21

Evaluating the Social, Ethical,

and Economic Aspects of
Advertising and Promotion

McGraw-Hill/Irwin Copyright © 2012 McGraw-Hill Companies, Inc., All right reversed

Advertising and Promotion Viewpoints

Provides information to consumers

Encourages higher standard of living

Proponent
arguments Promotes competition

Helps new firms enter a market

Creates jobs

More propaganda than information

Critic Creates consumer needs, faults
arguments
Promotes materialism, insecurity,
and greed

21-2
Ethics in Advertising and Promotion

Ethics: Moral principles and values that

govern the actions and decisions
of an individual or group

A marketing or Marketers must

Not all issues promotion decide the
can be action may be appropriate-
regulated legal but not ness of their
ethical actions

20-3
Promoting Responsible Drinking

20-4
Shock Ads

20-5
Untruthful or Deceptive Advertising

Consumers Industry Problems

Don’t trust advertising Deliberately untruthful

Rely on word of mouth False and misleading claims

Find ads intrusive Faulty sweepstakes

Find relevance too low Providing too little info

Trust websites slightly more Puffery and embellishment

20-6
Advertising as Offensive or in Bad Taste

Objectionable Sexual
Shock ads
products appeals

Condoms
Feminine
hygiene products
Women’s
undergarments
Hemorrhoid
products

20-7
 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

20-8
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?

20-9
Dolce & Gabbana’s Controversial, Offensive Ad

20-10
Attitudes Toward Sex in Advertising

20-11
 Advertising and Children

Children's TV
Watching Behavior

Children watch an 80% of ads targeted to

average of 22 hours children cover:
of TV per week •Toys
•Cereal
They see up to 30,155
commercials per year •Candy
•Fast food

20-12
Perspectives on Ads for Children

Advocates Argue That Children:

Lack the knowledge and Cannot differentiate

skills to evaluate between programs and
advertising claims commercials

Marketers Argue that Children:

Must acquire skills

Must learn
needed to function in
through socialization
the marketplace

20-13
 Other Areas of Concern

• Areas of potential concern

• Cable television programming
• Internet ads
• Ads encouraging children to call 900
numbers
• An increase in toy-based programs
• Marketing of violent films, music, games
• Advertising and promotions in schools by
companies like Coca-Cola

20-14
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?

20-15
Does advertising affect Society?

20-16
 Advertising and Stereotyping

Portrayal of women to
reflect their changing role
in society

Criticisms of Portrayal of
Gender
women as
stereotyping Advertising sex objects
With Regard to
Stereotyping

Ethnic
Sexual
stereotyping/
orientation
representation

20-17
Targeting Specific Markets

20-18
Do Advertisers Control the Media?

Ads are the primary source of revenue for

newspapers, magazines, television and radio

Media’s dependence on ads for revenue makes

them vulnerable to control by advertisers

Advertisers may exert control over media by

biasing editorial content, limiting coverage of
certain issues, or influencing program content

20-19
Can Media Resist Advertisers?

Media 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”

20-20
The Social Value of Media

20-21
Economic Effects of Advertising

Makes consumers aware

of products and services

Provides consumers with

information to use to
make purchase decisions

Encourages consumption,
fosters economic growth

Leads to economies of
scale & lower prices

20-22
Economic Impact of Advertising

Consumer Choice
• Differentiation
• Brand Loyalty

Competition
• Barriers to entry
• Economies of scale

Product Costs & Prices

• Advertising is an expense
that increases product costs
• Increased differentiation

20-23
 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

20-24
 Summarizing Economic Effects

Change consumers’ tastes

Advertising
Equals Lowers sensitivity to price
Market
Power Builds brand loyalty

Results in higher profits

Reduces competition
Leads to higher prices
Leads to fewer choices

20-25
 Summarizing Economic Effects

Provides useful information

Advertising
Equals Increases price sensitivity
Information
Increases competition

Pressure for high quality

Pressure for lower prices
Forces inefficient firms out

20-26
The Value of Advertising

Advertising.
The way great
brands get to
be great
brands.

20-27
The Positive Effects of Advertising

20-28