The Benetton Group

Case study - The Benetton Group

The Controversy Continues Problem Identification Benetton, the world famous clothing producer, once again dives into social issues that the United States may not be ready for. The Italy based group is well known for their shocking world issue advertisements that only bear the company logo. In fact, Benetton's advertisements traditionally do not feature the clothes it sells; only the issues play the lead role. After years of controversy over ads such as AIDS, war, interracial relationships, and priests kissing nuns, it may be time for Benetton to campaign about something other than controversial social issues, like clothes. On January 1, 2000, Benetton's new advertising campaign wasn't about sweaters or pants, but about convicted murderers that are on death row. The "death row" ads feature portraits of American death row inmates in prison uniforms with the slogan "Sentenced to Death". The ads give the inmate's name, date of birth, crime, and expected method of execution. Within the campaign, inmates also talk about topics ranging from their childhood to their dreams, everything except their victims. According to CNN, victims' rights advocates are outraged as well as are the individuals that lost loved ones to the profiled inmates. Once again, Benetton is faced with another controversy that could perhaps worsen their already poor US market share. According to the New York Stock Exchange, where The Benetton Group is publicly traded, it seems that the company has lost over ten dollars per share since their peak of 50 15/16 in January. This decrease could be attributed to many things, but perhaps the most significant was the February announcement that Sears would immediately pull Benetton designed clothes from all 400 of its stores that had been selling the Benetton USA line. The Benetton USA line was specifically designed for Sears when the two companies joined last summer to introduce a new line of juniors, kids, and men's apparel. Troubled by the campaign, Sears renegotiated its contract with Benetton to gain the right to preview future Benetton ad campaigns. A revised clause in the contract also gave Sears the ability to withdraw from the deal without penalty if the two parties were unable to agree on future campaigns, according to CNN. Regardless of these changes, the controversy was too significant for Sears to ignore due to the hundreds of consumer complaints that poured into the store after the campaign released. According to the February 21, 2000 article in Advertising Age, a Sears spokesman said the chain allied itself with Benetton because "We thought they were past that and had come to a point where they were interested in selling merchandise. The whole episode is tragic, for the victims, for Sears and for Benetton." However, Sears is not the only one taking action against the company. According to CNN, it was announced on February 10, 2000 that the state of Missouri was suing Benetton for ads featuring death row inmates that reside in Missouri prisons. Missouri claims that the company deceived the state when it used the death row inmates as part of its ad campaign. The state thought the inmates were being interviewed for a project sponsored by the National Association of Criminal Defense Lawyers. In addition, according to the February 19, 2000 article in The Economist, a Benetton spokesperson in New York admitted that payment was made to two inmates for the rights to their likeness. The state accuses Benetton of fraudulent misrepresentation, trespass by deceit and trespass by exceeding the scope of consent. Although the problems with Sears and Missouri could have significantly decreased the overall value of Benetton, the fact remains that consumers ultimately decide the fate of a company by whether or not they shop there. It seems that sources such as CNN, Wall Street Journal, and Advertising Age, among others, have touched upon US consumer reactions to the new ad campaign. Overall, it is not being accepted well in the United States and an already weak market will continue to weaken as long as Benetton refuses to change its US advertising techniques. According to the Washington Post, Benetton is standing by its campaign. In fact, its US director of communications stated, "Once again, it's very hard for people to see what we're doing and understand that it's not advertising, that it's a way to get people to think." Perhaps this is the problem with Benetton's campaigns in the United States, US consumers do not want to think about AIDS or the death penalty when they are shopping for pants, maybe they just want to shop for pants. Overall, the new campaign seems to be high-risk for Benetton as its market value continues to decrease. A January 24, 2000, article in the New Statesman stated the dangers to Benetton seem insignificant. Benetton is used to unfavorable publicity, and for all its undoubted worthiness, the whole campaign is expressly designed to provoke outrage. Such strategies have become the Benetton signature. Although Benetton wants to call attention to the reality of capital punishment, is provoking outrage a good strategy for a market that obviously does not take social issues lightly? Benetton should learn from past US experience. In 1992 the Wall Street Journal stated that Benetton had 700 stores in the United States in the early 1980s, which five years earlier was the biggest market outside Europe. However, today those numbers have decreased significantly to 200. This could be attributed to the failure to design a consistent marketing strategy from the outset. Most storeowners in the US closed their Benetton doors because of personal conflict with the company's campaigns. The past seems to be repeating itself with the Sears conflict. The marketing issue for Benetton becomes the decision of whether to continue its current ad campaigns in the United States despite the risk of losing

more market value or to redesign the campaigns to better suit the US consumer's frame of mind. As a group, we feel that Benetton needs to rethink its US market strategy to increase its presence, better its reputation, and increase its market value. In order to do this, we have come up with some consumer behavior factors that Benetton needs to be aware of and recommendations that they should seriously consider to turn around the US market.

Marketing and Ethics (United Colors of Benetton)

Marketing issues, as they relate to business ethics, extend across a wide range of business activities that characterize a company's relationship with its customers (product manufacturing and integrity; disclosure, labeling and packaging; marketing and advertising; selling practices; pricing; and distribution). In recent years the