7 - Corporate Social Responsibility
As a means to distinguish themselves in the marketplace, some firms have latched on to the notion of social responsibility: they make much ado about their sponsorship of popular causes, such as engaging in environmentally-friendly practices, refusing to do business with suppliers who use slave labor, or lend their support to cancer awareness.
Naturally, all of this is done to make the brand more appealing to customers - but it is always done with a pretension of genuine concern. This puts firms in the delicate position of having to do without being so overt as to be accused of being disingenuous.
(EN: There are hypocrites on both sides, as customers are often drawn to labels that are essentially meaningless - they flock to a company that claims to be "green" but don't know if they really are, and in some instances will give their dollars to a company that gives less support to a cause than another whose gives more but makes less noise about it. So in that sense, it's a very interesting proposition from a psychological perspective: people who pretend to care about something patronize companies who also pretend to care in a mutually-sustaining charade.)
The Responsibility Paradox
What makes the situation precarious for companies is that public demands that companies should espouse popular causes, but becomes suspicious when firms claim to do exactly that. Therefore, using social responsibility to woo customers requires a company to be just vocal enough about its support of causes that the public is appreciative, but not vocal enough to make it seem like it is only being supportive to gain public appreciation.
One way around this quagmire is through public relations: the company engages in behavior that is supportive of causes, but does not brag about its own altruism, and instead gets others to mention it for them. Traditionally, they have used journalists and politicians, but they are lately turning to bloggers and social media enthusiasts, whose voice is more credible and whose admiration seems authentic to the general public.
Avoiding Accusations
Given the availability of information online, companies are easily audited by the general public, who can monitor their alleged charitable activities and share information with other users. That is to say that irresponsible behavior will be exposed, as will failure to deliver on promises of responsible behavior.
A research study (Wagner 2009) indicates that the public is less trusting of corporation than in years past: people recognize a firm will attempt to portray itself in a positive light and expect them to bend the truth in doing so, and do not trust their claims without corroboration. The more abstract a claim, the less it is likely to be believed or accepted. Misrepresentation, through an outright lie or too exaggerated a claim, negatively impacts the perception of the firm and its brands.
Most companies have plans in place for "crisis communications" to respond to negative reports about its activities - but the research revealed that companies with a proactive communication strategy are perceived as being less credible than those that communicate reactively once the news of an incident has broken. In other words, saying too much, too soon, and in too polished a manner detracts from credibility.
It is suggested that the ideal manner of responding to a crisis of public relations is to release a short and abstract statement early, followed by a more detailed and concrete statement afterward. In proactive communications, this follows the principle of "under-promise then over-deliver" and in reactive communication it suggests that the company was unaware of the problem (rather than aware but simply neglecting it until public outcry resulted.)
Another loose tip, which should be common sense, is "of you are not certain that you can keep your promises, it is better not to make any."
Finally, there is the suggestion that it is better to admit to wrongdoing soon rather than deny until denial is no longer sustainable. This allows the firm to quickly transition the conversation from the damaging incident to the solution it intends to undertake.
Sustainable consumers don't exist
Recently, some attention has been given to the notion of corporate sustainability, which requires a firm to plan for the long term rather than doing what is expedient, particularly when expedience damages the long-term prospects. However, sustainability of production requires stability of demand, and demand is not stable.
Customers do not consume in a sustainable manner, but change their patterns of consumption in an unpredictable and sometimes irrational manner. Moreover, while they have pretensions of concern about larger issues such as environmentalism and fair treatment of workers, their purchasing patterns in the marketplace do not match the volume of their alleged interest.
(EN: The Walmart phenomenon is proof enough of this. People are fond of criticizing the retail giant for driving local merchants out of business by tough price competition - but these same people often shop at Walmart for items that would cost more at local merchants because their strongest motivation as consumers is to seek the lowest prices and their interest in local merchants is a pretension.)
The explanation is that sustainability is a luxury, which is only one of many factors that drive purchasing decisions: primarily, people seek products that serve their needs and desires. If two options are otherwise equal in price and benefits or if they have sufficient income to pay a premium for a product that is no better in terms of price and benefits, only then will they be inclined to entertain other interests.
Moreover, customers have a wide range of definitions of what is sustainable or responsible, and there is no consensus of the qualities they seek in a supplier. Neither is there a single vision, to which any significant customers adhere, as to what is a sustainable lifestyle, hence what products would be consumed in its pursuit.
A survey of consumer's concepts of sustainability (Walton 2010) classified customers into six basic profiles:
- Pioneers (15%) are convinced of the ideals and make purchasing decisions accordingly.
- Adopters (21%) are not convinced, but yield to social pressures from family, friends, and peers
- Strugglers (13%) agree with the ideals, but find it difficult to act accordingly
- Confused (12%) feel overwhelmed by contradicting information and feel too uncertain to make a decision for or against
- Passives (16%) are indifferent to the ideals, and buy products based on their value and price
- Skeptics (23%) do not believe in the cause and are not convinced by the argument, and may avoid patronizing companies that espouse it
It's admitted that these proportions are based on the culture of the day, but there is no expectation the relative size of these groups is likely to change in future without a preceding cultural shift. (EN: It also stands to mention that people may be temporarily aligned with one of these groups, as specific ideologies come in and out of fashion with the masses. For example, some people are diehard environmentalists, but most care about it periodically when it is getting media attention.)
Green Advertising
If the definition of a "green" business is nebulous and there is no such thing as a "green" customer, then is there any point in "green" advertising? As it turns out, there is. In spite of all the unclarity and skepticism, it works.
To put it bluntly, consumers are hypocrites. They pay lip-services to ideals that they do not uphold in their behavior, except when this behavior is observed by others whom they wish to convince that they have positive qualities of character. There is little concern for "green" in products that are consumed in private, little effort put into researching the actual behavior of firms, and little willingness to make significant life changes to support the ideology.
As such, customers largely follow the lead of others, who in turn tend to be accepting of the claims made by brands (EN: Though brands should not be lackadaisical because the small number of hardcore true-believers will likely be more vigilant and will expose any dishonest pandering). In many instances, it is sufficient and safer for a firm to make general statements about its support of causes while making token efforts. Any informative claim that provides explicit details will likely be investigated, and it may be assessed whether the firm is doing "enough" to substantiate its claims of concern. For example, a claim to "support" a cause raises no objection while an indication that a specific amount was donated to a specific charity draws questions of "why that charity?" and "why not a larger donation?"
It's also suggested that cause-based advertising can backfire when it causes consumers to be uncomfortable (the advertising makes them feel guilty or hypocritical for not giving more genuine support to the cause). Firms also run the risk of the cause they espouse becoming unpopular, or having the need to continue to sponsor a cause when its popularity has waned, in order to maintain the illusion of genuine concern.
Implied Support
A more subtle way that a company can gain the benefit of espousing a cause is simply to use messaging components that suggest association, even when doesn't exist. For environmental concerns specifically, using images of nature in advertising may imply a concern for the environment, even when the company makes no overt claim to that effect or takes no other action. This can also be a safe route to gaining favor with cause-motivated consumers while not actually supporting a cause.
The use of "natural" imagery in advertisement pre-dates the environmental movement, on the idea that people have an emotional affinity for nature that dates back to the onset of industrialization - in much the same way that advertisements that feature animals have stronger emotional appeal regardless of whether the sponsoring company has any connection to the animal rights movement.
Vague reference is made to a marketing experiment done in Spain, in which subjects were shown a series of proposed advertisements for products in different categories (mobile phones, cars, gasoline, and washing powder). The ads used various combinations of natural imagery, a product name that suggested nature, product/packaging that used colors that suggested nature, and copy that suggested environmentally friendly characteristics of a product. Each of these factors was influential in leading subjects to have more positive impression of the brand - and that colors and imagery were more impactful than words in conveying this impression.
The Value of Reputation
Companies are increasingly aware that their reputation is an important element in appealing to customers and can have a positive (or negative) impact on revenue and engagement.
The author provides details from a study in Italy (Gatti 2012) that indicates that perceptions about social responsibility not only influence the reputation of the firm, but also improve the stated purchase intentions of customers.
(EN: Pause for a moment to consider the possible Hawthorne effect in this study and the previous one. Customers response to advertisement or stated intent to purchase may reflect the degree to which they want to appear to be concerned, but not necessarily how they will actually behave in the market. A quick search turned up a number of articles in advertising and marketing trade journals that indicate that it's not a guaranteed sell and may even make it more difficult to sell because the "small niche" of those generally concerned about environmentalism is far outweighed by customers who believe that a green product is inferior because it is compromised to make it more environmentally friendly.)
Ultimately, the author concedes that reputation is "the icing on the cake." Customers will lean toward a responsible company if other factors (functional benefits, cost, convenience, etc.) are largely similar between brands.