Current Perspectives on Public Policy Issues

Michael B. Mazis, The American University
ABSTRACT - This paper reviews four papers dealing with a variety of public policy issues -corrective advertising, performance labeling, price marking and selling restrictions. Both laboratory experiments and cross-sectional economic modeling is used in these studies. While concern for research methodology and internal validity is evident, greater attention to generalizability and measurement of economic effects is needed.
[ to cite ]:
Michael B. Mazis (1982) ,"Current Perspectives on Public Policy Issues", in NA - Advances in Consumer Research Volume 09, eds. Andrew Mitchell, Ann Abor, MI : Association for Consumer Research, Pages: 333-335.

Advances in Consumer Research Volume 9, 1982      Pages 333-335

CURRENT PERSPECTIVES ON PUBLIC POLICY ISSUES

Michael B. Mazis, The American University

ABSTRACT -

This paper reviews four papers dealing with a variety of public policy issues -corrective advertising, performance labeling, price marking and selling restrictions. Both laboratory experiments and cross-sectional economic modeling is used in these studies. While concern for research methodology and internal validity is evident, greater attention to generalizability and measurement of economic effects is needed.

PERCEPTION OF CORRECTIVE ADVERTISING

The paper by Belch, et. al., "An Examination of Consumers' Perceptions of Purpose and Content of Corrective Advertising," considers one major question frequently addressed by public policy researchers: Does corrective advertising produce the intended effects on consumer perceptions? In examining this issue, the authors employ a laboratory experiment methodology in which consumers are provided with a corrective message and are asked to respond immediately to a series of questions concerning the experimental stimulus. Since other authors (e.g. Mazis and Adkinson 1976; Mizerski, Allison and Calvert 1980; Sawyer and Seminik 1978) have discussed the importance of simulating exposure to a message under normal viewing conditions and of using non-exposed control groups, this paper will not examine these issues in depth. It should be noted, however, that both internal and external validity would have been enhanced if these issues were considered in the study design. Given the voluminous corrective advertising literature, this comment will focus on the major goals of the Belch, et. al study and its contribution tn understanding corrective advertising effects.

Must Consumers Comprehend the Purpose of Corrective Advertising?

One purpose of the Belch, et. al. study was to determine if consumers "comprehend the purpose of corrective advertising." Can't corrective advertising accomplish its goal of providing needed information without informing consumers that the message is remedial in nature? A Court of Appeals struck down the Federal Trade Commission's use of the phrase, "contrary to prior advertising," because it was believed that there was no reason to inform consumers of previous sins since such disclosures would serve only to humiliate the advertiser. The Court reasoned that in the absence of convincing contrary evidenceS correction of false beliefs could be accomplished by providing consumers only with needed factual information.

It should be noted that previous research has addressed this issue. Mazis and Adkinson (1976) found that identification of a corrective advertisement as emanating from the Federal Trade Commission did not result in greater recall and belief change than the identical message without source disclosure. Therefore, it may be unnecessary that "consumers must be able to comprehend both the purpose and content of corrective advertisements" in order to restore beliefs to their previous levels.

What is the Purpose of Corrective Advertising?

In order to convey the purpose of corrective advertising to consumers, it is necessary, of course, to understand that purpose. Is the purpose of a remedial message to merely make available factual information to the consumer' If consumer exposure is the principal goal of corrective advertising, a simple disclosure in the context of the advertiser's persuasive communication (e.g. "Warning: The Surgeon General has determined that cigarette smoking is dangerous to your health.") may be a satisfactory approach to discharging the advertiser's responsibilities. However, if the goal of corrective advertising is to alter consumer beliefs or behavior, the message must be interesting or it will fail to compete for the consumer's attention. As a result, consumers rarely notice the Surgeon General's warning against the backdrop of attractive models and powerful counter-messages, e.g. Newport cigarette's message, "Alive with Pleasure." This raises a philosophical question: Is it the government's role to inform or persuade? By developing governmental messages or by forcing advertisers to develop more potent messages which promote anti-consumption, isn't government attempting to persuade? On the other hand, if government focuses on mere information exposure through labels or ads as its goal, is it exercising its responsibilities to inform consumers since this information is unlikely to be noticed in the cluttered commercial marketplace? There must be a clear consensus as to the purpose of corrective advertising before effective messages can be developed. Currently, there is no clear goal ant, as a result, there is no adequate procedure for judging corrective ad effectiveness.

Do Consumers Understand Corrective Advertising?

In a recent article, Jacoby, Nelson and Hoyer (1981) suggest that the FTC's remedial orders may serve to confuse consumers as much as the deceptive messages they are designed to correct. The current study indicates that a substantial portion of consumers agreed with the statement, "STP motor oil additive will reduce oil consumption," in spite of the fact that the corrective message was designed to disabuse consumers of this belief. However, the message may have been confusing since it states that tests '|cannot be relied on to support the oil consumption reduction claim by STP," but that "new tests have been undertaken to determine the extent to which the oil additive affects oil consumption.

Are corrective advertisements inherently confusing to consumers? The procedure used to draft corrective advertising orders, controlled largely by attorneys, and to modify orders, accomplished by judges, frequently does not involve consumer research. While there have been changes in this process in the last few years, message development is still part of the legal process which rests in the hands of the legal profession. While corrective ads are not inherently confusing to consumers, the process of negotiation sat modification often produces messages which are not pleasing to consumer researchers and communications experts.

What is the Future of Corrective Advertising Research?

Given the amount of corrective advertising research (about 20 major studies in the last ten years), what is known and unknown about corrective advertising effects? What should be the focus of future investigations? Nearly all studies have shown that corrective messages have the potential to be noticed by consumers and to affect consumer beliefs. A recent evaluation study on the impact of Listerine corrective advertising indicated that the effects tended to be logarithmic with the greatest impact occurring in the early months of the campaign. The message also affected reported Listerine use for colds and more throats. However, a significant proportion (40%) of Listerine buyers still use the product for cold and more throat prevention or cure (Mazis 1981).

There is, however, less known about the effects of varying corrective message design. Can messages be developed which communicate essential information to consumers without imposing a serious financial burden on advertisers? Can procedures be developed to insure that corrective messages achieve desired goals (e.g. through performance standards) at a reasonable cost?

Finally, more research is needed on the internal mechanisms used by consumers to accept or reject corrective messages. The courts have upheld the FTC's right to order corrective advertising because they view a corrective message as a form of affirmative disclosure which is needed to permit accurate reception of currently truthful ads. Is this an appropriate view of consumer reception of existing ads with and without corrective disclosures? Could other promotional vehicles be used to carry the corrective message? Is corrective marketing a more appropriate term than corrective advertising? Cognitive response models and other information processing tools might be used to provide insights into these questions.

VOLUNTARY PERFORMANCE INFORMATION DISCLOSURES

The paper by Crosby and Grossbart address the increasingly important relationship between economic theory and the need for information disclosure. The focus of public policy discussion has been shifting from enhancing disclosure effectiveness to the appropriateness of disclosure or any other governmental intervention for solving marketplace problems. Two key questions are critical to policymakers: When is government intervention appropriate? What is the appropriate form of government involvement? (Mazis, Staelin, Beales and Salop 1981).

As the authors suggest, non-intrusive remedies should be considered before turning to government intervention. As such, the paper suggests that voluntary performance informance disclosure should be considered as a practical solution to the lack of marketplace information. The reported experiment concluded that "voluntary disclosure can have a positive impact on consumer preferences." These results suggest that marketers consider voluntary disclosure as a marketing tool to increase profitability. However, the methodology used in the experiment makes it difficult to extrapolate the results beyond the laboratory setting. For example, subjects were informed that Brand A rates its carpets on wearability and discloses these ratings to consumers, while Brand B does not disclose performance information. As expected, consumers preferred the brand containing performance information perhaps attributing lack of quality to the non-disclosing brand. In the marketplace, however, consumers' attention would not be focused on disclosure information and it is unclear if the same attribution processes would take place.

What future information disclosure research should be undertaken? At this point, there is a need to carefully simulate the natural exposure conditions. Actual field studies are needed because the process through which information diffuses through society has not been examined. For example, a recent study suggests that the mass media (e.g. news stories) or word-of-mouth communication may have been more important in communicating information about unsubstantiated advertising than information disclosure (Bernhardt, Kinnear, Mazis and Reece 1981). Emphasis needs to be shifted from information processing studies on direct reception of information to diffusion research in natural settings which takes into account the varied forms of information transmission.

In addition, it must be recognized that there are economic consequences of information disclosure. If it is assumed that information disclosure will raise the costs of producing a product, the distributive effects of these increased costs must be studied. For example, if open-dating is used by a dairy producer, well-educated persons are likely to use open-dating to select the freshest merchandise. However, poorly-educated persons may not use open-dating as readily so they may receive merchandise which is less fresh than the more educated consumers. As a result, it might be argued that the costs of implementing the open-dating program fall disportionately on the less educated consumers. Therefore, it is important to study the varied usage of disclosure information and the economic consequences of these effects.

IN-STORE PRICE INFORMATION

The paper prepared by Valarie Zeithaml was placed in this session as a result of its selection as the best consumer behavior paper based on a doctoral dissertation completed during 1980-81. By addressing an important public policy issue -- the effect of the removal of price marketing on consumer behavior - and by studying this issue within an information processing framework, the research makes a significant contribution to the literature. The study's principle strength is its methodology, which is a fine example of a laboratory simulation. Great attention is devoted to internal validity issues. The study's major findings are that removal of price marking creates increased recall errors of product prices and causes consumers to spend more money. Given these are controversial findings, some alternative perspectives and observation may be appropriate.

Since this is a laboratory study which focuses on the short-term effects resulting from price removal, a fact which is readily acknowledged by the author, it is possible that consumers might adjust their decision making overtime by devoting greater attention to shelf labels. Any short-term effect may dissipate as consumers develop coping strategies. It should be noted that other long-term effects may emerge also. With price making, consumers are continually exposed to prices after the purchase is made. This repetition may facilitate increased recall of prices.

The artificial nature of the budget constraint may have had an impact on the results. Consumers were asked to "shop" for a list of twelve items and were instructed to stay within a $10 budget. Consumers were not, however, permitted to keep any remaining money thereby reducing incentives to pick the most economical product. Therefore, unit price information, which exists on the shelf labels, might not have been referred to as much as might have been the case if there were greater incentives to save money.

Also, additional dependent variables might have been introduced to gain greater insights into consumer behavior. While recall errors of the exact and relative prices of products selected are important measures, other recall measures could be examined also. Knowledge of the "best buy" within a product category and recall of relative prices of chosen and unchosen alternatives within a given product category should be studied also. Perhaps shelf tags would be more helpful than individual price marking in these cases.

Encoding and brand loyalty measures might be refined in subsequent studies. Both covariates employ general construct measures ("I notice price changes;" "I make price comparisons"; "I buy brand names"). As a result, these variables to not provide much explanatory power. More specific encoding measures designed to assess actual processing in the experiment and brand loyalty toward the products studied are preferred.

Finally, the study does not address the key economic question: Is consumer welfare enhanced by maintaining price marketing? In order to study this issue, consumer savings through using price marking must be compared against the retailer's cost saving obtained through price removal. Since some estimate of economic effects may be deduced from the experimental data, the author is encouraged to pursue this analysis.

ALCOHOLIC BEVERAGE RESTRICTIONS

The Bloom and Franzak study differs substantially from the previous three studies since it employs cross-sectional economic modeling rather than a laboratory experiment. Since few consumer research studies use this approach, it is pleasing to see an appropriate alternative methodology applied to an important public policy problem -restrictions on the sale of alcoholic beverages. Since varying states employ different restrictions, this presented the opportunity to use a quasi-experimental design.

However, the study is limited by the data base, sales of distilled spirits by wholesalers, since actual consumption behavior is not measured. Given that wholesalers may sell across state lines and consumers may travel across state borders to avoid legal restrictions, measurement on an individual consumer level would have been preferred. The attempt to teal with these issues through a proxy variable (BORDER), does not appear to be satisfactory. Therefore, retention of the null hypotheses must await confirmation using a more sensitive data base. An alternative approach is the use of interrupted time series analysis examining localities that had changed regulations over time. Also structural equations could have been used and some form of cross-validation might have been attempted.

REFERENCES

Bernhardt, Kenneth L., Thomas C. Kinnear, Michael B. Mazis and Bonnie B. Reece (1981), "Impact of Publicity on Corrective Advertising Effects," in Advances in Consumer Research, Kent B. Monroe, ed., 8, Ann Arbor MI, Association for Consumer Research. 414-415.

Jacoby, Jacob, Margaret C. Nelson and Wayne D. Hoyer (1981), "Correcting Corrective Advertising," in Advances in Consumer Research, Kent B. Monroe, ed., 8, Ann Arbor MI: Association for Consumer Research, 416-422.

Mazis, Michael B. (1981), "The Effects of the FTC's Listerine Corrective Advertising Order," report presented to the Federal Trade Commission, (November).

Mazis, Michael B. and Janis A. Adkinson (1976), "An Experimental Evaluation of a Proposed Corrective Advertising Study." Journal of Marketing Research, 13 (May), 178-183.

Mazis, Michael B., Richard Staelin, Howard Beales and Steven Salob (1981), "A Framework for Evaluating Consumer Information Regulation," Journal of Marketing, 45 (January), 11-21.

Mizerski, Richard W., Neil R. Allison and Stephen Calvert (1980), "A Controlled Field Study of Corrective Advertising Using Multiple Exposure and a Commercial Medium," Journal of Marketing Research, 11 (August), 341-348.

Sawyer, Alan G. and Richard J. Seminik (1978), "Carryover Effects of Corrective Advertising," in Advances in Consumer Research, 5, R. Keith Hunt, ed., Ann Arbor, MI: Association for Consumer Research, 343-351.

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