'Good' Matters to Consumers

Self Magazine Study: Altruism Pays Off for Marketers

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Consumers are willing to pay more for purchases from a company they know to be doing good.

More likely than not, you know that. So did we. What we didn't know was that the phenomenon is so powerful they're willing to pay an average of 6.1% more for a product they see as doing good.

Surprised? So were we -- sort of. Because while Self, no doubt like you, understood that consumer relationships with brands increasingly are influenced by broad perceptions of altruistic purpose, or what we have coined (and spell fully capitalized) "Good," we didn't know exactly how that worked or just what the payoff could be for marketers. Thus, the Good research initiative was born.

Good corporate citizenship takes many forms, ranging from charitable funds derived from sales of a particular product to progressive corporate policies. However, the consumer does not distinguish among the many terms marketers use to describe a company's efforts to be a force for positive change: corporate social responsibility, pro-social marketing, cause marketing. For her, they all fall under the rubric of doing Good. Accordingly, our research refers to any effort to be a force for positive change as Good.

In the field
In early 2007, Self partnered with Latitude Research to develop a major body of research titled, appropriately, "Good" to help us understand and help educate our marketing partners about female consumer attitudes toward doing Good. The Good study focused on consumer perceptions of companies that do Good and on how consumer needs are met when they support these companies' efforts. The study comprised more than 2,700 completed surveys and 111 in-person interviews with consumers and experts in the field of cause marketing. Its centerpiece was a major online survey projectable to the U.S. population of women ages 18 to 49 with annual incomes of more than $50,000. Field work was completed in May 2007.

The Good study sought answers to critical questions: When a consumer supports a Good brand, how does it make her feel about herself? What emotional benefits does Good provide vis-à-vis traditional marketing? What are the challenges of Good marketing? Has the Good ship sailed for marketers who are not already aboard?

The study used an innovative tool to measure in concrete terms the contribution Good makes to brand value in a consumer's mind. Respondents were presented with an exercise designed to simulate the decisions they make in real-life shopping. The exercise was quite similar to those marketers use to optimize brand features and benefits and determine price points. Self's innovation was to apply it to the topic of Good marketing, testing Good's effect on consumer behavior given three variables:

RELATIONSHIP: history or experience with the brand, ranging from none at all to long-term familiarity and loyalty.

PRICE: consumer willingness to pay a premium for Good brands or products in relation to comparable items (1% to 5%, 6% to 10% or no premium at all).

GOOD MESSAGE: a range of nine pro-social practices, including environmentally sound methods and fair workplace policies.

The perception that a company was doing Good raised the premium consumers were willing to pay by an average of 6.1% across all categories measured. In beauty and health, the top categories, Good raised brand value by roughly 8%.

Good contributed even more to a brand's perceived value than did relationship -- in other words, the consumer's previous experience with the brand, which contributed 5.3% for a brand long used and trusted. Good added more value than did brand relationship in all but two categories: automotive and technology. Nevertheless, even in those cases, Good added roughly 5% to consumer perception of a brand's value.

Consumers are looking for more Good marketing. No less than 85% would like to see companies do more Good. Consumer perception is at a tipping point, and now is the time for those inclined to take a position. Doing Good can recast a marketer's relationship with consumers, boosting the bottom line.

Four essentials of Good marketing

These are as fundamental from the consumer perspective as they are overlooked. But don't overlook them. through her connection to Good products, the consumer wants to feel closer to her idealized view of herself.
Transparency equates to honesty in the consumer's mind. In fact, 71% of women want to know exactly what portion of their purchase is going to a cause. Moreover, they want details of your efforts and how their dollars are helping, so paint the picture in fine strokes.
The consumer needs to know that your relationship to your chosen cause is not a fling but a deep, long-term commitment. Show that your company has a genuine affinity with and concern for the cause it's claiming to champion.
A Good company must demonstrate responsible practices across operations. Fully 78% of women are more convinced a brand is doing Good if it does so in running its business. Show that your commitment is true throughout all aspects of your enterprise.
The benefits of doing Good can accrue only to companies that communicate the Good they do via marketing. Women want to know what Good you're doing (only 4% of those surveyed said they weren't interested), but they don't have time to seek that out.

Our research showed that consumer failure to support a Good brand was largely due to ignorance of what the company was doing (49%) or forgetting about it at the point of purchase (34%). Remember that keeping the consumer informed gives her another opportunity to feel Good about herself through her connection to your brand.

Five Do-Gooders

Here are some marketers that are doing Good the right way.

WHIRLPOOL: Whirlpool is a prime example. Since 1999, Whirlpool has worked with Habitat for Humanity in many ways, including significant employee participation and donating two appliances to every Habitat home built in North America. When consumers became aware of the affiliation, brand loyalty increased 160%.

BURT'S BEES: Burt's Bees sees the importance of consistency in message and corporate practice, which is not always the easy route. The company, alongside competitors and the Natural Products Association, is leading a campaign to regulate the word "natural" in products, helping create a new standard. Burt's Bees champions this cause even though it will probably have to reformulate half its product line to comply. But that will give consumers complete confidence, letting them know that when they see the word "natural," it is.

RED: Red, which has generated $50 million for the Global Fund, looks at consumer engagement as vital to helping eliminate AIDS in Africa. The idea of Red is to inspire, connect and empower everyday people -- people who want to do good. As a result, those behind Red believe it is imperative to clearly show their consumer community where and how the money is spent, communicating the impact simple acts of consumer choice can have on generations of people in Africa.

YOPLAIT: Yoplait demonstrates the value of both commitment and consumer connection through its efforts to eradicate breast cancer, helping consumers take small actions that bring huge benefits. This is the 10th year of its Save Lids to Save Lives program; for every pink lid consumers send back to the company, Yoplait donates 10¢ to Susan G. Komen for the Cure. To date, Yoplait, its foundation and its parent company, General Mills, have donated more than $18 million to the breast-cancer cause.

STARBUCKS: Starbucks prioritizes corporate social responsibility in its daily business practices -- it's one of the six guiding principles in the company's mission statement. By offering fair-trade-certified coffee, minimizing its environmental footprint and engaging local communities, Starbucks works toward improving both its industry and the world. As a result, consumers can feel better about their purchases.
Kimberly Anderson Kelleher is VP-publisher of Conde Nast's Self, which reaches 5.5 million women each month.
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