In a , our research team examines the nature, functioning, and performance relevance of Machiavellianism in alliance partnerships.

We do so by focusing on a fundamental issue alliances face—both the bright side and dark side of alliances shape their effectiveness. Alliances offer a platform for joint learning that can serve the interests of the partnership (bright side) or they can foster learning-related exploitation and the use of power to prioritize one’s own goals (dark side). The tension between these routes can be used by an alliance partner with Machiavellian characteristics.

Machiavellianism in an alliance is a firm’s strategy of social conduct that involves manipulation of the partner for own gain, often against its best interests. Our Theories-in-Use interviews with executives confirmed that Machiavellianism resonates strongly in the marketing alliance context. For example, one CEO commented that “For companies like mine, tie-ups are a unique vehicle that offer great opportunities to benefit from the partner and its skills. We are masters of manipulation.”

Like other social psychology constructs transferred from the individual to the firm level, Machiavellianism is partly dispositional (internal beliefs) and partly manifest (behavioral). We did not find evidence that Machiavellianism is a fixed, firm-level disposition. Instead, our interviewees were convinced their firm’s Machiavellianism and its dimensions (i.e., distrust in the partner, desire for status, amoral manipulation, and desire for control) vary across alliance settings. For instance, the managing director of a marketing alliance was adamant that “It can change. Our motives, needs, and desire to lead in the production of new skills … change, as it is often easier to chalk up another victory by deceiving rather than leading.” 
 
Our main study examines a firm’s Machiavellianism as a driver of its performance effectiveness in the alliance via learning and power mechanisms. We find that Machiavellianism harms performance by: (a) weakening motivations to develop and learn new knowledge with the partner (i.e., collaborative learning); (b) strengthening motivations related to anxiety about failing to access and learn new knowledge from the partner (i.e., learning anxiety); and (c) increasing the use of power to dominate the alliance’s agenda. 
 
We also find that while Machiavellianism naturally drives learning anxiety, it can encourage collaborative learning when there is situational knowledge furnished by collaborative history. The path to use of power is unaffected by collaborative history. Using history to understand the situation opens the way for Machiavellian pragmatists to favor bright-side (collaborative) learning over the more intuitive dark-side (anxiety) route in the race to learn. Using collaborative history, we find moderating conditions that can benefit performance by neutralizing the negative performance effects of Machiavellianism through collaborative learning and learning anxiety, but not use of power. 
 
Our quasi-longitudinal study allows us to recognize that learning and power effects take time to unfold. We unveil evidence that performance outcomes of learning are contingent on the alliance development stage. We observe an inverted U-shaped moderation at the alliance development stage on the paths from collaborative learning and learning anxiety to performance. Once an alliance partnership is past its peak, opportunities fade for both learning-related mechanisms.
 
We further observe that the competitive mechanism, use of power, appears to be problematic because it is resistant to the conditioning effects of both knowledge built via collaborative history and the alliance development stage. Machiavellian use of power to dominate the alliance’s agenda is a key concern for alliance management. 
 
We advise managers that Machiavellian firms’ preoccupation with dark-side learning anxiety and use of power could preclude a focus on collaborative learning, to the detriment of performance. Still, it is important that managers factor into their planning the conditioning effects of alliance situational factors like collaborative history.
 
Understanding how to identify a Machiavellian partner is beneficial for practitioners because such partners are adept at creating the illusion of cooperation. Our Theories-in-Use discussions surfaced manifestations of Machiavellianism’s behavioral side that would allow the detection of a Machiavellian partner. Machiavellian firms are likely to exhibit behaviors that reflect its dimensions, such as hypervigilance, authoritative work patterns, and calculative adaptations.
 
Firms may find it prudent to set up an alliance with a partner with Machiavellian characteristics, provided the partner offers a good fit of capabilities for the alliance work. The challenge facing managers is to surface this partner’s Machiavellianism and suppress its deleterious effects until they can find value in collaborative learning.

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From: Giuseppe Musarra, Matthew Robson, and Constantine Katsikeas, “,” Journal of Marketing.

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With the California Consumer Privacy Act (CCPA) taking effect on Jan. 1, many publishers have sent out notices dutifully informing recipients of their changing privacy policies. But many websites appear to be complying at minimum with the statute’s regulations, burying “Do Not Sell My Personal Information” buttons or links at the bottom of pages or behind dense fine print. Smart marketers would do well to educate users on their privacy options, not simply uphold the letter of the law.

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Frederick’s, one of the first established lingerie brands to achieve mainstream popularity, is altering its brand with a new campaign to widen its audience and reach millennial consumers. Headlined by a 12-minute “action mini-series” video featuring four female internet personalities, the campaign is a major gambit for the notorious naughty underwear brand—critics question the overall strategy, positing that Frederick’s is only diluting its image.

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Eater takes a look at how the rise of plant-based meat substitutes has turned the phrase “plant-based” into a phrase that “means everything and nothing.” According to the article, the phrase is now being used to refer to products that were already vegan or vegetarian, like pasta. It’s a move not unlike marketers slapping the label “gluten-free” on products already obviously gluten-free. “By futzing with the assumed connotations of plant-based (i.e., a meat substitute made from plants), brands can use the buzzword to their advantage, and stretch it to cover almost anything but meat. But describing a product as specifically plant-based when the product it’s riffing on is also plant-based is redundant at best and cynical at worst, an attempt to sell customers something ‘new’ that’s not really that new.”

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Twitter introduced a new Promoted Trend Spotlight on Monday that allows advertisers to take over the top section of the social media platform’s Explore tab. Similar to its Promoted Trends ad, the Promoted Trend Spotlight allows for six-second videos and GIFs, along with static images, to appear at the top of the Explore tab for a user’s first two visits per day. After being viewed twice by that user, then placement moves to the Promoted Trend placement and organic editorial content replaces it in the Spotlight location.

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An article without a byline that positively describes Facebook’s efforts to safeguard political speech was posted to TeenVogue.com on Wednesday, but was soon edited to include a line in italics at the top that read, “Editor’s note: This is sponsored editorial content.” The post, “How Facebook Is Helping Ensure the Integrity of the 2020 Election,” was eventually taken down. Condé Nast, which owns Teen Vogue, apologized in the labeling of the piece and for any confusion it may have caused. Facebook pitched the idea for the article last year when it was in talks with Teen Vogue about the Teen Vogue Summit. Facebook was a sponsor of the event, and its paid partnership included sponsored content.

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While retail sales soared over the holiday shopping season, particularly online, some large chains posted noticeably weaker returns. J.C. Penney, Kohl’s and Victoria’s Secret saw lower sales in November and December, with the latter noting particular slumps in women’s retail. These three companies lost out to bigger retail outlets such as Amazon, Target and T.J. Maxx, which offer comparable products with additional convenience at lower price points. Analysts are not optimistic that these companies can turn things around in the new year, either. When companies like Costco and Walmart are similarly jumping up in revenue, it has become apparent that the bigger the retailer, the better the holiday 2019 positioning—even among titans.

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Photos: TIME home page screenshot via Marketing Land; ‘Plant-Based’ by Vegan Liftz on ; Teen Vogue via screenshot

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One of the most complex relationships in our industry is the client and agency partnership. When it’s working well, everyone is on the same page and the business results are there to prove it. Both parties are satisfied in their own identities and in their identity as a team. When it’s not working, it can be toxic; one side holds back things they’d like to say, while the other side feels there is something wrong and looks for ways to try and please their partner—often driven by fear of losing the business.

Or worse, the client doesn’t share its disappointment and leaves its agency partner with no warning. I’ve even been in situations in which the client calls to inform that it’s conducting an request for proposal (RFP) with no warning, and then invites the agency as an incumbent to participate in that RFP. In my 20-year career, I’ve not once seen an incumbent win when invited to an RFP.

All of this comes down to one thing: feedback. As a client, providing your agency with actionable, clear feedback in the moment (not six months later when inviting them to an RFP or firing them) offers the agency the opportunity to address the outage. This is the only fair way to manage the relationship. You should also evaluate all your current and prior relationships with agencies. How did those relationships end? Is it the same story each time? Was it a case of, “They were great until they stopped being great, so we let them go”? If that’s the case, there’s likely more to the situation.

To be a fair client, you must also be willing to take feedback and accept that, as in every relationship, there is give and take. Very rarely do marriages break up due to the actions of one party. Your team isn’t perfect. They may need training and guidance, such as how and when to provide actionable feedback, writing a proper brief or understanding research results.

Giving Actionable Feedback

Regardless of the situation, understand that no agency ever intentionally misses a brief. There is a lot of time and energy spent on putting together creative presentations. If an agency has missed the mark, there needs to be a candid conversation around how they did so. Refer to documents to which you both aligned and investigate where things went off track. Remember: We take our jobs very seriously, so we’re dismayed to hear when something we’ve accomplished isn’t on task. Provide transparent insights on exactly what you were expecting so we can candidly discuss how we missed it. Then, give your agency a true second chance to course-correct. If you are unable to do so (i.e., it’s out of your hands or you aren’t willing to give them the chance to fix it), the respectable approach is honesty.

If your agency performs well and delivers, but there are certain things that you expected (and didn’t necessarily articulate), then you need to do a little soul-searching. Is it their fault for not reading your mind? Or should you have stated what you were looking for in the brief? If you expect to see something in a presentation, that needs to be clearly communicated. And you should be able to state the rationale and how it addresses the brief. This approach will align everyone and you won’t be yearning to see something that you didn’t ask for (thus building up some sort of resentment with your agency partner which can resurface).

Like any relationship, your agency wants honest and timely feedback. We don’t want to hear that things are great when they aren’t. We don’t want you to swallow the desires that you’d like to have articulated but didn’t. We want to deliver the best creative possible and make you look like a rock star. That’s why you hired us to begin with. If you don’t have chemistry with one of our people, please don’t be shy about telling us. We get it; not everyone clicks.

Bottom Line

Don’t ever think that withholding feedback is a “good thing,” even if it means temporary discomfort in communicating difficult information. Don’t sugar coat it. Say what you mean and mean what you say. We are grown-ups; we want to know what’s not working. Conversely, we’d also like to know what is working. When you’ve got tough news to share, start with the good stuff, then raise the opportunity areas. Also, be open to feedback. Understand that yes, while you are paying us, this is a partnership. If your side isn’t giving us what we need and we can’t tell you about it, the work will never be as great as it could and should be.

When in doubt, always speak to the most senior person on the totem pole and have a frank discussion. If you don’t get action, then it’s time to reevaluate your relationship.

Photo by Charles on .

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In the summer of 2011, Italian fashion brand Gucci learned that Shilla, operator of the duty-free retail facility located in the Incheon International Airport, offered Louis Vuitton concession terms that were more generous than its own. Gucci perceived that it was being treated unfairly and requested the same terms as Louis Vuitton. Shilla denied the request. In protest, Gucci transferred two of its locations from Shilla’s facilities to Shilla’s main competitor, Lotte Duty Free. Gucci viewed Louis Vuitton as a comparative referent, even though the firms had achieved different performance levels, creating a referent discrepancy (i.e., when a focal firm selects a referent firm that is not comparable based on specified criteria, such as sales performance).

Past research has analyzed the importance of social comparison and fairness in retailer–supplier relationships. However, market understanding of how referent discrepancy influences attitudinal outcomes, such as perceptions of distributive fairness (i.e., the supplier’s perception of the fairness of earnings and other outcomes it receives from its relationship with the retailer), is limited. Furthermore, there is little guidance on how a retailer can manage perceptions of distributive fairness in a context in which differential treatment of suppliers is inevitable. This work addresses these gaps through a two-study examination of retailer–supplier relationships in a store within in a store (SWS) format in Japan. SWS formats have increased in popularity and are seen everywhere from department stores to duty-free stores.

The first study employs a survey of suppliers within a SWS context, providing objective performance data. The results indicate that upward referent discrepancy decreases a focal supplier’s perceptions of distributive fairness while downward referent discrepancy increases perceptions of distributive fairness. The second study employs an experiment using brand/store managers.

Our findings present a foundation on which a greater understanding of upward and downward social comparison in a retailer–supplier context can be advanced. Importantly, the majority of referent discrepancy is upward, negatively influencing perceptions of distributive fairness. Downward referent discrepancy, though less common, results in increased perceptions of distributive fairness. These findings contribute to the literature by extending related work pertaining to the attitudinal and behavioral effects resulting from an advantageous or a disadvantageous perceived distribution situation. Specifically, while being in a disadvantageous position results in an expected negative attitude (i.e., lower perception of distributive fairness), a divergence from a balanced state (i.e., referent discrepancy) that benefits the focal supplier does not always produce relationally harmful effects.

Retailers need to recognize that social comparison occurs among partnering suppliers. While upward referent discrepancy can result in deleterious supplier attitudes, downward referent discrepancy can have positive relationship effects. Given the differential effects, we recommend that a retailer identify whom a supplier is using as a comparative referent. This information can be gleaned during a retailer’s regularly scheduled meetings with its suppliers. The retailer can then determine, from its criteria of evaluation, whether the supplier is engaging in upward or downward referent discrepancy. This assessment is important because it can:

1. Help the retailer understand whether its criteria of evaluation is clear and observable by its suppliers (possibly suggesting the need for greater transparency to suppliers);
2. Identify which suppliers are potentially in situations of upward or downward referent discrepancy (and by what magnitude); and
3. Aid in developing effective relationship management strategies based on a supplier’s specific situation.

Finally, there is a tendency for managers to avoid or delay discussing aspects that could be viewed negatively (e.g., delaying the delivery of bad news, failing to explain rationale behind a change). Yet failure to proactively provide an explanation (i.e., foreseeing possible differential treatments that can cause decreased levels of perceived distributive fairness and providing justification in advance) with substantive content and specificity (i.e., providing directive information on similarly performing comparative referents) will most likely result in negative attitudes, potentially damaging the relationship. Our results indicate that providing proactive explanations of differential treatment across partners can enhance perceptions of distributive fairness when upward referent discrepancy exists. This finding makes our research team wonder whether Shilla could have saved its relationship with Gucci had it proactively provided an explanation.

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From: Hannah Lee and David Griffith, “,” Journal of Marketing, 83 (March).

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To do that, it’s hitched itself to a millennial target and four fitness brands defining modern exercise, chief among them CrossFit. Reebok is enjoying the exclusive licensing rights to CrossFit’s trademark and title sponsorship of its summer games, but can the fitness program make Reebok relevant again?

“The real test is still in front of us—making the Reebok brand more relevant to consumers.”  

Those are the words adidas Group CEO and chairman Herbert Hainer said to shareholders in a 2007 annual report. At the time, Reebok had been a subsidiary of , the global sporting goods parent company of adidas and TaylorMade, for just more than a year. Reebok, once the leader in the athletic footwear market, ahead of Nike, had fallen out of relevance more than a decade earlier. When it was acquired by adidas Group for $3.8 billion in January of 2006, Hainer warned critics of the long road to the brand’s recovery.

Each March for the next four years, the group CEO assured investors that Reebok was finally on the right path. In 2009, the “clear roadmap” to success set out Reebok’s plans to dominate women’s fitness, challenge men’s sports, and revive heritage styles. By 2010, the success of the “toning category”—featuring footwear that promised to tone wearer’s legs—seemed to have revealed a better way forward. But by 2011 toning was waning and Hainer grasped at Reebok’s running and fashion shoes for a bright spot.

While the brand continued to search for an identity and a foothold in the market, the seed of a partnership with great promise had been planted. If and when it would bear fruit was yet to be seen.

The CrossFit Courtship

Among the crowd of enthusiasts that flocked to Carson, California, in July of 2010 for three days of fitness competition was the director of sports marketing for Reebok. A CrossFitter himself, Chad Whittman was there as a spectator but was also on a mission: to make contact with Greg Glassman and introduce the founder of CrossFit to Reebok.

Both brands were at an inflection point. CrossFit, a high-intensity exercise regimen created by Glassman to practice functional movement, had outgrown its former arena, a ranch in Aromas, California. For the first time, the CrossFit Games would be hosted at the Home Depot Center in Los Angeles to accommodate the growth of the sport. At the time, CrossFit had been gaining popularity for a decade. CrossFit Inc. was incorporated in 2000, but Glassman’s program was first picked up in 1995 by a police force in Santa Cruz, California, and later by visitors to CrossFit.com, where anyone interested could find a new workout posted each day. But with  about the potential dangers of the demanding sport and little infrastructure, word of mouth had yet to build a following as strong as any of its component activities (Olympic lifting, gymnastics and aerobics). Reebok was on its way out of American football as it radically shifted its focus away from sports and back to its fitness roots.

“When [Reebok] was the most powerful and meaningful … it was centered around fitness,” says Yan Martin, vice president of brand management at Reebok. Fitness in 2010 looked a lot different than it did in the 1980s, though. Women had ventured outside the mirrored studios where they once did step aerobics and had begun to make their way toward the dumbbell rack. While Reebok wanted to leverage the equity it had in its women’s fitness category, it also wanted to carve out a place in the modern fitness market.

“Our president, at the time, was working out at CrossFit New England and came back one day and said, ‘This thing is amazing. It’s what fitness will be for years to come,’ ” Martin says. 

Meaningful fitness—exercise that lets people discover their potential—and community orientation were two tenets that Reebok identified as central to both modern fitness and CrossFit. “We felt it was a perfect fit based solely on purpose,” Martin says.

That summer, Steve Weiss was among the team from CrossFit that traveled to Reebok headquarters in Canton, Massachusetts, to learn more about how the two brands might work together. Initial conversations mentioned nothing of licensing, revenues or business synergies. Rather, the brands talked about shared values. “They really convinced us they believed in CrossFit as a lifestyle and a fitness program and they wanted to help elevate that movement rather than just trying to sell apparel,” Weiss says.

Although the brands meshed ideologically, a business case had to be made as well. CrossFit was seeking a title sponsor of its annual games as well as global infrastructure to grow the sport. (In six years, the number of CrossFit affiliates has grown from approximately 1,500 to more than 12,000 in 150 different countries). Reebok would in turn get exclusive rights to create CrossFit-branded footwear and apparel and an authentic position in one of the fastest-growing movement in fitness. “Reebok was using CrossFit as a lighthouse as they transitioned away from team sports,” Weiss says. The brands penned a 10-year deal, and Reebok took its first step in pursuit of the “Fitness Generation.”

Putting Faith in the FitGen

CrossFit was the first of four strategic partnerships Reebok would go on to make with athletic brands aligned with the FitGen—a segment, or “tribe,” defined by Reebok as, “a generation hungry to get back to the basics.” Following CrossFit with obstacle-course race series  and group fitness studio  in 2013, then mixed martial arts promotion company the following year, Reebok rounded out its “tough fitness” category. 

The next year also saw the debut of a new logo, the Reebok Delta, whose three sides represent the physical, mental and social transformation people experience when they commit their lives to fitness. As president Matt O’Toole described it in a press release that year, “It’s not a logo, it’s a symbol … a way of life.” The lifestyle of fitness is what sets the FitGen apart from those that came before it. “What we’re seeing is that what we call the Fit Gens—the consumer who’s typically in their 20s whose entertainment is working out—they’re responding to our version of fitness, which is much more challenging but also much more social,” .

With a core group of partners assembled, Reebok debuted its multichannel “Be More Human” campaign on Super Bowl Sunday in 2015. The TV spot, titled “Freak Show,” features everyday people flipping tractor tires, leaping over flames, and stepping in unison to a high-intensity instructor, but also fighting fire in a burning building, playing patty cake with their kids and maneuvering in a wheelchair. According to the narrator: “We do it to get better. Period.”

“One thing that’s hard on the fitness and training side is capturing emotion,” says Ellen Schmidt-Devlin, director of the University of Oregon’s sports product management program. That’s why brands often use sport to create an emotional association with their products. That Reebok figured out a way to use training to capture emotion is one reason Schmidt-Devlin believes the campaign is effective.

“The intensity, the visuals: this is beautiful stuff, but this is millennial marketing,” says John Rowady, CEO of Chicago-based sports marketing firm rEvolution. “[Millennial marketing] is about custom human experiences. … ‘Be More Human’ is this general cast on trying to study and target the millennial audience. Reebok is trying to intermingle lifestyle, fashion and competitive sport. They’re trying to say, ‘Life in general is a sport.’ ”

If Reebok needed a foundational segment to which it could sell its new definition of fitness, numbers would suggest they’ve tapped into the prime patrons of the fitness industry. According to the , 76% of regular exercisers are 18-34 years old. A  reported that 69% of millennials believe physical competitions are a good way to keep fit, and 77% would like their workout to be as interactive as possible.

“I think there’s a lot of trust and loyalty with this generation of buyer,” Rowady says. “If you’re listening to them, you’re part of the community, you’re born in the space and you’re what they feel is the legitimate company that is part of their lifestyle, they’d rather reward you over another brand.”

That’s what Reebok is banking on as it competes in a fitness category whose customers are no longer the fringe. “We feel we play a big role as community participants,” Martin says. “We understand that we were the first mover in the marketplace. … What makes our company unique is the fact that we are our consumers.”

Among the more than 10,000 CrossFit-affiliated gyms that have opened since Reebok and CrossFit joined forces, 108 are co-branded Reebok affiliates. Reebok CrossFit One, the 500-member affiliate located on Reebok’s campus in Canton, has become a place of pilgrimage for CrossFitters around the world. “We had Katrin Davidsdottir (female winner of the 2015 Reebok CrossFit Games) here last week,” Martin says. “[Reebok CrossFit One] has become a symbol of how authentic the relationship is between CrossFit and Reebok.”

Reebok’s CrossFit-branded products are a manifestation of the community, as well. Whether it be Kevlar-infused shorts to protect against barbell abrasion or the ever-evolving CrossFit Nano—a shoe designed for diverse workouts allowing athletes to run, jump, weightlift and rope climb in the same pair of shoes—every product takes a consumer-focused approach, says Mike Kratochwill, senior director of training and CrossFit asset marketing for Reebok. “We have hundreds of hours of video of top CrossFit athletes sitting with our developers, designers and marketers talking about what they like and don’t like. All of our product is designed, developed and executed by someone who does CrossFit here at Reebok.”

Competitors Take Aim

In April 2015, Nike released the Metcon 1, a competitor cross-training shoe to Reebok’s CrossFit Nano. Because of CrossFit’s trademark status, Nike, like any brand other than Reebok targeting the CrossFit consumer, can’t market or describe the Metcon or its successor, the Metcon 2, with the word CrossFit. But that hasn’t stopped the powerhouse brand from trying. With its own sponsored CrossFit athletes, such as Lauren Fisher and Mat Fraser, Nike has taken an interest in Reebok’s brand of competitive fitness. Days prior to the 2015 Reebok CrossFit Games, (during which athletes were required to wear CrossFit-branded Reebok shoes and apparel) Nike released a version of the Metcon 1, designed as an homage to the Air Jordan 1, which Nike calls its “first outlawed shoe.” “During the biggest event in the world of high-intensity training, our athletes have been banned from wearing the Metcon 1,” Nike said in a product description below the words, “Don’t ban our shoe. Beat our shoe.”

“Nike is the classic guerrilla marketer,” Rowady says. “Nike invests and gets into marketplaces that other people start. They want to be dangerous enough to understand the space and target audience, and if it goes well, they’ll want to be further in.” The scale of Nike’s resources make it a tough competitor in any category it chooses to enter, he says, so the challenge for Reebok will be the balance between building an endemic reputation for itself in the CrossFit category and protecting its market share. “The question,” Rowady says, is, “Does Reebok need to be an owner rather than a sponsor to really protect their long view, in the way that Vans owns their own events?”

But for the next four years, at least, no amount of marketing can wrest from Reebok its exclusive rights to the CrossFit trademark. “It’s tough for competitors to compete with the position Reebok has,” Schmidt-Devlin says. “Every other brand needs to come into [the CrossFit] territory and define it differently.” In lieu of carving out their own CrossFit categories, competitor brands, she says, will either align CrossFit products with another category in which they’re strong, such as running or basketball, but this can make the products more gender-focused. “Reebok defined CrossFit in a space where there’s equal respect [among the genders]. It’s a niche between fitness and sports, and in that niche, there’s equality and empowerment. Gender doesn’t matter,” she says. 

That niche creates both a safety net and a ceiling for Reebok in the adidas Group and the athletic apparel market. “Reebok’s not really Reebok any longer,” Rowady says—at least not the Reebok it was at its height. “It’s a niche brand under the adidas portfolio.” As such, Reebok’s role is not as a contender with Nike, Under Armour or other brands of their size. Rather, it fills out the specialized segments for adidas Group, he says. While training is one of adidas’s key categories, CrossFit and Reebok’s other brands of tough fitness diversify the portfolio enough to make their own category.

“Reebok had to have made a determination to move into a place where they’d have few competitors so they could own the space and be heard,” Rowady says. “Reebok can be relevant and define a sustainable growth pattern for the brand in the [CrossFit space]. And I think that’s what they’ve done.” 

The Numbers Story

Profound. That’s the word Kratochwill uses to describe the impact CrossFit has had on Reebok. Kratochwill has been with the brand for eight years and seen its transformation catalyzed by its partnership with CrossFit.

Since Reebok became the exclusive licensee of CrossFit’s trademark and the title sponsor of the CrossFit Games, Reebok’s training category has nearly doubled, composing nearly 34% of the brand’s net sales. Q4 of 2015 marked the 11th consecutive quarter of growth for the brand overall and the third consecutive year of double-digit growth for its training category, of which CrossFit is a big driver Kratochwill says.

The numbers suggest CrossFitters and cross-trainers are beginning to trust Reebok to outfit their fitness, but across all its categories, the brand’s sales have hovered between $2 and $3 billion since 2006, while adidas Group overall sales have trended up by about $6 billion.

Last year, adidas Group had to quash speculations that it would divest Reebok.

“Can Reebok leverage their leadership in [the CrossFit] category to rebuild their brand? I don’t know,” Schmidt-Devlin says. “It would be interesting to see if people believe enough in their products to say, ‘I trust you for CrossFit, now I trust you for my running shoe or my sports bra.”

Apparel is one area where Reebok is particularly optimistic about growth. Since 2012, Reebok’s overall apparel business has grown 19% year-on-year. “Apparel is key,” says Dan Sarro, corporate communications manager at Reebok. “Traditionally Reebok had been heavily a footwear brand with a lot of our apparel in licensed business, with the NFL, for example. Branded apparel wasn’t really there. The new partners we have have generated a huge increase in our apparel sales so we’ve become a footwear and apparel brand the way we want to be.”  

Just as important to Reebok’s viability is the growth of CrossFit as a brand and a sport, which will depend not only on how many gyms open up, but media sponsorships and how much airtime the games get on television. Thus far, in Rowady’s estimation, Reebok has yet to truly break through the growth ceiling it’s been under for a decade. 

“You run the risk of really destroying the brand by uncoupling it from the much broader strategy Reebok had,” he says. “They seem to have stabilized and made sure they didn’t have any massive downturn in their sales by refocusing. That’s really hard to do.  It’s also very difficult to find something that’s increasingly more popular that matches with their original roots. The real question is, will CrossFit continue to grow and have expansive audiences? I feel it’s going to be a long climb to continue to grow that fan base.”

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MNCs are comprised of headquarters and foreign subsidiaries, the latter of which directly manage local channel partners. These arrangements are both common and resource-intensive, yet often poorly managed. Large MNCs can have 100 or more subsidiaries, making them difficult to study. However, doing so is imperative: Headquarters and field perspectives may differ or even sharply contrast, and MNCs may be viewed as outsiders in local markets, impeding marketers’ ability to deploy channel strategies and build market share.

Since current research on MNC channels is limited, our research team decided to review current literature to identify gaps and propose a new, more comprehensive framework for academic and practitioner use moving forward. We focused on equity-based MNC arrangements in which wholly owned subsidiaries manage independent channels because of the higher ongoing investment in, longer length, and complexity of these relationships, as well as the fact that they have been under-studied to date.

We propose a meta-theory that uses a political economy framework to understand the economic and social interactions of exchanges. This framework allows us to explore subsidiary networks, which are integral to MNCs, as well as deepen research on MNCs headquartered in emerging markets. We further offer testable frameworks to evaluate MNC marketing channel structures and processes as well as their outcomes. Our framework offers the following implications for marketers. 

We highlight how organizational features of the MNC influence channel partner management. A case in point is Mattel, which responded to deteriorating global sales by retooling its internal organization. Given its focus on strategic flexibility, Mattel’s HQ opted for informal decision making with subsidiaries to boost channel performance. Nestlé resolved a similar issue differently, by shuffling employees across the subsidiary network to promote company-wide global efficiency. Thus, effective channel management means the HQ seeks to align the subsidiary’s goals in light of the HQ’s strategic goals and by leveraging the subsidiary network.

Weak legal institutions abroad represent hurdles for MNCs from the developed world. Major industry players such as Cadbury’s, Shell, and Vodafone received an unpleasant jolt recently when authorities in India altered tax laws retroactively. Negotiating such scenarios might require subsidiary managers to build linkages with third-party mediators, such as local industry associations and appellate tribunals in the host country. An inadequate appreciation of local culture is another stumbling block, even for premier brands such as Home Depot, which had to shut down several stores in China where the easy availability of maintenance people makes a do-it-yourself ethos rare. To avoid such blunders, subsidiary managers might create dedicated roles and hire local staff to foster cultural sensitivity.

Emerging-market MNCs face distinct challenges, too. Many MNCs, such as SEACOM, the submarine cable operator from Mauritius, compete on a low-cost basis. When they seek growth, they traditionally have looked internally (i.e., HQ–subsidiary link) to leverage an efficiency strategy for reining in manufacturing costs. Our framework points to another venue for action, beyond manufacturing costs—the subsidiary-channel partner link. For emerging-market MNCs, it is critical to commit marketing resources to foreign channel partners to build a strong presence in the downstream market. For example, the Chinese phone maker Huawei has a pronounced manufacturing orientation but has underinvested in branding in key developed markets. Without strong resonance with local channel partners and consumers, the brand has remained vulnerable in the United States and Europe. Many emerging-market firms, such as Zimbabwe’s agribusiness company AICO Africa Limited, are virtually compelled to expand abroad due to the political instability and market inefficiencies at home. Yet with foreign brand names, offshore manufacturing, and weak home currencies, these emerging-market MNCs also face hurdles in acquiring legitimacy from U.S. channel partners. This legitimacy gap could be bridged with certifications from local agencies or alliances with reputable brands. Other companies, such as Sun Pharmaceuticals (India) and Cemex (Mexico), have found that strategic acquisitions of local channel partners could also plug the legitimacy gap. 

Finally, emerging-market MNCs sometimes exhibit traditional—even anachronistic—business approaches and a reluctance to adopt practices that are standard in the developed world. Some firms struggle to reconcile a communal logic prevalent at home with the individualistic logic of developed markets. For example, Chinese firms that have benefited from the state capitalism model, which removes most resource constraints, must learn how to develop subsidiary abilities as they expand abroad, without government support.

MNCs need to take a holistic approach to channel management. Our framework empowers academics to explore key topics in a structured way and identifies areas for further research. It also enables marketers to consider the importance of MNC relational interplays as they move downstream from headquarters to the channel, as well as leverage subsidiary networks and the local host environment to maximize partner performance. 

MNCs operate in a world of global competition and constant corporate tie-ups. Aligning all parties to drive revenues and build market share in new geographies may not make or break an MNC’s year: It can make or break a firm’s future. 

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Rajdeep Grewal, Amit Saini, Alok Kumar, F. Robert Dwyer, and Robert Dahlstrom (2018). “,” Journal of Marketing, (82) July, 49-69.

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​Cobranding, the marketing of brands in combination, is pervasive. Yet cobranding is not a complete concept. It is a loose label that encompasses a number of distinct ways in which a brand can partner with another brand. A company contemplating cobranding should first ask: “Which type of cobranding, if any, is appropriate for my brand?”  While financial rationales such as cost savings are cited in support of cobranding, marketing managers would do well to recognize the potential of cobranding in shaping customers’ preferences. Surprisingly, little to no work has compared and contrasted consumer responses to various types of cobranding to improve managerial decision making in this important strategic domain. 

Higher cobranding integration leads to a greater impact on attitudes and consideration of the partnering brands. 

Cobranding integration represents the degree to which the brands are intertwined in development, form, and function.  Integration can range from almost completely self-standing to completely intertwined. Yum! Brands Taco Bell, Pizza Hut, and Kentucky Fried Chicken co-located in one building exemplify the low end of the integration spectrum.  A low integration means the brands remain separate in form. Joint use of the brands, while not necessary, has the potential to add utility for the customer.  At the other extreme, Nike + iPod for example, a music and fitness product co-developed by a Nike–Apple joint venture, is a case where the two brands are fully integrated.  In the case of high integration, the partnering brands are combined in form and function and the consumer is forced to use both brands.

As integration between the brands increases (e.g., Oreo in Breyers Ice Cream) greater interdependence between the brands increases. When higher-integrated brands are consumed jointly, confusion can set in among the consumer as to which brand deserves responsibility for the outcome. In these arrangements, the brands are more likely to share the credit (or blame) for the outcome of the partnership. On the other hand, in a low integration cobrand (e.g., Starbucks in Barnes & Noble), the brands are more clearly separated in form and function and retain individual image and quality perceptions. Consumers are unlikely to attribute the performance of one brand (Starbucks) to its partner (Barnes & Noble), and so consumers’ evaluation of one brand is not likely to be influenced much by the cobranding arrangement.

Higher levels of integration reinforces the association between the brands in consumers’ minds, allowing the brands to be mentally co-categorized. Linking the brands together by using a cobrand partnership will enhance the memory retrieval of the brands and even facilitate a kind of brand recall. Accordingly, in a low brand integration arrangement, the performance of one brand is not clearly related to the other brand, joint sales are not mandatory, and, of course, the bond between the brands is weaker.

The impact of cobrand integration is mitigated by the details of the the partnership including the duration and exclusivity of the arrangement.  Additionally individual brand characteristics such as brand image fit and how the brands “work” together also play a role in how consumer’s attribute credit (or scorn) to a brand.  

Article Citation:

Source: Casey E. Newmeyer, R. Venkatesh, and Rabikar Chatterjee (2014), “,” , 42, 103-118.

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The corporate philanthropy of yesteryear—images of CEOs handing over giant checks—has been made over. Middle market firms now have an opportunity to step up and get involved in philanthropic initiatives on a level deeper than monetary contributions. Many are choosing personal causes, and they aim to connect with their internal and external communities, steps that benefit both giver and recipient.

The  report by Charity Navigator showed that corporations donated $18.45 billion in 2015, a 3.9% increase from the previous year, and corporate giving made up 5% of all U.S. charitable contributions. A  from America’s Charities found 60% of companies offer year-round giving. The report also found 60% of small to midsize companies offer volunteer opportunities, 37% have payroll contributions and 28% engage in matching gift options.

The opportunities are nearly endless for corporate philanthropy. According to Sandra Miniutti, vice president of marketing at Charity Navigator, options include direct contributions, participating in nonprofit special events, attending galas and buying tables or participating in activities. Some companies also allow their employees to take time off to volunteer or to use part of their work hours to donate their skills and expertise directly to a charity.

Choosing a Cause

There are plenty of causes to choose from: The  in the U.S. include religious groups (33%), education (16%), human services (12%), foundations (11%) and health-related groups (8%). Miniutti says companies should find a cause they have a meaningful connection with.

“If the company is looking to build goodwill among shareholders, consumers and regulators, then it’s important to see that there is an authentic relationship between the company and the charity’s mission,” she says.

Choosing the right organization can matter quite a bit for a company, as the America’s Charities report found 90% of survey respondents said partnering with a reputable nonprofit enhances their brand.

“Look for a strong alignment,” Miniutti says. “Once the company has identified some charities that are good candidates, we recommend that the company vet them to make sure that they’re financially strong, accountable, transparent and that they can speak to the impact of their work.”

Many individuals and companies choose a cause that’s very personal to their lives or the company’s mission. Bradley Schmarak, senior partner at Reed Smith and global co-chair of its private equity practice, is board chairman for the , an annual golf tournament that benefits the National Kidney Foundation of Illinois. Schmarak says the event began from a very personal place for tournament creator Scott Lang. His then-wife worked for NKF of Illinois. Lang reached out for participants from the companies he worked with the most, pulling largely from the middle market business community in Chicago.

Schmarak says middle market companies and the firms that support them can have philanthropy built into their core. For example, 71% of lawyers at Schmarak’s firm did pro bono work in 2016, coming out to 76,000 hours, or $40 million in billable time.

From America’s Charities’ 2015 report, “The New Corporate DNA: Where Employee Engagement and Social Impact Converge”

“Oftentimes, the organizations that the middle market companies choose to embrace happen to have ties to the leadership of those organizations,” Schmarak says. “If you’ve got a CEO who is battling lung cancer, that company might choose to work with the related charity that’s important to him or her. That’s often what we see in pro bono: You have leadership where something is sparked in them and they want to get involved. As they get more fulfillment from the work they’ve done, they make those opportunities available to their employees and other people in the company.”

Another option for companies that may not have a personal cause to pursue is to consider charities that clients or customers are already involved with.  close relationships with customers are key in this market, and demonstrating a tangible interest in the same causes as your clients is an opportunity to strengthen these relationships.

Companies must involve employees in these decisions. The America’s Charities survey found employee engagement receives a boost when supported causes are those that employees are passionate about, not just those the leadership team chooses.

“It’s helpful to give employees an opportunity to help select the causes that the company participates in,” Miniutti says. “There’s been lots of research showing that that’s much more powerful than having it be a top-down decision.”

Community-building Opportunities

One of the lesser-discussed benefits of philanthropic involvement is the opportunity to work with others—both inside and outside of the company. Local volunteer work brings employees together and is a chance to showcase the company’s nonprofit work to the surrounding community. According to the America’s Charities survey, 86% of employers say employees expect them to provide opportunities to engage in the community.

When working with other middle market companies, philanthropy can often lead to highly beneficial networking. Schmarak says the Middle Market Open is one of the few times the leadership of the Chicago business community comes together for a day of charity.

“We’re used to working together, and now we’re coming together for competition, for fun and philanthropy,” Schmarak says. “There may be a dozen law firms [at the event], and we all compete for work every single day. But at the same time, we know each other, we respect each other, we refer deals to each other when we have conflicts. We know at the end of the day, there’s a likelihood these people are going to be on the other side of a deal with us, so it’s nice to have that personal relationship as well.”

The board for the Middle Market Open includes about 35 people who meet once per month. Schmarak says the board members witness one another working on the strategy, planning and execution of the event.

“Any number of people there have gotten work from other board members who have been impressed with the way they conduct themselves at the board meeting,” he says. “We’re doing this altruistically, but at the same time, if a board member who’s with a private equity fund thinks that one of the board members who’s an investment banker is doing a phenomenal job with strategy, vision and execution for the event, that person may likely say, ‘I like working with you in a pro bono context, I’d like to hire you for a deal.’”

PR and HR Benefits

The main purpose of engaging in corporate philanthropy is to help others, but many middle market companies see public and human relations benefits as well. Millennials, in particular, are drawn to companies that give back.

“Increasingly, there are studies coming out showing that millennials really care about the corporations that they work for and their social responsibility,” Miniutti says. “They look for companies where they have opportunities to give back, where it’s baked into the DNA of that organization. [Marketing and PR] have historically been where the focus is for companies getting involved in philanthropic activities, but we’re seeing increased data showing that it’s important for HR efforts as well.”

The America’s Charities report says millennials expect their employers to support their involvement with causes. They consider a company’s social responsibility and support for philanthropic activities when deciding whom to work for. Seventy-seven percent of respondents to the survey believe offering employee engagement opportunities is key to attracting millennial employees.

One of the benefits of hiring millennial employees may also be that they’re tech-savvy, and technology has begun to play a major role in corporate philanthropy: The America’s Charities report found 80% of respondents use technology to allow employees to give money, 65% use it to record volunteer hours and 69% use technology to sign up for volunteer events. Technology has also broken down barriers to entry for small and midsize businesses getting involved in charity.

A company’s social media presence plays a powerful role in getting the word out about charitable giving. Compared with large companies that often have greater restrictions on employee social media use, the report found small and midsize companies believe their employees have higher expectations around social media tools that allow them to post content and promote causes to their peers. Fifty-six percent of employers incorporated social media tools into their giving program in 2015, the report found.

Another promotional avenue is for the company to help disseminate a press release on behalf of a charity, as a for-profit company likely has more PR tools at its disposal, Miniutti says. This sort of give-and-take on the marketing side strengthens the partnership between the two, something the report found is important for companies of all sizes. Strong partnerships between reputable nonprofits and companies are a supreme benefit to all involved, as 90% of survey respondents say they enhance the brand.

Partnerships, whether between colleagues, companies or nonprofits, may be the most important piece of middle market charity. They can help draw employees to a company and a cause.

“I think the charity component plays a significant role,” Schmarak says of the Middle Market Open. “All of these participants can play golf at any course they want, anytime they want, but coming together and doing it for an organization like the NKF of Illinois makes the day a little bit different.”

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