ETHICS, REGULATION AND SOCIAL RESPONSIBILITY
KEY ETHICAL ISSUES
1. Puffery - praise an item or service to be sold with subjective opinions,
superlatives, or exaggerations, vaguely and generally, stating no specific
facts.
2. Taste - different things offend different people. Sometimes it’s the
product people are offended by and not the advertising.
3. Stereotyping - presenting a group of people in an unvarying pattern that
lacks individuality. Does advertising shape our values or mirror them?
4. Advertising to children - Children’s Television Advertising Practice Act,
places a 10.5 minute per hour ceiling for commercials during the weekend
on children’s programming. Requires commercial breaks be distinguished
from programming.
5. Controversial Products - Tobacco, Alcohol, Gambling
6. Subliminal - a message is transmitted in a way that the receiver is not
consciously aware of receiving it. The symbols are too faint or brief for the
consumer to recognize them.
REGULATION
First Amendment states that congress shall make no law “abridging the
freedom of speech….
Courts have extended First Amendment protection to commercial speech,
which is speech that promotes commercial activity, but the protection is not
absolute. The Supreme Court has ruled that only truthful commercial speech
is protected, not misleading or deceptive statements.
The Courts keep reinterpreting how the First Amendment applies to different
situations, case law.
Federal Trade Commission (FTC) is the primary governing agency over the
advertising industry. Set up to identify and eliminate deceptive ads.
Deception - pricing, false criticisms of competing products, deceptive
guarantees, ambiguous statements, or false testimonials.
Terminology
Endorsement or testimonials - using a spokesperson or statements from a
person/s who consumers believe reflects the opinions or beliefs of that
person.
Product placements - use brand name items in movies or on TV
Consent decree - The FTC notifies the advertiser and asks the advertiser to
sign a consent decree agreeing to stop the deceptive practice.
Cease-and-desist order - when an advertiser refuses to sign consent decree
the FTC holds a commission similar to a court trial.
Corrective advertising - when consumer research determines that an ad
campaign has perpetuated lasting false beliefs, the FTC can order advertising
be created to correct the false impression.
FTC can require advertisers to validate any claim
FTC can order a refund, return of property, payment of damages
FTC can hold an advertising agency accountable if they had reason to know
it was false or deceptive.
OTHER REGULATORY AGENCIES
Food and Drug Administration (FDA) - packaging, labeling of food and
drug products
Federal Communication Commission -regulates radio and tv
US Postal Service - monitors materials sent through the mail
Bureau of Alcohol, Tobacco and Firearms - regulates advertising for
alcoholic beverages
US Patent Office - Oversees trademarks
Library of Congress- copyright protection
INDUSTRY SELF REGULATION
National Advertising Review Council - National Advertising Division
(NAD) and National advertising Review Board (NARB)
Media Regulation - screening and rejecting ads that violate their standards
SOCIAL RESPONSIBILITY
Advertising can be used in a positive way as a tool to improve society.
PSA’s - Public Service Announcements
The Ad Council - a private, nonprofit organization that includes advertising
agencies and media that adopt good causes and develop free advertising
campaigns on their behalf.
Social Marketing - companies, government agencies and nonprofit
organizations can also use advertising to communicate about their social
programs.
Most agencies, and in-house marketing departments follow a business
model:
The companies task is to determine the needs, wants and interests of target
markets and to deliver the desired satisfactions more effectively, efficiently
than it’s competitors in a manner that is non offensive to the target market.
THE MARKETING PROCESS
Marketing is the process of planning and executing the conception, pricing,
promotion, and distribution of ideas, goods and services to create exchanges
that satisfy the perceived needs, wants and objectives of the target audience.
Marketing Mix - blend of activities such as designing the product and its
package, pricing, distribution and promotion
Business Plan - encompasses the whole business and answers how a
business is going to make money.
Marketing Plan - encompasses the marketing mix
1.Product - includes design and development, branding and packaging
2. Distribution - includes the channels used in moving and storing the
product from the manufacturer to the buyer
3. Price - includes the price at which the product or service is offered for sale
4. Promotion or marketing communication - includes personal selling,
advertising, public relations, sales promotion, direct marketing, point of sale,
packaging and outdoor.
Terminology
Branding - makes a product distinctive in the marketplace. A brand is the
name, term, design, symbol, etc. The brand name can be spoken. Brand
equity is the reputation the name or symbol connotes.
Marketing Communications plan/mix - blueprint of marketing
communications activity
To plan marketing communication effectively, marketers must understand
the strengths and weaknesses of each marketing communications
tool/technique.
Advertising is a tool in the promotion part of the marketing mix.
Advertising Strengths
1. Can reach a mass audience
2. Introduces new products/services
3. Explain changes in a product or service
4. Reminds and reinforces
5. Persuades
MARKETS
Market is either a region where goods are sold and bought or a particular
type of buyer.
Four Main Types of Markets are:
1. Consumer
2. Business-to-Business- use in own business or to make other products
3. Institutional - schools/hospitals/non profits
4. Reseller markets - wholesalers, retailers, distributors
Terminology
Product differentiation - marketing strategy designed to create product
differences in the minds of the consumers that distinguish the company’s
product from all others.
Image - implies a difference
Positioning - is the process of determining what place a product should
occupy in the target market’s mind.
You can position by:
1. Price - high, low, medium
2. Attributes - Vortex offers a quiet heater
3. Ability to surpass the competition
4. Application - Tylenol flu is for flu attacks
5. Product User - teens, seniors, children, etc
6. By product class - Starbucks is a coffee
The role of the marketing and advertising strategy is to relate the product’s
position to the target market.
AD AGENCIES
Full Service Agency - includes the four major staff functions:
1. Account Management - liaison between client and agency
2. Creative Services - copywriter, artists, producers
3. Media Planning and Buying
4. Account Planning/Research - gathers intelligence on market, competitors,
consumers
5. Internal Services - billing, personnel
Specialized Agencies - specialize
1. Functions - creative or media buying
2. Audience - youth, minority
3. Industry - healthcare, automotive, business-to-business
4. Direct marketing
5. Public Relations
6. Sports marketing
7 Events marketing
8. Single client agencies
Agencies are paid through a combination of fees and commissions