A Project

On
Advertising Ethics and viewer’s perception towards Surrogate Advertisements

(On partial fulfillment of paper “Advertising management) For BBS 5th semester Den Dayal Upadhyaya College University Of Delhi

Submitted to submitted by Keshav Jha and Pankul Gupta Deptt. Of Business studies 07/B.B.S /7023/7039 DDU College semester

Aanchal Gupta

5th

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OCT OBER 2009

“Advertising Ethics and viewer’s perception towards Surrogate Advertisements”

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Table of content:
Executive Summary.............................................................................................................4 Introduction:........................................................................................................................5 Problem Statement:...........................................................................................................13 Research Objective:...........................................................................................................14 Sampling Plan:...................................................................................................................15 Research Design:...............................................................................................................15 Data Analysis:...................................................................................................................16 Findings:............................................................................................................................26 QUESTIONNAIRE...........................................................................................................27 Bibliography:.....................................................................................................................29

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Executive Summary
Product advertising for liquor and cigarette companies is banned in the country since 1995 by Cable Television Network (Regulation) Act. This ban is now likely to be extended to advertising of extended brands. The very purpose of banning liquor advertisements is defeated by surrogate advertising. A surrogate advertisements is one in which a different product is promoted using an already established brand name. Such advertisements or sponsorships help in contribute to brand recall. The different product shown in the advertisement is called the “Surrogate.” It could either resemble the original product or could be a different product altogether, but using the established brand of the original product. In India, the trend of surrogate advertisement gathered momentum with the Cable TV Network Regulation Act, which prohibits tobacco and liquor advertisements on TV channels. Due to the ban, liquor companies focused more on promotions for brand building. The ban on advertising of alcohol beverage products has severely handicapped communication with consumers. Companies with liquor brands are not advertising liquor products; instead they have extended the equity of their brands into other fields. However as the TV was the most effective medium of advertising, surrogate advertising on TV became popular. In the mean time, some producers entered new segments under the liquor brand or advertised these products under liquor brand. The surrogate advertisements from liquor companies intensified further through sponsorships of movies, music shows, and other programs and attracting youth. In late 2001, the broadcasters began airing socially responsible advertisements sponsored by liquor companies. By early 2002, surrogate

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advertising of liquor brands had intensified like never before on satellite TV channels. Keeping this thing in mind I decided to conduct a research to find out whether really this surrogate ad helps to recall the original brand. Survey was done comprising of 50 respondents of different age group, different educational level and different class of society. Questionnaire was asked to fill by them, and data analysis was done with the help of SPSS package, findings have been given in the report.

Introduction:
Product advertising for liquor and cigarette companies is banned in the country since 1995 by Cable Television Network (Regulation) Act. According to Rule 7 (2) of the Act, no broadcaster is permitted to show advertisement which promotes directly or indirectly promotion, sale or consumption of cigarettes, tobacco products, wine, alcohol, liquor or other intoxicants, infant milk substitution, feeding bottle or infant food. This ban is now likely to be extended to advertising of extended brands. In June 2002, the Indian Information and Broadcasting (I&B) Ministry served notices to leading television broadcasters to ban the telecast of two surrogate ads of liquor brands McDowell No.1 and Gilbey’s Green Label. The Ministry also put some other brands ---Smirnoff Vodka, Hayward’s 5000, Royal Challenge Whiskey and kingfisher beer on a “watch list.” The surrogates used by these advertisements ranged from audiocassettes, CDs, perfumes to golf accessories and mineral water. A market survey in 2001 revealed that advertising has a direct influence on the consumption habits of 431 million people in India and an indirect impact on 275 million `aspirants' from the lower income group. Considering this and realizing that nearly 50 per cent of the television owners have access to cable channels, there is no doubt that the hidden call for alcohol consumption behind the surrogate advertisements is not escaping the eyes of viewers in the world's fourth highest liquor-consuming country. The very purpose of banning liquor advertisements is defeated by surrogate advertising.

Surrogate Advertisements:
A surrogate advertisements is one in which a different product is promoted using an already established brand name. Such advertisements or sponsorships help in contribute to brand recall. The different product shown in the advertisement is called the “Surrogate.” It could either resemble the original product or could be a different product altogether, but using the established brand of the original product. The sponsoring of

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sports/cultural/leisure events and activities also falls under the purview of surrogate advertising. In India, the trend of surrogate advertisement gathered momentum with the Cable TV Network Regulation Act, which prohibits tobacco and liquor advertisements on TV channels. The liquor industry has intentionally blurred the line between products, advertising `old wine' in a `new bottle,' only this time with a soft-drink label. By August 2002, the I&B Ministry had banned 12 advertisements and leading satellite TV channels including Zee, Sony, STAR and Aaj Tak were issued show cause notices to explain their rationale behind carrying surrogate liquor advertisements. Answering to the notices, Zee and STAR stopped advertisements, followed soon by Aaj Tak and Sony. telecasting the

In addition, the I&B Ministry hired a private monitoring agency to keep a watch on all the advertisements for violation of the Act. These developments led to heated debates over the issue of surrogate advertising by liquor companies being allowed on national media. Though the companies involved came out strongly against the I&B Ministry’s decision, they seemed to have no other choice, given the highly regulated nature of the liquor business. Analyst remarked that there was lot of hypocrisy underlying the government policy. They said “on the one hand they allow these ‘socially bad’ products to be manufactured and sold and then they deny the manufacturers the right to propagate knowledge of their products in order to drive sales. If some thing is bad and cannot be advertised, why allow it to be sold at all?” Liquor producers spent heavily on advertising on the electronic media, particularly TV. Though the broadcasters were bound by the 30 yrs old advertising code, which stated that “No advertisements shall be permitted which relates to or promotes cigarettes and tobacco products, liquor, wines and other intoxicants,” the telecast of such product continued blatantly over the years. More over the satellite channels garnered about 50% of their revenue from liquor and cigarettes advertisements. In the peak seasoned it gets almost doubled. Due to the ban, liquor companies focused more on promotions for brand building. They started sponsoring events that projected the “glamour” of the brands, like track racing, car rallies etc. for instance Shaw Wallace Co. one of the leading liquor companies in India, conducted the Royal Challenge Invitation Golf tournament, which became an annual event. Some companies

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also promoted their product through corporate advertising, distributing free gifts like Caps and T-Shirts with the brand name and using glow-signs outside the retail outlets. The ban on advertising of alcohol beverage products has severely handicapped communication with consumers. The industry is naturally compelled to make the best use of the channels and media of communications still open to it. Companies with liquor brands are not advertising liquor products; instead they have extended the equity of their brands into other fields. Over a period of time these products have become independent businesses for companies. However as the TV was the most effective medium of advertising, surrogate advertising on TV became popular. The liquor producers seemed to have ensured that the ban was only on the paper. In the mean time, some producers entered new segments under the liquor brand or advertised these products under liquor brand. Most of the liquor producers entered into packaged water segment, such as Kingfisher Mineral water. McDowell used surrogate advertising by using its mineral water and soda brands, which generated additional revenues for the company. In the early 2001, SWC started marketing its range of golf accessories under the liquor brand Royal Challenge. It also announced that India’s flagship Golfing Event – the Indian open would be sponsored by the company till 2006. The surrogate advertisements from liquor companies intensified further through sponsorships of movies, music shows, and other programs and attracting youth. For instance, Seagram’s Royal Stag was promoted by sponsoring movie related activities and Indian pop music using the banner Royal stag Mega Movies and Royal stag Mega Music. In late 2001, the broadcasters began airing advertisements sponsored by liquor companies. socially responsible

By early 2002, surrogate advertising of liquor brands had intensified like never before on satellite TV channels. These advertisements attracted criticism from various people. There were numerous other advertisements selling music cassettes, CDs, water, clothing, fashion accessories and sports goods --- many of them accused of being sexually provocative and offensive.
(Exhibit-1)

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Exhibit-1

The Advertising Standards Council of India (ASCI) has clarified that as per its code, the mere use of a brand name or company name that may also be applied to a product whose advertising is restricted or prohibited is not reason to find the advertisement objectionable provided the advertisement is not objectionable and the product is produced and distributed in reasonable quantities and the objectionable advertisement does not contain direct or indirect cues for the product that which is not allowed to be advertised. However the analyst opined that the ban could turn out to be advantages for the domestic players. In March 2001, as per the commitment to the WTO agreement, MNCs would have an unrestricted license to sell their products. After the ban, these MNCs would not have access to the quickest and most effective form of advertising --- the TV.

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Some analyst argued that the ban would not affect the established domestic players severely. It would only affect the new launches and new brand building of these companies.

The ban was also expected to improve the margins for these players. The latest television ad for “AC Black Apple Juice” epitomizes so many things that are wrong with surrogate advertising in India. Most of the surrogate advertising is done pretty blatantly with the “harmless” product being nothing more than a front for advertising the “harmful” brand. So you have various liquor/cigarette manufacturers resorting to ingenuous ways to peddle their wares like, Of course there are a very few brands which start off as a surrogate brand, but over a period of time actually become full-fledged brands in themselves. The “Wills Sport” clothing line from the manufacturers of “Wills” cigarettes is one of those rare cases. But on the whole, surrogate advertising is dedicated towards using an insignificant, “harmless” product to increase/maintain awareness for their primary “harmful” brand. And that’s not an easy task. For instance, how do you portray the essence of a whiskey or vodka or a cigarette using a bottle of bottled water or a pack of apple juice? Similarly "HUM tum or mera Bagpiper". This Bagpiper club soda advertisement, featuring cine celebrities, is similar to the earlier one for Bagpiper whisky. The advertisement comes with the same music and punch line as the one for the popular liquor brand telecast before the ban on liquor advertisements. Not easy. And guess who/what suffers when faced with this quandary? 1. Consumers - because we have to put up with the lameass, stupid advertising that’s designed to sell booze/ciggies but pretends to be all about water or apple juice! It’s like everyone knows what’s going on the manufacturers know what the real reason for the ad is, the consumers know what’s really been advertised, and the government knows that too. So why not either (i) do away with this wholesale scam and just let them advertise all their stuff, or (ii) ban such surrogate advertising?

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2. Advertising - because ad agencies have to come up with silly ads
based on briefs from clients who are not interested in the surrogate brand, but the primary brand. I agree some might consider it a worthy challenge to do something like this, but from what I’ve seen of surrogate advertising in India the output is pretty lame.

Surrogate advertisements are not only misleading, but also false and dishonest in many cases. With surrogate advertising so widespread, this is the moment to tackle the problem head-on.

There should be stringent regulatory measures to curb the practice, such as: i) Making transparent laws banning surrogate advertisements for different products under a single brand name, by amending the Trade Marks Act, for instance. ii) Providing teeth to the Advertising Standards Council of India to enable it take action against false and misleading advertisements, and keep a close vigil over clever evasion of the law. iii) Asking the electronic and print media to adhere to the advertisement codes and not encourages surrogate advertisements. iv) Calling on the ASCI address complaints received from consumers against surrogate advertisements and take appropriate actions immediately. v) Creating a consumer awareness programme to help people understand the negative impact of surrogate advertisements. vi) Adopting strict laws to penalize those companies featuring surrogate advertisements without any real existence of the product. vii) Requiring advertising agencies to have full knowledge of the products under the same brand for which they are promoting advertisements, and taking legal actions against those agencies which design surrogate advertisements. If one believes that honesty is the best policy and truth ultimately gains, the best policy would be to stand up strongly to the dishonest practices of surrogate advertising. Senior sources at IBF also said that the industry body had sent out showcause notices to a couple of channels regarding ads of certain alcohol and tobacco products. Most channels have reportedly complied with the Government panel’s directive to the extent that the ads of a liquor company

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– that purportedly makes apple juice after drinking which anything can happen (‘kuch bhi ho sakta hain’) – have been taken off air. (Exhibit 2)
A man sitting at a bar nursing his drink. A ravishing lady in black walks in and stations herself opposite our man.

He takes a sip and looks up at her. The high neck...

... dress she was wearing gives way to a bateau neck line.

Exhibit 2

He's surprised at the revelation. Once The lady's dress has now become an off shoulder again taking a sip, he glances at her. one.

Sipping his drink once more, he looks ... to find a shorter, more tantalizing dress on her. through the glass...

Sipping in anticipation, his eyes fall on his chest...

... to find the shirt unbuttoned. He looks at the lady...

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... who too was doing the same with her drink.

MVO: AC Black apple juice. Kucch bhi ho sakta hai. Kucch bhi.

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Problem Statement:
When the Advertising Standards Council of India (ASCI) withdrew its code to regulate tobacco, liquor products etc. consumer activists were concerned over the impact of the move. The issue has taken a new twist with the Central Government deciding to ban these product companies from sponsoring sports and cultural events. Liquor or tobacco advertising in banned in India and hence companies that sell these products have to resort to advertising their wares using less “harmful” products which carry almost the same names and looks surrogate advertising.

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Research Objective:
With keeping these in mind, the research will be conducted to solve the following questions:  What does this all have to do with the final consumer?  What image does he carry of these products?  Does he know that the advertisement which is shown is meant for some other product?  Does he think it is Right/Ethical?

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Sampling Plan:
• • Sampling Method: Conveniently Sampling. Sample Type: Target audience would be comprises of those who are
of the age group of 15 yrs and above. Educated, at least know about what advertising is, have seen the surrogate advertisement.

• •

Sample Size: 50 Sample Area: Borivali and Mira Road.

Research Design:

Exploratory Research conducted by me included door to door surveys, in the Royal College Campus and in the Dalmia School for filling up the questionnaires. Instrument Design, in the form of questionnaire and interviews with the respondents.

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Limitations of Project
• • • Limited Sample Size (50) This study is restricted to the geographical limits of Mumbai. Limited period of survey

Importance of Study:
The study will help to find the people’s perception of surrogate advertisements.

Data Analysis:

120

100 96 80

60

40

Percent

20

0 YE S NO

seen advertisement on t.v

When the respondent where asked how many of them watch the advertisement on television 96% responded positive towards this. The above graph depicts the same thing.

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The table shows the cross tabulation between the person who have seen the advertisement on television and that to of any cigrates or alcohol.
Seen Advertisement on T.V * Seen Advertisement of Cigrates or Alcohol Cross tabulation Count seen advertisement of Total cigrates or alcohol YES NO seen advertisement on TV YES NO Total 41 41 7 2 9 48 2 50

41 respondents out of 50 said they have seen the advertisement of alcohol and cigrates.

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50

40

9

30

32

20

10 3

awareness of banned
6 NO YES YES NO

Count

0

seen advertisement of cigrates or alcohol

Out of the 41 respondent who have seen the ads of cigrates and alcohol 32 of them are aware of the fact that an advertisement of such product is banned in India.

30 29 28

26

24

22

20

Count

20

18 YES NO

advertisement requirement

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29 of the respondent said that cigrates and alcohol do require advertisements in this competitive world. But 20 of them where not agree to this fact.

40

36 30

20

10

13

Count

0 Missing YES NO

information of surrogate ads

Out of 50 respondent 36 said that they have knowledge what surrogate ads are they form the 72%. While 13 of them don’t know about the surrogate advertisements.

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NO 32.0% Missing 4.0%

YES 64.0%

When the respondent who knows about surrogate ads asked that do they recall the original brand while looking at it 64% of them recall the product 32% said no and 4% have not given their view. Information of surrogate ads * Product recall Cross tabulation Count Product Recall YES 29 3 32 Total NO 7 9 16 36 12 48

Information of surrogate ads Total

YES NO

The above cross tabulation shows that the surrogate as helps the organisation to advertise their product in a different way and make a brand recall at the time of purchase.

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view towards surrogate ads
22.92% n=11 33.33% n=16 ethical unethical should be banned no comments Pies show counts

8.33% n=4

35.42% n=17

on question of ethical issue of surrogate ads 35% said that surrogate ads are unethical while majority of them constituting 33% refused or where not able to give their opinion on the issue. 23% said they are required and they are ethical while only 8% where in the opinion of banning the ad.
Advertisement requirement * view towards surrogate ads Cross tabulation Count View towards surrogate ads ethical unethical should be banned 8 11 1 3 11 6 17 3 4 Total no comments 8 8 16 28 20 48

Advertisement requirement Total

YES NO

The cross tabulation between the respondents who said that advertisement is required for such product and ethical issue of surrogate ads shows that 11 of them said that ads are required but surrogate ads are unethical to do that, while 8 of them where agree that it is ethical to do the surrogate advertisement.

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3 0

2 0

2 1

1 0 8 8

1 0

Count

0 en rta in te in g b ring a d d rb o n istu in in rm tive fo a m u in isg id g

2 n n o th a o o e f e b ve

vie to ards p se a s w w re nt d

When respondent where asked how they find these ads 21 of them said, they are entertaining while only 10 of them said, they are informative about products.

ad appeal
YES NO Pies show counts 40.82% n=20

59.18% n=29

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Strong view of 60% came from respondent that the surrogate ads do not induce them to use the product; only 40% said that they are inspired by the ad to use the product.

28

27

27

26

25

24

23

22

Count

22

21 YES NO

family member consuming such product

For checking how do the respondent recall the original product they where asked whether the respondent or any of his/her family member consume the product, 27 of them said Yes, and 22 said No.
Family member consuming such product * product recall Cross tabulation Count Product recall YES 19 13 32 Total NO 8 8 16 27 21 48

Family member consuming such product Total

YES NO

19 respondent where those whose family member consume such product and due to which they were able to recall the original brand while looking at the surrogate ads whereas 13 of them where those whose member doesn’t use the product but then also they recall the original brand.

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Respondent’s profile:
30

23 20

13 10

7

7

Count

0 15-18 18-21 21-24 24 and above

age group of respondent

The above graph shows the age group of the respondent, 30 of them belongs to the age group of 21 yrs. and above and 20 where below 21 yrs. Age group of respondent * ad appeal Cross tabulation Count ad appeal YES 2 5 10 3 20 NO 5 8 13 4 30 Total 7 13 23 7 50

age group of respondent

Total

15-18 18-21 21-24 24 and above

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4 0

3 0 29

2 0

1 0

11 6 4

Count

0 < 10000 10000-100000 100000-500000 > 500000

fam incom per m ily e onth

Family income was asked to checked that the surrogate ads effects the buying habits or not majority of our respondent who have nothing to do with the surrogate ads and who usually purchase the product belong to high class of the society with their family income of 1,00,000/- and above.

30

26

20

Count

12 10 under graduate

12 graduate post graduate

education level of respondent

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26 respondent where post graduate and rest of the 24 where graduates and undergraduates.

Findings:
On analyzing the data following conclusions were drawn: 1) Majority of the respondent were agreeing to the fact that advertisement is requiring for such product in these competitive world.

2) Many of them have knowledge of surrogate ads but they were of the
view that these are unethical ways of brand advertising. 3) The surrogate ads which they see are instead of informative being considered as entertaining for majority of the respondent. 4) Original Brand recall is high among the respondents.

5) Strong facts that the surrogate ads do not induce the consumer to

purchase the original brand, they just remind the brand existence.

6) 35% of the respondents where those under the age group of 21 yrs., they where attracted by the surrogate ads and were induce to use or at least try the product.

7) Major of the respondent were also able to recall the original brand
either because these were used by them or any of their family member.

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QUESTIONNAIRE
1. Do you see Advertisements on television? a) Yes b) No 2. Have you seen any advertisement of cigarettes or alcohol? a) Yes b) No 3. Do you know that advertisement of such products is banned in India? a) Yes b) No 4. Do you think that advertisement of such product is required? a) Yes b) No 5. What would you say about banning of advertisement of these products? a) Is a right step b) No need of banning such ads c) Product should be banned d) No comments 6. Do you know about surrogate advertisement? a) Yes b) No 7. Do you recalled about the original product while looking at the surrogate ads? a) Yes b) No 8. What do you think that the surrogate ads are a) Ethical b) Unethical c) Should be banned 9. How will you rank the present advertisement?
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d) no comments

a) Entertaining d) Misguiding

b) Boring and Disturbing e) None of the Above.

c) Informative

10.Does the ad induce you to try the product? a) Yes b) No 11. Does your any of the family member consume such products? a) Yes b) No 12.Which age group you belong to? a) 15-18 b) 18-21 c) 21-24 d) 24 and above. 13.What is your approx. Family Income? a) Less than 10,000/b) 10,000 – 1,00,000/c) 1,00,000 – 5,00,000/d) 5,00,000 and above. 14.What is your Educational level? a) Under Graduate. b) Graduate. c) Post Graduate.

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Bibliography:

Various website and articles including the following were referred for project. 1) www.agencyfaqs.com 2) www.jivhathetongue.com 3) Close floodgates on surrogate ads- Deccan herald files. 4) The Hindu business line. 5) Indbazaar India consumer guide. 6) Framework convention alliance- Ban on surrogate tobacco ads.
7)

Advertising Express magazine- November 2002, issue 11, and volume-2.

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