New Media Mania

Consumers and advocacy groups with unprecedented access to media as both receivers and transmitters are asking more searching questions about the economic, environmental, and social impacts of modern society, which economists have traditionally termed “externalities”. A simple question mark over an organization’s negative impacts can quickly escalate into a reputation management challenge. Thus corporate social responsibility (CSR) has become increasingly important consideration for marketing communications practitioners.

This post touches on how organizations augment and/or mitigate “externalities” for which they are responsible, and argues the case for incorporating CSR messages in integrated marketing communications strategies in order to protect reputations, position brands, and promote products. The terms “communicator” and “marketing communications professional”, and “communications” and “marketing communications” are used interchangeably throughout, based on the principle that all communications to and with stakeholder groups and target markets should be managed according to a single integrated communications strategy.

Externalities Defined

Johnson (1994-2005) defines externalities as the opportunity costs (or by-product benefits) of purchase, production, or other resource-usage decisions that are not directly paid (or enjoyed) by those making the decisions. Externalities are the costs (or benefits) of an economic activity incurred (or enjoyed) by third parties.

Externalities can be positive or negative, and they can have universal, local, or even personal implications. For example, as the world’s population approaches 7 billion, the hidden costs of fossil fuel burning technologies and the agricultural and medical advancements that made those population numbers possible, are coming home to roost for everybody in the form of human-made climate change and global warming (for which there currently seems to be varying degrees of scientific consensus). This is an example of an externality that is both negative and universal.

An example of a more positive and more personal externality is an opportunity in a NGO-funded hospitality training centre in Luang Prabang for an underprivileged young Laotian created as a by-product of the global tourism industry.

Organisations (and their customers) are responsible for both positive and negative externalities. For example, an airline that ferries tourists between Bangkok, Thailand and Luang Prabang, Laos could be said to be contributing to both poverty alleviation and global warming.

What is CSR?

For the purposes of this essay, CSR is defined as an organization’s efforts to manage its externalities—social, environmental, economic— with the view to augmenting those that are positive and eradicating or mitigating those that are negative.

The World Business Council for Sustainable Development (WBCSD) might have disagreed with this definition back in 1999, positioning CSR as one of three pillars of WBCSD’s “Corporate Responsibility” model, which also includes financial (CFR) and environmental (CER) responsibilities. Yet in the same report about CSR, WBCSD goes on to discuss environmental issues. WBCSD currently defines CSR as “the commitment of business to contribute to sustainable economic development, working with employees, their families, the local community and society at large to improve quality of life”.

If there is a lack of clarity and consistency on defining CSR within an organization that claims authority on such topics, then communicators and the marketplace can be forgiven their confusion. Consumer research by Oxley & Pace (2009) on the perceptions of CSR in Germany, the United Kingdom, and the United States showed divergence in what “CSR” is perceived to mean in each of those markets. CSR has a lot to do with industrial relations according to German consumers. In the United States and United Kingdom there is more CSR focus on charity and community contribution underpinned by ethical and moral responsibility. Across all markets CSR is perceived to comprise the social aspects, local impacts, as well as teamwork and collaboration related to “environmentalism”.

Oxley & Pace (2009) summarise the areas of greatest potential (in the US, UK, and Germany) for organisations seeking to leverage CSR to position themselves and their products:-

• Building respect and ethics – encompassing a commitment to fair, respectable and ethical labour, especially in the employee relationship and contribution, but also in community and team efforts.
• Teamwork and collaboration with long-term protection and security – collaboration that yields longer term relationships and protects today’s generations in the future.
• Environmental awareness and enhancement – sustaining and preserving the environment, especially its beauty, for future generations.
• Human trust and togetherness – comfort and proximity to protect current and future generations.

How Are Companies Responding?

There is neither a standard definition nor a clearly defined business case for CSR. Despite this, The Economist Intelligence Unit (EIU, 2005) found that 85% of senior executives and institutional investors believe that CSR is a central or important consideration in decision making.

Capital markets have agreed, delivering highest share price growth rates years to companies that have embraced sustainability as an issue (EIU, 2008): “Causality is difficult to establish, but the link appears clear: the companies that rated their efforts most highly over this time period saw annual profit increases of 16% and share price growth of 45%, whereas those that ranked themselves worst reported growth of 7% and 12% respectively.”

Jevons & Polonsky (2006) warn that CSR requires commitment because failure to deliver on stakeholder expectations will damage an organisation’s reputation. Indeed successful implementation of a CSR activity in the public domain requires that there be something substantial and verifiable to communicate, lest the public dismisses it as a cynical marketing exercise.

Juno Consulting (2005) identified four broad approaches to CSR commonly employed by organisations:-

1. By the Book – This CSR approach looks at governance and starts with measuring and reporting—mostly in the form of a Global Reporting Initiative (GRI) report. It is very popular with resource and manufacturing industries and has an environmental bent.
2. Human Rights – Companies operating in cheap labour markets, such as those in the textiles, apparel and cosmetics industries, are mainly focused on human rights and labour practices.
3. Soft – The most common CSR approach in knowledge-based industries focuses on employee morale and motivation, as attracting and keeping the best people is critical to competitive survival. The approach often involves high levels of employee participation in any philanthropic or community-based CSR activities.
4. Brand – A combination of philanthropy and cause-related marketing is at the core of brand CSR. A company will actively advertise its CSR activities, oftentimes spending as much or more on advertising than the activity itself. This approach is popular in the food industry.

How Are Consumers Responding?

Consumers form opinions of organisations’ levels of responsibility. And consumer perceptions of corporate responsibility are becoming more important. According to Ipsos MORI research (cited in Okunniwa 2007), 80% of people believe that large companies have a moral responsibility to society, and the proportion of consumers who think that corporate social responsibility is very important nearly doubled to 44% in the four years to 2007.

An illuminating study by Maddock Douglas (2010) places North American brand leaders in ten industry sectors on a perceptual map based on each brand’s “actual” and “perceived” sustainability scores. Where an organization sits on the map relative to its competitors has important business strategy and/or marketing communications implications.

For example, commercial shippers UPS and DHL score about equally well in how green their actions actually are. But when it comes to consumer perceptions, UPS scores almost five times higher. According to Maddock Douglas, DHL is an example of a “bashful” brand not getting credit in the marketplace. This might be corrected with “improved communications about its efforts” and/or more “green consumer-facing innovations”.

The Role of Communicators

James (2002) identified the role of communications professionals (“corporate affairs”) within CSR-practicing organizations: “Stakeholders need reassurance that companies are behaving responsibly and it is the job of corporate affairs, as the custodians of reputation, to make sure that they receive it, with evidence [and] ensure that both action and ongoing commitment are communicated inside the company, demonstrating a clear link back to business objectives.”

There are three fronts in the organisational battle for hearts, minds and budgets when it comes to CSR. One is defensive: To be able to protect the organisation’s reputation.

The other two are more proactive: To position the organization’s CSR efforts as an element of branding for all target audiences. And to promote CSR credentials to target customers as part of the value proposition and competitive differentiation of the product.

Thus, the role of the marketing communications practitioner for the purposes of this essay is to protect, position, and promote an organization’s CSR credentials.

Protect: Cover the Pitfalls

Of a bullet list of specific roles James (2002) prescribes, which more or less mirrors the job description of a marketing communications practitioner, two are particularly worthy of highlighting as they are critical to the defensive aspects of CSR-related communications. They are also potentially hazardous pitfalls if not covered over effectively.

The first point to highlight: “Ensure that efforts are not misinterpreted as tokenism or a part of marketing”: Organisations that adopt and integrate CSR in their communications must ‘walk the talk’, and record evidence to back up results. Ideally, organisations should ‘walk then talk’. CSR activities should be adopted and undertaken by the whole organization so that communications professionals can confidently spin them into their strategies, plans, and messages.

Without understanding the complexity of social or environmental issues, organisations may unintentionally exaggerate claims or set themselves up for criticism (Jevons & Polonsky, 2006). False or misleading claims about the good created (or bad avoided) by an organization can have devastating impacts on its reputation.

Organizations that enjoy positive CSR reputations without claiming to be good corporate citizens are still vulnerable to a backlash. Maddock Douglas (2010) refers to these organizations as “the lucky” because they enjoy undeserved credit for their CSR credentials. The researchers warn that “the lucky” are at risk of being exposed and that they should transparently disclose the reality of in the context of intentions and future action.

The second James (2002) point to highlight: “Make sensible use of existing internal and external communications tools … to create dialogue, to respond to concerns …” Dialogue with highly involved stakeholders, such as NGOs and advocacy groups, will serve to build confidence, trust, and even alliances on the “correct” side of an issue.

And response is related to crisis communications. Even if an organization is not actively engaged in managing a particular externality, it will not do for it to be portrayed in the media as being on the “wrong” side of it. Contingencies should always be written into an integrated marketing communications strategy. Just as there must be a hierarchy of spokespeople in the event of a factory disaster, or a plane crash, or if downsizing is on the cards, there must also be senior executives and communications professionals willing, able, and authorised to respond in an open and transparent manner to concerns regarding the organisation’s environmental, social, or economic impacts.

A case illustrating both points is Nestle, which in March 2010 found itself in hot water for being portrayed as being on the wrong side of an issue. The damage to its reputation, however, could have been avoided through better crisis communications management.

Greenpeace had created and posted on YouTube an online video advertisement in which a Kit Kat chocolate-coated biscuit had been substituted with a fake orang-utan finger. As the office worker takes a break, he bites into the finger which releases streams of blood. The catchline “give the orang-utan a break” was followed with a message to stop Nestle from buying oil palm from companies that destroy rainforests.

A shocking ad, for sure—and not necessarily a fair reflection of the truth—it is no wonder Nestle’s first instinct was to have the video shut down and taken off the internet. However, that instinct for censorship was wrong, and the predictable result in the age of new media was that millions of people who may never have become aware of the ad very quickly did become aware of it, and they watched it.

A better approach for Nestle would have been to sit down with Greenpeace to deal with the issues. It would have given them an opportunity to present Greenpeace with contradictory perspectives, if they exist, as well as demonstrate a willingness to acknowledge and correct any mistakes. Publicly addressing the accusations with alternative perspectives and seeking out better approaches to its procurement procedures in consultation with its accusers may have given Nestle a much better chance of protecting its reputation—perhaps even enhancing it—than did their clumsy efforts to cover up.

Position: Ensure Involvement

When attempting to position their organizations and brands along CSR lines, communicators need to understand that externalities have become emotive and complex issues. It is essential to understand issue complexity and to consider carefully any CSR-linked brand or product positioning before pressing ahead with any positioning strategy (Jevons & Polonsky, 2006).

An essential first step is to determine whether the issue is indeed relevant to the organization’s target publics. Are target publics “involved” in the issue? And if so, how are they involved and by how much?

There are three types of involvement:-

1. Values-relevant involvement is related to belief systems. “I like that brand or I want that product because it has a small carbon footprint and it is made in my country.”
2. Outcomes-relevant involvement is related to consequences. “I like that brand or want that product because it is economical and it supports local jobs and the economy.”
3. Impressions-relevant involvement is related to one’s concern about others’ perceptions. “I like that brand or want that product because I want my peers to see me as environmentally-conscious and as a patriot.”

Cho et al (2005) describes a means of testing levels of values-, outcomes-, and impressions-relevant involvement for specific subjects. In theory a communicator may be able to adopt and refine their research methods to nail down the levels of values-, outcome-, and impressions-relevant involvement specific to his/her target audience(s). One might take that even further to see if there is any significant difference in levels of involvement between target groups and between sub-segments of target groups. With a deeper understanding of the extent, type, and level of involvement in target groups on specific issues, a marketing communications professional will be better equipped to develop coherent and appropriate messages related to CSR activities.

One way to position an organization and brand as being responsible on issues deemed relevant to its target groups is to develop active working relationships and communications partnerships with highly involved groups, such as NGOs. The Economist Intelligence Unit (2008) agrees, suggesting that a successful company will frequently cooperate with a range of stakeholders that might otherwise campaign against it. The partner stakeholder plays the role of consultant and may even lend its endorsement/approval of the organization, its brands, and/or products.

Positioning a brand alongside an issue is more effective if the target audience is already involved. However, should communicators raise a target public’s involvement in an issue in which there is no pre-existing involvement? The findings of Cho et al reading suggest that it matters what type of business and what type of products a practitioner represents. Clearly the role of governments and not-for-profits is often to raise awareness and involvement in issues deemed in the public interest. There may also be a case for commercial organizations to do this, but that is not the scope of this essay.

Promote: Exploit Salience

A good reputation doesn’t necessarily translate into sales. 2004 research by the Journal of Research in Marketing (cited in Okunniwa 2007) showed that CSR may have a dormant effect activated in circumstances where consumers rely on corporate associations to inform their judgements. And market research by Oxley & Pace (2009) showed that while consumers believe in the idealism of the phrase “CSR”, the reality is they don’t monitor the actions or history of companies’ activities. As a result, CSR doesn’t seem to impact how consumers feel or what they buy.

That is not the full story. Oxley & Pace write of the imagery and factor analysis elements of their research: “[By] tapping into the visual and emotional aspects [of CSR] there are distinct opportunity areas, [which] offer a platform for companies to adopt and build upon to expand their position on social responsibility.” These “visual and emotional aspects” suggested by Oxley & Pace offers clues on how to transfer positive perceptions of organizational responsibility into sales. However, this entails an understanding of the theories of not only involvement, as described in the previous section, but also salience.

Salience is a brand’s ability to be recalled by customers in a purchase situation, according to the Ehrenberg-Bass Institute at the University of South Australia. Romaniuk & Sharp (2004) claim to show that brand salience is distinct from awareness and attitude because salience is the “propensity to be noticed or come to mind in buying situations [and] reflects the quantity and quality of the network of memory structures buyers’ hold about the brands.”

Brand salience is essentially what market positioning aims to achieve. In positioning their products, marketing communicators endeavour to develop networks of “memory structures” in the minds of target groups by associating their brands and products with specific (or bundles of) benefits and attributes in such a way that those associations influence target groups’ attitudes and behaviour during the purchase situation.

To promote CSR during the purchase situation is to exploit the salience built up by an integrated marketing communications campaign that reiterated the CSR message and positioned the organization and brand closely to it. It requires that there be a cue or reminder about the CSR message at point of sale. Naturally, marketers should employ only those brand assets most likely to encourage a positive decision thus CSR cues should not be incorporated at the expense of more important factors. However, if the appropriate effort has already gone into positioning a brand alongside certain issues, then the prospects for positive brand associations, enhanced brand loyalty, and stronger sales are very good.

Conclusion

Economic externalities are coming in from the cold. They are being ushered into boardrooms by the concerns of individuals and interest groups increasingly informed and empowered by the media. And someone is expected to pay the hidden costs. While many consumers won’t necessarily pay more for sustainable goods and services, they do expect government and business to take the lead in mitigating negative social and environmental impacts. And we have seen how some groups get quite emotional and vocal about it.

Never has emotion had greater implications for managers and leaders than today. We’ve seen how mega-trends have placed human-oriented management concepts firmly onto board- and executive-level agendas. HRM (human resource management), PR (public relations), CRM (customer relationship management), et cetera, increasingly enjoy special consideration, dedicated personnel, budgets, and/or are outsourced to a proliferation of consultants.

CSR is no different. Organisations can view this phenomenon as either an opportunity or a threat. Either way, professional communicators need to be aware of potentially highly complex and emotive issues. And, at the very least, they must be sufficiently prepared to protect their organisations’ reputation should it come under attack.

Help Me Understand: What Do You Think?

References

Cho, Hyunyi; Boster, Franklin J., 2005 ‘Development and Validation of Value-, Outcome-, and Impression-Relevant Involvement Scales’ in Communication Research, vol. 32, no. 2, pp. 235-264

Deloitte, (2009) ‘The Green Gap: Avoiding pitfalls on the sustainability path to shareholder value’, 2009, downloaded 13 April, 2010, from http://www.deloitte.com/assets/Dcom-UnitedStates/Local%20Assets/Documents/US_CP_GreenGap_Feb09.pdf

Economist Intelligence Unit, The (2005), ‘The Importance of Corporate Responsibility’, January 2005, downloaded 11 April, 2010, from http://www.eiu.com/site_info.asp?info_name=eiu_Oracle_Corporate_Responsibility

Economist Intelligence Unit, The (2008), ‘Doing good: Business and the sustainability challenge’, February 2008, downloaded 13 April, 2010, from http://www.eiu.com/site_info.asp?info_name=corporate_sustainability

Ehrenberg-Bass Institute, University of South Australia, http://marketingscience.info/mr/mr/mr/BrandAwareness.html

Hein, S. (year unknown), Emotions, EQI.org, viewed 11 April, 2010 at http://eqi.org/emotions.htm

James, Z., (2002) ‘The impact of good CSR practice on corporate reputation’, Ethical Corporation, 19 February, 2002, viewed 12 April, 2010 at http://www.ethicalcorp.com/content.asp?ContentID=43

Jevons, C., Polonsky, M. J., (2006), ‘Understanding issue complexity when building a socially responsible brand’, European Business Review, Volume 18, Issue 5, PP 340 – 349, Emerald Group Publishing Limited

Johnson, P. (1994-2005) ‘Externality’, A Glossary of Political Economy Terms, viewed 11 April, 2010 at http://auburn.edu/~johnspm/gloss/externality

Juno Consulting Pty Ltd, (2005), ‘Making Sense of Corporate Social Responsibility’, viewed 12 April, 2010 at http://www.junoconsulting.com.au/public/articles

Maddock Douglas (2010), ‘MapChange2010: Mapping the Future of Green Innovation’, viewed 13 April, 2010 at http://www.maddockdouglas.com/stuff/contentmgr/files/0/a0a8d441d36ef6e3edfd56b67a34d378/files/mapchange_2010_perspective_full.pdf

Okunniwa, T. (2007) ‘The rise and rise of CSR’, Admap Magazine, May 2007, viewed 30 March, 2010, on WARC database

Oxley, M. & Pace, J. (2009) ‘Looking under the hood of CSR – What consumers really think’, ESOMAR Congress, Montreux, September 2009, viewed 30 March, 2010, on WARC database

Romaniuk, J. & Sharp, B., “Conceptualizing and measuring brand salience”, Marketing Theory, Vol. 4, No. 4, 327-342 (2004), as summarized at http://mtq.sagepub.com/cgi/content/abstract/4/4/327

World Business Council for Sustainable Development, (date unknown), ‘CSR: Meeting Changing Expectations’, viewed on 12 April at http://www.wbcsd.org/DocRoot/hbdf19Txhmk3kDxBQDWW/CSRmeeting.pdf