Ethical Issues in

Advertising Controversies:

Public Relations Strategies of

Starbucks and Nike

Introduction

Advertising

Definition : Advertising is a public notice meant to convey information and invite patronage or some other response.

Advertising Controversy Information represents a distorted image of reality Response is negative

Public relations strategies Mitigating harm Responding to stakeholders needs Repairing image

Ethical principles that apply in handling Advertising controversies

The Dilemma:How to Handle Public

Criticism of “Questionable” Advertisements

Starbucks’ immediate withdrawal of “Collapse into Cool” campaign: alleged 9/11 imagery

Nike’s “letter to the editor” defense against allegations of exploitation of foreign workers (Kasky v Nike)

The Starbucks Case

To some this was clearly offensive after 9/11

To others this image is innocuous

New York Post, June 18th 2002:

“Starbucks Yanks Ad Mocking 9/11”

"As a New Yorker who watched the whole [Sept. 11] incident outside my window…seeing the poster in Starbucks directly across from Ground Zero adds some resonance that perhaps the people in Seattle did not grasp," fumed customer Gregory Moore, who first complained to the Post.

Starbucks response

"We deeply regret if this ad was in any way misinterpreted to be insensitive or offensive, as this was never our intent. The poster, promoting Tazo Citrus and Tazoberry beverages, was designed to create a magical place using bright colors and whimsical elements such as palm trees and dragonflies."

Starbucks Press Release 6/16/2002

Question:Should a Major Marketing Campaign be derailed by:

A call from a New York Post reporter, Internet rumors, and Being mentioned on the ABC television Show

"Politically Incorrect"

Why Recognizing the Ethical Dilemma Matters

These are immediate decisions which will forever affect the public's opinion of the company and the value of the world wide brand.

If the company does not identify or recognize ethical aspects of crisis, it’s too late.

Schemas and Scripts: When Are You in An Ethical Dilemma?

Gioia at Ford: By the rules, The Pinto was not even remotely eligible for recall.

Action: ignore reports using rules based schema

Result: more deaths, financial losses

Starbucks Collapse into Cool:

Action: Recognize post-9/11 environment & immediately pull the ads

Result: stakeholders protected

How Starbucks Evolved its Scripts / Schemas

Repeated Risk Exposures 1995 - 2001 Created New Sensitivities in 2002

Issue Risk

Clustering StoresPerception of Ruthlessness in Competition vs. “Mom and Pop” coffeehouses (like Wal-Mart)

Genetically Modified Milk in UK

Selling more milk by volume than coffee, Growth Hormone cows = serious public concern during Mad Cow / GM food scare

Worker Exploitation

Fair-Trade Coffee: marketing or real change agent? Investing in schools, healthcare, working conditions in South America & African “coffee-origin” countries helps. Big $$ at stake.

When to Address the Script?

Position the Company as a “Good Corporate Citizen”

Before It Hits the Fan“To keep from getting caught in the crossfire, companies [must] practice…"Preemptive positioning"… Tactically, a company must cultivate the sort of … relations that enable it to effectively communicate its intentions and interests as a corporate citizen… Image is always an important factor in profitability and even more so now.”

Kasky V. Nike

1996-1997 Nike became a major target of protests against sweatshop conditions in foreign manufacturing plants

Attempt to clean up image

Letters to the newspaper

Speak at conferences

Independent audit of factories

Background

Kasky V. Nike

Kasky claims that Nike’s attempts to clean up their image through their efforts were intended to sell more merchandise

Overseas operations have not improved to minimum standards

Acting as “private attorney general” California’s unique unfair-trade-practices law False advertising lawsuit

Background

Kasky V. Nike

Nike Deny working conditions overseas do not meet

minimum standards Defensive posture

Kasky Feels it is his right and responsibility to police

corporations Pro workers rights Anti-corporation

Schemas and Scripts

Legal Dilemma First Amendment Rights

Individuals have full 1st Amendment protection Corporations have limited protection

Statements regarding “commercial speech” only have limited protection

• Puffery “Practice by a seller of making exaggerated, highly fanciful, or suggestive claims about a product or service”.

“Noncommercial speech” has full protection California’s Unfair Trade Practices Law

Allows citizens to become “private attorney general” Could open up any cooperation to law suit for any

communications

Ethical Dilemma

Nike Labor practices overseas Reaction to public criticism Historical track record Produce a profit

Marc Kasky Sue happy Power hungry Self proclaimed cooperate police man

4-D Analysis

Nike Personal Relationship Development

Nike executives/Newspaper editors

Human Dignity Development

Overseas operations shows a lack of attention to this category

Allegedly lied to their customers

Individual relativism vs. cultural relativism vs. universalism

4-D Analysis

Nike

Group Development

• Company organized a team to deal with Mr. Kasky

• Concerned that ruling will hamper communications for corporations in the future

Self Development

• Improve or maintain public perception

4-D Analysis

Kasky

Personal Development

• Build a strong relationship with his team

Human Dignity Development

• Fighting for better labor standards overseas

4-D Analysis

Kasky

Group Development

• Improve cooperate communication for all consumers

Self Development

• Build a name for himself

• Power/Ego

Conclusions

Law and ethics do not fall within common borders

Advertising is a social process

- response to ethical criticism is a strategic business decision

- ethical schemas already in place determine crisis management strategy

Corporations’ obligations are subject to moral criteria

QUESTIONS ?

References Should Go Here

See other posted project to see how to list references