Title: Task 10: CSR in the Marketplace
Course: Corporate Social Responsibility online > Section: Part 3: Strategic approch to CSR

/30 minutes/

Who would not be willing to buy from a responsible company rather than from an irresponsible one? The answer seems obvious. However, is this really the question that we need to ask ourselves? Unfortunately, this dilemma is not that easy, as it is difficult to distinguish between a responsible and an irresponsible company. The big question is rather:

How should firms respond, and how can they respond, to the the growing social, ethical and environmental espectations expressed by  customers?

Thus, in this section, we start by talking about consumer markets and not about financial markets or business-to-business markets. This is important to note, as decisions made by customers differ from market to market.

The marketplace is one of the most important arenas for considering CSR. CSR can be seen as commercially viable, because it attracts consumers and builds brands that consumers evaluate more favorably.

It is important to notice that CSR may earn a premium for business, yet consumers can also punish corporations, e.g. with consumer boycotts. A CSR-labeled firm is much more exposed to critics reagrding its social, ethical or environmental compliance.  Consumers may use the market power to ensure that a business acts responsibly (Crane, Matten & Spence 2014).

Noteworthy is also that firms can have different approaches toward CSR in the marketplace (Crane, Matten & Spence 2014):

ethical approach means that firms take their social responsibility to ensure that their marketplace activities offer appropriate benefits to customers
instrumental approach means that firms offer SR to the extent it is demanded by their customers (business case for CSR)

This also reflects the different strategic positions that may be adopted by a firm:

An ‘ethical niche’ where CSR sets the core of the product/service value. In an ethical market, customers have strong ethical preferences, so companies position products / services as socially responsible alternatives to conventional offerings. Also communications on this market focuses on CSR benefits rather than product / firm attributes.

‘Mainstream’ where CSR credentials are perceived as additional factors. In the mainstream market, ethical considerations are not the main selling propositions or focus of differentiation, so CSR is often added as an extra feature or passing fad. In this case, on the one hand firms are concerned about not being labelled as ‘greenwashers’, on the other hand firms express doubts over consumer willingness to pay a premium price for CSR attributes. In the 'mainstream market',  consumers’ CSR concerns are secondary to price, quality and convenience, therefore CSR 'signal' may not always attract them, especially when it goes with a premium price.

As an example of an ethical niche, we can use the Me to We Style, a company that is committed to providing ethically manufactured quality apparel for the socially conscious consumer. As the firm states, their product line is "domestically produced, sweatshop-free and made using certified organic cotton and bamboo":

https://www.youtube.com/watch?v=bJ-sYGYZZEE

Source: MeToWe, Me to We Style (2:56 min) [access 13.06.2020]. Derived from Youtube: https://www.youtube.com/watch?v=bJ-sYGYZZEE

As we have noticed, an organization that has built its name on CSR may be exposed to critics while braking its promise. This was also the controversy around the We Charity. You can read more in the following article about the critics and the firm's response.
https://www.queensjournal.ca/story/2018-10-18/editorials/wes-use-of-child-labour-reverses-social-progress/

As an example of using CSR as a differentiation feature in the mainstream market, we can use the H&M Conscious Collection 2019: Dress for a sustainable fashion future

https://www.youtube.com/watch?v=Xkx0mjFv-i4

Source: H&M, H&M Conscious Collection 2019: Dress for a sustainable fashion future (0:30 min) [access 13.06.2020]. Derived from Youtube: https://www.youtube.com/watch?v=Xkx0mjFv-i4

After watching both these commercials, please answer following questions:

What do you think about  both the commercials presented in this section?
Which message sounds more convincing to you? Please explain your point of view and tell us why you are or your are not convinced about each of these messages, i.e. from the Me to We and H&M commercials?
Please look also for other examples from the ethical niche market and the corresponding mainstream market. Please explain what aspects of customer decision making play a role in these contexts?

Please upload your answer, ca. 300-500 words, as an attachement to this assignment.

References:

- Crane A. (2014) Ethical Consumers and the CSR Marketplace In: A. Crane, D. Matten, and L.J. Spence (eds.), Corporate Social Responsibility: Readings and Cases in a Global Context, 3/e. Abingdon: Routledge, pp. 213-221.