, false demos Partial Disclosures  Kraft cheese slices made with 5 oz. of milk but omit the processing loses about 2 oz. of the milk Small-Print Qualifications Bait and Switch *as defined by the courts

23. Ethics vs. Social Responsibility Ethical advertising  Doing what is the advertiser and advertising peers believe is morally right in a given situation Social responsibility  Doing what society views as best for the welfare of people in general

24. Style Considerations Stereotypi ng  presenting one group in an unvarying pattern that lacks individuality Offensiveness in Advertising

25. Racial and Ethnic Stereotypes Portrayals of groups in subservient or unflattering lights Example  Southerners portrayed as dumb or hicks

26. Offensiveness in Advertising What is viewed in bad taste by some is quite acceptable to others … in other words, taste is subjective and individual..  Taste is also affected by locale European ideals of sexuality vs. U.S. Advertisements more overtly sexual in Europe

27. Examples

28. Advertising and the Law Agencies Involved  FTC, FCC, FDA Problem Areas  Deceptive Advertisements Misrepresent, mislead, omit Bait Advertisements Endorsers  Unfair Advertising Unjustifiably injured or violate public policy Inadequacy of complete disclosure or other externality

29. Agency Roles FDA  Monitors drugs, cosmetics, food products  Labels, packaging, branding of these products its domain  Seeks complete information for consumers  Requires warning labels  Monitors terms such as “low fat,” “fat-free,” etc.  Nutritional labels

30. Agency Roles - FCC Maintains jurisdiction over radio, TV, telephone, satellite, the Internet and the cable industry Indirect impact on advertising as it enforces cease and desist orders Monitors profanity and obscenity issues

31. First Amendment Protections There is a distinction between “speech” and “commercial” speech in the court system Twenty year history favors significant protection for truthful advertising under free speech, hence use of advertising by professionals such as attorneys and physicians

32. Bait Advertising Attractive but insincere effort to sell something Example: See the Kohl’s Sunday Flier for a great promotional price, not available when you get there. Bait and Switch - not available and try to sell up!

33. Corrective Advertisements If lingering effects known - cease and desist or consent decree not sufficient or agreed upon must correct the false impression made that consumers use for future purposes Examples: Listerine, Ocean Spray

34. Guidelines to Ethical Advertising Truthful Substantiate Claims Refrain from False Comparisons no bait! explicit guarantees no false price claims competent witnesses tasteful and decent

35. Arguments against advertising to children Children, especially young ones, are vulnerable to advertising because they lack the necessary experience and knowledge to understand and evaluate the purpose of persuasive advertising appeals. Children cannot differentiate between commercials and television programs, do not perceive the selling intent of commercials, and cannot distinguish between fantasy and reality. Children must be able to understand how advertising works and develop a skeptical or critical attitude to defend themselves against it. Advertising to children is inherently unfair or deceptive. © The McGraw-Hill Companies, Inc., 1998 Irwin/McGraw-Hill Slide 22-2

36. Arguments in favor of advertising to children: Advertising is a part of life and children must learn to deal with it as part of the consumer socialization process of acquiring the skills needed to function in the marketplace. Studies have shown that children are capable of perceiving persuasive intent and the inability to perceive such intent does not necessarily lead to incorrect beliefs about a product. Parents should be involved in helping children interpret advertising and can refuse to purchase products they feel are undesirable for their children. Advertisers have a right under the First Amendment to communicate with consumers who make up their primary target audience © The McGraw-Hill Companies, Inc., 1998 Slide 22-3

37. Arguments For Advertiser Control of the Media The media's dependence on advertising revenue can make them susceptible to advertisers because advertisers can influence the media by: exerting control over editorial content  biasing editorial opinion  limiting coverage of controversial issues © The McGraw-Hill Companies, Inc., 1998 Irwin/McGraw-Hill Slide 22-6

38. Arguments Against Advertiser Control of the Media It is in the best self-interest of the media to report the news fairly and accurately and not be perceived as biased to retain public confidence. It can be argued that advertisers need the media more than the media need any individual advertiser. © The McGraw-Hill Companies, Inc., 1998 Irwin/McGraw-Hill Slide 22-7

39. Proposed Restrictions on Use of the World Wide Web Banning unsolicited e-mail that cannot automatically be screened out. Disclosing fully and prominently both the marketer’s identity and the use for which information is being gathered. Giving consumers the right to bar marketers from selling or sharing any information collected from them and to review the personal information collected. © The McGraw-Hill Companies, Inc., 1998 Irwin/McGraw-Hill Slide 21-6