Underland beauty salon says it is standing by its decision to display the pillowcase with the phrase "goodnight c---" on it, despite receiving a number of complaints.

The salon, which opened this year, is located in Coliseum Walk, a busy laneway connecting Bridge Mall and Little Bridge Street.

The pillow has been displayed on sale for at least a week, but the shop owners have defended promoting the product with the offensive word.

It is surrounded by plush toys and colourful artwork.

When contacted by The Courier, the shop said the word was chosen because of its "popularity and attractiveness".

"Every shop front has a window where they advertise what they are selling! We at Underland have started to sell 'trendy' engraved pillowcases that have beauty benefits on our shop's services," the Underland team said in a statement.

"We wanted to make the pillowcases fun and we chose the C-word based on its popularity and attractiveness to our clientele these days, as a positively used word in Australia.

"We never intended to offend anyone at all, especially with the common use of the C-word these days. We honestly didn't think it would attract this much attention.

"We never intended to have the pillowcases up forever as our products we sell and advertise in the shopfront are changing all the time.

"We are a unique salon that offers unique experiences, unlike any other salon in Ballarat area and that's another reason why the pillowcases suit our shop's unique taste and experience."

An earlier Facebook post by the salon about the pillow drew a mixed response.

While some people were in support of the pillow, others said it was inappropriate for it to be in a shopfront where children would see it.

"I do think when it is now school holidays and Santa is going near your store it is very inappropriate. The Bridge Mall has enough negativity from the public now with out adding to it," one user commented.

"As a mum of two little girls who have just learned to read and read everything they can see. I would be very dismayed to see this in a window for my children to read," another posted.

The C-word itself is often considered one of the most offensive words in the English language.

Its use in advertising has been deemed inappropriate by the Australian Association of National Advertisers (ANAA) in previous instances, breaching its code of ethics.

When referencing the case of the notorious Wicked campervans, the ANAA said the word was "considered both strong and obscene by most members of the community".

The infamous "CU in the NT" tourism campaign from the Northern Territory was also banned from popular markets by the council in Darwin.

The ANAA's code of ethics also states: "Advertising or marketing communications shall only use language which is appropriate in the circumstances (including appropriate for the relevant audience and medium). Strong or obscene language shall be avoided."

City of Ballarat says it is investigating the matter, but it doesn't have the power to have the pillow removed.

"The City of Ballarat's regulatory services department is currently investigating this matter, however the current statutory and local laws is insufficient to require the forcible removal of the advertising signage in this instance. This is a matter that has been referred to Consumer Affairs," said a council spokesperson.

Consumer Affairs Victoria, National Retail Association and the Bridge Mall Traders Association have all been contacted for comment.

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