Product RED: Applying the 10-Point Plan to Improve Revenue Stream - Case Study Example

Product RED: Applying the 10-Point Plan to Improve Revenue Stream Introduction The launch of Product RED is far from being low-key in consideration of international star Bono’s presence as the “main man” or founder. Many efforts on CSR have banked on their endorsers or popularity of the persons involved as can be observed in the case of Angelina Jolie as a United Nations ambassador, Gwyneth Paltrow as ambassador for Save the Children, and of course, the late Diana Spencer for various charities around the world (Nasrulla, 5). This trend has been traced to have been originated by Boomtown Rats’ Bob Geldof (Nasrulla, 7) and soon, a very corporate effort has been launched with Bono’s entry. This paper will try to discuss the applicability of the 10-Point Plan of Deeper Luxury on Product RED to improve the revenue stream. Discussion Product RED Product Red is a cooperative effort of several iconic or popular brands with musician Bono (of the band U2). It was “created to raise awareness and money for The Global Fund to Fight AIDS, Tuberculosis and Malaria […through] RED-branded products,” (quoted from Ponte, Rickey and Baab, 301). It was launched in Davos in 2006. The various brands include American Express, Apple, Converse, Gap, Emporio Armani, Hallmark and Motorola. A certain percentage of the gross sales in said RED products go to the Global Fund. Red has been used by corporations to sell products or portray themselves as “caring and cool” and a marketing tool linked with corporate social responsibility (4). Ponte et al has added that “RED engages corporations in profitable ‘helping’ while simultaneously pushing the agenda of CSR towards solving the problems of ‘distant others’” (302). The Ten-Point Plan Bendell and Kleanthous (42) provided the ten point plan in corporate social responsibility as follows: 1. Understanding the brand 2. Understanding the consumer 3. Getting the company in order 4. Handling the program with care 5. Innovation 6. Motivation 7. Collaboration 8. Communication 9. Activate Consumers 10. Measure, monitor and report progress. The various ways and means that RED products can employ the Ten Point plan is as follows: 1. In understanding the brand, Bendell and Kleanthous (42) suggested that a brand perception audit be conducted. For the brands under RED, perception is generally positive due to established reputation and brand awareness. The existing knowledge about these brands serves as the “true personality.” But aside from the current image, these brands should encompass tradition and creatively explore how the brands affect the environment and society. In employing CSR through Product RED, these companies provided an extension of their already established brands which employs the model of reputation games (Sacconi, 4). These companies have employed self-regulation as a long-run strategy in implementing social contract (Sacconi, 5), and Product RED is but an addition to their multiple marketing programs aside of course from the complementary “brand” weight the founder Bono provides. 2. Consumer awareness is a basic engagement of firms to continuously maintain competitiveness. Aside from demographic data, many firms today explore the psyche and attitudes of consumers to provide them fitting products that address needs and expectations (Szmigin, 3). In the introduction of CSR employing sustainability, Product RED offers customers a chance to meet ethical lifestyles through consumption of the products. The website of Product RED provides a calculator for users to determine the CSR impact of buying a certain product so that with a click, they are informed of how many anti-retroviral pills were contributed through purchase of a RED t-shirt. 3. Bendell and Kleanthous (42) suggest that the firm should employ all ethical and sustainable means in their system from product development, company operations, to distribution and marketing in a properly audited and monitored process. They propose an “engaged” CSR program through actual involvement. Product RED, on the other hand has been evaluated by Ponte et al (303) as “disengaged” which meant that the firms employ traditional corporate philanthropy of which possibility “they do not challenge any of the tenets of normal business conduct—on the contrary, the more successful a company is, the more money it can donate—no matter how and where that profit was obtained,” (Ponte et al,, 303). This leads to an understanding that competitive and exploitative practices in production and trade were justified through charitable donations (Ponte et al, 307). In evaluating the firms/brands under Product RED, Ponte et al (307) found the following: Company Ranking in Business Ethics magazine “Best 100 Corporate Citizens” Disengaged CSR Engaged CSR American Express 36 High Medium Apple n/a Low Medium Armani n/a Low Low Converse/Nike 3 High High Gap 25 Medium High Hallmark n/a High Low Motorola 4 Medium High Source: Ponte et al,307. 4. CSR should not be a treated as a trend and passing marketing practice that can be discarded or replaced any time soon. Corporate responsibility and sustainability should be integrated in all aspects of firm “to develop key performance indicators (KPIs) of sustainable business practices,” (Bendell and Kleanthous, 44). CSR for a long time now has been used interchangeably with corporate philanthropy, taking from Andrew Carnegie who proposed that Carnegie believed that “corporations had a responsibility to improve conditions for vulnerable groups—the disabled, the poor and the elderly,” (Ponte et al, 304). 5. Innovative brands find ways to help their consumers respond to social and sustainable issues so that design should be incorporated in their earliest stage such as product development. The products should “do useful jobs while enhancing people’s perceptions of themselves as environmentally or socially responsible,” (Bendell and Kleanthous, 45). 6. Motivation on the proposal of Bendell and Kleanthous centers on the firm’s efforts towards their team and practices. When it comes to Product RED, this can only be glimpsed on second-hand information as provided by Ponte et al (309) as presented on the table above as well as table below: Company Degree of Negative profile in media Tricky CSR issue Qualitative characterization American Express Low Lobbied for new bankruptcy law in the USA and benefited from it; benefited from sub-prime credit crisis Muddler Apple Medium Alleged poor working conditions at an iPod assembly in China; poor e-waste management Muddler Armani Low Alleged poor labor conditions; guilty of bribing tax auditors Outside the public radar Converse/ Nike High Sweatshop allegations Good performer-rebounder Gap High Sweatshop history allegations Good performer-rebounder Hallmark Low None apparent Outside the public radar Motorola Medium Coltan issue; child labor and poor work conditions allegations Good performer-proactive . Source: Pote et al, 309 7. The suggested collaboration effort in WWF (Bendell and Kleanthous, 43) includes engaged and disengaged efforts to address CSR programs that reinforce the commitment of the firms for sustainability. Strategic partnership has been mentioned which the Product RED firms complied with but their environment impact cannot be determined. The social aspect has been defined as provision of relief medication for AIDS patient in third world countries (Ponte et al, 309). 8. Bendell and Kleanthous (2011) encourages the firms to be transparent as well as inform the public, their customers and prospective customers about their CSR programs but at the same time honest enough to admit that efforts may still need development. 9. Product RED through involvement of their customers online activated awareness as well as engagement although much is still needed to fully integrate a “sustainable” practice since it is not yet fully clear how the firms at Product RED advance their CSR and sustainability agenda. As Bendell and Kleanthous (44) suggested, “If your brand makes them feel like better people at the same time as fulfilling its principal function, then it will thrive,” (45). 10. There are companies that at Product RED that have employed CSR programs and sustainable measures such as Converse/Nike, Gap and Motorola (Ponte et al, 309). Aside from Product RED, they are labeled active or with high CSR engagement which accounts to their commitment to produce results. Conclusion: Revenue fuels the continuity of every business enterprise. Some of the mentioned companies that have participated in Product RED clearly indicated commitment towards integration and implementation of CSR programs through their “engaged” practices but others have questionable practices as indicated in the data gathered. Improved revenue stream, however cannot be easily determined through the data gathered but instead, hints like market presence of these products indicate that entry to the CSR program Product RED may have helped as well as balance the negative image these companies have acquired in their recent history. Market presence until today translates to improved revenue stream but this does not mean the 10-Point Plan was implemented, if at all considered. In fact, only 3 of the companies mentioned by Ponte et al actually have their own CSR agenda that applied a few of the 10-Point Plan. Reference: Bendell, Jem and Anthony Kleanthous. 2011. Deeper Luxury. WWF. Nasrulla, Amber. 2008. Celebrities and their Charities. May 26, Suite101. Accessed from http://www.suite101.com/content/celebrities-and-their-charities-a48888 Ponte, Stefano, Richey, Lisa Ann and Baab, Mike(2009)Bonos Product (RED) Initiative: corporate social responsibility that solves the problems of distant others, Third World Quarterly,30:2,301 — 317 Sacconi, Lorenzo. 2004. A Social Contract Account for CSR as Extended Model of Corporate Governance (Part II): Compliance, Reputation and Reciprocity (December). Trento University Economics Working Paper No. 11. Szmigin, Isabelle. 2003. Understanding the consumer. Sage. Read More