Consumer behavior public policy
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Consumer Behavior & Public Policy. Why the Concern?. Advertising -- communication by an identified sponsor about its goods or services, meant to inform or persuade using a mass media vehicle Inherently one-sided Somewhat intrusive Advocative Should advertising be used only to inform?

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Presentation Transcript

Why the concern
Why the Concern?

  • Advertising -- communication by an identified sponsor about its goods or services, meant to inform or persuade using a mass media vehicle

    • Inherently one-sided

    • Somewhat intrusive

    • Advocative

  • Should advertising be used only to inform?

  • Should advertising be used to persuade?


Why the concern1
Why the Concern?

  • Advertising decisions and executions are often made by an agency external to the firm (Ad agency)

    • Will the ad agency use the same ethical standards that the firm would use?

      • FTC has decided that in some cases, the answer may be “NO”

      • Moreover, FTC has decided that in order to maintain a fair and competitive playing field, certain ad rules must be followed

      • So advertising is regulated

        • BUT HOW MUCH? HOW SHOULD IT BE DONE?


Why the concern2
Why the Concern?

  • Advertising continuum

    Information Persuasion Embellishment Deception

  • Consumer is protected (by law) from deception. What about embellishment?


Regulation of ads
Regulation of Ads

  • Deceptive practices are monitored and laws are enforced by the Federal Trade Commission (FTC)

  • Protects consumers from fair and unethical practices

  • Protects competition


Regulation of ads1
Regulation of Ads

  • How does the FTC determine whether ads are deceptive (CB has helped)

  • Deceptive Ads have 3 components

    • Ads which have the capacityto deceive consumers (i.e., consumers form beliefs about the advertised brand which cannot be substantiated by the advertiser)


Regulation of ads2
Regulation of Ads

  • Components of deceptive advertising

    • Ads have the capacity to deceive in a materialmanner (i.e., unsubstantiated beliefs are important in terms of consumer’s buying behavior)


Regulation of ads3
Regulation of Ads

  • Deceptive advertising -- components of law

    • Ads have the capacity to deceive consumers acting reasonably (consumers are acting with care and credulousness)


Regulation of ads4
Regulation of Ads

  • Deceptive advertising -- punitive actions

    • Cease & desist orders

    • Corrective ads

      • Do they work? -- Listerine case

    • Fine & retribution


Advertising children
Advertising & Children

  • Issue 1

    • Can children distinguish ads from programs?

      • Those aged 7 or less can not

      • Should advertisers be allowed to target such kids?


Advertising children1
Advertising & Children

  • Issue 2

    • If children are exposed to ads, do they have the defenses to deal with them?

      • Not those less than the age of 8 (although, this may be changing – media education programs exist in most schools)

      • Defenses seem to emerge for kids aged 8 - 12

      • Should advertisers be allowed to target such kids? All kids?


Advertising children2
Advertising & Children

  • Issue 3

    • Do programs which feature toys as characters negatively affect kids?

    • Parents think so:

      • Unfairly influence kids’ choices

        • Kids think products will be like those in the show

      • Often lead children to act in an antisocial manner

      • Leads kids to play less creatively


Advertising children3
Advertising & Children

  • Public Policy Actions

    • Stations must provide 3 hours of educational television per day

    • Stations must provide “commercial identifiers”

    • Restrictions on certain ads during “toy-based programs”

      • No advertising for toys that are related to the program


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