Keep corporate ethics within sales context

The article “Make the most of your ethics” (MW June 9) missed two key points: firstly, environmental and ethical factors are just one element of a company’s overall reputation; and secondly there is no “one size fits all” solution.

Clearly ethical issues are important for all companies. Our own data shows that when asked about environmentally friendly products, 15 per cent more UK consumers think this is the responsibility of companies rather than individuals.

The thornier question is whether having a good corporate reputation will actually influence sales. Our corporate reputation research, CRED (Corporate Reputation Diagnostic) shows that ethical and environmental issues (what we call a company’s “public responsibility”) are just one of three core elements of reputation. CRED allows marketers to put public responsibility into context alongside “leadership and success” (being seen as a winner) and “consumer fairness” (doing the right thing by your customers, such as charging fair prices and producing good-quality products and services).

This is important because measures of public responsibility generally have a significantly lower impact on sales than leadership and consumer fairness factors. So even though consumers want to act responsibly, they don’t always follow that through into their buying behaviour.

A detailed understanding of a company’s corporate and brand relationship is also key. In sectors where the industry as a whole has a relatively poor environmental reputation (for example, motor fuel), corporate efforts are essential and can also be promoted as a means to genuine product differentiation.

On the other hand, corporations that have a weak link between their corporate identity and their brands, such as Altria, Diageo and Unilever, will find that their corporate reputation does not have much influence on buying behaviour. So while these relatively low-profile companies should have sufficient responsibility efforts in place (it is not only the right thing to do, but it also defends against the potential downside of negative PR), it will probably not make sense for them to use precious marketing resources communicating their efforts to consumers.

Instead, this budget would be better spent focusing on improving product quality, price and packaging – and then making consumers aware of those advances.

Corporations that do not consider ethical and environmental issues as part of a holistic business planning process could inadvertently waste budget, or damage their brands or product sales.

Duncan Southgate

Research and development

Millward Brown

Tachbrook Park

Warwick

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