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Issues in Consumer Protection and Potential Ethical Issues in Marketing Strategy Presentation Grading Guide

MKT/554 Version 2


Issues in Consumer Protection and Potential Ethical Issues in Marketing Strategy Presentation Grading Guide

MKT/554 Version 2

Consumer Behavior


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Individual Assignment: Issues in Consumer Protection and Potential Ethical Issues in Marketing Strategy Presentation
Purpose of Assignment

Student understanding of consumer behavior is applied at the end of the course to how individuals and companies may harm the public in part based on similar insights on consumers and their vulnerabilities.
Grading Guide



Partially Met

Not Met


The student provides personal thoughts and examples of data privacy and identity theft.


The student provides personal thoughts and examples of sustainability and environmental stewardship

The student provides personal thoughts and examples of addictive consumption

The student includes personal thoughts and examples of marketing ethics as it pertains to children, the elderly, and other disadvantaged groups.

The student includes graphics to enhance the effectiveness of their presentation.

The presentation is 10 to 15 slides with speaker notes and is appropriate for the audience.

The presentation includes relevant media and visual aids that are consistent with the content.

Total Available

Total Earned



Presentation Guidelines


Partially Met

Not Met


The presentation is laid out with effective use of headings, font styles, font sizes, and white space.

Intellectual property is recognized with in-text citations and a reference slide.

The presentation includes an introduction and conclusion that preview and review major points.

Major points are stated clearly; are supported by specific details, examples, or analysis; and are organized logically.

Rules of grammar and usage are followed including spelling and punctuation.

Total Available

Total Earned




Assignment Total




Additional comments:

Wk 6 – Issues in Consumer Protection and Potential Ethical Issues in Marketing Strategy Presentation
Top of Form

Assignment Content

Top of Form
Create a 10- to 15-slide Microsoft® PowerPoint® presentation, with speaker notes, in which the interrelationship between consumer behavior and marketing is discussed.

Include topics such as business ethics and consumer rights from Ch. 2 of Consumer Behavior: Buying, Having, and Being.

Include the following in your presentation:
· Your personal thoughts and examples on data privacy and identity theft, sustainability and environmental stewardship, addictive consumption, and marketing ethics as it pertains to children, the elderly, and other disadvantaged groups
· Graphics to enhance the effectiveness of your presentation.

Format your presentation consistent with APA guidelines.
Bottom of Form

Bottom of Form

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2 Consumer Well-Being

Chapter Objectives

When you finish reading this chapter you will understand why

Christen wheels her cart down the grocery aisles, absent-mindedly
throwing in the usual fill-ins she always buys on her weekly trip. She
reaches for a box of Tide laundry detergent and is about to toss it
into the cart when she stops herself in midair: She just remembered
her resolution to think a little more about the environmental impact
of the cleaning products and other groceries she brings into the
house. When her son Jon came home from school and asked her
how she was helping to preserve the world for the next generation,

2-1 Ethical business is good business.
2-2 Marketers have an obligation to provide safe and functional
products as part of their business activities.
2-3 Consumer behavior impacts directly on major public policy
issues that confront our society.
2-4 Consumer behavior can be harmful to individuals and to





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she was embarrassed that she couldn’t answer him. From the
mouths of babes! Time for this 33-year-old to learn a lesson.

Source: DmitriMaruta/Shutterstock.

Might as well start with detergents—Christen thinks about that news
report she saw last week about the excessive use of chemicals and
other additives that are bad for the water supply, not to mention the
huge amount of fresh water U.S. consumers waste just to wash their

Christen has always bought Tide; it’s the same product her mother
used for years. Now as she takes a closer look in the detergent
section she notices a lot of other brands, including some
“ecologically sound” ones she’s never seen before like Dropps, Ecos,
Method, and Seventh Generation. When she looks at each box, Tracy
notices that some carry different “ecolabels,” including one issued
by the U.S. Environmental Protection Agency called DfE (Design for

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the Environment). Hmmm…Tide doesn’t have that on its box. On the
other hand, the Tide package does recommend just using cold water
instead of hot for the laundry, and Procter & Gamble (P&G) now sells
a concentrated version that doesn’t require as much soap to do the
wash. Christen also notices that the “green” brands seem to cost a
bit more. Today every penny counts—how much of her precious
grocery budget is worth sacrificing for a slightly less sudsy wash?
All of these choices are really confusing. Maybe she should stick
with what she knows and let others worry about the environment.
Then again, what will she tell Jon the next time he asks about how
“green” she is?

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Business Ethics and
Consumer Rights

Mainstream U.S. shoppers like Christen increasingly choose “green”
products that are better for the environment. On the other hand, there has
been a lot of hype about “the green revolution”; since the recession of 2008,
consumers are a lot more cost-conscious. To add to the confusion, even
well-intentioned shoppers have trouble figuring out which brands really are
better. It’s practically a full-time job to sort out all the competing claims.
One solution is for independent rating agencies to develop labeling
systems that the shopper can use to decide among options—but even
these systems can be overwhelming. There are 464 eco-label systems
worldwide. The U.S. government is trying to encourage businesses and
consumers to select green cleaning products; the Environmental Protection
Agency (EPA) even signed a promotion agreement with NASCAR to raise
awareness of the DfE label. In addition to DfE certification and other rating
systems the cleaning industry sponsors, a few manufacturers and retailers
even offer their own labels, such as SC Johnson’s Greenlist and Eco-Scale
by the Whole Foods grocery chain. Other major brands, like P&G’s Tide,
sell highly concentrated versions that are formulated to work with cold
water. It’s tough to make apples-to-apples comparisons, and these
competing systems threaten to “throw the baby out with the bath water” if
consumers like Tracy throw up their hands and just stick to what they know.

Ethical business is good business.OBJECTIVE 2-1



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Is it possible for marketers to “do good” and still “do well”; can they
provide profits and still do what’s right for customers and the environment?

The answer is simple: Ethical business is good business. A majority of
consumers around the world say they are willing to pay more for products
and services from companies that are committed to positive social and
environmental impact. What is even more encouraging is that younger
consumers express this preference even more strongly: About three-
quarters of them feel this way, and 81 percent of them even expect their
favorite companies to declare publicly what they are doing to make the
world a better place.

Business ethics are rules of conduct that guide actions in the
marketplace; these are the standards against which most people in a
culture judge what is right and what is wrong, good or bad. These universal
values include honesty, trustworthiness, fairness, respect, justice, integrity,
concern for others, accountability, and loyalty.

Of course, notions of right and wrong differ among people, organizations,
and cultures. Some businesses believe it is okay for salespeople to pull out
all the stops to persuade customers to buy, even if this means they mislead
them; other firms feel that anything less than total honesty with customers
is terribly wrong. Because each culture has its own set of values, beliefs,
and customs, companies around the world define ethical business
behaviors quite differently.

These cultural differences certainly influence whether business practices
such as bribery are acceptable. Since 1977 the Foreign Corrupt Practices
Act makes it illegal for U.S. executives to bribe foreigners to gain business.
The Organization for Economic Cooperation and Development (OECD), to
which most industrialized countries belong, also outlaws bribery. Still,
these practices are common in many countries. In Japan, it’s called kuroi


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kiri (black mist); in Germany, it’s schmiergeld (grease money), whereas
Mexicans refer to la mordida (the bite), the French say pot-de-vin (jug of
wine), and Italians speak of the bustarella (little envelope). They’re all
talking about baksheesh, the Middle Eastern term for a “tip” to grease the
wheels of a transaction. Giving “gifts” in exchange for getting business
from suppliers or customers is acceptable and even expected in many

Regardless of whether they do it intentionally, some marketers do violate
their bonds of trust with consumers. In some cases, these actions are
actually illegal, as when a manufacturer deliberately mislabels the contents
of a package. Or a retailer may adopt a “bait-and-switch” selling strategy
that lures consumers into the store when it offers inexpensive products
with the sole intent to get them to switch to higher-priced goods.

In other cases, marketing practices have detrimental effects on society
even though they are not explicitly illegal. Some companies erect billboards
advertising alcohol and tobacco products in low-income neighborhoods;
others sponsor commercials that objectify women as they pander to male

Needs and Wants: Do Marketers
Manipulate Consumers?

One of the most common and stinging criticisms of marketing is that
companies convince consumers they “need” many material things, and that
they will be unhappy and inferior people if they do not have these
“necessities.” The issue is a complex one and is certainly worth

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considering: Do marketers give people what they want, or do they tell
people what they should want?

Who controls the market—companies or consumers? This question is even
more complicated as new ways of buying, having, and being are invented
every day. It seems that the “good old days” of marketerspace—a time when
companies called the shots and decided what they wanted their customers
to know and do—are dead and gone. Many people now feel empowered to
choose how, when, or if they will interact with corporations as they
construct their own consumerspace .

In this new environment, individuals dictate to companies the types of
products they want and how, when, and where (or even if) they want to learn
about those products. In turn, companies need to develop and leverage
brand equity in bold new ways to attract the loyalty of these consumer
“nomads.” People still “need” companies—but in new ways and on their
own terms. As we’ll see throughout this text, profound changes in
consumer behavior are influencing how people search for product
information and evaluate alternative brands. In the brave new world of
consumerspace, we have much greater potential to shape our own
marketing destinies.

Do Marketers Create Artificial Needs?
The marketing system has come under fire from both ends of the political
spectrum. On the one hand, some members of the religious right believe
that marketers contribute to the moral breakdown of society when they
present images of hedonistic pleasure and encourage the pursuit of secular
humanism at the expense of spirituality and the environment. A coalition of
religious groups called the National Religious Partnership for the
Environment claims that gas-guzzling cars and other factors that cause


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climate change are contrary to Christian moral teachings about protecting
people and the Earth.

On the other hand, some leftists argue that the same deceitful promises of
material pleasure function to buy from people who would otherwise be
revolutionaries working to change the system. According to this argument,
the marketing system creates demand—demand that only its products can

A Response.

As we saw in Chapter 1 , a need is a basic biological motive; a want
represents one way that society has been taught to satisfy the need. For
example, thirst is a biologically based need. Marketers teach us to want
Coca-Cola to satisfy that thirst rather than, say, goat’s milk. Thus, the need
is already there; marketers simply recommend ways to satisfy it. A basic
objective of marketing is to create awareness that needs exist, not to
create needs.

Is Marketing Necessary?
More than 50 years ago, the social critic Vance Packard wrote, “Large-scale
efforts are being made, often with impressive success, to channel our
unthinking habits, our purchasing decisions, and our thought processes by
the use of insights gleaned from psychiatry and the social sciences.” The
economist John Kenneth Galbraith charged that radio and television are
important tools to accomplish this manipulation of the masses. Because
consumers don’t need to be literate to use these media, repetitive and
compelling communications can reach almost everyone. This criticism
may even be more relevant to online communications, where a simple click
delivers a world of information to us.





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The American Association of Advertising Agencies created this ad to
counter charges that ads create artificial needs.
Source: Used with permission of the American Association of Advertising Agencies.

Some people charge that marketers arbitrarily link products to desirable
social attributes, so they foster a materialistic society where what we own
defines our value as a person. One influential critic even argued that the
problem is that we are not materialistic enough: We do not sufficiently
value goods for the utilitarian functions they deliver but instead focus on
the irrational value of goods for what they symbolize. According to this
view, for example, “Beer would be enough for us, without the additional
promise that in drinking it we show ourselves to be manly, young at heart,
or neighborly. A washing machine would be a useful machine to wash
clothes, rather than an indication that we are forward-looking or an object of
envy to our neighbors.”9

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A poster for Westin Hotels’ Well-Being Movement.
Source: Courtesy of Starwood Hotels & Resorts Worldwide, Inc.

A Response.

Products meet existing needs, and marketing activities only help to
communicate their availability. The economics of information
perspective regards advertising as an important source of consumer
learning. This view emphasizes the economic cost of the time we spend
to search for products. Accordingly, advertising is a service for which
consumers are willing to pay because the information it provides reduces
their search time.

Do Marketers Promise Miracles?



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Advertising leads us to believe that products have magical properties; the
things we buy will transform our lives. We will be beautiful, successful,
perhaps even live forever. In this respect, advertising functions as
mythology does in primitive societies: It provides simple, anxiety-reducing
answers to complex problems.

A Response.

Marketers simply do not know enough about people to manipulate them.
Consider that the failure rate for new products ranges from 40 to 80
percent. Although people think that advertisers have an endless source of
magical tricks and scientific techniques to manipulate them, in reality the
industry is successful when it tries to sell good products and unsuccessful
when it sells poor ones.12

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Consumers’ Rights and
Product Satisfaction

Fifty-four million dollars for a pair of missing pants? A judge in
Washington, D.C., made headlines a decade ago when he filed a $54 million
lawsuit against his neighborhood dry cleaner because it lost a pair of his
pinstriped suit pants. He claimed that a local consumer protection law
entitled him to thousands of dollars for each day over nearly four years in
which signs at the shop promised “same day service” and “satisfaction
guaranteed.” The suit dragged on for several months, but at the end of the
day the plaintiff went home with empty pockets. And some people claim
we have too many lawsuits in this country!

If you’re not happy with a product or service, what can you do about it? You
have three possible courses of action (though sometimes you can take
more than one):

1. Voice response—You can appeal directly to the retailer for redress
(e.g., a refund).

2. Private response—You can express your dissatisfaction to friends
and boycott the product or the store where you bought it.

Marketers have an obligation to provide safe and
functional products as part of their business activities.



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3. Third-party response—Like the pantsless judge, you can take legal
action against the merchant, register a complaint with the Better
Business Bureau, or write a letter to the newspaper. These
comments can be effective, especially when others join in. Cover
Girl ran an advertising campaign targeted at female football fans
that depicted a model wearing a Baltimore Ravens jersey with the
tagline, “Get Your Game Face On.” At about the same time, a
prominent Ravens player made headlines in a series of allegations
about NFL players who physically abused their wives and girlfriends.
Protestors went online and altered the ad to make it look like the
model had a black eye. When enough people band together to
express negative marketplace sentiments through activist
organizations such as Greenpeace or in social media mass protests
such as the one Cover Girl ran into, dramatic changes can result.

The Tangled Web
From ihatestarbucks.com to
boycottwalmart.meetup.com/, irritated customers have
launched hundreds of gripe sites to air their grievances
against companies. The practice is so widespread that
some firms proactively buy unflattering domain names
to keep other people from buying them. Xerox, for
example, registered xeroxstinks.com,
xeroxcorporationsucks.com, and ihatexerox.net. About
20,000 domain names end in “sucks.com.” About one-
third of these sites are registered to none other than
the companies they slam: owners include Walmart
Stores, Coca-Cola, Toys “R” Us, Target, and Whole
Foods Market.




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In one study, business majors wrote complaint letters to companies. When
the firm sent a free sample in response, this action significantly improved
how the students felt about it. This didn’t happen, however, when they only
received a letter of apology—but no swag. Even worse, students who got no
response reported an even more negative image than before. This shows
that any kind of response is better than none.

Mass protests can sometimes bring about change.
Source: ZUMA Press, Inc./Alamy Stock Photo.

A number of factors influence which route we choose. People are more
likely to take action if they’re dissatisfied with expensive products such as
household durables, cars, and clothing than for problems with inexpensive
products. Ironically, consumers who are satisfied with a store in general
are more likely to complain if they experience something bad; they take the
time to complain because they feel connected to the store. And, if a



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company resolves the problem, customers feel even better about it than if
they hadn’t complained in the first place! The moral: Although nobody
likes criticism, organizations should encourage people to complain for
these reasons:

1. They get the chance to correct the situation.
2. They will avoid an escalating problem that results when consumers

take to social media to let others know they’ve been treated badly.
People are more likely to spread the word about unresolved negative
experiences to their friends than they are to boast about positive

3. They collect valuable insights about customers’ experiences that will
(hopefully) help them to improve for future customers.

4. If consumers do not believe that the store will respond to their
complaint, they will be more likely to simply switch than fight as
they just take their business elsewhere.

Companies that score high in customer satisfaction often benefit from a
big competitive advantage—especially when so many firms skimp on the
attention they pay to customers. A five-year study of customer satisfaction
in the Canadian banking industry provides typical results: Banks that
provided better service commanded a larger “share of wallet” than did
others (i.e., their customers entrusted them with a larger proportion of their

Even so, more than half of the chief marketing officers (CMOs) who
participated in a large survey reported that their companies do not reward
their employees if customer satisfaction improves. More than one-third
said they have no way to track word-of-mouth among customers, and fewer
than three in ten said their firms are good at resolving customers’
complaints. What is wrong with this picture?




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Consumers get creative when they want to vent their feelings about
companies they don’t like.
Source: Michael Matthews/Alamy Stock Photo.

When a product doesn’t work as we expect or turns out to be unsafe (like
the spate of hazardous products from China, ranging from toothpaste to
dog food), it’s the understatement of the year to say we’re not satisfied. In
these situations, marketers must immediately take steps to reassure us, or
they risk losing a customer for life. If the company confronts the problem
truthfully, we are often willing to forgive and forget. But if the firm seems to
be dragging its heels or covering up, our resentment grows. This is what
happened during the BP oil spill in the Gulf of Mexico or during the
infamous “Poop Cruise,” when a disabled Carnival cruise ship sat at sea
while 4,200 passengers and crew suffered through five days with no
plumbing or electricity, and little food, under the glare of an unrelenting
media spotlight.

Market Regulation


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The subprime mortgage meltdown that led to the collapse of major
investment banking and insurance companies such as Bear Stearns,
Lehman Brothers, and AIG, as well as triggering the Great Recession of
2008 (and beyond), illustrates why many people look to governments and
industry watchdogs to provide oversight and regulation rather than relying
strictly on businesses to police themselves. Some members of the
business community regard this level of government oversight as
excessive, and the Trump administration has aggressively unraveled many
rules that relate to product safety and the environment. Still, concern for
the welfare of consumers has been an issue since at least the beginning of
the 20th century, and activists continue to voice concerns about a range of
issues such as child labor, exploitative advertising, and genetically
engineered food.

Partly as a result of consumers’ efforts, the U.S. government established
many federal agencies to oversee consumer-related activities. These
include the Department of Agriculture, the Federal Trade Commission, the
Food and Drug Administration, the Securities and Exchange Commission,
and the EPA. After Upton Sinclair’s 1906 book The Jungle exposed the
awful conditions in the Chicago meatpacking industry, Congress was
prompted to pass important pieces of legislation—the Pure Food and Drug
Act in 1906 and the Federal Meat Inspection Act a year later—to protect
consumers. A summary of some important consumer legislation enacted
since that time appears in Table 2.1 . You can find other information
about consumer-related issues at consumerreports.org and cpsc.gov (the
Consumer Product Safety Commission).

Table 2.1 Sample of Federal Legislation to Enhance Consumers’ Welfare

Year Act Purpose

1953 Flammable Prohibits the transportation of flammable fabrics



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Fabrics Act across state lines.

1958 National
Traffic and
Safety Act

Creates safety standards for cars and tires.

1958 Automobile

Requires automobile manufacturers to post
suggested retail prices on new cars.

1966 Fair
and Labeling

Regulates packaging and labeling of consumer
products. (Manufacturers must provide information
about package contents and origin.)

1966 Child

Prohibits sale of dangerous toys and other items.

1967 Federal
Labeling and

Requires cigarette packages to carry a warning label
from the Surgeon General.

1968 Truth-in-
Lending Act

Requires lenders to divulge the true costs of a credit

1969 National
Policy Act

Established a national environmental policy and
created the Council on Environmental Quality to
monitor the effects of products on the environment.

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1972 Consumer
Safety Act

Established the Consumer Product Safety
Commission to identify unsafe products, establish
safety standards, recall defective products, and ban
dangerous products.

1975 Consumer
Goods Pricing

Bans the use of price maintenance agreements
among manufacturers and resellers.

1975 Magnuson-

Creates disclosure standards for consumer product
warranties and allows the Federal Trade Commission
to set policy regarding unfair or deceptive practices.

1990 The Nutrition
Labeling and
Education Act

Reaffirms the legal basis for the Food and Drug
Administration’s new rules on food labeling and
established a timetable for the implementation of
those rules.

1998 Internet Tax
Freedom Act

Established a moratorium on special taxation of the
internet, including taxation of access fees paid to
America Online and other Internet Service Providers.

2010 Dodd-Frank
Wall Street
Reform and

Prompted by the recession that began in 2008,
intends to promote the financial stability of the United
States by improving accountability and transparency
in the financial system, to end “too big to fail,” to
protect the American taxpayer by ending bailouts, and
to protect consumers from abusive financial services
practices. The Trump Administration is working to
repeal this Act.

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2016 Consumer
Fairness Act
of 2016

Passed in response to a number of incidents where
companies tries to stifle negative online user reviews
by including a “gag clause” in a contract that
threatens legal action or monetary damages when
customers say bad things about the company. The
bill allows the FCC and individual states to take action
against companies that try this tactic.

Table 2.2 lists major U.S. regulatory agencies and what they do. One of
the most important ones for consumers is the Food and Drug
Administration (FDA); it polices advertising claims as well as the contents
of edible products and pharmaceuticals. For example, as part of an FDA
crackdown on consumer drug advertising, Bayer HealthCare
Pharmaceuticals launched a $20 million corrective advertising
campaign for Yaz, the most popular birth control pill in the United States.
This term means that the company must inform consumers that previous
messages were wrong or misleading. The TV commercials, which ran
during prime-time shows such as Grey’s Anatomy and on cable networks,
warned that nobody should take Yaz hoping that it will also cure pimples or
premenstrual syndrome. Bayer was required to run these ads to correct
previous messages after regulators decided the earlier ads overstated the
drug’s ability to improve women’s moods and clear up acne.

Table 2.2 U.S. Regulatory Agencies and Responsibilities



Product Safety

Protects the public from potentially hazardous products.
Through regulation and testing programs, the CPSC helps
firms make sure their products won’t harm customers.


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Agency (EPA)

Develops and enforces regulations aimed at protecting the
environment. Such regulations have a major impact on the
materials and processes that manufacturers use in their
products and thus on the ability of companies to develop


Regulates telephone, radio, and television. FCC regulations
directly affect the marketing activities of companies in the
communications industries, and they have an indirect effect
on all firms that use broadcast media for marketing

Federal Trade

Enforces laws against deceptive advertising and product
labeling regulations. Marketers must constantly keep
abreast of changes in FTC regulations to avoid costly fines.

Food and Drug

Enforces laws and regulations on foods, drugs, cosmetics,
and veterinary products. Marketers of pharmaceuticals,
over-the-counter medicines, and a variety of other products
must get FDA approval before they can introduce products
to the market.


Regulates interstate bus, truck, rail, and water operations.
The ability of a firm to efficiently move products to its
customers depends on ICC policies and regulation.

Advertisers, retailers, and manufacturers typically try to police themselves
to ensure that their messages and products are not harmful or inaccurate.
In addition to good intentions, they have a practical reason to do so: They
don’t want governments to do it for them. Indeed, sometimes these efforts

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even seem to go a bit over the top. Consider, for example, a ruling by the
National Advertising Division (NAD) of the Council of Better Business
Bureaus, which is one of these industry watchdogs. Acting on a complaint
by rival Kimberly-Clark, P&G must add little flecks of cartoon toilet paper to
the backsides of its Charmin cartoon bears in future ads for its toilet paper.
Although P&G supported its claim that Charmin leaves “fewer pieces
behind” than the Cottonelle brand (and showed the results of its test on the
brand’s website), the NAD decided that the test “did not accurately reflect
the results consumers normally see and experience.”27

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