Case Study: Product Red

As first-world consumers, we have tremendous power. What we collectively choose to buy, or

not to buy, can change the course of life and history on this planet. So begins the manifesto of
Planet Red, set up by Bobby Shriver and Bono to raise awareness and money for a charity, The
Global Fund, which helps women and children affected by HIV/AIDS in Africa. Companies
such as Motorola, American Express, and Apple (corporation + collaborative value creation;
multi stake holder networks) have produced and marketed Product-Red-branded products, and a
percentage of the sales of specially branded phones, credit cards, iPods, etc. goes to the fund.
(Built – in; drivers – performance, markets , products)

Ad Age, an advertising trade magazine, has criticized this example of new philanthropy. It
claims that, despite a marketing outlay by individual companies of $100m, the brand had raised
just $18m by mid-2006. The figures have been contested and Product Red supporters say that
$25m has been raised in six months on an investment of $40m. Perhaps more significantly, it has
been pointed out that the sum paid to The Global Fund is five times higher than that which had
been raised by corporate contributions over the previous five years. Indeed, an assumption that
money spent on advertising is money that would otherwise have gone to charity does not reflect
the way in which business operates. Moreover, the advertising spend was not intended simply to
promote the products, but equally to raise awareness of the scale of the AIDS epidemic in Africa
(Proactive). There are also criticisms that corporate spending on Product Red is masking
cutbacks in other types of corporate philanthropy. Again, defenders of the initiative say that
Product Red creates a regular stream of revenue for the charity (value creation), rather than
leaving it dependent on annual donations from corporate philanthropy budgets. The aim is to
create a sustainable source of funding for The Global Fund that will represent a new model for
fundraising.

(Vallely, 2007; www.joinred.com; www.adage.com)

a). What are the features of Product Red that distinguish it from traditional forms of corporate
philanthropy? (2
marks)

Any 4 of the following points

Contemporary CSR Product Red

Drivers Image, Brand, Public acceptance Product Red creates a regular
stream of revenue for the charity
Actors Corporation + Multiple stakeholders, Companies such as Motorola,
collaborative value creation American Express, and Apple
have produced and marketed
Product-Red-branded products
Relation to the bottom-line Integral goal: CSR is value creation A percentage of the sales of
specially branded phones, credit
cards, iPods, etc. goes to the
fund.
Orientation Proactive Raise awareness of the scale of
 the AIDS epidemic in Africa
Motto CSR is built-in a percentage of the sales of
specially branded phones, credit
cards, iPods, etc. goes to the fund

b). Propose measures for Product Red’s long-term success. (3

marks)

The proposed measures should be based on the following two steps

1. Evaluate firm identity in terms of social needs and opportunities.
2. Create a plan integrating issues, stakeholders, identity, resources, competitive
environment, and expected outcomes.

This is based on two steps of Husted & Allen’s 7-step model of CSR strategy development that
is relevant in this context.