© 2007 by Prentice Hall 12-1 E-Bay What has made e-Bay successful? Have you purchased or sold anything on e-Bay? Should companies like e-Bay and VISA become.

© 2007 by Prentice Hall 12-1

E-Bay• What has made e-Bay successful?• Have you purchased or sold

anything on e-Bay?• Should companies like e-Bay and

VISA become involved in causes like Auction for America?

• What are your thoughts about sponsorships and naming of sports stadiums?

• Are your purchases impacted by sponsorships and/or causes companies support?

12Discussion Slide

© 2007 by Prentice Hall 12-2

Public Relations, Sponsorship Programs, and Regulations12

•Public relations–Role of public relations–Assessing corporate reputation–Social responsibility–Damage control

•Sponsorship and event marketing•Regulating marketing communication

–Federal Trade Commission–Industry regulations

Chapter Overview

© 2007 by Prentice Hall 12-3

Public Relations Events• Public relations department

• Separate entity• Part of marketing department• Department of Communications

• External agency• Goal of public relations

• Hits• Positive/negative stories

• Reinforce IMC plan

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• Identify internal and external stakeholders

• Assess the corporate reputation• Audit corporate social responsibility• Create positive image-building

activities• Prevent or reduce image damage

F I G U R E 1 2 . 1

Public Relations Functions

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• Employees• Unions• Shareholders• Channel

members• Customers

• Media• Local community• Financial community• Government• Special-interest

groups

F I G U R E 1 2 . 2Stakeholders

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Employees need to be aware of what is being said in advertisements and on the Internet.

Motorola’s Web siteHttp://www.motorola.com

Internal Stakeholders

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o Discriminationo Harassmento Pollutiono Misleading communicationso Deceptive communicationso Offensive communications

o Empowerment of employees

o Charitable contributionso Sponsoring local eventso Selling environmentally

safe productso Outplacement programso Support community events

Image Destroying Activities

Image Building Activities

F I G U R E 1 2. 3Examples of Activities that Affect a Company’s Image

Corporate Social Responsibility Audit

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Corporate Social ResponsibilityAudit

• Undertaken by management• Organizations need

• Ethical guidelines for all employees• Code of ethics• Ethical hotline

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Creating a Positive Image

• Cause-related marketing

• Green marketing• Pro-environment

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Cause-Related Marketing

• Businesses pay over $600 million in cause-related marketing

• Consumer studies:• Nearly 50% switch brands, increase usage,

try new brand• 46% felt better about using product when

company supported a particular cause• Cause liked by one – disliked by another

© 2007 by Prentice Hall 12-11

Salvation Army

Click on speaker to play ad.

A radio advertisement encouraging support of the Salvation Army.

© 2007 by Prentice Hall 12-12

YWCA Web site: http://www.ywca.org

• Improve public schools (52%)• Dropout prevention (34%)• Scholarships (28%)• Clean-up environment (27%)• Community health education (25%)

F I G U R E 12.4Causes Consumers Prefer

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McDonald’s reminded the public of its support for the Olympics with a series of advertisements.

© 2007 by Prentice Hall 12-14

Cause-Related Marketing

• Cause should relate to firm’s business• Good fit important• Benefits not-for-profit organization• Not-for-profit organizations compete for

dollars• Publicizing causes

• Public recognizes companies need to benefit• Should publicize, but not significant amount

© 2007 by Prentice Hall 12-15

Green Marketing

• Survey concerning green marketing• Try to save electricity (58%)• Recycle newspapers (46%)• Return bottles and cans (45%)• Buy products –recycled materials (23%)

• Consumers not willing to sacrifice• Price• Quality• Convenience• Availability• Performance

© 2007 by Prentice Hall 12-16

F I G U R E 1 2 . 5U.S. Consumer’s Segmented on Their Attitudes Toward Support of Green Marketing

• True Blue Green (9%) – Have strong environmental values and are politically active in environmental issues. Heavy users of green products.

• Greenback Greens (6%) – Have strong environmental values, but are not politically active. Heavy users of green products.

• Sprouts (31%) – Believe in green products in theory, but not in practice. Will buy green products, but only if equal to or superior to non-green products.

• Grousers (19%) – Are uneducated about environmental issues and cynical about their ability to effect change. Believe green products are too expensive and inferior.

• Basic Browns (33%) – Do not care about environmental issues or social issues.

Source: Jill Meredith Ginsberg and Paul N. Bloom, “Choosing the Right Green Marketing Strategy,” MIT Sloan Management Review, Vol. 46, No. 1 (Fall 2004), pp. 79-84.

© 2007 by Prentice Hall 12-17

Green Marketing Strategy?

1) What percentage of customers fits into green segments?

2) Can brand or company be differentiated based on green lines and become a competitive advantage?

3) Will current target market be alienated with green marketing approach?

© 2007 by Prentice Hall 12-18

Pro-Environment Activities

• Low-key approach• Coca-Cola

• Publicize product first, pro-environment second• Prius

• Promote pro-environment• The Body Shop• Patagonia• Honest Tea

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• Proactive Strategies• Entitling• Enhancements

• Reactive Strategies• Internet interventions• Crisis management programs• Impression management techniques

F I G U R E 1 2 . 6

Damage-Control Strategies

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1. An expression of guilt, embarrassment, or regret.

2. Statement recognizing inappropriate behavior and acceptance of sanctions because of wrong behavior.

3. Rejection of the inappropriate behavior.4. Approval of the appropriate behavior and a

promise not to engage in the inappropriate behavior again.

5. An offer of compensation or penance to correct the wrong.

F I G U R E 1 2 . 7

Elements of an Apology Strategy

A Crisis Management Technique

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Impression Management

• Conscious or unconscious attempt to control image

• Remedial tactics• Expression of innocence• Excuses• Justifications• Other explanations

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Intel’s Response to a Crisis

In 1994, a glitch in Intel’s microprocessors was made public. Not only did Intel avoid a crisis, they actually benefited from the glitch.

After listening to Dennis Carter, discuss why you think Intel was able to benefit from this crises rather than suffer damage to their brand.

Discussion Slide

Click icon for video.

© 2007 by Prentice Hall 12-23

Sponsorships and Event MarketingUnited States

Source: “Events & Sponsorships,” Marketing News, Vol. 38, No. 2 (July 15, 2004), p. 18.

Sports, 68.8%

Causes, 8.9%

Entertainment, tours, and attractions, 9.8%

Festivals, fairs and annual events, 7.1%

Arts, 5.4%

© 2007 by Prentice Hall 12-24

Event Marketing and SponsorshipsCanada

Source: “How Big Is the Canadian Sponsorship Pie?” The Sponsorship Report (Http://www.sponsorship.ca/p-issues-howbig.html)

Sports (45%)

Cultural Events (20%)

Education (10%)

Health (10%)

Humanitarian (10%)Environment (2.5%)

© 2007 by Prentice Hall 12-25

What is the likelihood that a fan will buy a sponsor’s product?

• NASCAR 72%• Tennis 52%• Golf 47%• NBA 38%• NFL 36%

Source: “Event Marketing/Sponsorships,” Public Relations Society of America (Http://www.prsa.org/ppc/68022.html)

© 2007 by Prentice Hall 12-26

Sponsorship Marketing Objectives

• Enhance company image.• Increase firm visibility.• Differentiate a company or brand.• Showcase specific goods or

services.• Develop a closer relationship with

current and prospective customers.• Unload excess inventory.

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Sponsoring Individuals

• Name recognition 68%• Current popularity 56%• Overall image 53%• Character 51%

Source: “Event Marketing/Sponsorships,” Public Relations Society of America

What attributes do sponsors look for in endorsing an individual such as Tiger Woods?

© 2007 by Prentice Hall 12-28

To Maximize Event Marketing

• Determine objective.• Match event with customers, vendors,

and employees.• Cross-promote event.• Include company in all event advertising

and brochures.• Track results.• Evaluate the investment following the

event.

© 2007 by Prentice Hall 12-29

Regulating Marketing Communications

• Unfair and deceptive marketing practices• Wheeler-Lea Amendment (1938) to Section 5 of

the Federal Trade Commission Act

• An advertisement or communication is deceptive or misleading if:• A substantial number of people or typical person

is left with false impression or misrepresentation.• The misrepresentation induces people or the

typical person to make a purchase.

© 2007 by Prentice Hall 12-30

Claims versus Puffery

• Puffery not factual statement• Claim is a factual statement• Puffery statements include

• Best, greatest, and finest• Better – puffery or claim

• Papa John’s – “Better ingredients, better pizza”• Hunt’s – “Only the best tomatoes grow up to be Hunt’s”• Progresso – “Discover the better taste of Progresso”

© 2007 by Prentice Hall 12-31

Claims versus PufferyAd making a claim. Ad using puffery.

© 2007 by Prentice Hall 12-32

• Federal Trade Commission (FTC)• Food & Drug Administration (FDA)• Federal Communications Commission (FCC)• US Postal Service (USPS)• Bureau of Alcohol, Tobacco, and Firearms

(ATF)

F I G U R E 1 2 . 9Governmental Regulatory Agencies

© 2007 by Prentice Hall 12-33

Federal Trade Commission(FTC)

• Created in 1914 by passage of Federal Trade Commission Act.

• Original intent was to enforce anti-trust laws.• FTC authority expanded in 1938 with Wheeler-Lea

Amendment.• Given power to stop unfair and deceptive

advertising practices.• Granted FTC access to courts to enforce their

decisions.

© 2007 by Prentice Hall 12-34

How an FTC Investigation Begins

• Consumers• Businesses• Congress• Media

Complaints can be lodged by any of the following

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FTC Actions• Consent order• Administrative complaint• Cease and desist order• Full commission hearing• Appeal to U.S. Court of Appeals• Corrective advertising order• Trade regulation ruling

© 2007 by Prentice Hall 12-36

FTC Alternative Actions

• FTC uses court system to stop unfair and deceptive practices• Company violates a cease and desist order• Actions of company so severe immediate

action is needed

• FTC works with other agencies to stop unfair and deceptive practices

© 2007 by Prentice Hall 12-37

Substantiation of Claims

• Is the typical person misled by the marketing communication?

• Does the marketing communication lead the typical person to make a purchase or pursue some other type of activity?

• Is the claim mere puffery or does it have to be substantiated?

• Is the claim substantiated by competent or reliable evidence?

© 2007 by Prentice Hall 12-38

To substantiate its claim that Kleenex is softer the company conducted touch tests involving consumers.

Substantiating that Kleenex is “made with 24% more cottony, soft fiber,” as the ad claims, would require some type of lab test.

Click image to enlarge.

© 2007 by Prentice Hall 12-39

Substantiation of ClaimsPrinciples Used by FTC and Courts

• Assumes consumers read ads broadly• Evidence must test actual product• Evidence must be accepted by experts in

the field• Totality of evidence considered

© 2007 by Prentice Hall 12-40

FTC Web Site

Http://www.ftc.gov

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• Better Business Bureau• National Advertising Division (NAD)• National Advertising Review Board

(NARB)

F I G U R E 1 2 . 10

Industry Regulation