In the face of global competition, monopolies are at end. Networked public opinion can make or break markets for established products and company reputations. Sustainability is a major problem for companies discovering that the erstwhile branding equations have altered.
Japanese carmakers Toyota has enjoyed top international success in recent times. In USA, they outsold the local brands that needed government bailouts to keep from going under. However, five fatal accidents from last year involving Toyota cars have prompted public reaction to the brand, and now a Congressional hearing. The accidents have been attributed to jammed accelerator and brake pedals, or electronic malfunctioning, although the exact problem is not yet clearly identified. Some consumers also complain that their feedback to the company about the problems four years ago was ignored.
The company has been forced to recall products for repairs. Akio Toyota, the chairman of the company rushed to Washington to apologize. His people, he said, had become “confused” between product sales (their compulsions) and product quality (their constraints). Any company can ill-afford the image association that its competitors can feed off. Toyota's sales figures are already down by about ten percent reflecting the dip in consumer confidence.
US biofoods giant Monsanto lobbied long and hard for the cultivation of genetically modified (GM) vegetables in India. They convinced the agricultural ministry of the “second green revolution” with the mass cultivation of their Bt brinjal, a GM vegetable. However, with strident public protests against the product, the environment ministry withheld its clearance. Monsanto’s track record in the country has also not inspired trust. Earlier, the company had sold processed potato chips containing GM-ingredients in retail outlets, without the labels on the packs that are mandatory in the West for such foods.
In India, it is no longer enough for a company to have a saleable product. Companies are pushed to provide something extra to attract consumer attention and create positive associations in their minds. Some companies still stick to promotions, discounts, mutual tie-ups, and so on, in various short-term measures.
The point is predicting consumers’ buying patterns has become difficult. With increasing range of available products and changing consumer attitudes, companies need to have a finger on the pulse of the people to keep ahead.
A more recent trend among companies seeking the competitive edge is exhibiting a serious corporate commitment to people or planet. The way forward to building an image memorable to consumers has become owning CSR.
Some very large corporations have created charitable institutions, parallel to their profit-making ventures, to conduct strategic philanthropic programmes around the world. These foundations channelize money from rich corporate bodies in the West, e.g., from Microsoft or Dell in the computer industry, to fund programmes run by the local NGOs in developing nations. The main criterion for the funding generally is reaching as wide an aspect of society as possible, like large donations to assist in the economic uplift of the destitute. Others, even cricket clubs or reality shows, show support for child education, the rights of the girl child, and so on.
In India, the mobile phone companies appear to be adopting environmental causes. The Aditya Birla Group’s cellular division Idea, had earlier come up with the “walk and talk” campaign to encourage sedentary sections of the population to get more exercise. But then their message was criticized for endangering safety, since by doing so people may become unmindful whilst amongst traffic. They have since shifted to saving the planet by saving trees from being cut down for the manufacture of paper. Nokia calls for public donations of old handsets for recycling to prevent excessive mining in the country. The company has pledged to plant a tree for each phone recycled.
The Tata Group, one of the oldest in Indian family business, now has the fifth generation in corporate leadership. Mahatma Gandhi had lauded the company as exhibiting exemplary trusteeship, its operations contributing to the freedom movement through economic means. More recently, they launched their bold new TV ad campaign entitled “Jaago Re!” and meaning 'wake up to reality' on a slightly different track - social development. The campaign built around their tea products is aimed at the conscious awareness of habitual practices that render an ailing society.
The simple but effective video clips contain no celebrity faces. Rather, ordinary looking but savvy generation next characters identify to the general public the roots of social issues like political incompetence, bureaucratic bribery, corruption in public life, and so on. Their message is that the public’s toleration of social evil merely serves to enable it.
During the elections, the campaign’s website also offered help in voting registrations, pledging to target one billion votes in the country that presently has less than fifty percent exercising franchise. Dovetailed with improved product quality, the campaigns have proved hugely successful, as reflected in the rising sales of the range of Tata Tea.
Corporate social responsibility as a marketing initiative is making sense to many companies as a solution to their concerns about sustainability and competition. The average consumer, perhaps fed up with daily reports about malfeasance in high places, is appreciative of a return to ethical values, albeit in advertisements. Consumers are rewarding the companies for their social cause initiatives with longer-term relationships with their brand. Companies still awaiting legislation to force them into socially responsible business practices may eventually discover that, along with and society's tolerance, their time has run out.
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