Ethics and Customer Loyalty Assignment

Ethics and Customer Loyalty Assignment Words: 1338

“COLGATE DISTASTEFUL TOOTHPASTE” CASE STUDY Case Overview:- Colgate is a very well known company in the United States and is remembered for its toothpaste. It not only specializes in personal care but in household care as well. They are not only into oral care but in personal care, home care and pet nutrition as well. The New York based company also included Ajax, Fab, and Hill pet foods. Colgate is well known in other countries such as Australia, Latin America, Canada, France, and Germany. Colgate learnt a hard lesson in 1985 by getting into a partnership with Hawley and hazel.

This strategy was used to enter the Asian market place (Hong Kong, Malaysia, Singapore, and Taiwan). This step has made them see the company’s downfall. Initially everything was going well; gradually it has changed and saw a downfall in company’s revenues. Hawley and Hazel’s key product was ADarkie toothpaste. The maker of this product came up with this name by traveling to the United States and falling in love with a very well known black-faced entertainer (a white person with black makeup on his face), named Al Jolson. The founder decided to recreate the character’s big smile and white teeth.

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He decided to copyright the name ADarkie to go along with his logo. At first the toothpaste featuring a black man with a big white smile was a perfect advertising scheme and it was sold in Asia for over 60 years. The named reached United States as Colgate thought of selling it in the American markets and it was criticized immediately. The name ADarkie was considered to be a very racist and distasteful brand name. When the name was brought to the attention of the ICCR, the Interfaith Center on Corporate Responsibility, in a package they received from Thailand, they started a fight against Colgate.

The ICCR wrote a letter to Colgate asking them to change the name and logo of this distasteful product. 1. CRITICAL ISSUES OF COLGATE:- Issue here is about the logo of the toothpaste called Darkie which says black man toothpaste. According to Desjardins and McCall (2005), this is an ethical issue. Hawley and Hazel were very popular in Asian markets for a long time. The logo was not offensive in Asian markets but was vice versa in US market. This logo had given millions of dollars to Colgate and Hawley and Hazel. This is because of the Asian market. In the US there are more black people compared to Asians.

According to the logo it had hurt the black people sentiments and norms. According to US constituent, to tell anyone black is odious. By looking at this case one can say it is related to the ethical issues. 2. STRATEGIC ISSUES OF COLGATE:- Strategic management is the process of determining an organization’s mission and objectives then implementing a plan of action for pursuing this mission and attaining objectives. Hawley and Hazel have a huge market in Asia. To get into Asian markets Colgate without having any production plan had bought Hawley and Hazel with 50% partnership. And Colgate had given all the management rights to them.

All this was done to gain the Asian markets entirely. This was Colgate’s strategy. Darkie was very popular in Asia and Colgate had given many things to Hawley and Hazel for their partnership and to gain Asian markets. At the time of action plan with the threat of losing customer loyalty and brand name, Colgate had taken 3yrs to change the product name and logo. Alternatives to control the situation:- Here managerial rights play a key factor. Darkie toothpaste was a horrible things for Colgate. It’s given sleepless nights for all the Colgate officials. Darkie had made Colgate a non-social and irresponsible company.

Colgate had a good name and customer loyalty and that’s the reason why customers wait for a longtime for boycott. The point here is does the situation has any alternative? Yes, for a brand like Colgate customer loyalty and reputation is more important than its business. Colgate may promote the product saying its logo is non-offensive. It shows a special concern for a community. I support this case by looking into few cases. Let’s take an example of Nike which is a huge brand all over. It found that their contractors had been appointing children and women at low wage rates and had poor safety environment at plant.

As an ethical issue Nike had not kicked out them instead it had given fund for their development and study and keeping them to support their family and taken back at an age of 14yrs. This is a perfect example to come out from a situation without losing customer loyalty. Colgate can come up with such kind of alternatives. It can fight for black people human rights to gain their support and loyalty. Changing the name of the product may not be enough. It should gain customer loyalty as well. Another example can be Procter and Gamble. It had launched Rely Tampon, new super absorbent.

Food and Drug Administration found a strong relation between uses of Rely and Toxic shock. P had done its investigation and found nothing in its favor. So it had decided to buy back customers informing through emails, newspapers and advertisement at a cost of $75 million dollars. Customers appreciated P for their quick action. Something like this should be done by Colgate to gain customer loyalty. KNOWING MANAGEMENT RIGHTS:- Doing business internationally is taking and giving strategy. Hawley and Hazel is a very big Company in Asian markets. Colgate in order to gain Asian markets I had come to a partnership with Hawley and Hazel.

In any business giving and taking is a policy. Colgate had given its managerial rights and has taken 50% partnership with Hawley and Hazel. This was the deal. This partnership has given millions of dollars for the companies. In business point of view it was a good deal. According to me Colgate distasteful toothpaste is totally related with the managerial powers. Colgate in order to gain customer loyalty it must have taken immediate actions. In any business customer loyalty plays a vital role. Business is secondary. I feel whole of this case is related to managerial rights.

Giving away managerial rights was a huge mistake Colgate has done. SWOT Strength * Strong financial performance * Focus on innovation and new product launches * Colgate business planning initiative * Formidable entry barrier for entrants * Very strong brand image * Share holder friendly Weaknesses * Profits of company totally dependent on one segment * Highly leveraged * Product research * Market growth of 10% in volume terms * Not much of innovation Opportunities * Increase of Hispanic population in the US * Emerging markets growth * Growing in technology * Tapping personal care in Asian markets

Threats * Decrease in consumer confidence in the US * Increase in the number of competitors * Increasing commodity prices RECOMMENDATION:- Ethics is most important for any organization to see success. It gives good name and reputation to the company. It is tough for any organization to run fully ethically. But if any organization doesn’t follow ethics it sees a downfall gradually. There’s an old saying that good ethics gives good business. Any organization should follow the same. Negotiation is a part of business but not at the cost of customer loyalty and social responsibility. CONCLUSION:-

Through brief discussion of our case, I conclude that ethics had relative effect. It varies with culture and with individual as well. Colgate initially couldn’t come out of the dispute as pressure increased from higher officials and group it had to come up with a solution. Giving away all the management rights was a big mistake Colgate had done. It’s not an easy task to find out a company which works fully ethical but ethics plays a vital role in the success or development of any organization. Ethical organization has support from society and customers. Finally, good ethics gives good results.

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