ADVERTISING AND PROMOTION MANAGEMENT

WEEK- 12

Lecture 56

“Advertising is a non-moral force, like electricity, which not only illuminates but also
electrocutes. It’s worth to civilization depends upon how it is used.”
-J. Walter Thompson

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“Copies don't invalidate either ad; they just dilute both.”
-Oliver Caporn

Advertising and Law

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Advertising has been accused of many crimes like social, economic, and moral. By being an
advertiser, it gives people hopes that might only be exaggerated, through promises and deals it
promotes conspicuous consumption, and it even misleads people by causing them to believe
what may not be true. Despite all its ill effects, the fact remains that advertising cannot be
totally ignored, because it has many a positive feature too. However, it can be regulated to
ensure that the ill effects are reduced to the minimum.
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While Western countries have many uncompromising laws governing advertising, India too
has adopted these provisions by making necessary changes. In India, the laws and regulations
regarding advertising are governed by various acts, laws and legislations, as well as self-
regulatory or ethical codes of conduct. The various acts outline the legal framework within
which the advertising industry is allowed to operate, whereas the codes of conduct are only
self-regulatory in nature and set an ethical backdrop that guide the industry in the way it is
expected to operate. All those engaged in advertising should be familiar with the legislation
affecting advertising in India

Legislation Affecting Advertising

Following are some important acts that set the legal boundaries within which advertisers are
allowed to operate. Violation of the acts or the rules thereof can lead to penalties mentioned in
the acts.
The Indian Penal Code (IPC), 1860
It prohibits the dissemination of any obscene matter. IPC also prohibits the publication of
matters pertaining to unauthorized lotteries. It further forbids the publication of appeals using
national symbols for furthering the prospects of a candidate at election. Thus, political
campaigns cannot use national symbols for advertising.

Drugs and Cosmetics Act, 1940

An Act to regulate the import, manufacture, distribution and sale of drugs and cosmetics:
• No drugs or cosmetics shall be misbranded by failing to label it in a prescribed manner or by
making false or misleading claims on the packaging or advertising.
• Drugs or cosmetics shall not be spurious such as by branding them under the name of other
drugs, by plain or conspicuous packaging that resembles that of other drugs, etc.
• Patent or propriety medicines must include in their labelling a list of active ingredients in the
drug and their quantities.
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• No drugs shall be imported unless they are packed and labelled under the rules of this Act.

Drugs Control Act, 1950

This Act lays down guidelines and rules for the control of sale, supply and distribution of the
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drugs.

The Drugs and Magic Remedies (Objectionable Advertisements) Act, 1954

This is an Act to control the advertisements of drugs in certain cases, and to prohibit the
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advertisements for remedies alleged to possess magic qualities. The Act states that unless
prescribed by registered medical practitioners or after consultation with the Drugs and
Cosmetics Act, 1940, no advertiser shall publish any advertisement referring to any drug that
is used for miscarriage in a woman, correction of menstrual disorder in women, and the
diagnosis, cure, mitigation, treatment or prevention of any disease.

The Young Persons (Harmful Publications) Act, 1956

The Act prohibits distribution of publications that may be harmful to underage kids. 'Harmful
publications' are defined as books, magazines, pamphlets, etc. wherein stories are told
portraying criminal offences, acts of violence or cruelty, incidents of repulsive or horrible
nature, in such a way that the publication as a whole tends to corrupt a child into whose hands
it might fall, whether by inciting or encouraging the child to commit offences or acts of violence
or cruelty, or in any other manner.
The Indecent Representation of Women (Prohibition) Act, 1986
This is an Act to prohibit indecent representation of women through advertisements or in
publications, writings, paintings, photographs, or in any other manner. What constitutes
"indecent representation" is of course subjective and to be determined based on the time period
and culture of a place. However, the act prescribes general legislative action to check the
growing commoditization of women and to see to it that a woman or her body are not
represented in a derogatory manner.

The Emblems and Names (Prevention of Improper Use) Act, 1950

This Act forbids any private party or for commercial purposes the use of certain national names
and emblems such as the Indian National Flag, government seals and coat-of-arms, certain
government buildings, pictorial representation of Mahatma Gandhi, Chhatrapati Shivaji, the
President and the Prime Minister, etc. For certain special cases, permission may be sought
beforehand.

The Prize Competitions Act, 1955 EL

This Act controls and regulates prize competitions and prohibits the publication of matter with
unauthorized prize competitions.
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The Prize Chits and Money Circulation Schemes (Banning) Act, 1978
An Act to ban the promotion or conduct of prize chits and money circulation schemes, except
for certain schemes offered by the government, banking companies, educational institutions,
etc.
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Indian Copyright Act, 1957

Copyright means the exclusive rights of an owner to do, or authorize to do, literary, dramatic,
musical or artistic work, including cinematographic films and sound recordings. Copyright
registered in any design is valid till the design has been reproduced more than fifty times by an
industrial process by the owner of the copyright or, with his license, by any other person. For
a longer protection on designs, they should be registered under The Designs Act,
1911.Copyright is infringed if any person violates the rights of the copyright owner without
license or permission for profit or commercial activity; or sells, hires, distributes, imports, etc.
copyrighted material without license or permission. However, copyright infringement cannot
be evoked if such material is used for private use, including research; criticism or review of the
work; reporting current events in a publication; etc.

Trade Marks Act, 1999

The Trade and Merchandise Marks Act, 1958 has been now repealed and replaced by the new
Trade Marks Act, 1999, which is in force since 15th September 2003. The new Act has enlarged
the definition of the mark of identity that can be protected by law; while a trademark means a
mark capable of being represented graphically and which is capable of distinguishing the
products of one person from those of others, the new Act now also covers the shape of goods,
packaging and combination of colours in the definition.
Thus, a trademark can be a word, slogan, design, picture, shape of a productor container, or
any other symbol used to identify and distinguish products. In addition to distinguishing and
identifying products, trademarks are important brand marks that also help in promoting
products. They are one of the prime tools for building brand identity.
A trademark does not have to be registered for use but registration under the Trademarks Act
confers exclusive rights on the owner to use the trademark and obtain relief in respect of
infringement on trademark. A trademark does not give its holder uncontrolled monopoly on the
word, phrase, shape or colour as such. Only commercial use of the trademark for those classes
of products can be restricted by the trademark holder. Non-commercial use of a trademark
cannot be prevented under this Act, except if that use harms the trademark's distinctiveness.
A trademark is said to be infringed when it is used by a person other than the proprietor on
packaging, in advertising, on products, etc.; when a mark identical to the registered trademark
is used and such use may cause confusion among people, give the unauthorized user an unfair

etc.
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advantage, or be detrimental to the distinctive character or repute of the registered trademark;

A registered trademark can also be infringed by any advertising of that trademark if such
advertising:
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a. takes unfair advantage of the trademark or violates professional standards of
honesty,
b. is detrimental to the trademark's distinctive character, or
c. is against the reputation of the trademark.
A trademark is not just infringed by its visual representation but also by its spoken use or
reference. A case of 'passing off' arises in trademark law when the rights of an unregistered
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trademark are misappropriated by any party. The principle of passing off states that no one is
entitled to pass off his goods as those of another since it damages the goodwill of another

The Pharmacy Act, 1948

An Act to regulate the profession of pharmacy and prescribe the minimum standards of
education for qualified pharmacists. Only registered pharmacists can dispense prescription
medicines. The All India Radio code exhorts advertisers to be familiar with this Act, among
others.

The Monopolies and Restrictive Trade Practices (MRTP) Act, 1984

The MRTP act served the dual purposes of
a. preventing monopolistic and restrictive trade practices in the economy, and
b. preventing unfair trade practices.
 c. 'Unfair trade practices' covered under their domain various practices and
representations that could be effected by advertising and promotion, and termed unfair.
However, the MRTP Act was later repealed and replaced by The Competition Act, 2002.
Nonetheless, the latter was not burdened with the subject of 'unfair trade practices,'
which was given effect under The Consumer Protection Act, 1986
The Consumer Protection Act, 1986
This Act provides for the better protection of the interests of consumers and for the purpose
establishes consumer councils for the settlement of consumers' disputes. Under this Act,
consumers, their representatives, voluntary consumer organizations, and the government can
complain against unfair trade practices, defective or hazardous products, etc.
Thus, the Act serves two purposes.
1. to provide education to consumers regarding their various rights, and
2. to provide for as implified, inexpensive and speedy remedy for redressal of grievances
of consumers.
It is important to note that the Act covers under its ambit 'unfair trade practices,' earlier a
domain of the MRTP Act, which include, among other things, the following activities
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pertaining to advertising and promotions:
• Making false or misleading representations about the standard, quality, quantity, grade,
composition, model, etc. of a product.
• Representing old, rebuilt, second-hand goods as new.
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• Claiming that products have sponsorship, approval, characteristics, benefits, uses, etc.
which they do not have.
• Giving guarantee or warrantee that are not based on an adequate or proper tests, and that are
not carried out as per the promises made.
• Misleading the public regarding the price of a product.
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• Publishing advertisements regarding the sale of products which are not actually offered for
sale at the mentioned bargain price, offer period, quantity, etc.
• Misrepresenting the public regarding the offer of gifts, prizes, etc., or creating an impression
that something is being given or offered for free when it is fully or partly covered by the amount
charged in the transaction as a whole.
• Conducting any contest, lottery, game of chance or skill, for the purpose of promoting a
product.
• Withholding the final results of a game of chance or skill from the participants; the
participants of a scheme have to be informed of the final results of the scheme within a
reasonable time, with the results to be published prominently in the same newspapers in which
the scheme was originally advertised;
• Giving false or misleading facts disparaging the products of another person.
Cigarettes and Other Tobacco Products (Prohibition of Advertisement and Regulation of
Trade and Commerce, Production, Supply and Distribution) Act, 2003
In India, advertising tobacco products is banned in public interest. This Act prohibits all direct
and indirect advertisements that suggest or promote the use of tobacco products.
Advertisements include all types such as display ads, films or video tapes with ads, leaflets,
handbills, documents, hoardings, transit ads, etc. However, display of tobacco products on
packs, or in shops or warehouses selling or stocking tobacco products is allowed. On the other
hand, ads that rebuke the consumption of harmful tobacco are often issued in public interest by
hospitals and healthcare providers.

Advertising and Ethics

Advertising and ethics are deeply connected because advertising has the power to influence
public opinion, consumer behaviour, and societal norms. Ethical advertising involves being
transparent, truthful, and responsible in how businesses market their products or services. The
goal is to create advertising that not only complies with the law but also upholds moral
standards that benefit consumers and society.
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The critics of advertising would dismiss any discussion on advertising and ethics in one
sentence by saying that advertising and ethics didn't go together. They have many reasons in
support of their argument including that advertising makes people buy things they may not
need, advertising creates an unequal world, it builds stereotypes, it is sexist, it exaggerates
facts, and on.
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If advertising is glamorous, has beautiful people endorsing products, and creates a world of
make believe, it is also a fact that it allows people to make informed choices about products
and services and creates competition among products, thus helping consumers get products of
better quality at lower price. The advertising industry has always been in sharp focus and more
often for wrong reasons. One of the commonly held criticisms against advertising is that it
affects sales by leading consumers to change their minds or to think in a certain way about a
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product.

Advertising', according to Michael Schudson (1993),

'Associates a given brand or product with a prestigious person or a romanticized lifestyle and
suggests that the use of the product will transform the consumer into a more beautiful, more
desirable, or more energetic human being. The consumer believing or half believing this, and
consciously or sub- consciously coaxed by the ad's suggestion, buys the product.’

Advertising is also considered a waste of money that could be better spent in price reductions
or product improvements. The profession is also criticized for using appeals such as envy and
snobbery as virtues worth emulating, thus creating attitude problems in the society. Similarly,
the vigorous use of lifestyle advertising' is believed by many to create chaos among the haves
and the have-nots, thus further widening the gap between the rich and the poor. While
advertising's informational role is generally accepted, many analysts note that competitive
advertising merely shifts demand from one good to another and raises prices in the bargain.
Although advertising widens the range of consumer choice, it is criticized for stimulating a
desire for material acquisitions and excessive consumption. Like other professions, the
profession of advertising also has a code of ethics which is elaborate and provides practical
guidelines to practitioners.

The Advertising Standard Council of India (ASCI)

The Advertising Standard Council of India (ASCI) is a representative body of people from the
world of advertising and also draws experts from the industry and public domain. The ASCI
has an overarching goal to maintain and enhance public confidence in advertising.
ASCI seeks to ensure that advertisements conform to its code of self- regulation which requires
advertisements to be: -
a) truthful and fair to consumers and competitors,
b) within the bounds of generally accepted standards of public decency and propriety, and
c) not to be used indiscriminately for the promotion of products hazardous or harmful to
society or to individuals, particularly minors, to a degree unacceptable to society at
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large.
The ASCI encourages the public to complain against advertisements which they may be
unhappy with for any reason and ensures that each complaint receives prompt and objective
consideration by an impartial consumer complaints committee (CCC), which takes into account
the viewpoint of the advertiser, and an appropriate decision is communicated to all concerned.
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The ASCI's Code of Advertising Practice is quite wide ranging and since the time it has come
into force, the Council has received thousands of complaints. Although the decisions of the
Council in dealing with cases do not have a legal bearing, experience has shown that the
concerned advertising agencies have followed the Council's advice by and large. Some of the
highlights of the ASCI's Code include the following:
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a) Advertising should be so designed as to conform not only to the laws but also to the
moral, aesthetic, and religious sentiments of the country in which it is published.
b) Advertisements likely to bring contempt or disrepute to the profession should not be
permitted.
c) Advertising should be truthful, avoid distorting facts, and misleading the public by
means of implications and omissions.
d) Advertising should not be permitted to contain exaggerated claims that inevitably
disappoint the public.
e) Direct comparison with competing brands or firms and disparaging references are
in no circumstances permitted.
f) Indecent, vulgar, suggestive, repulsive, or offensive themes or treatment should be
avoided.
g) No advertisement should offer to refund money paid.
h) Advertisements must not carry claim of drugs to prevent or cure any diseases or
ailments.
Besides the above, members are prevented from placing any advertisements in any medium
which is knowingly a copy or a plagiarism of any other advertisement of any kind, makes
attacks of a personal nature, is indecent vulgar, suggestive, repulsive or offensive in theme or
treatment, concerns objectionable medical treatment, and concerns a product known to contain
habit forming or dangerous drugs.
In the event of a member proving to the satisfaction of the Executive Committee that a client
has withdrawn his account on the grounds of the member’s refusal to undertake unethical
advertising, no other member shall accept any business whatever from the said client. The
Code's rules are not the only ones to affect advertising. There are many provisions, both in the
common law and in the statutes, which can determine the form or the content of an
advertisement
The Code, according to the ASCI, is not in competition with law. Its rules, and the machinery
through which they are enforced, are designed to complement legal controls, not to usurp or
replace them. The ASCI on its part has been educating the consumers about misleading
advertisements and the procedure to lodge a complaint. The ASCI's website is interactive and
is visited by companies, competitors, advocacy groups, and the general public.

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General rules of conduct in Advertising:

1. Advertising shall be designed as to conform to the laws of the country and should not offend
the morality, decency, and religious susceptibilities of the people.
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2. No advertisement shall be permitted which: -

i. derides any race, caste, colour, creed, and nationality;
ii. is against any of the directive principles, or any other provision of the Constitution of
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India;
iii. exploits the national emblem, or any part of the constitution or the person or personality
of a national leader or state dignitary; or
iv. vii. relates to or promotes cigarettes and tobacco products, liquor, wines and other
intoxicants.

3. No advertisement message shall in any way be presented as News.

4. No advertisement shall be permitted the objects whereof are wholly or mainly of a religious
or political nature; advertisements must not be directed towards any religious or political end
or have relation to any industrial dispute.

5. Advertisements for services concerned with the following shall not be accepted:
i. Money lenders;
 ii. Chit funds;
iii. Saving schemes and lotteries other than those conducted by central and state
government organizations, nationalized or recognized banks, and public sector
undertakings;
iv. Matrimonial agencies;
v. Unlicensed employment services;
vi. Fortune tellers or sooth-sayers, etc. and those with claims of hypnotism;
vii. Foreign goods and foreign banks.

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 Lecture 57

Intellectual Property Rights-Role and Relevance

Intellectual property rights are the rights given to persons over the creations of their minds.
They usually give the creator an exclusive right over the use of his/her creation for a certain
period of time. Intellectual property rights (IPR) and their safeguards have gained focus,
especially after the Internet united the world with boundless knowledge that transcended
artificial boundaries. Earlier known as 'Industrial Property Rights’, the domain has expanded
with new interpretations coming with latest enactments and contests in various statuary bodies
and the courts of law.

Why do we need to Protect Intellectual Property?

Intellectual property is protected to acknowledge the creative or innovative work done by
people in their area of competence. Authors of books, playwrights, musicians, artists, scientists,
designers, and engineers who use their creative abilities to create unique contributions apply
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for the protection of their intellectual rights so that they draw benefits of personal and financial
nature. The industrial revolution brought about many similar products that forced their
manufacturers to give them distinct characteristics and identity through a brand name, a distinct
monogram, lettering style, etc. Pharmaceutical companies were the earliest applicants for the
award of patents for their medicines. There are a number of laws and acts exist that protect new
designs, trademarks, and other artistic work.
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Advertising and Intellectual Property Rights

• Is advertising an Intellectual activity?

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Critics of advertising reject this claim, alleging it to be a clever and cunning discipline that
makes people buy products that they do not need. Hence, they claim that there can be nothing
intellectual about the discipline. This, however, may be an extreme view. Those who believe in
advertising, on the other hand, feel that advertising moves minds and markets. Advertising over
the years has been recognized as an important activity for informing and educating consumers
about brand attributes. The profession that for long was considered to be a creative art form
has now acquired the status of an applied science.
Advertising, as a part of the marketing mix, is used to publicize the product in the mass media.
Advertising is aimed at building the brand character of a product. An advertisement broadly
comprises visual, copy, and the mark of identity of the company, besides a mission statement
or tagline. Some advertisements may not have every element referred to above, but the mark
of identity or brand name, logo, monogram, or trademark are invariably there to lend identity
to the brand and the company. There have been arguments regarding whether advertising is an
intellectual activity that needs protection.
There is, however, no denying the fact that tangible manifestations such as the design of the
product and the trademark are very much a part and parcel of the visual element of advertising.
How a product is shaped, where the label goes, how prominently the trademark is placed on
the product and advertisements make advertising and IPR interdependent.

• Nike: Nike’s “swoosh” logo and the phrase “Just Do It” are globally recognized trademarks.
They symbolize quality athletic apparel and footwear, helping the brand maintain its market
dominance.
• Apple: Apple’s trademark includes the bitten apple logo, representing innovation and sleek
design in technology. This trademark reinforces brand loyalty and distinguishes Apple products
from competitors.
• McDonald’s: The golden arches and the phrase “I’m Lovin’ It” are key trademarks for
McDonald’s. These symbols are synonymous with fast food and consistency, making
McDonald’s a household name worldwide.
• Google: Google’s trademark encompasses its colourful logo and the name itself. These
trademarks have become synonymous with online search and digital innovation, securing
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Google’s position as a tech giant.
• Microsoft: Microsoft’s trademark includes its four-color square logo and the name
“Microsoft.” These trademarks represent reliability and innovation in software and technology.
• Starbucks: Starbucks’ green siren logo is a well-known trademark in the coffee industry. It
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signifies quality coffee and a unique café experience, attracting loyal customers globally.
• Amazon: Amazon’s trademark includes its curved arrow logo and the name “Amazon.” These
trademarks symbolize a vast selection of products and exceptional customer service in e-
commerce.
• Disney: Disney’s trademark features the distinctive signature logo and the castle image.
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These trademarks evoke a sense of magic and entertainment, making Disney a beloved brand
for all ages.

Defining Intellectual Property Right

Intellectual property (IP) refers to creations of the mind – everything from works of art to
inventions, computer programs to trademarks and other commercial signs. Intellectual property
(IP) refers to creations of the mind – everything from works of art to inventions, computer
programs to trademarks and other commercial signs. activities, and plays an important role in
both cultural and economic life. This importance is recognized by various laws which protect
intellectual property rights. IP law is complicated: there are different laws relating to different
types of IP, and different national laws in different countries and regions of the world as well
as international law
Intellectual Property Rights Objectives
The term "Intellectual Property" (IP) refers to any original work of the human mind, including
those in the arts, sciences, literature, technology, or other fields. Intellectual property rights are
granted by considering the following objectives:
• Allowing people to profit financially or gain popularity from their inventions and creations
• To promote an environment where creativity and innovation can thrive by striking a balance
between the interests of innovators and the larger public interest
• To protect traditional knowledge

1. Patents
A patent is a legal protection for an invention; however, not all inventions are patentable. In
order to pass the test of invention, it has to be 'new', should involve some 'inventive' step, 'non-
obviousness' and, most importantly, should be industrially applicable. Patents, according to the
World Intellectual Property Organization, cover a whole range of inventions in the field of
human endeavour, scientific discoveries, industrial designs, agricultural innovations, literary,
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artistic, and scientific works, performances of performing artists, and protection against unfair
competition. Agricultural scientists in India have been advocating that the Government should
enact a geographical appellation act to protect products that have commercial significance by
usage over a period of time and products that haves specific characteristics and are known by
the name, such as 'Basmati rice',’ Nagpur oranges', 'Goa Cashews', and 'Alphonso mangoes’.
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• What can be patented?

An invention can be defined as a product or process that offers a new way of doing something,
or a new technical solution to a problem.
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'Invention' has been defined in Patents Act, 1970. The Act defines invention to cover the
following:
• Art, process, method, or manner of manufacture
• useful machine, apparatus, or other article
• Substance produced by manufacturer and includes any new and useful improvement of any
of them and a so-called invention.
• It should however have the following characteristics: the manner of manufacture, which
should be novel, an outcome of inventive activity, and have utility and should not be contrary
to law and morality.

2. Design
The design element in a product, how it is shaped, what colours are chosen, and what material
is used are very important considerations before a product is able to see the light of the day.
The protection obtained by registering a design is for a limited initial period from the date of
application for registration, which is further extended. After the expiry of the term, the design
is expected to be in the public domain, which can be copied by anyone. Design elements at
times become the unique selling propositions in the advertising of these products.
In order to qualify for an intellectual property right, a designer has to keep in view the shape
and configuration, beauty and ornamentation, distinctiveness, and the possibility of mass
production. Reebok and Nike trademark, appear prominently not only on the shoes but also on
the soles of the shoes. A lot of effort goes in designing the trademarks, for which the advertising
agencies are involved. Design is not just about a good visual appeal; it has to take into
consideration the company' philosophy and ethos.
3. Trademark
A Trademark is a mark of identity approved by law, to be exclusively used by its owner for a
period of time. A trademark can be applied for and owned by a manufacturer, importer,
distributor, or even a salesman. The definition and implication of a trademark is that it should
not be hypothetical, notional, imaginary, conceived, and stored in file. It must be used on goods.
In this regard advertising is very relevant, as the use of a trademark in an advertisement is seen
as its 'use' in connection with goods or services.
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In order to acquire that status, it needs to be registered. Identity marks, like a symbol, lettering
style, or colour code, may be used with or without registration. If registered, they will be known
as 'trademarks’. Registration of trademarks gives the manufacturer or the owner a legal remedy
against unfair practices by unscrupulous traders and competitors. The trademark law grants a
manufacturer or a trader an exclusive right to use the mark of identity for his goods. The
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trademark needs to be distinctive and not descriptive. It may not be registered otherwise.
Words that are used to describe one or the other qualities of goods, such as, 'perfect', 'best',
'clean', 'superb', etc., are not registrable. Despite that one finds some such registration, on the
ground that it has acquired distinctiveness with a long use. Devising an appropriate trademark
and obtaining registration for the same creates an intellectual property in the trademark. It
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protects its use by others for similar goods in exactly the same way as it protects any other kind
of private property.

• Trademark Vs patent
The difference between a trademark and a patent is that the former identifies the origin of the
article to which it is affixed, while a patent is a grant from the Government. Trademarks have
great recall value for the brands and are used prominently by advertisers in advertisement
campaigns along with the tag catchphrase.
• Trademarks are recognizable signs distinguishing goods or services whereas Patents are
exclusive rights granted to inventors for inventions.
• Trademarks protect specific identifiers like logos, slogans, etc. whereas Patents protect entire
inventions, providing broad coverage.

• Redesigning trademarks
Some companies change their trademarks for various reasons that include an expansion in their
activities, change in the man-date or statutory requirements, or to be in tune with the changing
times in terms of design and approach. Britannia Industries went in for a complete overhaul of
its identity in the early 1990s. Oil and Natural Gas Corporation (ONGC) has changed many
logos between 1960-till now. The logic for change was ‘The design is more minimalistic, with
a clean, modern, and dynamic look. The logo is now iconic and reflects ONGC’s modern
identity as a leader in the oil and gas industry in India and globally.’
Global giant Procter & Gamble changed its logo for critical reasons. The company became a
victim of wild rumours that it was in league with Satan and was funding the Church of Satan.
• Background of the Rumours:
In the 1980s, Procter & Gamble became the target of a rumour campaign claiming that the
company was associated with Satanism. The rumours suggested that P&G’s logo, which
featured a man in the moon with stars around it, was a symbol of Satanic worship. The rumour
falsely claimed that the company had ties to the Church of Satan and was funding it. This
conspiracy theory spread through various channels, including television talk shows, religious
groups, and the media, leading to public outrage and protests. People believed that the stars
and crescent moon in the logo were linked to Satanic symbols, and the company was accused
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of promoting occultism. However, in April 1985, the company gave up the fight and announced
that it would remove the logo from its products, thereby avoid unnecessary controversy, despite
winning the court case.
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• Trademark as an Advertising Tool
A trademark performs the function of advertising and publicity for a company and brings about
'top-of-the-mind’ recall among consumers. Some famous trademarks have become the
benchmarks of quality and credibility. Mercedes Benz, Ford, Pepsi, Coca-Cola Apple, Johnson
& Johnson, and Marlboro, as global brands, Maruti, TATA, ONGC, Infosys and WIPRO, to
name a few from the home turf, spell quality and dependability in the minds of the consumers
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• Personal name as trademark

• Can names qualify as trademarks?
Yes, personal names can indeed qualify for trademark protection, especially if they are
associated with a specific identity or brand that the public recognizes and connects with a
particular product or service. This is particularly true in the case of celebrities, entertainers, and
individuals whose names have gained significant recognition. In the interesting case of DM
Entertainment Vs. Rajesh Jhaveri, Daler Mehndi, pop singer known for his distinct style that
came to be referred as pop', was able to get an action against the defendants for registering the
domain name dalermehndi.net, thereby violating his rights to the name. The Court restrained
the defendants from using the plaintiff's trademark 'Daler Mehndi', thus giving a benchmark
judgment by recognizing the celebrity status of an entertainer's personal name as having
trademark significance. DM Entertainment v. Rajesh Jhaveri, involving Daler Mehndi, is an
important landmark decision that highlights how personal names, especially those of
celebrities, can acquire trademark significance and be protected under intellectual property law
In case of a design, it refers to the features of shape, configuration, pattern, or ornament applied
to any article by any industrial process or means, whether manual mechanical, or chemical,
which, in the finished article by any industrial process or means whether manual, mechanical,
or which in the finished article appeals to and is judged solely by the eye.

4. Copyright
Copyright is a form of legal protection granted to the creators of original works of authorship.
It allows creators to control how their works are used and to prevent others from using them
without permission. The works protected by copyright can include literature, music, art, films,
software, and other forms of creative expression. It not only confers on the holder the right to
do something but also excludes others from committing those acts covered under the copyright
act. An interesting deviation was made by the Government of India in 1994, when the copyright
on Nobel Laureate Rabindra Nath Tagore vested with the Vishwa Bharti University came to an
end. Bowing down to its sentiment that there could be misuse and misinterpretation of his work
for commercial purposes, the copyright was extended for ten more years. After the end of the
extension in 2004, Tagore's works are now in the public domain.

• Copyright Vs trademark
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Under the Copyright Law, authors, composers, dramatists, and artists are entitled to protection
for their creations of intellectual nature, while under the trademark law, the work may not
necessarily be artistic. It may not even be new or novel, but it is registrable by virtue of it
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becoming distinctive either by usage or being capable of being identified with the
manufacturer/owner. The applicants pay a certain fee to the Registrar of Trademarks who, after,
convincing himself of the originality of the work, grants the trademark. The registration once
made is valid, can be renewed from time to time.
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IPR and Advertising

Advertising is expected to give a distinct niche to a product, service, or an idea and help in
brand building. Successful brands always face problems of imitation. It is a fact that a parallel
imitation industry runs in this country, which copies various national and international brands.
According to industry experts, there are two kinds of buyers of such products, those who know
they are buying an imitation product which is a look-alike of a famous brand but at a price that
is affordable to them, and who are cheated into buying such products because the package looks
almost the same and the slight difference in the brand name is overlooked by them. 'Pass Pass'
becomes’ Aas Pass' and 'Boroline' becomes 'Borocine’. There are hundreds of examples to
quote. The various enactments help the companies in safeguarding their rights.
Products that are banned by law for advertising in the mass media use the surreptitious
surrogate route. Liquor and cigarette companies breach the law both in letter and in spirit and
often get away with it. As advertising is used by a company to publicize its brands, identity
marks which are inherent to its existence are reflected in the publication or broadcasting of
advertisements. Hence, IPR concerns the profession of advertising in every way.
In the sphere of advertising, one has seen the imitation of the voices of famous people in
advertising. The character artist Ajit and super star Amitabh Bachchan's voices and mannerisms
are used in many advertisements, which is a clear violation of copyright. Imitation is considered
the best form of flattery, maybe that is why one does not find lawsuits against copyright
infringement in these cases famous actresses Audrey Hepburn, on the other hand, had sued a
fishery company for imitating her voice in the radio advertisement to promote its product many
decades ago.
Analysts feel that the intellectual property rights scenario is very encouraging in India as one
has seen an upsurge in awareness, recognition, understanding, and appreciation of various
issues related to these rights, both at the individual and institutional levels.

Advantages of IPR
The main advantage of intellectual property rights (IPRs) is to encourage and protect the
creation, distribution, and offering of new goods and services that are based on the development
and use of inventions, trademarks, designs, creative works, and other intangible assets. Others
are: -
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• Economic Growth: Giving statutory expression to the creators' economic rights and fostering
fair trade, intellectual property rights can support economic growth by fostering economic
development. IPRs can generate income not only from direct marketing but also by licencing
them to third parties.
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• Fostering of Culture: Copyright allows authors, performers, producers, and other creators
to receive an economic reward for their works that enrich cultural heritage, enhance cultural
diversity, and benefit society as a whole. These creative industries include publishing, music,
and film.
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• Technical Information Dissemination: Any member of the public, including researchers,

can use patent information even when a company, university, or research institution does not
intend to use its own patented inventions.

• Fair Competition: By allowing consumers to make informed decisions about various

products and services, the protection of IPRs such as distinctive signs aim to encourage and
ensure fair competition as well as to protect consumers.

• Research and Development: IPRs promote R and D activities due to the financial benefits
indirectly provided to the creators. These R and D facilitate two things: It facilitates the
innovations and production of new technology, like a new formula of drugs against any life-
threatening disease. This new technology/formula, after the patent period, helps a large
population (for example, through the development of generics). Thus, it serves the social
purpose of IPRs.
• Collateral used to secure financing: IPRs, which are intangible assets, frequently aid small
and medium enterprises (including start-ups) in their efforts to persuade outside parties to
provide them with financing (such as investing equity or granting loans). The financial industry,
particularly knowledge-intensive SMEs, depends heavily on the valuation of intangible assets,
such as patents.

Intellectual Property Rights Disadvantages

• Extra Charges for Creators: It might be a bit costly to obtain protection for the first time,
especially if the product is complex and includes methods, designs, and processes.

• Plagiarism: Sometimes it becomes difficult to stop someone from copying the inventory
work, even after obtaining IP protection. It becomes disadvantageous for the original creator
of the patent.

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• Decreasing Quality: As time goes on, the quality of intellectual property degrades along with
the rights to it.

• Worldwide Inequities: The laws governing intellectual property are sometimes different.
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Different IP laws in different nations can result in unequal access to innovations and
technologies, which disproportionately affects the development of developing nations.

• Costly nature of patented products: Due to high prices for patent registration, research and
development, and evergreening of patents, the price of patented products like pharmaceuticals
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has skyrocketed. It harms the interests of the general public, as they rely on these drugs.
 Lecture 58

Social Aspects of Advertising

The social aspects of advertising are often volatile. For those who feel that advertising and
promotion are intrusive and manipulative, the social aspects usually provide the most fuel for
heated debate. Social aspects of advertising can be considered in several broad areas. On the
positive side, it can be considered advertising's effect on consumers' knowledge, standard of
living, and feelings of happiness and well-being, and its potential positive effects on the mass
media. On the negative side, there can be examined a variety of social criticisms of advertising,
ranging from the charge that advertising wastes resources and promotes materialism to the
argument that advertising perpetuates stereotypes.

“Every coin has two sides”

As the President of American Association of Advertising Agencies, John O’Toole has
described.
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“Advertise is something else. It is not related to studies, but it educates. It is not a journalist
but gives all information. And it is not an entertaining device but entertains everyone”.

Deception in Advertising:
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The relation between the buyers and sellers is maintained if the buyers are satisfied with what
they saw in advertise and what they got after buying that product. If seller shows a false or
deceptive image and an exaggerated image of the product in the advertisement, then the relation
between the seller and buyers can’t be healthy. One of the major complaints against advertising
is that many ads are misleading or untruthful and deceive consumers. A number of studies have
shown a general mistrust of advertising among consumers.
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Sometimes advertisers have made overtly false or misleading claims or failed to award prizes
promoted in a contest or sweepstakes. However, these cases usually involve smaller companies
and a tiny portion of the hundreds of billions of dollars spent on advertising and promotion
each year. Most advertisers do not design their messages with the intention to mislead or
deceive consumers or run sweepstakes with no intention of awarding prizes. Not only are such
practices unethical, but the culprits would damage their reputation and risk prosecution by
regulatory groups or government agencies. National advertisers in particular invest large sums
of money to develop loyalty to, and enhance the image of, their brands. These companies are
not likely to risk hard-won consumer trust and confidence by intentionally deceiving
consumers.

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.
Sources of Distaste
Consumers can be offended or irritated by advertising in a number of ways. Some object when
a product or service like contraceptives or personal hygiene products is advertised at all. A
study of prime-time TV commercials found a strong product class effect with respect to the
types of ads consumers perceived as distasteful or irritating. The most irritating commercials
were for feminine hygiene products; ads for women’s undergarments and haemorrhoid
products were close behind.
Another study found that consumers are more likely to dislike ads for products they do not use
and for brands they would not buy. Ads for personal products have become more common on
television and in print, and the public is more accepting of them. However, advertisers must
still be careful of how these products are presented and the language and terminology used.
There are still many rules, regulations, and taboos advertisers must deal with to have their TV
commercials approved by the networks.
Another way advertising can offend consumers is by the type of appeal or the manner of
presentation. For example, many people object to appeals that exploit consumer anxieties. Fear
appeal ads, especially for products such as deodorants, mouthwash, and dandruff shampoos,
are criticized for attempting to create anxiety and using a fear of social rejection to sell these
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products. Some ads for home computers were also criticized for attempting to make parents
think that if their young children couldn’t use a computer, they would fail in school.

Advertising principles of the American Advertising Federation

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1. Truth- Advertising shall reveal the truth, and shall reveal significant facts, the omission of
which would mislead the public.
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2. Substantiation- Advertising claims shall be substantiated by evidence in possession of the

advertiser and the advertising agency prior to making such claims.

3. Comparisons- Advertising shall refrain from making false, misleading, or unsubstantiated

statements or claims about a competitor or his products or service.

4. Bait Advertising- Advertising shall not offer products or services for sale unless such offer
constitutes a bona fide effort to sell the advertised products or services and is not a device to
switch consumers to other goods or services, usually higher priced.

5. Guarantees and Warranties- Advertising of guarantees and warranties shall be explicit,

with sufficient information to apprise consumers of their principal terms and limitations or,
when space or time restrictions preclude such disclosures, the advertisement shall clearly reveal
where the full text of the guarantee or warranty can be examined before purchase.
6. Price Claims- Advertising shall avoid price claims that are false or misleading, or savings
claims that do not offer provable savings.

7. Testimonials- Advertising containing testimonials shall be limited to those of competent

witnesses who are reflecting a real and honest opinion or experience.

8. Taste and Decency- Advertising shall be free of statements, illustrations, or implications

that are offensive to good taste or public decency

Raunchy Appeals
The advertising appeals that have received the most criticism for using sexual appeals. These
techniques are often used to gain consumers’ attention and may not even be appropriate to the
product being advertised. Even if the sexual appeal relates to the product, people may be
offended by it. Many people object to both nudity in advertising and sexually suggestive ads.

Shock Advertising
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With the increasing clutter in the advertising environment, advertisers continue to use sexual
appeals and other techniques that offend many people but catch the attention of consumers and
may even generate publicity for their companies. In recent years there has been an increase in
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what is often referred to as shock advertising, in which marketers use nudity, sexual
suggestiveness, or other startling images to get consumers’ attention.

Advertising Puffery
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Advertising Puffery refers to the use of exaggeration and hyperbole, sometimes to extreme
levels, to promote a product or service. In other words, It is defined as advertising or
promotional material that makes broad statements about a product or service that are subjective
(or a matter of opinion), rather than objective (something that is measurable), and that which
no reasonable person would presume to be literally true.

Hyperbole is often used in advertising, often referred to as Dramatizing” the selling point.
• Superfluous Superlatives: One of the hallmarks of hyperbole in advertising is the extensive
use of superlatives such as "best" or "greatest" or "most." In the absence of definitive data,
these attributes toot the company's horn without necessarily providing useful information or
meaningful comparisons.
• Inflated Promises: Truth in advertising laws prevent advertisers from misleading the public,
especially where health and safety are concerned. Nevertheless, advertisers often use
exaggeration to hype up their offerings and intrigue their audience.
• Lofty Deals: In the world of advertising hyperbole, idyllic aspirations reign. People depicted
in commercials and magazines are effortlessly youthful, virile, sexually desirable, ardent and
strong. They share happy moments basking in the warmth and love of their families, and if they
aren't having fun now, their use of the advertised product, whether that is a cologne or hair
replacement cream, will seemingly lift them to new heights of pleasure and fulfilment.

• Visual Hyperbole: Imagery grabs attention in cluttered media landscapes (e.g., billboards,
Instagram ads for food or luxury brands). Advertisers are experts at displays of visual
hyperbole. Such ads show how users can gain tremendous, super-human benefits from a
product. The ad campaign for the Red Bull energy drink promises to give the consumer wings
to fly above his lethargy.

• Audio Hyperbole: Dramatic sound design heightens emotion and memorability (e.g., movie
trailers, car commercials with roaring engines). Some advertisers turn to audio cues to tout their
products.

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• Verbal Hyperbole: Relatable exaggeration humanizes brands and sparks viral humour (e.g.,
influencer endorsements, snack advertisement mocking "dramatic" cravings).

• Negative Hyperbole: An extreme exaggeration that's used to describe a negative result or

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situation. Rather than tout the merits of their own products with hyperbole, advertisers often
resort to using negative hyperbole to attack the competition. Political campaign ads are the
benchmark for negative hyperbole, as one side attempts to stain the reputation of the other with
outlandish claims and exaggerations of guilt by association.
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Effect on Our Value System:

The advertisers use puffing tactics, endorsements from celebrities, and play emotionally, which
makes ads so powerful that the consumers like helpless preys buy those products. These ads
make poor people buy products which they can’t afford, people picking up bad habits like
smoking and drinking, and buy products just because their favourite actor endorsed that
product. This affects in increased the cost of whole society and loss of values of our own selves.

Advertising and Children

One of the most controversial topics advertisers must deal with is the issue of advertising to
children. TV is a vehicle through which advertisers can reach children easily. Children between
the ages of 2 and 11 watch an average of21.5 hours of TV a week and may see between 22,000
and 25,000 commercials a year. Studies show that television is an important source of
information for children about products. Critics argue that children, particularly young ones,
are especially vulnerable because they lack the experience and knowledge to understand and
evaluate critically the purpose of persuasive advertising appeals. Research has shown that
preschool children cannot differentiate between commercials and programs, do not perceive
the selling intent of commercials, and cannot distinguish between reality and fantasy.
Basic principles underlie these guidelines for advertising directed to children
• Advertisers should always consider the level of knowledge, sophistication, and maturity of
the audience to which their message is primarily directed. Younger children have a limited
capability for evaluating the credibility of what they watch. Advertisers, therefore, have a
special responsibility to protect children from their own susceptibilities.
• Realizing that children are imaginative, and that make-believe play constitutes an important
part of the growing-up process, advertisers should exercise care not to exploit that imaginative
quality of children. Unreasonable expectations of product quality or performance should not
be stimulated either directly or indirectly by advertising.
• Recognizing that advertising may play an important part in educating the child, information
should be communicated in a truthful and accurate manner with full recognition by the
advertiser that the child may learn practices from advertising that can affect his or her health
and well-being.
• Advertisers are urged to capitalize on the potential of advertising to influence social behaviour
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by developing advertising that, wherever possible, addresses itself to social standards generally
regarded as positive and beneficial, such as friendship, kindness, honesty, justice, generosity,
and respect for others.
• Although many influences affect a child’s personal and social development, it remains the
prime responsibility of the parents to provide guidance for children. Advertisers should
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contribute to this parent-child relationship in a constructive manner
• Advertising to children will remain a controversial topic. Some groups feel that the
government is responsible for protecting children from the potentially harmful effects of
advertising and other forms of promotion, while others argue that parents are ultimately
responsible for doing so.
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• Various consumer groups have also urged the media, particularly television broadcasters, as
well as marketers to assume responsibility for the programs and advertising and promotional
messages they offer to children.
• A study comparing the attitudes of business executives and consumers regarding children’s
advertising found that marketers of products targeted to children believe advertising to them
provides useful information on new products and does not disrupt the parent-child relationship.
• However, the general public did not have such a favourable opinion. Older consumers and
those from households with children had particularly negative attitudes toward children’s
advertising.

Social and Cultural Consequences

Concern is often expressed over the impact of advertising on society, particularly on values and
lifestyles. While a number of factors influence the cultural values, lifestyles, and behaviour of
a society, the overwhelming amount of advertising and its prevalence in the mass media lead
many critics to argue that advertising plays a major role in influencing and transmitting social
values
In his book Advertising and Social Change, Ronald Berman says:
“The institutions of family, religion, and education have grown noticeably weaker over each of
the past three generations. The world itself seems to have grown more complex. In the absence
of traditional authority, advertising has become a kind of social guide. It depicts us in all the
myriad situations possible to a life of free choice. It provides ideas about style, morality,
behaviour”

Advertising Encourages Materialism

Richard Pollay says, “While it may be true that advertising reflects cultural values, it does so
on a very selective basis, echoing and reinforcing certain attitudes, behaviours and values far
more frequently than others.”
Many critics claim advertising has an adverse effect on consumer values by encouraging
materialism, a preoccupation with material things rather than intellectual or spiritual concerns.
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Seeks to create needs rather than merely showing how a product or service fulfils them.
Surrounds consumers with images of the good life and suggests the acquisition of material
possessions leads to contentment and happiness and adds to the joy of living. Suggests material
possessions are symbols of status, success, and accomplishment and/or will lead to greater
social acceptance, popularity, and so on. It is also thought by some that long-term exposure to
advertising will destroy your soul and blind you to what really matters in life.
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Advertising Makes People Buy Things They Don’t Need

A common criticism of advertising is that it manipulates consumers into buying things they do
not need. Many critics say advertising should just provide information useful in making
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purchase decisions and should not persuade. They view information advertising (which reports
price, performance, and other objective criteria) as desirable but persuasive advertising (which
plays on consumers’ emotions, anxieties, and psychological needs and desires such as status,
self-esteem, and attractiveness) as unacceptable. Persuasive advertising is criticized for
fostering discontent among consumers and encouraging them to purchase products and services
to solve deeper problems. Critics say advertising exploits consumers and persuades them to
buy things they don’t need.
Defenders of advertising also take issue with the argument that it should be limited to dealing
with basic functional needs. In our society, lower-level needs recognized in Maslow’s
hierarchy, such as the need for food, clothing, and shelter, are satisfied for most people. It is
natural to move from basic needs to higher-order ones such as self-esteem and status or self-
actualization. Consumers are free to choose the degree to which they attempt to satisfy their
desires, and wise advertisers associate their products and services with the satisfaction of
higher-order needs. Proponents of advertising offer two other defences against the charge that
advertising makes people buy things they do not really need.
• First, this criticism attributes too much power to advertising and assumes consumers have no
ability to defend themselves against it.
• Second, it ignores the fact that consumers have the freedom to make their own choices when
confronted with persuasive advertising

Advertising and Stereotyping

Advertising is often accused of creating and perpetuating stereotypes through its portrayal of
women, ethnic minorities, and other groups. The portrayal of women in advertising is an issue
that has received a great deal of attention through the years. Advertising has received much
criticism for stereotyping women and failing to recognize the changing role of women in our
society. Critics have argued that advertising often depicts women as preoccupied with beauty,
household duties, and motherhood or shows them as decorative objects.
Nonverbal behaviours involving dominance and control are associated more with boys than
girls. Advertising directed toward children has also been shown to feature more boys than girls,
to position boys in more dominant, active roles, and to use male voice-overs more frequently
than female ones. While the focus here has been on women and ethnic minorities, some other
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groups feel they are victims of stereotyping by advertisers.
Many groups in our society are battling against stereotyping and discrimination, and companies
must consider whether their ads might offend them. It is increasingly difficult not to offend
some segment of the public. Creative personnel in agencies are feeling restricted as their ideas
might offend someone or be misinterpreted. However, advertisers must be sensitive to the
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portrayal of specific types of people in their ads, for both ethical and commercial reasons.
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 Lecture 59

Economic Effects of Advertising

Advertising plays an important role in a free market system like ours by making consumers
aware of products and services and providing them with information for decision making.
Advertising’s economic role goes beyond this basic function, however. It is a powerful force
that can affect the functioning of our entire economic system. Advertising can encourage
consumption and foster economic growth. It not only informs customers of available goods
and services but also facilitates entry into markets for a firm or a new product or brand leads
to economies of scale in production, marketing, and distribution, which in turn lead to lower
prices; and hastens the acceptance of new products and the rejection of inferior products.
Critics of advertising view it as a detrimental force that not only fails to perform its basic
function of information provision adequately but also adds to the cost of products and services
and discourages competition and market entry, leading to industrial concentration and higher
prices for consumers. In analysis of advertising, economists generally take a macroeconomic
perspective: they consider the economic impact of advertising on an entire industry or on the
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economy as a whole rather than its effect on an individual company or brand. Our examination
of the economic impact of advertising focuses on these broader macro-level issues. We consider
its effects on consumer choice, competition, and product costs and prices

Effects on Consumer Choice

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Some critics say advertising hampers consumer choice, as large advertisers use their power to
limit our options to a few well-advertised brands. Economists argue that advertising is used to
achieve
(1) Differentiation, whereby the products or services of large advertisers are perceived as
unique or better than competitors’, and
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(2) Brand loyalty, which enables large national advertisers to gain control of the market, usually
at the expense of smaller brands.
Larger companies often end up charging a higher price and achieve a more dominant position
in the market than smaller firms that cannot compete against them and their large advertising
budgets. When this occurs, advertising not only restricts the choice alternatives to a few well-
known, heavily advertised brands but also becomes a substitute for competition based on price
or product improvements. Heavily advertised brands dominate the market in certain product
categories, such as soft drinks, beer, and cereals.
But advertising generally does not create brand monopolies and reduce the opportunities for
new products to be introduced to consumers. In most product categories, several different
brands are on the store shelves and thousands of new products are introduced every year. The
opportunity to advertise gives companies the incentive to develop new brands and improve
their existing ones. When a successful new product such as a personal computer is introduced,
competitors quickly follow and use advertising to inform consumers about their brand and
attempt to convince them it is superior to the original.
Effects on Competition
One of the most common criticisms economists have about advertising concerns its effects on
competition. They argue that power in the hands of large firms with huge advertising budgets
creates a barrier to entry, which makes it difficult for other firms to enter the market. This
results in less competition and higher prices. Economists note that smaller firms already in the
market find it difficult to compete against the large advertising budgets of the industry leaders
and are often driven out of business. Large advertisers clearly enjoy certain competitive
advantages. First, there are economies of scale in advertising, particularly with respect to
factors such as media costs. Firms such as Procter & Gamble and PepsiCo, which spend over
$2 billion a year on advertising and promotion, are able to make large media buys at a reduced
rate and allocate them to their various products.
Large advertisers usually sell more of a product or service, which means they may have lower
production costs and can allocate more monies to advertising, so they can afford the costly but
more efficient media like network television. Their large advertising outlays also give them
more opportunity to differentiate their products and develop brand loyalty. To the extent that
these factors occur, smaller competitors are at a disadvantage and new competitors are deterred
from entering the market. While advertising may have an anticompetitive effect on a market,
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there is no clear evidence that advertising alone reduces competition, creates barriers to entry,
and thus increases market concentration.
Lester Telser noted that high levels of advertising are not always found in industries where
firms have a large market share. He found an inverse relationship between intensity of product
class advertising and stability of market share for the leading brands. These findings run
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contrary to many economists’ belief that industries controlled by a few firms have high
advertising expenditures, resulting in stable brand shares for market leaders.
Defenders of advertising say it is unrealistic to attribute a firm’s market dominance and barriers
to entry solely to advertising. There are several other factors, such as price, product quality,
distribution effectiveness, production efficiencies, and competitive strategies.
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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. Some argue that advertising
increases the prices consumers pay for products and services.
First, they say the large sums of money spent advertising a brand constitute an expense that
must be covered, and the consumer ends up paying for it through higher prices. This is a
common criticism from consumer advocates.
A second way advertising can result in higher prices is by increasing product differentiation
and adding to the perceived value of the product in consumers’ minds.
Paul Farris and Mark Albion note that product differentiation occupies a central position in
theories of advertising’s economic effects. The fundamental premise is that advertising
increases the perceived differences between physically homogeneous products and enables
advertised brands to command a premium price without an increase in quality. Advertising
generally points to the differences in prices between national brands and private-label brands
that are physically similar, such as aspirin or tea bags, as evidence of the added value created
by advertising. They see consumers’ willingness to pay more for heavily advertised national
brands rather than purchasing the lower-priced, non-advertised brand as wasteful and irrational.
The prescription drug industry is again a very good example of this, as it argue that the increase
in advertising is encouraging consumers to request brand-name drugs and steering them away
from lower- priced generics. However, consumers do not always buy for rational, functional
reasons. The emotional, psychological, and social benefits derived from purchasing a national
brand are important to many people
Proponents of advertising offer several other counterarguments to the claim that advertising
increases prices. They acknowledge that advertising costs are at least partly paid for by
consumers. But advertising may help lower the overall cost of a product more than enough to
offset them.

Economic benefits of advertising:

1.
2.
3.
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Advertising provides informational utility.
Maintains or enhances brand equity.
Supports the media.
4. Provides employment.
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5. Reduces distribution costs.
6. Provides product utility.
7. Stimulates introduction of new products.
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Advertising provides information to consumers and can help them make better economic
decisions than they would otherwise. The other side of the coin in many nutrition-related
deceptive advertising cases is that banning the advertising would eliminate the increased
awareness of nutrition issues that such advertising generates.
A study by David Aaker and Donald Norris of 524 prime-time television commercials suggests
that even television advertising is perceived as informative by substantial groups of people. On
the average 18.1 percent of respondents (approximately 500 per commercial) checked the word
informative from a list of twenty adjectives when asked to describe a commercial. The
percentage was over 20 when snack and beverage items were excluded.

“Advertising plays an important role in establishing and maintaining brand names."

A brand name identifies the source of a product and provides a construct by which a buyer can
store information about that source. A buyer can reasonably assume that a manufacturer willing
to risk large sums of money to talk about a product is not likely to let poor product quality
damage the investment. Brand equity implies that brand names can add value to a product
independent of any other production or marketing activities. Just adding the name Coca-Cola,
for example, to a new soda drink adds value to the drink. The measurement of the value of the
equity in a brand name is a challenging task which has become of particular importance for
corporate mergers and acquisitions.
Advertising encourages new product development by providing an economical way to inform
potential buyers of the resulting new products or product improvements. In many situations,
innovation requires large research and development expenditures and substantial investments
in production facilities. Advertising contributes by informing consumers about the existence of
the innovation and encourages competition. The development of new products and the
improvement of existing products can mean an expanding economy with more jobs and
investment opportunities and a product selection that is continually improving in breadth and
quality.

Effect on Business Cycle

Advertising could theoretically be a tool to alleviate the economic pain arising from extreme
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swings in the business cycle. A knowledgeable businessperson, anticipating a booming
economy and capacity production, should reduce advertising expenditures. Conversely, when
the economy is weak and orders are needed, many firms should increase their advertising. Since
the extremes of a business cycle cause inflation or unemployment, any mechanism to stabilize
conditions would be an economic benefit. The problem is that many advertisers, especially
those who tend to set their advertising budgets at a fixed percentage of sales, increase
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advertising when times are good and decrease it when sales are weak. These firms may thus
increase the extremes of the business cycle instead of decreasing them.
Julian Simon concluded that this tendency dominates, and advertising expenditures generally
follow the same course as the business-cycle. He also concluded that the potential of
advertising to affect the business cycle is small, since decisions such as inventory investment
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are much stronger determinants of the nature of economic cycles.

The evidence to date is that advertising has a negative though small impact in reducing the
extremes of the business cycle.

Causal Model in Advertising

A Simplified Causal Model that summarizes various hypotheses suggesting that advertising
contributes to a reduction of competition in the marketplace. The model introduces several
crucial constructs such as market concentration, barriers to entry, and product differentiation.
The arrows represent hypothesized causal relationships among these constructs. After
presenting these hypotheses, some counterarguments will be raised, and several relevant
empirical studies will be examined. The central construct in the model is market concentration.
The basic argument is that when concentration exists, there is little incentive to engage in
vigorous price competition and higher prices and profits are generated.
With price competition inhibited, there is a hypothesized incentive to engage in heavy, non-
informative advertising, the cost of which is passed on to the buyer in the form of higher prices.
The reduced price of private-label brands is cited as evidence of such higher prices. Another
hypothesized effect is the attempt to differentiate products that are essentially identical with
respect to their primary function. Differentiated products can generate brand loyalty and thus
escape vigorous price competition.
The result is another link to higher prices and profits. The higher profits are not considered
earned rewards of product innovation but the result of market power. Concentration is said to
be perpetuated and increased by the existence of barriers to entry. Advertising is thought by
some to generate entry barriers directly and through the product differentiation it generates.
The purpose of product differentiation is presumably to develop a reason for a buyer to buy
one brand over another and generate brand loyalty. This brand loyalty is hypothesized to be a
barrier to entry.
Advertising is also hypothesized to give larger advertisers two kinds of advantages.
• First, the large advertiser is thought to receive preferential treatment by the media with respect
to the cost and selection of advertising space
• Second, a threshold level of advertising is hypothesized to exist, below which advertising
would be ineffective. When this threshold level is high, the cost of entering a market and the
attendant risk becomes excessive. EL
One additional feature be emphasized is the existence of higher prices and margins tends to
generate advertising since it "pays" to advertise high-margin products. Thus, the feedback from
higher prices to advertising. The result is an ever-increasing cycle of concentration-
profitability- advertising-concentration.
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Two schools of thought on advertising’s role in the economy

Albion and Farris suggest that economists’ perspectives can be divided into two principal
schools of thought that make different assumptions regarding the influence of advertising on
the economy.
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1. “Advertising Equals Market Power”

2. “Advertising Equals Information”

Advertising Equals Market Power

The belief that advertising equals market power reflects traditional economic thinking and
views advertising as a way to change consumers’ tastes, lower their sensitivity to price, and
build brand loyalty among buyers of advertised brands. This results in higher profits and market
power for large advertisers, reduces competition in the market, and leads to higher prices and
fewer choices for consumers. Proponents of this viewpoint generally have negative attitudes
regarding the economic impact of advertising.

• Advertising- Advertising affects consumer preferences and tastes, changes product attributes,
and differentiates the product from competitive offerings.
• Consumer Buying Behaviour- Consumers become brand loyal and less price sensitive and
perceive fewer substitutes for advertised brands.

• Barriers to Entry- Potential entrants must overcome established brand loyalty and spend
relatively more on advertising.

• Industry Structure and Market Power- Firms are insulated from market competition and
potential rivals; concentration increases, leaving firms with more discretionary power.

• Market Conduct- Firms can charge higher prices and are not as likely to compete on quality
or price dimensions. Innovation may be reduced.

• Market Performance- High prices and excessive profits accrue to advertisers and give them
even more incentive to advertise their products. Output is restricted compared with conditions
of perfect competition. EL
Advertising Equals Information
The belief that advertising equals information takes a more positive view of advertising’s
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economic effects. This model sees advertising as providing consumers with useful information,
increasing their price sensitivity (which moves them toward lower-priced products), and
increasing competition in the market. Advertising is viewed to communicate with consumers
and tell them about a product and its major features and attributes. More informed and
knowledgeable consumers pressure companies to provide high-quality products at lower
prices. Efficient firms remain in the market, whereas inefficient firms leave as new entrants
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appear. Proponents of this model believe the economic effects of advertising are favourable
and think it contributes to more efficient and competitive markets.

• Advertising - Advertising informs consumers about product attributes but does not change
the way they value those attributes.

• Consumer Buying Behaviour- Consumers become more price sensitive and buy best
"value." Only the relationship between price and quality affects elasticity for a given product.

• Barriers to Entry- Advertising makes entry possible for new brands because it can
communicate product attributes to consumers.
• Industry Structure and Market Power- Consumers can compare competitive offerings
easily and competitive rivalry increases. Efficient firms remain, and as the inefficient leave,
new entrants appear; the effect on concentration is ambiguous.

• Market Conduct- More informed consumers pressure firms to lower prices and improve
quality; new entrants facilitate innovation.

• Market Performance- Industry prices decrease. The effect on profits due to increased
competition and increased efficiency is ambiguous.

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 Lecture 60

Moment Marketing
Moment marketing is the process of taking advantage of an event or a current occurring with
which a brand can deliver relevant and relatable content. Brands can insert themselves into the
current happenings and market themselves. It is one of the best opportunities for brands to
stand out of the clutter and become a part of trending conversations happening around the topic.
What makes moment marketing unique is its simplicity and cost- effectiveness. Any brand can
start with moment marketing with just a simple graphic making it super affordable for brands
to market their business.
One big difference between today’s moment marketing and the past is that it's easier to
advertise to niche groups now. So, you can create marketing material that taps into a select
event and know that you’re speaking to a specific audience. It’s also easier to find your
audience by advertising on channels such as YouTube or Instagram. As a form of advertising,
moment marketing is fast-paced and reactive, which makes it just as accessible to small
businesses as it does larger corporations.

• Why use moment marketing?

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Moment marketing can be a great way to make the most of current events and reach a
previously untapped audience.
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• Greater reach – When you fuse your product or service with a popular event, your marketing
campaign can appeal to a wider audience. While you can’t guarantee the reception, if executed
properly, you can potentially hook people on the concept and build brand awareness.
• Improve customer loyalty – Creating content that’s specific and relevant to your audience
shows you’re aware of their interests and gives your brand some personality.
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• Cost-effective – When done well, moment marketing is effective at drawing in new customers
and, at its very peak, provides an opportunity to go viral.
• Improved Engagement – Producing marketing content that’s both timely and relevant to a
large group of people means you can expect greater engagement than your typical marketing
material. Social media algorithms promote engagement and can have a snowball effect once
you get established.
• Creative and Flexible – If you want your moment marketing to be relevant, it’ll need to be
unique, exciting and current. Taking on these values and applying them to your work can help
foster a creative atmosphere in your business.

Meme Marketing
Meme marketing is a new trend in digital marketing that has gained popularity in recent years.
It involves the use of memes to promote products or services on social media platforms. Memes
are humorous images, videos, or pieces of text that are widely shared on social media. This
form of marketing can be effective in engaging younger audiences who are more likely to use
and share memes. However, it can also be risky as memes can quickly become outdated or
offensive and may not resonate with all audiences. Businesses must research popular and
relevant memes and ensure they fit naturally into their marketing strategy.

What’s the difference between moment marketing and meme marketing?

Meme marketing relies on the use of existing memes, whereas moment marketing relies on the
use of existing moments. While both are reactive and there is some crossover in terms of
approach and intent, the key difference is in the content type.

Guerrilla Marketing
Guerrilla marketing is an advertising strategy that uses unconventional tactics to delight and
attract customers. It is an alternative to traditional marketing, such as print media, television
commercials, billboards, and direct mail. Instead, it focuses on disrupting public spaces and
events with unusual, memorable images or activities that may lead to brand association or
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purchase. Typically, guerrilla marketing relies on human interaction in urban areas to create a
big impact on a small budget in hopes of spreading by word of mouth and social media.
Advertising executive and author Jay Conrad Levinson coined the term “guerrilla marketing”
in the 1980s. Its name references guerrilla warfare, whereby smaller military groups can defeat
larger, better-resourced armies with surprise attacks. Similarly, the idea behind guerrilla
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marketing is to create an impact with a limited budget.

Advocacy Marketing
Advocacy marketing involves deliberately encouraging others to express a positive attitude
about a brand and encouraging them to recommend its products to their friends, family and
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other contacts. Advertisers might encourage this type of discussion among its: Customers,
Employees and Other business affiliates. This type of marketing allows individuals to share
their personal perspectives on why to purchase a product, so potential customers may feel more
trusting of their opinions compared to other forms of marketing.
Advocacy marketing has two main components— building a business and product that inspires
passion and creating outlets where your customers can easily share their positive opinions about
your company.

Stealth Marketing
Stealth marketing is a type of marketing that focuses on gaining attention without being
detected, which means it advertises a product or service to a target audience without them being
aware of the promotion. Stealth marketing, also known as undercover marketing, involves
promoting products in a way that the consumer is unaware of being marketed to. This approach
often uses subtle, indirect methods like product placements or endorsements without clear
disclosure. While effective in certain contexts, it carries ethical considerations, especially in
today's transparency-driven market.

To ensure ethical and effective stealth marketing campaigns, consider the following checklist:
1. Compliance Check: Verify that all promotional activities comply with local and
international regulations.
2. Transparency Strategy: Develop a clear strategy for disclosing sponsored content.
3. Content Review: Regularly review content to ensure it aligns with brand values and legal
standards.
4. Employee Training: Provide training for employees on best practices for engaging with
company content online.
5. Monitoring and Feedback: Continuously monitor the effectiveness and reception of
marketing campaigns and be open to feedback for improvement.

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Interruptive Marketing or Outbound marketing
Outbound marketing is strategy businesses use to initiate contact and conversations with
potential customers rather than waiting for them to come to them. Cold calls, TV ads, paid
digital advertising, direct mailings, and billboards are all examples of outbound marketing.
Also known as traditional, push, or interruptive marketing, outbound marketing involves
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“pushing” contact between you and the customer into the customer’s day, such as through a
postcard in their mailbox or a radio ad while listening to music in the car. This technique
encourages customers to make a specific purchase and purchase and builds brand awareness.
Outbound marketing is important because it is a keyway to actively reach potential customers
and create immediate awareness among a large group of people who may not yet know they
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want to make a purchase. It’s an effective marketing technique for businesses with broad-based
appeal and a solid grip on their audience’s demographics. It can make large groups of potential
customers aware of your company. It also helps you alert your target audience to your service
or product’s existence, which is the first step to someone becoming a customer.
A challenge of using outbound marketing techniques is the way customers limit advertising in
their daily lives. Browser extensions can remove online ads, TV commercials can be skipped,
and phones can screen for unknown numbers. Moreover, some outbound marketing techniques,
like cold calls, have a poor reputation among professionals who disregard them as spam.
Outbound marketing also tends to be more expensive than inbound marketing. Thorough
demographic research and high-quality marketing branding are smart ways to address these
challenges while maintaining an effective outbound marketing approach. Personalized emails
that offer value and highlight the benefits of your product or service can initiate a conversation
with a potential customer.
Winning Strategy for Rural Marketing and Advertising Strategy

1. Localization is Key- Localization of marketing campaigns, whether in product design,

packaging, or communication, can create stronger connections with rural consumers. This
includes advertising in regional languages, partnering with local influencers, and crafting
messages that resonate with local traditions and values.

2. Offer Value- Driven Solutions While rural incomes are rising, affordability remains a key
concern. Brands that offer value-driven solutions, such as smaller product packages or easy
financing options, are more likely to succeed. Whether it’s FMCG products sold in sachets,
affordable tech devices, or small cars, offering high-quality products at affordable prices is
essential for rural engagement.

3. Leverage Digital and Offline Channels - A hybrid approach that leverages both digital and
offline channels is critical for success in rural India. While digital platforms are gaining
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traction, grassroots marketing efforts such as village-level activations, local events, and
partnerships with local retailers continue to play a significant role. Building trust through on-
ground engagement is key to long-term success.

4. Keep Low Price and Small Unit Package- When people live on a day basis, especially
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manual labourers selling products in package are one time use makes better sense. Although
rural markets use small quantity per capita, requires huge volumes in unit packages.

5. Building Imagery around Packets- Rural audience has its way of recognising and referring
to products. Like Double Haathi refers to Rice with two graphic elephants, Ghadi detergent
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with graphic of clock are all referred to by the picture on their packs when they are purchased.

Rural India is Crucial for Different Industries

• E-commerce: Tapping into the Digital Revolution With nearly 400 million internet users in
rural areas, the e-commerce industry is poised for growth. Platforms like Flipkart and Amazon
have already started penetrating rural markets, offering affordable products and cash-on-
delivery options.

• Automotive: Demand for Mobility on the Rise Improved roads, better connectivity, and rising
aspirations have fuelled the demand for vehicles in rural India. Auto companies are offering
affordable two-wheelers and four-wheelers to cater to rural mobility needs.
• Real Estate: Emerging Housing Opportunities As infrastructure improves in rural areas, there
is a rising demand for affordable housing. Developers are targeting small towns and villages
where new housing projects are gaining traction.

• Technology: Digital inclusion the technology sector is rapidly expanding in rural India. From
fintech to edtech, rural consumers are increasingly adopting tech solutions.

Globalisation and Indian Advertising

With markets becoming global and satellite communication turning marketplaces into a single
playground, the advertising fraternity, especially in India in the nineties, could not have asked
for more. This phenomenon, however, also brought along with it many challenges, especially
regarding the use of strategy, creativity, market insights, and management issues. Globalization
means worldwide or pertaining to or embracing the total. In market terms, it would mean
interdependence of the world based on demand and supply phenomena.
In the Indian context, globalization came with the implementation of liberalization in the early
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1990s, The pre-liberalisation era in India was referred to as the license raj', which meant that
during the period one needed to obtain licenses for everything before initiating business. After
more than 40 years of independence, some political parties began to seriously consider opening
the Indian economy to international investment. It was thought that disinvesting the
government's share in public sector undertakings, many of which had become perennial loss
makers and a liability for the public, Prime Minister P.V, Narasimha Kao, after winning the
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elections in became the architect of liberalization in India.
Globally, the disintegration of the USSR, the merging of East and West Germany, the creation
of the European Union, the softening of the socialist economy in China, the role of the World
Bank, and the growing need of the developing nations to borrow money and technology from
the developed countries were some of the factors that contributed greatly to globalization.
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Some analysts in India relate globalization to the old philosophy of ‘Vasudheva Kutumbakam’
of the worst kind. Whatever the reasons or effects of the phenomenon, never since the coming
of the India Company has India been thrown open to overseas bidding on as big a scale as now.
In fact, there are two schools of thought in the country, one that believes that liberalization is
irreversible and another that believes that the current phenomenon is not liberalization in the
true sense of the term. They feel that the current system is a total sellout. It is one-way opening
the Indian economy to foreigners, while suffocating Indian industry,
Globalization, feel some analysts, has become a favourite catchphrase with journalists and
politicians, it has become 'a key idea for business theory and practice, and has entered academic
debates'.
However, Nobel laureate Amartya Sen argues that to look at globalization as merely western
imperialism of ideas and beliefs would be a serious and costly error. Globalization, he feels, is
much more than that. The emergence of institutions like the World Bank and the European
Central Bank has brought new constraints and imperatives. Globalization may be about
connectivity-but more through wires and Internet than through interpersonal interaction with
various constituencies. Online banking and retailing have enabled companies to connect with
people and communities living in various continents and speaking different languages in a short
time. The interconnectivity provided by the web and the live chat rooms have unified like-
minded people all over the world.
The standardization approach, on the other hand, focuses on the similarities between cultures
and advocates developing global advertising campaigns eliminating the need for adaptation to
local conditions. Proponents of this school of thought see the world as a common marketplace
and each country as a melting pot where all cultures assimilate. They feel that artificial barriers
have been broken by globalization and consumers have developed similar needs and wants,
quite independent of location. Some analysts feel that current marketing practice seems to be
characterized by a 'middle-of-the-road' or 'contingency' approach that suggests that the
feasibility and effectiveness of standardization depends on local market conditions.
In global branding, analysts feel, brand identity through corporate symbols such as logo, brand
name, colour, and shape is the starting point, followed by the brand's positioning, its marketing
mix, distribution, strategic principles, and advertising, that are of considerable importance.
Being global creates an association with the country of its origin. Japan and electronics have
been synonymous for a long time. Watches and chocolates are associated with Switzerland.
Germans are known for their precision and world-class automobiles. Coke, McDonald's, and
the US are synonymous. EL
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