Do People Really Prefer To Buy From Ethical Companies?
You can find this article on my student blog: https://bit.ly/245NgYQ
Last month the biggest data leak in history exposed how the wealthy have been keeping their taxes nicely hidden in offshore law firm Mossack Fonseca, instead of paying them like the lower working class folk of the country. And after it was revealed that David Cameron's father had dealt in tax evasion with the firm in the past, the Prime Minister found himself revealing his financial details in a bid to regain the public's confidence. Even though he was quick to cool the public's anger, their trust in him has decreased to 21% compared to 29% in February, whereas the trust in Jeremy Corbyn has risen from 26% in February to 28%.
It is clear from this crisis (if the 5000-strong protest in London for Cameron to resign is to be considered alone) that people don't like secrets and don't like being lied to, and a company does so at their own peril if they choose to pull the wool over their customer's eyes.
For a client project with a company well known for its transparency, cosmetics brand Lush, research group Banana Moon asked students at Manchester Metropolitan University questions on product quality, company policies, and company reputation to identify whether a company's corporate social responsibility and sustainability policies affect buyer behaviour.
With consistent ethical behaviour comes increasingly positive public image, and a lack of corporate social responsibility, by comparison, may damage a firm's reputation and make it less appealing to stakeholders. A positive moral image will lead to long-term growth, cost and risk reduction, and an anti-capitalist sentiment among other benefits.
The Results
59 students answered the survey, 83% shop at Lush 0-3 times a year, stating that the main reasons for choosing this company are that they like the products (41%) and they like that Lush don't test on animals (30%). Just under half (49%) claimed that it does matter to them where the ingredients are sourced, and 37% claimed that it doesn't matter to them. When it came to company reputation, 72% claimed that having ethical policies helps to maintain a positive image (although the majority of respondents don't know any specific policies).
50% of respondents claimed that they would pay more for a brand with an ethical reputation, and 45% claimed that it really depends on the quality of the product. The survey also revealed that respondents shop at Superdrug and Boots which offer cosmetic brands at a cheaper price. They also claimed that the ethical and sustainability policies of these cheaper cosmetic companies don't affect their buying behaviour here. This could suggest that ethical and sustainability practices are benefits expected of a higher cost product and not expected of a lower cost product.
The results show that customers do consider a company's reputation in terms of their ethics and sustainability practices. With the analysis on students, 95% aged 18-24, it could be argued that they are on a budget with little disposable income to spend on bath and shower luxuries, and the majority shopping at Lush 0-3 times a year, they see the brand as a 'treat' further distinguishing it as a luxury.
The survey concludes that the corporate social responsibility and sustainability practices do affect buyer behaviour, but the customer may be forced to prioritise product cost if they are on a budget regardless of their ethical standpoint.
Jess Pagan