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Chapter Objectives

Chapter Objectives. To be familiar with the advertising regulation system in Canada To evaluate the ethical perspectives of advertising. Chapter Objectives. To understand the social effects of advertising

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Chapter Objectives

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  1. Chapter Objectives • To be familiar with the advertising regulation system in Canada • To evaluate the ethical perspectives of advertising Chapter 18 : Advertising Regulation and Ethical, Social, and Economic Effects of Advertising

  2. Chapter Objectives • To understand the social effects of advertising • To examine the economic role of advertising and its effects on consumer choice, competition, and product costs and prices Chapter 18 : Advertising Regulation and Ethical, Social, and Economic Effects of Advertising

  3. Advertising Regulation in Canada • Canadian Radio-television and Telecommunications Commission (CRTC) • Regulation of Tobacco Advertising • Quebec Regulations on Advertising to Children • Advertising Standards Council (ASC) Chapter 18 : Advertising Regulation and Ethical, Social, and Economic Effects of Advertising

  4. CRTC • Mandate is to ensure the Broadcasting Act of 1991 and Telecommunications Act of 1993 are upheld throughout Canada • Make certain that all Canadians can receive broadcasting and telecommunications services Chapter 18 : Advertising Regulation and Ethical, Social, and Economic Effects of Advertising

  5. CRTC • Advertising aspects regulated: • Advertising Limits • Infomercials • 900 numbers • Alcohol and drugs • Not covered: • False and misleading ads • Internet Chapter 18 : Advertising Regulation and Ethical, Social, and Economic Effects of Advertising

  6. Regulation of Tobacco Advertising • Restricted by Health Canada regulations on their use of traditional advertising media • Sponsor various arts, cultural, and sporting events (will be discontinued in 2003) Chapter 18 : Advertising Regulation and Ethical, Social, and Economic Effects of Advertising

  7. Regulation of Tobacco Industry • Print ads communicating sponsorships were only permitted advertising • Underground marketing has emerged, communication of brands occurs through exclusive distribution in select bars, pubs and nightclubs Chapter 18 : Advertising Regulation and Ethical, Social, and Economic Effects of Advertising

  8. Quebec Regulations on Advertising to Children • Consumer Protection Act of Quebec • It is illegal to direct commercial messages to persons younger than 13 • Concerns the product, the way the ad is presented, and the time and place the ad is shown Chapter 18 : Advertising Regulation and Ethical, Social, and Economic Effects of Advertising

  9. Advertising Standards Council (ASC) • Not-for-profit, self regulatory, industry body with mandate to create and maintain community confidence in advertising • Represents advertisers media organizations and advertising industry suppliers Chapter 18 : Advertising Regulation and Ethical, Social, and Economic Effects of Advertising

  10. ASC • Canadian Code of Advertising Standards • Describes what is not acceptable advertising • Pertains to the content of ads only • Intention is to provide standards so that responsible and effective advertising results • Gender Portrayal Guidelines • Ensure that women and men are portrayed appropriately in advertising Chapter 18 : Advertising Regulation and Ethical, Social, and Economic Effects of Advertising

  11. ASC • Complaint Process • Handles complaints in three streams • Consumer complaints: from ordinary citizens who believe an ad is unacceptable • Special interest groups: from a demonstrated organization that expresses a unified viewpoint • Trade disputes: complaints from other advertisers Chapter 18 : Advertising Regulation and Ethical, Social, and Economic Effects of Advertising

  12. ASC • Complaints Report • Comprehensive annual report • Identification of advertisers and the details of all complaints • Clearance Process • Alcohol • Cosmetics • Non-prescription drugs • Ads directed towards children • Food Chapter 18 : Advertising Regulation and Ethical, Social, and Economic Effects of Advertising

  13. Ethical Effects of Advertising • Advertising as Untruthful or Deceptive • Advertising as Offensive or Bad Taste • Advertising and Children Chapter 18 : Advertising Regulation and Ethical, Social, and Economic Effects of Advertising

  14. Advertising as Untruthful or Deceptive • Studies have shown a general mistrust of advertising among consumers • Puffery: advertising or sales presentations which praise the item to be sold with subjective opinions, superlatives, or exaggerations, vaguely and generally stating no specific facts Chapter 18 : Advertising Regulation and Ethical, Social, and Economic Effects of Advertising

  15. Advertising as Offensive or in Bad Taste • Common criticism of advertisers by consumers is that ads are offensive, tasteless, irritating, boring or obnoxious • More likely to dislike ads for products they do not use and brands they would not buy • Type of appeal or presentation can also be offensive (especially sexual and/or nudity) Chapter 18 : Advertising Regulation and Ethical, Social, and Economic Effects of Advertising

  16. Advertising and Children • TV is a vehicle through which advertisers can reach children easily • Critics argue that young children are vulnerable to ads because they lack the experience and knowledge to understand and evaluate the purpose of persuasive appeals Chapter 18 : Advertising Regulation and Ethical, Social, and Economic Effects of Advertising

  17. Advertising and Children • Others argue it is part of life and children must learn to deal with advertising as a part of life • Consumer socialization process: acquiring the skills needed to function in the marketplace Chapter 18 : Advertising Regulation and Ethical, Social, and Economic Effects of Advertising

  18. Social Effects of Advertising • Advertising Encourages Materialism • Advertising Makes People Buy Things They Don’t Need • Advertising and Stereotyping • Advertising and the Media Chapter 18 : Advertising Regulation and Ethical, Social, and Economic Effects of Advertising

  19. Advertising Encourages Materialism • Materialism: A preoccupation with material things rather than intellectual or spiritual concerns Chapter 18 : Advertising Regulation and Ethical, Social, and Economic Effects of Advertising

  20. Advertising Encourages Materialism • Critics believe advertising: • Creates needs rather than showing how a product/service fulfills them • Surrounds consumers with images of good life, and suggests material possessions leads to happiness and adds to the joy of living • Suggests material possessions are symbols of status, success and accomplishment Chapter 18 : Advertising Regulation and Ethical, Social, and Economic Effects of Advertising

  21. Advertising Makes People Buy Things they Don’t Need • Some say advertising should just provide information useful in making purchase decision and should not persuade • Persuasion criticized for fostering discontent among consumers and encouraging them to purchase products/services to solve deeper problems Chapter 18 : Advertising Regulation and Ethical, Social, and Economic Effects of Advertising

  22. Advertising and Stereotyping • Women • Has received a lot of attention through the years • Criticized for stereotyping women and failing to recognize their changing roles • Portrayals of women emphasize passivity, deference, lack of intelligence and credibility, and punishment for high levels of effort Chapter 18 : Advertising Regulation and Ethical, Social, and Economic Effects of Advertising

  23. Advertising and Stereotyping • Visible Minorities • Imbalance of visible minorities in advertising, consumers not exposed as frequently to them Chapter 18 : Advertising Regulation and Ethical, Social, and Economic Effects of Advertising

  24. Advertising and the Media • Concern because advertising plays such a role in financing the media, advertisers may influence or control the media • Economic Censorship: the media avoids certain topics or even presents biased news coverage because of advertisers demands Chapter 18 : Advertising Regulation and Ethical, Social, and Economic Effects of Advertising

  25. Advertising and the Media • Arguments supporting advertising control • Media’s dependence on advertiser’s support makes them susceptible to various forms of influence Chapter 18 : Advertising Regulation and Ethical, Social, and Economic Effects of Advertising

  26. Advertising and the Media • Includes: • exerting control over editorial content • biasing editorial opinions to favor the position of the advertiser • limiting coverage of a controversial story that might reflect negatively on a company • Influencing the program content of TV Chapter 18 : Advertising Regulation and Ethical, Social, and Economic Effects of Advertising

  27. Advertising and the Media • Arguments against advertiser control • Best interest of the media not to be influenced too much, so that they retain public confidence, must report news fairly and accurately without bias • Advertisers need the media more than they need any individual advertiser, particularly when the audience is large or does a good job of reaching a specific market Chapter 18 : Advertising Regulation and Ethical, Social, and Economic Effects of Advertising

  28. Economic Effects of Advertising • Effects on Consumer Choice • Effects on Competition • Effects on Product Cost and Price Chapter 18 : Advertising Regulation and Ethical, Social, and Economic Effects of Advertising

  29. Effects on Consumer Choice • Some argue that large advertisers use their power to limit options to a few well advertised brands Chapter 18 : Advertising Regulation and Ethical, Social, and Economic Effects of Advertising

  30. Effects on Consumer Choice • Economists argue advertising is used to: • Differentiation: products or services of large advertisers are perceived as unique or better than competitors • Brand loyalty: enables large national advertisers to gain control of the market, at the expense of smaller brands Chapter 18 : Advertising Regulation and Ethical, Social, and Economic Effects of Advertising

  31. Effects on Consumer Choice • Generally, advertising does not create brand monopolies or reduce the opportunities for new products to be introduced Chapter 18 : Advertising Regulation and Ethical, Social, and Economic Effects of Advertising

  32. Effects on Competition • Power in the hands of large firms with huge advertising budgets creates a barrier to entry making it difficult for other firms to enter the market Chapter 18 : Advertising Regulation and Ethical, Social, and Economic Effects of Advertising

  33. Effects on Competition • Large advertisers enjoy certain competitive advantages: • Economies of scale • Sell more products/services and can allocate more monies to advertising • No clear evidence that advertising alone reduces competition, reduces entry barriers or increases market concentration Chapter 18 : Advertising Regulation and Ethical, Social, and Economic Effects of Advertising

  34. Effects on Product Costs and Prices • Critics say advertising increases the prices consumers pay for products and services through • Large sums of money spent on advertising the consumer ends up paying for • Increasing product differentiation and adding to the perceived value of the product Chapter 18 : Advertising Regulation and Ethical, Social, and Economic Effects of Advertising

  35. Effects on Product Costs and Prices • Counterarguments: • Advertising may help lower the overall cost of a product • Makes a market more competitive leading to greater price competition • Means to market entry, stimulates product innovation, making market more competitive, keeping prices down Chapter 18 : Advertising Regulation and Ethical, Social, and Economic Effects of Advertising

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