Why Ethical Branding is Important

A company’s ethics are important because over time, people have become concerned about sustainability and environmental concerns. Companies should become ethical and environmentally responsible to differentiate themselves from their competitors, make extra money, and avoid boycotts. Furthermore, companies should stay away from ‘greenwashing’ (defined below), as it will have a negative impact on the company.

Environmental responsibility is a good way to differentiate your product from a competitors. You can claim that your product is better for the environment, uses less resources, or is manufactured in a better way. Claims like these make your product seem better than the competitor’s in the eyes of the consumer because consumers are concerned about these things. Some consumers are looking for ‘green’ products, and supplying this need will give you a new market. A product advertised as being most environmentally friendly will draw in consumers who are concerned about companies being socially responsible. Environmental or social campaigns also attract the consumer’s attention.

These campaigns make consumers more willing to buy the product because they show that the money being given to the company is used in a socially responsible way. Consumers are concerned about the ethics of the company they are giving money to because they do not want their money to support practices like child labour and environmentally unfriendly practices. Since Americans are willing to pay approximately 6.6% more for an environmentally friendly brand (Pelsmacker et al., Journal of Consumer Affairs, 2005), that allows the company to make extra money, despite increased costs in production.

While consumers are willing to spend extra money to buy a sustainable brand, they are also willing to avoid unsustainable or unethical brands. Boycotts can substantially harm a company, and they give negative publicity as well as decreased revenue. A Nike boycott forced them to change to more ethical manufacturing in 2005. Boycotting today is easier than it used to be, because consumers can organize themselves via the internet to take down offending brands. On the other hand, Starbucks markets themselves as an ethical company, and their revenues have increased. Consumers can change the way companies operate, and they will continue to do so in the future, especially with the internet as an easy way to organize and collect information.

Since information is so readily available, companies cannot greenwash their products. Greenwashing refers to a sustainable or ethical image appearing in one aspect of the company, such as the products or campaigns, while the majority of the company is not following sustainable or ethical practices. A promotion may claim that the product is environmentally friendly, but the consumer will be able to go online and determine if the company itself is environmentally friendly, or if it has just created the product to attract consumers who are concerned about the environment. If the company is not sustainable or ethical, the consumer will not buy the product, and may start a boycott of your product.

Sustainable and ethical practices are beneficial for a company, as long as they are applied properly and fully. Consumers will support these practices, as long as they are reflected in all aspects of the company. However, refusing to acknowledge these practices will not be an option for much longer. Consumers consider brands that are not sustainable or ethical to be uncaring, making the company lose engagement with the consumer, or outdated, leading the consumer to find a newer, better brand. Sustainability is the issue of the future, and companies should consider it, before they are forced to act.

Resources:

Great Ideaz provides secure online collaboration workspaces where you can determine the best way for your brand to engage with your target audience. To see how we can help you, visit greatideaz.com.

Melissa Davis’s The Fundamentals of Branding

Suzanne Bletcher’s ‘Consumers Want Socially Responsible Brands’ – http://www.brandchannel.com/home/post/2010/03/30/Consumers-Want-Socially-Responsible-Brands.aspx

Trendwaching.com’s ’11 Crucial Consumer Trends for 2011′ – trendwatching.com/briefing/

Patrick De Pelsmacker, Liesbeth Driesen, & Glenn Rayp’s ‘Do consumers care about ethics? Willingness to pay for fair-trade coffee’ – http://findarticles.com/p/articles/mi_hb3250/is_2_39/ai_n29239405/