Benetton
Case:
Brief summary
of Benetton Case
Benetton is
the Europe's largest clothing manufacturer and world's largest consumer of wool
in the garment sector. To penetrate the market, Luciano Benetton, founding
father of Benetton, exploited the niche market. From noticing that there was
little color in the majority of clothing people wore, he decided to introduce
colorful products of a substantial quality, which later on proved to be correct
and the company grow into the global clothing manufacturer. Benetton adopted
the franchise system to penetrate the global market. It's distribution strategy
revolves around a large network of independent franchisees and resellers who
invest capital in their own stores. Benetton describes itself as vertically
de-integrated and automated distribution system that its core functional
activities such as design and global strategy are centralized. The company
developed communication strategies to lessen overhead cost and integrates
supplies, manufacturers and retailers. The major competitors of Benetton Group
are Inditex (Zara), GAP and H & M. But what makes Benetton different from
other companies and its competitors? Aside from its strong market entrance,
product materials quality and innovations on strategic operations, Benetton
developed "Product Identity" through a unique
marketing approach.
Benetton becomes a pioneer in advertising, by removing its products from
advertisements and deliberately manipulated it over the years to gain publicity
and thus stimulate interest in its product. In other words, Benetton
"capitalized" on controversial advertisements which were made
possible through the ideas of Oliverio Toscani, an advertising photographer,
when he joined the Benetton Group.
In 1982, the advertising technique is so simple: take a powerful image, stamp
the logo in the corner. No marketing research and no need for ad agencies,
choosing not to directly advertise their clothing and apparel, but addressing
social issues. Toscani's most well-known motifs were dying AIDS patient,
priests kissing nuns, T-shirt of Bosnian soldier (with bullet holes), military
cemetery with star of David, ship with refugees , HIV positive tattooed, oil-
polluted duck and new born child. This change in 2000, when Toscani initiated
an expensive project called "sentenced to death".
A campaign to which the Benetton spent E20 million investment and 2 years
touring American state prison and interviewing prisoners on death row.
Case Analysis
and Reaction to CSR of Benetton
In my point
of view, Benetton has a strong business ethics and give emphasis on its
corporate social responsibilities when it successfully created a powerful brand
that is not just clothing but carries a statement. In some citations, Benetton
officially adopted the code of ethics. However, its central focus is on
compliance with law and regulations of their demographics. Second to this, is
community relation in which organizations CSR is geared to maximize its impact
and minimize negative impact on society. To develop community relations, Benetton
did not directly advertise their main product, but raise public awareness of
universal problems. Promoting competitive corporate excellence at the same time
focused on social elements.
It is remarkable that unique advertising campaigns lead to the growth of
Benetton, paving its way to capture a large market share. However, Benetton did
not take into consideration the risk in the following aspect. Benetton
marketing strategy is concentrated in capitalizing on social issues and degree
of CSR participation applied in their competitive and regulated markets.
For Benetton is a corporation operating globally and its sales revenue is
generated mainly from Europe and America. Benetton, incorporated social issues
and images on their product, the corporation applied the same promotional
strategy/method to their overall market. The company was able to lower
marketing expenditures to at least 4% of its retained income. However, Benetton
assume that the preference of both market is the same, and publicity will
stimulate interest on their product. The company did not consider marketing the
product solely by design and quality, and did not strategically manage
advertising or randomly selected the areas where reaction could differ
depending on culture and values. In other words, Benetton did not consider
spending for market research, since it requires an extensive behavioral, moral
and social study of marketing mix and people. Benetton exploit public
perceptions, it deliberately manipulated advertisement were it targeted not the
actual customers but the issue of culture and society. Hence, it is no longer
the products that becomes saleable but the statement it carries and in that
statement embedded the vision of Benetton, the unity of colors, which also means
fairness, equality, unity and change. But is it moral and ethical to
incorporate social issues to a product? Especially when you advertise the
product globally and becomes subject to public opinion? And it is said that not
just because it is legal doesn’t really mean that it is ethical.
To answer this question is draw a very thin line between the essence of being
right or wrong. I strongly believe that the campaigns of Benetton were
intentionally built to develop social awareness at the same time was used for
commercial profit and to gain publicity through unique, critical, real and
controversial issues. Promotional activities such as advertisements has its
purpose, the main concern of this activity is market the product to gain
profit, and it becomes so evident when Benetton did not just advertise by using
controversial issue once but repeatedly. To address social issue is
ethical, but being ethical is subject to ethical judgment and it is necessary
to point out the level of ethical obligation to see whether Benetton
exceeds the level of required participation when it comes to corporate social
responsibilities. In other words, does Benetton was able to manage corporate
social responsibility? The first level is (1) minimal ethical requirements which
may not be under all circumstances or will not violate ethical standard, (2)
positive obligations which are good practices, (3) the aspiration for ethical
ideals which strives for ethical excellence. Since, moral issue is used as
marketing tools to promote a product; minimal ethical requirements were
violated since it was used for a purpose other than social awareness. It may be
a positive obligation based on Toscani’s philosophy, when Benetton with a
certain amount of discretion repeatedly raise social awareness, but the degree
of participation was overlooked. Advertisement was made globally, with
different social and cultural values, it was not strategically place into areas
or market that it will be accepted or if not will not develop a very strong negative
impact. At the third level, Benetton proceed without studying the long term
risk of not taking a different approach on ethical valuation. The type of
passive-aggressive advertising pushed Benetton to earn high income on sales but
disregarded the concept of contemporary morality; it is the responsibility or
in other words accountability when it comes to freedom, specially the freedom
of expression. US was not pleased with advertisement of Benetton on
racial issues, the black and white campaign, thus banned by the state but
becomes even more popular in Europe. It is evident that reactions and public
perception vary in location and other factors that concern the government
structure and morality. Benetton continuously adopt the reality advertisement when
it campaigns for AIDS, and consumers thought that the company has gone too far.
Benetton went beyond the components of responsibility in which three things are
involved, (1) the subject of responsibility or who is responsible, (2) the
content of responsibility or for what one is responsible and (3) the authority
toward whom one is responsible. Benetton exceeds corporate social
responsibility in a way that its efforts to raise social awareness resulted to
protest and conflict of ideas between people, thus the product was banned to
other countries and patronized by not so affected, accepting bodies or state.
The advertisement was considered obscene, disgusting and disgraceful
exploitation of tragic situations and Benetton believe that they are not
accountable and responsible for those who did not accept their views about the
issue. Despite the negative reactions, Benetton perhaps becomes even encourage
to use controversial issue for promoting their brand. Until, 2000 “Sentenced to
Death Campaign” set Benetton into a dreadful situation, it made them realized
the damage advertising cause them. As a result of repeated campaign, Benetton
was subjected to litigation and widespread protest. The company was forced to
make court settlements, write apology letters to family victims and ordered to
pay for the damages it causes. But the major setback is the cancellation of its
deal with the US major retailers to open Benetton outlets in Sears’s stores
across America.
Benetton prestige and uniqueness slowly faded out after they revert back to
classic method of advertising, which made the company and its product lose
identity. The economic effect especially on marketing aspects for clothing
industry is that it becomes hard to convince buyer to buy a product since
promotional activities no longer work. The buyer becomes intelligent breed;
they don’t want others to affect their own preference. What seems to be a
ethical was dictated by public perception, and thus making it situational and
eventually considered unethical after Benetton exceeds and or failed to manage
its corporate social responsibility.
No comments:
Post a Comment