More consumers buying based on corporate ethics

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By: Wise Marketer Staff |

Posted on August 14, 2007

More consumers buying based on corporate ethics

More than two-thirds of Americans say they consider a company's business practices when deciding what to buy, according to the Cone Cause Evolution Survey 2007, which also noted a substantial increase in the number of workers who want their employers to support a social cause or issue.

The study indicates an evolution in consumer thinking about the ways businesses interact with society. According to Julia Hobbs Kivistik, executive vice president of cause branding for Cone, cause-related marketing efforts have a proven impact on sales and remain an effective way for a company to express its humanity and core values.

Consumers care more But there has recently been a radical change in the value equation involving consumers, companies, and society. Good business was traditionally all about providing fair value, decent service, and high quality. Later, that definition expanded to include a company's role and contribution in society. But companies now also have to consider their operating practices and how those impact their social commitments. Indeed, today's consumers are increasingly asking questions such as "Is this a good company?" and "What does this company really stand for?".

As a result, across almost all industry sectors, business practices have become an important purchasing influence for approximately one-third of American shoppers. Another one-third of consumers said they consider both social issues and business practices when deciding what to buy. The majority of consumers (85%) said they would switch to another company's products or services if a problem with business practices was uncovered.

Major brand differentiator Consumers' expectations of companies are at an all time high, with 83% saying that companies have a responsibility to support worthy causes, and 92% saying that they have a more positive image of companies that support a cause they care about.

In many areas, consumers are now more likely than ever before to reward companies for supporting social issues, with 87% saying they are likely to switch from one brand to another (assuming price and quality are approximately equal) if the other brand is associated with a good cause - an increase of more than 31% in 1993's survey (in which this proportion stood at only 66%).

The influence of social issues Consumers also consider a company's commitment to social issues when deciding:

  • Which companies they want to see doing business in their community (86% compared to 58% in 2001);  
  • Where to work (77% compared to 48% in 2001);  
  • Which stocks or mutual funds to invest in (66% compared to 40% in 2001).

However, word of mouth does not seem to play such an important part in the corporate handling of social issues, as only 30% reported having told a family member or friend about a product or company as a result of hearing about that company's commitment to social issues (a surprising decline of 30% from the 2004 score of 43%).

According to company chairman and founder, Carol Cone, "Cause marketing has come of age. Consumers expect companies to support social issues, and companies have responded in a variety of ways from multi-year, multi-million dollar commitments, to something as simple as adding a ribbon to a package or advert and donating funds to a non-profit organisation. Companies must now identify the issues that have the most relevance for both target stakeholders and their business. And, their social issue programmes must be authentic, sustainable, transparent, and well-communicated."

Communicating the cause Advertising and the internet are the two main ways consumers prefer companies to communicate their social and environmental issues and practices (45% and 41% respectively). Americans are also using technology proactively to learn about and support social and environmental issues and causes. More than one in five consumers (22%) use the internet and other technologies to engage in grassroots activism, while others are searching for information on issues (37%) or forwarding important messages to family and friends (38%).

Many companies are now choosing which issues to support based on where they can deliver the most meaningful results. Nine out of ten consumers (90%) said that companies should support causes that are consistent with their responsible business practices, and 87% said they want a company to support issues based on where its business can have the most impact. Health is the leading issue consumers want companies to address (80%), followed by education, environment, and economic development (all at 77%).

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