Gap (red) – Are they giving enough?

Gap (red) shirt

FT WEEKEND MAGAZINE – FEATURE: Spend, spend, spend. Save, save, save
By Alan Beattie, Financial Times
Published: Jan 27, 2007

Buy a red T-shirt to fight AIDS. But does it really help
By Ben Arnoldy, The Christian Science Monitor
Published: Mar 12, 2007

Both of these articles are interesting analyses of the Project (red) campaign, founded by Bono. I however, take a little more issue with the article from the Christian Science Monitor and am thus choosing to focus on that here. The in-store advertising at Gap outlets repeatedly demonstrates that “half the profits” on the Gap (red) line will go to fund Project (red) contributions. And while Mr Arnoldy makes a good point in saying that there’s a lack of transparency by failing to disclose what “half the profits” are, he seems to forget that some contributions are better than nothing, regardless of what their numbers might be.

My personal stance is to agree with Ms. Smith. As stated in the Financial Times article, the idea behind Project (red) goes past mere cause-related marketing. As I’ve been reading in various books, any company can simply cut a cheque to have its corporate logo attached to a charity of its choosing. The idea behind (red) however, is cause-related consumption. This cause-related consumption takes note of the statistic that shows that, ceteris paribus, people more likely to change their consumption patterns to a brand that is socially responsible. This is where someone like me fits in. They see the idea of what (red) does and that consumption of the (red) design looks trendy, thus they will opt to spend the $28 in order to help fight AIDS in Africa, having made a difference on their purchasing behaviours.

For the sake of Mr. Cortez’s argument though, let’s assume that when you subtract the materials, labour, and design of the basic Gap (red) t-shirt, they receive $14 profit. Even that 50% profitability figure seems like a low number to me.

Half the profit ($7) is 25% of what the shirt costs to purchase. It would be hard to argue that 25% of purchase cost is a shabby number, particularly given that American Express (red) is only donating 1% from purchases made by people who have the (red) card and that the AMEX card is only available in the UK. Apple iPod is giving only $10 of $200 iPod (5% of product sale). Converse is donating 15% of net sales (which is pre-profit, meaning less). The only (red) brand that otherwise shows such high donation percent of retail cost is the $17 of a $60 RAZR phone (28%) only at Sprint in the US.

This means that for all of Mr. Cortez’s concerns about how much of his $28 is going to fight AIDS in Africa are less than justified, when compared to (red)’s other partners. The fact of the matter is, it’s more likely he wouldn’t have written the Global Fund a cheque on his own accord, nor would he spend $28 on any other shirt at Gap. By purchasing his shirt, he has at least become an active participant in the idea of corporate philanthropy through consumption.

Either way, the result is that the (red) campaign has raised the $25 million for AIDS prevention and treatment. And it’s hard to argue those results, regardless of what numbers Gap is actually providing for half its per shirt profits (and those ($28) shirts are on the cheaper end of the gap (red) line). If the 25% was applied to the higher priced products, then Gap is still writing the global fund a large cheque.

Bookmark to:

Hide Sites

3 Responses to “ Gap (red) – Are they giving enough? ”

Dany

says:

16 March 2007 at 1:20 pm

i liked your post about product red, especially since i just read an artcile about in in macleans yesterday… some (read: many) people are critical of the line because it was supposed to be the first consumer driven product line of its kind and has failed to deliver the 100 million to AFrica that it had set out. True, but the millions that it has given so far is still more than Ireland gives annually and lets face it, nothing to sneeze at.The only problem i forsee is the same thing that happens to many other brands, which is that ppl get tired of it. Hopefully that will only happen (if it does – maybe red has what it takes to go the distance? with oprah and bono who knows) in a few years from now when there are other similar companies.

On that note, I would rather see Africa-based brands be imported into our countries so that we see viable African economies and self-sufficiency rather than dependency… of course, for that to happen, the civil war and strife would have to end

smalrus

says:

16 March 2007 at 4:11 pm

Dany-

I didn’t see what the time frame was for raising that $100 million. However, the (red) line has only been around for one year thus far (announced on 26 January 2006 at the World Economic Forum). For them to raise even one-quarter of that in a year is still a gigantic feat.

I view it as such a great accomplishment because the (red) brand is consumption-based, not donation-based. That means that in one year, they were able to cut a $25 million cheque based solely on what people purchased from those companies. That also means that based on the percentage of revenues, the (red) products themselves are grossing maybe $250 million in revenue. Imagine applying that not only to the entirety of a corporation’s products, but to entire industries involving various brands. These corporations would compete to become more philanthropic and eventually evolve to integrate problem solving into their sustainable business models, emerging beyond merely throwing money at the problems, but actually working to solve them.

I’ve happened to hear of another company that is working with businesses in cause-related consumption models, though unlike (red), it is not being overly advertised at the moment. You’re right, the entire concept might become over-extended after a time, however the concept will truly work when fitting in with products that people need, not just want. While it may be easy enough to persuade someone buying an iPod Nano to purchase the (red) one to benefit AIDS relief, it still is not enough to persuade a non-buyer to get one.

The other problem that may tie into the (red) model is that, as the Financial Times article says, (red) has chosen one and only one brand in each category, as to not saturate entire industries with its unique brand development. The flip-side to this is that it marginalizes the total possibilities of the brand to a select few companies. For instance, I cannot purchase a (red) RAZR since it is carried through Sprint and my plan is through Verizon. I have no money to shop for Giorgio Armani, so perhaps their clothes don’t really reach me. And if I hated iPods (which I don’t, but that’s completely unrelated), I could not buy a ScanDisc Senza to benefit (red).

Brands thrive when they can prove themselves successful. Though it is very easy to be cynical that (red) has not raised enough money for the Global Fund, it is nonetheless $25 million dollars that would be otherwise pocketed by the corporations. In my opinion, that’s something to write home about.
And you’re right, according to the Global Fund, that $25 million raised in one year by (red) ties it at 16th place with Russia’s total donor contributions. (Ireland is 13th.)

http://www.globalhealthfacts.org/topic.jsp?i=41&srt=2&ord=0#table