1. Copyright © 2012 McGraw-Hill Companies, Inc., All right reversed McGraw-Hill/Irwin 20 Evaluating the Social, Ethical, and Economic Aspects of Advertising and Promotion

2. Advertising and Promotion Viewpoints Creates consumer needs, faults Promotes materialism, insecurity, and greed More propaganda than information Proponent arguments Critic arguments Provides information to consumers Creates jobs Encourages higher standard of living Promotes competition Helps new firms enter a market 21-2

3. Ethics in Advertising and Promotion Not all issues can be regulated A marketing or promotion action may be legal but not ethical Marketers must decide the appropriate- ness of their actions Ethics: Moral principles and values that govern the actions and decisions of an individual or group 20-3

4. Promoting Responsible Drinking 20-4

5. Shock Ads 20-5

6. Untruthful or Deceptive Advertising Consumers Don’t trust advertising Rely on word of mouth Find ads intrusive Find relevance too low Trust websites slightly more Industry Problems Deliberately untruthful False and misleading claims Faulty sweepstakes Providing too little info Puffery and embellishment 20-6

7. Advertising as Offensive or in Bad Taste Sexual appeals Objectionable products Shock ads Condoms Feminine hygiene products Women’s undergarments Hemorrhoid products 20-7

8. Test Your Knowledge Advertisers are using shock advertising to: A) Test their First Amendment rights B) Get ads noticed in the midst of clutter C) Make a statement against self-regulation D) Test the ethics of the advertising industry E) Act as advocacy ads for company management 20-8

9. What is your opinion of this ad? Is this woman portrayed as a sex object? Does this ad contain cues that are sexually suggestive? Does this ad present an image of sexual submissiveness? 20-9

10. Dolce & Gabbana’s Controversial, Offensive Ad 20-10

11. Attitudes Toward Sex in Advertising 20-11

12. Advertising and Children Children's TV Watching Behavior Children watch an average of 22 hours of TV per week They see up to 30,155 commercials per year Children watch an average of 22 hours of TV per week They see up to 30,155 commercials per year 80% of ads targeted to children cover: Toys Cereal Candy Fast food 80% of ads targeted to children cover: Toys Cereal Candy Fast food 20-12

13. Perspectives on Ads for Children Advocates Argue That Children: Marketers Argue that Children: Lack the knowledge and skills to evaluate advertising claims Cannot differentiate between programs and commercials Must learn through socialization Must acquire skills needed to function in the marketplace 20-13

14. Other Areas of Concern Areas of potential concern Cable television programming Internet ads Ads encouraging children to call 900 numbers An increase in toy-based programs Marketing of violent films, music, games Advertising and promotions in schools by companies like Coca-Cola 20-14

15. Social and Cultural Consequences Does advertising encourage materialism? Does advertising encourage materialism? Does advertising make people buy things they don’t need? Does advertising make people buy things they don’t need? Is advertising just a reflection of society? Is advertising just a reflection of society? 20-15

16. Does advertising affect Society? 20-16

17. Advertising and Stereotyping Portrayal of women to reflect their changing role in society Portrayal of women as sex objects Ethnic stereotyping/ representation Gender stereotyping Sexual orientation Criticisms of Advertising With Regard to Stereotyping 20-17

18. Targeting Specific Markets 20-18

19. Do Advertisers Control the Media? Ads are the primary source of revenue for newspapers, magazines, television and radio Advertisers may exert control over media by biasing editorial content, limiting coverage of certain issues, or influencing program content Media’s dependence on ads for revenue makes them vulnerable to control by advertisers 20-19

20. Can Media Resist Advertisers? Media must report the news fairly and accurately to retain public confidence Advertisers need the media more than the media need any one advertiser Media maintain separation between news and business departments “The Wall” 20-20

21. The Social Value of Media 20-21

22. Economic Effects of Advertising Makes consumers aware of products and services Provides consumers with information to use to make purchase decisions Encourages consumption, fosters economic growth Leads to economies of scale & lower prices 20-22

23. Economic Impact of Advertising Consumer Choice Differentiation Brand Loyalty Product Costs & Prices Advertising is an expense that increases product costs Increased differentiation Competition Barriers to entry Economies of scale 20-23

24. Test Your Knowledge From an economic perspective, advertising might lower the cost of a product by: A) Creating barriers to entry for less efficient firms B) Moving consumers to the consumer socialization stage of the buying process C) Making it possible for firms to realize economies of scale through expansion of sales volume D) Allowing firms to advertise at high levels along with competitors E) Doing none of the above 20-24

25. Summarizing Economic Effects Change consumers’ tastes Reduces competition Lowers sensitivity to price Builds brand loyalty Advertising Equals Market Power Leads to higher prices Leads to fewer choices Results in higher profits 20-25

26. Summarizing Economic Effects Provides useful information Pressure for lower prices Increases price sensitivity Increases competition Advertising Equals Information Forces inefficient firms out Pressure for high quality 20-26

27. The Value of Advertising Advertising. The way great brands get to be great brands. 20-27

28. The Positive Effects of Advertising 20-28