Ethical Issues in

Advertising Controversies:
Public Relations Strategies of
Starbucks and Nike
Introduction
Advertising

Definition : Advertising is a public notice meant to convey information

and invite patronage or some other response.

Advertising Controversy
 Information represents a distorted image of reality
 Response is negative

Public relations strategies

 Mitigating harm
 Responding to stakeholders needs
 Repairing image

Ethical principles that apply in handling Advertising

controversies
 The Dilemma:
How to Handle Public
Criticism of “Questionable”
Advertisements
 Starbucks’ immediate withdrawal of
“Collapse into Cool” campaign: alleged
9/11 imagery

 Nike’s “letter to the editor” defense

against allegations of exploitation of
foreign workers (Kasky v Nike)
The Starbucks
Case
 To some this
was clearly
offensive after
9/11
 To others this
image is
innocuous
New York Post, June 18th 2002:

“Starbucks Yanks Ad
Mocking 9/11”
"As a New Yorker who watched the whole [Sept. 11]
incident outside my window…seeing the poster
in Starbucks directly across from Ground Zero
adds some resonance that perhaps the people in
Seattle did not grasp," fumed customer Gregory
Moore, who first complained to the Post.
 Starbucks response

"We deeply regret if this ad was in any way

misinterpreted to be insensitive or offensive, as this
was never our intent. The poster, promoting Tazo
Citrus and Tazoberry beverages, was designed to
create a magical place using bright colors and
whimsical elements such as palm trees and
dragonflies."

Starbucks Press Release 6/16/2002

Question:
Should a Major Marketing
Campaign be derailed by:
 A call from a New York Post reporter,
 Internet rumors, and
 Being mentioned on the ABC television Show
"Politically Incorrect"
 Why Recognizing the Ethical
Dilemma Matters
 These are immediate decisions which will forever
affect the public's opinion of the company and the
value of the world wide brand.

 If the company does not identify or recognize ethical

aspects of crisis, it’s too late.
Schemas and Scripts: When Are
You in An Ethical Dilemma?
 Gioia at Ford: By the rules, The Pinto was not
even remotely eligible for recall.
 Action: ignore reports using rules based
schema
 Result: more deaths, financial losses
 Starbucks Collapse into Cool:
 Action: Recognize post-9/11 environment &
immediately pull the ads
 Result: stakeholders protected
 How Starbucks Evolved its
Scripts / Schemas
Repeated Risk Exposures 1995 - 2001 Created
New Sensitivities in 2002
Issue Risk
Perception of Ruthlessness in Competition vs.
Clustering Stores
“Mom and Pop” coffeehouses (like Wal-Mart)
Genetically Selling more milk by volume than coffee,
Modified Milk in Growth Hormone cows = serious public
UK concern during Mad Cow / GM food scare
Fair-Trade Coffee: marketing or real change
Worker agent? Investing in schools, healthcare,
Exploitation working conditions in South America & African
“coffee-origin” countries helps. Big $$ at stake.
When to Address the Script?

Position the Company as a

“Good Corporate Citizen”
Before It Hits the Fan
“To keep from getting caught in the crossfire, companies
[must] practice…"Preemptive positioning"… Tactically, a
company must cultivate the sort of … relations that
enable it to effectively communicate its intentions and
interests as a corporate citizen…
Image is always an important factor in profitability and
even more so now.”
 Kasky V. Nike
Background
 1996-1997 Nike became a major target of
protests against sweatshop conditions in
foreign manufacturing plants
 Attempt to clean up image
 Letters to the newspaper
 Speak at conferences
 Independent audit of factories
 Kasky V. Nike
Background

 Kasky claims that Nike’s attempts to clean up their

image through their efforts were intended to sell more
merchandise
 Overseas operations have not improved to minimum
standards
 Acting as “private attorney general”
 California’s unique unfair-trade-practices law
 False advertising lawsuit
 Kasky V. Nike
Schemas and Scripts
 Nike
 Deny working conditions overseas do not meet

minimum standards
 Defensive posture

 Kasky
 Feels it is his right and responsibility to police

corporations
 Pro workers rights

 Anti-corporation
 Legal Dilemma
 First Amendment Rights
 Individuals have full 1st Amendment protection

 Corporations have limited protection

 Statements regarding “commercial speech” only have

limited protection
• Puffery “Practice by a seller of making
exaggerated, highly fanciful, or suggestive
claims about a product or service”.
 “Noncommercial speech” has full protection
 California’s Unfair Trade Practices Law
 Allows citizens to become “private attorney general”

 Could open up any cooperation to law suit for any

communications
 Ethical Dilemma
 Nike
 Labor practices overseas

 Reaction to public criticism

 Historical track record

 Produce a profit

 Marc Kasky
 Sue happy

 Power hungry

 Self proclaimed cooperate police man

 4-D Analysis
 Nike
 Personal Relationship Development
 Nike executives/Newspaper editors
 Human Dignity Development
 Overseas operations shows a lack of
attention to this category
 Allegedly lied to their customers
 Individual relativism vs. cultural relativism
vs. universalism
 4-D Analysis
 Nike
 Group Development
• Company organized a team to deal with
Mr. Kasky
• Concerned that ruling will hamper
communications for corporations in the
future
 Self Development
• Improve or maintain public perception
 4-D Analysis
 Kasky
 Personal Development
• Build a strong relationship with his team
 Human Dignity Development
• Fighting for better labor standards
overseas
 4-D Analysis
 Kasky
 Group Development
• Improve cooperate communication for
all consumers
 Self Development
• Build a name for himself
• Power/Ego
Conclusions
 Law and ethics do not fall within common
borders
 Advertising is a social process
- response to ethical criticism is a strategic
business decision
- ethical schemas already in place determine
crisis management strategy
 Corporations’ obligations are subject to moral
criteria
QUESTIONS ?
 References Should Go Here
 See other posted project to see how to list references