Responsible Retailing and Corporate Responsibility

1. Responsible Retailing and Corporate Responsibility Paul N. Bloom Kenan-Flagler Business School University of North Carolina at Chapel Hill

2. Basic Argument • Among the many social responsibility initiatives a retailer can pursue, corporate societal marketing programs deserve close attention, as they can differentiate your brand in the eyes of (skeptical) consumers and enhance your bottom line, while also improving social welfare.

3. Agenda • Review trends in “corporate societal marketing” • Discuss why it can work • Cover the implications for retailers • Highlight the biggest implementation challenges

4. Corporate Societal Marketing • Marketing initiatives that seek to differentiate a brand/company through social involvement • Cause-related marketing • Corporate social marketing • Strategic philanthropy and sponsorship • Community relations projects • Sustainable development and environmental (green) programs • Economic development programs • Quality/safety improvement programs • Self-regulation initiatives (e.g., ethics codes) • Consciousness raising

6. Corporate Societal Marketing • Marketing initiatives that seek to differentiate a brand/company through social involvement • Cause-related marketing • Corporate social marketing • Strategic philanthropy and sponsorship • Community relations projects • Sustainable development and environmental (green) programs • Economic development programs • Quality/safety improvement programs • Self-regulation initiatives (e.g., ethics codes) • Consciousness raising

8. Corporate Societal Marketing • Marketing initiatives that seek to differentiate a brand/company through social involvement • Cause-related marketing • Corporate social marketing • Strategic philanthropy and sponsorship • Community relations projects • Sustainable development and environmental (green) programs • Economic development programs • Quality/safety improvement programs • Self-regulation initiatives (e.g., ethics codes) • Consciousness raising

10. Corporate Societal Marketing • Marketing initiatives that seek to differentiate a brand/company through social involvement • Cause-related marketing • Corporate social marketing • Strategic philanthropy and sponsorship • Community relations projects • Sustainable development and environmental (green) programs • Economic development programs • Quality/safety improvement programs • Self-regulation initiatives (e.g., ethics codes) • Consciousness raising

12. Corporate Societal Marketing • Marketing initiatives that seek to differentiate a brand/company through social involvement • Cause-related marketing • Corporate social marketing • Strategic philanthropy and sponsorship • Community relations projects • Sustainable development and environmental (green) programs • Economic development programs • Quality/safety improvement programs • Self-regulation initiatives (e.g., ethics codes) • Consciousness raising

14. Corporate Societal Marketing • Marketing initiatives that seek to differentiate a brand/company through social involvement • Cause-related marketing • Corporate social marketing • Strategic philanthropy and sponsorship • Community relations projects • Sustainable development and environmental (green) programs • Economic development programs • Quality/safety improvement programs • Self-regulation initiatives (e.g., ethics codes) • Consciousness raising

16. Corporate Societal Marketing • Marketing initiatives that seek to differentiate a brand/company through social involvement • Cause-related marketing • Corporate social marketing • Strategic philanthropy and sponsorship • Community relations projects • Sustainable development and environmental (green) programs • Economic development programs • Quality/safety improvement programs • Self-regulation initiatives (e.g., ethics codes) • Consciousness raising

18. Corporate Societal Marketing • Marketing initiatives that seek to differentiate a brand/company through social involvement • Cause-related marketing • Corporate social marketing • Strategic philanthropy and sponsorship • Community relations projects • Sustainable development and environmental (green) programs • Economic development programs • Quality/safety improvement programs • Self-regulation initiatives (e.g., ethics codes) • Consciousness raising

19. Statement of Ethics

20. Corporate Societal Marketing • Marketing initiatives that seek to differentiate a brand/company through social involvement • Cause-related marketing • Corporate social marketing • Strategic philanthropy and sponsorship • Community relations projects • Sustainable development and environmental (green) programs • Economic development programs • Quality/safety improvement programs • Self-regulation initiatives (e.g., ethics codes) • Consciousness raising

22. Outlook for CSM • Promises to become more prevalent • Hard to differentiate brands through better product features, better service, cleanliness, or more clever and visible advertising. • Therefore need to turn to: • price (i.e., Wal-Mart) or • pulling on heart strings to create affinity and limit skepticism • CSM may do this better than CRM (and loyalty programs) or sports sponsorships • Examples: Newman’s Own, Whole Foods, Starbuck’s

23. What CSM Can Do • Can improve social welfare • Through the program itself • Through helping nonprofits be more effective • Can improve corporate social reputation • Can improve brand image and equity • Can improve employee loyalty and service • Can improve brand sales and profits

25. How CSM Does What It Does • All marketing initiatives are designed to create more favorable beliefs, attitudes, intentions, and behaviors toward brands • Compared to other actions, adding social content to an initiative may create stronger changes in beliefs, etc. by getting consumers to weight “style of marketing” more positively and strongly in evaluating a brand than other functional and image attributes • It may do this whether the cause-brand fit is strong or weak

26. Exposure to Marketing Initiative Amount of Social Content of Initiative Degree of Fit of Initiative with Brand Judgments/Feelings: Beliefs/Weights Given to Initiative & Other Attributes Brand Attitude Brand Purchase Intention Brand Purchase Behavior

27. More Specifically… • Consumers have “persuasion knowledge” • They are always trying to figure out what marketers are up to • High levels of skepticism • Reward what they like (Attitude toward Ad a strong predictor of Attitude toward the Brand) • Hence, “style of marketing” becomes an important attribute in evaluating a brand • When it’s social it may get weighted more heavily and positively than when it’s more conventional. • Also, halo effects on other functional and image attributes • When it’s a good fit, it may be better or worse, depending on consumer feelings about sincerity

28. Pilot Study Demonstrating Effect • Asked consumers to rank eight different “profiles” of a beer brand, where they were varied systematically based on container type, price, calories, protein, and type of sponsorship (2 levels of each). • Can infer how much they weight these attributes based on the rankings • Some of the participants ranked a brand that had a social sponsorship as an option and others had a sports sponsorship as an option

29. 12 ounce Bottle $5 per 6 pack 150 calories per serving Fortified with 1.5 grams of Protein per serving Sponsor of the Budweiser Designated Driver Program RANK IS: 1 2 3 4 5 6 7 8 (no ties please)

30. Conjoint Results “Designated Driver” and “Help Kids Read” > NASCAR and ABC Family Movie A high fit social cause will lift the ranking of a profile equivalently to a 50 cent price cut per 6 pack.

31. Implications for Retailers • Look for social causes as a way to differentiate yourself • Avoid really low fit social causes, but lower fit may work better if it is distinctive and credible • In addition to differentiability, pay attention to how substantial the market is that cares about the cause • May require a more subtle approach if not substantial • Examples in the Green Marketing context

32. Green Marketing Strategy Matrix

33. Implementation Challenges for Retailers • Making your (necessary) responsible drinking and tobacco control efforts be perceived as credible and distinctive • Avoid being seen as a “tool” of the big alcohol and tobacco companies (although working with their social programs is fine) • Strike out on your own with alliances with community groups • Need a portfolio of causes • Since you need to be supporting responsible drinking and tobacco control, which is risky, look for less risky other causes (e.g., education, the elderly, auto safety) • Sustaining the effort and continuing to inform consumers about what you are doing • Needs attention similar to what is given to displays, signage, and advertising • Need internal marketing to get all employees cooperating