Companies often face competition as they launch products and services that already exist in the market. As a result, companies work to differentiate their brands from their competitors through everything from pricing strategies to their customer service tactics. As a part of their advertising campaigns, companies compare the benefits of using their product or service to using competing brands through comparative advertising. The Federal Trade Commission (FTC) has a few guidelines that outline best practices for comparative advertising.
History
The FTC Act of 1914 and the Wheeler-Lea Amendment of 1938 set the stage for comparative advertising guidelines, giving the FTC the power to stop companies who made negative remarks about competing brands. The first documented case of comparative advertising and the FTC occurred in 1974, when Ronson, a manufacturer of shavers, launched a complaint about Schick's electric shaver advertisement. Schick claimed that its Flexamatic electric shaver shaved closer than rivals. The FTC concluded that Schick misused data in its claims.
Tell the Truth
The FTC notes that if a brand compares its product or services to another brand, it can make disparaging comments, however, the comments must present consumers with truth, not assumptions or blatant lies. The FTC's mission is to ensure that if companies make disparaging comments, they do so without deceiving consumers by providing false information.
Provide Evidence
For companies to ensure that they're sharing accurate information, they have to be able to supply evidence that substantiates any comparative comments they make about another company or product. Companies can get evidence by conducting consumer and market research. For example, if a laundry detergent company says customers can get 20 percent more wash loads with their 20-oz. container, compared to a competing brand with a 20-oz. container, research is necessary to substantiate the claim. In this instance, the company may produce research about the ingredients in their product, compared to the competitor, which allows customers to use less of the product and get more wash loads per bottle.
Benefits
The FTC notes that comparative advertising can be advantageous for both companies and consumers, so they encourage companies to use the tactic, as long as they can substantiate any claims they make. Comparative advertising can help inspire ideas for new products and services and encourage businesses to make improvements to the products and services they offer. It can also have a positive effect on prices, making products and services lower for consumers. Comparative advertising also provides consumers with specific information, such as features and benefits, of brands, which can help them decide which products and services best fit their needs.
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