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Impact of misleading/false advertisement to consumer behaviour. International

Journal of Economics and Business Research, 2018 Vol.16 No.4, pp.453 - 465

Article in International Journal of Economics and Business Research · September 2018

DOI: 10.1504/IJEBR.2018.095343

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Int. J. Economics and Business Research, Vol. 16, No. 4, 2018 1

Impact of misleading/false advertisement to

consumer behaviour

Mohammed T. Nuseir
Department of Management and MIS,
College of Business,
Al Ain University of Science and Technology,
P.O. Box 112612, Abu Dhabi, UAE
Email: drmnuseir@yahoo.com

the rise as a result of businesses seeking to compete for customers. It would

appear that presentation of false information has gradually been adopted as a
major marketing strategy by some organisations, and it is becoming a new
normal. It is however, worth noting that such false information are never
helpful to the customers who soon realise that they acted (by buying goods or
services) on the basis of information that cannot be verified nor validated.
Accuracy should entail full disclosure of all information because this is crucial
in the marketing field where consumers expect to make informed decisions.
The regulations on advertisement and marketing illegalises use of false or
misleading representation or symbol for quality, quantity, data of manufacture,
methods of use, content, price, place of origin, the manufacture, processor or
place for a product either in advertisement or other platform. In this study, it
has been found that while misleading advertisements tend to provide overtly
more positive information than is necessary, such positivity tend to result in
negative experience for customers. Studies are expanding in the roles of false
and misleading information that form the content of advertisements. This study
has explored the importance of enhancing marketing activities through truthful
facts, to ensure that the functions of the organisation (especially outward facing
activities like marketing) are believable and thus helpful to customers to make
the right decisions. The study emphasises the importance of buyer being aware
of key information about a product or services through careful search during
the buyer decision process.
Keywords: false; fake; misleading; buyer behaviour; buying process.
Reference to this paper should be made as follows: Nuseir, M.T. (xxxx)
‘Impact of misleading/false advertisement to consumer behaviour’, Int. J.
Economics and Business Research, Vol. X, No. Y, pp.xxx–xxx.
Biographical notes: Mohammed T. Nuseir is an Associate Professor of
Business and Marketing with a cross-cultural background. Possessing academic
and training experience at multinational academic institutes and corporations,
he holds academic degrees from the American and Canadian universities along
with professional experience in training senior management levels in a wide
variety of fields such as e-marketing strategies, marketing management,
international business, sales and human resources management. In addition to
experience in teaching UG and graduate students, and experience in conducting
specialised training programs, he have been supervising Master and PhD
students. Moreover, his work has been extended to research papers, where he
published many papers in collaboration with some fellows in peer-reviewed
regional and international journals, with a focus on topics of marketing,
management and business, e-marketing and SME’S.

Copyright © 20XX Inderscience Enterprises Ltd.

2 M.T. Nuseir

1. Introduction

This study looked at the effects of false or misleading advertising on

consumers’ decisions. Marketing strategies are aimed at generating a high number of
sales and thus revenues. Advertising is the most common tool used by marketers to create
awareness of the features of a product or service and to persuade consumers to buy it.
The effort to entice buyers is often made up of many claims whose truth is often hard to
establish.
Advertising is the most popular means of reaching potential customers with
information about a product (Kariyawasam and Wigley, 2017). Advertising is used as a
tool to grow businesses. Several fields of study combine to form the concept of
marketing, including sociology, economics, aesthetics, and psychology (Doborji and
Hamed, 2016). The interpretation of advertising information is different for each person,
and the information passed to the consumer is never completely objective.
When advertisers engage in misleading or false advertising, consumer choice is
affected because consumers are unfairly convinced to believe in the messages of the
advertisers, which affect their judgment. Misleading advertising either compels
consumers to purchase items at a higher price or at a lesser quality than what they
wanted, or to purchase the wrong product or service (Kariyawasam and Wigley, 2017).
Such advertisements violate the interests of consumers by suggesting that the product or
service has unique qualities. They also manipulate consumers, thus making them more
vulnerable and less likely to make rational choices.

False or misleading advertising

In most jurisdictions, advertising regulations have made the use of false or misleading
advertising illegal. It is illegal to misrepresent the quality of a product or the
specifications related to its composition, manufacture, price, or place of origin. “False”
refers to the misrepresentation of the facts; false information can lead to an unacceptable
number of people using the information to make incorrect decisions (Doborji and
Hamed, 2016).

Approaches to unjust advertising

The three components of false advertising are “fraud,” “falsity,” and “misleading,”
referring to the advertiser, the message, and the effects on the consumer, respectively.
 Impact of misleading/false advertisement to consumer behaviour 3

Fraud

Fraudulent advertisements are made with the aim of deceiving consumers. There are
many ways to create false impressions of goods or services in consumers’ mind. Fraud
plays a role in affecting consumer decisions; however, this role can be “positive,” as false
information tends to be more positive about the good or service being offered for sale than
is real.

Falsity

Falsity refers to inconsistency in claimed facts (Spears, 2015), for instance, when a car
manufacture claims that the car’s gas mileage is higher than it actually is. Recently,
Toyota was fined for falsifying such mileage information (Forbes, 2014). It is difficult to
exercise regulatory control on the many channels for advertising where the validity of the
advertisements is problematic (Doborji and Hamed, 2016).

Misleading

Some advertisements create an impression about a product that is untrue or about a

product’s features that do not exist. Misleading advertising affects the choices of
consumers and the buying process.

2. Literature review

The evolution of advertising as a marketing tool has been based on the

principles of truthfulness and accuracy (Hankinson, 2007). Researchers have studied
advertising as a function of marketing by a business (De Mooij, 2013; Parente and
Strausbaugh-Hutchinson, 2014). Advertisements are meant to pass along information and
ensure that consumers know what is being sold (Bleier and Eisenbeiss, 2015). This role
of advertising, however, is changing. Numerous media exist through which
advertisements can be disseminated (Davis et al. 2013). The onus for passing clear
information to consumers falls to the marketer. The old adage of “buyer beware” has now
become “seller beware” (Kachersky et al. 2014; Parente and Strausbaugh-Hutchinson,
2014).

Current claims of misleading advertising relate to manipulating consumers;

often, the falsehoods cannot easily be detected (Aslam, 2014). Aslam’s view of
concealment of information refers to how businesses perceive the judgment of
consumers. Many brands have misrepresented features of their products, as happened in
the case of Toyota described above. According to Hasan et al. (2011), some of the claims
of false advertising are about the lack of attribute information, inconspicuous
information, truth, and expansion implications.

Importance of this discussion

The benefits of following international law in regulating advertising are highlighted by

this study. An attempt has been made to highlight the most common types of misleading
information and offer methods that can be used to protect the consumer. From a legal
point of view, a business is said to be misleading or giving false information if it
intentionally and purposefully presents information about a product that is not genuine or
truthful (Aslam, 2014).
4 M.T. Nuseir

According to the European Commission (Hasan et al., 2011), misleading advertising is a

profitable activity that includes giving dishonest information, lying, deceiving, or
cheating consumers to make them choose what they would not otherwise have chosen.
As per the Consumer Protection from Unfair Trading Regulations (Janet, 1985), an
advertisement is misleading if it deceives or if it is presented to a person in a deceptive
manner, has financial implications, or is likely to overcome competitors in the market. It
also refers to presenting information that is untrue to vulnerable consumers in order to
influence their decisions or responses (Janet, 1985). These actions showcase situations
where businesses consider the perceptions of consumers to be inferior, or where
competition forces businesses to engage in unethical practices.
Consumers are vulnerable to advertising when they are presented with a
unique environment. They view commercial messages as a source to guide them in
making decisions on what to buy (Janet, 1985). Consumers are defenceless when they
cannot recognize deceptive messages (Aslam, 2014). In the age of wider access to
information, consumers should ensure that they gather as much information as possible.
Gathering information or “searching” is an important stage of buying behaviour; the
adage “buyer beware” still holds.Advertising consists of messages about the
characteristics of the product or service. False advertising consists of claims that are
purposefully made about a product or service, with the aim of misleading consumers to
come to a conclusion about the product or service (Hasan et al., 2011). With the large
number of misleading claims in advertising, the critical issue is whether consumers are
able to discern false claims before making their purchasing decisions (Aslam, 2014).
Consumers are likely to be cheated if their trust is based on advertisement.
When consumers become aware of misleading advertising, they become more
sensitive to any form of advertising, depending on their level of emotion. Misleading
advertising has an impact on how they observe the product and the immediate
environment in which the claims are presented. This is referred to as “situational
contexts” (Hackley, 2010). In the case of misleading advertising, finding the truth can be
a hard task that needs some level of motivation and ability. Consumers are not always
interested in, or are capable of, deducing claims of deception. If they are not focused on
the moment of advertisement contact, they are more vulnerable to false advertisement.
Studies by Mir (2011) and Hosseini et al. (2016) showed how quantity is one aspect that
has been recognized by consumers, and how it changes how they respond to false
advertising. For instance, the ingredients that make a product desirable to consumers can
be exaggerated. Consumers respond differently to false advertising claims when they
recognize them; their dispositional and developmental characteristics have been used in
studies to explore their responses. Dispositional differences are those characteristics that
change based age, family, gender, and lifestyle (Janet, 1985). Mir (2011) claimed that
age relates to the level of effort of consumers need to recall knowledge-based factors
when processing information from a given advertisement. Developmental differences are
those that are based on the knowledge and expertise of the consumer as it changes with
time.
According to Hosseini et al. (2016) the knowledge of the consumer evolves
from the perceptual stage through to the logical stage, and then to the reflective stage.
The level of vulnerability to false advertising varies based on the development of the
consumer from childhood to adulthood.
 Impact of misleading/false advertisement to consumer behaviour 5

It is also about the awareness by consumers of scheming strategies where they are not
paying attention to momentary cognitive business factors (Hackley, 2010, Soroa-Koury
and Yang, 2010). Depending on whether consumers have the ability and incentive to
evaluate false claims, they either can or cannot separate false advertising from truthful
advertising. In addition, when consumers are not aware of deceptive claims, they become
more vulnerable to false advertising. Situational contexts and individual characteristics
are likely to affect the ability of consumers to make choices based on false advertising
(Hackley, 2010; Faerber and Kreling, 2014).
The demographic divide also contributes to vulnerability insofar as young
adults tend to be better able to spot misleading information than the older persons
(Vincent, 2011; Spears, 2015). A study by Hosseini et al. (2016) showed that gender can
be a factor in identifying false advertising. Gender is an especially important factor with
respect to personal products.
The demographic divide also contributes to vulnerability insofar as young
adults tend to be better able to spot misleading information than the older persons
(Vincent, 2011; Spears, 2015). A study by Hosseini et al. (2016) showed that gender can
be a factor in identifying false advertising. Gender is an especially important factor with
respect to personal products.
When consumers search for products and services, they look for specific
features such as quality, price, or ingredients. Research shows that consumers focus on
different aspects of products, but some specific factors more important than others. They
also look for what makes the product stand out among other, similar products. The quality
and accessibility of the product affect the consumer’s interest in buying or using it
(Parguel et al., 2015).

Customer loyalty is only attained from true and informative advertising; hence, most
misleading advertising is not about long-term relationships with the consumers (Faerber
and Kreling, 2014; Soroa-Koury and Yang, 2010). Multiple variables make customers
happy and loyal to a business. Companies that want loyalty must always ensure that they
offer true and correct information in their advertising. A study on how consumers
perceive an advertisement and how they identify deception reported that advertisers
deceive consumers by describing fallacious features of products (Faerber, et al. 2014).
Businesses mislead consumers by including ambiguous messages and unclear statements
in their advertisements. Consumers’ demands are not addressed when a product is
presented in false advertisements. The customers’ mind is filled with negative images of
the brand (Sharma and Sharma, 2014).
Some studies have explored advertising with a focus on issues of packaging,
labelling, media statements, sales people, customer interaction, and other
communications relating to sales. Many scholars have highlighted the concept of
deception; most have opined that deception usually benefits the sellers (Faerber and
Kreling, 2014; Xie, Madrigal and Boush, 2015). Consumer behave in certain ways to
satisfy their desires through purchasing, choice, consuming, and evaluating products or
services. They go through various stages and processes when they want to buy a product
or service (Evans, 2010; Patil, 2017). The reaction of the consumer is based on the
service that they get. If they come across misleading marketing practices, they are likely
to be disappointed. Consumers may switch completely away from the brand. Many
6 M.T. Nuseir

consumers have circulated negative word-of-mouth about their bad experience with a
product (Parguel et al., 2015; Faerber and Kreling, 2014).
Misleading advertising persuades consumers to buy a product not because it is
the best among the alternatives, but because it is simply presented as the best. However,
many consumers can notice patterns of imitation in the features of a product compared
with other similar products, and they respond to them as misleading. When consumers
respond to false or misleading advertising, they are likely to experience emotional and
financial losses (Sheehan, 2013). They buy products and services based on misleading
advertisements emotionally as well mentally. Consumers have limited resources; hence,
they lose these limited resources when purchasing products based on fraudulent
advertising. Consumers experience emotional, financial, and medical losses when they
are helpless, lonely, and have low self-esteem (Gensler et al., 2013; Weber, 2015).

3. Methods
Research questions

The research questions were based on the literature review presented above.
1. What is the impact of false or misleading advertising on consumer behaviour?
2. How does gender affect the vulnerability of consumers to false or misleading
advertising?
Hypotheses

The following two hypotheses were based on the research questions presented above. H1:
False or misleading advertising has an impact on consumer behaviour.
H2: Gender factors into the vulnerability of consumers to false or misleading advertising.

Research design

The study used primary data and quantitative research methods to analyze the responses
of 50 consumers who participated in the online study. The online consumers
were solicited for their views on various aspects of false or misleading advertising.
A descriptive approach was used. Descriptive, statistical methods were used to
explore the different relationships among the study variables. It is an approach
that researchers expect to yield evidence linking cause-and-effect relationships from
the data collected (Baum and Kabst, 2014).
Researchers targeted a variety of consumers online, especially those who
had written negative comments about products on social media. Conducting the
study online was the most practical option because it drew consumers from different
areas who were able to give their views.
Eighty people were invited to participate in the study. Stratified
random sampling was used to yield 50 respondents aged 20 to 50 years who
completed the questionnaire online. The questionnaire was made up of closed-ended
questions ranging from demographic information to specific issues relating to the
nature of information presented by advertisements, including false or
misleading information. Google Surveys, a free online polling application, was used to
generate the data.

Statistical techniques

The data collected were coded and analyzed using the Statistical Package for Social
Sciences (SPSS) software. The two hypotheses were tested using regression analysis.
 Impact of misleading/false advertisement to consumer behaviour 7

Data source
The primary data were collected using a questionnaire designed to understand the impact
of false or misleading advertising on consumer behaviour.

4 Results

Demographic statistics
Table 1 shows descriptive statistics on the people that respondent to the study.
Table 1 Descriptive statistics
N Minimum Maximum
Gender of respondents 50 1.00 2.00
Valid N (listwise) 50

Gender

The study sought the gender of the respondents, as one research question and one
hypothesis tests gender as a factor in identifying false or misleading advertising.

Males and females were equally represented in the study (Figure 1).

Table 2. Exposure of the public to advertising The public is frequently exposed to an

overdose of advertising
Frequency Percent Valid percent Cumulative percent
Valid Yes 41 82.0 82.0 82.0
No 9 18.0 18.0 100.0
Total 50 100.0 100.0

Table 2 shows the number of people who felt that the public is exposed to many forms of
advertising such as television, radio, Internet, and print media, among others. Eighty-two
percent of respondents expressed that public is exposed to an overdose of advertising,
while only 18% felt that the public is not exposed to too much advertising. Exposure to
too many advertisements is likely to confuse the consumers and make them unfocused on
the process of advertising. It is likely to affect their judgment for the advertisement and is
likely that they would fail to discern misleading messages.

H1: False or misleading advertising has an impact on consumer behaviour

Table 3. Results of regression analysis for hypothesis 1— Model Summary

1 .078a .006 –.036 .33284

a
Predictors: (constant), public is frequently exposed to overdose of advertisement, respondent
encountered false or misleading advertisement.
8 M.T. Nuseir

Table 3 shows the R value representing the correlation between the observed and
predicted values of the dependent variable. R2 is the coefficient of determination. The
value for R2 is 0.078, thereby indicating that the independent variable of the model can
predict 7.8% of the variance in the dependent variable.

Table 4. Results of Analysis of Variancea — Model 1

Model Sum of squares df Mean square F Sig.
1 Regression 4.932 2 4.16 3.144 .006b
Residual 11.207 47 .111
Total 15.239 49
a
Dependent variable: change consumer behaviour.
b
Predictors: (constant), public is frequently exposed to overdose of advertisement,
respondent encountered false or misleading advertisement.

Table 4 shows the results of the analysis of variance. The regression variability is
presented in the model. The F value is 3.144 and the P value is 0.006, thereby indicating
that misleading and false advertising has an impact on consumer behaviour.

Table 5. Coefficients
Unstandardised Standardised
Model coefficients coefficients t Sig.
B Std. error Beta
1 (Constant) 2.207 .186 11.841 .000
Respondent encountered false –.035 .100 –.052 –.354 .009
or misleading advertisement
Public is frequently exposed –.041 .125 –.049 –.329 .008
to overdose of advertisement
aThe dependent variable is “changed consumer behaviour.

Table 5 gives the regression constant, the coefficient, and the level of significance. The
P values of the regression coefficients for frequent overdoses of advertising and
encountering false or misleading advertising are 0.009 and 0.008, respectively, both of
which are less than 0.05, thereby indicating that the hypothesis is accepted and that
misleading advertising does have an impact on consumer behaviour.

H2: Gender is a factor for vulnerability of consumers to false or misleading

advertising

Table 6. Response to false or misleading advertising: Chi-Square Analysis, by gender

(Hypothesis 2)
Chi-square tests Value df Asymp. Sig. (2-sided)
Pearson Chi-square 2.400a 3 .494
Likelihood ratio 2.532 3 .470
Linear-by-linear association 1.784 1 .182
N of valid cases 50
a
two cells (25.0%) have expected count of less than 5. The minimum expected count is 2.50.
 Impact of misleading/false advertisement to consumer behaviour 9

The chi-square tests were done based on the gender of the respondents. The study wanted
to establish whether gender affects the way consumers react to misleading and false
advertising. Based on the results above where the Pearson chi-square value at three
degrees of freedom is 2.400 with a two-sided significance value of 0.494, no statistical
difference exists between the responses of males and females with respect to false or
misleading advertising. Both males and females respond negatively to advertising that
contains false or misleading information. Figure 2 offers more details.

Figure 2 shows the gender-based responses, which are similar. However, a higher number
of female respondents compared to male respondents stated that they do not react
negatively to misleading or false advertising.

Table 7. Likelihood of changing brand due to false or misleading advertising: Chi-

square analysis, by gender (Hypothesis 2)
Chi-square rests Value df Asymp. sig. (2-sided)
Pearson Chi-square .444a 3 .931
Likelihood ratio .451 3 .929
Linear-by-linear association .271 1 .603
N of valid cases 50
a
Four cells (50.0%) have expected count less than 5. The minimum expected count is 1.50.

The chi-square test explored how likely it is that participants would change brands based
on false or misleading advertising. It sought to ascertain brand loyalty. The Pearson chi-
square value was not statically significant, thereby indicating that the impact of false or
misleading advertising on brand loyalty is not influenced by gender.

Figure 3 shows the responses of participants to the question of switching brands when
they discover that the brand has engaged in false or misleading advertising. A large
number of respondents (males and females) stated that they strongly agree or agree with
the statement that they would switch brands; only a small number of respondents
disagreed with the statement. The responses from male and female respondents were
similar.

Gender as a factor for vulnerability of consumers to false advertising can be dismissed,

because no statistical significant difference exists between the way males and females
react to false or misleading advertising.

6 Conclusions

There are many advertisements in virtually all platforms that consumers can access.
Plentiful misleading and false advertisements have had an impact on consumer behaviour.
Consumers become more careful when they encounter false advertising (Lamabadusuriya
2014). They have been exposed to many false or misleading claims when consuming
advertisements for products and services. Consumers are likely to abandon the brands to
which they are loyal if they discover that businesses are not truthful or are misleading in
their advertising.This explains why companies that have true advertisements always have
a significant market share. Thus, our study suggests that misleading and false advertising
10 M.T. Nuseir
changes consumers’ behaviour by causing them not to trust any kind of advertising, even
genuine ones (Kariyawasam and Wigley, 2017). They are forced to go through a long
consumer purchasing process during which they need to verify information before making
a decision about whether to buy the service or product. We recommend strong national
and international regulations to limit the exposure of consumers to misleading advertising.
These regulations are, however, hard to control on online platforms, but they can be
enforced.
The principle of “buyer beware” has ostensibly been replaced by “seller
beware,” but that is as far as it goes. Buyers cannot surrender their duty to be vigilant to
sellers; with multiple media available to sellers for advertising and multiple sources of
information available to consumers to search and make informed decisions, consumers
have to be aware. A better understanding of the buying decision process is needed, but
such information should be passed on to the consumers. The question is how such
information should be passed on.
This study proposes the importance of buyer vigilance when buying products
and services. It is clear that, while there are authorities who may have to deal with
problematic advertisers post-advertising and post-purchasing, it is the buyers themselves
who must demonstrate pre-purchasing vigilance.
 Impact of misleading/false advertisement to consumer behaviour 11

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 Impact of misleading/false advertisement to consumer behaviour 13

Figure 1: Gender of Respondents

Figure 2: Number of participants who respond negatively to

false or misleading advertising, by gender

Figure 3: Likelihood of changing brands due to false advertising, by gender

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