Out-behaving the competition

Out-behaving the competition

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Author: David Jones

David Jones describes the evolving social landscape in which companies and brands will operate. Good behaviour will be required by more discerning consumers, placing demands on companies never previously experienced. Marketing is the gatekeeper of consumer opinion – and the enabler of products and services – that will succeed in this environment

BEFORE the financial meltdown, the fastest-growing trend in business was the move towards social responsibility, and the economic crisis has only served to accelerate this. The world saw all too clearly that the ruthless pursuit of profit at all costs almost led to the total collapse of the global financial and economic system.

Today, many businesses that understand that the philosophy of ‘profit for profit’s sake’ is no longer the key to sustainable success are actively seeking to change how they operate. Doing well and doing good are no longer seen to be mutually exclusive.

Overall, the crisis has magnified consumers’ expectations that companies should give back as much as they take. Their voice is already highly influential and will only become more so. Social media has given people an amazing tool to keep business honest, to share information and above all to create movements to support or bring down those businesses, leaders or governments that they do or don’t ‘like’. And all at dramatic speed.

There is overwhelming evidence that the way in which companies go about their business is becoming more important than ever. A study carried out in 2010 found that 86% of consumers believe it’s important that companies stand for something other than profitability.

The three ages of socially responsible business

While business is starting to take seriously the need to behave according to a different standard, it wasn’t always so. Previously, a company’s image was often its key concern, rather than its reality. Words spoke louder than actions. If we examine the path that led modern business to this new reality, it can be broken down into three ages, which fit broadly into three consecutive decades.

The Age of Image, 1990-2000

The first age – the Age of Image – lasted from around 1990 to 2000. Businesses used the growing interest in how companies went about their affairs and what they stood for, especially in an environmental context, to create new communications strategies.

These were, on the whole, designed to establish or alter the image of their businesses in the consumer’s mind – rather than genuinely changing how things were done. As the Dilbert cartoon says: ‘We didn’t do it to help the planet; we did it to look like the sort of company that cares about that sort of thing.’

The terms ‘greenwashing’ and ‘nicewashing’ were coined to describe cynical attempts by companies to mislead the public about their environmental performance and ethical commitments.

In 1992, Greenpeace published a ferocious report entitled The Greenpeace Book of Greenwash, which eviscerated companies including DuPont, General Motors, Shell and Dow Chemical, among others, for co-opting environmental terms and using them for their own ends. Despite this, some companies continued to cosmetically enhance their images with claims and marketing campaigns that did not necessarily reflect reality.

The Age of Advantage, 2000–2010

As consumers grew more and more vocal, and more digitally empowered, some of the smarter and more progressive companies realised that there could be genuine competitive advantage to be gained from really delivering on the promises of the Age of Image. And hence we saw the arrival of the second age – the Age of Advantage (2000–2010).

Here we saw companies setting out to genuinely make their business more socially responsible, in order to gain an edge. Walmart transformed its business during this period. Others, such as Marks & Spencer and Toyota, leapt ahead of their competitors by genuinely tackling their impact on the world around them. New companies that placed better business as a central tenet, such as Whole Foods and Burt’s Bees, began to make a significant impact, delivering on consumers’ expectations.

In the Age of Advantage, many business leaders recognised and accepted the need for business to change. In fact, almost three-quarters of business leaders (73%) questioned in a global study in 2010 believed in the edge corporate social responsibility gave them and even more (79%) accepted it as a business cost.

The Age of Damage, 2010-present

I believe we are now heading into the third age – the Age of Damage. If the first age was about creating an image but not delivering on it, and the second age was about the genuine delivery by the few, then the third age is poised to be an era during which businesses that are not socially responsible will suffer damage as a result of this failure. Consumers now know more about companies and expect more of them. Not only that, they will now act against those that do not come up to their standards.

Unilever CEO Paul Polman is well aware of this: “Those companies that wait to be forced into action, or who see it solely in terms of reputation management or CSR, will do too little, too late and may not even survive,” he warns. Polman is committed to improving Unilever’s sustainability performance, but not at the expense of growth, and he intends to double the size of the business while halving its environmental impact (Market Leader, March 2012).

Polman’s goals are seen by many to be ambitious, but they are also the symbol of a new era in which companies focus on both their results and the impact of those results. Other companies that have occupied this space in the past decade have seen clear benefits. General Electric says it has spent $5 billion in the first five years of Ecomagination, its programme to develop clean technologies for the future, but adds that a staggering $70 billion has already been generated. General Electric CEO Jeffrey Immelt says: ‘Ecomagination is not an advertising ploy or marketing gimmick. GE wants to do this because it is right, but also we plan to make money while we do so.’

Marks & Spencer launched Plan A in 2007, making 100 commitments to tackle climate change, waste, raw materials, fairness throughout its supply chain and health issues over five years to 2012.

The retailer anticipated investing £200 million over the period to achieve these targets but, according to its ‘How We Do Business’ reports, the plan has already broken even; in 2010 it added £50 million in profit and in 2011 a net benefit of £70 million. This is in addition to an energy efficiency improvement of 23%, 94% of all waste from stores, offices and warehouses being recycled and major progress in terms of sustainable sourcing.

In the third age, businesses that are not socially responsible will suffer damage as a result of this failure

MARKETING IS THE NEW WORLD

Someone changed the questions

If the world of business has entered a new and dramatically changed environment, then the changes and challenges confronting the marketing world have been even more dramatic. The ‘social’ consumer is driving business to be more socially responsible.

So how should marketers react in this new world to create successful and trusted brands? Leroy Stick, aka @BPGlobalPR, provides a very succinct answer: “You know the best way to get the public to respect your brand? Have a respectable brand.” This should be the mantra for every marketer in the coming decade. For today’s consumers, actions really do speak louder than words.

For those looking for a slightly more in-depth answer than Mr Stick’s, the following ten points (abridged for this excerpt) represent my views on the key changes taking place and guidelines for creating successful brands in the social age.

1. From image is everything to reality is everything

In today’s open world, it’s incredibly difficult for a company to pretend it is something it is not. Someone, somewhere, will find out and share that with the world. The key to today’s successful social brand is to create or identify the best possible reality, to share that with as many people as possible and to actually make that reality better in the first place.

2. From consumers to prosumers

The key driver in this change from image to reality is the changing consumer. We’re moving into a world where ‘prosumers’, or influential, marketing-savvy, engaged consumers, are much more important. If the rules for the past century were about advising the all-powerful brand on how to better interact with people, the rules for this century are about how a brand must behave to ensure it doesn’t incur the wrath of the all-powerful consumer.

3. From employees to advocates

It isn’t only prosumers who have an incredibly enhanced ability to influence. Employees can be a highly positive or negative force for a brand too. If they believe passionately in a business and brand, they will become powerful advocates. This is particularly relevant given the fact that many people entering the workforce today say they would prefer to work for a company whose values they believed in for a lower salary than a higher-paying firm they viewed to be less socially responsible.

4. From buying attention to earning it

In the 20th century of Don Draper’s Mad Men, TV was still relatively novel, TV audiences captive and an entire media industry focused on buying people’s attention. Today you can still buy media, but you can no longer buy attention. You have to earn it. And the successful social brand focuses much more on earned than bought media.

 

5. From ‘talking at’ to ‘listening to’

While generating earned media is often about sending a message out, the power of social media for receiving messages should not be underestimated. One of my early bosses said to me, when advising me on how to be a good account manager: “David, you have two ears and one mouth and you should use them in that proportion.”

I have probably failed to follow that advice at too many points in my career, but if it is great advice for a career, it is even better advice for the social media world.

6. From controlling to collaborating

Marketing used to be all about control. Our focus was on policing brands, like gatekeepers, ensuring rigorous and ruthless adherence to what the centre had deemed to be the brand guidelines. This was especially true as brands extended their reach and became global. In today’s world, I would argue that the best marketers will be those who collaborate the most, not those who control the most.

7. From local to global

Technology and social media have dramatically shrunk the world and made people realise that we are all connected –we are global citizens, genuinely impacted and affected by global events. National boundaries are less and less important. This is equally true for brands.Whether a brand is deliberately social or not, it is a fact today that there is no such thing as a local brand that can truly be contained locally.

8. From who to where

If the focus of marketing used to be all about ‘who’ we were targeting, we are entering an era in which ‘where’ we are targeting them will be more important. And here I mean their exact physical location, rather than their country.

To date, we have had, on the one hand, the virtual world of digital – with its cool, sexy and exciting image, but little in the way of actual sales – and on the other hand the old world of bricks and mortar, which was often seen as ‘boring’ but had the major benefit of billions of dollars of sales. With the possible exception of Amazon, the connection between digital hype and tangible sales delivery has not really happened before. In the next generation, the two will come together.

9. From discrete targeting to open access

Companies used to be able to target different audiences in different channels, often with different messages. As an extreme example, they could announce record profits to their shareholders while explaining to consumers the need for fees to go up and to their employees the fact that there would be no pay increases. Social media has put an end to that. Everyone has open access to everything. In real time. Tweets and posts are read by employees, shareholders, customers and the media alike.

10. From profit to purpose

If business and marketers now need to take more interest in where consumers are physically, consumers are becoming increasingly interested in where businesses are in their plans to become more socially responsible. Massive shifts are taking place as the social consumer demands that businesses become more socially responsible. Consumers want to buy from brands that share their values and beliefs. And they will punish those businesses they view as irresponsible.

This article featured in Market Leader, July 2012.

Adapted from Who Cares Wins: Why Good Business is Better Business, by David Jones, published by FT Press, 2011

David Jones is global CEO of Havas and co-founder of One Young World

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Author: The Marketing Society
Posted: 10 Nov 2012
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