Role of Government and Industry Agencies in Marketing Communications - Essay Example

Role of government regulatory agencies and industry agencies in enforcing fair standards in the areas of advertising and marketing communications Introduction: Marketing communications is a concept arising from management and covers aspects lijke advertisements, sales promotion, direct marketing and public relations. According to the American Marketing Association, integrated marketing communications (IMC) is “a planning process designed to assure that all brand contacts received by a customer or prospect for a product, service, or organization are relevant to that person and consistent over time.” (marketingpower.com). Advertising is an integral component of marketing communications in the fast changing world of commodity market. With the advent of Information technology, marketing and advertisements have also become an integral part of services like telecommunications. Role of advertising and marketing communications in America: Advertising comprises of a significant part of the American society. The principles of free speech, competition and democracy are duly considered in the role of advertising. Marketing communications have lead to advertisements as an important source of vital information about the open market economy. This brilliant way of communication moves parallel to the new stream of forces like innovative technologies, easy access to information and entrepreneurial role, all of which are assisting towards a transformation of the nation. Advertising is a crucial engine of economic growth and it exists as a big industry by itself. Advertising is connected with democratic forces and runs at equal par with the forces that transforms the society. America is undeniably intertwined with marketing communications, especially advertisings in order to positively affect the interests of consumers, businesses and the country in its totality. Advertising leads to brand promotion and thus creates a healthy competitive environment in the economy. American consumers rely largely on marketing forces like advertisings for the necessary information about the different characteristics and benefits about a product and they spend a huge amount of dollars on goods and services, thus helping the open market survive. Advertisements also help in alerting the consumers to avail the right kind of products and purchase locations, acts as a counselor for pricing information and opportunities for promotion and also helps them to save money by creating a downward pressure on the price movements due to the rising competition. It also promotes free entry and exit of new products and services in the market. Advertisings can become a true friend to a consumer by enhancing their confidence level and helping them in deciding on their purchases. Another contribution is the provision of job opportunities to the people in the society. The following table shows that in terms of Advertisement expenditure growth, America is the largest contributor in among the top ten nations considered in this context: Top ten contributors to advertising expenditure growth 2005-08 US$ million, current prices Countries Contribution US$m % Of market 2005 % Of market 2008 USA 23318 41.9 40.5 China 6441 2.4 3.5 Russia 5968 1.3 2.3 Japan 4444 10.3 9.7 UK 3118 5.4 5.2 Indonesia 2512 0.8 1.2 Brazil 1661 1.6 1.7 Spain 1443 2.1 2.1 Mexico 1382 0.9 1 Poland 1239 0.9 1 Source: Zenith Optimedia If we consider the different continents, then North America lies at the top position in list of nations in terms of contribution towards the advertising expenditures. This reflects the importance of the role of advertisements in the nation’s progress. Advertising expenditure: Major media (newspapers, magazines, television, radio, cinema, outdoor, internet) Countries 2004 2005 2006 2007 2008 North America 168250 173271 182209 189878 197369 Europe 104567 108448 113010 117726 122657 Asia/Pacific 78802 83162 88819 95420 101816 Latin America 15546 18021 19754 21090 22244 Africa/M.East/Row 18160 21206 24581 28043 32190 World 385324 404108 429373 452157 476276 Source Zenith Optimedia Enterprises depend a lot on advertisings, mainly in the context of rising competition in the marketplace. It helps them reach their target set of consumers in an instant and bridges the gap between the manufacturer and their set of customers. Advertising is by any means the most effective means of communication regarding the information about a product and a conscious choice to effectively generate the consumer demand. Tax on advertising: Advertising is a cost incurred in business activity and like all other expenses, these expenditures are also totally deductible in the year of occurrence and treated similarly as the other expenses of businesses in the tax code. This gives total freedom to the organizations to choose from their available choices of advertisement strategies or devise the most effective and efficient way to communicate with the masses. The government did think of reviewing the 100% tax deductibility policy but analysis shows that if the existing tax treatment were changed it would enhance the budget deficits since the companies will think twice before choosing a particular strategy and hence sale would suffer. Thus advertising costs cannot be amortized without causing loss to the economy because the advertisers will immediately respond with a reduction in their investment in the respective state. Regulations in advertising and marketing communication industry Advertising is an industry that is regulated heavily, at almost all levels of administration – central, state and local. Advertising is intently monitored wherever it is created and located. The main federal agency that has been assigned the authority of regulations over advertising is the Federal Trade Commission (FTC) Advertising is an industry that is regulated heavily, at almost all levels of administration – central, state and local. Advertising is intently monitored wherever it is created and located. The main federal agency that has been assigned the authority of regulations over advertising is the Federal Trade Commission (FTC) which has the power of regulating and banning those advertising that it deems to be deceptive, unfair (if it causes or is likely to cause substantial consumer injury) and meant to cheat upon the consumers. Penalty actions can also be brought against the advertisers in case of law violations. The FTC Act can be said to be violated if the advertiser or the organization involved in marketing cannot substantiate their claims that has been communicated to the mass. The FTC can undertake regulations if it finds out that there has been deception in terms of omission of important relevant information in the advertisements that may have claims which are truthful. This might deceive the customer who would realize their mistakes only after spending huge sum of money in their purchase. Thus the caption of advertisement should be generated towards authenticity of promoting the right product in the right way. The Internet has been a media for random and often indiscrete advertising covering a wide range of products. Though Internet is an undeniable means of fast flow of information within the mass, it can also be misleading to the consumers. The FTC has shown its hold over the online environment by bringing about many cases against the false advertising on the Internet. In advertising cases, the basic remedy for a violation of the FTC Act is a cease and desist order. If merely prohibiting future misrepresentations will not dispel misperceptions already conveyed, the Commission may order corrective advertising. When it leads to extreme cases, the FTC has ordered consumer redress or financial remedies and even imposed high fines where it thought that strong actions might be required. The most common remedy of violation of the FTC Act is a cease order. Since prohibitions of future misrepresentations cannot eliminate those misperceptions that already exist among the masses, therefore the Commissions have also taken corrective measures towards advertisers. Several states are also providing the lead of federal government in provision of broad regulatory authority over dissemination of advertising within the borders. The Congress has transferred the authority for specific industries to agencies other than the FTC. For instance, the Securities and Exchange Commission had been assigned the responsibility for advertisement of stocks, securities and the financial instruments, the department of Transportation does the job of regulating airline advertising, the Food and Drug Administration is assigned with the role of regulating drug prescription, the Federal Communications Commission regulates different aspects of children’s advertising and the Treasury Department’s bureau of Alcohol, Tobacco and Firearms is dedicated with the task of regulating some dimensions of advertising alcohol beverages. The Lanham Trademark Act of 1946 undertakes the areas of false advertising in a comparative sense that is a company can sue another company if the products and services of the company are promoted in a wrong way through advertising. False and misleading statements about one’s products is highly condemned and penalized by the act. This protects the interests of different companies. Before the regulatory body notices the advertisement, the advertising agency and the media impose a multi screening process. The legal adviser of the organization initially reviews the copy of advertisement and evaluates the precision of the claims made in the advertisement with the help of technical and scientific staffs. A storyboard is submitted to the television networks in order to gain clearance and approval. Once it is obtained, the process of production begins along with the continuation of the review process. The legal staffs and technical personnel also accompany the networks to review the commercial such that the original copy has not been distorted in the final presentation. This self-regulation persists even after the advertisement is brought out to communicate with the mass in form of print or visuals. The self-regulatory body of the National Advertising Division (NAD) and the National Advertising Review Board (NARB) of the Council of Better Businesses contributes a great deal. It is a compulsion for NAD to ensure the validity and truthfulness of the claims of national advertising. Their assessment is initiated from consumer complaints, competitors’ challenges and their self-monitoring systems. A separate board for monitoring children’s advertisements is formed by NAD and is known as Children’s Advertising Review Unit (CARU). The better business bureau (BBB) has also taken measures in regulations of advertisements to protect the interests of the consumers. Across the nation of America owners of houses who face mortgage foreclosure are undergoing scams by foreclosure “rescue” organizations that initially promise to protect their house and end up taking their money ultimately. In the context of this emerging pattern of occurrences, the Better Business Bureau (BBB) has given warning regarding the gloomy forecasts or prediction for the housing and financial markets means. They have warned against these mortgage foreclosure scams to which people are increasingly falling prey. (Bbb.org). The advertiser through providing the necessary details, substantiating the claims, modifying the advertisement or voluntarily withdrawing the ad campaign from the market, resolves the cases of NAD. In case where the NAD is not able to solve the issue, the NARB intervenes and a five-member panel acts as a court of appeals. It is voluntary to comply with NAD or NARB process and NAD has successfully dealt with many cases where advertisements were modified or discontinued voluntarily. Honest national advertising can be ensured or enforced not only by government regulation or self-regulation but also actually by advertisers’ dependence on millions of sales for their success. This can be maintained by repeat business and consumer trust. The development of public service advertising is an activity of advertising community. The Advertising Council was established as the central body for the creation of advertising and media and distribution of public service campaigns. The Advertising Council is mainly supported through the contributions and volunteer efforts of several corporations, advertising agencies and publishers. Conclusion: Marketing communications in the form of advertisings is gaining prominence all over the world as the need for open market existence is rising. In order to make their place in the market these organizations undergo a great deal of efforts and expenses towards advertisements. Their strength of existence in the free market space is mainly ensured by honest production and transparency in promoting their products. The reliability and validity of advertisement relies mainly on the strength of the product characteristics and the honest approach or self-regulation of the manufacturer or producer. Reference: Federal Communications Commission, Federal Communications Commission and Federal Trade Commission Issue Joint Policy Statement on Deceptive Advertising of Long Distance Telephone Services, March 1, 2000, Lightenberger J., Advertising Compliance Law: Handbook for Marketing Professionals and Their Counsel, August 18, 1986, Quorum Books, Westport, USA. Mortgage Foreclosure Scams on the Rise, Warns the BBB: Foreclosure "rescue" companies may promise to save your home, but only empty your wallet, www.bbb.org Young, Charles E., Integrated Testing for Integrated Marketing: One size almost fits all, April 2006, Quirks Marketing Research Review, < http://www.ameritest.net/images/upload/raimg2006417123619850.pdf> Young, Charles E., Researcher as Teacher: A heuristic model for pre-testing TV commercials, March 2001, Quirks Marketing Research Review, < http://www.ameritest.net/images/upload/raimg200384125637521.pdf> ZenithOptimedia, World Cup to boost adspend growth in 2006 Internet to sustain momentum to 2008, 2006. http://www.zenithoptimedia.com/about/news/pdf/Adspend%20April%202006.pdf Read More