Sunday, July 29, 2012

Brand Building On Social Purpose

By Nick Sutherland

The societal marketing concept calls upon marketers to build social and ethical considerations into their marketing practices. They must balance and juggle the often conflicting criteria of company profits, consumer want satisfaction, and public interest.
Increasingly more organizations are holding themselves to a higher ethical standard considering the overall interests of society in the operations of their day-to-day business, but many of them don’t know how to actually make changes that would improve both business performance and societal impact.

Beyond the transaction/marketing driven model of brand building, enlightened brand owners are building the value of their brands around aligning social good with business good. These organizations realize the foundation of their competitive advantage will be based on a higher purpose --- social good.
In the marketing driven model of brand building, the focus is on awareness and communicating better features of the product. Consumers and customers simply exchanged money for a product. When the performance of the product matched up to customer expectations the brand promise was delivered. End of story.

That’s not good enough for consumers/customers today.
Apple’s  problem  of complicity in the harmful working conditions in the Chinese supplier factories is a recent example of the deeper scrutiny placed on brand owners. Apple’s circumstances makes the point clear --- consumers not only consider the products you make, or the services you provide, they’re also looking carefully at your entire value chain–where your stuff is made, what it’s made from, how it impacts the environment,  the community, who your suppliers are, how well employees are treated. Consumers are scrutinizing the value of brands based on the social good they do in the world.

Brand owners must ask themselves “how can we align our business good with social good”?  The answer to that question needs to come from the very top of the organization, not from marketing or PR departments.
Nielsen’s Global Corporate Citizenship Survey found that 46 percent of global consumers are willing to pay extra for products and services from companies that have implemented programs to give back to society.
Younger consumers tend to be more socially conscious, the research shows. Just over half of those consumers between 15 and 39 years old said they were willing to pay extra for such items, compared with 37 percent of those over 40.

Shoppers outside of the U.S. are leading the social responsibility push. The study revealed a larger percentage of consumers in Asia Pacific, the Middle East, Africa and Latin America are willing to pay extra for products and services from socially responsible companies than their North American and European peers.
Environmental sustainability, improvements to science, technology, engineering and math education and the eradication of extreme poverty and hunger topped the list of causes important to socially conscious consumers.

Breaking down the barriers within organizations
The problems start when the CEO hasn't drunk the Kool-Aid and considerations for shareholders and senior management dominate over customers and employees. Far too many companies have set up CSR initiatives simply to provide some window dressing or PR to their corporate story.
The problem gets more complicated because there is much research showing that consumers favor brands that show social responsibility. So the temptation to greenwash is real and brands do the logical thing and try to ride the bandwagon.

Traditionally, the siloed nature of organizations would have one group of people thinking and acting on corporate philanthropy and community, while other groups are developing and marketing products with the greatest margins possible. These functions rarely if ever are coordinated by a vision to maximize social and business good. Business good and social good being “functions” rather a unifying principal of existence.
Enlightened brand owners are breaking down the functional barriers in their organization and converging these interests into a common social purpose driven brand value.

Patagonia Outdoor clothing is extraordinary in this regard. The higher purpose of Patagonia is not to make and market more technically driven outer wear, rather Patagonia’s leadership has aligned their core values and mission around stewardship and sustainability of the planet as a whole. They are a leading voice and advocate for the greater good. This is not a brand strategy, or clever marketing– it’s who they are as an enterprise. It’s the reason their employees come to work every day. It’s also the reason the brand has unquestioned relevant differentiation in their customers minds and competitive advantage at a premium price point in the marketplace. Patagonia is a brand that represents social good and business good as two sides of the same coin.

The deeper principal that brands like Patagonia are based on is simple --- social good is highly valued (relevant) to its customers and drives business performance (competitive advantage). Patagonia then walks the talk every day. For Patagonia, there’s no difference between advocating for greater sustainable and stewardship of the planet and making money.

Cooperate and collaborate with competitors
Companies now face multiple challenges including a struggling economy, an eroding middle class, persistent poverty, and growing environmental damage. As such, companies need to work together to solve problems that are larger than their own self-interest. Such efforts are also a powerful demonstration to their customer community of the brand’s commitment to the well being of others as well as themselves. When companies collaborate they are smarter, faster, and more effective at finding the solutions and often reap unforeseen benefits for their individual brands.

Corporate social responsibility (policy, program or process) is strategic when it yields substantial business-related benefits to the firm, in particular by supporting core business activities and thus contributing to the firm’s effectiveness in accomplishing its mission,” according to Lee Burke and Jeanne Logsdon in  How Corporate Social Responsibility Pays Off.

It does so by emphasizing the new idea that the purpose of corporate social responsibility within firms is for value creation. “The question that is addressed here is: under what conditions does a firm jointly serve its own strategic business interests and the societal interests of its stakeholders,” Burke and Logsdon wrote. In their study, value creation is most prevalent when the following factors are considered:
  • Centrality — closeness of fit to the firm’s mission and objectives;
  • Specificity — ability to capture private benefits by firm;
  • Pro-activity — degree to which the program is planned in anticipation of emerging social trends and in the absence of crises;
  • Voluntarism — the scope for discretionary decision-making and the lack of externally imposed compliance requirements;
  • Visibility — observable, recognizable credit by internal and/or external stakeholders for the firm; and
  • Value creation — identifiable, measurable economic benefits that the firm expects to receive.
Doing good is not good enough.
With these insights brand owners and managers can more easily identify activities of social good that your brand can own in unique and authentic ways.

Doing good is good business.  

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