Product Red Case Study
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Over the years, businesses have evolved to incorporate consumer views in their practices. As a result, consumer power has become an influential force that directs organizational strategies towards ethical practices. Based on the previously mentioned view, an evaluation of Product red’s strategy provides insight on its strengths, weaknesses, and improvements. Product Red
Harvard Business School (2009) argues that numerous challenges face various nations. As a result, business organizations should utilize models that contribute to projects that reduce the scourge. Illustratively, the product red strategy inspired business organizations participate in the production and marketing of RED products with an aim of raising funds for AIDS in Africa. This innovative approach of engaging public and private entities in raising funds has enabled the global fund to fight diseases in Africa. Some of the diseases that the global fund targets include AIDs, tuberculosis, and malaria. According to Harvard Business School (2009), RED partners have managed to attract higher revenues since consumers associate the brands with ethical practices. Strategy Analysis
Product red business has made significant gains in inspiring organizations to produce commodities whose revenues can be contributed to ethical activities. As a result, an evaluation of the model’s strengths and weaknesses reveals some improvements that should be made to enhance the model’s efficiency. Strengths of the RED Strategy
Harrison (2005) argues that Product RED strategy increases the awareness of consumers and shareholders on the application of ethical practices in their organizations. As a result, consumers and shareholders utilize their influences to demand for social, political, and environmental responsibility. Given the inadequacies in government policy and challenges in the allocation of funds, multinational organizations may place their emphasis on capitalistic goals thus introducing negative aspects to society. Illustratively, the Red strategy has the strength of inspiring partner organizations to protect and facilitate consumer rights. The above-mentioned strength has advanced the course of ethical consumerism thus enhancing social responsibility among entities.
In contrast to the traditional charity model, the RED strategy portrays the company as an equal partner with its associates. The above-mentioned strength is confirmed by the increase in profit in organizations that have participated in RED’s activities (In Healey,2013).The innovative approach has encouraged partner organizations to devote their resources in the development of RED’s products, promote the concept of ethical practice in business and generating additional benefits that simultaneously benefit the needy in society. Additionally, the RED strategy enables organizations to produce ethical products at prices that match their non-ethical equivalents. The RED strategy has facilitated the production of cheap products thus reducing economic pressures on consumers. According to Harrison (2005), high prices associated with ethical commodities have been a hindrance to the adoption of ethical goods. Subsequently, the introduction of ethical commodities with prices equivalent to that of non-ethical goods has enabled the RED strategy to attract the drifter and conventional groups of consumers In Healey (2013) contends that effective public relations are crucial in the adoption of ethical consumerism within a society. Subsequently, the RED strategy employs concepts of the public relations excellence-theory to develop a suitable communication loop between organizations and consumers. As a result, RED strategy develops a strength that is associated with enhanced co-orientation of messages between environmental, consumer and organizational systems. The above-mentioned strength enhances availability of information among consumers thus promoting ethical consumerism. Weaknesses of the RED Strategy
The RED strategy has several strengths that have enhanced it adoption in several organizations. However, the strategy has weaknesses that limit its effectiveness hence an evaluation of each weak spot facilitates the development of suitable recommendations. Foremost, the RED strategy has the weakness of not regulating organizations based on a set of sustainability standards and social wellness. As a result, RED company certifies organizations that participate in un-ethical practices. For instance, Red’s partner Foxconn received certification despite violating labor standards in its companies. These weaknesses have enabled unethical organizations to paint images of socially responsible entities thus covering their misdeeds.
According to In Healey (2013), inadequate certification processes have led to “red washing” of entities. Secondly, lack of transparency in RED’s activities is a weakness that attracts numerous criticisms to the model. The aforementioned view is supported by market research findings that revealed mismatches between advertising investments and amounts raised for charity activities. Illustratively, market research reveals that RED company invested one hundred dollars in marketing and advertisement but generated eighteen million dollars for charity(In Healey, 2013).The lack of transparency attracts criticism on RED’s efficiency and credibility. This weakness may reduce RED’s influence in the long-run since its opponents hold the view that donating directly to the needy is more effective. Thirdly, the RED strategy has a sustainability related weakness due to the randomness and one-time purchase of RED products. Subsequently, the market based approach is affected by lack of loyalty among consumers hence its ability to cater for ARV needs in Africa may be jeopardized. Improvements on the RED Strategy
Several improvements can be made on product RED’s strategy to enhance its effectiveness. In the first case, Product Red should enhance its screening capabilities to ensure that its partners with organizations with good corporate-social responsibility histories. The aforementioned improvement will enable Product RED to enhance consumer trust thus enhancing sustainability it the company’s activities (Harvard Business School, 2009). In the second case, Product RED should enhance its access to financial reports from partner companies. Improved access to financial data will enhance transparency in associate companies since the right percentage is remitted to the global fund. In addition, Product RED should introduce channels that allow direct donations from individuals to affected individuals in Africa. This will increase revenues raised and reduce overhead costs associated with the transfer of funds (Harrison, 2005). In the third instance, Product RED should collaborate companies that offer exceptional services on a daily basis. This will enable the entity to enhance consumer loyalty thus improving the sustainability RED projects. Additionally, Product RED should certify competitive and innovative partners to attract and retain consumers. This will promote sustainability the generation of funds. Conclusion
Ethical consumerism has led to the introduction of innovative concepts in business organizations. One of the innovative models that was introduced by Product Red with an aim of supplementing government activities in the fight against AIDS is the MBS. The market-based system portrays strengths and weaknesses that determine the adoption of the model among business entities. Some of the weaknesses and strengths include reduction of the prices of ethical goods, increased corporate responsibility among entities, lack of transparency and inadequate screening of partner organizations. Conclusively, an evaluation of Product red’s strategy provides insight on its strengths, weaknesses, and improvements.
Harrison, R. (2005). The ethical consumer. London [u.a.: Sage. Harvard Business School. 2009. Product (Red) (A). HBS Case No. 9-509-013. Boston, MA: Harvard Business School Publishing In Healey, J. (2013). Ethical consumerism.