Assignment Title: Case Analysis: Product Red A

MGMT566 Sustainability and International Corporate Citizenship

Prepared by: Chandandeep Singh

Professor: Todd Thexton

Royal Roads University

Words: 1190

MGMT 566

CHANDANDEEP SINGH

Table of Contents

Title Page #

Table of Contents 2

Product Red A - Introduction - Purpose 3

Product Red A - Concept 3

Product Red A - Goals & Objectives 3

Product Red A - Way it Works 3

Product Red A - Current Status &

Strengths4

Product Red A- Weaknesses Issues and

Criticism5

Product Red A- Recommendations &

Conclusion6

Bibliography 7

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Introduction – Purpose

This paper highlights the concepts of Ethical Consumer Movement model which became

popular in year 2006 and is known as Product Red. Product Red was started on an original idea

to market products of different companies promoting a social cause that would generate funds

to be donated for the purchase of medicated drugs to help the poor and sick people of Africa

affected with AIDS.

Product Red A – Concept

The Product RED concept was founded in 2006 by famous U2 activists Bono Shriver and Bobby

Shriver with a purpose to engross the financial support from the big companies in private sector

to raise funds for the elimination of HIV/AIDS in Africa.1

Goals & Objectives

The fundamental objective of this strategy was to buy antiretroviral drugs from the money

generated from these companies to save millions of African that were dying from diseases such

as AIDS, Tuberculosis and Malaria.2 Another objective of the strategy was to develop the brand

awareness of Red in such a way that it significantly helps to maintain continuous flow of funds

from the private sector by projecting the brand as an appealing and sustainable way of

contributing towards an ethical cause to charity.3 The current goal of Red is an AIDS free

generation by 2015.4

Way it Works

Red uses an unconventional way of raising the funds by partnering up with big multinational

brands like Nike, American Express (UK), Apple Inc., Starbucks, GAP, Dell etc. These

multinational companies acquire the license of association with Red and use the concept to

market some of their products by associating these products with cause related marketing by

flaunting their products with logo (Product) Red. In return they pay the licensing fee to support

the running of cost of Red operations and pay a significant part of the purchase price they

1 Harvard Business School Case Study by Youngeme Moon, Michael Norton and David Chen2 Ibid3 Ibid4 http://www.joinred.com/results/

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obtain generated from the sale of Red products directly to the Global Fund which is an

international organization that was set up in 2002 to fight AIDS, Tuberculosis and Malaria.5

Example: When a customer buys (PRODUCT) Red associated merchandise from Apple, Apple

gives a portion of the purchase price to the Global Fund to fight AIDS in Africa.

Current Status, Facts & Strengths

Due its unconventional model clubbed with an ethical support theme Red has obtained wide

recognition in public and mass media for promoting this ethical consumer movement that

promotes philanthropy in the society. Following are the strengths of Red as assessed from the

case and additional research:

1. Since its inception, donations from private sector companies have generated more than $200

million charity for the global fund for the elimination of AIDS in Africa.6

2. The core strength of Red’s concept is that 100% money generated from donations goes to

Global Fund HIV/AIDS grants7

3. Red is also partnered with promotional media entities like MTV, Google, Yahoo, You Tube,

HBO etc. which enables it to use the broadcasting services of these partners to educate

consumers about its ethical consumer movement to obtain consistent funding8

4. Red has successfully demonstrated its expertise in promoting corporate social responsibility

among various multinational giants by bringing this model of ethical consumer and cause

marketing model which further creates win-win model for all the parties involved namely

consumers, corporations, Aids affected community and society as a whole.

5. Consumers do not pay anything additional than the product’s price but can still contribute

significantly for an ethical cause as part of the purchase price is donated toward the

elimination of AIDS which makes this process highly convenient and efficient for consumers.

It has considerably helped in stimulating the feeling of social responsibility in society and

corporate social responsibility in corporate sector

5 http://www.theglobalfund.org/en/about/diseases/6 http://www.joinred.com/results/7 Ibid

8

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6. The Red’s model gives opportunity to consumer and corporations to participate actively in

eliminating obstacles affecting the people, society by promoting consumer activism. It has

raised the level of consumer and corporate awareness that has benefitted 4.2 million people

who are now receiving antiretroviral drugs9

7. Red has not only attracted consumers from LOHAS segment but also has appealed to

regular consumers with different buying behaviors by promoting a sense of responsibility with

this convenient model of ethical support

Weaknesses Issues and Criticism

Claims were made that the partaking companies were the ones who got real opportunities to

raise mass profits and to build images of Philanthropists. The purpose of the Product Red

campaign is clearly reflected in the case which illustrates that it was established with the sole

purpose to help eliminate AIDS in Africa. Following are the weaknesses and criticism:

1. Product Red was criticized for not having received donations as much its associated partner

companies invested in advertising to show their association with Red. It was said to have

offered a lot more benefit to the partner companies than that of the benefit that Global Fund

in terms of profitability these companies gained as compared to the donations they made to

the Global Fund10

2. The lack of transparency in regards to the amount of money going to charity as a percentage

of every purchase was criticized as well11

3. Red mostly associated itself with the companies manufacturing clothing and accessories and

the research indicates that it have no partnerships with any pharmaceutical companies so

being an evaluator of this case I condemn Red for its ignorance in terms of the benefits it

could have gained in all these years by promoting partnerships with various national and

multinational pharmaceutical companies

9 http://www.theglobalfund.org/en/about/diseases/10 Harvard Business School Case Study by Youngeme Moon, Michael Norton and David Chen11 http://adage.com/article/news/costly-red-campaign-reaps-meager-18-million/115287/

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4. Product Red was also criticized by reputable organization like National Labor Committee for

Worker and Human Rights for having companies like GAP and Apple as two of its partners

as GAP and Apple were both considered to be sweatshop companies12,13

5. Additionally, Product Red was criticized for wrapping the corporation in the patina of

philanthropy by diverting them from their central purpose of increasing shareholder profit

which was said to be responsible for changing the market based governance as donations

and advertisement investment for cause related marketing was diminishing shareholders

profits14

Recommendations & Conclusion

Product Red needs to demonstrate higher level of responsibility towards the transparency of

operations and disclosure for funds to obtain the label of integrity and transparency. It must

disclose the proceeds of donations from corporations publicly through convenient channels that

are in the reach of general public. It must also responsibly educate consumers by exhibiting

them about its unique model and its contribution so far in eliminating AIDS in Africa through

documentaries that it can broadcast through its promotional partners like Google and Youtube

without incurring any significant costs. It should actively involve in securing win-win partnerships

with big multinational pharmaceutical corporations that can directly contribute its cause

marketing efforts by supplying antiretroviral drugs.

Conclusion

It is concluded that Product Red must immediately lay out programs for implementation of the

recommendations offered to be more transparent focused not only building partnerships with

corporations but also on building close ties with consumers through advised awareness

programs.

12 http://nymag.com/news/intelligencer/23175/13 http://www.labourbehindthelabel.org/issues/faq/content/view/73/67/14 http://www.ssireview.org/blog/entry/the_patina_of_philanthropy/

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References

Harvard Business School Case Study by Youngeme Moon, Michael Norton and David Chen

Join Red Official Website

The Global Fund Website

Article # 115287 from www.adage.com

The patina of philanthropy from Stanford Social Innovation Review

Article on ‘Labour behind the label’ from www.labourbehindthelabel.org/issues/faq/content/view/73/67

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