© 2010 South-Western, a part of Cengage Learning All rights reserved. PowerPoint Presentation by Charlie Cook The University of West Alabama Eighth Edition Ethical, Regulatory, and Environmental Issues CHAPTER 21 1. Appreciate the ethical issues associated with advertising, sales promotions, and other marcom practices. 2. Understand why the targeting of marketing communications toward vulnerable groups is a heatedly debated practice. 3. Explain the role and importance of governmental efforts to regulate marketing communications. 4. Be familiar with deceptive advertising and the elements that guide the determination of whether a particular advertisement is deceptive. Chapter Objecves After reading this chapter you should be able to: © 2010 South-Western, a part of Cengage Learning. All rights reserved. 21–2 5. Be acquainted with the regulation of unfair business practices and the major areas where the unfairness doctrine is applied. 6. Know the process of advertising self-regulation. 7. Appreciate the role of marketing communications in environmental (green) marketing. 8. Recognize the principles that apply to all green marcom efforts. Chapter Objecves (cont’d) After reading this chapter you should be able to: © 2010 South-Western, a part of Cengage Learning. All rights reserved. 21–3 © 2010 South-Western, a part of Cengage Learning. All rights reserved. 21–4 Ethical Issues in Marketing Communications Ethical Issues in Marketing Communications • Ethics in Marcom Ethics in Marcom Involves matters of right and wrong, or Involves matters of right and wrong, or moral moral , conduct , conduct pertaining to any aspect of marketing communications pertaining to any aspect of marketing communications Honesty, honor, virtue, integrity Honesty, honor, virtue, integrity • Ethical Conduct Ethical Conduct Lack of consensus about what it is Lack of consensus about what it is Ethical lapses and moral indiscretions occur under Ethical lapses and moral indiscretions occur under pressures of trying to meet business goals and pressures of trying to meet business goals and attempting to satisfy the demands of the financial attempting to satisfy the demands of the financial community community © 2010 South-Western, a part of Cengage Learning. All rights reserved. 21–5 Sources of Ethical Issues Sources of Ethical Issues Ethical Issues in Marketing Activities and Communications Advertising Targeting Marcom Public Relations Internet Marketing Sales Promotions Packaging Communications © 2010 South-Western, a part of Cengage Learning. All rights reserved. 21–6 The Ethics of Targeting The Ethics of Targeting • Ethical Debate Ethical Debate Is it ethical to target products Is it ethical to target products and communications efforts to and communications efforts to segments that vulnerable or segments that vulnerable or put at risk by these actions? put at risk by these actions? • Is Targeting Unethical or Is Targeting Unethical or Just Good Marketing? Just Good Marketing? When does a good targeting When does a good targeting strategy become a method of strategy become a method of unfair (unethical) advantage? unfair (unethical) advantage? © 2010 South-Western, a part of Cengage Learning. All rights reserved. 21–7 Is Targeting Unethical or Is Targeting Unethical or Just Good Marketing? Just Good Marketing? • Positive Positive Targeting benefits Targeting benefits rather than harms rather than harms consumers—providing consumers—providing them with products them with products best suited to their best suited to their particular needs and particular needs and wants wants • Negative Negative Targeting is not Targeting is not concerned with fulfilling concerned with fulfilling consumers’ needs and consumers’ needs and wants, but rather with wants, but rather with exploiting consumer exploiting consumer vulnerabilities vulnerabilities © 2010 South-Western, a part of Cengage Learning. All rights reserved. 21–8 The Ethics of Targeting The Ethics of Targeting Targeting Food and Beverage Products Targeting Tobacco and Alcohol Products Targeting Miscellaneous Products Ethical Issues in Targeting Children and Teens © 2010 South-Western, a part of Cengage Learning. All rights reserved. 21–9 Targeting to Children and Teens Targeting to Children and Teens • Negative Targeting Outcomes Negative Targeting Outcomes Products targeted to kids are unnecessary and the Products targeted to kids are unnecessary and the communications involved are exploitative communications involved are exploitative Posters, book covers, free magazines, advertising, and other Posters, book covers, free magazines, advertising, and other so-called learning tools that are ads for products so-called learning tools that are ads for products Movies with tie-in merchandise programs Movies with tie-in merchandise programs Targeting adult products (e.g., beer) to pre-adults Targeting adult products (e.g., beer) to pre-adults Using unacceptable cartoon-like images (e.g., Joe Camel) Using unacceptable cartoon-like images (e.g., Joe Camel) Promoting adult-oriented entertainment (e.g., violent films, Promoting adult-oriented entertainment (e.g., violent films, video games, and music products) to children and teens video games, and music products) to children and teens Marketing food products (e.g., high-fat, high-calorie snacks) Marketing food products (e.g., high-fat, high-calorie snacks) that contribute to childhood obesity that contribute to childhood obesity © 2010 South-Western, a part of Cengage Learning. All rights reserved. 21–10 Targeting to Economically Disadvantaged Targeting to Economically Disadvantaged Consumers Consumers • Billboards advertising tobacco and alcohol Billboards advertising tobacco and alcohol disproportionately appear in inner-city areas disproportionately appear in inner-city areas • Examples: Examples: R.J. Reynolds attempt to market new brands R.J. Reynolds attempt to market new brands cigarettes to African-Americans and downscale young cigarettes to African-Americans and downscale young women women Heileman Brewing Company’s targeting of “Power Heileman Brewing Company’s targeting of “Power Master” high-alcohol malt liquor to inner-city Master” high-alcohol malt liquor to inner-city neighborhoods neighborhoods [...]... 2010 South-Western, a part of 21 27 Environmental Marketing Communications • Legitimate Green Marketing Is a firm’s introduction of environmentally oriented products and its undertaking of marcom programs to promote them Seeks to accomplish two objectives: Improve environmental quality Satisfy customers © 2010 South-Western, a part of 21 28 Green Marketing Initiatives • Green Marketing Communications. .. deception © 2010 South-Western, a part of 21 31 Figure 21. 4 Green Advertising Presenting an Image of Environmental Responsibility © 2010 South-Western, a part of 21 32 Guidelines for Green Marketing General Recommendations for Environmental Claims Make Specific Claims Reflect Current Disposal Options © 2010 South-Western, a part of Make Substantive Claims Make Supportable Claims 21 33 Figure 21. 3 Green Advertising... drugs © 2010 South-Western, a part of 21 23 Regulation by Federal Agencies (cont’d) • Drug Advertising FTC regulates deceptive and unfair advertising for over-the-counter (OTC) drugs FDA regulates advertisements for prescription drugs in requiring advertisers to present a balanced perspective when advertising drugs © 2010 South-Western, a part of 21 24 Regulation of Marketing Communications • Regulation... Communications Advertisements that promote green products Environmentally friendly packaging Seal-of-approval programs promoting green products Cause- and event-oriented marcom efforts that support environmental consciousness Point-of-purchase display materials that are environmentally efficacious Direct marketing programs that reduce resource usage by developing more efficient solicitations Outdoor... efficient solicitations Outdoor advertising efforts that reduce the usage of environmentally damaging materials © 2010 South-Western, a part of 21 29 Figure 21. 2 Green Advertising Addressing the Biophysical Environment © 2010 South-Western, a part of 21 30 Guidelines for Green Marketing • FTC’s Green Guides Qualifications and disclosures should be sufficiently clear and prominent to prevent deception... Regulatory Authority Deceptive Advertising Unfair Practices © 2010 South-Western, a part of Information Regulation 21 20 Regulation by Federal Agencies (cont’d) Elements of the FTC’s Deception Policy Misleading Misrepresentation or Omission Reasonable Consumer Test © 2010 South-Western, a part of Material Misrepresentation 21 21 Regulation of Unfair Practices • Unfair Advertising Acts or practices... 2010 South-Western, a part of 21 17 Fostering Ethical Marketing Communications The Golden Rule Act in a way that you would want others to act toward you The Professional Take only actions that would be viewed as proper by Ethics Test an objective panel of your professional colleagues The TV test Would l feel comfortable explaining this action on television to the general public?” © 2010 South-Western,... of 21 18 Regulation of Marketing Communications • Justifications for Regulation When consumer decisions are based on false or limited information When benefits realized exceed the costs • Benefits of Regulation Improved consumer choices Improved product quality Reduction in prices • Costs Regulatory compliance Enforcement costs Unintended side effects © 2010 South-Western, a part of 21 19... acknowledge problems or, instead, attempt to cover up the problems © 2010 South-Western, a part of 21 14 Ethical Issues in Packaging and Branding Label Information Packaging Graphics Packaging and Branding Ethical Issues Packaging Safety Environmental Implications Brand Naming and Brand Name Theft © 2010 South-Western, a part of 21 15 Ethical Issues in Sales Promotions • Sales Promotions Manufacturer... new product—Is this a form of bribery and is it unethical? • Consumer-Oriented Sales Promotions A promoter offers a reward for a consumer’s behavior that not delivered or lies about the odds of winning Consumers who make false claims for coupon redemptions and refunds © 2010 South-Western, a part of 21 16 Ethical Issues in Online Marketing • Consumer Privacy Issues Consumer’s privacy rights to . and music products) to children and teens Marketing food products (e.g., high-fat, high-calorie snacks) Marketing food products (e.g., high-fat, high-calorie snacks) that contribute to childhood. high-alcohol malt liquor to inner-city Master” high-alcohol malt liquor to inner-city neighborhoods neighborhoods © 2010 South-Western, a part of Cengage Learning. All rights reserved. 21 11 Targeting. extolling products © 2010 South-Western, a part of Cengage Learning. All rights reserved. 21 18 Fostering Ethical Marketing Communications Fostering Ethical Marketing Communications The Professional