Advertising Research Issues from FTC Versus Stouffer Foods Corporation

Extrinsic evidence is frequently offered in Federal Trade Commission advertising deception cases, most often in the form of advertising research, such as copy tests. Although generally accepted principles exist for copy test evidence presented before the Commission, how these principles are operationalized can provide fertile ground for challenges. Thus, the authors review six copy testing and ad interpretation issues from the recent Stouffer Foods case. The authors discuss difficult tradeoffs inherent in relative versus absolute claims, multiple claims, control ad groups, control questions, and disclosure information. The careful consideration of such trade-offs in advertising research decisions will help in the preparation of extrinsic evidence before the Commission

Up Close It Feels Dangerous: 'Anxiety' in the Face of Risk

Motivated by individuals' emotional response to risk at different time horizons, we model an 'anxious' agent - one who is more risk averse with respect to imminent risks than distant risks. Such preferences describe well-documented features of 1) individual behavior, 2) equilibrium prices, and 3) institutions. In particular, we derive implications for financial markets, such as overtrading and price anomalies around announcement dates, as well as a downward-sloping term structure of risk premia, which are found empirically. Since such preferences can lead to dynamic inconsistencies with respect to risk trade-offs, we show that costly delegation of investment decisions is a strategy used to cope with 'anxiety.

The Role of Qualifying Language on Consumer Perceptions of Environmental Claims

A copy-test of seven environmental claims on aerosol packages shows that consumers interpret general, unqualified claims (e.g., environmentally friendly or ozone friendly) as meaning the product is safe for the environment in both an absolute (safe) and a relative (safer) sense. These perceptions of environmental safety are enhanced by specific qualifiers for general claims such as No CFCs and general qualifiers for specific claims. In addition, the results show that almost all specific environmental claims improve consumers’ perceptions of the aerosol product relative to general claims for environmental benefits of the product. Implications for marketing and public policy professionals are presented

The SBI Case as Experiential Learning

One of the most successful Small Business Administration (SBA) Management Assistance projects is the Small Business Institute (SBI) program (1, p.1). The SBI program uses students as consultants to small businesses in the local community. Properly used, these SBI cases can be an effective type of experiential learning