BUSINESS MANAGEMENT

RESEARCH PROJECT

Research Question:

How effective were Balenciaga’s crisis management

strategies following their November 2022 advertising
campaign incidents?

Concept: Ethics

Word Count: 1,492

1
Table of Contents

Introduction……………………………………………………………………… 3

Methodology.……………………………………………………………………. 3

SWOT Analysis…………………………………………………………………. 4

Stakeholder Analysis…………………………………………………………….6

Marketing Mix: Promotion.…...………………………………………………….7

Perception Maps…...…………………………………………………………….8

Limitations………………………………………………………………………...9

Conclusion………………………………………………………………………..9

Bibliography……………………………………………………………………..10

Supporting Documents…………………………………………………………11

2
Introduction

Established in 1919, Balenciaga is one of the world’s most popular luxury fashion
brands. Yet, in November 2022, public outrage grew against the brand due to the
content of two advertising campaigns. On November 16th, Balenciaga published their
campaign ‘Balenciaga GiftShop’, including photographs featuring young children holding
teddy bears wearing leather harnesses. These outfits were labeled by many as inspired
by BDSM practices linked to sexual behaviors. The juxtaposition of young children with
explicit clothing provoked angry responses from consumers accusing the brand of
sexualising children, leading to the hashtag #cancelBalenciaga trending across social
media. Despite public outcry, just five days later, Balenciaga released their
‘Garde-Robe’ advertising campaign. In one of the campaign’s images, a Balenciaga
handbag was pictured alongside printed copies of the U.S Supreme Court ruling on ‘U.S
v Williams’ (a case examining whether promoting child pornography curtailed first
amendment freedom of speech rights), causing further public outcry and accusations of
condoning child exploitation (Gargoles & Ambas, 2023).

This report will examine Balenciaga’s response to the campaigns, and the ensuing
public outrage, by addressing the research question ‘How effective were Balenciaga’s
crisis management strategies following the November 2022 campaign incidents?’.
To do so, the conceptual frame of ethics will be used to illuminate whether Balenciaga’s
response represented ethical behavior following the crisis, notably with respect to their
transparency, integrity and respect for stakeholders.

Methodology

To address the research question, this report will apply the following business tools:

- SWOT analysis
- Stakeholder analysis
- Marketing mix & perception map analysis

To ameliorate this analysis, secondary research has been conducted; secondary

research documents can be found in the supporting documents and bibliography
sections.

3
SWOT Analysis

SWOT analysis is a strategic planning tool used to support businesses’ strategic

decision making by conducting an internal audit of strengths and weaknesses whilst
analyzing opportunities and threats in the external environment. The following section
will use a SWOT analysis to outline Balenciaga’s position before, during and after the
November 2022 campaign incidents, and to address the effectiveness of their response.

Strengths

- Balenciaga commands a strong, distinctive brand identity. The brand has been
refined for over 100 years, became renowned for its innovative designs, and has
been praised by fashion icons such as Givenchy, who labeled Balenciaga “the
architect of haute culture” and Christian Dior, who dubbed Balenciaga “the
master of us all”.
- The power of Balenciaga’s brand has contributed to its popularity amongst many
celebrities who have endorsed Balenciaga.
- Due to their strong brand image, Balenciaga commands a loyal customer base
and a strong market position.
- The brand’s association with luxury and cutting edge fashion have enabled it to
adopt premium pricing and high profit margins for its products, leading to the
generation of $1.81 billion of sales revenue in 2021 (NY times, 2022).
- It can be argued that these strengths damaged the effectiveness of Balenciaga’s
crisis response as the strength of the brand image caused managers to be
complacent and lax in their response time to the crisis.

Weaknesses

- Balenciaga’s weaknesses can be attributed to their response to the campaign

incidents of November 2022.
- Their response to the crisis was delayed and allowed more outrage to build, thus
creating a greater public relations crisis. Balenciaga’s first response came on
November 24th- eight days after their controversial ‘Balenciaga GiftShop’ images
were published- through an apology on Instagram (NY Times, 2022).
- Balenciaga attempted to deflect blame, scapegoat and sue the production
company ‘North Six’ for their involvement in the photo shoot.

4
 - This led to further consumer discontent due to the perception of Balenciaga
attempting to shift the blame for their campaigns, causing the withdrawal of the
court case by Balenciaga on the 2nd December.

Opportunities

- Despite the negative publicity created by the crisis, Balenciaga had the
opportunity to rebuild and strengthen customer relations following the incidents.
- Balenciaga announced that it would partner with National Children’s Alliance
(NCA), an organization dedicated to ending child abuse (The Fashion Law,
2023).
- The crisis presented an opportunity for the brand to implement more rigorous
marketing review processes, including new editorial controls to prevent future
scandals, and the hiring of a crisis management expert (NY Post, 2023).

Threats

- The crisis presented a threat to Balenciaga in the form of rising competition in the
luxury fashion sector.
- As well as damaging existing customer trust and loyalty, the crisis could divert
potential new customers towards some of Balenciaga’s rivals in the luxury
fashion sector, such as Farfetch Limited who exhibited a 42.4% annual growth
rate between 2019-2022 (Statista, 2024).

In combination with the conceptual lens of business ethics, this SWOT analysis
elucidates a lack of ethical behavior on behalf of Balenciaga in their crisis management
strategies. Not only did the initial campaigns cause stress and concern to their loyal
customer base, Balenciaga’s response compounded the crisis. According to the
conceptualisation of business ethics as acting with transparency, integrity and respect
for stakeholders to create a positive impact on society, Balenciaga failed to act ethically.
Further, the attempt to deflect blame for the crisis and the evident lack of accountability
prevented Balenciaga from acting with transparency. Whilst Balenciaga can point to the
efforts to partner with the NCA as a means to reconcile with their consumer base, it can
be argued that this partnership was a ploy to divert criticism.

5
Stakeholder Analysis

A stakeholder can be defined as any individual or group that is interested or affected by

activities of a business. Using stakeholder analysis can illustrate Balenciaga’s failure to
respond ethically to their campaign crisis.

Stakeholders:

Customers-
As an external stakeholder with a high level of interest in the business, customers
should be kept informed by the business. However, Balenciaga failed to communicate
effectively with customers; after the crisis emerged, it took Balenciaga eight days to
reach out to customers, and after this, Balenciaga suspended its two biggest social
media platforms. The brand stopped posting and muted all comments. Further, rather
than communicating transparently with customers, the brand tried to shift the blame,
thus failing to act ethically (Gargoles & Ambas, 2023).

Shareholders-
By failing to respond to the crisis effectively, managers at Balenciaga jeopardized the
reputation and bottom line of the business. Consequently, they were not upholding their
ethical responsibility to shareholders, who could be damaged by a loss of dividend
income.

6
Partners-
Balenciaga’s slow response to the crisis damaged key partners’ reputations and caused
partner organizations (Adidas) and individuals (Kim Kardashian) to be pressured by
consumers online to condone Balenciaga’s campaigns (The Fashion Law, 2023).

Employees-
Balenciaga acted unethically towards its employees by prolonging the crisis and
allowing the reputation of the business to be damaged. This could have damaged the
job security of employees, and, according to Maslow’s Hierarchy of Needs, undermine
their feeling of safety within the organization.

Society-
Balenciaga failed in its ethical responsibility to society at large by failing to swiftly
condemn child exploitation associated with their campaign.

Marketing Mix: Promotion & Perception Maps

Using the marketing mix can further highlight the effectiveness (or lack thereof) of
Balenciaga’s crisis management response.

Pre Crisis

- Balenciaga’s creative director, Demna, has previously launched intentionally

controversial campaigns to create publicity (The Cut, 2024). This strategic
publicity drives brand awareness and engagement which contributes to
Balenciaga’s brand image.

Post Crisis

- The absence of a crisis communication plan and ineffective social media

monitoring contributed to a delayed crisis response, exacerbating damage to
their reputation and stakeholder trust (illustrated by perception maps below).
- Balenciaga embarked on a listening tour and publicly partnered with NCA as a
promotional strategy to quell consumer outrage.

7
8
These perception maps highlight that, whilst Balenciaga remains a prestigious brand,
its reputation and trust from consumers were damaged by the crisis.

However, Demna remains Balenciaga’s creative director. Consequently, the possibility

for future risky promotional strategies, crises and further damage to stakeholders still
exists. By failing to address the root cause of their ineffective crisis management
response, Balenciaga has acted unethically.

Limitations

Whilst various secondary sources have been used to ameliorate the analysis of this
issue, this study is limited by the breadth of secondary sources. Thus, a greater array of
sources (preferably some primary research involving key decision makers or
stakeholders at Balenciaga) may lead to a richer analysis.

Conclusion

Overall, in its position as one of the most popular fashion brands in the world,
Balenciaga has an ethical responsibility to millions. However, Balenciaga’s crisis
management strategies following the November 2022 campaign initiative were vastly
ineffective and unethical, leading to a worsening of the crisis. Balenciaga’s decision to
delay and divert blame for the scandal represented unethical behavior due to a failure to
be transparent and treat stakeholders with respect. Indeed, Balenciaga’s ineffective and
unethical crisis response strategies have been illustrated by using stakeholder analysis
to isolate the impacts on each stakeholder, SWOT analysis to highlight Balenciaga’s
internal strengths and weaknesses and external opportunities and threats during the
scandal, as well as an element of the Marketing Mix- Promotion to illustrate that
Balenciaga has still not addressed the root cause of the problem.

9
Bibliography

"Crisis Communication: An Opinionated Case Study on Balenciaga's Ad Controversy

and Turbulent." Medium,
https://medium.com/marketing-in-the-age-of-digital/crisis-communication-an-opinionated
-case-study-on-balenciagas-ad-controversy-and-turbulent-817b675700a1. Accessed
January 2024.

"Our Story." National Children's Alliance,

https://www.nationalchildrensalliance.org/our-story/. Accessed January 2024.

"Fastest Growing Luxury Watch Brands Worldwide." Statista,

https://www.statista.com/statistics/303240/fastest-growing-luxury-watch-brands-worldwi
de/. Accessed January 2024.

Emilia Petrarca, "What to Know About the Balenciaga Ad Scandal." The Cut,
https://www.thecut.com/article/what-to-know-about-the-balenciaga-ad-scandal.html.
Accessed January 2024.

Ellie Pithers, "Demna: ‘We Strongly Condemn Child Abuse’ – Balenciaga’s Creative
Director Breaks His Silence." Vogue UK,
https://www.vogue.co.uk/news/article/demna-balenciaga-interview. Accessed January
2024.

"The Art of a True Genius: Fashion Icon Cristóbal Balenciaga." DSF Antique Jewelry,
https://dsfantiquejewelry.com/blogs/journal/the-art-of-a-true-genius-fashion-icon-cristoba
l-balenciaga. Accessed January 2024.

Schwarz, Benjamin. "Balenciaga: The Master of Us All." Benjamin Schwarz,

https://benjaminschwarz.org/2013/03/01/balenciaga-the-master-of-us-all/. Accessed
January 2024.

10
Supporting Documents:

Supporting Document 1

Date Accessed: 24th January 2024

Link: https://www.nytimes.com/2022/11/28/style/balenciaga-campaign-controversy.html

Supporting Document 2

Date Accessed: 24th January 2024

Link: https://link.springer.com/chapter/10.1007/978-3-031-38541-4_1

Supporting Document 3

Date Accessed: 24th January 2024

Link:
https://www.thefashionlaw.com/balenciaga-ad-controversy-a-case-study-in-communicati
on-in-a-crisis/

Supporting Document 4

Date Accessed: 24th January 2024

Link:
https://nypost.com/2023/03/01/balenciaga-seeks-crisis-management-expert-after-bdsm-
ad-scandal/

Supporting Document 5

Date Accessed: 24th January 2024

11
Link: https://www.thecut.com/article/what-to-know-about-the-balenciaga-ad-scandal.html

12