1. Regulatory, Ethical, and “Green” Issues in Marketing Communications
Chapter Twenty
Regulatory, Ethical, and “Green” Issues in Marketing Communications

2. 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

3. 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

4. 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

5. 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

6. 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”

7. 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

8. Federal and State Regulation
Federal Regulation
State Regulation
Marketing Communications

9. Federal Regulation Regulation of deceptive advertising
Regulation of unfair practices
Information regulation
Regulation of product labeling
Regulation of prescription drug advertising

10. 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.”

11. Elements of Deception
Misleading
Reasonable consumer
Material

12. Misleading?
Misleading
Reasonable consumer
Material

13. Regulation of Unfair Practices
Three major areas
Advertising substantiation
Promotional practices directed to children
Trade regulation rules

14. Advertising Substantiation
Promotional practices directed to children
Trade regulation rules

15. 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

16. Proactive Correction
Response prior to
corrective
advertising

17. Regulation of Product Labeling
Food and Drug Administration (FDA)
Responsible for regulating information
on the packages of food and drug
products

18. Regulation of Prescription Drug Advertising
Food and Drug Administration (FDA)
Responsible for regulating advertisements for prescription drugs

19. 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

20. 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

21. 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

22. 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

23. 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

24. 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

25. 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

26. Ethical Targeting to Youth?
Example of
Controversial
Advertising
- Camel’s “Joe camel”

27. Targeting to Economically Disadvantaged Consumers
Billboards advertising tobacco (and alcohol) were disproportionately more likely to appear in inner-city areas

28. 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

29. 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

30. 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

31. 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

32. 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

33. 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

34. 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

35. 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?”

36. Response to Environmental Problems
Green advertising
Packaging response
Seal-of-Approval programs
Cause-Oriented Programs
Point-of-Purchase

37. Green Advertising Relationship between product and environment
Promote a green lifestyle
Corporate responsibility

38. Green Advertising Relationship between product and environment
Promote a green lifestyle
Corporate responsibility

39. Green Advertising Green Advertising Addressing the Biophysical
Environment

40. Green Advertising Green Advertising Promoting an Image of
Environmental
Responsibility

41. Green Advertising Green Advertising Promoting an Image of
Environmental
Responsibility

42. Green Advertising
Concentrated
refill packs allow
for less waste

43. Green Advertising
Corporate
Responsibility

44. Response to Environmental Problems
Green advertising
Packaging response
Seal-of-Approval programs
Cause-Oriented Programs
Point-of-Purchase

45. Package Response Recyclable bottles Polystyrene to paperboard
Plastic to cardboard
Smaller packages

46. Response to Environmental Problems
Green advertising
Packaging response
Seal-of-Approval programs
Cause-Oriented Programs
Point-of-Purchase

47. Seal-of-Approval Programs
Designed to assist consumers in identifying environmentally friendly products and brands
Green Seal of Approval
“Chasing arrows logo”

48. Response to Environmental Problems
Green advertising
Packaging response
Seal-of-Approval programs
Cause-Oriented Programs
Point-of-Purchase

49. Cause-Oriented Programs

50. Response to Environmental Problems
Green advertising
Packaging response
Seal-of-Approval programs
Cause-Oriented Programs
Point-of-Purchase

51. Point-of-Purchase Programs
Use the point-of-purchase as a
vehicle for promoting a brand’s
environmental virtues

52. 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

53. 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

54. Appropriate Environmental Claims
Make specific claims
Reflect current disposal options
Make substantive claims
Make supportable claims