Trick or Treat: How Corporate Social Responsibility Violations affect Marketing EffectivenessAbstract
Corporate Social Responsibility (CSR) has become a major topic in business practice and business research. Companies nowadays start to gain sustainable profits by producing products, which exert a positive impact on society. On the other hand companies who violate against the major and established ethical believes of their customers face severe risks. Several actual examples demonstrate how Consumer Boycotts and Anti Consumption Campaigns can harm the immediate sales and how on-holding public protests can have an enduring negative impact on the brand image and on market share.
Marketers who have to react to such crisis scenarios have to be aware, that beside these direct negative effects a CSR crisis may also affect the effectiveness of the established marketing instruments. In consequence price reductions or advertising campaigns during or after a crisis which base on the estimated pre crisis figures will be less effective and a brand will be more vulnerable for any marketing activities of it’s competitors.
Our study investigates how a CSR crisis moderates the elasticity of price and product performance. To deliver broader and more generalizable result we incorporate product category and the question of guilt (in case of multiple market participants) as second order interaction effects.
Using an innovative conjoint approach, which incorporates social pressure, our studies shows that that consumers become totally price inelastic. Ethical aspects become the most important choice attributes and further decrease the impact of product quality on choice behavior. Additionally our results suggest that marketers facing a CSR crisis have to rethink their market segmentation due to the heterogeneous ethical believes of their customers. Surprisingly we find that these effects do not only occur for crisis-affected marketers but also for non-affected market participants.Method The so-called Barter Conjoint enables the participants not only to choose between several different stimuli, but also allows for communication and thus interaction between individuals. In addition Barter Conjoint also allows participants to observe the behavior of all other individuals in the same study and therefore provides real social pressure.
Barter Conjoint was developed to obtain better and more data from conjoint participants. Furthermore, the authors could show that Barter Conjoint delivers comparable or even better results than ordinary Choice-Based-Conjoint approaches.
Data gathering during a Barter Conjoint combines classic barter markets with traditional conjoint approaches. Participants are assembled into trading-markets (differing in size according to the individual conjoint and stimuli design). Each subject is endowed with an individual stimuli and a specific amount of money. At the start of the market every participant can observe with which products the other market participants are endowed with. According to his or her own preferences a participant can then decide whether he or she wants to make a trading offer to other participants in the market. Preference measurement takes place in a round-based approach.
The study is implemented through a web interface based on Java-Script, which was developed by the authors. Data was assembled in a single Database (MySQL) on a Webserver. With this implementation, studies can be conducted on any computer that has an Internet connection.