Endorsers and Retail Partners Drop Paula Deen
By Sierra Hillinger
The once beloved “Queen of Butter,” Paula Deen, has lost approximately $12.5 million in revenue after her racism and sexism scandal. Almost immediately after Deen’s scandal broke out to the news, retailers and endorsers began to drop the chef’s products from their shelves.
Even though Deen is 4th on Forbes’ Top Earning Chefs List, she quickly started losing endorsement deals. Sears responded with “after careful consideration of all available information” they have decided to phase out all of Paula Deen’s products. Walgreens then shortly came out and told the news that they were also phasing out all of Deen’s products. Smithfield Foods, whose products Deen had endorsed since 2006, dissolved its relationship with her during the summer of 2013. Smithfield came out with a public statement regarding the scandal: “Smithfield condemns the use of offensive and discriminatory language and behavior of any kind. Smithfield is determined to be an ethical food industry leader and it is important that our values and those of our spokespeople are properly aligned.” Other companies that dropped Deen from their partnerships include Kmart, Wal-Mart, Target, QVC, J.C. Penney, Home Depot, Caesars Entertainment, and Novo Nordisk.
The way in which Deen’s endorsers and retail partners responded to the scandal showcases the Social Exchange Theory. The theory revolves around using a costs and benefits analysis to predict behavior and decisions based on the rewards gained and costs incurred. It also states that people will analyze decisions before they chose a course of action based on the desire to keep costs low and rewards high.
In the case of Deen’s sponsors and endorsers, they had to weigh the costs of keeping Deen as part of their image after such a high profile scandal and the damage it could bring, against the benefits her name brings to their business, which include a large amount of revenue.
Ballantine, a publishing company, announced it was canceling its multiple book deal with Deen, including her upcoming book “Paula Deen’s New Testament: 250 Favorite Recipes, All Lightened Up” which was scheduled to be release in October 2013. This news came as a surprise considering the book was Amazon’s number one book after a large amount of pre-orders from fans. Ballantine pulling out of this deal demonstrates the social exchange public relations theory. The costs of keeping Deen associated with their company, such as possible bad press and damage to their image, outweighed the benefits of keeping her book deal and the revenue that would come along with it.
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QVC’s CEO Mike George took to the internet and wrote a blog post saying, “For now, we have decided to take a pause. Paula won’t be appearing on any upcoming broadcasts and we will phase out her product assortment on our online sales channels over the next few months.” When weighing the costs and benefits of keeping Deen part of his company’s image, he didn’t feel the need to make a long term decision. He decided that currently the costs outweighed the benefits but in the future, the benefits may outweigh the costs. He communicated this to his customers by continuing to write “Some of you may wonder whether this is a “forever” decision – whether we are simply ending our association with Paula. We don’t think that’s how relationships work. People deserve second chances.”
The companies associated with Deen and how they responded during this scandal demonstrates the Social Exchange Theory and how people will weigh the costs and benefits of a decision and then act on the decision they think maximizes their rewards and lowers their costs. Every company that responded by dropping Deen felt that the current costs damaged their PR and image more that the benefits her revenue brought to them.
Sources:
Paula Deen Loses Major Endorsement Deal