Chapter 21 – Evaluating the Social, Ethical, and Economic Aspects of Advertising and Promotion
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CHAPTER 21
EVALUATING THE SOCIAL, ETHICAL, AND
ECONOMIC ASPECTS OF ADVERTISING AND
PROMOTION
Chapter Overview
The purpose of this final chapter is to evaluate the social, ethical and economic aspects of advertising.
Advertising is a very powerful and influential force in our society, and this text would not be complete
without considering the various perspectives and criticisms regarding its social and economic effects. The
first half of the chapter focuses on the various criticisms of advertising from an ethical and societal
perspective. Attention is then given to appraising the effects of advertising on the economy including its
Learning Objectives
2. To consider various perspectives concerning the social aspects of advertising and promotion.
4. To examine the economic role of advertising and its effects on consumer choice, competition, and
product costs and prices.
Chapter and Lecture Outline
I. INTRODUCTION
Because of its high visibility and pervasiveness, along with its persuasive character, advertising has been
the subject of a great deal of controversy and criticism. Various parties and scholars have attacked
advertising for a variety of reasons including its excessiveness, the way it influences society, the methods
used by advertisers, its supposed exploitation of consumers, and its effect on our economic system. The
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II. ADVERTISING AND PROMOTION ETHICS
While many laws and regulations determine what advertisers can and cannot do, not every issue is
covered by a rule or guideline. In many situations, advertisers must make decisions regarding appropriate
and responsible actions based on ethical considerations rather than what is legal or within industry
guidelines. Ethics are moral principles or values that govern the actions and decisions or an individual or
Professor Notes
III. SOCIAL AND ETHICAL CRITICISMS OF ADVERTISING
Much of the controversy over advertising stems from the ways it is used by many companies as a selling
tool and because of the impact advertising has on society’s tastes, values, and lifestyles. There are a
number of criticisms of specific techniques used by advertisers as well as charges against its impact on
society in general.
A. Advertising as Untruthful or Deceptive—One of the major attacks against advertising is that
many ads are misleading or untruthful and end up deceiving consumers. The issue of what
constitutes deception is, as we discussed in Chapter 20, a very difficult one. However, a concern
of many critics is the extent to which advertisers are deliberately untruthful or misleading in their
advertising. Most large companies are unlikely to risk their reputation and image or subject
themselves to prosecution by various regulatory groups by making overtly false or misleading
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B. Advertising as Offensive or in Bad Taste—Another common criticism of advertising, particularly
by consumers, is that ads are offensive, tasteless, irritating, boring obnoxious, and so on.
1. Sources of distaste—consumers can be offended or irritated by advertising in a number of
ways. Some are offended that a product or service is even advertised at all (such as
2. Sexual appeals—the type of advertising appeals that have received the most criticism for
being offensive or in poor taste are those using sexual appeals and/or nudity. These
techniques are often used as ways of gaining consumers’ attention and in some cases may not
3. Shock advertising- Many advertisers are relying on shock advertising by using nudity,
suggestiveness, and/or other startling images to gain consumers attention and shock them.
Companies that have been known for using shock advertising over the years include
Benetton, Calvin Klein and Bijan. Clothing retailer Abercrombie & Fitch has also been
C. Advertising and Children—One of the most controversial topics advertisers must deal with is the
issue of advertising to children. A study by the Kaiser Family Foundation found that children
ages 2 to 7 are exposed to an average of 13,904 TV commercials per year, those between the ages
of 8 to 12 are exposed to just over 30,000 while teens are exposed to 28,655. Concern has also
been expressed over marketers’ use of other promotional vehicles and techniques such as radio
ads, point-of-purchase displays, premium offers, and the use of commercial characters as the
basis for television shows. Arguments can be presented on both sides of this controversial issue.
Arguments against advertising to children include:
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• Children cannot differentiate between commercials and television programs, do not perceive
the selling intent of commercials, and cannot distinguish between fantasy and reality.
Arguments in favor of advertising to children include:
• Advertising is a part of life and children must learn to deal with it as part of the consumer
socialization process of acquiring the skills needed to function in the marketplace.
Concern over advertising to children remains an important issue for consumer groups such as the
Center for Science in the Public Interest and Commercial Alert. Advertising to children is likely
to remain a controversial issue to which advertisers must remain sensitive. Another area of
concern that has emerged is the role of advertising and other marketing practices in contributing
to the obesity problem among children (as well as adults). The opening vignette to the chapter
discusses this controversy and the attacks being made against the food industry.
Professor Notes
D. Social and Cultural Consequences—Concern is often expressed over the impact of advertising on
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1. Advertising Encourages Materialism—many critics claim that advertising has an adverse
effect on consumer values by encouraging materialism, which refers to a preoccupation with
material things rather than intellectual or spiritual concerns. Advertising can create
materialism in many ways such as:
• creating needs rather than showing how a product or service fulfills them
The criticism of advertising on the basis of creating materialism assumes that materialism is
undesirable and done at the expense of nonmaterialistic goals. Even if one assumes that
2. Advertising makes people buy things they do not need—another common criticism of
advertising is that it has the power to manipulate consumers and make them buy things they
do not need. Persuasive advertising which plays on consumers’ emotions, anxieties, and
social and psychological needs and desires is viewed as undesirable. This type of advertising
3. Advertising and stereotyping—advertising is often accused of creating and perpetuating
stereotypes thorough its portrayal of certain groups including women and ethnic minorities.
a. Women—Advertising has received a great deal of criticism for its stereotyping of
women. Critics charge that advertising generally depicts women as being preoccupied
with beauty, household duties, and/or motherhood or shows them as decorative objects or
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b. African Americans/Hispanics—African Americans and Hispanics are two ethnic groups
that have also been the target of stereotyping in advertising. For many years advertisers
c. Other groups—Some advertisers have been criticized for portraying senior citizens as
feeble, foolish, inept, or in desperate need of help. It has become increasingly difficult for
Professor Notes
4. Advertising and the media—the fact that advertising plays such an important role in financing
the media has led to concern on the part of many that advertisers can influence or even
control the media. The text discusses how the media sometimes face challenges from
advertisers who stop advertising in a publication when they find their editorial coverage
objectionable or unfavorable to the company.
a. Arguments supporting advertiser control of the media:
• The media’s dependence on advertising revenue makes them susceptible to various
forms of influence such as exertion of control over editorial content, biasing editorial
opinions, limiting coverage of controversial topics or stories, and influencing the
program content of television.
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b. Arguments against advertiser control:
• It is in the best self-interest of the media that advertisers not influence them too
much. To retain public confidence, they must report the news fairly and accurately
and not be perceived as biased or attempting to avoid controversial issues. Media
executives point to the vast amount of topics they cover and the investigative
reporting they do as evidence of their objectivity.
E. Summarizing the Social Effects of Advertising—Negative opinions regarding advertising have
been around just as long as the field itself and it is very unlikely that they will ever disappear. It is
important that the advertising industry remains cognizant of, and continually addresses the
Professor’s Notes
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IV. ECONOMIC EFFECTS OF ADVERTISING
Considerable attention has been given to examining the economic impact of advertising. Advertising
plays an important role in a free-market system such as that found in the US and other countries by
making consumers aware of products and services and providing them with information that can be used
to make purchase decisions. However, advertising’s economic role goes beyond this basic function of
A. Effects on Consumer Choice—Some critics argue that advertising has a negative effect on
consumer choice, as large advertisers use their power to limit our options to a few well–advertised
brands. Economists argue that advertising is used by large national advertisers to achieve
differentiation and brand loyalty, usually at the expense of smaller brands. These large companies
often end up charging a higher price and are able to achieve a more dominant position in the
B. Effects on Competition—One of the most common criticisms economists have with advertising
concerns its effect on competition. They argue that large firms with huge advertising budgets
create a barrier to entry, which makes it difficult for other firms to enter the market. This in turn
leads to less competition and higher prices. Large advertisers enjoy certain competitive
advantages such as economies of scale in advertising, particularly with respect to factors such as
media costs.
C. Effects on Product Costs and Prices—A major area of debate among economists, advertisers,
consumer advocates and policymakers concerns the effects of advertising on product costs and
prices. Critics offer several reasons why advertising results in higher prices:
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• The large sums of money spent on advertising and promotion are an expense that is passed on
to consumers in the form of higher prices
Proponents of advertising offer several counter-arguments to the claim that advertising increases
prices:
• Price insensitivity and brand loyalty can be created by a number of nonadvertising factors
such as product quality, packaging, favorable usage experience and market position
D. Summarizing Economic Effects—Economists’ perspectives regarding the effects of advertising
can be divided into two principal models or schools of thought, each of which makes different
assumptions regarding the influence of advertising on the economy:
1. Advertising = Market Power—This model reflects traditional economic thinking and views
advertising as a way of changing consumers’ tastes, lowering their sensitivity to price, and
2. Advertising = Information—This model takes a more positive viewpoint of advertising’s
economic effects, as it views advertising as providing consumers with useful information,
Chapter 21 – Evaluating the Social, Ethical, and Economic Aspects of Advertising and Promotion
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These two perspectives take very divergent views regarding the economic impact of advertising
as shown in Figure 21-3. It is unlikely that the debate over the economic effects of advertising
will be resolved soon. Many economists will continue to take a negative view of advertising and
Professor Notes
Teaching Suggestions
In this final chapter we evaluate advertising from a societal, ethical and economic perspective.
Advertising is a very powerful institution in this country and has been the target of considerable criticism
regarding its social and economic impact. Much of the criticism of advertising concerns the specific
techniques and methods used by advertisers, as well as advertising’s effect on societal values, tastes,
lifestyles and behavior. We examine these various criticisms of advertising along with the responses of
advertisers to these attacks. It is important to recognize that there are usually two sides to each of these
issues and we try to recognize the arguments of the critics as well as of the advertising industry. For
example, one of the classic debates over the social impact of advertising concerns the issue of whether
of Marketing, April 1986 and Morris B. Holbrook, “Mirror, Mirror on the Wall, What’s Unfair in the
Reflections on Advertising,” Journal of Marketing, July 1987 and a rejoinder by Pollay, “On the Value of
Reflections in ‘The Distorted Mirror,” which also appeared in the July 1987 issue of JM. Stephen Fox’s
book, The Mirror Makers: A History of American Advertising and Its Creators (New York: Morrow
1984) also provides an excellent discussion of arguments concerning the impact of advertising on society.
Numerous controversial issues regarding advertising are raised in this chapter and can be used as a basis
Chapter 21 – Evaluating the Social, Ethical, and Economic Aspects of Advertising and Promotion
Answers to Discussion Questions
1. The lead in to the chapter discusses the new “toner” shoes that are marketed as having the
ability to improve ones’ figure, among other claims. The shoes and the claims have been
controversial ,as may doctors do not believe they are true. Discuss the social and ethical issues
surrounding these shoes. Should these claims be allowed to be made? (LO1)
If the claims being made in the ads are not true, the companies making these claims could be held
responsible for deceptive advertising. At the very least, the claims would seem to be unethical. In
2. What are shock ads? Do you think they are designed to create sales, or to bring attention to
specific issues? Do they work? (LO2)
Shock advertising refers to ads in which companies use nudity, sexual suggestiveness, violence,
or some other startling images to capture consumers’ interest and intention. One of the primary
goals of the “shock–vertising” used by companies is to break through the clutter and ensure that
3. Over the years, and again very recently, there have been calls to eliminate or severely restrict
advertising to children. Discuss the social and ethical issues as to whether advertising to children
should be permitted. Support your position. (LO1)