Does The Nice Company Finish Last?
Corporate social responsibility [CSR] has always been a touchy subject in marketing. Is money spent on CSR worthwhile? Is the publicity valuable? Does it enhance shareholder wealth?
Research again and again has shown the publicity is more valuable than sales promotion and product advertisement. People view publicity with a level of authenticity that cannot be matched by other marketing mediums. But people have always been skeptical about how CSR can be incorporated in this marketing matrix to enhance brand equity.
CSR has been viewed as an unnecessary component of an organization by some because the goal of an organization is to make a profit. Ideally, the organization should achieve this objective by ethical and legal means but the only requirement is the latter. Because CSR is viewed as the job of the government, as the government would know best how to allocate money to achieve a socially optimum level of utility, opponents of CSR see it as wasteful of organizations.
This view, though rational, has potential flaws. CSR can be compatible with “bottom-line” ideology because CSR can augment the product perception of consumers. Consumers pay for quality, and a company that has positive publicity from CSR, can make statements that are readily more trusted by consumers. As such, these companies with CSR can spend less on advertisement, make more profit, and retain loyal customers.
Here is the solid evidence:
*70% of consumers are willing to pay a premium for products from socially responsible companies*
*28% of consumers are willing to pay at least $10 more for products from socially responsible companies*
http://www.adweek.com/aw/content_display/news/strategy/e3id9db7bed8e9402cbfb822466e4855c09
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I think it is important firms continue to include CSR in their operational management and uphold the values outlined in their mission statements. I think too often people forget that companies are "citizens" themselves, not just profit-maximizers. Employees do not toss their values at the door; or when they do, fraudalent activities, such as that of AIG and Goldman Sachs, occur.
ReplyDeleteSometimes firms do abuse CSR to exploit consumers. For example, I learned from a MPH student at Columbia that pharmaceutical companies often skip FDA drug testing in the States and conduct it in lower developing economies with the promise of selling it for free to the neediest upon approval. Once they receive this approval, they spike the prices and advertise them through local NGO's. Because of the high level of reliance, consumers expend all they have to purchase the drug. Clearly the system is not fair at times; firms need CSR to keep them honest.