Advertising SocietyPower or Information?What do you think?Some Economic Questions:Slide 5PowerPoint Presentation3 Ethical Issues:5 Controversial Issues:Regulation - 2 Main Purposes Regulation - 3 Main Areas5 FTC Concerns:4 Possible Remedies for Deceptive Ads:6 Government Regulatory Groups:2 Industry WatchdogsBig QuestionsSlide 15&Advertising SocietyEconomics The effects of advertising on our economy Ethics The effects of advertising on our society Regulation Our attempts to manage those effectsPower or Information? Market PowerAdvertising Persuades consumer to purchase one brand over another more often Excess brand profits Higher barriers to entry and more market power More advertising leads to greater brand loyalty Reduce quality/raise price Reduced consumer sovereignty Monopoly Market Information AdvertisingIncreased consumer knowledge More substitute products consumers can consider Lower barriers to entry by new brands Reduced market power for any individual brand Better pricing/distribution more product innovation Optimal brand profits, consumer choice, and price benefitsWhat do you think? Advertising = Market Power Advertising = Market Information Or both?Some Economic Questions: How does advertising affect the price of a new car? How does advertising affect the price of a latté from Starbucks? How does advertising affect the way that you spend your money?Some Economic Questions: Can ads make people buy things they don’t want or need? Can ads make people more materialistic? Are the benefits of advertising worth the annoyance? Ads destroy freedom of choice Ads give consumers more choicesAn Ethical DebateAds simply reflect the “real world” Ads = freedom of speechAds destroy democracy/mediaAdvertising warps social values3 Ethical Issues:1) Advocacy What does the advertising advocate?2) Accuracy How accurate is the advertising? Some of this depends on susceptibility of the audience (i.e., kids).3) AcquisitivenessWhat is the overall effect?Does it make us more materialistic?5 Controversial Issues:1) Puffery "Nothing beats a Bud”2) Decency Sexual innuendo, violence3) Stereotyping Portrayals of housewives,seniors, racial groups4) Children Violence, dangerous acts, unhealthy habits5) Controversy Condoms, alcohol, fashionRegulation - 2 Main PurposesRegulation - 3 Main Areas Purpose for advertising regulation To protect competition To protect consumers from economic or physical harm Regulations are concerned with Deceptive or unfair content How advertising is delivered Protection of susceptible groups (kids, etc.)5 FTC Concerns:1) Deception Must lead to material injury.2) Comparisons Must substantiate withstatistically significant data.3) Endorsements Must be qualified; must use product. 4) Demonstrations Must be accurately depicted.5) “Bait & Switch” Product must be available.4 Possible Remedies for Deceptive Ads:1) Consent Decree2) Cease & Desist 4) Consumer Redress FTC mandates reimbursement.FTC asks advertiser to stop.FTC mandates new ads to correct false perceptions.3) Corrective AdsFTC gets court order toforce advertiser to stop.6 Government Regulatory Groups:1) FDA Packaging and labeling 2) FCC Broadcast advertising3) Postal Service Magazines, direct mail4) ATF Liquor labeling, advertising5) Patent Office Trademarks6) Library of Congress Copyrights2 Industry Watchdogs1) NAD (National Advertising Division)- Part of Better Business Bureau2) National Advertising Review Board- Represents advertisers and agencies- A division of the NAD Compliance is strictly voluntaryBig Questions What do you think is the biggest benefit of advertising? What do you think is the biggest problem with advertising? What do you think is the best example of bad advertising? What do you think is the best example of good
View Full Document
Unlocking...