Comstrat 380 1nd Edition Lecture 4 Outline of Last Lecture I. What are the debates about Marcom’s social roleII. Demand creation: shaping versus mirroringIII. Diversity and stereotypesOutline of Current Lecture I. Federal Trade Commission (FTC)II. Food and Drug Administration (FDA)III. Federal Communications Commission (FCC)IV. Other regulatory bodiesV. The impact of RegulationVI. Media Review of AdvertisingVII. Self-regulationCurrent LectureI. Federal Trade Commission (FTC)i. Regulates deceptive and misleading advertising, focusing on:1. Unfairness2. Deception3. Violation of public policy ii. It also oversees advertising involving weight loss products, children and elderly people, telemarketing, and the entertainment industryII. Food and Drug Administration (FDA)a. Regulatory division of the U.S. Department of Health and Human Servicesb. Oversees package labeling, ingredient listings, and advertising for food and drugsc. Determines the safety and purity of foods, cosmeticsd. It is also a watchdog or drug advertisingIII. Federal Communications Commission (FCC)These notes represent a detailed interpretation of the professor’s lecture. GradeBuddy is best used as a supplement to your own notes, not as a substitute.a. Regulates radio and television broadcast communications (media , not advertisers)b. Can issue and revoke licenses, ban deceptive messages or those in poor tastec. It responds to complaints but doesn’t initiate actionsd. Works closely with FTC to eliminate false and deceptive advertisingIV. Other Regulatory Bodiesa. Bureau of Alcohol, Tobacco, and Firearms (BATF)i. Regulates deception in advertising an establishes labeling requirements for the liquor industry b. U.S. Postal Servicei. Regulates direct mail and magazine advertising including the area of obscenity, lotteries, and fraudc. The States’ Attorney Generali. Regulates advertising at the state levelV. The impact of Regulationa. The FTC and children’s advertingi. Children Advertising Review Unit (CARU) evaluates ads directed at children under 12ii. The Children’s Television Advertising Practice Act (1990) placed ceiling on ads during TV programsiii. As of 1996, all stations must air three hours per week of educational programming b. Regulating deceptioni. Deceptive advertising misleads consumers by making false claim, failing to fully disclose important facts or bothc. Current FTC policy contains three elements:i. Misleading: representation, omission, practiceii. Reasonableness: “reasonable consumeriii. Injuries: must cause material injury d. Remedies for deception and unfair advertisingi. Cease and desist orders1. A process similar to court trial preceded the orderii. Corrective advertising1. Advertiser runs messages correcting the false impressionsiii. Consumer redress1. Cancel or reform contracts, refund money, return property, pay fordamages, or public notification e. Remedies for deception and unfair advertisingi. Can the ad agency be held liable long with the advertiser? VI. Media review of advertisinga. The media screens and rejects adverting that violate standards of truth, good tasteb. The First Amendment allows publishers to refuse to run adsVII. Self-regulationa. Self-disciplinei. Organizations develop and use their own normsii. Major advertisers and agencies utilize in-house procedureiii. Several U.S. companies have their own codes of behavior and criteria for acceptable advertising b. Industry Self-Regulationi. NARCii. ASRCiii. NADiv. NARBc. Self-regulation by Public and Community Groupsi. Better business bureau1. Advises local business on legal aspects of advertising2. Consumer activist groupsa. Action for Children’s Advertisingb. Public Citizen c. Cultural Environment