Like most startup companies, Dannon faced challenges as a company until several decades after, in 1988, when Dannon capitalized on the advantages of having an FDA approval that they had one of their first most successful product launches. Since then, Dannon have developed many novel yogurt products. In 1994, it conducted a strategic operational reorientation and started focusing more on the health benefits of its products.
Like its parent company, Dannon thrives in the yogurt industry distributing various forms of yogurt products around the world, ranging from its Staples or Fruit Blends, to Light and Fit (a low calorie yogurt), Kids, and its most recent and most successful launch, Activia (a probiotic cultured yogurt).
In spite of the worldwide popularity of yogurt products, Dannon discovered that it is not a core part of the American diet compared to their European counterpart, as demonstrated by the 2007 yogurt consumption statistics.
With Dannon’s recent goal to grow the yogurt category and its relevance to the American market, its executives saw this opportunity as a high-potential growth. Thus, by the end of 2009 being at the strategic crossroads to become the U. S. market’s leading distributor of yogurt in the domestic sector, Dannon’ senior director of public relations, Michael Neuwirth, wondered if the company’s corporate social responsibility (CSR) might have a role in this venture.
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To study the perspectives of the company’s stakeholders regarding the idea, he posed several questions which consisted of: 1. Should we communicate Dannon’s CSR activities? 2. What would be the best means to do so? 3. Should it be a corporate-level or brand-level campaign? 4. What would Danone think about this decision? 5. What would be the implications on Dannon’s current CSR initiatives? 6. What, if anything, would it require in terms of additional CSR programs? (Marquis et al. , 2011, p. 2).
Six of Dannon key leaders whom Neuwirth consulted with were (1) Alessandro Arosio, Senior Director of Marketing, (2) Jon Pollock, Brand Manager, (3) Marc Jove, Senior Vice President of Marketing, (4) Claudia Sargent, Director of Media, (5) Tony Cicio, Vice President of Human Resources, and (6) Gayle Binney, Manager of Corporate Responsibility and The Dannon Institute. Each of them shared valuable views of the possible risks and benefits of using CSR as a tool in repositioning the company in the American market. The Debate: To Communicate or Not to Communicate Dannon’s CSR
Dannon pride itself not just for its CSR activities, but especially for maintaining a “humble” corporate profile by keeping its CSR efforts “internal”. According to Tony Cicio, this is the key in maintaining its authenticity, demonstrating that it is done for the right reasons. In this regard, Dannon’s stakeholders have enumerated several risks and benefits if they were to tie-in marketing efforts with its CSR activities. These benefits include: a) Communicating Dannon’s CSR programs will demonstrate consistency in its marketing message and increase consumer confidence. Alessandro Arosio, Senior Marketing Director. (Marquis et al. , 2011, p. 9).
b) Communicating its nutrition-based CSR efforts can bolster the Dannon brand as the nutrition expert, thus aligning its business with its social mission. – Jon Pollock, Brand Manager. (Marquis et al. , 2011, p. 10).
c) Still focused on its nutritional benefits, communicating Dannon’s CSR can develop a more personal engagement by demonstrating that the company care about what their consumers also care about, which in turn can build more credibility. – Claudia Sargent, Director of Media. Marquis et al. , 2011, p. 11-12).
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What is Corporate Social Responsibility? Corporate Social Responsibility (CSR) is a self-regulated system that companies use to ensure that their operations are in line with ethical standards, the law and the norms of society. CSR aids companies in taking responsibility for their actions and “encourage a positive impact through its activities on the environment, consumers, employees, communities, ...
d) If communicated through a well-thought out campaign, it can help distinguish Danone’s and Dannon’s connection as a company and commitment to health and nutrition which can generate the external credit it has long deserved from its covert CSR efforts. – Gayle Binney, CSR Manager. (Marquis et al. , 2011, p. 13).
Although communicating Dannon’s CSR programs may have some clear benefits, based on careful analysis of the stakeholders, several redundant themes on its risks had also been identified.
Two of these risks identified by Arosio were; (1) First, since Dannon provided intangible benefits, it will be difficult to measure its return on investment (ROI), and (2) if the consumers are not clear on which company had been promoting the publicized CSR programs, its competitors could take advantage of a potential halo effect which poses a potential loss on investment for Dannon (Marquis et al. , 2011, p. 9).
Pollock added that in terms of its ROI measurability and cost for making such an investment, his concerns were if the idea would only become a sacrifice for short-term profitability with not much promise of a long-term value (Marquis et al. , 2011, p. 10).
Sargent, on the other hand, emphasized that Dannon’s benefits were brand specific and that the communication should be done on a brand-campaign basis so that reallocating the funds for such a campaign does not take away from its current focus.
Furthermore, she implied that the “current skepticism around “green- washing” and ”pink-washing,” practices may disingenuously emphasize the social and environmental benefits” of its CSR programs (Marquis et al. , 2011, p. 12).
Being Dannon’s CSR Manager, Binney’s concerns pointed directly to the complexity of using the company’s CSR programs as a marketing message where it will require a carefully structured campaign that can clearly articulate what Dannon has done and distinguish it from its parent company’s contributions.
While Arosio, Pollock, Sargent, and Binney were able to point out both the positive and negative sides of communicating the company’s CSR efforts, Jove, Vice President of Marketing, and Cicio, Vice president of Human Resources, did not have any reservations in voicing out the true risks of the idea. According to Jove, since the U. S. population is still an emerging market for yogurt, the timing for communicating Dannon’s CSR as a marketing message would be premature. He knew very well that the current challenge is to get the American consumers to “want yogurt first” before making them “want Dannon”.
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Jove quoted, “I cannot put the chariot in front of the horse. First is product. Then we can enrich it with community and social activities. ” (Marquis et al. , 2011, p. 11).
Alongside Jove opposition to the idea, Cicio’s main concerns communicated its potential “moral dilemma”. He reminded Neuwirth of the bold conflict that the idea can bring by mixing CSR concepts as a marketing effort and potentially damaging the authenticity of its CSR programs. Cicio summed up his perspective and clearly pointed out that overadvertising can create backlash and will only result in losing the company’s overall credibility.
Indisputably, there are advantages to Neuwirth’s idea of using Dannon’s CSR activities to bolster its marketing effort; however, there are also strong and valid oppositions for such a campaign. Contrary to what he was expecting out of the discussions, these substantial underpinnings put Neuwirth back into the drawing board in making the choice whether to proactively communicate Dannon’s CSR efforts or not. The difference in this instance, however, is that he is now equipped with valuable information prior to choosing which direction to go. A Chip of the Old Block: Impacts of a Corporate Parent Danone first entered the U. S. n 1941 and introduced yogurt to the American market as its first product during its inception. After sixty-seven years of success in the industry, it is now the parent company of three business; the Dannon Milk Products, Inc. , Danone Waters of America, and Stonyfield. Its management encouraged and trusted local decision making, thus its local executives were given full responsibility for the management of its country-based business units’ (CBUs) profit and losses. Similarly, the specific taste profiles of its products were adapted from its CBU following its main scientific formula which was created at its headquarters.
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As its wholly owned subsidiary, Dannon’s fiduciary duties to Danone include meeting annual targets for profitability, and providing reports for its operating free cash flow, manufacturing safety, and environmental sustainability. Since Danone provided the leadership training to all its subsidiaries to ensure cultural cohesion, Dannon’s company values is patterned from its parent company’s acronym as well: HOPE (humanism, openness, proximity, and enthusiasm).
By doing so, as Cicio indicated, Dannon is able to fulfill its responsibility to the parent company by living its values and deliver financial return.
In terms of its CSR activities, Danone follows three main themes: nutrition and health, nature, and people. Again as a subsidiary, Dannon is encouraged by its parent company to capitalize on these key themes as the foundation of its own CSR initiatives (The Dannon Company, Inc. , 2007; Marquis et al. , 2011).
Accordingly, the nutrition and health initiative, as the heading implied, is dedicated in promoting and communicating the link between nutrition and good health. Dannon’s biggest project in this realm is the creation of the nonprofit organization named the U. S. Dannon Institute. The institute, directed by Virginia A.
Stallings, aimed to promote health and nutrition through leadership and awareness programs. As a result of its successful activities, Dannon was given the Focus on the Future Humanitarian Award in 2008 for its contributions to nutrition education over 10 years. In addition to the programs from the institute, Dannon also made efforts to make healthy eating accessible for every socioeconomic group by providing schools with an affordable nutrient-rich food for students. Moreover, Dannon also donated its surplus products to Feeding America as a charity to aid in relieving domestic hunger.
Another successful charitable venture by Dannon is the Dannon Next Generation Nutrition Grants whose mandate is to help teach children and their families about healthy lifestyles to combat childhood obesity. Also in 2008, Dannon joined the Children’s Food and Beverage Advertising Initiative in support of directing all advertisements for children under age 12 to meet the key nutritional guidelines reviewed and approved by the Council of Better Business Bureaus (Marquis et al. , 2011, p. 8).
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On the other hand, Dannon’s people initiatives focused on supporting local community organizations through volunteerism and donations.
Part of this initiative also included enriching the health and well-being of its employees through the development and utilization of comprehensive work-life wellness programs. Consequently, the nature initiatives focused on identifying and reducing the company’s environmental footprint. A successful program that carried this duty is the Dannon’s cross-functional Green Obsession, formed and sustained by its own employees. Another program within the nature initiatives is the administering of the Carbon Footprint Analysis that measured the amount of carbon generated by its products throughout its lifetime.
As have been demonstrated, having a parent company served as the umbrella in all of Dannon’s operations; from the management of its fiscal responsibilities, to the corporate values in which Dannon uses as its operational cornerstone, and more importantly, Dannon’s CSR initiatives are but a mere shadow of its parent company despite its independently managed programs. In retrospect, Binney shared really valid points about making sure that if Dannon does come to a conclusion of communicating its CSR activities, that it should be handled and articulated strategically so that it distinguishes Danone from Dannon’s CSR image.
A Final Touch: The Communication Strategy In hindsight of the major risks and benefits of Neuwirth’s idea to expand Dannon’s market territory in the U. S. through the externalization of its CSR efforts, as identified by its stakeholders, whichever direction the company decided to partake is guaranteed to change the course of Dannon’s position in the U. S. market. In Neuwirth’s mind, his philosophy boiled down to the health benefits that Dannon consumers will be able to enjoy regardless of the company’s choice, while the business growth and expansion will only be the “icing on top”.
Therefore, in spite of Jove’s and Cicio’s prospects about the serious implications of mixing marketing with the externalization of Dannon’s CSR activities, there is a clear and truly favorable outcome which turns out to be the bottom line of the idea after all. In practical terms, there is are effective ways to structure the marketing message so that it complements Dannon’s CSR initiatives without risking a marketing backlash. One of the ways to accomplish this is by moving away from the top-down approach determined by the board and instead, using the bottom-up strategy established and created by its stakeholders (Battacharya, 2009).
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What the “bottom-up” strategy meant is wielding focus groups and other marketing research techniques that aimed to understand the deeper psychological needs of its stakeholders and capitalize on those key points by addressing them effectively. For example, if consumers can find a more personal relevance to a company’s responsibility initiatives that make them feel as a co-contributor of such activities regardless of their level of participation, they can draw personal pride and self-esteem by being affiliated with the socially responsible company, through direct efforts or otherwise.
As it turned out, Dannon’s Give Hope with Every Cup campaign in 2010 followed just that. By partnering with the National Breast Cancer Foundation, Dannon was able to demonstrate that its two pillars of historical commitment, social and business, are not competitive with each other at all, but rather coexistent and are equally important (Marquis & Thomason, 2011).
Through its continued campaign, in 2012 Dannon was recognized as one of the 100 prominent global brands, and at the top in its category of consumer staples (Brandlogic, 2012).
Additionally, the same report ranked Dannon as the leader in sustainability leadership (p. 16) which further supported that it’s social and business pillars are truly coexistent and are operationally effective together. Conclusion The Dannon Company Inc. , subsidiary of Danone, is one of the leading brands of yogurt distribution in the United States. It was initially introduced in the country by Isaac Carasso in 1949 as the Dannon Milk Products, Inc. in New York.
Sixty-seven years later, it has reached its strategic crossroad to choose whether to reposition itself to become the top yogurt brand in the country or remain as a sub contender to its competition. In light of such a major corporate step, Dannon is faced with the dilemma of whether to communicate its CSR activities publicly as a marketing tool, pointed out by Michael Neuwirth, Senior Director of Dannon’s Public Relations. In order to make the best decision, Neuwirth presented his idea along with a set of questions to Dannon’s executive stakeholders to find out what their perspectives are regarding the subject.
After a thorough discussion, he found himself even more confused than prior to the conversations as each of the executives provided him legitimate arguments identifying the two sides of the coin, enlisting the risks and benefits of externalizing the Dannon’s CSR programs. One of the major benefits that were identified is the possible increase in its credibility and confidence from its consumers should Dannon decide to communicate its CSR programs publicly.
However, the main argument was the possible backlash and complications of mixing its marketing message with its CSR efforts, which according to Cicio, can possibly damage the authenticity of its CSR efforts. Nonetheless, there were several advantages and disadvantages that Neuwirth would clearly have to consider if he were to make the right decision. In conclusion, Neuwirth will have to consider the bottom line of his idea which is to put the consumers’ interest first by putting emphasis on the nutritional benefits of its products, and the corporate benefits should ollow afterwards. Apart from this, Neuwirth will need to device a strategic way to communicate Dannon’s CSR that does not stir up adverse effects if it were to be combined as a marketing tool; and that will distinguish it from its parent company. One way that this can be accomplished is by using a bottom-up approach and making the most out of knowing and addressing its stakeholder’s deeper needs first, specifically with its consumers and employees. By doing so, Dannon had positioned itself in a win-win-win situation. References Battacharya, C. B. (2009, November 20).
Corporate social responsibility: It’s all about marketing. Retrieved from http://www. forbes. com/2009/11/20/corporate-social-responsibility-leadership-citizenship-marketing. html Brandlogic. (2012).
2012 sustainability leadership report: Measuring perception vs. reality for 100 prominent global brands. Retrieved from http://www. sustainabilityleadershipreport. com/downloads/2012Sustainability_leadership_report. pdf Marquis, C. , Shah, P. , Tolleson, A. , & Thomason. , B. (2011, Spetember 28).
The Dannon Company: Marketing and corporate social responsibility (a).
Harvard Business School Publishing, Boston, MA, 9-410-121, 1-23. Retrieved from https://cb. hbsp. harvard. edu/ cbmp/asset/19189805 Marquis, C. & Thomason. , B. (2011, Spetember 28).
The Dannon Company: Marketing and corporate social responsibility (b).
Harvard Business School Publishing, Boston, MA, 9-412-047, 1-7. Retrieved from https://cb. hbsp. harvard. edu/cbmp/asset/19189807 The Dannon Company, Inc. (2007).
2007 corporate social responsibility and sustainable development overview. Retrieved from http://www. dannon. com/pdf/ 2007DannonCSROverview. pdf
