Case Analysis of Product Red A (Individual) This assignment builds on the discussion of the case: Harvard Business School. 2009. (Product) Red (A). HBS Case No. 9-509-013. Boston, MA: Harvard Business School Publishing. This paper outlined the issues raised by using consumer power to promote socially and environmentally responsible business practice. What were the program’s goals? How was this program intended to achieve those goals? What does your knowledge of the ethical consumer movement suggest about the strengths and weaknesses of the Product Red strategy? What could be done to improve the strategy?

1. Case Analysis: (PRODUCT) RED
Shirley Li
MGMT 566 Sustainability & International Corporate Citizenship
June 2, 2013

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Contents
INTRODUCTION ............................................................................................................................3
GOALS & FUNCTIONALITY........................................................................................................3
STRENGTH......................................................................................................................................3
WEAKNESS.....................................................................................................................................4
SUGGESTIONS:..............................................................................................................................5
CONCLUSION:................................................................................................................................6
BIBLIOGRAPHY.............................................................................................................................7

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INTRODUCTION
(Product) Red is a campaign claims to offer an innovative approach to raising funds for
AIDS drugs in Africa(HBS 2009). Since its launch in 2006, supporters call itan
innovative and successful business model because it achieved significant economic
benefitin a very short period of time, while critics challenge the motivation of its
partner companies andits credibility because the limits of the business modelitself.
This paper will describe thegoals and strategy of Product Red, which will be followed
by an analysis of weighing the strength and weaknessbased on the ethical consumerism
trend and market governance mechanism. Finally suggestions for improvementswill be
given.
GOALS & FUNCTIONALITY
The concept and purpose of Product Red is to engage private sector for the purpose of
getting funds to help eliminate deadly disease AIDS in Africa. The way it functions is
that a brand licensed to companies such as existing partners like Nike, Apple, Converse,
Gap, Emporio Armani and other global giants. Each partner companycreates a product
with the Product logo, in returna percentage of the profit gained by each partner is
donated to the Global Fund, a UN organization to fight AIDS, Tuberculosis and
Malaria.100% of the funds generated by (RED) partners and events go to Global Fund
without passing through Product Red organization and is only being used to provide
medical care and support services for people affected byAIDS in Africa. No overhead is
taken by either (RED) or the Global Fund. Giving more contribution than national
government or non government organizations, (RED)has become the largest private
sector donor to the Global Fund.
STRENGTH
Because of the governmental inefficiencies in policy making and fund allocating,
corporation especially global companies begin to function as political
institutions.(Thexton 2013). Shareholders like customers have extended their interest to
market and expect companies to perform political accountability.Instead of being

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passive, consumers are actively and willingly to “vote with theirdollars” which is
sometimes stated as “buycotts”(as opposed to boycotts), so as to make a difference for a
better society.(Youde 2009)(RED)captured the growing trend of ethical
consumerism.Partnership companies of (RED) voluntarily become the facilitator and
protector of citizen rights which well addressed the market request of socially
responsible segments.
The essence of (RED) is market driven.Compare to the 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 fundamental
force for the partner companiesto devote their resources designing and producing (RED)
products, promoting the concept to the society and continuously generate more benefit,
which will simultaneously benefit the people in needs.(RED) doesn’t give pressure to
customers either. Many ethical goods are more expensive than non-ethical equivalents,
but (RED) product is different becauseconsumers don’t have to pay more than the
original price. (RED) is just giving them an ethical choice that through their
consumption they can contribute goodness to the society without paying additional
money. This targeted the Drifter and Conventional group who are just minding their
own businesses.
WEAKNESS
Market governance mechanism has been exploring a way that all the stakeholders like
consumers, investor and civil organizationsget enough information about how a
company’s perform CSR. That’s when a certification comes into picture. (RED) does
not regulatecompanies to meet certain standards in terms of sustainability and social
wellness. For example its partner company Apple’s supplier Foxconn has a poor
reputation of labor standardin China but (RED) could not go as far to question or
control this. The same thing happens to GAP that it had history in using sweatshops in
Africa(McDougall 2007). At the same time these companies are using (RED) to
showcase it social responsibility which is a “red washing” similar to “green washing” to
get good reputation in market.

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Another weakness is lack of transparency. Market research shows that $100 million has
been invested in marketing and advertising but only $18 million is raised for The
Global Fund(Product Red 2013). From the perspective of organization, basically all the
activities should be profit driven, (RED) might turn to be just a part of its marketing
strategy rather than real corporate social responsibilitybecause (RED) itself benefit
partner companies much more than the benefit goes to charity causes.This also invited
the criticism for its inefficiency and doubt for its credibility. People argue that instead
of buying (RED) product, customers should donate directly to the people who need
help.
More people argue that market based approach is vulnerable and actually does not have
sustainability because customers usually do not have loyalty to it.Continuously helping
people in Africa need sustainable funds however buying (RED) is one time purchase
and on random. The uncertainty to the future might put the stakeholders in Africa at
risk.
SUGGESTIONS:
In order to overcome its lack of regulation to its partner companies without slowing
down its expansion and development speed, Product Red should continue pursuing new
partner companies but should also increase its capacity of screening, so as to choose
companies with both good performance and CSR history. This is necessary because
customer trust is a valuable and vulnerable asset for it sustainable development.
To tackle the problem of non transparency in partner companies, first Product Red
should get more access to partner company’s financial performance and report, to make
sure the promised percentage of profit actuallywent to Global Fund; second it need to
open a direct donation channel for people who want to help the sufferers of AIDS in
Africa so as to eliminate the “middle cost” happens through partner companies.
In order to keep its sustainability, (RED) needs to perfect its current operation model.
One approach is to choose good partnerswho can make profitable and attractive stuff to
attract customers, secondpossible approach is to explore service sectors where daily

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consumption occurs. New technology could also be considered for instance open an on
line (RED) store as a window to increase its availability and visibility.(HBS 2009)
CONCLUSION:
From the above discussion, we can say that Product Red as an innovative and effective
approachprovidespositive efforts and assistance to international problem,and is a good
supplement to government and traditional charity.However, too much rely on market
mechanism comes along with uncertainty and lack of regulation which might
undermine its future development. Critical analysis and mechanism improvement is
necessary forProduct Red going forward.

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BIBLIOGRAPHY
HBS. "(Product)Red(A)." HBS Case No., 2009: 9-509-013.
McDougall, Dan. "Child sweatshop shame threatens Gap's ethical image." 2007.
http://www.guardian.co.uk/business/2007/oct/28/ethicalbusiness.india (accessed June
2, 2013).
"Product Red." 2013. http://en.wikipedia.org/wiki/Product_Red (accessed June 2,
2013).
Thexton, Todd. "MGMT566 Lecture." 2013.
Youde, Jeremy. "Product (RED) and Private Funding for Public Goods." 2009.
http://www.tandfonline.com/doi/pdf/10.1080/07393140902872369 (accessed June 2,
2013).