Table of contents Abstract ............................................................................................................................................................. 2 Acknowledgments ........................................................................................................................................ 3 Introduction ................................................................................................................................................. 4 Problem formulation ......................................................................................................................................... 5 Delimitations ........................................................................................................................................................ 7 Section 1: Methodology .................................................................................................................................... 7 4.1. The structure of the Methodology part ............................................................................................ 8 4.2. Critical realism ............................................................................................................................................ 8 4.3. Research approach: ................................................................................................................................ 10 4.4. The methods .............................................................................................................................................. 11 4.5. Data collection .......................................................................................................................................... 12 4.5.1. The survey .............................................................................................................................................. 13 4.5.2 The sampling frame ............................................................................................................................. 14 4.6. Methods and work process ................................................................................................................. 16 4.7. Validity and reliability .......................................................................................................................... 16 Section 2: Theory approach ........................................................................................................................ 17 The concept of false advertising and what it entails ........................................................................ 17 Deception in advertising ........................................................................................................... 19 Regulatory definitions ................................................................................................................. 20 The principles for assessing whether the conduct is missleading ........................................ 21 Consumer susceptibility and defensiveness ......................................................... 23 An ethical justification of profit maximization ........................................ 26 Stakeholder theory ............................................................................................................................. 27 The shareholder theory ................................................................................................................. 28 Section 3: Analysis and discussion .............................................................................. 29 Consumer’s questionaries’ ........................................................................................................ 29 Empirical data ........................................................................................................................................ 31 Objectives of advertising regulation ........................................................................ 43 Section 4: conclusion and future implications ........................................... 44 Bibliography .............................................................................................................................................. 50
Appendix ………………………………………………………………………………………………………………………………………56
Abstract Misleading advertising has become a topic of research of many authors. One can observe and experience through every day’s life and testimonies from those around us that false advertising creates a negative image of the company that can have serious consequences. False advertising in the cosmetic industry becomes a rather interesting topic to discuss about since one way or another affects regular people and nobody is really immune to it. This thesis is going to provide an better overview of what false advertising entails and the consequences of it just as they way large corporations such as L’oreal cosmetics change their approach to customers in order to appear more ethical and gain customer trust.
2
Acknowledgments I would like to be grateful to all the persons that have helped me in this study since I would not have be able to proceed with the investigations without their collaboration. This includes all the participants of my questionaries that have taken a few minutes of their time to answer the questions that have helped me to develop this paper. Furthermore, I would like to thanks my supervisor Özge Cokpekin since I believe she has shown interest on the topic of my research from the very beginning and she has guide me and helped me through the process of writing this paper.
3
Introduction Commercial advertising has become a great part of our daily lives.
When going outside, one can find posters, billboards,
when going on the bus there are adds on them, and even when one gets home and turn on the television are going to be exposed to advertising. Advertise is “the dissemination of information concerning an idea, service or product to compel an action in accordance with the interest of the advertiser”(Kazmi & Batra 2008: 10). Its main objectives are attention, interest, desire and action by the person who is receiving publicity. It is estimated that the average person will see 250 television’s advertisements per week, 350 poster sites and 400 press adds per week (Kitchen 1999: 120). There are a few different types of ads are characterized by the smoothness with which broadcast their messages, while others appeal to the imperative, or appeal to the senses, reason, emotion. Some use the image as the main element, while others simply use text. Advertising represents a great part of the world in which we are, and it is undeniable linked to mass culture and promotes a particular cultural consumption. It plays an important role in dissemination and persuasion through the transmission of messages that influence a public receptor by either destroying or introducing new values and forms of behaviour (Samli 1995: 59, 60). That is why today one cannot deny the great influence of advertising in our lives. Over the years we can see how the ads reflect different lifestyles and social aspirations of the majority of people, and how advertising is shaping society by showing them new ideas about the roles of men and women, new lifestyles, values, principles, also is creating publicity for the new society needs for new varieties of products that use the same broadcast (Kase 2012: 48, 49). A particular section of advertising that has claimed my attention is the one in the cosmetic industry.
4
The cosmetic industry has had a great impact on the female consumers. Since the early twentieth century, the production of cosmetics has been controlled by a handful of multinational corporations. The global cosmetics industry is broken down into six main categories; skincare being the largest one out of them all, accounting for 33.8 percent of the global market in 2012.1 As every corporation has as ultimate goal an increase in sales, companies take the concept of advertising too far creating ads that mislead their customers and end up in customer dissatisfaction. These companies launch their new products with “exclusive features” that promise some certain results that are not always proved. An example of this is the case of Rorie Weisberg, a woman who purchased a $45 plus tax for a one-ounce bottle of makeup foundation from Lancome (Teint Idole Ultra 24H foundation) that supposed to stay fresh for 24 hours. As the result was not what she expected, and her face did not remain fresh and dewy for 24 hours, she got so upset she sued Lancôme and its parent company L’Oreal The filing, with Manhattan's federal-court, accuses Lancôme of violating New York business law through 'deceptive acts and practices. The suit seeks unspecified damages on behalf of Ms Weisberg, and other customers who bought the foundation; and also requests a "corrective advertising campaign".
2
(see
details and outcome of the case in appendix 1)
Problem formulation In the following paper, I will study false advertising in the cosmetic companies that belong to the French multinational L’Oreal. This study will entail different aspects, such as the over retouched commercial which give a false image of the
1 http://www.statista.com/topics/1008/cosmetics-‐industry/ 2 http://abcnews.go.com/blogs/business/2013/05/woman-‐sues-‐make-‐up-‐company-‐for-‐false-‐advertising/
5
product and the false advertising of products that involve some features which are not proven to work. I find the topic interesting since customers seem to spend a considerable amount of money on cosmetic products trying to achieve some certain results, which in most of the occasions are not the expected ones. It is rather interesting how can companies get away with this sort of fraud and potentially how customers seem to accept the fact that it might not fulfil their requirements. Furthermore, there is a psychological aspect regarding this topic since this sort of fraud lead to repurchase new product lines with the same promises putting the hopes up to customers who strongly believe that beauty products will help in achieving social and economic goals.3 The primary purpose of this study is to investigate whether L’Oreal cosmetics can make launch their product in a more ethical way and the impact that false advertising has on its current customers just as their reactions towards the products In relation to the contexts and considerations of the above, this paper’s problem statement is as follows: How can L’Oreal cosmetics launch their product lines in an ethical and responsible manner that ensures that customers are not mislead? •
How susceptible are customers to be misleading in what refers to advertising in the cosmetic industry?
•
How do consumers react after being exposed to deceptive advertising and what are the potential consequences of it for L’oreal?
•
What kind of actions has the company been taking in order to satisfy both shareholders and stakeholders?
3 http://www.nytimes.com/2011/10/13/fashion/makeup-‐makes-‐women-‐appear-‐more-‐competent-‐study.html?_r=0
6
Delimitations The coverage of this study is going to have its primary focus on corporate social responsibility and business ethics theories. In order to answer the problem formulation, this case will be analysed from both, the company and the customer perspectives. This paper is based on primary and secondary data obtained through various methods. Information about L’Oreal will mainly obtained
through
its
official
website
and
therefore
the
validity of the data might be presented in a way that displays L’Oreal positively. For this cause, I will try to be critical concerning
the
information
gathered
on
the
company
by
attempting to ensure their validity by collecting information about the company from other sources online and interviewing those related to the business. Furthermore, I will try to validate some of the data collected on L’Oreal by contacting their management. To be able to gain an insight of the customer perspective, I had to collect data through a survey. Such a method has its strengths and its weaknesses, Some of the weaknesses are the possibility of ending with impartial information, which I will tried to minimize the risk for by applying different methods and approaches in collecting the data and using a greater number of respondents. However, because of the limited time and resources, the validity of the data collected cannot be fully reliable (This is discussed in details in the methodology chapter).
Section 1: Methodology In the following section, I will try to identify and describe some of the assumptions that I have during writing process,
7
the approaches and the methods that I am going to use to be able to answer the problem formulation and how I would go on analyzing the data and how the validity of the data would be ensured.
This
will
theories
and
models
consumer
susceptibility
statistics
obtained
be
done
linked in
by
integrating
to
deception
and
ethics
the
survey
in
the
in
different
advertising,
corporations
linked
to
to
the
quantitative
research.
4.1. The structure of the Methodology part
The first step
The second step
the third step
The fourth step
THe 5. step
the 6. step
• The philosophy of science
• Deductive approach
• The Mixed methods
• Data collection
• Method and work process • Reliability and Validity
4.2. Critical realism The research philosophy that I am going to implement in a research covers important assumptions about the way in which I view
the
world
(saunders
lewis
and
thornhill
2009).
The
philosophy that I chose has an impact on the methods and the approaches that I can use to collect the data. According to Clark and Johnson (Johnson and Clark 2006) once must be aware 8
of the philosophical commitment that will be made through the choice of research strategy since this has importance not only on what will be done but also in what I understand what I am examining. The most common research philosophies are either positivism or interpretivism. In positivism, the main mechanisms are that the social world exists externally and is viewed objectively (Blumberg
et
observable
al,
social
2011). reality
Academics and
the
prefer end
working
result
of
with
such
a
research could be law like generalization (Saunders, 2007; P. 113). Meanwhile, regarding interpretivism, the social world and its meaning is constructed by intentional behavior and actions
and
it
is
not
possible
to
understand
it
through
objective observations (Blumberg et al, 2011). Interpretivism attempts
to
interpretive
understand
subjective
explanations,
which
realities are
and
to
meaningful
for
offer the
participants of the research (Blumberg et al, 2011). In search for a more flattering philosophical position for this report, realism was considered. Realism is placed in the middle between positivism and interpretivism as it is sharing some principles with both positions (Sayer, 1992). Critical
realism
main
assumptions
is
that
the
belief
that
there is a world existing independently of our knowledge of it (Sayer, 2000: 2). This means that, the world exist as it is, no matter what one might think of or what are ones feelings (which I observe the world through) could deceive
(Saunders,
2007). It has been noted in the literature about critical realism that: it
is,
‘’While it is evident that reality exists and is what independently
of
our
knowledge
of
it,
it
is
also
evident that the kind of knowledge that is produced depends on what problems we have and what questions we ask in relation to the world around us’’. (Danermark et al., 2002: 26).
9
According to Poul Bitsch Olsen and Kaare Pedersen, realism can be described as objectivist because it maintains that it is possible
to
exam
theories
according
to
absolute
criteria.
However Theories can be fabricated and this can be done by using empirical data (2011, p: 155). Researchers on the subject did not agree on one name for the philosophy but most of them agreed on the following: they denied that we can have any ‘’objective’’ or certain knowledge of the world and accept any possibility of alternative valid accounts of any phenomena (Maxwell, 2012). Furthermore,
I
found
the
combination
of
understanding
that
there is a world existing independently of my perception and that
my
understanding
of
this
world
is
inevitably
a
construction from my own standpoints and positions (Maxwell, 2012),
the
most
suitable
philosophy
to
answer
the
problem
formulation as it helps me in going in depths to comprehend the motives behind the social events and allow me to assets their
validity
by
empirical
data.
Therefore
I
have
chosen
critical realism as the philosophical approach to develop the paper and answer the problem formulation
4.3. Research approach: It is of utmost importance to start the study with a research approach
in
mind
because
typically
involves
induction.
Both
“scientific
alternating
methods
involve
inquiry
between interplay
in
practice
deduction of
logic
and and
observation. And both are routes to the construction of social theories” (Babbie, 2010: 53). Deductive and Inductive Reasoning can be better clarified with the diagrams below: Figure 1: Deductive
10
Theory Hypothesis Observa9on Conclusion
Observa9on Pa=ern Tenta9ve Hypothesis Theory Figure 2: Inductive. In deductive reasoning, an investigator starts from a general area (theory) then finishes with a specific (conclusion). It is sometimes called a “top-down” approach or “reasoning from the general to the particular “(Social Research Methods, 2006). Inductive reasoning on the other hand works the other way by starting with a specific observation to broader generalizations and theories. A investigator works with these precise observations and measures, begins to detect patterns and consistencies, formulate some uncertain hypotheses that he/she can explore and end up developing some general conclusions or theories (Social Research Methods, 2006). In inductive reasoning, there is no theory at the beginning of the research and that theories may even evolve as a result of the research. For this paper, I chose deductive reasoning since I would present the relevant theories first in order to apply them to the case I want to analyze for then get to the solution and the conclusion that would answer the overall problem statement.
4.4. The methods Qualitative
research
is
usually
used
to
make
sense
of
situations which are not possible to measure or where there
11
are many different factors that affect the outcome. The method is also good to say something about people's everyday world and its meaning (Kvale, 1997) Quantitative research, on the other hand, is usually based on a larger sample and therefore more statistically valid. It provides
answers
to
some
different
questions
than
the
qualitative research, such as providing a quantitative answer to a question or need to generalize findings to a population. As
research
2004),
both
illustrates
(Johnson,B
quantitative
and
and
Onwuegbuzie,
qualitative
A.J,
research
are
essential and useful. By combining both methods in one study, one can draw from both approaches strengths and minimize their weaknesses. However, for this papers in order to be able to better
understand
the
reasons
behind
false
advertising
in
L’Oreal cosmetics and to collect information about the market and its trends, I used a quantitative method that, according to David Morgan (2013), are best suited to use when wanting to explain a phenomena or to confirm an assumption. In this case, I wanted to confirm the assumptions that I have developed by studying
the
theories
and
also
by
using
exploratory
qualitative research. To confirm/disconfirm these assumptions and to explain the reasons behind the change in attitude, the survey would be used for collecting the data.
4.5. Data collection In this part, I will present the methods we used to be able to answer the problem formulation. To develop an understanding about the market and the study case customers, I have used surveys where I asked L’Oreal customers about their opinion about the company and the brand.
12
In the following sections, I will present the methods that I chose to collect the primary data and the concerns I had while developing and constructing the methods to collect the data.
4.5.1. The survey A Survey is defined as “a systematic method for gathering information quantative
from
entities
descriptors
for
of
the
the
purpose
of
constructing
attributes
of
the
larger
population of which the entities are a member” (Robert M. Groves,
Floyd
J.
Fowler,
Jr.,
Mick
P.
Couper,
James
M.
Lepkowski, Eleanor Singer, Roger Tourangeau, 2004 :2). Based on the information gathered from the interviews and the appropriate theories related to the topic, particularly Peter Druckers three assumptions theory, it was achieved to develop hypotheses,
which
were
the
main
inspiration
for
me
while
constructing the survey. According to Fowler, F.J (2009), like all measures in all sciences, social survey measurement is not mistake free. The processes used to conduct a survey have a great effect on the likelihood that the resulting data will describe accurately what
they
are
intended
section will be used
to
describe.
Therefore,
the
next
to present the considerations we had
while constructing and analyzing the survey results. Sampling:
Simple
random
without
replacement
combined
with
convenience methods. Sampling observe
consists so
one
on can
choosing estimate
some
parts
something
of
population
about
the
to
whole
population (Thompson, 2012) as observing the whole population would be costly, time consuming and rather difficult (if not impossible) with the resources provided to develop this paper. According to the literature on survey methodology, there are many different methods to construct a sample of a population. For the purpose of this paper, simple random sampling methods will be used.
13
According to Thompson (2012), Simple random sampling is design where a number of distinct unit are selected from the whole population in such a way that each combination of the possible unit of this population is equally likely to be selected. For the questionaries delivered to the Danish population, I try to contact as many responders as possible. The main goal was to achieve around 1000 participants from the pertinent age groups to the research (see section 4.5.2), however, the results were obtained from 673 responders which is a very representative sample for the study of the case.
4.5.2 The sampling frame At the beginning of the process, it was rather complicated to set a realistic sampling frame because of the size of the population.
As
L’Oreal
is
an
international
brand
and
its
customers are all over the globe and the fact that Business model should be the same for all markets, the size of the population is huge. However, after studying the case and its specifications, I was able to set a sample frame which helped narrow the sample group further down. I decided that it was appropriate to focus on 3 age groups. Women aged 15 to 25 , 26 to 35 and 36 over. These three age groups are representative in different ways concerning
the
subject
of
false
advertising.
One
important
point to clarify in this section is that, it is clear that women aged 15 to 25 have general good complexion. This age group will not be affected by the false advertising linked to the anti aging products, but more to makeup, hair products and anti acne prone skin products. Women aged 26 to 35 are most likely linked to anti age products, which promise keeping the skin looking fresh and young for longer. Women aged 36 and older
would
firming
be
most
creams.
All
likely these
consumers statements
of can
anti be
wrinkle
and
consider
as
14
general since people age different depending on many factors such as sun exposure, food and life style. Even though the frame helped to narrow the population, it was still a huge population to work with and to be able to build up unbiased information from the survey; all groups in the population
should
have
been
represented.
As
it
was
not
possible to do that, I decided to use the resources that I could count with to collect as many responses as I could. Therefore I decided to use social media and E-mails to send and share the surveys with as many respondents as possible
Advantage
of
the
methods Disadvantage
of
the
methods
chosen
chosen.
Highly representative if all
Simple random is only
groups are included.
possible if the population is relatively small
Convenience: it is not time
Simple random is quite time
consuming and does not
consuming/ resource
require a lot of resources
consuming.
Simple Random & Convenience:
Convenience method: Can
combining both methods
highly be misleading.
allowed me to collect a big number of respondents.
By combining the simple random and the convenience methods of sampling, it was possible to diminish some of the weaknesses of
both
sampling
methods
that
are
presented
in
the
table
above. However, one must be aware that there is still a chance for a high percentage of unbiased information that I will try to reduce by collecting the biggest amount of responses.
15
4.6. Methods and work process The project theories and models aim at addressing the problem of misleading advertising in today's society, related to the rights of consumers and users to obtain a more clear and detailed information of the goods and services that are offered on the market. This would be further ahead used to analyze L’Oreal commercials in order to identify whether those are misleading their customers or not and what are the potential consequences of it. The next theoretical approach of the paper is going to be based
on
presented ethics
the in
and
shareholder
the
and
the
stakeholder
book
by
Dahl
Rendtorff’s
legitimacy
of
Corporations”.
theories
“Responsibility,
As
a
support
for
further argumentation and discussion I will use Carsten Koch’s article “an ethical justification of Profit maximization”. The
reason
for
choosing
the
stakeholder
and
shareholder
theories is because both are normative theories of corporate social
responsibility
managing
an
that
organization
addresses and
morals
therefore
and
they
values
become
in
quite
relevant when discussing the case. This segment of the paper starts with the presentation of the article where the authors arguments will be explained and further elaborated followed by the relevant theories that will support the foundations of the article. For the first section, the references will be between brackets indicating the page number where they were taken from since the only two sources used are Koch article for section 3.1 and Rendtorff’s textbook for section 3.2 and 3.3.
4.7. Validity and reliability Validity in Quantitative research has to do with whether the methods,
approaches
and
techniques
actually
relates
to,
or
measure, the issues you wish to explore (Daymon, Holloway, 2002). Nevertheless, Validity in qualitative research is more
16
complicated
as
the
researcher
is
the
main
tool
used
to
investigate or measure the matters in the project therefore the
results
makes
it
can
never
difficult
be
to
exclusively
prove
the
and
consistent
reliability
of
collected, analyzed and the validation of it.
which
the
data
According to
Daymon and Holloway (2002), Data triangulation could be used to guarantee the quality of the research. According to Denzin (1989),
Data
triangulation
could
be
conducted
by
using
multiple data sources, such as collecting data from different groups
or
settings.
triangulation
is
a
In
addition
helpful
tool
to
this,
according
Methodological to
Daymon
and
Holloway (2002) and it is defined as when an examiner use two or more methods in the same study. For the purpose of this paper,
I
secondary
did
use
data
sources
and
triangulation I
have
also
by
using
used
primary
and
methodological
triangulation by operating both qualitative and quantitative methods to ensure the consistency and the cogency of the data collected through the investigation process.
Section 2: Theory approach The concept of false advertising and what it entails The ways of producing goods and services suffered a profound change from the twentieth century, which has created a cloud in the market and the accentuation of the difference between subjects facing their interest in what was called the "consumerism. " This term is used in economics and sociology, to designate the kind of society that corresponds to an advanced stage of capitalist industrial development, and is characterized by the mass consumption of goods and services made available through mass production thereof.4 Consumerism arises due to the rise of industrial mass production and the "politics of consumption ", through which 4
Neva Goodwin, Julie A. Nelson, Frank Ackerman and Thomas Weisskopf (2008) Consumption and the Consumer Society
17
the company seeks to increase the propensity to acquire, through psychological conditioning of the public, and by constantly proposing to create a permanent demand for goods or services intended to satisfy needs at that actually already covered, and whose livelihood is to be the creation and establishment of a framework of trust and security falsified that would prevent the perception of actual structural conflict situation that exists in their interests5 Hence the emergence of various movements that seek to protect the consumer, due to the constant abuse it suffers in its consumer relations on the part of employers, which scramble for recognition of their rights and the establishment of tools to materialize. When entrepreneurs, marketing executives and advertisers aim to develop an advertising campaign that is striking, original and persuasive to increase their sales volumes or obtain a certain result in the short term, they should be careful not to use messages to capture the attention or to persuade target audience more effectively by misleading the recipient in order to affect certain behavior, such as economic, because the practice is known as "false advertising". This practice, besides being very challenged, controlled and regulated in many countries, is affecting seriously the image of the company to the target market and society in general. In order to analyse and interpreter what misleading advertising means within the cosmetic industry, one must take into consideration the advertising laws applied in the European Union and in Denmark. In this case, I will not look into the specific law, but the principles of what misleading advertising entails. One also must be aware of the fact that what is consider false advertising varies from one country to another, so it might be permitted by law but it is still consider as false advertising. 5 Neva Goodwin, Julie A. Nelson, Frank Ackerman and Thomas Weisskopf (2008) Consumption and the Consumer Society
18
Deception in advertising Advertising is considered as deceptive in any way, including its presentation, when is likely to mislead recipients and affect their economic behaviour or be likely to have a negative impact towards a competitor, which uses fair publicity. It is also considered as misleading advertising the one that silences critical data asset, activities or services where such an omission can mislead recipients. However, this definition can have diverse interpretations when it is actually applied to real advertising (O'Guinn, Allen, Semenik 2011: 138) . For this reason, it is crucial to look at it from different authors perspective for further ahead classify what it is consider as deceptive and analyse of L’oreal and its commercials. An advertisement is misleading if it contains statements, whether directly or by omission, that by their form and/or content are calculated to give the market an incorrect impression of the good or services concerned, their price, nature or sales conditions, and when such statements are relevant to purchasing decisions.6 Common law defines fraud as any illegal activity encompassing any conduct that includes material misinterpretation facilitating proximate injury (La Fave and Scott 1972). Deception is an intentionally misleading falsehood. Hence, those who commit fraud intentionally mislead their victims. Advertising provides a medium where misleading claims might be made linguistically; they may be made about ideas, goods or services; they might be false without misleading and misleading without being false (Hyman 1990: 5). This last statement becomes crucial when analysing what it is consider deceptive advertising. It is important to understand that and advertisement can still be considered deceptive without infringing the law. Deceptive publicity is a rather common practice now a day. Sometimes a campaigner does it innocently; however, it is done with the intent in the direction of deceiving the consumers (Aaker, 1974: 137-157).
19
Regulatory definitions The federal trade commission is an independent agency that has a primary goal to prevent business practices that are anticompetitive or deceptive or unfair to consumers; to enhance informed consumer choice and public understanding of the competitive process; and to accomplish this without unduly burdening legitimate business activity (Heide-Jørgesen
2013:
306) 7. The FTC considers an act or practise as deceptive when8: •
A representation, omission, or practice misleads or is likely to mislead the consumer
•
A consumer’s interpretation of the representation, omission, or practice is considered reasonable under the circumstances
•
The misleading representation, omission, or practice is material.
Regarding this last statement that refers to material misinterpretation, the FTC ads materiality as a condition that limits the rage of deceptive advertising. Material misinterpretation implies that one party methodically hiding or falsifying a material fact that, if known to the other party, could have aborted, or significantly altered the basis of, a contract, deal, or transaction. American marketing association defines deceptive advertising as “the advertising intended to mislead consumers by falsely making claims, by failure to make full disclosure, or by both” 9
The AMA as well the FTC includes an omission of particular
information to be deceptive, since excluding material information can lead a consumer to reach false or inaccurate beliefs about a product or service.
7 http://www.ftc.gov/about-‐ftc 8 Federal Trade Commission Act Section 5: Unfair or Deceptive Acts or Practices 9 Joshua O. Miluwi (2011) Consumerim and decetive advertising claim : An experimental investigation -‐ International Journal of Information Technology and Knowledge Management p.181
20
The European commission defines misleading advertising as any advertising which, in any way, including in its presentation, is capable of deceiving the persons to whom it is addressed, distorting their economic behaviour, or as a consequence, harming the interests of competitors. Furthermore, the EC states that, when determining whether advertising is misleading, several factors shall be taken into account. These are:10 •
The characteristics of the goods or services concerned
•
The price
•
The conditions of delivery of the goods or provision of the services involved
•
The nature, attributes and rights of the advertiser
Consumer protection for unfair trading regulation states that an advertisement is considered misleading when it contains false information and is therefore untruthful (see appendix 2) or if it or its overall presentation in any way deceives or is likely to deceive the average consumer in relation to any of the matters presented in appendix 1, even if the information is factually correct. Furthermore, an ad can also be considered as deceptive if it causes or is likely to cause the average consumer to take a transactional decision he would not have taken otherwise.11
The principles for assessing whether the conduct is missleading Literature proposes two broad tactics to understanding various categories of deception. Some researchers have developed deception tactics that are primarily based on case law and examples of deceptive practice (e.g., Petty and Kopp 1995; Preston 1989b; Richards 1990). Other researchers have relied on psychological theory to explore specific types of deception (e.g., Burke, Milberg, and Moe 1997; Pechmann 1996)12. However, there is a typology of deception that integrates both these http://ec.europa.eu/justice/consumer-‐marketing/unfair-‐trade/false-‐advertising/index_en.htm , last update 16.07.2013 http://www.legislation.gov.uk/uksi/2008/1277/regulation/5/made 12 American Marketing association, Deception by Implication: A Typology of Truthful but Misleading Advertising 2011 10 11
21
approaches. For this, researchers Hastak and Mazis (2011) had relayed on the work of other researchers as well as on legal cases involving deceptive advertising and labelling claims. Furthermore, they have relayed on a diverse set of psychological theories to provide a more comprehensive understanding of why consumers are likely to be misled by a particular type of deception. The purpose is to create a better appreciation of how consumers process various types of possible misleading information and to study its implications. Integrating consumer behavior theory into legal analyses is potentially valuable to researchers and to public policy makers because understanding how consumers process information enables public policy makers to generalize beyond a single case or public policy issue and to make valuable predictions. This comprehensive analysis of misleading claims is based on research for the US Food and Drug Administration and proposes a five-category typology of misleading advertising claims: •
omission of material facts
•
misleadingness due to semantic confusion
•
intra-attribute misleadingness
•
inter-attribute misleadingness
•
and source-based misleadingness
Operationally, experimental researchers have used three major approaches to identify deceptive claims: normative beliefs, salient beliefs, and descriptive techniques. These methods largely rely on self-report questionnaires administered during or after research participants are exposed to the advertisements (Barbour II & Gardner, 1982). The normativebelief method tests whether the claims lead to false net impressions of product attributes or anticipated performance. The salient-belief method focuses on capturing specific beliefs or impressions that are significant enough to influence consumers’ purchasing decisions (Posavac 2012: 95, 96, 97). Descriptive techniques examine the extent to which consumers themselves think a particular advertisement is
22
deceptive (for details, see Xie & Boush 2011). This would be further used in the analysis section in order to identify how susceptible are customers to be mislead with adds in the cosmetic industry. The next section discusses the key findings that reveal the psychological mechanisms and ramifications of deceptive advertising.
1.2 Consumer’s susceptibility and deceptive advertising Consumer susceptibility and defensiveness In this part we will discuss under what circumstances consumers are more or less susceptible advertising discusses and what their reactions Into deceptive this section under are. what circumstances consumers
are more or less susceptible to deceptive advertising and how Consumer’s susceptibility to advertising refers to “the extent to which individuals
do they react to it. Consumer susceptibility to advertising attend to and value commercial messages as sources of information for guiding their
refers to “the extent to which individuals attend to and value consumptive behaviours” (Barr and Kellaris, 2000, p. 230). Consumer’s susceptibility to commercial messages asa sources ofof information for1980’s guiding deceptive advertising has been growing area the study since the (Xie and their consumptive (Barrunder & Kellaris, 2000: Boush,2011). Susceptibilitybehaviours” includes the conditions which consumers can or230cannot 234). Extant research suggestsGurol that recognise deceptive claims (Armstrong, andhigh Russ, susceptibility 1979), the psychological results from interactions among the deceptive mechanisms of being deceived (Darke and Ritchie, 2007) and the effect claims, of regulatory resorts situational contexts, and consumer characteristics (Figure 1). (Darke and Ritchie, 2007). The next sections discuss the key findings and the theoretical Researchers suggest that high susceptibility result from interactions among the
underpinnings of the existing research.
deceptive claims, situational contexts and consumer’s characteristics (Xie and Boush, 2011).
CONTENT Advertising claims
CONSUMER Individual differences in responding to advertisements
CONTEXT Situational differences when advertisements are presented and/or consumers are exposed to the advertisement
Framework of consumer’s susceptibility to deceptive advertising (Xie and Boush, 2011).
23 9
It is well documented that due to suspicion of an ulterior sales motive, consumers tend to be sceptical about marketers manipulative intention in general (Campbell and Kirmani 2000 69-83). This means that, consumers have a tendency to be sceptical about a product or service since they are aware that, in general terms, the main objective of every single corporation is to increase profit independently of the methods and tactics used to do so. One of the well-reviewed foundations of distrust is the consumer persuasion model about markets motives and persuasion tactics (Friestad and Wright 1994). This model presents how people develop and use persuasion knowledge to cope with persuasion attempts. In other words, it refers to how consumers redefine their attitude towards the product and the marketers. This model decomposes the persuasion practice into two main components: the target and the agent. The target refers to the planned recipient of the persuasion effort (the consumer), whereas the agent denotes whomever the target identifies as the creator of the persuasion effort (the marketer). The persuasion effort includes not only the message of the agent, which itself is influenced by the agent’s knowledge of the topic, target, and the efficiency and applicability of different persuasion strategies, but also the target’s perception of the agent’s persuasion approach. Represented on the following (figure 2) is the model developed by Friestad and Wright (1994) known as the consumer persuasion model. (figure 2) Friestad and Wright (1994) Persuasion Knowledge Model - Journal of Consumer Research
24
In sum, eexperimental academics tend to rely on consumer perceptual evidence to assess deceptive advertising claims, while regulators also take materiality into concern. In practice, both scholars and specialists may face challenges to verify advertising deceptiveness theoretically. Indeed, the degree to which customers can be misled may depend upon a combination of intrinsic and extrinsic aspects. Sometimes the relationships among these aspects can be ambiguous, intertwined, and elusive. Therefore, under what conditions customers are more or less susceptible to misleading advertising has become a crucial issue of interest for experimental academics.
25
An ethical justification of profit maximization The article is divided in different segments addressing how profit
maximization
can
be
justified
and
defended
from
an
ethical point of view. To clarify more this last statement, what Koch examines on his article is whether it is justifiable from an ethical perspective having profit maximization as the main objective when establishing a business as long as they do not violate law, norms or social customs (p.5) Further ahead he argues that this last statement is, as he addresses, “conditionally defended” (p.6) and to support his argument, he uses the term “institutional environment”. This term
refers
to
the
systems
of
formal
laws,
regulations,
procedures, customs, and norms, shape socio-economic activity and behaviour of an organization. He therefore states that, profit
maximization
is
ethically
acceptable
under
the
conditions of a specific institutional environment. In
what
respects
to
his
ethical
analysis,
he
bases
his
arguments in the rule consequentialism ethics. This means that the consequences of one's behaviour are the ultimate basis for any judgment about the rightness of that behaviour. Further ahead, Koch defends this theory from a business perspective arguing that, in corporations, rule consequentialism ethics means
that,
the
decision-making
will
be
based
on
past
experiences that that leaded to positive outcomes (p.8) As Koch tires to justify profit maximization, he mentions why the companies are seeking profit. He literally states that “profit seeking is not only an expression of self interest or greed, it is a condition for continued operations”(p.10). This means that organizations must keep the stakeholder satisfy in order for them to run their businesses, and both customers and providers maintain a relationships were one is dependant on the other and vice versa. After this segment, Koch explains his justification regarding profit maximization. He does it by looking at it from three
26
different angles and substantiates his arguments with the use of rule consequentialism ethics. Firstly
he
mentions
risk
of
corporations.
Attempting
to
maximize profit is ethically justifiable since it ensures risk reduction and therefore the survival of the company in the market. Furthermore, he considers this as a way to maintain the
stakes
of
the
company
and
therefore
it
can
ethically
justifiable. Further ahead he market conditions. He argues that, when the company raises the price of the products, there is a tendency from the consumer side to find cheaper alternatives. Besides this,
if
another
company
attempts
to
recreate
the
same
product, the response from the competitors will be an increase on production in order to satisfy customer needs, (p.14) and avoid those from buying the other product. So, according to Koch, because of the fact that they are fulfilling customer needs, profit maximization is, again, ethically justifiable. The last part talks about profit as a reward for innovation. He argues starting a new product or service if the current market is an attempt to maximize the profit of the company. As a consequence of this, customers might find it attractive and therefore they will purchase it in order to satisfy their needs.
Fulfilling
customer
needs
is
ethically
correct
and
therefore, attempt to maximize profit through innovations is, once again, ethically justifiable. As
we
can
see
through
Koch’s
argumentations,
profit
maximization can be justified in many ways. In the following segment,
the
shareholder
and
stakeholder
theories
will
be
introduced. This is going to give a clearer overview of profit maximization from both theories.
Stakeholder theory American philosopher Edward Freeman refers to the stakeholder theory as an idea about how business really works. It states
27
that,
for
any
significant employees
business
value and
to
for
so
be
successful
customers,
forth.
it
has
suppliers,
According
to
to
create
communities,
this
theory,
the
management of these stakes should not be done in isolation, but their interest must go in the same direction. The
stakeholder
domination
of
corporations economic impact
is
rather
corporations.
have
power”
on
theory an
ability
(p.101).
customers,
critical
It and
This
employees
towards
market
that,
“large
argues tendency
has
an
and
to
abuse
inevitable
communities.
their
negative For
this
reason, in order to maintain the survival of in the market environment, it is important for a company to
analyse the
important regarding its stakeholder and use it to apply the appropriate adjustments. This is better known as “stakeholder analysis” (p.103). Furthermore,
it
is
of
utmost
importance
to
clarify
the
relationship difference that the stakeholders have with the corporation. Those are listed as “1, Voluntary and involuntary stakeholder
such
as
owners
and
non-owners,
2,
primary
and
secondary stakeholders such as owners and customers and 3, external and internal stakeholders” (p.104).
The shareholder theory The biggest difference between the stakeholder theory and the shareholder is normative. What is of utmost importance for the shareholders
when
aiming
for
profit
maximization
is
to,
obviously enrich themselves but by doing so, in order to keep their business running the must ensure enhancing the wellbeing of their stakeholders as they pay a crucial role in the wealth creation process. For this reason, the only way to create value for shareholders in today’s world is to pay attention to suppliers, customers, employers, communities etc. There are many authors that argue about the shareholder theory
28
and
it’s
economist
implications and
on
statistician
profit Milton
maximization.
Freeman
states
American that
“the
only ethical behaviour in businesses is to get as much profit as possible in an economical rational manner” (p.92) which means it is profit maximization is justifiable as long as corporations respect the rules of the society and the state regulations. Other authors like John Locke, present other theories linked to how individuals should act in an economic market. In his philosophy of the natural law doctrine of the social contract, he states “individuals have the right coexist without being violated by others” (p.91). This entails two of his “natural rights” and the third one affirms that, “everyone is entitled to own all they create or gain through gift or trade so long as it doesn't conflict with the first two rights.” (p.91)
Section 3: Analysis and discussion Consumer’s questionaries’ As a starting point in order to spread the questionnaire, I have used the international social network the Facebook (www.facebook.com) and my personal e-mail contacts. Furthermore, I have used Google Docs to put in form the questionnaire. This tool was quite useful since the link could be easily used and spread. I wanted for the questionaries’ to have the snowball effect. This can arch
be
defined
subjects.
as
a
technique
for
finding
rese
The snowball sampling is a non-probability
sampling technique used by researchers to identify potential subjects in studies where subjects are hard to find. Researchers use this method of sampling if the sample for the study is rare or if it is limited to a very small subset of the population. This type of sampling technique operates as a chain. After watching the first subject, the investigator
29
asked him to help identify other people who have a similar interest feature. The sampling process snowball is like asking your subjects to designate another person with the same trait as the next guy. Then, the investigator observes the subject and is designated in the same manner until sufficient numbers of subjects. (Blankenship 2010: 88, 89) That is why I selected one person from each sample and asked him or her to spread it through his or her personal circle. Moreover, as I chose a Danish population, the questionnaire was in Danish language, but I also made one in English since there are quite a few non-Danish speakers. The questionnaire began with a small presentation of the case study to let the respondents know who made the research and what the aim of the study was. Additionally, I highlighted that it was very important for the research to receive as much answers as possible. The aim of this introduction was first to present the research, but also to create a relationship with our respondents letting them know who I was and what my main purpose was. Furthermore, I wanted to include them in this study as actors, to make them feel significant and touch them emotionally to a certain extend. As Barbour II & Gardner (1982) mentioned, there is a type of questionary that can be used to identify deceptive claims known as the salient-belief method, the normative-belief method tests and descriptive techniques. The normative method is rather useful when the claims are fact based and for this reason, I decide to use a yes/false questionaries’ type as the main approach for this method. The salient belief measurement is based on a notion consistent with the FTC definition of deceptive advertising. This is closely link to the fact that, an ad can create false beliefs when not all these beliefs are pertinent to the purchase decision. This approach consists of three steps : identifying claims that relevant consumers perceive the ad is making, measuring the perceptions, beliefs and salience of a representative sample of consumers exposed
30
to the ad. For this, I created a questionary of closed-end questions that will give the responders different options to choose from. The descriptive technique gives the responders the options to make their own judgements. For this type of research I would ask the responders to judge with a scale from 1 to 10 how deceptive they think the advertisement is. This type of research is usually used to determine the existence of advertising deception.
This presentation was followed by a structured questionnaire made of four closed-end questions. Close-ended questions are questions that give respondents a list of multiple-choice answers from which they have to pick the answer that fits the best for them. I made the questionaries in order to obtain a better overview of the demographics. Moreover, I made questions about advertising in general for later on the process get to the specifics and get into the subject of deceptive advertising and how they react to it.
Empirical data It was specify at the beginning of the questionary that it has to be done by Danish citizens or foreigns residing in Denmark. The reason for this specification is because even though L’oreal is a big multinational that operates world wide, the commercials layout for the different products tend to change from one region to the other, for this reason it in important to narrow the research to the Danish market. It seems that the majority of the responders are Danish citizens and the topic has seem to get their attention. This is rather important in order to understand what population sample is more willing to answer
31
Have you try a negative experience with any of any of these brands, which belong to the L’oreal cosmetics group? (Appendix 3)
1.yes 2. no 2 9%
1 91%
For this question I gave the responders a series of different commercials that entail different forms of false advertising. As it is shown from the results obtained, one can see that the vast majority of the responders have try at least one of the products represented on the commercials and had a negative experience with them. The reason behind chosen the commercials attached to the questionaries’ is because they are very common items sold in the European market, and that also entail the Danish market. The commercial where taken from different editions of the Danish magazine “Alt for Damerne” and from Matas catalogues of 2013 and 2014. There are different factors to determine whether a commercial is misleading or not. Regarding the first commercial, it represents a mascara that supposed to give volume and “multiply” the lashes. According to the federal trade commission, one of the main factors to determine whether a commercial is misleading or not is “if the misleading representation, omission or practise is material”. This is when the party is hiding or falsifying a material fact that, if know by the other party, in case the consumers of this product, could altered their purchase decision. The commercial taken from the Matas catalogue, does not specify
32
that the celebrity chosen has got her eyes styled with lash inserts, as it is specified in the L’oreal American website13. This is an important factor since it is not specified in the Danish commercial and it could give a different perspective to customers when deciding to purchase the product. Another factor that must be taken into consideration in the language used in the commercial. “Become a lash millionare” and “3x thicker lashes with volume as if they are multiplied” are messages that can lead to confusion within the audience. According to the US food and drug administration, misleading due to semantic confusion is a typology used when assessing whether a conduct is misleading or not. The use of superlative expressions and borderline words can lead to misleadingness and might confuse customers that will otherwise not purchase the products. The second commercial represents a product from the luxurios subdivision of L’oreal products. It is a foundation from Lâncome that states to be 24 hours touch free and that offers more long wear and comfort than any other foundation. As starting point one can observe that the commercial does not state whether it was tested or not and what are the basis to endorse that last 24 hours. There are different important factors that are dot addressed on this commercial such as the skin type or ethnicity of the people of whom this foundation was tested, or whether it was tested at all. Source based misleadingness is a typology that the US food and drug administrations used in its comprehensive analysis when assessing whether a product is misleading. In this case, there is no source that can confirm that the product offers more comfort and long wear that any other foundation in the market since it does not include any customer reviews or statistics of any kind regarding the product tested. Furthermore, according to the European commission, an advertisement can be considered as misleading in any way including in its 13 http://www.lorealparisusa.com/en/products/makeup/eyes/mascara-‐ primer/voluminous-‐million-‐lashes-‐excess.aspx
33
presentation, is capable of deceiving the persons to whom it is addressed, distorting their economic behaviour, or as a consequence, harming the interests of competitors. Regarding this last statement, one can argue that, addressing on an advertisement that the product offers more long wear and comfort than any other foundation can be consider a way of harming the interest of competitors since the commercial does not specify any comparative analysis of any kind. The third commercial to analyse belongs also to the L’oreal luxurious subdivision of products. It a skin serum from Biotherm that claim reduce wrinkles, dark spots and give an overall more firm complexion. The interesting fact about this product is that it reveals on its commercial some percentages linked to the results promised. As one can observe, the percentages of women agreeing with the results are relatively high, which can be considered as positive when deciding upon purchasing an expensive product. However, in the bottom right of the commercial appears some crucial information regarding the test done by the company. It specifies that it was tested by 50 women, which is a relatively low sample considering the promises it makes. Furthermore, it does not specify the nationality of those women, the ethnicity, the lifestyle and the sun exposure. All these factors are crucial when testing a product since the results may vary form one person to another depending on them. The consumer protection for unfair trading regulation defines false advertising, as that containing false information and it is therefore untruthful. According to Hyman (1990) a product, good or service can be false without misleading and misleading without being false. The latter is the case of this commercial. The information presented on it is not necessary false since those tests made by the company on those 50 women are verified and the results obtained on it are therefore true. However, one cannot say that the information delivered by the commercial is false, but it can lead to misleadingness due to omission of material facts. It is crucial when testing a product to have a more
34
representative sample in order to provide the customer with a better overview of the results the product offers.
From 15 to 25 is deceptive advertising in the previous cosmetics easy to identify? Specify on a scale from one to 5 being the latter the most difficult and number 1 the easiest. 1. 3% 2. 7% 3. 3% 4. 30% 5. 57%
60 50 40 30 20 10 0 1
2
3
4
5
From 26 to 35 is deceptive advertising in the previous cosmetics easy to identify? Specify on a scale from one to 5 being the latter the most difficult and number 1 the easiest. 1. 37% 2. 21% 3. 18% 4. 5% 5. 9%
35
40 35 30 25 20 15 10 5 0 1
2
3
4
5
36 and over is deceptive advertising in the previous cosmetics easy to identify? Specify on a scale from one to 5 being the latter the most difficult and number 1 the easiest. 1. 55% 2. 18% 3. 2% 4. 2% 5. 3% 60 50 40 30 20 10 0 1
2
3
4
5
36
The purpose of this last question is to use the descriptive techniques proposed by Xie and Bousch (2011) in order to see the correlation between the three age groups chosen and the easiness of customers to identify whether the claim is misleading or not. As it is observer from the results of the test, the youngest age group finds difficult to identify false advertising compare to the two other age groups. Barr and Kellaris (2000) stated that consumer’s advertising refers
susceptibility
to
to the extent to which individuals attend
to and value commercial messages as sources of information for guiding their consumptive behaviours. Each consumer has his own susceptibility, and so, feels different after have been deceived. According to the framework of consumer susceptibility to deceptive advertising created by Xie and Boush, there are interactions between the deceptive claims, the situational context and the consumer characteristics. In this case, the content of the commercials which customers have been exposed to contain some certain characteristics that can lead to misinterpretation as it was mentioned in the analysis of the previous section. The context refers to the situational differences when advertisements are presented and/or consumers are exposed to the advertisements. In this case, the situational context was the same for all the participants and the commercials sent to the population were easy to recognize and the vast majority of the participant affirmed to have a negative experience with it. However, one must be aware of the fact that there are different methods used by companies to advertise their products. Some of them are more manipulative than other and consumers reach on a different way depending on the situation. For example, television commercials can use sound and computer generate images to persuade the consumer, however, Bronner and Neijens (2006: 92) claimed that “print media has been found to have a stronger transformative impact on affect and product attitudes than television”. It means that people are more likely to believe the information and advertisements found in printing medias than on television.
37
The next factor to consider in Xie and Boush framework is the consumer individual differences in responding to advertising. As we can see from the results of the above, it seems that the younger age sample has more difficulties determining whether the advertisements are misleading or not. According to Campbell and kirmany (2008) due to suspicion of an ulterior sales motive, consumers tend to be sceptical about marketers manipulative intention in general. For this reason, it is understandable than consumers belonging to the oldest age group have a stronger tendency to mistrust the commercials since they have had previous deceptive experiences with them and they have become more skilled on identifying false claims.
What is your reaction after experiencing deceptive advertising within the product division listed previously? 1. Do not buy the product anymore 31% 2. Write a complain 3% 3. Ask for money back 11% 4. Talk about the experience with those around you 39% 5. Take the blame 16%
45 40 35 30 25 20 15 10 5 0 1
2
3
4
5
As one can observe from the study of the above that there is a quite tie result between number 4, talk about the experience with those around you and number 1, do not buy the product
38
anymore. According to Friedstad and wright (1994) consumer persuasion model, this presents how people develop and use persuasion knowledge to cope with persuasion attempts which means how do consumers change their attitudes towards the product and the marketers. In this case, when the participants experience deceptive advertising, their attitude towards the product change and they consider that talking about their negative experience with others is a way to defend themselves and protect the others from false advertising claims. The second highest percentage refers to not buying the product anymore, which can have more serious consequences for the company. This means that, they way the target perceives the agent persuasion strategy is rather harmful since they will not give a second chance to the product. However, the third highest response is taking the blame. It seems there is a significant percentage of customers that will actually take the blame for a product that does not fulfil the claims that it makes. This can be linked to the fact customers might have been attracted to the product not because they have read the facts of it, but because they feel attracted by the marketing campaign done by the company and they based their purchase decision on a series of memories and past experiences. What do you think of deceptive advertising within the cosmetic industry? 1. It should be forbidden 21% 2. It is a marketing strategy of corporations 39% 3. It is unethical 40%
39
45 40 35 30 25 20 15 10 5 0 1
2
3
One can observe from the results of the above, that there is a very
tie
result
between
“it
is
marketing
strategy
of
corporations” and “it is unethical”. However, there is a way to
justify
the
misleading
actions
advertising
taken and
justifiable.
Since
correspondent
consequences,
important
to
highlight
customers
did
not
every
how in
a
the
can
action
that
make
by
those
has
the
company to
case
profit
considerable
be
ethically
deal
of
lost
regarding with
L’oreal,
from
it
the is
dissatisfied
difference
for
the
company. Now since the economical lost was not that significant, the actions done by the shareholders in order to get into track were more linked to build up trust and create customer value. Since
the
products
company world
is
a
wide,
a
big
multinational
series
of
that
incentives
export linked
its to
corporate social responsibility have been taken in order to create more credibility on their advertisements even though what they claim can not be justified. Since the year 2001, L’oreal has been putting special emphasis on
having
what
they
call,
ambassador
from
different
ethnicities. The term ambassador in this case refers to those 40
representative
public
figures
used
to
promote
some
certain
product or brand. This can be seen in the campaign of 2007, when the company use Indian top model and actress Aishwarya Rai to launch one their new mascaras14. In the upcoming years, we have seen a dramatic change on their advertising and their choice of ambassadors. Public figures such as Eva Longoria of Mexican origins and Beyonce Knowles of African American origins are being more and more implemented in their marketing campaigns. The reason behind this sort of implementations
are
linked
to
changing
the
perception
the
customers have from the products by using a broader range of skin
types
that
can
give
more
credibility
when
the
advertisement claims can not be proved. Now since one of the most difficult challenges in marketing, and in business in general is to change the perception of the consumer, the actions taken by the company were rigorously selected in order to maintain the actual stakeholder and gain possible future ones. An example of this was the marketing campaign done in the year 2008 launching the innovative range of
lipstick
lipsticks, light
products.
developed
brunette,
This
consisted
according
brunette,
to
dark
on
four
skin
24
tailor
phenotypes:
tones.
15
This
made
blonde, has
a
correlation with Koch’s article and his arguments regarding profit
maximization
innovation
is
not
as just
ethically a
way
justifiable. of
increasing
Implementing profit
and
therefore enriched the shareholders, but it is also a way to satisfy stakeholder customers by fulfilling their demands. Advertising campaigns were not the only approach done by the company in order to gain more trust from their stakeholders and gain a better image for the company. In the year 2003, L’Oreal released a new diversity action. As Sir Lindsay OwenJones, L’Oréal Chairman states “Diversity, in all its forms, 14 http://www.visit4ads.com/advert/LOreal-‐Lash-‐Architect-‐Carbon-‐Gloss-‐Mascara-‐ Aishwarya-‐Rai-‐LOreal-‐Product-‐Range/55654 15 http://www.lorealparis.com.au/cosmetics/studio-‐secrets/lipstick-‐red-‐650.aspx 41
is a business imperative for L’Oreal. Our ability to embrace diversity will shape, define and add clarity to our shared vision for success in the 21st century.” this,
the
company
has
taken
some
16
. In addition to
serious
initiatives
to
condemn racism not just inside the firm, but also outside. Executive director, International League Against Racism and Anti-Semitism
(LICRA)
mentions
in
the
company’s
website
“L’Oréal has supported our fight against discrimination for many years. The company was bold in taking concrete steps, especially in hiring” 17 . Now this is a crucial step for the company
since
it
is
going
beyond
its
own
policies
and
collaborating with external organizations that condemn racial discrimination. According to Koch arguments, the action done by the company are
ethically
justifiable
especially
concerning
the
shareholders. Since we are talking about a big multinational company,
satisfying
all
stakeholders
would
be
rather
impossible. Since their campaigns had so much focus in ethnic minorities, there are some other stakeholders that have not seen the benefits of it. Regarding this last point, there is a criticism concerning the actions that have not been done to solve the problem. Launching new products on the market is a way to satisfy some certain group of stakeholders and gain profit, but what about those who do not see the benefit of it? For
these
stakeholders,
the
actions
taken
have
been
insufficient. Now one can argue that it is the final consumer that
counts
since
it
is
purchasing
the
product
and
collaborating on the wealth creating process. But the reality is that, as the company is a big multinational, it also owns other cosmetic brands such as The Body shop
18
with a quite
strong corporate social responsibility policy regarding human rights. Small communities from third world countries worldwide 16 www.developpementdurable.loreal.com/.../diversities-‐actions-‐report 17 http://www.en.loreal.ca/_en/_ca/html/our-‐company/l-‐oreal-‐s-‐initiatives-‐to-‐ promote-‐diversity/richard-‐serero.aspx 18 http://www.treehugger.com/corporate-‐responsibility/the-‐body-‐shop-‐says-‐yes-‐to-‐ loreal-‐takeover.html 42
supply The Body Shop with the raw material to elaborate its products such as aloe Vera, shea butter, coconut oil etc. Now the question is, could they have done a better job targeting the suppliers stakeholder group? The answer can vary depending on the angle of approach. Taking into consideration Freemans stakeholder’s theory, in order for a business to be successful it must create value to all the stakes, and they should all go in the same direction important for the company that, in order to create value they must also create credibility. One can not really justify that the actions taken by the company in their campaigns where they include more ethnicities are a solution to create more credibility, but one can deduce that it is an approach to target more customers and justify their advertise claims in an indirect way.
Objectives of advertising regulation Given that the control of misleading advertising is in the interest of consumers, competitors and the general public, nowadays, there are various laws and agencies (which vary from one country to another) that are intended to protect consumers against misleading messages, exaggerated or false and to avoid or eliminate unfair methods of competition are part of misleading advertising. It should also be noted that in some countries, eg the European Union (EU ), the intention is that people or organizations that have a legitimate interest in prohibiting misleading advertising may take legal action against such advertising and / or bring this ad before an administrative authority competent either to decide on complaints or to initiate appropriate legal proceedings. Therefore, it is imperative that marketers and advertisers, 1) raise awareness about the negative effects of misleading advertising in the target audience, the company, competitors
43
and society at large , 2 ) decide not to use this practice under no reason , 3 ) know the laws of their respective countries against misleading advertising for what is not allowed and therefore should not do (intentionally or not), and 4 ) contact the various bodies responsible for monitoring and controlling commercials for advice on this subject . That way, one can avoid surprises along the way that can seriously affect the image of the company, its investment in the advertising campaign and the same professional career marketer or publisher.
Section 4:
conclusion and future implications
This thesis has been a research on how consumers process commercial, the misleading impact of them and how can companies launch their product lines in a more responsible manner in order to keep their shareholders and stakeholders satisfy. This paper main purpose was to examine consumers’ experience with beauty ads and whether the storytelling of this was potentially misleading. Furthermore, it was necessary to evaluate how L’oreal cosmetics could possibly implement some corrective advertising measurements in order to ensure loyalty and avoid misleadiness. There are certain elements appearing in the cosmetics ads that have been brought into attention. As it was shown in the analysis of the above, there are certain elements that have a sub-conscious misleading effect on consumers. Another purpose of the paper was to analyse consumer’s reaction to deceptive advertising in cosmetics and whether this can have consequences regarding customer loyalty. The answer to this lies on the way L’oreal communicates its message to customers, and the fact that it is affecting customers in a negative way. This has of course an impact on customers trust and has a potential negative effect on customer’s loyalty. Even though L’oreal is a quite successful company with many strengths, it
44
is clear from the analysis of the above that the strategies used to communicate the message have provoke negative attention because of unachievable promises. However, L’oreal keeps using the same techniques when delivering the message in their ads. It is shown that customers purchase l’oreal products as a trial in order to fulfil their specific needs, but they do not necessary buy the products because of a particular quality. Consumers have a tendency to try the new products in the market introduced by L’oreal with no intention to choose the brand, but because they are attracted subconsciously by the persuasive messages used by L’oreal when making the ad. In order to make the communication more personal and attract customers, the message that is being transmitted must communicate both authenticity and experience. By doing so, the message transited in the add will create empathy within the target audience. This way, the company can strength its image. Furthermore, it is important that the message does not over promise results that are rather difficult to meet, but quite the opposite. This way, customers will be surprised in a positive way about the results when purchasing a beauty product. L’oreal seems to be quite good at creating top of mind awareness, but has quite a rather low control in the post purchase. This last phase is just as important as the previous one in the sense that, . it is important that L’oreal is aware of the of the perception their ads and products are creating to their customers in order to adjust their message appropriately. There are several elements visual and linguistic components in the advertisements for L’oreal cosmetic products that could have a potential subconscious misleading effect due to the use of elements such as celebrity endorsement, small letter containing crucial information, superlative expressions, border words, and comparative reports. L’oreal storytelling is highly connected with the consumer memories and past experiences. It happens quite often that consumers do not remember the exact message, but they
45
more or less can reconstruct an inexact version based on memories reconstructed in the process. This can actually have a potential high risk for consumers that will purchase some of the products based on wrong assumptions. This can also happen when customers have different views of the same situation. It is crucial for L’oreal to understand hoe their customers perceive their advertising and the different ways they can interpret it. As it was shown in the analysis of the above, consumers might not be intentionally aware of what effects do beauty ads have on them. When the audience was asked about the beauty ads, they respond that they had expectation about the cosmetics products that they have purchased and those were not met, leaving those left with negative outlooks about the product. However, even though they are aware that the product has not meet the expectation they had before their purchase, they do not feel like the ad has actually mislead them, but they blame themselves for instead for trusting them. This has obviously a adverse impact on customers that leads consequently to a negative word-of-mouth. This also means that L’oreal is not completely aware of the effects of their commercials on their consumers, which has an inevitable risk to increase future disappointments within the audience. For the reasons explained, L’oreal must apply some certain strategies when promoting their product in order to avoid disappointment within their audience, retain their customers and obtain new ones. A good incentive will be, instead of giving high expectations making the customers disappointment, L’oreal must be more aware of what is important for customers and ad value to it. Based on the analysis of the above, L’oreal must apply certain changes on their advertising complains such as change the representative of the company for more realistic images of women, where one can see the real results of a product without computer modifications or makeup. Another incentive that has actually been taken is the used of different ethnicities in their advertising campaigns in order
46
for the consumers to have a broader spectrum of possibilities to choose from and see how products work on different skin types. Some of the commercial presented to the audience, there is a small letter text where it is specified in how many women the products were tested and for how long. None of the commercials taken from magazines specify what is the ethnicity of those women, nationality, life stile, occupation or the type of nutrition they have followed during the period they were tested, it is important for customers to be aware of this facts in order to obtain a better overview of how the products work. This would be a better approach to customers that would have a much more positive impact and will make consumers feel more special. In order to retain its costumers and avoids those from having negative experience due to unmet promises, L’oreal must make its customers feel unique and implement a series of inceptives linked to customer retention and loyalty. A good inceptive would be a better handling on customers complains and enquiries just as loyalty programmes where customers are taking into consideration in order to make the appropriate changes to the existing products and the upcoming ones. It is also important to review the progress of these programmes regularly in order to ensure that the implemented systems are as helpful as possible. Consequently, this paper has also consummate the goal to find out why customers might experience deception on an advertisement. Misleading ads might have negative long-term consequences in what refers to customer loyalty. This means that, after experienced disappointment when making a few purchases of different products, some customers might turn away from the brand completely when the products have not worked as expected leading to bad publicity and avoidance from other customers to become loyal to the brand. However, one bust be aware of the fact that L’oreal cosmetics is the biggest multinational brand of cosmetics which owns brands
47
from L’oreal luxe , the active cosmetic division and the professional product division to the consumer product division and The body shop which are more standard brands. This thesis gives an insight to beauty companies such as L’oreal to get into consumers’ mind giving the company the chance to modify their market strategies when approaching customers with new products. If the current strategy used is making the consumers feel misled, it is important for L’oreal to make its customers to take the brand seriously in order to avoid retain its customers and acquire new ones. Speaking in general terms, many companies use advertising methods and strategies that leave a great responsibility on customers hands when interpreting the message of the commercial. One can assume that companies do not do this intentionally, but the matter and the fact is, that misleading is happening whether is done deliberately or not. There is limited research on how customers process deceptive advertisements and the potential consequences of it. However, it seems that the new generation of consumers is changing into being less tolerant to deception and possible-misleading ads is not something big respected multinational companies should disregard. However, consumer neuroscience is growing science that used the combination of consumer research and modern neuroscience that helps to find neural explanations for consumer behaviors in both normal and diseased individuals. This can be a quite useful research tool for the upcoming products in the market. Consumer neuroscience allows a more complete and objective understanding of consumer desires, and becomes a versatile and consistent tool in accompanying companies for setting and implementing their marketing strategies. The application of neuroscientific analysis methods, and comprehension of human behaviour related to consumption, opens
48
unexpected horizons to conquer. Neuromarketing and consumer neuroscience, is the study of the mental processes involved in consumer behaviours in different contexts concerning marketing, which is applied and followed in real life contexts of the individual, based on the paradigms and technological developments of neuroscience, whose advances have made it possible for researchers to further knowledge about how the brain works.19 The paradigm of neuromarketing is still in development and therefore is full of opportunities for research. However, one of the mayor implications is the legislative. In this paper, it was deduced for the results of the interviews to young teenagers that those have a stronger tendency to try beauty new beauty products after they have viewed the ads. In the case that these tendencies keep remaining and the expectations cannot be fulfilled, there will be a violation of the marketing regulation regarding advertising under the age of eighteen. Younger consumers are more susceptible to be mislead in advertising because of their natural ability to pull automatic interpretations. There are many implications to the findings of this thesis, but speaking in general terms, companies need to be more aware of the message they are sending to their audience, as well as the methods and strategies used in the process in order to create credibility that will potentially lead to consumer retention and acquisition of new ones.
19
http://www.biomedcentral.com/1471-‐2377/13/13
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Appendix Apendix 2 The matters referred to what misleading advertising entails are: •
the existence or nature of the product;
•
the main characteristics of the product
•
the extent of the trader’s commitments;
•
the motives for the commercial practice;
•
the nature of the sales process;
•
any statement or symbol relating to direct or indirect sponsorship or approval of the trader or the product;
•
the price or the manner in which the price is calculated;
•
the existence of a specific price advantage;
•
the need for a service, part, replacement or repair;
•
the nature, attributes and rights of the trader (as defined in paragraph 6);
•
the consumer’s rights or the risks he may face.
The “main characteristics of the product” include:
•
availability of the product;
•
benefits of the product;
•
risks of the product; 55
•
execution of the product;
•
composition of the product;
•
accessories of the product;
•
after-sale customer assistance concerning the product;
•
the handling of complaints about the product;
•
the method and date of manufacture of the product;
•
the method and date of provision of the product;
•
delivery of the product;
•
fitness for purpose of the product;
•
usage of the product;
•
quantity of the product;
•
specification of the product;
•
geographical or commercial origin of the product;
•
results to be expected from use of the product; and
•
results and material features of tests or checks carried out on the product.
Appendix 3 L’oreal commercials Numer 1
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Number 2
57
58
Number 3
59
Appendix 1 Case against Lancome
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