Business Ethics Adidas UAE

Group Members Pankul Kohli 11DCP031 Prantar Goswami 11DCP034

Sarang Jain 11DCP042 Vishal Zaveri 11DCP052

Adidas Suicidal Promotion Strategy

Adidas is a German sports apparel manufacturer and parent company of the Adidas Group, which consists of the Reebok sportswear company, Taylor Made-Adidas golf company (including Ashworth), and Rockport. Besides sports footwear, the company also produces other products such as bags, shirts, watches, eyewear, and other sports- and clothing-related goods. The company is the largest sportswear manufacturer in Europe and the second-biggest sportswear manufacturer in the world, with American rival Nike being the biggest The company's clothing and shoe designs typically feature three parallel bars, and the same motif is incorporated into Adidas's current official logo. The "Three Stripes" were bought from the Finnish sport company Karhu Sports in 1951. The company revenue for 2009 was listed at 10.38 billion and the 2008 figure at 10.80 billion. Adidas being such a strong brand in every aspect had come up with a brand image degrading promotional strategy. They had come up with a strategy which is explained below was not only brand degrading but was done by procuring database of Standard Chartered Bank s clients E-mail Ids which was unethical.

CASE
In the month of October 2010, many customers in UAE started getting mails from Adidas, one of the leading shoe brands in the world, about a campaign that they had started recently. It was a guaranteed return promotion on any pair of Adidas running shoes. Basically, one can buy the shoes and use them for 30 days. If they are not satisfied, they can return them and get their money back. This approach downgrades Adidas positioning to one of a new comer that needs to prove its quality. It gives the message that Adidas target market is not sure about it and must be given a bonus to buy into it. People believe they gave into this just to gain a quick sales increase without really looking at the damage this will cause to the brand image and its positioning in the long run. Secondly- Adidas used people s mail address to send them this promotion notification without their consent. This is what you call unsolicited direct marketing, which is highly criticized in modern marketing ethics frameworks. How did they get their addresses? They are partnering with a bank, Standard Chartered for the UAE marathon competition. In all probability they thought this gives them the excuse to use my mailing address and send them their promotion, which shows lack of commitment to marketing ethics in both organizations. Several mails were sent for a week continuously. Now, what is unethical about this whole incident? Lately, a new trend has emerged, which we call as direct email marketing, which is a form of direct marketing. Direct marketing is a channel-agnostic form of advertising that allows businesses and nonprofits to communicate straight to the customer, with advertising techniques such as mobile messaging, email, interactive consumer websites, online display ads, fliers, catalogue distribution, promotional letters, and outdoor advertising. Direct marketing messages emphasize a focus on the customer, data, and accountability. Characteristics that distinguish direct marketing are: 1. Marketing messages are addressed directly to customers. Direct marketing relies on being able to address the members of a target market. Addressability comes in a variety of forms including email addresses, mobile phone numbers, web browser cookies, fax numbers and United States and international postal addresses. 2. Direct marketing seeks to drive a specific "call to action." For example, an advertisement may ask the prospect to call a free phone number or click on a link to a website.

3. Direct marketing emphasizes track able, measurable responses from customers regardless of medium. Direct marketing is practiced by businesses of all sizes from the smallest start-up to the leaders on the Fortune 500. A well-executed direct advertising campaign can prove a positive return on investment by showing how many potential customers responded to a clear call-to-action.

General advertising eschews calls-for-action in favour of messages that try to build prospects emotional awareness or engagement with a brand. Even well-designed general advertisements rarely can prove their impact on the organization s bottom line. Consumers have expressed concerns about the privacy and environmental implications of direct marketing. In response to consumer demand and increasing business pressure to increase the effectiveness of reaching the right customer with direct marketing, companies specialize in targeted direct advertising to great effect, reducing advertising budget waste and increasing the effectiveness of delivering a marketing message with better geodemography information, delivering the advertising message to only the customers interested in the product, service, or event on offer.

Additionally, members of the advertising industry have been working to adopt stricter codes regarding online targeted advertising.

Email Marketing
Sending marketing messages through email or Email marketing is one of the most widely used direct-marketing methods. According to one study, email is used by 94% of marketers, while 86% use direct mail.

One reason for email marketing's popularity is that it is relatively inexpensive to design, test, and send an email message. It also allows marketers to deliver messages around the clock, and to accurately measure responses.

Online Tools
With the expansion of digital technology and tools, direct marketing is increasingly taking place through online channels. Most online advertising is delivered to a focused group of customers and has a track able response.

Display Ads are interactive ads that appear on the Web next to content on Web pages or Web services. Formats include static banners, pop ups, videos, and floating units. Customers can click on the ad to respond directly to the message or to find more detailed information. According to research by eMarketer, expenditures on online display ads rose 24.5% between 2010 and 2011.

Search: 49% of US spending on Internet ads go to search, in which advertisers pay for prominent placement among listings in search engines whenever a potential customer enters a relevant search term, allowing ads to be delivered to customers based upon their already-indicated search criteria. This paid placement industry generates more than $10 billion dollars for search companies. Marketers also use search engine optimization to drive traffic to their sites.

Social Media Sites, such as Facebook and Twitter, also provide opportunities for direct marketers to communicate directly with customers by creating content to which customers can respond.

The following is the offer they promoted while sending it to people s email addresses:

Issues

1. Intrusion of Private Space People use email ids for 2 plain and simple reasons, personal or professional use. Receiving mails from reputed companies like adidas on such id s is something people don t generally expect. These mails don t even go into spam and come directly to inbox. In today s blackberry and apple world inbox is directly synced with mobile phones and such emails in that respect act more like an intrusion into the private space. One mail is still ok, but about 6 or 7 daily according to reports is more than disturbing for any person who uses mail on a regular basis daily. It floods your inbox and reduces the speed. This is more of a selling concept that adidas tried to push in, where in they seem to be in some sort of a race to reach to the people. They have not just tarnished their image with such an act but also incurred losses as the marathon was a flop and this scheme didn t work either. 2. No Declaration about the Source of Ids It is obvious that such ids have not been given by people by their wish and have been procured from other means, and then at least such means should be specified in the mean so that the person knows what sort of sources they should refrain from while sharing their email ids. It is like you are using someone s content and not even mentioning their name at the end of it. In this case Standard Chartered is equally at fault for sharing their client s email database. This database is supposed to be confidential and both Adidas and Standard Chartered have breached ethical conduct in light of viral marketing. 3. Procuring e-mail ids unethically Most merchants forget the trade and use only the tricks. This aptly describes the scenario of e-mail marketing in current times. Though marketing through the e-mail opens up vast opportunities to showcase a product or service, unethical and abusive use of this medium has become a norm today and, in turn, has resulted in negative publicity.

In the given case, Standard chartered act of providing email addresses of customers to Adidas was highly unethical. It is actually breach of trust or confidentiality on the part of Standard Chartered. The bank should have never had released its list of customers to anyone and more so to a marketing company. This may lead to distrust between the bank and its customers, as banks are supposed to be the place which should maintain high level of confidentiality, and getting important personal information like your e-mail address to a third party is highly immoral and unethical on the part of Standard Chartered.

4. No prior consensus So, is there no way of legally or ethically marketing your material through emails? There surely is. Ethical marketing consists in sending marketing emails only to those addresses who have been your customers at some point of time, or who have requested material from you directly. A good marketing practice also consists in not sending such mails very often. Respect a person s privacy and immediately stop sending messages to those who wish not to receive them. Permission based email marketing is a good option for businesses wherein commercial mail is sent only to those who have permitted to receive information and offers on products and services. These fair practices need to be followed not merely for the moral values implicated, but because they are practices that would really work in favour of your business. In the given scenario, being a reputed brand, Adidas should not have employed a marketing strategy of sending promotional mails to everyone from a bank s database. This act can actually backfire for a reputed company like Adidas in some cases. This is against the privacy of any person and against the person s wish to see things that may be unnecessary to him. These kinds of mails are actually annoying as they may disturb a person when he is expecting some important mail or doing an important work.

Being stung by a bee is painful, but being stung by a swarm of bees is a problem of a different magnitude. And, like bees, the unwanted mails intrinsically come in large quantities. All said and done, there is a thin line between ethical and unethical practices in email marketing. A genuine business needs to walk this line without losing out on the opportunity provided by email marketing and at the same time respecting peoples right to privacy.

Solutions and Recommendations

If we would have been in place of Adidas marketing team then following would have been the steps for promoting the event and also restoring the image in the consumer s eyes 1. Ethical Means of Procuring email Database Obtaining email ids from unfair means like procuring from sponsor partners Standard Charted was absolutely unethical but what could have been done was that on Adidas outlets their sales people could have made the customers fill forms where in details would have been mentioned. Such an act is completely ethical and consumers would know that they have shared their email ids with Adidas and the mail would make more sense to them. 2. Mails as Spams Instead of sending direct mails to mails, they could have send them as spams to all the users as majority of the people check spam mails only when they have free time. They could have also included a link to subscribe for such kind of mails in future, if they wanted, and defined the source from which the email address was procured. 3. Buy Database Ethical database purchase is not a costly affair. Sites and databases like yellow pages are meant for such purposes. Adidas could have bought the database ethically from

their and stated in the mails that this was the source from where we have obtained your email id. It would have still kept their image in tact rather than just mailing the shared data from Standard Chartered.

4. Counter Emails Send counter emails to rectify their errors stating their apologies for intruding their virtual spaces and stating the source from where such database was actually obtained. This would at least throw some light on their intended goodwill post the incident and maintain the interest of their customers in their company. Had they not indulged in forceful email marketing, this event would have been brought them more publicity and revenues.

References
y y y y Marketing Management (13th Edition) by Phil Kotler Ethical Marketing by Patrick E. Murphy http://www.uaemarketingblog.com/2010/10/adidas-suicidal-promotionstrategy.html http://www.marketresponse.info/