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PowerPoint Presentation by Charlie Cook The University of West Alabama Eighth Edition © 2010 South-Western, a part of Cengage Learning All rights reserved.

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Presentation on theme: "PowerPoint Presentation by Charlie Cook The University of West Alabama Eighth Edition © 2010 South-Western, a part of Cengage Learning All rights reserved."— Presentation transcript:

1 PowerPoint Presentation by Charlie Cook The University of West Alabama Eighth Edition © 2010 South-Western, a part of Cengage Learning All rights reserved. Ethical, Regulatory, and Environmental Issues CHAPTER 21 INTEGRATED MARKETING COMMUNICATIONS IN ADVERTISING AND PROMOTION

2 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. 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

3 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. 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 (contd) After reading this chapter you should be able to: © 2010 South-Western, a part of Cengage Learning. All rights reserved.21–3

4 © 2010 South-Western, a part of Cengage Learning. All rights reserved.21–4 Ethical Issues in Marketing Communications Ethics in MarcomEthics in Marcom Involves matters of right and wrong, or moral, conduct pertaining to any aspect of marketing communications Involves matters of right and wrong, or moral, conduct pertaining to any aspect of marketing communications Honesty, honor, virtue, integrity Honesty, honor, virtue, integrity Ethical ConductEthical Conduct Lack of consensus about what it is 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 Ethical lapses and moral indiscretions occur under pressures of trying to meet business goals and attempting to satisfy the demands of the financial community

5 © 2010 South-Western, a part of Cengage Learning. All rights reserved.21–5 Sources of Ethical Issues Ethical Issues in Marketing Activities and Communications Advertising Targeting Marcom Public Relations Internet Marketing Sales Promotions Packaging Communications

6 © 2010 South-Western, a part of Cengage Learning. All rights reserved.21–6 The Ethics of Targeting Ethical DebateEthical Debate Is it ethical to target products and communications efforts to segments that vulnerable or put at risk by these actions? 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?Is Targeting Unethical or Just Good Marketing? When does a good targeting strategy become a method of unfair (unethical) advantage? When does a good targeting strategy become a method of unfair (unethical) advantage?

7 © 2010 South-Western, a part of Cengage Learning. All rights reserved.21–7 Is Targeting Unethical or Just Good Marketing? PositivePositive Targeting benefits rather than harms consumersproviding them with products best suited to their particular needs and wants Targeting benefits rather than harms consumersproviding them with products best suited to their particular needs and wants NegativeNegative Targeting is not concerned with fulfilling consumers needs and wants, but rather with exploiting consumer vulnerabilities Targeting is not concerned with fulfilling consumers needs and wants, but rather with exploiting consumer vulnerabilities

8 © 2010 South-Western, a part of Cengage Learning. All rights reserved.21–8 The Ethics of Targeting Targeting Food and Beverage Products Targeting Tobacco and Alcohol Products Targeting Miscellaneous Products Ethical Issues in Targeting Children and Teens

9 © 2010 South-Western, a part of Cengage Learning. All rights reserved.21–9 Targeting to Children and Teens Negative Targeting OutcomesNegative Targeting Outcomes Products targeted to kids are unnecessary and the communications involved are exploitative 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 Posters, book covers, free magazines, advertising, and other 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, video games, and music products) to children and teens 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 Marketing food products (e.g., high-fat, high-calorie snacks) that contribute to childhood obesity

10 © 2010 South-Western, a part of Cengage Learning. All rights reserved.21–10 Targeting to Economically Disadvantaged Consumers Billboards advertising tobacco and alcohol disproportionately appear in inner-city areasBillboards advertising tobacco and alcohol disproportionately appear in inner-city areas Examples:Examples: R.J. Reynolds attempt to market new brands cigarettes to African-Americans and downscale young women R.J. Reynolds attempt to market new brands cigarettes to African-Americans and downscale young women Heileman Brewing Companys targeting of Power Master high-alcohol malt liquor to inner-city neighborhoods Heileman Brewing Companys targeting of Power Master high-alcohol malt liquor to inner-city neighborhoods

11 © 2010 South-Western, a part of Cengage Learning. All rights reserved.21–11 Targeting Tobacco Products Figure 21.1

12 © 2010 South-Western, a part of Cengage Learning. All rights reserved.21–12 Ethical Issues in Advertising Advertising Creates and Perpetuates Stereotypes Advertising Persuades People to Buy Things They Do Not Need Advertising Plays on Peoples Fears and Insecurities Criticisms of Advertising Advertising Is Untruthful and Deceptive Advertising Is Manipulative Advertising Is Offensive and in Bad Taste

13 © 2010 South-Western, a part of Cengage Learning. All rights reserved.21–13 American Association of Advertising Agencies Code of Ethical Standards Ethical Code and Standards of PracticeEthical 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 Set lofty goals for the advertising industry and provides a framework for evaluating whether or not ads meet the high standards specified

14 © 2010 South-Western, a part of Cengage Learning. All rights reserved.21–14 Ethical Issues in Public Relations PublicityPublicity Involves disseminating positive information about a firm and its products and handling negative publicity Involves disseminating positive information about a firm and its products and handling negative publicity Like advertisingthe same ethical issues apply Like advertisingthe same ethical issues apply Negative PublicityNegative Publicity When firms confess to product shortcomings and acknowledge problems or, instead, attempt to cover up the problems When firms confess to product shortcomings and acknowledge problems or, instead, attempt to cover up the problems

15 © 2010 South-Western, a part of Cengage Learning. All rights reserved.21–15 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

16 © 2010 South-Western, a part of Cengage Learning. All rights reserved.21–16 Ethical Issues in Sales Promotions Sales PromotionsSales Promotions Manufacturer promotions directed at wholesalers and retailers and to consumers Manufacturer promotions directed at wholesalers and retailers and to consumers Slotting AllowancesSlotting Allowances Manufacturers have to pay retailers to handle a new productIs this a form of bribery and is it unethical? Manufacturers have to pay retailers to handle a new productIs this a form of bribery and is it unethical? Consumer-Oriented Sales PromotionsConsumer-Oriented Sales Promotions A promoter offers a reward for a consumers behavior that not delivered or lies about the odds of winning A promoter offers a reward for a consumers behavior that not delivered or lies about the odds of winning Consumers who make false claims for coupon redemptions and refunds Consumers who make false claims for coupon redemptions and refunds

17 © 2010 South-Western, a part of Cengage Learning. All rights reserved.21–17 Ethical Issues in Online Marketing Consumer Privacy IssuesConsumer Privacy Issues Consumers privacy rights to personal information and shopping behaviors collected by online marketers Consumers privacy rights to personal information and 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 consent of consumer Selling of personal information to other parties without consent of consumer Bogus positive product evaluations and blogs deceptively extolling products Bogus positive product evaluations and blogs deceptively extolling products

18 © 2010 South-Western, a part of Cengage Learning. All rights reserved.21–18 Fostering Ethical Marketing Communications The Professional Ethics Test Take only actions that would be viewed as proper by an objective panel of your professional colleagues The Golden Rule Act in a way that you would want others to act toward you The TV test Would l feel comfortable explaining this action on television to the general public?

19 © 2010 South-Western, a part of Cengage Learning. All rights reserved.21–19 Regulation of Marketing Communications Justifications for RegulationJustifications for Regulation When consumer decisions are based on false or limited information When consumer decisions are based on false or limited information When benefits realized exceed the costs When benefits realized exceed the costs Benefits of RegulationBenefits of Regulation Improved consumer choices Improved consumer choices Improved product quality Improved product quality Reduction in prices Reduction in prices CostsCosts Regulatory compliance Regulatory compliance Enforcement costs Enforcement costs Unintended side effects Unintended side effects

20 © 2010 South-Western, a part of Cengage Learning. All rights reserved.21–20 Regulation by Federal Agencies Deceptive Advertising Unfair Practices Information Regulation Federal Trade Commission (FTC) Regulatory Authority

21 © 2010 South-Western, a part of Cengage Learning. All rights reserved.21–21 Regulation by Federal Agencies (contd) Misleading Misrepresentation or Omission Reasonable Consumer Test Material Misrepresentation Elements of the FTCs Deception Policy

22 © 2010 South-Western, a part of Cengage Learning. All rights reserved.21–22 Regulation of Unfair Practices Unfair AdvertisingUnfair 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) 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) FTCs Criteria for Unfair Business ActsFTCs 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, competitors, or other businesses Act causes substantial injury to consumers, competitors, or other businesses

23 © 2010 South-Western, a part of Cengage Learning. All rights reserved.21–23 Regulation by Federal Agencies (contd) FTCs Corrective Advertising ProgramFTCs Corrective Advertising Program Requires a firm that misleads consumers to use future advertisements to rectify any deceptive impressions it has created in consumers minds 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 LabelingFood and Drug Administration (FDA)s Regulation of Product Labeling Responsible for regulating information on the packages of food and drug products Responsible for regulating information on the packages of food and drug products Requires advertisers to present a balanced perspective when advertising drugs Requires advertisers to present a balanced perspective when advertising drugs

24 © 2010 South-Western, a part of Cengage Learning. All rights reserved.21–24 Regulation by Federal Agencies (contd) Drug AdvertisingDrug Advertising FTC regulates deceptive and unfair advertising for over-the-counter (OTC) drugs 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 FDA regulates advertisements for prescription drugs in requiring advertisers to present a balanced perspective when advertising drugs

25 © 2010 South-Western, a part of Cengage Learning. All rights reserved.21–25 Regulation of Marketing Communications Regulation by State AgenciesRegulation by State Agencies Most, if not all, states have departments of consumer affairs or consumer protection Most, if not all, states have departments of consumer affairs or consumer protection Advertising Self-RegulationAdvertising Self-Regulation Is undertaken by the advertising community itself (i.e., advertisers, industry trade associations, and ad media) rather than by governmental bodies. Is undertaken by the advertising community itself (i.e., advertisers, industry trade associations, and ad media) rather than by governmental bodies.

26 © 2010 South-Western, a part of Cengage Learning. All rights reserved.21–26 Advertising Self-Regulation Advertising Clearance ProcessAdvertising Clearance Process 1.Advertising agency clearance 2.Approval from the advertisers legal department and perhaps also from an independent law firm 3.Media approval

27 © 2010 South-Western, a part of Cengage Learning. All rights reserved.21–27 The National Advertising Review Council National Advertising Review Council (NARC)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 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 UnitsNARC Organizational Units The Childrens Advertising Review Unit (CARU) The Childrens Advertising Review Unit (CARU) National Advertising Review Board (NARB) National Advertising Review Board (NARB) Council of Better Business Bureaus National Advertising Division (NAD) Council of Better Business Bureaus National Advertising Division (NAD)

28 © 2010 South-Western, a part of Cengage Learning. All rights reserved.21–28 Environmental Marketing Communications Legitimate Green MarketingLegitimate Green Marketing Is a firms introduction of environmentally oriented products and its undertaking of marcom programs to promote them Is a firms introduction of environmentally oriented products and its undertaking of marcom programs to promote them Seeks to accomplish two objectives: Seeks to accomplish two objectives: Improve environmental quality Improve environmental quality Satisfy customers Satisfy customers

29 © 2010 South-Western, a part of Cengage Learning. All rights reserved.21–29 Green Marketing Initiatives Green Marketing CommunicationsGreen Marketing Communications Advertisements that promote green products Advertisements that promote green products Environmentally friendly packaging Environmentally friendly packaging Seal-of-approval programs promoting green products Seal-of-approval programs promoting green products Cause- and event-oriented marcom efforts that support environmental consciousness Cause- and event-oriented marcom efforts that support environmental consciousness Point-of-purchase display materials that are environmentally efficacious Point-of-purchase display materials that are environmentally efficacious Direct marketing programs that reduce resource usage by developing more efficient solicitations Direct marketing programs that reduce resource usage by developing more efficient solicitations Outdoor advertising efforts that reduce the usage of environmentally damaging materials. Outdoor advertising efforts that reduce the usage of environmentally damaging materials.

30 © 2010 South-Western, a part of Cengage Learning. All rights reserved.21–30 Green Advertising Addressing the Biophysical Environment Figure 21.2

31 © 2010 South-Western, a part of Cengage Learning. All rights reserved.21–31 Guidelines for Green Marketing FTCs Green GuidesFTCs Green Guides Qualifications and disclosures should be sufficiently clear and prominent to prevent deception 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 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 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 Comparative claims should be presented in a manner that makes the basis for the comparison sufficiently clear to avoid consumer deception

32 © 2010 South-Western, a part of Cengage Learning. All rights reserved.21–32 Green Advertising Presenting an Image of Environmental Responsibility Figure 21.4

33 © 2010 South-Western, a part of Cengage Learning. All rights reserved.21–33 Guidelines for Green Marketing Make Specific Claims Reflect Current Disposal Options Make Substantive Claims Make Supportable Claims General Recommendations for Environmental Claims

34 © 2010 South-Western, a part of Cengage Learning. All rights reserved.21–34 Green Advertising Promoting a Green Lifestyle Figure 21.3


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