CHAPTER 20
MARKETING REGULATION
AND CONSUMER BEHAVIOR
LEARNING OBJECTIVES
LO1: Explain the two major concerns in marketing to children that CARU deals with
LO2: Describe the various marketing activities aimed at children that are controversial
LO3: Discuss new guidelines by the FTC regarding online privacy protection for adults
LO4: Explain marketing communication issues related to adults including deceptive advertising
LO5: Discuss regulation concerns when marketing to adults as they relate to product and price
SUMMARY
LO1: Explain the two major concerns in marketing to children that CARU deals with
Marketing to children is a major concern to regulators and consumer groups. One major reason for this
concern is evidence based on Piaget’s theory of cognitive development that children are not able to
LO2: Describe the various marketing activities aimed at children that are controversial
There are a number of marketing activities aimed at children other than television advertising that
cause concerns. Marketing to children through mobile devices is an emerging concern. Corporate
LO3: Discuss new guidelines by the FTC regarding online privacy protection for adults
With adult privacy issues, the FTC has been hesitant to craft specific legislation. However, in
LO4: Explain marketing communication issues related to adults including deceptive advertising
There is concern about the cumulative effect of advertising on adult values just as there is with
children. In addition, regulators and businesses alike are concerned that adults receive accurate and
LO5: Discuss regulation concerns when marketing to adults as they relate to product and price
The focus of consumer concern and regulation of products is twofold: Are they safe? and Are they
LECTURE TIPS AND AIDS
1) This is a fun chapter. On the issue of regulation, you will probably have students with vastly
differing views and philosophies from each other and from yours. Obviously, you must be careful
2) It is important that your students realize that they are unique. While this varies by campus,
business students are generally much less inclined to see a need for government regulation of
business than are other students. It can be fun to bring in an articulate student radical (in the sense
of being anti-business) and let him or her address the class.
5) The new nutritional labeling requirements are supposed to help consumers make sound diet
choices. However, note how the percentage of fat is presented. It is in terms of the percent of an
“average” person’s daily fat requirement that one serving of the product will provide. However,
6) Find several ads that demonstrate the notion of pragmatic implications. Many ads use “hedge”
words and phrases such as “can,” “aid,” “fight,” “fight the signs of,” and so on. One ad the author
found particularly humorous (but scary) was an ad that stated something to the effect “When you
7) Assign and/or prepare one or more of the CB PRESS HIGHLIGHTS articles for class discussion.
The searchable CB Press Highlights Database can be found in the Instructor Resources in
Connect.
REVIEW QUESTIONS
1) What are the major concerns in marketing to children?
The major concerns are children’s ability to comprehend the selling intent and the content of
2) What are the main issues concerning children’s ability to comprehend advertising messages?
(1) Do children understand the selling intent of commercials? (2) Can children understand specific
aspects of commercials, such as comparisons?
3) What is CARU? What does it do? What are some of its rules?
CARU is the Children’s Advertising Review Unit of the of the National Advertising Division
4) What are the major concerns about the content of commercial messages targeting children?
The impact of commercial messages on children’s values and the impact of commercial messages
on children’s health and safety.
5) What are the issues concerning the impact of advertising on children’s health and safety?
6) What are the issues concerning the impact of advertising on children’s values?
7) What are the concerns associated with mobile marketing to children?
Sometimes known as the “third screen,” cell phones are an increasingly integral part of our lives,
8) What is meant by “commercialization of schools”? What are the various areas in which
commercialization can occur and what are the major concerns?
Schools are often motivated by money as budgets continue to be tight. The issue of
• In-school ads – Ads in such places as school buses, scoreboards, bulletin boards, as well
as coupons and free samples. Other aspects might include schools selling naming rights to
companies and distributing ads in student newspapers
obesity and juvenile diabetes.
9) Why are consumer advocates worried about marketing to kids on the Internet?
Two major concerns emerge: invading children’s privacy and exploitation of children through
10) Describe the key provisions of The Rule under COPPA.
The Rule applies to (a) operators of commercial websites or online services directed to
children under 13 that collect personal information from children, (b) operators of general
audience sites that knowingly collect personal information from children under 13, and (c)
11) How would you go about deciding if COPPA has been effective?
Students may come up with a “pre” and “post” approach in which conformance was measured
12) What are the major concerns with marketing communications targeting adults?
13) What are the issues concerning the impact of advertising on adults’ values?
14) What is a pragmatic implication and how does it relate to information accuracy and deception?
Pragmatic implications are one form of implication and are the implied meanings (that are
15) What are the concerns with consumer information adequacy?
The concern is that each consumer have reasonable access to all the information she or he requires
to do this without causing information overload (see Question 16).
16) What is information overload?
This occurs when there is so much information or the information is so complicated that the
17) What is corrective advertising?
Corrective advertising is advertising run by a firm to cause consumers to “unlearn” inaccurate
information they acquired as a result of the firm’s earlier advertising.
18) What are the FTC’s general guidelines for “clear and conspicuous” disclosure in an online setting?
Place the disclosure near the claim it is qualifying; make the disclosure prominent; avoid having
19) What are the major regulatory issues with respect to products?
20) What are the major regulatory issues with respect to prices?
21) What is a reference price? What is the concern with reference prices?
A reference price is a price provided by the manufacturer or retailer in addition to the actual
sales actually occur.
Discussion Questions
22) A television advertisement for General Mills’ Total cereal made the following claim: “It would
take 16 ounces of the leading natural cereal to equal the vitamins in 1 ounce of fortified Total.”
The Center for Science in the Public Interest filed a petition against General Mills claiming that
the advertisement is deceptive. It was the center’s position that the claim overstated Total’s
nutritional benefits because the cereal is not 16 times higher in other factors important to nutrition.
a. Is the claim misleading? Justify your answer.
Have students analyze if using the information in CI 20-1. The direct claim appears to be true.
b. How should the FTC proceed in cases such as this?
Probably conduct research to see if people actually bought Total because they thought it was 16
c. What are the implications of cases such as this for marketing management?
23) Turkey ham looks like ham and tastes like ham but it contains no pork; it is all turkey. A
nationwide survey of consumers showed that most believed that the meat product contained both
turkey and ham. The USDA approved this label based on a dictionary definition for the technical
term ham: the thigh cut of meat from the hind leg of any animal. Discuss how consumers
processed information concerning this product and used this information in purchasing this
product. (One court ruled the label to be misleading but was overruled by a higher court.)
a) Is the label misleading?
b) How should the FTC proceed in such cases?
a. Is the label misleading?
This will generally elicit a variety of views. Have the students justify their opinions based on
b. How should the FTC proceed in such cases?
24) How much and what type, if any, advertising should be allowed on television programs aimed at
children?
a) under 6
25) Are the self-regulatory attempts by the food and beverage industry enough in regard to regulating
food marketing to children? What, if anything, additional would you propose? Explain.
As the chapter opener discusses, childhood obesity continues to be a major concern and given the
26) Does advertising influence children’s values? What can the FTC and/or CARU do to ensure that
positive values are promoted? Be precise in your response.
Many believe that the FTC and the CARU need even tighter rules concerning the types of
27) What rules, if any, should govern mobile marketing to children?
This is a great question for open debate. Many students have been marketed to via their cell
28) What rules, if any, should govern marketing to kids on the Internet?
29) What rules, if any, should govern advertising and promotional messages presented in the
classroom?
Students may suggest working closely with the companies to curb some of the overuse of
30) Does advertising influence or reflect a society’s values?
The answer is both. While most advertising reflects the values of at least a large portion of
31) Do you agree that beer advertisements portraying groups of active young adults having fun while
consuming beer teach people that the way to be popular and have fun is to consume alcohol?
32) Respond to the questions in Consumer Insight 20-1.
Inferences are a part of the interpretive process involved in perception. Pragmatic implications
relate to the inferences that consumers draw from materials based on a “practical” use of language
in everyday life. However, this type of inference process can lead consumers to believe things
about brands that were not directly stated and under certain conditions, lead them to be deceived
as defined by the FTC. Knowing about this inference process, marketers can structure their ads
and statements within their ads to avoid such implications. Pretesting to ensure that the desired
message is being delivered is always recommended.
Other forms of pragmatic implications:
33) Do you think corrective advertising works? Evaluate the three corrective messages described in
the text.
34) “Since riding tricycles is a major cause of accidental injury to young children, the product should
be banned.” State and defend your position on this issue (the first part of the statement is true).
This is a challenging question. Children spend a lot of time on tricycles so they may not be the
35) To what extent, if at all, do you use nutrition labels to guide your purchases? Why?
36) Do you believe reference prices generally reflect prices at which substantial amounts of the
product are normally sold? Does this vary by store, season, or other circumstances?