Business and Society 9th Edition by Archie Carroll,Ann Buchholtz

Exercise 2

The Comparative Advertising Wars
Comparative advertising traditionally takes place between the features of two brands-Coke vs. Pepsi, McDonald's vs. Wendy's, Starbuck's vs. Dunkin' Donuts. But, now, Walmart has raised the stakes and the battle is between entire stores, not just brands.
Walmart has gotten aggressive with its new advertising campaign. Its new campaign asserts that Walmart has lower prices than specific, named competitors and this has troubled many of them. Several of the targeted retailers, including Toys "R" Us, Best Buy, and some regional supermarket chains, such as Publix, claim Walmart has been citing inaccurate prices and comparing different products such as laptops with different specifications.
Best Buy, the electronics retailer, fingered a Walmart ad for a Dell laptop as being deceptive. Walmart had claimed the laptop cost $251 more at Best Buy. The electronics retailer said that the two laptops in the comparison were different models and that the one it was advertising had a longer battery life. Toys "R" Us told Michigan officials that Walmart was citing inaccurate prices for some of its products. Walmart's rivals also say that Walmart does not carry adequate stock for some of its advertised products and that to compete they have to match prices for products that are in short supply or unavailable at Walmart.
Walmart claims its ads are accurate. One company spokesman was quoted as saying: "We know competitors don't like it when we tell customers to compare prices and see for themselves." He continued: "We are confident on the legal, ethical and method logical standards associated with our price comparison ads."
The FTC has said the following about comparative advertising: "When truthful and non-deceptive [comparison advertising] is a source of important information to consumers and assists them in making rational purchase decisions."
1. When thousands of products and their prices are at stake, does it make sense that comparative advertising at the store level be permitted?
2. Based on what you have read and any further research you choose to do, has Walmart competed fairly with its comparative advertising campaign? Does the fact that so many retailers have complained about Walmart's advertising suggest that there are probably some problems with it?
3. A strong standard for advertising is that it be clear, accurate and adequate. Can comparative advertising as a practice meet these standards? Or, are there too many products with too many subtle variations to make the practice defensible?
4. Should the FTC reconsider its endorsement of comparative advertising? Should restrictions be placed on comparative advertising? If so, what would they be?