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 Creates consumer needs, wants

arguments
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.

A marketing or Marketers must

Not all issues can promotion action decide the
be regulated may be legal but appropriateness
not ethical of their actions
Promoting Responsible Drinking
Benettons 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 Sexual
Shock ads
products appeals
 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 80% of all advertising

watch an average of targeted to children
22 hours of TV per falls in four
week and see 30,000 product categories:
commercials per year
Toys, cereal, candy &
fast food restaurants
 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 Children:

Must acquire skills

Must learn
needed to function in
through socialization
the marketplace
Do TV Networks Have a Double Standard?
Social and Cultural Consequences

Does advertising
encourage materialism?

Does advertising make

people buy things
they dont 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

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

Ethnic
Sexual
stereotyping/
orientation
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

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Do Advertisers Control the Media?

Advertising is the primary

source of revenue for
newspapers, magazines,
television and radio

Medias 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

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 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

 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

 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