Wednesday, March 21, 2012

The Dannon Story: False Advertising, False Product

This is a story many health enthusiast will connect to and feel betrayed if they were apart of it. As we all know if you want to purchase highly healthy oriented products you must be willing do dish out the extra cash. Dannon entered this market with their Probiotic Activia yogurt product and invested over 100 million dollars in advertising around North America, through T.V., to print ads, to packaging to promote this product being healthier then all other yogurt products. Their claim was that the product contained a probiotic bacteria that caused a reduction in colds and strengthened the digestive system and claimed that the product was scientifically proven to meet these standards. With this claim they were capable of offering the market place a product that no other brand could match creating a purchase appeal and create price levels 30% above their competition.

In the year 2008 the Dannon campaign with their new yogurt product came to a halt. After questioning the fact that their yogurt proclaimed to have health benefits that no other yogurt brand had lead to further investigations. The investigation proved that the Activia brand from Dannon provided no addition benefit compared to the other competitive brands. This investigation then turned into a purposed class action lawsuit against Dannon for false advertising. The non conclusive evidence for Dannon forced them to plead guilty to the public and had to pay up to $45 million to up set customers that filed law suits against Dannon along with having to create a lot more strict guidelines to what they advertise in the future.

This story is a good example on how many companies try to make false claims to increase its bottom line. At the end of the story Dannon’s yogurt was no different then its competitors although claiming they were and marking up the price 30% on their product. This unethical claim for B2C is what is wrong with a lot of companies today and lets hope that in the future companies like Dannon will realize before going down this rout the impact it will have on its brand and perceived quality, which in a lot of way trumps short term low profit increases.

By: David Roberts

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