Band Management Case 1A case Analysis of (Product) Red (A)

Submitted By:Amit PathakNavin Koirala

February 18, 2015

Synopsis

(Product) Red (A) is an innovative business model which integrates business and charity

together. (Product) Red (A) is an original approach of raising fund for AIDS patient in Africa by

Licensing the brand to the business giant of the world and the fund directly going to Global

fund of United Nation. This innovative approach has been very successful in collecting funds

raising it form $5million to $50 million contribution by the private/corporate sectors.

Case Facts

Product (Red) is the best instance which can be taken as one of the best marketing campaign

with the assist of many huge and reputed firms. The sole purpose of this campaign is to raise

funds for HIV/AIDS victims in Africa through “The Global Fund” which is a nonprofit

organization with the corporation of reputed business organization like GAP, Armani, Apple,

Converse, American Express, Motorola etc. The main concept of this whole campaign is to raise

fund with the purchase of Product (RED) and certain part from the purchased amount is funded

in the Global Fund to help in the prevention and treatment of HIV/AIDS patient in Africa by

bearing the cost of Antiretroviral Drug (ARV), a treatable drug to extend the patient’s lives.

Above all this article carries out the various facts and details about Product (RED) and its stages

of the development and its business models which are pointed below:

It enlightens in how this campaign generate money to raise fund to the Global Fund.

The articles focuses on the benefits provided to HIV/AIDS patients in Africa with the

partnership with various organizations.

It focuses on the business models and decision by choosing the organization for the

growth of the brand.

It highlights on the partnership building and create a global brand with worldwide

recognition and giving benefits to the partners as well.

Statement of the problem

1.  In what ways is the RED model different from the traditional charity model? What are

the key criticisms of the model? Are these criticisms valid?

2. How successful has the campaign been? How would you define "success" in this case?

3. Who is the target market for the RED brand?

4. What do you think about RED's selection of its initial partners? Are these brands - and

their customers - a good fit for RED? What criteria should RED use to choose future

partners?

5. Is the RED campaign sustainable? What changes would you make to ensure

sustainability? Stick with the initial partners? Replace them? Add new ones?

Analysis:

Product RED is an initiative or an idea to create brand big enough to generate revenue for the

social and toughest health assignment HIV/AIDS patients in Africa which is two-thirds of the

world’s HIV-infected population. This unique concept has a simple idea of working toward

creating a brand image in an exceptional manner. The way it function is that a brand is licensed

to the companies like Armani, Apple, American Express, Converse, GAP and each partner

companies created a product with the product logo in return of certain percentage of profit

gained by each partner companies to the Global fund to provide the medical care and support

services for the patients of AIDS in Africa. In short Product RED came up in building the brand

and making fast money to save lives in short amount of time.

The essence of Product RED is market driven. While traditional charities seek donations from

different organizations. Compared to old charity model, Partner companies don’t see RED as

grantee but an equal business partner because the market response generated financial profit

from the association. This becomes the essential vigor for the partners companies to the society

and continuously generates more benefit, which simultaneously benefit the people in needs. RED

have fashioned a business model with the partner companies without affecting their own

business/marketing strategy. Product RED is no more different from other equivalent products in

the terms of quality and price. Consumers don’t have to pay more than the original price. RED

just offers them a choice that through their consumption they can contribute goodness to the

society without paying additional money.

It was a kind of tough decision for the companies to take chances by binding their brand with the

complete untested idea which was RED but they put themselves on the line. This also attracted a

lot of criticism about the execution of this concept. It was nothing new about the criticism faced

if any organization grows rapidly. One of the criticism faced by one of the website called

“Buylesscarp.com” which stated to donate the charity amount directly to the marketing campaign

and focus on real solution rather consuming on the expensive product. It can be believed that the

motto of Product RED is adding the value on the product so that when consumers buy the

products, they feel they are contributing in the social cause. Usually people who mind their own

business don’t try much just to donate in the charity. So for those who falls into those kinds of

categories suites for them who buys those product and make a difference in the lives of other

people. Another criticism faced as it benefits the profit to the partner companies more than the

charitable causes. It doesn’t matter how much partner companies are getting benefit and it

shouldn’t be the matter of concern as well. What matter is how much Product RED is making a

difference and contributing to the Global Fund. Product RED is making a contribution of 2% of

total Global fund and it is the 15th largest donor ahead of Russia, China, Saudi Arabia and

Switzerland. Another strong criticism RED faced was that RED was promoting consumerism

and promoting consumerism has a serious social, psychological, environmental effect in society,

individual and environment respectively. The concept of consumerism and donation are two

different entity and in fact two opposite thing. Hence, this is a serious criticism and in fact a valid

one when psychology and environmental aspect of the consumerism is taken into account.

The initiative behind Product RED is that it would craft a beneficiary for everyone. This

marketing campaign is focused from both perspectives .i.e. Increase Company’s profit and

generates revenue for the social cause. In addition Product RED is principled on profit-motivated

giving. To explain this, say suppose a customer is given Rs. 1000/- and is offered to choice to

give it up solely for donation or to purchase a product which supports a certain cause. We people

are always driven to incentives and hence that customer would choose to purchase and spend his

Rs 1000/- for that which he can actually obtain something in return and be the part of the social

cause. Product RED sells its product based mainly in this concept and that’s the business strategy

for them. Another positive thing can be taken is that this initiative encourages consumer’s

awareness to the AIDS in Africa while at the same time allowing easier participation from the

consumer of the cause. As a result, around 17% of the general population is aware of this brand

which is about the AIDS in Africa.

RED has been targeting those who are more conventional and just mind their own business. The

main target audiences for RED are those consumers in their 20’s to early 50’s who make socially

responsible purchase which are pointed below:

Coffee Lovers

Fashion Lovers

Technology Driven Consumers

Music Lovers

Premium Product Lovers

Even though the target audience of RED is geared towards the wide range of people, the

significance of the campaign stands the same to fight AIDS.

RED has selected high end brand name as its initial partners and this it has done to have great

exposure and to make people aware of the brand RED and its cause. This is to say that RED

wants to leverage the name of big giants to promote its brand. In other words, the piggy ride with

these corporate giants is well justified for a startup like RED. The success of RED as an startup

justifies that it is successful in selecting initial partners. But when issue of brand image of RED

due to its tie up with the initial partner has to be discussed and analyzed.

The consumer of premium brand are affluent class people. And the study suggests that rich

people are more narcissist- they are self absorbed and care for themselves than others. And study

also reveals that people with up to $35,000 per year donates around 3.2% of their earning while

rich people with per year income of above $75,000 donates around 1.3% of their earning

(Szalavitz, 2013). This statistics reveals that low earning people donates twice more than high

income people in comparison to their earning. The average earning of rich people are more than

twice larger than the earning of normal people but there are many folds normal people than rich

people. But for a startup which wants to create awareness and brand name through the piggy

ride in premium brand in order to have larger impact, the brand along with the customer is a

good fit as of now.

RED should choose the partner with low involvement product because in high involvement

product charity alone cannot be a differentiation factor and it cannot be crucial factor for the

purchase. While in case of low involvement product charity can be a differentiation factor

leading to higher impulse buying of that product category and this will benefit not only RED but

also to the partner as well.

The present RED campaign as some serious concerns to address. One of them being what Brady

said, " If one buys phone. He/she would probably not buy another phone for few years". So, they

need to partner with the brand that could make the same person to contribute everyday for RED

because it was evident that people exhibited brand loyalty towards RED. Therefore, we think

RED should add new partners in addition to the old ones.

Sustainability of RED depends upon whether it could benefit the partner or not. The relation

RED should look forward is commensalism where both partner are benefitted equally. Therefore,

the partner should be like whose product get differentiated due to licensing for RED and the low

involvement product category like daily consumable good would be beneficial as daily

consumable goods can provide continuous donation mechanism for RED loyal customer and a

continuous flow of fund to RED from its customer.

Conclusion

Therefore, the concept of (Product) Red (A) is well executed as an startup but the sustainability

along with the brand image has be considered while choosing new partners. Furthermore, the

transparency as well as the execution of the fund should be well documented and communicated

to make people believe that their money are being honestly utilized.