Monday, June 20, 2016

Cover Story - Legal Issues in Marketing || Shubham Shukla || IIM Shillong || February 2016

Legal Issues in Marketing

 -Shubham Shukla
IIM Shillong

Winning isn’t everything, it’s the only thing-Vince Lombardi

In the highly competitive scenario of today this psychology has been firmly embedded in the minds of the society and even marketers have not been unaffected. With the increasing number of products across all categories and the rising competition across different geographies marketers have come under significant pressures to come up with innovative means and ways to market their products. In this highly competitive environment the demarcation between what is ethical and legal and what is not, can become blurred. We also need to understand that just fulfilling the legal obligations by the marketing companies does not mean that ethical justice has been accomplished. Moreover the advent of community brandings, website advertising, blog writings, twitter groups and instant messaging has given rise to multitude of legal issues in the Indian context. As these are very new forms of communication, the legal and ethical practices in this zone have still to be defined clearly and code of conduct needs to be developed.
There are several legal and ethical issues in varied domains which a firm needs to address while deciding on their marketing strategy:
  • Misleading the customer-

1.       Product Endorsements – Product endorsements need to be truthful and in cases of celebrity endorsements the celebrities should have actually used the product. This is a major hurdle in front of marketing firms as they need to ensure that any advertisement does not highlight things about a product which cannot be fulfilled. Advertising false information about any product can even lead to imprisonment.

2.       Advertising to Children – There have been special rules established which stipulate that advertisements which are meant for a young audience need to be especially true in their
message and even the slightest amount of exaggeration about the product or showing something inappropriate in the advertisement is frowned upon.

3.       “Made in the ” labels – Many a times companies advertise their products of being made in a certain place or country in order to put their product in a more favorable light and also in order to sell their products at a higher price. For Ex- Pethas made in Agra are very famous and so in many shops in Delhi selling Pethas you would find them advertising that it belongs to Agra which would not be true. This is against the law and such a practice should not be followed by the firms.

4.       Health Claims – There are various ads for medicines and cosmetics which claim a lot of things but do not deliver on their claims. Such type of claims are not just legally wrong but can also turn out to be harmful for the health of the customers consuming that medicine.
  • Telemarketing: Another significant area which has been now heavily regulated in recent times is telemarketing. Telemarketing is a form of marketing in which a salesperson tries to convince customers to buy certain products over the phone. According to laws stipulated by the government if a person registers himself on the “Do not call” registry no telemarketer is allowed to place a call to him. In fact, if such a situation arises not just the telemarketing firm but the telecom service provider is also liable to be punished by the law. Furthermore, the law also protects people against any misinterpretation of facts that would have happened over the phone and a consumer in this case can visit the consumer courts.

  • Email SPAM: With the advent of e-mail, now there is a new type of marketing technique which has become very prominent-marketing through e-mail. But as we
    have all seen, apart from the handful of mails that may turn out to be of some use, most of the unsolicited mails that we receive are irritating and an infringement on our privacy. The IT Act enacted in the year 2000 does not have any specific section in this regards but under section 79 of the IT Act, internet intermediaries must take care and diligence with regard to the services they provide. If we couple this with section 43A of the IT Act (compensation for failure to protect personal data from theft) we can invoke our right to data privacy. The problem of spamming has been long objected. In 2004, Tata Son’s subsidiary company in India, Panatone Finwest Limited, filed a law suit against McCoy Infosystems Private Limited for transmission of spam. The matter was heard in the court where it was held that in the absence of statutory protection to check spam mails on the Internet, the traditional tort law principles of trespass to goods as well as law of nuisance would have to be used. This means that sending spam mails is trespassing your life to privacy and is thus an offence. However, the law in this area is still either very nascent or non-existent and work needs to be done in order to protect the right of the citizens to decide which advertisements and mails they want to receive.

  • Restrictions of marketing of certain products: According to the Cable TV Regulation Act of the Indian Constitution a company cannot advertise alcohol or tobacco products in televised media. But not one to be cowed marketers came up with the concept of surrogate marketing. Surrogate marketing is a form of advertising which is used to promote banned products in the disguise of another product. So to counter this law companies came up with products related to drinking and tobacco use like music CD’s, Soda Water and mouth refreshments in order to popularize their brand so that whenever there is mention of that brand, people start associating it with its main product. Examples include Bacardi Blast Music CD’s, Rajnigandha pearls and many more.

     Now let us look at some of the instances when the Indian legal system and its affiliated entities stepped in to regulate the marketing strategy of a company.

  1. In May, 2011 the Ministry of Information and Broadcasting in India issued a statement warning television channels not to broadcast deodorant television commercials following a rash of ads featuring voracious women and "libidinous" men as they felt that plot lines for deodorant ads aimed at young men were very racy which may not sit well with a certain section of the Indian society.
  2. The Food Safety and Standards Authority of India (FSSAI) had directed the state food safety commissioner to scrutinize and initiate stringent actions against those advertisements which raised misleading claims on the quality of food and beverages. As per the directions, companies were not allowed to use edible oil named ‘Super Refined’, ‘Extra Refined’, ‘Micro Refined’, ‘Double Refined’, ‘Ultra Refined’ and ‘Cholesterol Friendly’ unless the claims were substantiated by a research report. Also they stipulated that the research findings being produced would have to be published in a respected international journal or should be verifiable by the FSSAI.
  3. The Telecom Regulatory Authority of India had issued a notification in May 2012 limiting television advertisement duration to 12 minutes in an hour taking note of viewer irritation and had come up with a proposal to regulate the duration, frequency, timings and audio level of advertisement. The industry claimed that this could impact advertising revenues of the broadcaster by 15% to 40%. This move was challenged by the channels in front of the Telecom Disputes Settlement and Appellate Tribunal and results of the case are awaited. The Telecom Regulatory Authority of India has also pointed out that news and current affair channels cannot run more than two scrolls at the bottom of the screen, occupying a maximum of 10 per cent screen. All these steps are very important from a marketing perspective because now we need to make ads in such a way that they can grab the attention of the audience in a very small time as the time as well as space available for marketers to get their message across is decreasing.
  4.  Advertising Industry Watchdog Advertising Standards Council of India(ASCI) upheld complaints against Brooke Bond Red Label Natural Care, Tata Sky, Nikon Camera etc. In case of Tata Sky, ASCI said it had received a complaint against the company stating that "Cable is just a Dabba" in a print advertisement which could harm the reputation and business of existing cable TV service providers. Similarly, it had also upheld a complaint against Nikon camera's TV commercial for violation of The Performing Animals Registration Rules 2001 as the complainant had claimed that the animals used in the advertisement were not taken care of in accordance of the law.

As marketers we have a responsibility to not mislead the public or misuse the trust that they show in us and our brands and we have seen that the government and legal systems take ample measures to prevent this from happening. Moreover companies need to tailor their advertisements according to the culture and values of the audience as what may be acceptable for one section may be derogatory or disrespectful for the other section.
In our bid to win we must keep in mind that following the marketing and advertising related laws of the country in which we are selling our product is very important not just from a business but also from an ethical point of view. 


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