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In 2011, the US congress set aside $27 000 000 of tax payers money for Nascar army car. The congress cut $75 000 000 in benefit for homeless veterans. According to the founder of Patagonia, Yvan Chouinard, "traditional advertising is finished". Co-operations are doing more, making more and consuming more of the worlds resources. Co-operations are losing control in advertising. Adverts teach us more about products. There is nowhere to hide negative connotations to a business because social media makes things trend. Reviews and ratings are key, 90% of people trust peer reviews and 20% trust advertising.
Statistics revealed that US spends a total of $125 billion on Ads, $61 billion on TV ads, $35 billion on prints and $29 billion on web. Advertising is less effective because it's coming at you from different ways. Companies have to shift away from just saying they are great, but need to actually be great and do great. Delivering better products and services can be a form of advertising. For 20 years Alex Bogusky was advertising's most gifted story teller.
His stories were funny, relevant and ironic. He transformed small agency in Miami into top creative shop in the world. They won agency of the year, three times, and Alex won creative director of the decade. He began to contradict himself and decided to quit the advertising industry to go into making bicycles out of bamboo. Access to information is growing at a fast rate. Patagonia shows history of their products; the whole process. This is transparency as they show the good and the bad.
This increases productivity. Clear is the new clever. Under Armour began recycling water bottles. Their challenge was to make their performance products with a lighter environmental impact. Return on investment is the ultimate driver for any investment. Marketing is very important. Virgin America spends $10 000 000 a year on marketing. Virgin is associated with positive thoughts. According to Zappos, "happy employees mean happy customers." Zappos provides free health care to employees and a lifetime coach. Companies are becoming more transparent. Maybe advertising is telling a new story in a new way, maybe it is solving a small problem, maybe it's admitting to a big problem, maybe it's helping someone get through their day. In a transparent world, the consumer is a watch dog, a critic, a conscience but also a colabarator.
Corporate Governance is defined as the set of rules used by Top Management to direct and control the business. It provides a framework and control measures to look after the bottom line of the business.
Ethical BehaviourEthical behaviour in business is acting in a way that is consistent with what the society thinks good values are. There are certain ethical values that companies should follow, and these are:
Honesty- executives need to be honest and truthful in all their business dealings.
Responsibility- accept accountability and take responsibility of marketing practices.
Fairness- be fair in all forms, avoid manipulation of consumers information.
Respect- treat everyone with equal respect regardless of their gender, age, race, and culture.
Transparency- be open when marketing through communication, criticism, action and disclosure.
The triple bottom line can be defined as corporate communication with stakeholders that describes the approach to managing economic, environmental and social dimensions of its activities by the company. The triple bottom line reflects transparency, accountability, fairness, independence, discipline, social responsibility and responsibility of directors in a company, this is also known as the seven principles of good Corporate Governance. The triple bottom line was introduced as a requirement for management. It was expected that management should not only focus on the shareholders, but that all stakeholders (management, shareholders, customers, suppliers, government, the community as a whole and the environment) should be considered when strategies are formulated and implemented.
The "people" bottom line involves the interest in the welfare of stakeholders. This includes whether employees and suppliers receive fair payment and whether or not the working conditions are good. This bottom lines also includes the company's direct and indirect impact on the society. The "planet" bottom line focuses on the company's impact on the environment and whether or not the company reduces their manufacturing waste, and how they control their energy consumption. The "profit" bottom line is about looking at ways to generate more income for the business.
The seven principles of good Corporate Governance:
Transparency- this does not refer to the fact that everyone has to know what decisions are taken and why are they taken, some decisions may be kept confidential. However, it does refer to decisions being taken with a set of rules which everybody is familiar with and understand.
Accountability- this refers to taking responsibility for actions. This increases the level of confidence of stakeholders' decisions.
Independence- this means that there is no conflict of interest and no unfair influences from stakeholders that will result in unethical decisions being taken.
Discipline- this focuses on self-discipline in a business environment. Market discipline is when management does not make responsible decisions and this results in the market punishing the business. This could result in a lower market apitalization, which could lead the business to collapse. Regulatory discipline can only be imposed once the damage has been done, however if top management knows that corruption will be punished in a harsh manner by the law, they will rethink before doing something that will be in their interest rather than the interest of the business.
Social responsibility- businesses should follow a process of good governance in order to be publicly accountable.
Fairness- businesses should be considerate when evaluating all relevant parties' interests when decisions are taken. Management decisions should always be in the best interests of the business and employees.
Responsibility of directors- the directors represent the shareholders, therefore they hold high expectations as they are in a position of trust. Directors must act in good faith and honesty, they are not to abuse the power given to them, and ethical leadership is essential.
Corporate Social Responsibility is built on a system of ethics and the purpose of it is to drive change towards sustainability. A company should implement CSR programs in order to give back to the community as this boosts the image of the company and it helps employees and employers feel more connected with the world. Triple bottom line is a way to measure the success of the business by the impact it has on the economy, environment and on the society in which they operate.
The benefits of behaving ethically in a sustainable manner include improved financial performance, reduced operating costs, enhanced brand image, increase in sales and customer loyalty, increase in productivity and quality, access to capital and client satisfaction.
This act safeguards the consumers' right to receive a fair deal from the business. The business needs to act in a fair manner when goods and services are supplied to consumers. The Consumer Protection Act came in effect on the 1st of April 2011. Some of its main goals are to promote consumer behaviour that is responsible and prohibit unfair marketing and business practice.eThe following rights are given to consumers In the Consumer Protection Act:
The right against discriminatory marketing practices
Suppliers may not give special treatment to consumers based on elements such as geographical location, socio-economic status, gender or race.
Consumers are allowed to refuse unwanted direct marketing, therefore the business may not continue to market their products or services to that specific consumer.
Consumers are allowed a cooling-off period of five working days to cancel transactions. They are also not allowed to be charged for drawing up quotations by suppliers.
The right to disclosure of information
It is essential for suppliers to display prices in full view.
The right to fair and responsible marketing
Advertising of a product or service in order to attract consumers to come to the store and then not have the advertised product or services available is known as bait-marketing or false advertising, and this is not permitted.
Misleading or deceiving consumers when advertising is not allowed.
Any unfair tactics such as harassment or physical force is not allowed when marketing.
Overbooking and overselling is not allowed. This means that the seller may not accept payment for goods if they will not supply the goods.
The right to good quality, fair value and safety
Consumers are allowed to return goods if the goods are of bad quality, unsafe or defective, as long as its within a period of six months. The supplier would then have to replace, refund or repair the product.
Businesses need to be ethical when advertising, which means that they need to act in an accepted manner by society. They need to be honest as honesty generates trust and a positive relationship with the public.
This act aims to prevent manipulation of the opinions and choices of the public and it ensures that all the advertising that takes place is not false advertising. The Independent Broadcasting Authority Act of 1993 gives the ASA the right to develop and implement a code of Advertising Practice that all advertisers have to obey. The code states that all advertising must be legal, decent and truthful, it shouldn't be misleading, it needs to be prepared with a sense of responsibility and it should comply with the principles of fair competition. If advertisers fail to comply with the code, their reputation may be damaged, they will be sued for any misleading advertisements, they may get blacklisted or even lose customers.
A brand is how people perceive the values and beliefs of the business. The brand is the appearance and personality of the business. It should be developed to send a strong and positive message about the business. The brand is said to be a combination of the name of a business and its trade mark.
The brand helps the consumer to identify the product or service, as well as provide them with reasons to choose a certain company over its competitors and in some cases pay more money. For example, luxury clothing brands such as Gucci and Dior give the impression that being expensive means better quality and high status in society. Brand awareness is the ability of the consumer to recall and recognize the brand by hearing jingles, seeing a logo (the double "G" for Gucci) or a pattern associated with the brand. Gucci has managed to use a snake to differentiate themselves to other high-end luxury clothing brands. Their new logo helped consumers to recognize the brand.
Companies that are brand-conscious are aware of how important the opinions of consumers about their brands are. It is essential for a business to determine their target audience in order to figure out their lifestyle and affordability. Businesses need to create an identity for their brands that they can understand and relate to. In order to know the value that your business provides, a mission statement needs to be formulated to define the purpose for existing from the logo to the voice, message and personality. It is important to research brands within the industry niche as this will allow businesses to differentiate from the competitors. A business such as Gucci has managed to use their marketing mix in order to promote their brand, and they've done this exceptionally well. They have a strong international exposure. In one of its ads for a perfume called Opium it posted a naked image of a female model, Sophie Dahl. This helped Gucci gain media coverage across the globe, and it led to brand awareness.
It is vital for businesses to understand that a solid brand building process can transform any small business into a successful competitor. Customers will become loyal to the brand and this will definitely increase sales.
The founder of Patagonia, Yvon Chouinard, stated that traditional advertising is finished, and when analyzed it is made clear that this statement is in fact true. Advertisements in newspapers and direct mail don't often get read by the public as its seen as an ordinary distraction by people. Just because people subscribe to newspapers and magazine doesn't necessarily mean that they read them. Most people get aggravated by telephone marketing therefore they don't answer the calls, or they block the number. Modern marketing on social media is taking over the advertising world, especially if it's promoted by the right social media influencers and bloggers.
According to Zappos, "Happy employees mean happy customers". This is very much a true statement because happy employees tend to their job to the best of their ability, thus attracting more customers which in the end generates more income. Business is only productive when the employees are happy. Customers want to deal with employees who are cheerful and have positive energies as this assures them that they are putting their money to good use. Happy employees perform at a higher level.
In the documentary, it was stated that "clear is the new clever". This is very important for a business to understand because transparency is what consumers what, it's what they are looking for. They want to be able to see where their money is going, if it's going to good use and if it is really worth it. Transparency increases productivity in a business because it forces employees to perform to the best of their abilities as they now know that they are being watched. Clear is definitely the new clever and businesses should look at using this method.
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