Advertising Society&

 Economics
 The effects of advertising on our
economy
 Ethics
 The effects of advertising on our society
 Regulation
 Our attempts to manage those effects
 Power or Information?
Market Power
 Advertising
 Persuades consumer to
purchase one brand over
another more often
 Excess brand profits
 Higher barriers to entry
and more market power
 More advertising leads to
greater brand loyalty
 Reduce quality/raise price
 Reduced consumer
sovereignty
 Monopoly
Market Information
 Advertising
 Increased consumer knowledge
 More substitute products
consumers can consider
 Lower barriers to entry
by new brands
 Reduced market power for
any individual brand
 Better pricing/distribution
more product innovation
 Optimal brand profits, consumer
choice, and price benefits
What do you think?
 Advertising = Market Power

 Advertising = Market Information

 Or both?
Some Economic Questions:
 How does advertising affect the
price of a new car?
 How does advertising affect the
price of a latté from Starbucks?
 How does advertising affect the
way that you spend your money?
Some Economic Questions:
 Can ads make people buy things
they don’t want or need?
 Can ads make people more
materialistic?
 Are the benefits of advertising
worth the annoyance?
An Ethical Debate
 Ads destroy  Ads give consumers
freedom of choice more choices

 Ads destroy  Ads = freedom of

democracy/media speech

 Advertising warps  Ads simply reflect the

social values “real world”
3 Ethical Issues:
1) Advocacy
 What does the advertising advocate?
2) Accuracy
 How accurate is the advertising?
 Some of this depends on susceptibility
of the audience (i.e., kids).
3) Acquisitiveness
 What is the overall effect?
 Does it make us more materialistic?
5 Controversial Issues:
1) Puffery "Nothing beats a Bud”
2) Decency Sexual innuendo, violence
3) Stereotyping Portrayals of housewives,
seniors, racial groups
4) Children Violence, dangerous acts,
unhealthy habits
5) Controversy Condoms, alcohol, fashion
  Vulgarity / sexually suggestive used to gain consumers’
attention
  Misleading information and deception
  Puffery
  Stereotypes
  Racial issues
  Controversial products (e.g. alcohol, gambling, tobacco etc)
  Use of women
  Targeting kids
  Subliminal advertising
  Targeting health
  Hitting vulnerable minds – youth
Unethical Advertsing
 1. When it has degraded or underestimated the substitute or rival's product.
 2. When it gives false or misleading information on the value of the product.
 3. When it fails to give useful information on the possible reaction or side
 effects of the product.
 4. When it is immoral.
 5. When it targets those who are vulnerable and have lesser maturity to
 decide what is right and wrong for them.
 6. When advertisements show that use of certain type of products enhances
 style, prestige and status in society.
 7. When ads use women in indecent manner to promote their products.
 8. When ads relate products of harmful nature with youth, which gradually
 leads to change in taste, preference and opinion
Regulation - 2 Main Purposes
Regulation - 3 Main Areas
 Purpose for advertising regulation
 To protect competition
 To protect consumers from economic or
physical harm
 Regulations are concerned with
 Deceptive or unfair content
 How advertising is delivered
 Protection of susceptible groups (kids, etc.)
 Concerns in Ads
1) Deception Must lead to material injury.
2) Comparisons Must substantiate with
statistically significant data.
3) Endorsements Must be qualified;
must use product.
4) Demonstrations Must be accurately depicted.
5) “Bait & Switch” Product must be available
6) Negative Option Advertising
4 Possible Remedies for
Deceptive Ads:
1) Consent Decree Law/regulator asks advertiser to stop.

2) Cease & Desist Law/regulator gets court order

to force advertiser to stop.

3) Corrective Ads mandates new ads to

correct false perceptions.

4) Consumer Redress mandates reimbursement.

Regulators

 Agencies Association of India, Indian

Society of Advertisers, Indian
Newspaper
 Society, and Indian Broadcasting
Foundation
 ASCI
 Consumer Complaints Council (CCC)
Laws
 Indian penal Code 1860 sec 292(2) (d)
 The Young Persons (Harmful Publications) Act 1956
 The Emblems and Names (Prevention of Improper Use) Act, 1950
 The Drugs and Magic Remedies (Objectionable Advertisements) Act, 1954
 The Indecent Representation of Women (Prohibition) Act 1986
 The Prenatal Diagnostic Techniques (Regulation and Prevention of
Misuse) Act 1994
 The Transplantation of Human Organ Act 1994
 The Drugs and Cosmetics Act 1940
 The Motor Vehicles Act 1998
 The Cigarettes and other Tobacco Products (Prohibition of
 Advertisement and Regulation of Trade and Commerce, Production,
 Supply and Distribution) Act 2003
 The Cable Television Networks
(Regulation) Act 1995
 The provisions of Trademarks Act
1999
Big Questions
 What do you think is the biggest
benefit of advertising?
 What do you think is the biggest
problem with advertising?
 What do you think is the best example
of bad advertising?
 What do you think is the best example
of good advertising?