Advertising Regulation and Ethical, Social, and Economic Effects of Advertising - PowerPoint PPT Presentation

1 / 35
About This Presentation

Advertising Regulation and Ethical, Social, and Economic Effects of Advertising


Chapter 18 Advertising Regulation and Ethical, Social, and Economic Effects of Advertising Chapter Objectives To be familiar with the advertising regulation system in ... – PowerPoint PPT presentation

Number of Views:223
Avg rating:3.0/5.0
Slides: 36
Provided by: peopleSen


Transcript and Presenter's Notes

Title: Advertising Regulation and Ethical, Social, and Economic Effects of Advertising

Chapter 18
  • Advertising Regulation and Ethical, Social, and
    Economic Effects of Advertising

Chapter Objectives
  • To be familiar with the advertising regulation
    system in Canada
  • To evaluate the ethical perspectives of

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

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)

  • 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

  • Advertising aspects regulated
  • Advertising Limits
  • Infomercials
  • 900 numbers
  • Alcohol and drugs
  • Not covered
  • False and misleading ads
  • Internet

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)

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

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

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

  • 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

  • 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

  • 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

Ethical Effects of Advertising
  • Advertising as Untruthful or Deceptive
  • Advertising as Offensive or Bad Taste
  • Advertising and Children

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

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)

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

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

Social Effects of Advertising
  • Advertising Encourages Materialism
  • Advertising Makes People Buy Things They Dont
  • Advertising and Stereotyping
  • Advertising and the Media

Advertising Encourages Materialism
  • Materialism A preoccupation with material things
    rather than intellectual or spiritual concerns

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

Advertising Makes People Buy Things they Dont
  • 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

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

Advertising and Stereotyping
  • Visible Minorities
  • Imbalance of visible minorities in advertising,
    consumers not exposed as frequently to them

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

Advertising and the Media
  • Arguments supporting advertising control
  • Medias dependence on advertisers support makes
    them susceptible to various forms of influence

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

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
  • 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

Economic Effects of Advertising
  • Effects on Consumer Choice
  • Effects on Competition
  • Effects on Product Cost and Price

Effects on Consumer Choice
  • Some argue that large advertisers use their power
    to limit options to a few well advertised brands

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

Effects on Consumer Choice
  • Generally, advertising does not create brand
    monopolies or reduce the opportunities for new
    products to be introduced

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

Effects on Competition
  • Large advertisers enjoy certain competitive
  • 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

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

Effects on Product Costs and Prices
  • Counterarguments
  • Advertising may help lower the overall cost of a
  • Makes a market more competitive leading to
    greater price competition
  • Means to market entry, stimulates product
    innovation, making market more competitive,
    keeping prices down
Write a Comment
User Comments (0)