The Riddle of Effectiveness and Ethics of Comparative Advertising

Advertising is about marketing goods and services by directing the target audience (customers) to purchase promoted products through creating all-new needs. With reference to this definition, advertising is intertwined with many angles of law, such as consumer, corporate, and competition laws in many countries, especially US and EU laws. The existence of asymmetric information between the seller and the buyer is recognized a priori by the relevant legislation. Consequently, it approaches with caution the idea that almost all consumers are well informed and able to reach the most convenient product with the help of technology (such as affordable and quick delivery service, online banking). However, it becomes more problematic when advertisements create illusions that may manipulate and even deflect consumers from making optimal decisions. For example, an advertisement might exaggerate the benefits of a product, leading consumers to believe it is more effective than it actually is. The chapter undertakes a comprehensive analysis of the legal parameters surrounding advertising, emphasizing the examination of pertinent case law such as Ford v. General Motors. Within this framework, fundamental consumer expectations and needs along with ethical codes will be scrutinized.