Transcript Response to Environmental Problems

Chapter Twenty
Regulatory, Ethical,
and “Green” Issues in
Marketing
Communications
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
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 selfregulation
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
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
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”
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
Federal and State Regulation
Federal
Regulation
Marketing
Communications
State
Regulation
Federal Regulation
•
•
•
•
•
Regulation of deceptive advertising
Regulation of unfair practices
Information regulation
Regulation of product labeling
Regulation of prescription drug
advertising
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.”
Elements of Deception
• Misleading
• Reasonable
consumer
• Material
Misleading?
• Misleading
• Reasonable
consumer
• Material
Regulation of Unfair Practices
Three major areas
• Advertising substantiation
• Promotional practices directed to
children
• Trade regulation rules
Advertising Substantiation
• Advertising
substantiation
• Promotional
practices directed
to children
• Trade regulation
rules
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
Proactive Correction
Response prior to
corrective
advertising
Regulation of Product Labeling
Food and Drug Administration (FDA)
Responsible for regulating information
on the packages of food and drug
products
Regulation of Prescription Drug
Advertising
Food and Drug Administration (FDA)
Responsible for regulating advertisements
for prescription drugs
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
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
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
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
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
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 socalled learning tools
•
Placing products in movies with tie-in
merchandise programs
•
Magazine use of Advertorials—ads
disguised as editorial opinions
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
Ethical Targeting to Youth?
Example of
Controversial
Advertising
- Camel’s “Joe camel”
Targeting to Economically
Disadvantaged Consumers
Billboards advertising tobacco (and alcohol)
were disproportionately more likely to appear
in inner-city areas
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
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
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
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
Ethical Issues in Packaging
3) Packaging safety—dangerous products
that are unsafe to children—not tamperproof
4) Environmental implications—suggest
environmental benefits but cannot
deliver
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
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
Enhancing Ethical Behavior
The Golden
Rule
Act in a way that you would
want
The
Professional
Ethics
Take only actions that would be
viewed as proper by an objective
panel of your professional
colleagues
The TV test
“Would l feel comfortable
explaining this action on
television to the general public?”
Response to
Environmental Problems
Green advertising
Packaging response
Seal-of-Approval programs
Cause-Oriented Programs
Point-of-Purchase
Green Advertising
• Relationship
between
product and
environment
• Promote a green
lifestyle
• Corporate
responsibility
Green Advertising
• Relationship
between
product and
environment
• Promote a green
lifestyle
• Corporate
responsibility
Green Advertising
Green Advertising
Addressing the
Biophysical
Environment
Green Advertising
Green Advertising
Promoting an
Image of
Environmental
Responsibility
Green Advertising
Green Advertising
Promoting an
Image of
Environmental
Responsibility
Green Advertising
Concentrated
refill packs allow
for less waste
Green Advertising
Corporate
Responsibility
Response to
Environmental Problems
Green advertising
Packaging response
Seal-of-Approval programs
Cause-Oriented Programs
Point-of-Purchase
Package Response
• Recyclable bottles
• Polystyrene to
paperboard
• Plastic to
cardboard
• Smaller packages
Response to
Environmental Problems
Green advertising
Packaging response
Seal-of-Approval programs
Cause-Oriented Programs
Point-of-Purchase
Seal-of-Approval Programs
• Designed to assist consumers in
identifying environmentally friendly
products and brands
• Green Seal of Approval
• “Chasing arrows logo”
Response to
Environmental Problems
Green advertising
Packaging response
Seal-of-Approval programs
Cause-Oriented Programs
Point-of-Purchase
Cause-Oriented Programs
Cause-Oriented
programs
Response to
Environmental Problems
Green advertising
Packaging response
Seal-of-Approval programs
Cause-Oriented Programs
Point-of-Purchase
Point-of-Purchase Programs
Use the point-of-purchase as a
vehicle for promoting a brand’s
environmental virtues
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
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
Appropriate Environmental Claims
• Make specific claims
• Reflect current disposal options
• Make substantive claims
• Make supportable claims