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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