In this blog assignment, select a brand that faced ethical or legal issues. Determine how these issues influenced consumer perceptions of the brand and how it impacted their engagement with the brand. What were the ultimate implications for the brand? What should the brand have done differently, and why? Provide at least two additional resources to support your reasoning.
The University of Phoenix (UOP) has faced legal issues. Essentially, this for-profit school used misleading advertising to attract potential students. Its ads featured major companies like Twitter, Adobe, and Yahoo. This gave consumers the impression that the university worked with these organizations to create job opportunities and/or that it tailored its curriculum to make graduates attractive to such companies. But the university did not have any connection with these companies, nor did it develop its curriculum with these companies in mind. Also, the UOP is the largest recipient of the post-9/11 GI Bill benefits since the program was established (Kowalick, 2019). Nevertheless, the school still used these ads to heavily target active and former military members so that it could receive more federal aid money.
The ramifications for the University of Phoenix were quite severe. A lawsuit was filed, and the UOP was ordered to pay $50 million to the Federal Trade Commission (FTC). The school was also forced to forgive $141 million in load debt from students who were harmed by its deceptive practices (Federal Trade Commission, 2020). This deceit also caused consumers to have a negative perception of the university, and they came to view it as an institution that is more concerned about making a profit than students succeeding through higher education. As a result, people were far less engaged with the UOP in which they stopped signing up for various seminars and campus tours. And by 2017, student enrollment had fallen by 70%, forcing the university to close 115 of its locations (Stebbins, Comen, Sauter, & Stockdale, 2018).
The University of Phoenix should have only featured employers that it had a relationship with, in its ads. This would have allowed the school to avoid misleading consumers. Or the school should have worked with the large organizations that it wanted to use in its ads to develop courses. That way, there would be a true connection, and the school wouldn’t have violated consumer trust, ruined its reputation, or faced legal action. Overall, the UOP should have simply been honest, as honesty is one of the best marketing tools. It allows consumers to have a positive experience with a brand, and it inspires their trust and loyalty. As equally important, honesty helps a brand to maintain a good reputation, which is vital for growth (Crespo, 2017).
Crespo, C. (2017, August 9). The Importance of Honesty in Sales & Marketing. Retrieved from https://www.motoza.com/2017/08/09/importance-honesty-sales-marketing/
Federal Trade Commission. (2020). FTC Obtains Record $191 Million Settlement from University of Phoenix to Resolve FTC Charges it used Deceptive Advertising to Attract Prospective Students. Retrieved from https://www.ftc.gov/news-events/press-releases/2019/12/ftc-obtains-record-191-million-settlement-university-phoenix
Kowalick, C. (2019, December 10). University of Pheonix Settles in $191-Million FTC Suit. Retrieved from https://www.timesrecordnews.com/story/news/local/2019/12/10/university-phoenix-settles-191-million-ftc-suit/4388971002/
Stebbins, S., Comen, E., Sauter, M., & Stockdale, C. (2018, February 12). Bad Reputations: America’s Top 20 Most-Hated Companies. Retrieved from https://www.usatoday.com/story/money/business/2018/02/01/bad-reputation-americas-top-20-most-hated-companies/1058718001/