The only way is ethics
Brands that promote their ethical stance are more likely to attract and retain affluent consumers, according to new research seen exclusively by Marketing Week.
Ethical consumers tend to be more affluent than average and are more likely to favour brands that they believe share their green values, according to research by consultancy Goodbrand, seen exclusively by Marketing Week.
Innocent Drinks, the Co-operative Bank, Marks & Spencer and other brands that actively promote their ethical credentials tend to fare well in the perceptions of such consumers. Meanwhile, companies such as Tesco, RBS, Argos and Snickers might find reason to worry about their corporate image.
Goodbrand’s Social Equity Index report classifies consumers on four levels according to their ethical stance. This is judged by whether they claim to recycle waste material, support local retailers, make charitable donations, buy Fairtrade products, buy organic food, check companies’ ethical claims and do voluntary work.
The study finds that consumers classified as “highly ethical” are likely to be wealthier than less ethically motivated people, with nearly two-thirds of this group falling into the ABC1 social class. Goodbrand interviewed 5,000 UK consumers as part of a wider European study of 25,000 people.
Highly ethical consumers make up 19% of the UK population and the study identifies a close correlation between a brand’s ethical reputation and these consumers’ likelihood to express a preference for it. The report’s findings indicate there are strong commercial benefits to brands being seen to act responsibly.
Money and influence
Goodbrand managing partner Richard Evans says: “A lot of people would question it, but our data demonstrates that there are people out there who are interested in how companies behave and to whom it does make a difference to their purchasing choices. There are a lot of those people, they are growing in number and they have money and influence.”
These consumers not only want to act ethically themselves but expect their favoured brands to be similarly responsible, says Evans.
The UK segment of the survey examines highly ethical consumers’ perceptions of 300 brands in six key “social equity” areas customers, society, community, environment, workforce and suppliers.
Using an index where 100 is set as the par score, the research suggests brands scoring above 100 are performing better than average for highly ethical consumers, while those below 100 are lagging behind.
While the financial services sector might have a bad image in connection with the economic crisis of the past few years, it scores above 100 on the community (167) and society (120) measures among highly ethical consumers. However, it averages 80 or below on each of the customers, environment and supplier measures.
The situation is not so positive for all financial services brands. One of the sector’s worst performers is RBS, which scores below the category average and below 100 on five of the six factors. Its worst score is on the customer measure, despite the high-profile customer charter initiative of RBS’ retail banking brands.
The bank suggests the charter is likely to be responsible for the relatively positive community score of 179, just above the category average of 167. An RBS spokesperson comments: “As part of its customer charter, RBS has an ongoing commitment to support the local communities where we live and work and we are pleased that this has been reflected in the research.”
In contrast, The Co-operative Bank leads the category, scoring well above the financial services sector’s average on all six measures of social equity. Evans explains: “There is a huge latent desire from consumers to see banks playing a constructive role in society. The Co-operative Bank is way out ahead of the main high street banks.
“Frankly it is the only one of the mainstream banks that is offering any kind of assurance at all about what it does with your money. There is a great opportunity for other banks to grasp that, but we wait with baited breath for that to happen.”
Away from finance, supermarkets often seen as big business damaging the British high street have the highest average score on five out of the six social equity factors.
Only on the customer measure (117) are supermarkets edged into second place by high street retailers, which score 120 on average. On every other measure, the average index score for the supermarket sector is at least 150.
The supermarket perceived by highly ethical consumers to have the highest social equity is Marks & Spencer. Its lowest score is 208 for customer service, well above the category average, while its highest score of 418 is for environment. Consumer awareness of M&S’ Plan A sustainability commitments appears to be translating into positive perceptions of the brand. Conversely, Tesco scores below the supermarket average on five out of six measures, though it only scores below 100 on the customer measure.
Tesco would not comment directly on its score but released a statement claiming: “As a business we are committed to buying and selling our products responsibly, caring for the environment, actively supporting local communities, providing healthy choices and creating good jobs and careers. We have set ourselves many ambitious targets including becoming a zero carbon business by 2050 and helping our customers to reduce their own carbon footprint by 50% by 2020.”
Among the remainder of the categories, the top performing brands match their perceived ethical reputations. John Lewis leads the high street retail sector, Divine Chocolate is top of the chocolate and confectionery category, Innocent is the soft drinks leader, Ecover leads cleaning products and Rachel’s Organic Dairy tops the dairy category.
The poor performances of retailer Argos and confectionery brand Snickers, which both trail their category averages and score below 100 on nearly all measures, are perhaps less obvious outcomes. Neither brand was able to provide comment in response to the findings.
Although the research investigates consumer perceptions rather than the facts of companies’ ethical behaviour, it also claims that those brands scoring badly are likely to be at a commercial disadvantage compared with their competition. The index may not be able to determine conclusively which brands are the most ethical, but it does demonstrate which ones communicate their ethical values most effectively.
The UK ranks fourth among European countries for the emphasis consumers place on social equity, according to the survey. Only Switzerland, Austria and Germany boast a greater proportion of highly ethical consumers.
The link between ethical consumer behaviour and affluence is also much stronger in the UK than the average across Europe. The message is clear any business in Britain failing to reach people with marketing messages about ethical issues risks losing out on a group of loyal and high-spending customers.
We ask marketers on the frontline whether our ’trends’ research matches their experience on the ground
It does not surprise me that dairy might not score that well as an ethical category within the context of food. There is an understanding that as cows chew grass, they release methane and that contributes to the problem with our atmosphere and climate change.
We have been able to grow along with the co-operative from which we source the majority of our milk. Where it gets harder is that to produce on a larger scale you need to do things like extend your shelf life because that lowers your waste. But we tread a very fine line with putting things in our products that preserve their shelf life, versus the true principles of our business having simple recipes that are what they say on the tin.
We do not make it a central principle in our marketing activities to push the ethical message. From time to time we have used it, such as in 2009 when we were first in our category to switch to both recycled and recyclate [recyclable] plastic in the liners of our pots, and we made a bit of a song and dance about that on the pack.
I have seen surveys where brands you would not think of as being ethical come out highly. You think/ is that just their ability to invest in messages about a certain part of their business that is just one part of a less ethical whole?
We think there are about 10% of consumers who are passionately green and ethical, who look for the Fairtrade or organic options first and foremost. We believe that there are then 70% of consumers who are looking for a brand they can trust. It is those 70% that matter enormously to us and getting them to buy into the M&S brand.
First and foremost, we are very clear that going green will not cost the consumer extra. That is not just because economic times are now tough. Why should a consumer pay more for a product that has protected the planet and not exploited people? M&S must manage that cost and not pass it on to the consumer.
Generally, the supermarket sector in the UK is working pretty hard on this. I struggle to think of any food retailer that is doing zilch in this area.
We are doing three major customer-facing campaigns at the moment. Unicef is the latest one. By encouraging consumers to recycle hangers at the point of purchase, nearly 80% of them are reused. The money saved goes to Unicef to fund a project in Bangladesh, looking at intervention at every point of a child’s life in some of the worst slums.
Ethical consumers are not a homogenous group. They cover a spectrum from extremely ethical consumers to occasionally ethical. Some are more concerned about the planet and environment, others about people and exploitation in the supply chain and others about animal welfare.
Figures show that Fairtrade is a preferred choice for consumers who apply ethical considerations to their shopping and that Fairtrade choices are reasonably resistant to economically challenging times. So if your commitment is to making choices that help other people, you do not abandon those choices when budgets are tighter.
When it comes to marketing chocolate, the priorities are taste and product variety. For many chocolate lovers, ethical considerations will be secondary to this. Although it is absolutely certain that Divine owes its initial success to the mobilisation of networks of people who really care about a fair deal for farmers, the growth of the brand today is also due to our products and range.
Looking at the other category high scorers, the results may be more directly related to marketing spend than an absolute measure of ethical credibility. Any company playing the “ethical card” is putting its head above the parapet and needs to be open to scrutiny. Very ethical consumers are very vocal and good users of social media.