VOL. MMXIII..No. 202

The Evolutionary Shopper | What They're Doing Now

Giving Good Brand: When Does CSR Count and Do Consumers Care?

As a brand development and marketing consultant, I am often asked whether an organization should make an investment in corporate philanthropy. In official lingo, it’s called CSR, or “Corporate Social Responsibility.” For MBA-types, it’s “Cause Marketing.” Regardless what you call it, it still means the same thing: “a strategic positioning and marketing tool that links a company or brand to a relevant social cause or issue, for mutual benefit.”[1]

 

But that definition is already becoming outdated. That’s because CSR is rapidly becoming less a “positioning and marketing tool” and more an expected way of doing business in a world where natural resources are becoming increasingly limited, and globalization is forcing companies to reexamine their supply chain policies. In the last twenty years or so dozens of companies have made corporate philanthropy the hallmark of the modern, “socially responsible” business — no matter how big or how small.

 

It’s a far cry for how things used to be, of course. In the early part of the twentieth century, philanthropy was the good deed of the elite and titled, who cemented their status in society by being the benign benefactor, giving alms to the poor or building libraries or hospitals in their own name.

 

 

 

Now it’s practically impossible to find a Fortune 500 company or even small startups that do not make charity a part of their corporate philosophy and social responsibility, and able to see measurable gain in their overall brand identity, talent pool, and community relations. Indeed for many it is an extension of one’s brand image, a marketing tool for communicating the “softer side” of a company, not to mention a tangential point of differentiation in the marketplace.

 

In fact, research indicates that many consumers demand more than just a product and actually make a conscious decision to purchase from brands that in some way resonate with their values.[2] From a purely business standpoint, CSR is an opportunity to leverage the emotional border between the consumer and a brand’s value. But more importantly, CSR helps build a corporate foundation that places a company higher on the world stage, proving that the leaders of that company have an eye towards the future, and a sense of responsibility towards the community that gave them their success.

 

 

 

Then again, for others, CSR is a continual battle, a desperate attempt to gain credibility. Chevron Corporation has spent billions of dollars trying to make consumers believe that they are committed to protecting the environment — with varying degrees of success. Still, ever since the disastrous Exxon Valdez oil spill, oil companies have been forced to deliver annual reports on their environmental responsibility.

 

Measuring the Benefits

There are measurables for how a company benefits. They include:

  • Brand differentiation
  • Enhanced employee recruitment and retention
  • Building newer and deeper community networks
  • Fostering talent and teaching new skills to employees, especially in regards to leadership, integrity, and responsibility
  • Improved relations with regional and federal governments

 

 It’s been heavily researched and proven that companies that are perceived as “ethically neutral” stand to gain the most from corporate social responsibility. For instance, consider the fact that most fashion houses have only recently seen the need to embrace causes; most notably breast cancer and AIDS. While these are clearly issues which resonate with their consumers, they are also personal causes for many companies: Liz Tilberis, the editor of Harper’s Bazaardied of ovarian cancer in 1999, and countless fashion designers and artists lost theirs lives to the AIDS epidemic.  Consider how the uproar over working conditions for garment workers in Indonesia and China has led many companies to prove their ethical standpoints.

 

 

 

The easiest way to determine the necessity for corporate social responsibility is to evaluate how the brand is perceived by one’s target market. How do our top tier customers view us — are we simply a store with great brands, or a product that performs? Do we, as a company, have a “personality” and if so, who is that person? Is our brand the kind of person who would give you their umbrella in the rain? Would they anonymously pay for your child’s education?

 

You’d be surprised just how much consumers actually rate a brand or product based on a company’s investment in socially responsible activities.

 

A pair of independent studies with university students asked them to rate how a cause-related campaign would affect their perceptions of certain companies. In the majority of cases, pairing a company with a cause measurably changed their perception of the brand. Ben&Jerry’s Ice Cream exemplifies an extremely ethical (albeit, at times controversial) company; Timex watches are ethically neutral; Philip Morris is perceived as unethical.[3]

 

 

 

Case Studies in CSR |  Home Depot Raises the Roof on Community Housing

Corporate social responsibility at Home Depot has its origins in the values of its founders, Bernie Marcus and Arthur Blank, who came from modest backgrounds and whose families were very involved in local community affairs. They believed strongly that their company should give back to the community in whatever way they could. As the company grew in size and philanthropy became a formal part of doing business, its owners realized that the program had to move from an ad hoc approach to one that was more structured for greater and more lasting impact.

 

 

 

Home Depot’s four focus areas are: 1) affordable housing; 2) environment; 3) youth at risk; and, 4) disaster preparedness and relief.  Corporate social responsibility at Home Depot has been a process of gradual evolution. In 1991, the company set up “Team Depot” to coordinate and support employee volunteer work. Team Depot has since evolved into a significant component of Home Depot’s efforts to give back to the communities where it operates.

 

The company continues to align its internal policies and practices with its core values and priorities, making CSR a pillar of the brand.  By the early 1990’s, the company had cemented its environmental principles to this day the company publishes an annual Social Responsibility Report.  Home Depot has been at the vanguard of informing their customers on products that can reduce their environmental footprint, earning Fortune magazine’s Most Admired Specialty Retailer award (which includes environmental criteria) eight consecutive years and receiving an ‘A’ rating in the Corporate Report of the Council on Economic Priorities and the President’s Sustainable Development Award.

 

Nike Challenges Consumers to Live Strong

You might be as sick of those yellow wristbands as I am, but the Nike “Live Strong” campaign is perhaps one of the most successful CSR projects ever. An alliance between the sports shoe manufacturer and a cancer non-profit organization associated with Lance Armstrong, the champion cyclist who is a cancer survivor, sparked a massive consumer craze for the yellow wristbands, which subsequently spawned a slew of copycat campaigns.

 

Nike underwrote the production and distribution of the entire first run of 5 million bracelets with the organization’s motto (and Nike’s), which means 100 percent of the proceeds went straight to the foundation. It was an easy sell for the consumer: Nike customers could easily purchase the bracelet for only USD$1.00.

 

As Armstrong cruised to victory in the Tour De France, sales of the bracelet grew exponentially. Celebrities wore them. John Kerry wore one while campaigning for president Soon they were showing up on eBay for $10 each.

 

So why were people willing to pay for cheap, plastic bracelet when they can just as easily send money directly to the foundation?

 

Because the bracelet gives them wearable proof of their goodwill. This is a perfect example of philanthropy posing as style and vice versa. In short, Nike did several things right with this particular example of CSR:

 

1)    They chose the right time to run the campaign (before the Tour de France)

2)    They chose the right cause to appeal to the masses (cancer, which crosses all boundaries of race, sex, and politics)

3)    They made the cause a fashion statement

4)    They chose a “heroic” celebrity and athlete (Lance Armstrong) to represent the brand

 

American Express Charges Against Hunger

In 1993, American Express and Share Our Strength joined forces to create one of the U.S.’s largest cause campaigns ever: Charge Against Hunger. In just 3 years they raised US$21Million benefiting over 600 anti-hunger, anti-poverty groups. During November and December of each year, American Express donated 3 cents from every card member transaction to Share Our Strength’s cause, which totaled $5Million each year.

 

 

 

American Express used this campaign as a leveraging tool to get other brands, i.e. the restaurants and retailers who were already disappointed with the high fees in using their services. The campaign became a new way to establish relationships with the brands and the customers, making Charge Against Hunger a win-win public relations campaign for everyone. It helped small and large businesses give back to their local communities, and encouraged merchants to display point-of-sale materials.

 

The campaign single-handedly changed American Express’s image. Before, both merchants and customers complained that the card company was greedy and charged too much for the privilege of using the card. Instead, they turned their image around and people actually began using their cards more.

 

In terms of American Express’s corporate structure, it revitalized the company’s employees urning many into volunteers for the company’s cause and encouraging “team spirit.” Fifteen years after the campaign ended, however, Amex would go on to even greater success with the current RED campaign, which has turned into a multi-brand program involving dozens of partner companies.

 

Brand Identity and CSR: Making it Work for Your Brand

 

Finding the “right” cause comes down to an evaluation of a company or group’s values. Most major corporations start with an internal audit of their values and company’s mission. These “values” could be the leadership philosophy of the head of the group, such as the Chairman. Take Cartier, which has been a sponsor of the Women’s Forum and partnered with McKinsey&Co. and INSEAD. At the Women’s Forum and Society in Deauville, a Cartier representative described the rationale for their involvement this way: ” “As we are a company with lots of women employees it appealed to us. It was the right thing to do in a company with 60% women.”  The company does not discuss their jewelry at these events and makes it’s total focus on the 76 women entrepreneurs from around the world, and all walks of life. “We are a very ‘people’ company and there is a real entrepreneurial spirit here. We have innovative edge, it’s a sort of audacity and part of our heritage as a pioneering brand.”[5]

 

However it is determined, a company’s CSR strategy must organically demonstrate and reflect the business and social objectives that have made the company successful. With some companies, it is the working employees — not upper-level executives or shareholders — who have rallied together towards a meaningful cause.

 

Smaller companies often collaborate with a charity and the reasons for that are quite simple.

 

Partnering allows one to borrow equity and bond with consumers towards a “brand name” charity, and allows a company to ride tandem on an established communications strategy with an existing infrastructure (i.e. volunteers and staff) to address the issue.

 

While directly founding and managing a CSR charity program offers a majorly increased clarity in marketing communications, top-line messaging, and a more streamlined in-kind donations decision-making process, the management, marketing, staffing resources needed to create and build awareness and credibility is sizeable. It’s for this reason that usually, only large corporations are able to fund such an endeavor and make it a success.

 

 

 

 

For Ann Inc., which operates both Ann Taylor and Loft retail stores, CSR became a major commitment ten years ago. They instituted a code of conduct which includes third-party monitoring of suppliers, supplier development programs, a green initiative, and a website called ResponsiblyAnn.com which makes their policies completely transparent to their constituents — their customer.[4]

 

CSR, no matter how it is scaled, remains a critical part of how a business today must do business, building partnerships with like-minded merchants, suppliers, and service providers, and  more critically, build a lasting relationship with the consumer that is meaningful beyond a simple transaction. And with major legislation being proposed such as the California Transparency in Supply Chains Act, it’s likely to be sooner rather than later that CSR will not be an option, but a requirement.

 

Read more | From Luxury Society, “Luxury Brand CSR: No Longer Just an Option?” From WWD, “Expect Expanded Reach for CSR Policies”

 

> Want to learn more about how CSR can benefit your brand or how to develop a compelling cause marketing program? Contact us at info@bonbrand.com for a complimentary consultation.

 


[1] Hamish Pringle and Marjorie Thompson, Brand Spirit: How Cause Marketing Builds Brands. Wiley, 1999.

[2] Cause Marketing Forum, 2006

[3] The Journal of Nonprofit and Public Sector Marketing, Vol. 11, Number 1, Haworth Press

[4] Arnold Karr, “Expect Expanded Reach for CSR Policies,” WWD. 10/11/11

[5] Maria Doulton, “Luxury Brand CSR: No Longer Just An Option?” www.luxurysociety.com. 10/24/11.

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