Harvard Case - New Balance, GrubHub, and PepsiCo: The Politicization of Business
"New Balance, GrubHub, and PepsiCo: The Politicization of Business" Harvard business case study is written by Neil Bendle, Amos Nadler. It deals with the challenges in the field of Marketing. The case study is 11 page(s) long and it was first published on : May 23, 2017
At Fern Fort University, we recommend a multi-pronged approach for companies navigating the increasingly politicized business landscape. This approach focuses on building brand resilience through transparent communication, fostering authentic connections with consumers, and prioritizing ethical practices that resonate with their values. This will require a shift in focus towards a more holistic approach to brand management, incorporating social responsibility and ethical considerations into every facet of the business.
2. Background
This case study examines the rising trend of businesses facing political scrutiny and consumer backlash due to their stance on social and political issues. It delves into the experiences of three prominent companies: New Balance, GrubHub, and PepsiCo.
- New Balance: The company faced public criticism for its CEO's political views, resulting in a boycott and damage to its brand image.
- GrubHub: The company faced backlash for its initial decision to continue working with the New York City Police Department, leading to a public apology and a change in policy.
- PepsiCo: The company faced widespread criticism for its controversial ad featuring Kendall Jenner, which was perceived as trivializing social justice movements.
These examples highlight the growing pressure on businesses to take a stand on social and political issues, often with significant consequences for their brand reputation and bottom line.
3. Analysis of the Case Study
This case study can be analyzed through the lens of several frameworks:
- Strategic Framework: The case demonstrates the importance of aligning a company's brand positioning with its core values and its target audience's values. This requires a clear understanding of the company's purpose, mission, and vision, and how these align with the social and political landscape.
- Marketing Framework: The case highlights the critical role of brand management in navigating political controversies. Companies must develop a marketing strategy that embraces transparency, authenticity, and ethical practices to build trust and loyalty with consumers. This includes strategic brand management and integrated marketing communications to ensure consistent messaging across all platforms.
- Consumer Behavior Analysis: The case underscores the importance of understanding consumer behavior and the impact of political and social issues on purchasing decisions. Companies need to analyze their target markets and understand their values, beliefs, and preferences to tailor their messaging and actions accordingly.
- Competitive Analysis: The case demonstrates the need for companies to monitor the competitive landscape and understand how their competitors are navigating political and social issues. This includes analyzing their competitive strategy and growth strategy to identify opportunities and threats.
4. Recommendations
Based on the analysis, we recommend the following actions for companies navigating the politicized business landscape:
- Develop a Clear and Consistent Brand Purpose: Define the company's core values and mission, ensuring they are aligned with the social and political issues relevant to its target audience. This purpose should be communicated transparently and consistently across all marketing channels.
- Embrace Transparency and Authenticity: Be open and honest about the company's stance on social and political issues. This includes acknowledging any missteps and taking responsibility for actions. Authenticity builds trust and fosters genuine connections with consumers.
- Prioritize Ethical Practices: Embed ethical considerations into every aspect of the business, from sourcing and manufacturing processes to marketing and customer service. This can be achieved through corporate social responsibility initiatives and transparent reporting on environmental and social impact.
- Engage in Meaningful Dialogue: Actively listen to and engage with consumers, stakeholders, and employees on social and political issues. This includes using social media and other platforms to foster open and respectful conversations.
- Invest in Data-Driven Marketing: Utilize market research and technology and analytics to understand consumer sentiment and preferences regarding social and political issues. This data can inform marketing strategies and ensure that messaging resonates with the target audience.
- Develop a Crisis Communication Plan: Prepare for potential controversies and develop a clear and concise communication plan to address any backlash or negative publicity. This plan should be tested and updated regularly to ensure effectiveness.
5. Basis of Recommendations
These recommendations are based on the following considerations:
- Core competencies and consistency with mission: Aligning brand positioning with core values and mission builds trust and authenticity, which are essential for long-term success.
- External customers and internal clients: Engaging in meaningful dialogue and addressing concerns of both external customers and internal clients fosters a sense of community and shared values.
- Competitors: Monitoring competitors' strategies and adapting to the evolving landscape ensures that the company remains competitive and relevant.
- Attractiveness ' quantitative measures if applicable: Investing in data-driven marketing and crisis communication planning can improve brand equity, customer retention, and ultimately, financial performance.
6. Conclusion
The politicization of business is a growing trend that companies must address proactively. By developing a clear brand purpose, embracing transparency and authenticity, prioritizing ethical practices, and engaging in meaningful dialogue, companies can navigate this complex landscape and build resilient brands that resonate with consumers.
7. Discussion
Other alternatives include:
- Remaining silent: This approach can be seen as avoiding responsibility and potentially alienating consumers who expect companies to take a stand.
- Taking a purely commercial approach: This approach focuses solely on profits and ignores the social and political context, which can lead to backlash and damage to brand reputation.
Risks associated with these recommendations include:
- Alienating a segment of the customer base: Taking a stance on certain issues might alienate some consumers who hold opposing views.
- Facing negative publicity and boycotts: Companies that are perceived as being insensitive or hypocritical can face negative media coverage and boycotts.
- Increased costs: Implementing these recommendations requires investments in data analysis, communication strategies, and ethical practices.
8. Next Steps
Companies should implement these recommendations through a phased approach:
- Phase 1: Conduct a thorough internal audit to assess the company's current stance on social and political issues and identify areas for improvement.
- Phase 2: Develop a clear brand purpose statement and communicate it transparently to all stakeholders.
- Phase 3: Implement ethical practices across all business operations and develop a crisis communication plan.
- Phase 4: Engage in meaningful dialogue with consumers and stakeholders, using data-driven marketing strategies to tailor messaging and actions.
By taking these steps, companies can navigate the politicized business landscape and build brands that are both profitable and socially responsible.
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Case Description
An investment analyst was tasked with determining the impact of political controversy on firm performance in the aftermath of the highly charged 2016 U.S. presidential election. After this election, U.S. firms such as New Balance, GrubHub, and PepsiCo faced boycotts from aggrieved activists. The analyst needed to better understand the downsides-and potential benefits-of firms' involvement in political controversy. To do so, she needed to graph the impact, if any, political events had on the companies' stock returns. But were markets truly efficient and rational-that is, could they reliably capture the impact of political controversy on firm performance?
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