Socially responsible
companies like the Gap are seeing an increase in sales.
Research has shown that public perception of companies' social responsibility and irresponsibility is increasingly having an effect on consumer buying habits. As more companies see a direct link between social responsibility and the bottom line, they are increasingly looking for ways to "do the right thing" and to let consumers know about it.
Social Responsibility
Researchers Lois A. Mohr and Deborah J. Webb define corporate social responsibility (CSR) as a company's commitment to maximizing a positive impact on society while reducing or eliminating harmful or negative effects. How a company's policies and practices impact its workforce, the environment, local communities and society at large can be judged by the public as either socially responsible, neutral or irresponsible.
Consumer Attitude
According to the business consultation firm, Forrester Research, most consumers are concerned enough about the environment and the community in which they live that they weigh these considerations when making purchasing decisions. In fact, a portion of the consumer base will pay extra for products or services from companies they believe are acting responsibly. This small but dedicated group earns more money than the average consumer and tends to be more brand-loyal. According to the website Trendwatch, consumers are increasingly paying attention to businesses' relationships with charities and ecological groups. Companies are thriving "by making it easy for consumers to be environmentally responsible or philanthropic," says Trendwatch.
The Gap
An indicative case of "doing well by doing good" is clothing retailer The Gap. In the sales doldrums for a number of years, Gap Inc. is showing a strong rebound by appealing to young and progressive customers with its social and environmental awareness programs. In March 2010, Gap Inc. saw a 12 percent increase in sales during March 2009, with all its brands -- Old Navy, Gap and Banana Republic -- showing growth. The Gap Inc. is frequently named one of "Corporate Responsibility Magazine's" 100 Best Corporate Citizens and received the Ethisphere Institute's "World's Most Ethical Company" honor in 2010.
Activism and Punishment
According to Georgia State University researcher Karen Saghini, socially responsible branding is often the deciding factor when quality and price are equal. More consumers view themselves as activists and are using the power of their wallets to reward or punish companies. Consumers also tend to distance themselves from non-socially responsible brands by boycotting or making negative comments about the company or product. Social responsibility researcher Carol Cone said in a 2008 interview that she believes the consequences for corporate social irresponsibility are more severe than they have ever been.
