Goodpasture Project Three Submission

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Southern New Hampshire University *

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500

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Marketing

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Apr 3, 2024

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docx

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MEMO To : Don Washington, Director of Marketing, Rewards Membership Alva Ramirez, Director of Sales, Rewards Membership Anne Hernandez, Chief Executive Officer From : Trisha Goodpasture, Internal Consultant Subject : Addressing Legal Team Concerns on Low-Income Marketing and Sales Plan Executive Summary Per my review of the memo from the legal department, two legal requirements and three ethical concerns have been brought to my attention regarding the marketing and sales teams’ plan to expand the rewards membership program. I have been asked to evaluate these concerns and recommend changes to the proposal that address both the legal and ethical barriers that exist with the current plan. The purpose of these changes is to ensure that the legal team will ultimately approve the proposal and allow the marketing and sales teams to move forward with an acceptable plan in place. Addressing the Two Legal Requirements Truth in advertising: Analysis and recommendations The legal department had particular concerns about the legal requirement for truth in advertising when reviewing the strategies outlined in the “Ad Lines” section of the proposal from the sales and marketing teams. The legal team cited requirements from the U.S. Federal Trade Commission in their address, specifically in terms of precision, deception, and substantiation of claims (United States,

2021). While the marketing team’s Ad lines are thus far high-level and non-specific, some of them do appear to directly violate one, if not more, of these requirements. The marketing team plans to advertise that the loyalty membership “pays for itself” and that “there is no better way to give”. These two lines are the most concerning, as they are difficult to prove, imprecise and could be potentially deceptive. For instance, the line stating “Membership pays for itself” is only applicable if the loyalty member spends enough to earn enough rewards to outpace the cost of the membership. If they are an occasional customer, there is a possibility that the monetary value of earned rewards will not add up to the money spent to be a part of the program. Based on a 2023 study of 2500 consumers, a large percentage fail to use loyalty programs to their full advantage, with 72% of participants using 50% or less of their memberships and 31% of consumers surveyed using 25% or less (Ebbo, 2023). That being said, it is my recommendation that the sales and marketing teams adjust their ad language to state “Loyalty program pays for itself when used to full advantage”. By restructuring the line this way, the customer is not deceived into thinking that minimal usage of the program will out-weigh the cost of entry and is instead given the understanding that they would need to participate fully in the program to truly recoup their investment. Similarly, there is no way to substantiate the claim for the ad line that reads “there is no better way to give”. There are millions of ways to give to various causes and there is no way to prove qualitatively or quantitatively that participation in ABC’s loyalty program is the best out of all of them. To mitigate this issue, the sales and marketing teams should simply adjust this language to read “It’s a great way to give”. Because the term “great” is subjective, there is no need to substantiate the claim and this change in language would therefore neutralize the legal issue brought forward by the legal department.

Data collection and privacy: Analysis and recommendations There were two areas of concern mentioned by the legal department regarding data collection and privacy upon their review of the marketing plan. The first concern was the marketing and sales teams’ regard for consumer privacy. They specifically cited the California Consumer Privacy Act of 2018, where it states the consumer has “the right to opt out of the sale of their personal information” (CCPA, 2018). In its current state, the proposal does not actively address this issue or how consumer data will be used or distributed to third parties. This concern is easily mitigated if the teams specify in their plan that customers will have a clear and easily accessible “opt out” option when it comes to the sharing of their personal data, both upon entering the loyalty program and at any point during their membership. The second area of concern in regard to data collection and privacy centers around the sales and marketing teams’ plan to enroll, and therefore collect data from, consumers under the age of 18. This concern is in reference to the teams’ intention to market and draw a consumer base in local high schools. The legal team gave specific guidance on how to address this by stating the teams must “come up with an alternative approach that does not require the kind of membership that students under 18 must purchase and share sensitive data to use”. As such, this concern can be mitigated by requiring prospective loyalty members under the age of 18 to join the program with the permission and buy-in of a parent or guardian. Essentially, the parent or guardian would need to be the one sharing the data and could subsequently list their minor child as an authorized user of the loyalty program and perks. Addressing the Three Ethical Concerns Direct marketing to low-income populations: Analysis and recommendations In their analysis, the legal team shared ethical concerns with how the marketing and sales teams plan to reach and target low-income populations. They specifically stated that it is imperative that participation in the loyalty program serves to add value to the lives of the consumers, rather than

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