This is the 2nd Blog in a series of 3 dealing with Ethics, Branding & ESG. The earlier blog dealt with Governance and today, we deal with Social Factors. The final blog in this mini series explores Ethics, Brand Equity and Environment.
S in ESG stands for Social Factors and consists of family, friends, relatives, colleagues, media, community and neighbors. A big part of the organizational environment is the culture of the society it operates in. It has deepest tie-in with ethical perspectives, impacting taste, fashion, social media, digital shopping usage, Sustainability, purchase pattern, education levels, lifestyles, tastes, safety concerns, spirituality, cuisine, music, health, disposable income & many other factors. Products must comply with collective culture for the company to stay relevant, because it is people who purchase products.
Brand Equity represents the total value of a brand as a separable asset, a measure of the strength of consumer’s attachment to a brand and a description of the associations and beliefs of the consumer about the brand. Companies with a positive brand image have higher market value, own a market value premium and generate an intangible asset vis-à-vis industry peers.
ACCA and CIMA give us new perspectives on Brand Equity, Ethics and Society.
Brand Equity traditionally factors in the culture and that is usually an external factor. There are 2 direct steps that a firm might take that ensures that it proactively enhances its brand in the social context. The first action is Bottom of the Pyramid initiatives. The second action is Compassionate Capitalism that encompasses social enterprise, social stewardship, community development and local talent sourcing & development.
Bottom of the pyramid initiatives comprise of steps taken to ensure that the company considers the unique product needs of the economic base of a society and takes specific marketing campaigns to keep them involved as a society. A unique pricing strategy means that this market worth USD 1.2 Trillion on a global level is part of the company’s product development strategy. Upwardly mobile members of BOP have a massive consumer loyalty. An example is Tata Tea and Tata Salt. Despite there being other alternatives present, the very name Tata is synonymous with integrity, commitment to quality, community initiatives and employee welfare. The families of Tata communities maintain a lifelong loyalty to the Tata Brand because they recollect the community initiatives that Tata as a group took to raise them out of abject poverty. Elasticity of demand is very low and even inflation would not cause a shift to another substitute. This strata is the ideal experiment ground for low cost but efficient products that are sustainable.
Compassionate capitalism as a strategy involves viewing people as clay, not as disposable assets. Employees are trained, local talent is nurtured with sports and community initiatives sponsored by the firm, burning social issues become the focus of social firms who are incorporated to take care of urgent issues of society and are still profitable in a win-win synergistic model. Important dates of the local culture are recognized in sponsorship and leave to employees. The main focus is keeping up with mass technologies and taking stakeholders along.
These initiatives are ethical for society and create a permanent brand.