Background of Dolce & Gabbana 

Dolce & Gabbana  is an Italian luxury fashion house, which was founded in the year  1985 by Domenico Dolce and Stefano Gabbana. The organization initiated the manufacturing process of the same through designing women’s collection by the year 1985. The organization designed underwear and swimming costumes by the end of 1988. The progress made by the organization was evident through the rising revenues of the same, which was recorded to be around US$ 500 million (1990) and US $633 million (2003) (Tregidga, Milne  and Lehman  2012). The turnover of the organization by the year 2005 was around €600 million, which clearly portrayed the progress made by the business (Taneja et al. 2014). The continuous innovation in the line of products has helped the business in achieving a competitive edge over the existing players in the global fashion markets. The key changes in the business operations are based on effective communication with the stakeholders, which has helped the business in understanding the concerns. However, in the recent years the organization faced different PR issues while operating in Chinese markets. It affected the operations of the business and restricted its expansion.

Dolce & Gabbana was compelled to cancel a high-profile catwalk show in Shanghai due to a racist marketing campaign that was believed to be undertaken by the organization. The campaign portrayed a Chinese model savoring an Italian dish using chopsticks. Most of the critiques believed that the organization disrespected the Chinese culture through the portrayal of such an event for promoting the show. On the other hand, it was comprehended that the official Instagram accounts of Stefano Gabbana and Dolce & Gabbana’s was hacked resulting to derogatory comments about China and Chinese internet users. The issues in the PR operations of the business affected the interests of the customers and forced them to switch to other companies, which respects the Chinese culture. The issue that is faced by the organization is due to the misinterpretation of the social media campaign that was undertaken by the organization. The misinterpretation of the idea affected the marketing campaign initiative that was undertaken by the organization. The organization failed to adhere to the lucid structure of communication, which affected the customer loyalty of the same while operating in the Chinese markets. The major crisis that is faced by the organization is based on the lack of communicability within the external and internal departments in the concerned organization. The lack of external communication affected the organizational understanding of the cultural concerns of the customers (Tregidga,   Milne  and Lehman  2012). On the other hand, the lack of suitable communication in the internal departments has affected the collaborative functioning approach of the same. In this relation, the lack of suitable communicability in the organizational structure affected the performance of the same leading to the crisis that is faced by the business enterprise.

Identification of the crisis faced by the organization

The crisis that is encountered by the concerned organization has resulted to degradation of customer loyalty towards the same. The misinterpretation of the marketing content affected the interests of the Chinese customers, as they believed that the organization abused their culture through the creation of a racial campaign (Nagle  and Müller 2017). On the other hand, the crisis that is faced by the organization has affected the PR functions of the same while operating in diverse Chinese markets. Most of the customers switched their preferences to the other competitors of the business as they believed that the organization abused the Chinese culture. The lack of lucid communication affected the interests of the customers through misinterpretation of the message that the organization tried to convey. Stefano Gabbana stated in an Instagram post that the Chinese people themselves suffer from an inferiority complex, as the campaign was not racial at all. However, the derogatory comments on Instagram also offended the internet users in China, which affected the grand show that was planned by the organization in Shanghai. On the other hand, it also affected the retention rate of the Chinese customers. The Chinese market being conservative in nature restricts the growth of different foreign companies. However, the misinterpretation of the campaign affected the position of the concerned organization in the Chinese markets.

Figure 1: The Instagram post of Stefano Gabbana

(Source: Kim 2016)

Lack of suitable communication medium resulted to ambiguity in the campaign that was undertaken by the business. The organization could have taken steps to maintain the brevity and lucidity of the campaign content in order to influence the interests of the Chinese customers. The different issues that are faced by the organization in adhering to the propositions made by the same added to the customer loyalty (Liu and Fraustino  2014). However, the lack of suitable communication with the customers has affected the concerned organization’s capabilities in bringing forth modifications in the organizational operations. Miscommunication thereby affected the suitable functioning of the PR department of the business while they fail to adhere to the propositions that are made by the same. It has resulted to the crisis that is faced by the same while operating in diverse Chinese markets.

The crisis that is faced by the concerned organization has affected the customer loyalty and Public Relations of the organization. The lack of suitable communication among the organization and the customers of the same have restricted the knowledge of the organization relating to the cultural preferences of the customers. On the other hand, the lack of suitable understanding of the behavior of Chinese people towards multi- cultural backdrops. It affected the marketing campaign that is planned by the organization. The crisis that is faced by the concerned organization affected the customer retention rates in the organization. The improper positioning of the marketing campaign affected the sustainable factors of the business (Tregidga,   Milne  and Lehman  2012). On the other hand, the organization also encountered an ethical dilemma while framing the marketing campaign as it dealt with the unification of the cultures, which was misinterpreted by the targeted Chinese customers.

Impact of the crisis on the PR functions of the business

Short term planning on the campaign content and ambiguity in the communication strategy restricted the organizational understanding of the diverse preferences of the customers while operating in the Chinese markets. Moreover, lack of suitable understanding of the psychological needs of the international customers affected the expansion objectives of the business. Giannakis andHarker (2014) stated that the key changes that are undertaken by organizations are based on the identification of the needs of the customers. The lack of proficient communication has affected the organizational operations and affected the marketing campaign of the same.  The short term planning of the organization resulted to crisis in the marketing communication system. In the long run, the degradation in the service quality affected the PR functioning of the business and thereby resulted to the loss of customer loyalty. Most of the customers are concerned about the so called “Cultural abuse” made by the organization, which was a misinterpreted version of the real message that the enterprise aimed at portraying. On the other hand, ambiguity in the communication strategy affected the organizational operations  in the Chinese markets (Pearson  2016).

Kim  and Ni (2013) stated that customer satisfaction and involvement are  the major priorities of an organization as it helps in retaining the target customers. It also helps in enhancing the sustainability factors of the enterprise. However, the concerned organization has failed to enhance the processes, as per the psychological needs of the customers. On the other hand, the lack of suitable medium of communication in the business units has affected the organizational capability of adhering to the interests and preferences of the customers. The local customers opposed the growth of the organization, as they believed that the organization aimed at abusing their national culture. However, in the global context, the profitability of the organization due to the enhanced quality of the apparels assisted the business in upholding the sustenance of the same.

The crisis that was faced by the organization began lately in the year 2018 and it continued to affect the organizational operations. The marketing campaign that was planned by the organization did not follow a lucid communication structure, which affected the customer retention strategies of the business (José Tarí,  Heras-Saizarbitoria  and Pereira  2013). On the other hand, the cost cutting strategies that were undertaken by the organization added to the crisis. Lack of suitable communication with the external and internal stakeholders of the business affected the market campaign planned by the same (Hur,   Won Moon  and Jun  2013). Lack of suitable communication among the internal and the external departments of the organization affected the collaborative approach of the same.  On the other hand, the persuasive technique that was utilized by the organization to attract the attention of the target customers affected the intention of the customers.

The crisis that is faced by the organization is dependent on the lack of suitable communicational platforms in the organizational model resulting to degradation of service quality and the delayed flight schedules. On the other hand, the lack of suitable communicational mediums also affected the attention seeking functions of the PR department, which resulted to a degradation of the customer base. Giannakis  and Harker (2014) stated that lucidity in communication plays a major role in upholding the efficacy of the PR departments in an organization, as it helps the enterprise in understanding the preferences of the customers. It assists the R&D in bringing forth modifications in marketing campaign that is planned by the same. On the other hand, the enhanced communication of the PR department of the organization would have helped the same in understanding the cultural psychology of the Chinese people while planning the market campaign (Waters 2017). It would have helped the organization in maintaining a transparency in the operations that are undertaken by the same. However, lack of suitable communicational abilities of the concerned organization resulted to misinterpretation of the message that the organization aimed at forwarding to the target customers through the video advertisement. It has affected the capabilities of the organization to undertake the smooth functioning of the business units as per the commitment of the propositions.

Media	What did the organization say?	Public responses	Can the crisis be broken down?	Time frame
Instagram	Stefano Gabbana stated that the organization did not intend to offend the interests of the target customers through the video. However, the organization aimed at passing the message of unification of the Italian culture with that of Chinese. Stefano Gabbana also stated that the marketing campaign was aimed at boosting the sales of the organization in the Chinese markets and not to lose the customer base.	The customers stated that the organization aimed at abusing the social culture of the Chinese people in general through the racial advertisement.  The advertisement not only offended their cultural psychology but also it aimed at breaking the unity among the Chinese people through the induction of Italian culture.	The crisis that is faced by the organization can be mitigated through the establishment of a sound communication medium through social media integration.The organization might create a Facebook page in order to interact with the customers in order to identify the different psychological needs and requirements of the customers while designing a  market campaign.	6 – 9 months
Press	Stefano Gabbana stated that they decided to keep the advertisement content in a manner through which the people in china would be attracted to the new sets of apparel that the organization offered. However, the misinterpretation of the message created the crisis.	The customers of the organization believed that the Instagram account of Stefano Gabbana was not at all hacked. The organization intentionally made the promotional video in a manner, which would abuse the Chinese culture drastically (Cahyanto et al. 2016).	The organization might take steps to develop firewalls in order to avoid the hacking activities thereby affecting the brand name of the business.	3- 7 years

Publics	Aspects of crisis	Responses
National customers	Cultural abuse	The cultural abuse that is made by the organization affected the psychology of the Chinese customers and made them believe that the organization intentionally looked down upon their culture.

Dolce & Gabbana had planned to implement as marketing campaign in order to improve its productivity and sales. For this purpose, it has also used the cross cutting strategy as well. It had aimed at providing premium apparels to the target customers with the view of maximizing their operations. Although, it has helped the organization in gaining a competitive edge to sustain in the highly competitive global markets; the strategy had failed due to lack in its communication system. As a result, the Public Relation (PR) of the company got worsened with time. There was lack of proficient communicability in the different departments of the company and it has resulted in the degradation of the service offerings of the public. The aimed at attracting the attention of customers with an affordable range of products to gain a competitive edge but the promotional strategy  affected the organizational operations. According to the Situational theory of PR, the Publics can be classified based on which they are aware of the issue and to the extent of which they do something regarding the very issue. It explains that when people communicate and when the communications are aimed at people are likely to be highly effective. It is also to mention that there are several key concepts of Situational theory. As per Waters (2017), they are the problem recognition, the constraint recognition, and their level of involvement, information processing and information seeking. According to him, problem recognition refers to the extent to which people recognize an issue facing them. They do not stop thinking regarding a situation until and unless they thinks that something is requires to be done for improving the very situation. Secondly, the constraint recognition refers to the level to which an individual would see his or her behaviors as limited by the several different factors beyond his or her own control. It is also to note that the constraints could be psychological as well. For example, it might be anything like self-efficacy. Lack of lucidity in the message that the organization aimed at portraying to the target customers affected the brand name4 of the same. On the other hand, the lack of transparency in the marketing initiative of the organization is based on the inefficiency of the same in identifying the psychological emotions of the Chinese people related to the culture and heritage of the same. Inefficiency of the communication methodology affected the marketing campaign that was planned by the concerned organization while operating in the Chinese markets. It can also be physical in nature like the shortage of access of a protective gear. Third comes the level of involvement. According to Pearson (2016), it refers to the measure of how emotionally or how personally relevant an issue could be for a person. It is to mention that the level of involvement gets increased with the possibility of the person attending to or is comprehending the messages. They have also claimed that the messages would be attended if the advantages or the disadvantages that are related with them are been taken on some sort of personal usefulness for the person. As stated by Nagle and Muller (2017), the people who have high level of involvement analyses the problems more frequently and they prefer the messages which contain better and ample of arguments. With the same, they also prefer the ones that gain greater levels of knowledge. Fourthly, information seeking is the next variable of situation theory. It is also a dependent variable like the variable of information processing. Many of the times, the information seeking is also known as “active communication behavior” and the information processing as “passive communication behavior”. It is to note that the actively communicating people seek out for gaining information and they try to understand it when they gain the information (Cahyanto et al. 2016). Hence, they become well-aware of the people and they do not communicate and process information alone. On the other hand, the passively communicating members do not seek out for information but they would often process the information which comes to them in random way, that is, in absence of any kind of effort on their parts. In the case of Air Arabian, the short term planning and lack of proper communication have ledthe companyin understanding diverse preferences of the customers while operating in the international markets.It was because of the lack of proficient communication that has affected the business operations and influenced the service propositions (Kim 2016). The short term planning of the organization proved to be profitable for the venture. However, in the long run, the degradation in the service quality affected the PR functioning of the business and thereby resulted to the loss of customer loyalty. Therefore, an appropriate medium for communication should be made for identifying the concerns of the customers and a proper development of their processes to fit into the needs and preferences of the customers should be ensured. Also, the company should improve its services as per the references of the customers.

Therefore, it might be stated from the above discussion that the issues faced by the concerned organization, Dolce & Gabbana, is mostly based on the lack of suitable communicability with the stakeholders. On the other hand, the different responses that are collected in the discussion helps in identifying the importance of the crisis on the performance of the business firm.  The key changes that might be undertaken by the organization is to develop a suitable communication medium in order to identify the concerns of the customers and thereby develop their processes to fit into the needs and preferences of the same. On the other hand, the organization might also take steps to enhance the services as per the assessment of the preferences of the customers in order to adhere to the proposition that are made by the same.

References

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Giannakis, D. and Harker, M.J., 2014. Strategic alignment between relationship marketing and human resource management in financial services organizations. Journal of Strategic Marketing, 22(5), pp.396-419.

Hur, W.M., Won Moon, T. and Jun, J.K., 2013. The role of perceived organizational support on emotional labor in the airline industry. International Journal of Contemporary Hospitality Management, 25(1), pp.105-123.

José Tarí, J., Heras-Saizarbitoria, I. and Pereira, J., 2013. Internalization of quality management in service organizations. Managing Service Quality, 23(6), pp.456-473.

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Kim, Y. (2016). Understanding publics’ perception and behaviors in crisis communication: Effects of crisis news framing and publics’ acquisition, selection, and transmission of information in crisis situations. Journal of Public Relations Research, 28(1), 35-50.

Liu, B.F. and Fraustino, J.D., 2014. Beyond image repair: Suggestions for crisis communication theory development. Public Relations Review, 40(3), pp.543-546.

Nagle, T.T. and Müller, G., 2017. The strategy and tactics of pricing: A guide to growing more profitably. Routledge.

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Tregidga, H., Milne, M. and Lehman, G., 2012, September. Analyzing the quality, meaning and accountability of organizational reporting and communication: Directions for future research. In Accounting Forum (Vol. 36, No. 3, pp. 223-230). Elsevier.