Transcript Business Ethics in Promotion

Business Ethics in Promotion
4.01D
Fear-based Advertising


Used to motivate target to take action
quickly; fear of missing out on
something; persuades target to
purchase before they are ready
Attention of painful consequences of
inaction; if you don’t buy bad things will
happen to you

You won’t make a jillion dollars; you won’t
lose 50 pounds; nobody will like you etc.
The fear factor:


Causes people to act
It is the strongest human motivator;
parents use it with their children:


‘don’t run with a pencil in your hand you
will poke your eye out’
‘don’t sit too close to the television, you
will go blind’ etc.
Fear effectively used in
advertising:


Provide a fear or threat then
Show a way to reduce or eliminate that
fear or threat by doing or using what
the company is selling
Fear-based advertising is
unethical when:




Overly dramatic and graphic
No social responsibility
Stimulates un-needed demand
Involves inappropriate manipulative
techniques
Sexism/Stereotyping in
Advertising



Are only women capable of cooking,
washing dishes, cleaning the toilet?
Are only men capable of driving a truck,
using power tools, drinking beer while
watching a ball game?
Is it ethical to continue to propagate
these stereotypes?
What can marketers do to
lessen stereotyping in ads?



Be more aware of the stereotyping
Get public opinions of ads before they
are launched
Consider the effects of the ads on the
people involved—positive or negative
Children and promotion:



Children are vulnerable and impressionable
Is it ethical to have alcohol or tobacco ads in
children’s magazines or during children’s
television programs?
Marketing to children is closely monitored by
the Better Business Bureau, the Federal Trade
Commission, consumer and parental groups
and broadcast networks
Ethics in sales promotion
sweepstakes, samples and
rebates



Avoid false and misleading advertising
Reject high-pressure manipulations or
misleading sales tactics
Avoid promotions that use deception or
manipulations
Stealth marketing—what is it?

Advertisement or promotions where
people are paid to use or ‘pitch’
products in public settings without
disclosing that they are being paid
Why is stealth marketing
unethical?



Failure to disclose a relationship
between the marketer and the
consumer is deceptive
It can take advantage of the kindness
of strangers
Family and friends become corporate
spokespeople which could erode trust
Ethics and customer information
obtained via the internet



Privacy—information should be confidential
and used only for expressed purposes
Ownership—information obtained should be
properly authorized and documented;
ownership should be safeguarded and
respected
Access—accounts, passwords and other
information should be confidential
Socially responsible
promotions

Socially responsible companies are
increasing charitable contributions and
committing to making the world or their
community a better place
Examples of socially
responsible promotions:




Maxwell House coffee donates part of their proceeds
to Habitat for Humanity
Haagen-Dazs donates a portion of its proceeds from
its honeybee brand to support research on the
disappearing of honeybees; honeybees are a very
important part of the global food chain
Tyson Foods launched a campaign to donate 100
pounds of chicken to the Capital Area Food Bank of
Texas for every comment posted on its blog—there
were 658 comments in just two hours
Coca-Cola is donating money to help save polar bear
habitats
Technology in the promotion
function
4.01e
Technology has changed the way
marketers communicate with
customers


The internet has become a major force
in the communication process between
marketers and consumers
Internet transforms the process into
real time interaction in the customer’s
home or at work
Blogging



Companies connect with consumers, manage
their image and generate interest in their
products—direct channel of communication
which gives personalized feedback
Corporate blogs sponsored by a company
with one or more brands and is maintained
by an employee
Non-coporate blogs are independent and not
associated with any particular company or
brand
E-mails

Promotional information sent via email
to the target market
Banner ads and Pop ups


These are brand promotions and not
necessarily sales pitches
Technology provides a way to track the
number of users who click the ad,
investigate a product, request more
information and ultimately make a
purchase
Company website

Transmit information, entertain,
advertise and provide electronic
commerce—buying on-line
SMS—Short Message Service

Text messaging on cell phones;
advertisements, contests and special
deals
Positive effects of technology
in promotion—internet




Cost saving—less than any other
promotion media
Instant reach—fast and instantaneous
Longer impact—once on internet it is
there forever; not time-bound
Saves time—send message to a large
number of people in a short period of
time
Negative effects of technology
in promotion








Limited reach—can only reach people who are technosavvy
Lack of personal touch
Authenticity—not everyone believes what they see on-line
Unwanted emails and spam (sending persistent annoying
eMail)
Computer viruses—may be attached to an email
Waste of advertising dollars—target audience may not
see the ad
Bluetooth and texting encroach on privacy
Overload of information on web site—too many ads on
web site
Internet as a promotion tool



Technology is mainly used for the
informational part of the promotional
mix but can be used for personal selling
Banner ads and AdSense are used for
advertising
Chatrooms are used for personal selling

Opt-in Email—the recipient of the
advertisement has consented to receive it—
“enter your email here”


The material that is emailed to consumers will be
"anticipated“ not unsolicited; opt-in email will be
more personal and relevant than random
untargeted ads
Viral marketing encourages others to carry
your message via email, and other online
relationships at their own expense
Technology has enhanced
opportunities to contact
customers





AdSense
Chatrooms
Instant messaging
Web pages
Interactive television




Facebook
Twitter
Reader-boards
GPS on phones—
text to person
walking within a
certain radius of a
store
Technology facilitates the use
of sales promotions







Download and print coupons
Groupons—deal-of-the-day coupons online for
certain stores if enough customers in one city
sign up to use them
On-line rebates and sweepstakes
Register online for free product samples
Online rewards programs for loyal customers
Personal email notifications for special sales
Web-based or display screen kiosks in stores
and malls
Regulation of Promotion
4.01f
The need for truthfulness in
promotional messages






Society has the right to truthful information
Will help consumers make informed buying
decisions
Will help measure the consumer’s satisfaction
and use experience
Improves relationship between company and
consumer
Enhances patronage and repeat sales
Contributes to economic activity, which creates
jobs
Regulating promotional
messages

Federal Trade Commission (FTC) has
regulatory power to end any potentially
misleading or deceptive promotional
messages



Ads must be truthful and non-deceptive
Advertisers must be able to back up claims
Ads cannot be unfair

State Agencies regulate promotions
through Consumer Protection agencies
in the State Attorney General’s office
Laws the protect consumers
from unwanted promotions


Federal Communications Commission
(FCC) adopted rules which prohibit
sending unwanted commercial email
messages to wireless devices without
prior permission (March 2005)
FTC adopted rules that restrict sending
unwanted commercial email messages
to computers
Laws that protect children
from promotional messages

FTC works with Children’s Advertising Review
Unit (CARU)


Advertising to children must not be deceptive,
unfair or innappropriate
FCC rules



Limit commercials in children’s television programs
10.5 minutes per hour on weekends and 12
minutes per hour on weekdays
Time limits are for meant for children 12 years old
and younger
Regulating telemarketing


National Do Not Call Registry—telemarketers
have to purchase this list from the FTC and
remove any number on this list from their
marketing lists—violations could be fined
$11,000 per call
Does not stop ALL unwanted solicitations—
surveys, political solicitations, charitable
solicitations
Telemarketing laws:





May not call if consumer has asked not to be
called
Call only between 8:00am and 9:00pm
Must tell you it is a sales call, the name of the
seller and what is being sold
Facts must accurately represent the goods or
services
Before payment is made telemarketer must tell
total cost of goods, restrictions of sale, if the sale
is final



In a prize promotion telemarketer must
tell the odds of winning, no purchase or
payment is necessary to win,
restrictions or conditions for winning
Illegal to withdraw money from
consumer checking account without
written verifiable authorization
Cannot lie to get consumer to pay
Regulation of data privacy



Children’s Online Privacy Protection Rule (COPPA)—
parents control what information is collected from
children online—designed to protect children under
13
Health Insurance Portability and Accountability Act
(HIPPA)—affects organizations that process medical
records on individuals
Gramm-Leach Bliley Act of 1999 (GLBA)—aimed at
financial institutions

Banks, Securities trading, Insurance companies, Lenders,
Tax preparers, Credit Counselors/Financial Advisors, Real
estate services, Debt collection services
What can the Federal Trade
Commission (FTC) do?




Must first establish that advertising is false or
misleading
FTC can impose fines
Court can require a corrective advertising
campaign to correct misleading statements
Court can award a plaintiff—one harmed by
the false or misleading ads—monetary
damages
Activity





“Wearable Technology FTC Fines Reebok”
http://www.ecouterre.com/ftc-fines-reebok25m-for-deceptive-advertising-over-easytoneshoes/
According to FTC what was deceptive or
misleading about the product? (What Reebok
claimed the product would do)
How had Reebok portrayed its customers?
What did Reebok have to do in order to
“make things right” for their customers?
Why regulate products used in
advertising




Protect children
Protect consumers from false or
misleading information
Health risks
Protects against harm to animals
Advertising varies from
country to country





Laws are different
Cultures are different
Promotion structure will vary from country to
country
Advertising will be regulated differently from
country to country—some products may not
be promoted in newspapers or on televison
Privacy laws vary—collecting, storing,
transferring and using personal information
requires special consideration

Promotional laws vary between
countries in the same region


Europe, Asia, North America etc.
International promotion is costly—
money-wise and time-wise