Executive summary The research investigates major brand failures, specifically focusing on

Balenciaga’s controversial 2022 and 2023 ad campaigns and Dolce & Gabbana; 's 2018 “The
Great Show” campaign in China, examining the reasons behind these failures. The research
employed secondary research methodologies of existing literature on brand equity and crisis
management, as well as on the two cases examined. The primary objective is to be able to
identify the factors contributing to these brand failures and extract lessons to prevent similar
issues within the luxury industry and for brands with global brand equities. The study uses the
SWOT analysis to be able to identify the brand strengths, weaknesses, opportunities, and
threats revolving around the crisis, as well as the PESTLE analysis to analyze external factors
that affect brands, such as Political, Economic, Social, Technological, Legal, and
Environmental. The research found that poor cultural sensitivity, ethical oversights, inadequate
crisis management, and forgetting that brand equity won’t save a brand from failing were critical
factors that contributed to both of these brands experiencing severe backlash from the public
after the ad campaigns were released, causing a downturn in the brand's reputation and
financial performance. The report concludes that luxury brands must prioritize cultural
awareness, ethical marketing, and robust crisis management strategies to maintain brand
reputation and avoid similar failures. Acknowledgments The researcher would like to extend
their deepest gratitude to all those who contributed to this report: journalists, authors,
researchers, and analysts whose work provided valuable insights on the topic. Special thanks
go to all those involved in the MSc Strategic Marketing program, particularly Professor Omar
Merlo for his unwavering support throughout the program. 1.0 Introduction 1.1 Background of
the Study The research study focuses on reviewing case studies on major brand failures from
the past twenty years. The study will find the reasons behind the failures and suggest lessons
that can prevent them from happening again. The two cases reviewed are going to be looking at
the Balenciagas Christmas 2022 campaign shot by Gabriele Galimberti and the spring 2023
campaign by Chris Maggio. These two campaigns sparked controversy around the ads that
included a child model standing with a teddy bear that was wearing black leather and chains,
which the public viewed as BDSM apparel, and have also pointed out a pile of legal documents,
which included the text of a Supreme Court decision related to child pornography. This case will
be examined on the side of the Dolce & Gabbana brand failure, where the fashion brand
launched three short videos on a Chinese social media network, Weibo, to promote its
upcoming Shanghai runway, which the public began boycotting due to the racist connotations
surrounding the campaigns. These two cases are similar to each other in regards to how they
have handled the backlash and dealt with the upkeep of their brand reputation, hence why this
research will be comparing them side by side. 1.2 The importance of Brand Reputation in
Strategic Marketing is a crucial aspect of the success of any marketing activity. A strong
reputation will build trust and credibility with stakeholders, such as customers, and it is
important, especially for a luxury brand, to maintain that reputation to sell their high-priced
products to their loyal customers. Effective reputation management is also essential for crisis
response, which helps companies recover quicker and maintain their customer loyalty (Barnett,
Jermier, & Lafferty, 2005). Managing this reputation requires a systematic approach that
includes transparent communication, ethical practices, and active engagement of those involved
(Fombrun 2001). 1.3 Purpose and Scope of the Report The purpose of this report is to analyze
the two case studies and identify the reasons behind the brand failures, as well as extract
lessons that can prevent similar issues in other brands within the luxury industry. The report will
analyze the case studies using the SWOT and PESTLE frameworks, as well as focus on
identifying key failure factors, lessons learned, and strategic implications for managing brand
reputation within the luxury market. Additionally, the report will review relevant literature, look at
brand management and reputation theories, as well as dive deeper into how the failures have
happened, and how social media amplified public opinions which impacted brand perception for
the two brands being analyzed. The case studies will be analyzed to identify key reasons for
their failure, ethical considerations that were not accounted for, strategic missteps of how these
brands handled the public backlash, the campaigns in question that impacted their reputation,
as well as lessons learned that can be useful to other similar brands. Near the end of the report,
different strategies for crisis management and building brand equity will be researched. The
report aims to also provide recommendations on preventing similar failures shortly. 2.0
Literature Review 2.1 Brand Management and Reputation Theory Brand management is the
process of creating, maintaining, and enhancing a brand's image and building up its brand
equity. Brands have to take a strategic approach to positioning the brand, in front of their
customers' minds, in a way that resonates with their beliefs, differentiates the brand from its
competitors, and builds unique associations. The most important factor of brand management is
to be able to uphold brand equity, which can be defined as the value a brand derives from its
reputation, recognition, and perceived quality. We can use Keller’s (2003) framework to
understand customer-based brand equity for the two case studies that are going to be analyzed.
Customer-based brand equity is the differential effect that brand knowledge has on consumers'
responses to the brand's marketing efforts. It focuses on ensuring positive brand associations
and awareness within the minds of consumers as two factors in building a strong brand. This
brand knowledge usually consists of brand awareness and image, which are to be managed. To
further build brand equity, brands need to also define their unique value proposition and
differentiation from competitors to position themselves and attract their target customers
towards them. By establishing points of difference, which is what luxury brands do a lot, they
create strong associations in their customers' minds. By using Keller’s framework on brand
management, we can analyze our case studies when it comes to their brand equity impact,
positioning issues, and revitalization strategies. The controversial BDSM-like child ads
negatively affected Balenciaga’s brand equity by creating negative associations, which also
damaged brand trust. The campaign also contradicted Balenciaga's established image in the
luxury market and alienated its target, which led to a lot of consumer backlash. Due to
Balenciaga’s previous reputation as a brand that innovates its products and creates bold
statements, led to its popular associations with popular culture and streetwear that attracted
celebrities and fans worldwide (Highsnobiety, n.d.). However, after the ad campaigns, their
customers did not want to be associated with the negative image of extremely controversial ad
campaigns, which were unethical and led to a serious backlash against the brand. This case is
similar to the Dolce & Gabbana China ad campaigns, where the racist connotations in their ads
for the Shanghai runway show damaged their brand equity within the Chinese market. The
target audience viewed the ads as poking fun at Chinese culture, which is not an association a
brand should have when entering a new market. The ad failed to respect cultural sensitivities,
leading to a significant disconnect between the brand's image and consumer expectations.
Moving on to the brand reputation theory, we look at Walker. K.'s Systematic Review of
Corporate Reputation (2010). Corporate reputation is a collective assessment of a company's
attractiveness to stakeholders relative to competitors; it is based on the company’s past actions
and the probability of future behavior (Walker, 2010). Reputation is a valuable and non-
substitutable resource that can provide companies, especially in the luxury market, with a
competitive advantage. Due to the high competition within this market, customers usually
purchase expensive products due to the brand's image and reputation. Companies signal their
quality and reliability to customers through consistent and positive actions, which in turn build up
their reputations. Companies need to have a strong reputation as it can help them better
withstand crises as stakeholders may give them a benefit of the doubt, differentiation, and better
financial performance. There are different dimensions of reputation, such as trustworthiness,
reliability, quality of products and services, financial performance, and ethical behavior. A
dimension that is going to be looked at when analyzing brand failures for the two case studies is
ethical behavior. The BDSM child ads led to public outrage and negative social media coverage,
which damaged Balenciaga's reputation as stakeholders perceived the brand as irresponsible
and unethical. We could measure the damage by analyzing the media, which would show the
extent of negative coverage, and financial performance metrics, which can show us the impact
on Balenciaga’s sales (Walker, K. 2010). Similarly, Dolce & Gabban's racist connotation in the
ads led to a boycott in China and global backlash, which stakeholders viewed as culturally
incentive and unethical. By doing a media analysis and looking at their 2016 financial
performance, we can assess the damage of this brand failure in the Chinese market. 2.2 Impact
of Social Media and Public Opinion on Brand Perception Over the recent years, social media
has significantly changed the landscape of brand management by enabling real-time interaction
between consumers and brands (Gensler et al., 2013). Social media gives consumers access to
share their own brand stories, which can be positive or negative. These stories can influence
brand perception and image due to the persuasiveness that consumer-generated content can
have. To maintain brand consistency, firms need to be able to coordinate the stories that
consumers share and ensure to limit the negative stories, as it can lead to brand dilution. When
it comes to brand failures, it may be common for negative consumer stories about the failure to
gain high engagement rates. A Yale study conducted in 2021 found that expression of moral
outrage on X (formerly Twitter) during real-life controversial events rewards users with more
likes and reach. This study also found that when users speak on controversial events, they are
more likely to continue doing so due to the rewards given by social media platforms (Hathaway,
2021). For brands, this can be either positive or negative, as dealing with brand failures may
become tougher due to the snowball effect of social media stories that can affect brand
perceptions. 2.3 Comparative Analysis Framework The chosen comparative analysis
frameworks are PESTLE & SWOT. PESTLE can be used to identify and analyze the external
factors that can impact an organization, which gives a broader look into political, economic,
social, technological, legal, and environmental factors. As brand failures happen, there will be
factors outside of the organization that need to be anticipated as threats or opportunities to the
brand. SWOT analysis is a planning framework that aims to identify internal and external factors
that can be favorable and unfavorable to achieving company objectives. This framework is used
to analyze the cases and the brand's strengths, weaknesses, opportunities, and threats. By
laying out a clear matrix, this type of analysis allows for the identification of misalignments
between a brand's internal capabilities and external environment. It can highlight areas where a
brand's strategy for a campaign failed to adapt to market conditions or changes (Ghazinoory,
Abdi, & Azadegan-Mehr, 2011). 3. Case Study: Balenciaga's Ad Campaign 3.1 Overview of the
Campaign and Controversy The two ad campaign failures that are going to be reviewed in
Balenciaga’s brand failure case are going to be the 2022 Christmas campaign, which featured a
child holding a BDSM toy bear, and the Spring 2023 campaign, which featured a Balenciaga &
Adidas bag in an office environment, where the public pointed out the legal documents used in
the campaign that contained text from the Supreme Court Decision related to the PROTECT
Act, a 2003 federal law that states child pornography is not protected by free speech (Parisi,
2022). After facing public outrage, Balenciaga pulled the ad campaigns from its website and
issued two apologies in November 2022. The controversy behind these edgy marketing
campaigns was the fact that children were used as models, depicted in very adult-like settings
and holding BDSM accessories, alongside the court documents in the office settings that
included legislation surrounding sexually explicit material children. 3.2 Public and Media
Reaction The reaction to the campaigns on social media was quick; after the text was pointed
out on November 20, 2021, the outrage grew, and fashion industry creators such as Diet Prada
picked up the story. From there, as mentioned earlier on, things started building up as
algorithms would push stories surrounding the controversial campaign to get more user activity
and engagement. From social media, it then went on to spread to major media outlets such as
Fox News, where Tucker Carlson covered the ad campaigns. Kim Kardashian, a longtime
ambassador for the brand, has posted a statement, claiming that she is re-evaluating her
relationship with the brand. Previous customers of the brand started posting to social media,
where they burned their previously owned Balenciaga clothing and promoted others to do the
same, which again turned it into a trend (see Appendices 1). Furthermore, The Business of
Fashion has revoked its 2022 Global Voices Award offer to Demna Gvasalia, a creative director
for Balenciaga. Many celebrities, including Britanny Aldean (Phillips.H., 2022), Aerie Luyendyk
Jr., and Lauren Burnjam (Speakman.K., 2022), have thrown away their Balenciaga attire,
posting their negative perceptions to their mass audience (see Appendices 2). Since then,
Balenciaga stores have been seen empty, and some individuals have even vandalized their
stores in major cities (see Appendices 3). 3.3 Analysis of the Failure: Ethical Considerations and
Strategic Missteps To understand the brand failure, the research looks at external factors and
the environment as well as internal problems within Balenciaga that have caused the outrage
using the SWOT & PESTLE analysis. One of the strengths of Balenciaga, which has also been
one of its weaknesses, is the strong brand equity they were able to build. The brand was able to
dominate the luxury market with its innovative and edgy designs and, over the years, has
climbed the ranks of one of the most sought-after brands in the luxury market, amongst
celebrities and consumers. One of the biggest contributing factors to their success is their edgy
product designs, which gain popularity through social media. For example, Balenciaga has gone
viral with their Lay’s Chips Designed bag from their SS23 collection, where social media
instantly started to talk about the brand, and this product was picked up by several fashion
pages such as Diet Prada (Mathews. C 2022). With their different luxury pieces, Balenciaga was
able to collect a loyal customer base while also turning other consumers away from the brand.
Their designer, Gvasalia, built brand equity around challenging society's accepted ideas of
luxury, with his designs going viral on social media, further boosting the brand's equity.
However, this strength is also a weakness, as being one of the most popular brands in the
luxury market can be critical during times of crisis. Brand equity is highly sensitive to negative
public opinion, especially concerning ethical concerns. As Huang & Sarigollu (2012) point out,
“A brand's equity is directly impacted by consumers' perceptions and attitudes, which are
influenced by both positive and negative experiences with the brand." During the ad campaign
crisis, Balenciaga's popularity has amplified the consequences of its edgy marketing. The
public's response and concern for ethical practices and cultural sensitivity as an external factor
have played a significant role in the backlash against Balenciaga. Alongside the rapid spread of
information through social media, which amplified the negative responses, making it more
difficult for the brand to control the narrative. The lack of proper crisis management and ethical
oversight turned their brand equity strength into their weakness. This ad campaign failure has
also revealed its internal weaknesses in terms of its ethical oversight and decision-making
process. Ethical marketing requires brands to not only follow legal standards but also anticipate
and align with the moral expectations of their target audience (Abdi et al., 2012). As the
investigations have begun into how these campaign photos were published, Balenciaga has
claimed that they did not sign off on the photos that were used, meaning that they have failed to
oversee and sign off on these campaigns, which was the biggest contributing factor to their
brand failure. Because of this, the campaigns were released to the public, and the backlash
began. During the crisis, Balenciaga was able to initiate targeted CSR initiatives that align with
societal values, as well as transparent communication strategies. By taking full accountability for
their lack of oversight and control of the campaigns, they acknowledged that they could have
done things differently. They have also filed a $25 million lawsuit against the production
company, North Six Inc., and set designer Nicholas Des Jardins over their contributions to the
creation of the 2023 spring campaigns. This failure has been an opportunity for Balenciaga to
do internal investigations to prevent this from happening again, as well as strengthen their crisis
management departments and campaign sign-off workflows. 3.4 Impact on Brand Reputation
and Financial Performance Although Balenciaga has taken accountability and initiated internal
investigations, the ongoing threat of social media backlash and consumer boycotts remains
significant. A trending hashtag “#cancelbalenciaga” (Mallenbaum, C. 2022) has amassed 300
million views (Kelly, D. 2023) and has been used by TikTok creators to slice up their Balenciaga
apparel and remove any associations they had with the brand. In addition to this, several
Balenciaga stores have been seen empty and vandalized, as well as one of the biggest luxury
consignment stores in Dubai, dropping all Balenciaga products from their store and website.
The brand must navigate these ongoing threats carefully to avoid further damage to its
reputation. One of the examples of this is their announcement of the $25 million lawsuit against
the production agency, which has further caused backlash as users on social media pointed out
that the brand is not taking full ownership of the campaigns and is trying to point fingers. When
brands make mistakes, ownership of the mistake with a clear outline of what is going to be done
about it or how to prevent it from happening in the future is the direction a brand should take
(Matthews, 2022). Balenciaga has failed to take full ownership with their announcement of the
lawsuit, which was a clear attempt at shifting the blame to protect their brand equity, which
amplified the situation further, leading to a Streisand Effect (Masnick, M. 2005), which is when a
brand files a lawsuit and gains even more search traffic and eyeballs to the lawsuit. In the case
of Balenciaga, this lawsuit attracted more attention to the situation. Google search trends have
shown an increase in search traffic on Balenciaga on November 28, 2022, around the time the
lawsuit was announced. (Balenciaga Web Search Interest, Google Trends, 2022) Balenciaga’s
ad scandal has slowed down the brand's growth in the United States and the United Kingdom.
According to the HSBC equity research report, the bank also noticed a slowing momentum in
China. The trade publication Business of Fashion revoked an award from Demma as they hold
children in the highest regard (Paton, Freidman, & Testa, 2022). In addition to this, many
celebrities, including Balenciaga's biggest ambassador, Kim Kardashian, have announced that
they will be reconsidering their partnership with the brand (see Appendices 4), in addition to
many other celebrities denouncing their support for the brand. 3.5 Lessons Learned The
Balenciaga case highlights the importance of aligning brand strategies with ethical standards
and cultural sensitivity, especially at a time when public opinion and social media can rapidly
amplify any missteps. The brand's failure to anticipate the negative impact of its ad campaigns
highlights significant internal weaknesses that need to be addressed. As the case
demonstrates, even with strong brand equity, it can quickly become a major liability if it fails to
meet the ethical expectations of its audience. Balenciagas attempt to deflect the blame through
a lawsuit rather than taking ownership has further escalated this failure. Moving forward, it is
crucial for brands to not only ensure tight review processes for marketing materials but also to
foster an internal culture that prioritizes ethical considerations. The backlash response also
emphasizes the need for brands to engage proactively with their audience during crises and
offer transparent communication. This case is a reminder that in the age where public opinions
can be shared on social media and consequences are magnified, brands must be vigilant and
prepared to navigate public perceptions. 4.0 Case Study: Dolce & Gabbana's The Great Show
Scandal 4.1 Overview of the Incident and Initial Response On November 21, 2018, Dolce &
Gabbana (D&G), an Italian luxury fashion brand, launched three short videos on Weibo, which
is a Chinese social media network. The ads were aimed at promoting the upcoming Shanghai
runway, “The Great Show." It was planned to have 300 runway looks, 140 performers, and
1,400 industry insiders as an audience. The show was planned to strengthen brand equity and
awareness in one of the most significant markets, as China represents 30% of the brand's
revenue. The videos featured an Asian woman in a Dolce & Gabbana dress attempting to eat
pizza, spaghetti, and cannoli. With Chinese folk music playing in the background, a Mandarin-
speaking voiceover begins saying, “Welcome to the first episode of Eating with Chopsticks, by
Dolce & Gabbana” (see Appendices 5). Dolce & Gabbana was mispronounced on purpose in a
way to mock Chinese speech. The male voice then proceeds to explain how to properly eat the
dishes, making statements such as “Is it too big for you?” when the woman is trying to eat the
cannoli. The man proceeds to then say, “Let’s use these small stick-like things to eat our great
pizza margarita." This is a case of stereotyping other cultures and was seen as being explicitly
racist due to the outdated notion that the ad was portraying China. As the comments came in,
which called out the racism of the ads, the viral videos were removed from Weibo within 24
hours. 4.2 Public and Media Reaction, Including Cultural Sensitivity Issues The initial response
of the public was to boycott Dolce & Gabbana from China, as the public did not want other
fashion brands to begin mocking their culture as well. In addition to the controversial ads, just
before “The Great Show," Diet Prada, a fashion blog, posted screenshots of alleged messages
between Stefano Gabbana and an anonymous Instagram user, where Gabbana appeared to
mock China, calling the country offensive terms (see Appendices 6). This further heightened the
boycott of the brand and the public outrage over their ads. Within two hours of the show,
hundreds of Chinese actors and models who were scheduled to walk the runway have been
withdrawn as the show was canceled by the Cultural Affairs Bureau of Shanghai, and D&G
Chinese brand ambassador, boy band star Wang Junkai, has terminated his deal with them.
Models with a large fanbase have spoken out against D&G, one of them being Estelle Chen,
who posted a message directly to the brand and the founder, making statements such as “No
one from China will ever purchase anything from your brand” and that the brand is focused on
money rather than respecting cultural values (Chen, E. 2018). Zhang Ziyi was one of the first
stars to say she would no longer be attending the show, posting on her Weibo account that
“Starting today, Miss Zhang and her team will not buy and use any D&G products.” After the
post was made, within hours, other popular Chinese actors and singers started to join the
protest. China Bentley, a modeling agency, has announced that their models will be joining the
boycott. 4.3 Analysis of the Failure: Cross-Cultural Miscommunication and Strategic Blunders
This has had a heavy impact on the brand and is one of the first times they have felt the
consequences of their actions. Dolce & Gabbana has been controversial many times before;
however, when it came to one of the largest nations, with a lot of buying power, insulting the
culture led to a decline in sales as the brand was removed from major retailers, and local news
outlets even reported an influx of D&G returns (TFLB Team, 2018). Due to its global brand
recognition, D&G had strong brand equity and a loyal customer base that was built through its
luxury image and iconic designs. This was one of their strengths that could have been
leveraged to gain a large market share within the Chinese market. Consumers in emerging
markets may have positive biases towards the quality of the products from developed markets,
meaning they already have strong associations with the brand before it enters the market due to
its popularity around the world (Sharma, P. 2011). However, due to the ad campaign failure, this
strength has also negatively impacted their brand equity. As D&G is a well-known brand around
the world, a single misstep can cause a spiral of negative public perceptions, similar to the
Balenciaga case. D&G should instead localized their advertising campaigns and underplay the
foreign element in their marketing mix (Sharma, P. 2011), but instead, they intensified the
foreign aspect of the brand by promoting ads that showed cultural indifferences. In China,
national price is strongly tied to political governance, and this misstep was perceived as a
political insult that led to regulatory scrutiny and the removal of the brand's products from major
Chinese shops and e-commerce platforms. This was one of their weaknesses that led to the
brand's failure to penetrate the new market, as they did not show understanding and respect for
Chinese cultural values; this in turn alienated the audience and quickly changed their
perceptions of the brand as a whole. Furthermore, the brand failed to effectively deal with the
crisis and is still, in fact, struggling to rebuild its reputation in the Chinese market. Now, although
the brand took responsibility for the ad, they have tried to shift the blame on the text messages
that were leaked from Stefano Gabbana by claiming that their accounts were hacked. This was
not received well by the public, as Stefano had previously been caught making racist and
controversial remarks on social media and within his product names, such as the “Slave Sandal”
that was released in 2016 (Pauly, A. 2021). Due to Stefano’s history of controversy, the pushed
narrative that the account was hacked was not successful for D&G. This blame-shifting has
further amplified the backlash that the brand received. Similarly to Balenciaga’s case, social
media has played a big role in threatening D&G’s brand equity, as the scandal was amplified
through various social platforms, where negative sentiments spread rapidly, to the point where
the show was canceled hours after Stefano’s insulting messages were posted on the Diet
Pradas page. China was a critical market for the brand, accounting for a large portion of its
global sales, and the scandal spread quickly over social media, this directly impacted the
brand’s financial performance, as the boycott led to a sharp decline in sales. Social media is an
ongoing threat to brands, so D&G should be aware of this threat and take the necessary steps
to control brand perceptions and prevent future leaks from happening. This can be done by
tightening their campaign review process as well as bringing on a social media manager for the
founder's pages. Despite the backlash, this was an opportunity for the brand to self-reflect and
apologize for its actions. Dolce & Gabbana posted a video (see Appendix 7) from the founders
themselves, where they addressed several incidents that angered Chinese authorities and
celebrities (Yam, K 2018). Investing in cultural sensitivity training and local partnerships could
help in mending relations and show commitment from the brand to make things right. This can
prevent the brand from ever repeating the mistake when it comes to entering other global
markets. 4.4 Lessons Learned This brand failure underscored the need for brands to adapt their
messaging to align with local cultural norms and expectations rather than solely relying on their
global brand equity. Additionally, the role of social media in amplifying the controversy
showcases the ongoing threat it poses to brand reputation, which makes it essential for brands
to proactively manage their public image and respond swiftly to crises. Investing in cultural
sensitivity training and local partnerships can help prevent such missteps in the future. 5.0
Comparative Analysis ● Implications for Global Brands and Marketing Strategies 5.1 Similarities
in Brand Failures The two cases discussed showcased similarities in how the brands have failed
within their ad campaigns, as well as the mistakes that were made by the brands during the
crisis. Both Balenciaga and Dolce & Gabbana experienced severe backlash due to their
controversial marketing campaigns, which were perceived as culturally insensitive and ethically
questionable. In Balenciaga's case, the use of BDSM-themed imagery involving children in their
2022 Christmas campaign sparked widespread outrage on social media. Similarly, with Dolce &
Gabbana's “The Great Show” campaign in China, which included racially insensitive depictions
of Chinese culture, which led to a massive boycott of the brand, Dolce & Gabbana still struggles
to regain its reputation within one of the largest markets. Both failures highlight a common
underlying issue, with a disconnect between the brand's creative direction and the cultural and
ethical values of its target audience. 5.2 Differences in Strategic Missteps Both brands were
similar in failing to align their campaigns with their audience’s sensitivities, but their strategic
missteps, which led to the brand failure, were different. Balenciaga’s primary failure was in the
lack of ethical oversight and the mismanagement of the public relations crisis that followed. The
brand's attempt to deflect blame through a lawsuit only worsened the backlash to the damages
that were done to their brand equity, as the public merely saw this as the brand not taking any
responsibility for what they had done. On the other hand, Dolce & Gabbana's misstep was
rooted in cross-cultural miscommunication and a failure to adapt its marketing strategy to the
local Chinese market. In addition, the brand's initial response, including the claim that their
accounts were hacked, was seen as insincere and further damaged their reputation. 5.3 Role of
Social Media in Amplifying Issues In both of these cases, social media has played a role in
amplifying the controversy. For Balenciaga, platforms like Instagram and TikTok fueled the rapid
spread of outrage, leading to a widespread call for boycott under the hashtag
#cancelbalenciaga, where celebrities and previous customers were burning their clothing and
announcing their negative views on the brand overall. Similarly, the Dolce & Gabbana scandal
was magnified by social media, particularly on Weibo and Instagram, where negative
sentiments about the brand have quickly escalated. The viral nature of these platforms turned
localized issues into global crises, demonstrating the power of social media in shaping public
opinion and mass-influencing brand perceptions. 5.4 Implications for Global Brands and
Marketing Strategies These failures show the critical need for global brands to ensure cultural
sensitivity and ethical integrity in their marketing strategies, as well as know how far they can
push their audience without receiving backlash for controversial ad campaigns. As these cases
illustrate, even strong brand equity with global awareness cannot shield a brand from the
consequences of cultural missteps and ethical lapses. Glocal brands must invest in thorough
culture research, localize their campaigns to resonate with specific markets and implement
robust internal review processes to prevent similar failures. Furthermore, the role of social
media as both a platform for consumer engagement and a potential amplifier of crises
necessitates that brands adopt proactive social media strategies and management processes.
These lessons are crucial for any brand operating in the global marketplace, where cultural
misalignment and strategic mistakes can have far-reaching impacts on brand reputation and
financial performance. 6.0 Strategic Marketing Management Implications 6.1 Importance of
Cultural Sensitivity and Ethical Marketing Cultural sensitivity and ethical marketing are important
factors to consider when planning any brand activities. In an increasingly globalized world,
cultural differences remain the most enduring factor influencing marketing strategies.
Multinational companies need to understand and respect these differences to operate in diverse
markets (Usunier & Lee, 2013). However, sometimes it may be hard to gain a deep
understanding of other cultures, which can cause missteps in marketing campaigns that rely on
stereotyped ideas, which can cause negative consumer reactions about the brand. Ethical
marketing involves more than just understanding cultural differences; it also needs to adhere to
legal standards and uphold the moral values of its target audience. This alignment is crucial in
building trust and maintaining a positive brand image. As seen from the two cases, not
considering cultural differences and the ethics of a target audience can lead to a severe
backlash that can damage a brand's reputation and lead to serious consequences such as
financial losses and legal troubles. 6.2 Crisis Management and Communication Strategies
Crises can be identified as the perception of an unpredictable event that threatens important
expectancies of stakeholders and can seriously impact brand performance, often leading to
negative outcomes (Coombs, T., 2011). When it comes to crises, brands should adopt
Coombs's three-staged model of crisis management. The pre-crisis stage focused on signal
detection, prevention, and preparation, where brands hold tight review processes before
anything is released to the public. Whilst the crisis is ongoing, brands should be proactive in
recognizing and acknowledging the reality of the situation, and do their best to contain the crisis.
After the crisis, Coombs emphasizes creating a stronger crisis management process and
evaluating the crisis to see what went wrong that can help brands learn from their mistakes. 7.0
Conclusions and Recommendations Based on the overall analysis of Balenciaga and Dolce &
Gabbana ad campaigns, the research reveals lessons in why these failures have occurred, as
well as implications on crisis management. Both of the cases have highlighted the importance of
aligning marketing campaigns with ethical standards and cultural sensitivities, especially in
today’s age of social media, where public opinions and failures can be spread rather quickly.
The failure of these campaigns was not just simply due to the ad campaigns being controversial,
but it was the deeper systematic issues within the brands that have led to negative outcomes,
such as inadequate oversight, poor crisis management, and a lack of cultural or ethical
awareness. Balenciaga’s mistake was the failure to push the level of controversy on their
campaigns without anticipating the public's ethical expectations, as well as the internal issues of
review processes and management of the crisis. Dolce & Gabbana’s culturally insensitive
campaign also reveals that the brand has failed to understand the culture and align its
campaigns with cultural values. Both cases have shown the consequences of ignoring their
target audience’s values, by the widespread backlash and reputation damage that the brands
have experienced within social media, which shows how powerful these platforms can be in
shaping public perceptions and opinions. Social media played a large role in amplifying the
failures, turning local controversies into global crises with far-reaching consequences for the
brand's reputation, equity, and financial performance. These failures have highlighted the need
for brands to be more vigilant in their marketing efforts and also imply the need to foster a
culture of proactiveness in crisis management and communication strategies. Both cases of
brand failures serve as a reminder for global brands that being able to maintain a strong brand
equity requires an ongoing commitment to ethical practices, cultural sensitivity, and strategic
adaptability. Brands must invest time, money & effort into robust internal processes to prevent
similar failures and to be prepared to navigate the complex landscape of global marketing with
consideration of their target audience. Appendices: Appendix 1: Customer Reaction to
Balenciagas Ad Scandal https://youtube.com/shorts/mT6X3F_OuTM?si=--Fo2ARAICz99NTd
https://youtube.com/shorts/AN1MoKNazEM?si=GMC1LKNY232FiTPb Appendix 2: Brittany
Aldean Balenciaga Post Appendix 3: Balenciaga Store Vandalism
https://www.tiktok.com/@ivoryflourcakes/video/7171150291394366726?embed_source=121374
463%2C121451205%2C121439635%2C121433650%2C121404358%2C121351166%2C12133
1973%2C120811592%2C120810756%3Bnull%3Bembed_share&refer=embed&referer_url=ifra
mely.highsnobiety.com%2Fapi%2Fiframe%3Falign%3Dleft%26app%3D1%26url%3Dhttps%253
A%252F%252Fwww.tiktok.com%252F%2540ivoryflourcakes%252Fvideo%252F717115029139
4366726%26key%3Dc22be6d0687ded39345d042fdb9d650c%26v%3D1&referer_video_id=717
1150291394366726 Appendix 4: Kim Kardashian on her relationship with Balenciaga View full
post: https://x.com/KimKardashian/status/1597017102665142272?
s=20&t=GyeBI2kwlM6Fy76KV8ov RA Appendix 5: Dolce & Gabbana Controversial Ad
https://www.youtube.com/watch?v=Jfzy-_jDyeo Appendix 6: Stefano Gabbannas Messages
with an instagram user Appendix 7: Dolce & Gabbana apology video
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