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Ethical marketing: get your house in order

Interested in ethical marketing but don’t know where to start?
Helen Edwards & Derek Day outline the different strategies you can take to be a force for positive change

How many consumers does it take to get a corporation to change its lightbulbs? The cynical view of the current fad for ethics in the world of brands is that it is just a selfish reaction to consumer pressure, merely another way to keep profits flowing, all dressed up in the guise of saving the earth.

And there’s no doubt that the consumer pressure is there. In a 2007 Henley Centre survey, 48% of UK consumers say that buying ethically produced goods is important to them, although only 13% claim actually to do so. More worrying from the marketer’s point of view, though, is the power of consumer veto – with Henley quoting 32% of respondents claiming to have stopped buying from companies that act unethically. When even a no-frills brand like Primark starts to wear its conscience on its sleeve, in order to counter reports of sweat-shop labour in its supply chain, you sense that the commercial imperative to be seen as ethical is a strong one.

The Ethical Bundle

Ethical marketing involves the brand taking a stance, and taking action, on one or more of these issues:

Carbon emissions and climate change

Ecological sustainability and bio-diversity

Renewable resources and energy

Sound sourcing and fair trade

Recycling, waste minimisation, waste disposal

Employee rights and welfare

Animal welfare

Social issues such as health, obesity and diversity

Supply chain integrity – insisting that independent suppliers match the company’s ethical criteria

From the consumer’s point of view, the issues in the ethical bundle are not equal, and their perceived relative importance is apt to vary by country. Millward Brown’s 2007 Reputation Z survey, which involved 23,000 consumers in the UK and the US, pointed to remarkable differences: the No 1 concern for UK consumers was global warming; for US consumers it was obesity – and not a single environmental issue made it into the US top 10.

Nevertheless, many managers profess a genuine desire to effect change in the world, irrespective of commercial considerations. Stuart Rose, CEO of M&S, claims that the retailer’s recently-announced ‘Plan A’ eco-initiative was the result of reading Al Gore’s book, An Inconvenient Truth, on holiday last summer. It was a principled decision, one that was enthusiastically endorsed by the company’s 70,000 employees. If that accords with what consumers want, and drives profits too, well, that is a win-win.

In any case, the combined imperatives of consumer pressure and genuine belief will be needed to keep ethical initiatives on track when the going gets tough, and to foster the will to steer around the complexities of moral marketing. Those who’ve been at it longest, like The Body Shop and The Co-operative Bank, know that the pitfalls are there for the unwary. Chief among them is the Law of Unintended Consequences, which is the graveyard of good intentions. As Simon Williams, Corporate Affairs Director at The Co-operative Group, points out, “The rage at the moment is all for carbon reduction, but businesses that rush in to do that and abruptly stop flying supplies find that they unintentionally impoverish farmers in the developing world.”

Right from the outset, the questions can be bewildering. Should you focus on a single, relevant issue or go for the full Ethical Bundle (see panel)? Should you work alongside an ethical NGO partner or make all your decisions inhouse? Should you trumpet your morality, like M&S, or play it down, like the internet banking brand smile?

This article examines the merits of six emerging ethical strategies, evaluated against the moral and commercial criteria listed below. Conspicuous by its absence, though, is the most dramatic ‘strategy’ of all: making and selling less. As Craig Bennett, of Friends of the Earth, concludes: “The bottom line is we all consume too much stuff, and the best thing we can do is consume less – but that won’t appeal to business.”

Six Ethical Marketing strategies

The Shallow Gesture

What it involves: The tell-tale word is ‘committed’ – usually accompanied by only the vaguest notions of ethical probity. It’s a sign that the business has suddenly woken up to the trend, realised that it isn’t part of it, and panicked into some kind of grandiose, but ultimately empty, declaration of intent.

Who’s doing it: Aviva. Their new ad campaign declares that the company’s strategy for the future is “to make sure there is a future.” What will Aviva actually do about it? It’s “committed to becoming the first insurer to go carbon-neutral worldwide.” Brands like Motorola and American Express buying into Bono’s RED initiative also have the whiff of big corporations seeking a quick ethical fix.

Ethical impact: Low or hard to evaluate – since the promises tend to be vague and devoid of objective measures or firm dates.

Commercial impact: Probably negative, if consumers sense that the company is just knee-jerking.

When to consider it: Only if the barriers to a more robust, metrics-based initiative are insurmountable – on the grounds that doing something is better than doing nothing. But even then, it is wise to be suitably modest in communications about the likely global effect.

The Single Focus

What it involves: Choosing a single issue from the ethical bundle – ideally one that’s relevant to the business activity – and focusing energy and resources to make a measurable difference.

Who’s doing it: Ariel – with its ‘Turn to 30’ campaign. In this piece of nifty thinking so typical of P&G, nothing about the product changes, but usage might. As Ivan Sakidan, Spokesperson for Ariel, explains, “75% of the energy in the washing process is heating the water up; if we can persuade the consumer to wash at 30 instead of 40 or above, she still gets white clothes and does something for the environment.” P&G has spent £2 million on the campaign, and must take some credit for the 48% of people who, according to Mintel, now claim to wash at lower temperatures.

Ethical impact: Single, simple measures that affect large populations can have more effect than all the tinkering with packs and formulations combined. For example, the US decision to extend summer time by four weeks is expected to save the equivalent of 10,000 barrels of oil per day.

Commercial impact: Good. According to Professor Craig Smith, Professor at London Business School, consumers are motivated by ethical initiatives relevant to the brand sector, and can be suspicious of those that are unconnected. For P&G, the subliminal message is that the product is so good, you don’t need those high temperatures.

When to consider it: When commercial circumstances makes it too costly or unwieldy to change everything for a complete ethical makeover.

Ethical marketing: eight criteria to consider

Is the activity specific and measurable – with objective metrics and firm dates?

Are you prepared to be in it for the long term?

Will it make an impact at least proportionate to the size of the business?

Is it relevant to the brand and its sector?

Is it likely to be light on unintended consequences – and have you at least thought about what these might be?

Is it easily communicable?

Will it improve, or at least not be deleterious to, product quality?

Will it enhance the brand’s consumer appeal?

The Ethical Makeover

What it involves: Embracing the full ethical bundle. It means a complete, top-to-toe audit of the business and its environmental and social impacts, followed by an overhaul of every business activity to put ethical considerations at the heart of all decisions.

Who’s doing it: M&S, with its 100-point, five-year, £200 million, eco-plan announced in January 2007. What impresses about Plan A is that it is business-wide, that it has set measurable targets by stated dates, and that, with the help of Jonathan Porritt, Founder Director of Forum for The Future, it has gone from concept to roll-out in just four months.

Ethical impact: Potentially high.

Commercial impact: Almost certainly good, but by no means guaranteed to compensate for the initial, and ongoing, cost of the programme. Might force tough profits-v-principles decisions down the line; for example, M&S says it will clearly label foods that have been flown, but its ethical credibility would be enhanced by sacrificing profits and not offering those out-of-season fresh peas and kiwi fruit at all.

When to consider it: When there is genuine commitment from every corner of the business, and when you’re the first in your immediate competitive set to do so. Followers will be seen for what they are.

Democratic Ethics

What it involves: Offering an ethical option within the wider brand repertoire. Consumers can then decide for themselves whether they want the standard or the ethical variant.

Who’s doing it: This is a common strategy. The petrol-electric hybrid Prius is just one of many Toyota models, which include the gas-guzzling Land Cruiser; the Levis’ range now includes the Eco jean; and last autumn Nestle launched its fairly-traded Partners’ Blend coffee. A variant of the strategy is where a big corporation buys a niche brand to add an instant ethical option to its portfolio: Cadbury’s acquisition of Green & Black’s is an example.

Ethical impact: This one throws up an ethical conundrum. Most of the ethical options are vastly more expensive than the comparable, standard offers. Green & Black’s Fairtrade, organic cocoa powder, for example, costs over three times as much, per 100g, as Cadbury’s Drinking Chocolate. Buying ethically is increasingly the privilege of the well-off, with the poorest in society totally unable to take part. And where’s the ethics in that?

Commercial impact: Variable. There is a ten-month waiting list for the Prius – but Nestle were cagey about the performance of Partners’ Blend. It seems the halo effect is what these companies are busily achieving.

When to consider it: If you believe that ethical decisions are those of the consumer alone – and not for your business to edit in advance – then this is an honest, and commercially viable, approach. It would help, though, if ethical and standard offers could be much closer in price.

Communications Only

What it involves: Putting the record straight about your existing business offer – making sure consumers know the facts, and combating any negative impressions that might be out there about the ethical record of the brand or its sector.

Who’s doing it: easyJet. Faced with criticism aimed at the sector, easyJet has been careful to communicate the environmental virtues of its business model, without overstating the case. Its ads have focused on the fuel-efficiency of its young fleet, and its high load factors, resulting in vastly lower emissions per passenger kilometre than the industry average. But it might want to reconsider that slogan – Come on, let’s fly.

Ethical impact: A communications-only approach implies no substantive change in the operation of the business. But information can help consumers make better choices, so some kind of ethical impact is possible.

Commercial impact: Depends on the quality of the communications. If it is too defensive, or claims that business decisions were taken for ethical reasons when they were in fact commercially-motivated choices that just happened to be ethically sound, the strategy could backfire.

When to consider it: When there are question-marks over the brand or its sector; when your ethical credentials are already stronger than those of your competitors, but you know, or sense, that consumers are unaware of the fact.

Deep Ethics

What it involves: This is less a strategy than a way of business life: the road travelled by the brands – like Innocent, Howie’s, People Tree, The Body Shop – that have been built from ethics up. Its two hallmarks are willingness to sacrifice profits for principles, and a continual hunger to move the ethical debate forward.

Who’s doing it: A comparison between fair-trade coffee shop Progreso and Starbucks shows the difference between deep and standard business ethics. Progreso goes beyond paying fair prices to producers, to make them active stakeholders in the business. This willingness to help the developing world move up the value chain is precisely what scares even the most ethically-savvy big corporations. Hence, Starbucks is locked in a legal battle to prevent Ethiopian farmers from owning trademarks to their own regional coffee variants.

Ethical impact: These brands are often smaller, niche players – so the direct environmental and social impact might be modest; but their force as change-agents and motivators of larger corporations makes them hugely influential.

Commercial impact: In the short term, profits can dip as these brands make sacrificial decisions. The Co-op, for example, wants to edit consumer choice by refusing to stock light bulbs that are not energy-efficient, running the risk that costumers will go elsewhere. In the long term, though, this may well be the business model of the future.

When to consider it: When it’s your own brand, your own life, your own business and your own money.