Scandal cost computations that uniquely impact luxury brands

2 Nov 2018 , 1:04pm

Recent research from the Kellogg School of Management indicates that witnessing a moral violation can - and does - change people’s product choices. These findings provide a valuable boost to the authority and effectiveness of the legal and compliance operations of luxury brands.

For years Stella McCartney’s ethical stances made her a style outsider. Now the luxury fashion industry is catching up. Scandals impact on our purchasing decisions, often in ways that are not obvious. In short, there is a strong connection between unethical behaviour and happiness.


Ping Dong, an assistant professor of marketing at the Kellogg School, and Chen-Bo Zhong, from the University of Toronto, found that we are more likely to buy a popular brand or product, as opposed to something that is unique, when we feel the social order has been breached.

Purchasing cues

Ping Dong and Chen-Bo Zhong’s findings indicate that what’s is at work in our decision to switch is our human need to maintain social order.  Our instinct is to repair the breach. One way of doing so is by demonstrating our own conformity to the majority decision.  We are, in effect, signalising that we won’t tolerate a violation of social norms.

When money and morality collide

Of vital interest to luxury brands is the question of whether people whose income increases become less, or more, tolerant of ethical breaches.  The Easterlin paradox is one of the most famous conclusions in social science. The Easterlin paradox maintains that above a certain threshold money can no longer buy happiness. 

Valuable lessons from Benetton branding

In June of this year United Colours of Benetton, the Italian clothing company, was harshly criticised after it launched a controversial advertising campaign featuring images of migrants rescued from the Mediterranean sea.  Controversial Italian photographer Oliviero Toscani designed this highly controversial Benetton ad campaign.  He claims the images were merely “dramatic”.  Benetton customers were not persuaded.

His earlier ad campaigns for Benetton have touched on subjects such as human rights, religion and racism. In 1991, Benetton outraged the Catholic church by using an image that showed a priest and a nun kissing.  Benetton billboard campaigns featuring the Pope kissing an Egyptian Imam were transfixing too.  Benetton built its brand on the force of its controversial advertising campaigns.  But in recent years it’s shock tactics have been undergoing a mind-set revision. 

John Mollanger, the Frenchman who is now in charge of the Benetton brand and products, acknowledges that in the 1980s and 1990s a key mission of Benetton advertising was to create awareness, by shocking people. He is very clear about what the new Benetton mission is: “We have moved away from pointing the finger at what we thought was wrong and instead we want to actually improve what we think is wrong.” Molanger also points out that Benetton is still committed to making clothes with a cause.  In his view the shock element in Benetton advertising is now superfluous because “Benetton has matured and the world has matured.”

Arguments to fight unethical behaviour

That we are more likely to buy a popular brand or product, as opposed to something that is unique, when we feel the social order has been breached is valuable marketing information. This research gives luxury brands an exceptionally strong incentive to become more proactive in business policy efforts that are designed to curtail unethical behaviour.