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UNC-Chapel Hill JOMC 170 - Social, Ethical, and Regulatory Aspects of Advertising

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1Social, Ethical, andRegulatory Aspectsof AdvertisingChapter 4© 2006 Thomson/South-WesternCh 4: Ethics & Regulation 2Social Aspects ofAdvertising• Advertising Educates Consumers– Pro: Advertising informs– Con: Advertising is superficial• Advertising improves living standards– Pro: Ads lower the costs of products– Con: Ads are wasteful and help only some© 2006 Thomson/South-WesternCritics of advertisingfeel that advertising issuperficial becausemany ads carry littleactual productinformation. Do youthink advertising issuperficial?© 2006 Thomson/South-Western2Advertising AffectsHappiness and Well-BeingCon: Ads create needsPro: Ads address a wide variety of basichuman needsCon: Ads promote materialismPro: Ads reflect society’s prioritiesCh 4: Ethics & Regulation 4© 2006 Thomson/South-WesternCritics feel advertisingpromotes materialism© 2006 Thomson/South-WesternAdvertising: Demeaning anddeceitful, or liberating and artful?Con: Ads perpetuate stereotypesPro: Advertisers are more sensitive nowCon: Ads are often offensivePro: Ads are a source of liberationCon: Ads deceive via subliminal stimulationPro: Advertising is artCh 4: Ethics & Regulation 6© 2006 Thomson/South-Western3Do you think this adperpetuates stereotypes?© 2006 Thomson/South-WesternAdvertising has apowerful effect onmass mediaPro: Ads foster a diverse and affordablemass media that provides informationCon: Advertising affects and controls programming. “Advertainment” hasmade matters worseCh 4: Ethics & Regulation 8© 2006 Thomson/South-WesternEthical Aspects ofAdvertisingEthics are the moral standards againstwhich behavior is judged. Key areasof debate regarding ethics andadvertising are:• Truth in advertising• Advertising to children• Advertising controversial productsCh 4: Ethics & Regulation 9© 2006 Thomson/South-Western4Ethical Aspects of AdvertisingTruth in Advertising• Deception is making false or misleading statements,but puffery (commercial exaggeration) is legal.• Cannot legislate against emotional appealsCh 4: Ethics & Regulation 10© 2006 Thomson/South-WesternEthical Aspects of AdvertisingAdvertising to Children—Issues• Advertising promotes superficiality and materialism inchildren• Children are inexperienced and easy prey• Persuasion to children creates child-parent conflicts• What does the literature say about kid’s abilities toprocess persuasive information?Ch 4: Ethics & Regulation 11© 2006 Thomson/South-WesternEthical Aspects of AdvertisingAdvertising Controversial Products• Critics question “targeting” minorities• Tobacco, alcohol, gambling and lotteries are productcategories of greatest concern• How does the concept of “primary demand” provideinsights here?• What does the literature say about advertising’simpact on these product categories?Ch 4: Ethics & Regulation 12© 2006 Thomson/South-Western5Regulatory Aspects ofAdvertisingAreas of advertising regulation:• Deception and unfairness• Competitive issues– Vertical cooperative advertising– Comparison advertising– Monopoly power• Advertising to childrenCh 4: Ethics & Regulation 13© 2006 Thomson/South-WesternKey Regulatory AgentsGovernment Regulation• Federal Trade Commission (FTC)– Wide range of regulatory programs and remedies• Federal Communications Commission (FCC)• Food and Drug Administration (FDA)• U.S. Postal Service• Bureau of Alcohol, Tobacco, and FirearmsCh 4: Ethics & Regulation 14© 2006 Thomson/South-WesternKey Regulatory Agents--FTCFTC Programs and Remedies• Advertising Substantiation Program• Consent Order• Cease and Desist Order• Affirmative Disclosure• Corrective Advertising• Control of Celebrity EndorsementsCh 4: Ethics & Regulation 15© 2006 Thomson/South-Western6Key Regulatory Agents (con’t)Industry Self-Regulation• National Advertising Review Board(NARB)• State and Local Better BusinessBureaus• Ad Agencies and Associations• Media OrganizationsCh 4: Ethics & Regulation 16© 2006 Thomson/South-WesternKey Regulatory Agents (con’t)Internet Self-Regulation• No industry-wide trade association hasemerged to date• Global Dialogue on Electronic Commerce(GBDe) is emerging as a governing body• Little progress has been made to addressconsumers’ complaintsCh 4: Ethics & Regulation 17© 2006 Thomson/South-WesternKey Regulatory Agents (con’t)Consumers as Regulatory agents• Consumerism: Grass roots consumermovements• Consumers Organizations– Consumer Federation of America– Consumers Union– Consumer Alert– Commercial AlertCh 4: Ethics & Regulation 18© 2006 Thomson/South-Western7Regulation of OtherPromotional Tools• Direct Marketing and e-Commerce– Privacy, Contests, Telemarketing– Spam=10 million messages/minuteworldwide• Sales Promotion– Premiums, Trade Allowances, Contests• Public Relations– Privacy, Copyright Infringement,Defamation (slander and libel)Ch 4: Ethics & Regulation 19© 2006


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UNC-Chapel Hill JOMC 170 - Social, Ethical, and Regulatory Aspects of Advertising

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