Brands emerged at the turn of the past century as an assurance of quality. They evolved into providing values that were emotional rather than simply having rational differentiators.
As brands have become ubiquitous and global, their impact over society is substantial. Brands now belong to more than just their consumers or shareholders. Over the past three decades, brands are being pushed to earn the trust of society at large via environmental stewardship and social responsibility.
No surprise here. The famous psychologist, Abraham Maslow in his model of human motivation, had placed "self-actualization" as the highest human need after one fulfills physiological, safety, social, and self-esteem needs. With rising living standards, consumers, especially in developed countries, are demanding brands can be trusted to be socially responsible. Successful brands require what is called a "license to operate." As such there is a need to show one is doing more than simply serving customers, but instead, being a positive force in the larger community.
How should brands approach this challenge? Should they cloak themselves in environmental consciousness and social responsibility and have this as the differentiator to drive purchase decisions? Or should brands be content to have it as a hygiene factor, doing what is necessary so as not to deter purchase and attract undue attention.
Some brands such as Body Shop and Timberland have been highly successful with the former strategy. However, "good for the world" demands a lot from the brand with respect to strategy, sourcing, production, marketing, and human resources. It also raises costs, which makes economic sense only if this position allows the brand to command premium prices.
For most brands, the more sustainable position is to ensure that they have social responsibility as a hygiene factor, one among the many, to earn the consumers' trust. It will not be the reason that consumer buys the brand, but it is also not the reason to deter purchase.
How much emphasis brands have to give to developing this as an integral part of their brand values depends on the position of the firm. Consumers are more demanding of social responsibility from larger brands versus smaller ones; from market leading brands than challenger brands; and from global brands rather than local brands.
Despite, or because of, all the recent corporate scandals, the need for brands to earn the trust of their consumers and stakeholders has never been greater. To brand owners, it may seem to be like walking up a down escalator, but there are no other options.
(The author is Professor of Marketing & co-director, Aditya Birla India Centre, London Business School)
Originally published in the Economic Times dated September 28th, 2011, written by Nirmalya Kumar associated with the Economic Times Bureau.