Evaluating the Social, Ethical, and Economic Aspects of Advertising

and Promotion

Evaluating the Social, Ethical, and Economic Aspects of Advertising

and Promotion

22

McGraw-Hill/Irwin Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved.

Advertising and Promotion Viewpoints

Creates consumer needs, wants Creates consumer needs, wants

Promotes materialism, insecurity, and greed

Promotes materialism, insecurity, and greed

More propaganda than informationMore propaganda than information

Provides informationProvides information

Creates jobs Creates jobs

Encourages higher standard of livingEncourages higher standard of living

Promotes competition Promotes competition Proponent argumentsProponent arguments

Critic arguments

Critic arguments

Helps new firms enter a marketHelps new firms enter a market

Ethics in Advertising and Promotion

Not all issues can be regulated

Not all issues can be regulated

A marketing or promotion action may be legal but

not ethical

A marketing or promotion action may be legal but

not ethical

Marketers must decide the

appropriateness of their actions

Marketers must decide the

appropriateness of their actions

Ethics: Moral principles and values that govern the actions and decisions of an individual or group.

Ethics: Moral principles and values that govern the actions and decisions of an individual or group.

Promoting Responsible Drinking

Benetton’s “Death Row” Ad Offensive

Advertising and Untruthful or Deceptive

General mistrust of advertising among consumers. Many do not

perceive ads as honest or believable

General mistrust of advertising among consumers. Many do not

perceive ads as honest or believable

Abuses involving sales promotions such as contests, sweepstakes,

premium offers

Abuses involving sales promotions such as contests, sweepstakes,

premium offers

Unethical and/or deceptive practices involving mail order, telemarketing and other forms of direct marketing

Unethical and/or deceptive practices involving mail order, telemarketing and other forms of direct marketing

Internet scams and abusesInternet scams and abuses

Advertising as Offensive or in Bad Taste

SexualappealsSexualappeals

Objectionable products

Objectionable products Shock adsShock ads

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

Advertising and Children

Children's TV Watching Behavior

Children's TV Watching Behavior

Children ages 2-11 watch an average of 22 hours of TV per week and see 30,000 commercials per year

Children ages 2-11 watch an average of 22 hours of TV per week and see 30,000 commercials per year

80% of all advertising targeted to children falls in fourproduct categories:Toys, cereal, candy & fast food restaurants

80% of all advertising targeted to children falls in fourproduct categories:Toys, cereal, candy & fast food restaurants

Perspectives on Ads for Children

Advocates Argue That Children:Advocates Argue That Children:

Marketers Argue Children:Marketers Argue Children:

Lack the knowledge and skills to evaluate

advertising claims

Lack the knowledge and skills to evaluate

advertising claims

Cannot differentiatebetween programs and

commercials

Cannot differentiatebetween programs and

commercials

Must learnthrough socialization

Must learnthrough socialization

Must acquire skills needed to function in

the marketplace

Must acquire skills needed to function in

the marketplace

Do TV Networks Have a Double Standard?

Social and Cultural Consequences

Does advertising encourage materialism?

Does advertising encourage materialism?

Does advertising make people buy thingsthey don’t need?

Does advertising make people buy thingsthey don’t need?

Is advertising justa reflection of society?

Is advertising justa reflection of society?

Does advertising affect Society?

Advertising and Stereotyping

Portrayal of women to reflect their changing role

in society

Portrayal of women to reflect their changing role

in society

Portrayal ofwomen assex objects

Portrayal ofwomen assex objects

Ethnic stereotyping/

representation

Ethnic stereotyping/

representation

Gender stereotyping

Gender stereotyping

Sexual orientation

Sexual orientation

Criticisms of Advertising

With Regard to Stereotyping

Criticisms of Advertising

With Regard to Stereotyping

What is your opinion of this ad?

Is this woman portrayed as a sex object?

Is this woman portrayed as a sex object?

Does this ad containcues that are sexually

suggestive?

Does this ad containcues that are sexually

suggestive?

Does this ad present an image of sexual submissiveness?

Does this ad present an image of sexual submissiveness?

Dove Challenges the Norms of Beauty

Test Your Knowledge

Groups such as the National Organization for Women (NOW) are critical of advertising that:

A) Portrays women in traditional sexist roles

B) Contributes to violence against women

C) Is insulting to women

D) Stereotypes women

E) Does any of the above

Advertising Can Address Social Problems

*Click outside of the video screen to advance to the next slide

Do Advertisers Control the Media?

Advertising is the primary source of revenue for

newspapers, magazines, television and radio

Advertising is the primary source of revenue for

newspapers, magazines, television and radio

Advertisers may exert control over the media by biasing editorial content, limiting

coverage of certain issues, or influencing program content

Advertisers may exert control over the media by biasing editorial content, limiting

coverage of certain issues, or influencing program content

Media’s dependence on advertising for revenue makes them vulnerable to control by

advertisers

Media’s dependence on advertising for revenue makes them vulnerable to control by

advertisers

Do Advertisers Control the Media?

They must report the news fairly and accurately to retain

public confidence

They must report the news fairly and accurately to retain

public confidence

Advertisers need the media more than the media need

any one advertiser

Advertisers need the media more than the media need

any one advertiser

Media maintain separation between news and business

departments “The Wall”

Media maintain separation between news and business

departments “The Wall”

U.S. Government Discourages Drug Use

Role of Advertising in the Economy

Makes consumers aware of products and servicesMakes consumers aware of products and services

Provides consumers with information to use to

make purchase decisions

Provides consumers with information to use to

make purchase decisions

Encourages consumption, fosters economic growth

Encourages consumption, fosters economic growth

Economic Impact of Advertising

Effects on Consumer Choice• Differentiation • Brand Loyalty

Effects on Consumer Choice• Differentiation • Brand Loyalty

Effects on Product Costs and Prices• Advertising as an expense that

increases the cost of products• Increased differentiation

Effects on Product Costs and Prices• Advertising as an expense that

increases the cost of products• Increased differentiation

Effects on Competition• Barriers to entry • Economies of scale

Effects on Competition• Barriers to entry • Economies of scale

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

The Economic Value of Advertising

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Summarizing Economic Effects

Change consumers’ tastesChange consumers’ tastes

Reduces competitionReduces competition

Lowers sensitivity to priceLowers sensitivity to price

Builds brand loyaltyBuilds brand loyalty

Advertising Equals Market Power

Advertising Equals Market Power

Leads to higher pricesLeads to higher prices

Leads to fewer choicesLeads to fewer choices

Results in higher profitsResults in higher profits

Summarizing Economic Effects

Provides useful informationProvides useful information

Pressure for lower pricesPressure for lower prices

Increases price sensitivityIncreases price sensitivity

Increases competitionIncreases competition

Advertising Equals

Information

Advertising Equals

Information

Forces inefficient firms outForces inefficient firms out

Pressure for high qualityPressure for high quality

Do you agree with Leo Burnett?

“It must be said that without advertising we would have a far different nation, and one that would be much the poorer-not merely in material commodities, but in the life of the spirit.”

Excerpters is from a speech given by Leo Burnett on the American Association or Advertising Agencies’ 50th anniversary, April 20,1967