BrandLoop #2, March 1997

Corporate Responsibility

Companies are experimenting with many ways of weaving ethics into their culture. This newsletter examines some of the newer efforts as consumers start to look at the company behind the brand. The consumer search is for attributes which are now becoming more tangible than either price or quality where parity has now been achieved.

Research in the UK shows that 83% of consumers agree that when a brand or company supports a cause they care about, they have a more positive image. They are more likely to buy the brand associated with a cause they like and they may also switch between brands or retailers. This is the first demonstration of a change in consumer pre-disposition.

More than three-quarters of Americans say that their buying decision is affected by a company's reputation about environmental issues. Yet, over 40% of Americans believe business is doing a poor job in controlling pollution, and over 90% of Americans believe that the public and private sectors are doing an inadequate job of protection. So what are the key issues to now satisfy consumers in the late 1990s?

A critical driver in terms of constructing a competitive edge for the company is a "good" reputation and a more powerful relationship with all of the stake-holders. This has created a shift towards more ethical and cause-related marketing.

Ethical Marketing

While consumers have become more knowledgeable about environmental matters, sales of "green" products have fallen dramatically over the past five years. Shoppers have become weary of paying more for products that perform badly. With no real benefits, consumers have become cynical and confused. The result is that many people have given up buying "green" products.

However, it does not mean that consumers have abandoned their search for greater morality in the consumption process. They want real efforts from companies and real actions, not "smoke and mirrors." Therefore, many companies are making greater efforts to inspire consumers' confidence.

Cause-related Marketing

Cause-related marketing (CRM) has become a key consideration in developing marketing strategies, becoming part of corporate identity. A company can establish a commercial partnership with a charity organisation or community cause for mutual benefit.

In 1992, Tesco introduced an initiative called "Computers for Schools". For every £25 spent in a Tesco store, customers received a voucher that they could pass to their local school. Two hundred vouchers bought a software package. This programme is entering its sixth year and is being continued because consumers remain supportive. Since the start, Tesco has donated electronic equipment worth £29 million to educational institutions, supplying 21,000 computers and 80,000 items of computer-related items.

The determination to help children's education has both attracted new consumers' confidence and loyalty, and assisted in building a stronger corporate image. This is just one of the elements which have helped Tesco to take the premier position in the market-place.

In November 1996, the New Covent Garden Soup Company launched a special soup to help promote Crisis, the national charity for single homeless people. The soup's packaging was re-created for the occasion, with an on-pack donations hotline number. A target of £40,000 was reached.

Several banks now issue credit cards that enable the owners to make a donation to a charity each time used. As an example, the Beneficial Bank entered into partnership with Visa and UNICEF in order to celebrate the charity's 50th anniversary, giving £5 to UNICEF for every successful card application.

British Telecom has also supported a significant number of causes or community projects relevant to its corporate image. In 1996, it made contributions in cash and kind worth £15 million to projects ranging from a charity for the homeless to environmental initiatives. British Telecom has now moved closer to its customers with this longer-term strategy which is advantageous for all parties.

Many companies are involved in some form of cause-related marketing. This kind of partnership captures the consumer's attention and can move them from passing interest to an intention to buy. It is important to note, companies need to be honest with themselves and establish the credibility of what they are doing.

Building Fair Trade Associations

Research from Christian Aid found that 85% of people wanted to see fairly-traded products in their supermarket and that 68% would pay more for them if they could be sure the products are ethical or environmentally friendly.

As an example, Cafédirect was launched in the United Kingdom in 1992 by the Fairtrade Organisation. This was set up by set up by Oxfam, Christian Aid, CAFOD, Traidcraft Exchange and the World Development Movement. The organisation aims to manufacture and market products on a fairly traded basis and make them available to British consumers in the wider marketplace. The goods are marketed in a way that benefits the people in the Third World who do the work. At the end of 1994, Cafédirect was in all the major supermarkets of the United Kingdom, and had sold a million packs, reaching a 10% value share. Cafédirect was the first product launched under the Fairtrade umbrella, followed by Clipper Tea and Maya Chocolate.

Integration of Disabled People

Up to now, the disabled community has been seen as "tragic but brave" victims. To challenge this stereotype, Nike used Peter Hull, the disabled athlete, in its pre-Olympic campaign. He was chosen for an inspirational advertisement about running a marathon. On one hand, the advertisement was well perceived as it challenged people's assumptions for running the marathon, and not just showing the disability. On the other hand, it portrayed the disabled as "superhuman" which was subject to possible criticism. It can be said that companies which "dare to" represent disability in their advertising face a risk of mis-interpretation.

Companies need and can easily take part in shifting society's perception in a positive way and not only for the disabled but for other disadvantaged sections of society. Advertising can help the company to be seen as socially responsible and responsive.

Summary

As more and more consumers are willing to make their brand or store choice on the basis of the company's ethical credentials, marketers have to move away from what may be perceived as marketing hype to genuine action.

To succeed today, businesses may need to be run more like social institutions. They should bear in mind that acting as a good corporate citizen may have more value than "buy one, get one-free" promotions. They will be seen as "a credible company" with a positive corporate reputation, with more robust values and a prominent corporate identity.

It is better to take control of your own corporate image before others seize the opportunity negatively. There are various organisations available such as Business in the Community in the UK which can help to devise community-related programmes.