Three Major Advertising Areas Regulated By Law
Here are some of the major areas in marketing and advertising that are affected by law.
1. Product decision
• A seller is prohibited from adding or deleting a product without estimating first the effects of the product on the competition or the effect of the products deletion on dealers and distributors.
• It is also generally not allowed to conduct mergers and acquisition if that will significantly lessen the competition in the industry.
• No product may be designed that is “illegally similar” to a product that already exists in the market. It is however allowed for a firm to license another firm to manufacture its product for a specified period of time.
• Some food, drug and fiber products are required to maintain its quality to conform to standards set by the government. This is particularly evident in many canned food products where you will find the manufacturer detailing on its labels the contents and its proportion to other nutrients. Shelf life and expiration dates of the products are also indicated.
• In many states, unit pricing is also enforced to allow the customer to make better selection through price against weight comparison.
2. Pricing Decisions – As long as economic conditions are normal, there are no price controls that set maximum levels for prices. What marketing people call as market forces are allowed to play.
• Some states however prescribe a minimum level of markup on the cost of the product.
• In many states, unit pricing is also enforced to allow the customer to make better selection through price against weight comparison.
• Deceptive pricing, like deceptive advertising is also prohibited.
Generally, prices are legislated to protect customers from price discrimination.
The Unfair Trade Practices act and Resale Price maintenance Agreements are examples of laws that have been passed to protect the buyer.
3. Distribution Decisions
Distribution decisions are the choice of channels where your products are moved from your end to the consumer.
• In general however, laws about goods distribution are passed to protect against distribution exclusivity. While there is nothing illegal with exclusive distribution, the issue arises when a company insists exclusivity that excludes the competition the would result in lessening the competition or in a monopoly.
Here is also the historical development of marketing related laws that you might want to be acquainted.
• The Sherman Anti-Trust Act – 1850. Covers the law on monopolies attempts to monopolize and conspiracies to restrain trade.
• Pure Food and Drugs Act – 1906. Prohibitions on fraudulent labeling of food and drugs.
• Federal Trade Commission Act – 1914. Declarations on unfair methods of competition that is deemed unlawful. The law is also amended by the Wheelers-Lea Act that added the phrase “and unfair or deceptive acts or practices.”
• The Clayton Act – 1914. The act basically supplements the Sherman-Trust Act on monopolies and attempts at monopoly. The act also prohibits specific types of discriminatory pricing, Interlocking directorates, exclusive dealings and tying clauses.
• The Robinson-Patman Act – 1936. Definitions of unlawful pricing and price discrimination, limits of quantity discounting, forbidding on brokerage allowances for brokers (except to independent brokers), and certain conditional prohibitions on promotional allowances to the furnishing of services or facilities.
• Miller-Tydings Act – 1937. The act amends the Sherman Anti-trust to exempt inter state fair trade agreements from prosecution.
• Anti-Merger Act. – 1950. Prevention on inter corporate acquisition that will affect adversely the competition
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