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22
Evaluating the Social,
Ethical, and Economic
Aspects of Advertising
and Promotion
McGraw-Hill/Irwin
Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved.
Advertising and Promotion Viewpoints
Provides information
Encourages higher standard of living
Proponent
arguments
Promotes competition
Helps new firms enter a market
Creates jobs
More propaganda than information
Critic
arguments
Creates consumer needs, wants
Promotes materialism, insecurity,
and greed
Ethics in Advertising and Promotion
Ethics: Moral principles and values that
govern the actions and decisions of an
individual or group.
Not all issues can
be regulated
A marketing or
promotion action
may be legal but
not ethical
Marketers must
decide the
appropriateness
of their actions
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
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
Internet scams and abuses
Advertising as Offensive or in Bad Taste
Objectionable
products
Sexual
appeals
Shock 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 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 four
product categories:
Toys, cereal, candy &
fast food restaurants
Perspectives on Ads for Children
Advocates Argue That Children:
Lack the knowledge and
skills to evaluate
advertising claims
Cannot differentiate
between programs and
commercials
Marketers Argue Children:
Must learn
through socialization
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 make
people buy things
they don’t need?
Is advertising just
a reflection of society?
Does advertising affect Society?
Advertising and Stereotyping
Portrayal of women to
reflect their changing role
in society
Gender
stereotyping
Criticisms of
Advertising
With Regard to
Stereotyping
Sexual
orientation
Portrayal of
women as
sex objects
Ethnic
stereotyping/
representation
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?
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
Media’s dependence on
advertising for revenue makes
them vulnerable to control by
advertisers
Advertisers may exert control
over the media by biasing
editorial content, limiting
coverage of certain issues, or
influencing program content
Do Advertisers Control the Media?
They 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”
U.S. Government Discourages Drug Use
Role of Advertising in the Economy
Makes consumers aware
of products and services
Provides consumers with
information to use to
make purchase decisions
Encourages consumption,
fosters economic growth
Economic Impact of Advertising
Effects on Consumer Choice
• Differentiation
• Brand Loyalty
Effects on Competition
• Barriers to entry
• Economies of scale
Effects on Product Costs and Prices
• Advertising as an expense that
increases the cost of products
• Increased differentiation
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
*Click outside of the video screen to advance to the next slide
Summarizing Economic Effects
Advertising
Equals
Market
Power
Change consumers’ tastes
Lowers sensitivity to price
Builds brand loyalty
Results in higher profits
Reduces competition
Leads to higher prices
Leads to fewer choices
Summarizing Economic Effects
Provides useful information
Advertising
Equals
Information
Increases price sensitivity
Increases competition
Pressure for high quality
Pressure for lower prices
Forces inefficient firms out
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