People expect companies not only to perform the traditional function of delivering goods and services to all people who are willing and able to pay for them but also to help society solve its problems. If a company’s involvement in social problems is seen as desirable, the organization is socially responsible. Any company should identify the needs of consumers and find a way to meet or exceed their expectations. Marketing aims to meet the expectations of customers, however, the increasing concern over the impact of marketing on consumer’s choices reveals that the needs of customers are not met. Customers are motivated to buy the goods they really do not need or want. Consumer rights are an important issue today because marketing serves to meet the needs of shareholders rather than customers.
Marketing, Consumers’ Expectations and Rights
Marketing is a process by which customers obtain what they need and want through exchanging value and products with others. Marketing is a philosophy; it makes the customer the key point of all business activities. Marketing is much broader than selling because it is a specialized activity aimed at meeting customers’ expectations. In simple words, marketing is focused on customer orientation and satisfaction of needs and wants. Marketing should produce a win-win situation by offering a product that meets the needs of customers and generating healthy profits for the company. Thus, successful marketing achieves both goals: customer wants are met and profit is generated. The process of marketing starts with the discovery of the customers’ wants. The problem is that many marketers jump to outbound marketing (advertising and promotions, for example) prior to identifying the needs of potential customers. As the result, companies end up trying to sell products customers really do not want or do not need.
Customer expectations are the wants, needs, and ideas of customers about a specific service or product. Expectations are influenced by customers’ perception of the product/service created by previous experience, advertising, or branding. Customer satisfaction is achieved when customer expectations are met. Special attention should be devoted to branding. The brand is an expectation to be fulfilled. However, the problem is that the promise is not always fulfilled at the moment of product purchase. At this point, the violation of consumer rights becomes the central issue. If consumers are offered inferior products, if goods are unsafe and worthless, if the consumer is not informed, if health and safety are threatened, the rights of consumers are violated.
John F. Kennedy equated the rights of American consumers with the national interest. He argued that American consumers have four fundamental rights: the right to safety, the right to choose, the right to information, and the right to be heard. Customers have the right to be protected against the marketing of products that can lead to hazardous life. Moreover, the right to choose implies access to a variety of products and services at competitive prices. Kennedy noted that the right to information guarantees protection against fraudulent and misleading information and advertising. Finally, consumer interests must receive full consideration in governmental policies. These rights serve the interests of American and global consumers. The Consumer International (CI) organization expanded these rights to include representation, redness, consumer education, and a healthy environment.
The Concept of Corporate Social Responsibility (CSR)
Corporations, national and international companies should be responsive to customer needs by creating products of high quality and marketing them in an ethical manner. Undoubtedly, the goal of any corporation is to act on behalf of its owners (shareholders). In other words, corporations should consider the interests of society by taking responsibility for their activities and their impact on customers, suppliers, employees, and other stakeholders. Corporate Social Responsibility goes beyond statutory obligations and organizations should are expected to take voluntary steps to improve the quality of products, life for employees as well as for society at large.
CSR is a part of the strategic planning process. The reasons to focus on social responsibility are related to human and environmental responsibility rather than self-interest and profit orientation. Some critics argue that there is no place for social responsibility in business because companies operate to gain profits and satisfy shareholders. Thus, corporate social responsibility contradicts the purpose of core business operations. At the same time, many companies believe that putting in place social projects is a tool to raise their reputation with the public. From this perspective, corporations integrate CSR into marketing with the hope to maximize profits rather than advance the interests of society.
The Importance of CSR
According to Il-Chung Whang, illegal and ethically questionable marketing practices are widely applied by modern businesses (19). For example, an automobile purchaser found that the car he bought has defective parts and that the wrong size of engine has been installed. The seller refused to accept responsibility for correcting the stated deficiencies until the car owner publicized the case through mass media. This case proves that there is incongruence between what the companies say and what they actually do. In other words, managers talk a lot about the importance of social responsibility but do little about it. While the majority of managers emphasize the ethical elements in daily practices, the small-business owners do not pay any attention to social responsibilities because they assume that society does not recognize their economic and social contributions.
Over the past few years, businesses have displayed an increased level of enthusiasm for corporate social responsibility. The research suggests that corporate social responsibility is the best instrument to enhance the legitimacy of the company among stakeholders and to develop a positive social image. As suggested by Maignan, there are three types of motivation driving the commitment to CSR (498). First, CSR is viewed as a tool to help achieve performance objectives defined in terms of sales volume and profitability. Second, businesses are compelled to adopt social responsibility initiatives to conform to stakeholder norms defining behavior. Third, some companies are self-motivated to have a positive impact. In any case, organization members should express social responsibility as a central and distinctive value to the company.
There are three types of corporate social responsibility processes: issues management, environmental management, and stakeholder management (Maignan 499). Once CSR is implemented throughout the organization, these processes contribute to addressing stakeholder demands successfully. Stakeholder issues affect organizational activities. Stakeholder groups include employees, customers, supplies, government, shareholders, and members of communities.
Examples of CSR
The company Kronenbourg aims at the achievement of high product quality as one of its social responsibility commitments (Maignan 504). The displays of General Motors underline its concern for driving safety and present diverse consumer production activities and education programs. AstraZeneca expresses its commitment to equal opportunity giving equal chances in internal recruitment and promotion programs. All employees regardless of race, gender, and age are offered equal opportunity; individual success is based solely on individual performance. The company Shells expresses its concern for employee safety by presenting safety management programs.
Company Smith & Nephew expresses its social responsibility commitment to stakeholders including a commitment to communicating timely information about its activities and results in order to properly reflect investment opportunities in the company. Nordstrom, for example, expresses its dedication to giving equal opportunities to suppliers and presents its program aimed at encouraging minority suppliers. Other initiatives include educational programs or the protection of the environment, and activities that may also result in the increased well-being of the community (Maignan 505).
In 2001, for example, Procter and Gamble scored high in the category of service to international stakeholders. Procter and Gamble have been generous in “international grants and gifts including earthquake relief in Turkey, community building projects in Japan, plus contributions for schools in China, school computers in Romania, special education in Malaysia, and shore protection in France” (Wagner 16). Hewlett-Packard, IBM, The St. Paul Companies, Fannie Mae, Sun Microsystems, Motorola, and Polaroid followed P&G in this rating. The term ‘corporate responsibility is coming into broader use these days as companies grow aware that responsibilities are beyond profit generation.
Benefits of CSR
It is the responsibility of business to reflect the values and desires of society as efficiently as possible in its services and goods. Any company that does this well is rewarded by customer support and brand loyalty (Berkhout 16). In other words, corporate social responsibility serves to reinforce profit-making responsibility. One of the challenges facing an organization that wants to operate under the principles of corporate social responsibility is deciding on how to balance social and environmental responsibilities with economic functions to generate profit. Nevertheless, the cost of being socially and environmentally responsible does not overweigh the benefits. It is worth adding that rules and norms imposed by society and government determine what constitutes acceptable corporate behavior. Thus, corporate social responsibility is a reflection of society’s (potential consumers’) expectations.
If a company is responsive to society’s expectations, the economic feasibility of CSR increases. Moreover, there is a strategic value in CSR that is beyond improved public relations. For example, employee development, waste reduction, improved environmental performance, and donations to local community groups are examples of CSR actions that make any company more competitive in the long run. The goal of CSR is to create and maintain higher standards of living while preserving the profitability of the corporation, for stakeholders within and outside the company. Henry Ford, for example, noted 100 years ago that employees should be treated well and paid a wage that allowed them to buy the products they made (Berkhout 16). Thus, Ford believed that happy and productive employees were the critical success factor.
In addition, consumers need to be aware of the company’s social responsibility commitment. Building awareness is the key purpose behind cause-related marketing. A company promoting that a percentage of sales goes to support a specific non-profit organization has more chances to gain customer loyalty compared to a company that is not involved in any local activity. Failure to inform the potential consumers on social involvement may not bring positive results, though.
Concluding Notes
Relatively little is known about corporate social responsibility management by international companies. As the result, multinational enterprises tend to fail to respond effectively to issues of primary importance in local markets. The consumer boycotts as experienced by Nestle in Africa and the child labor abuse by Nike in Asia are among the well-known examples of how failure to address CSR may lead to extremely negative outcomes. Leaders of corporations should reconsider the relationships patterns between society and business. CSR implies a change in strategic planning; it offers a strategic opportunity accompanied by a set of obligations.
Corporate social responsibilities and stakeholder demands require international companies to respond to both local issues and global issues. As research reveals, some companies take advantage of active social involvement while others are less motivated to participate in local activities. Moreover, research supports the assumption that commitment to CSR exceeds associated costs. Thus, the failure to manage CSR strategically has serious economic consequences for the firm. Effective management of CSR reduces risk and brings significant benefits to the company. Social involvement results in additional competitive advantages. In addition, CSR is a source of differentiating innovation.
Strategically managed corporate social responsibility is relevant to multinational enterprises’ performance. However, CSR requires companies to select strategies contingent upon the demands of stakeholders. Social responsibility involves questions of ethics, economic costs, legality, and management judgment. In general, a socially responsible company is perceived as ethical. Social responsibility should be employed both as a marketing tool and an ethical practice.
In conclusion, corporate social responsibility is not a new concept in the business world; however, very few companies are willing to apply it voluntarily. Taking into account that marketing is aimed to meet customers’ expectations, strategic CSR contributes to creating a positive company image and stronger brand loyalty. The problem is that current marketing strategies are aimed at motivating the purchase of products/goods/services the customers do not want and do not need. Corporate social responsibility helps companies define consumers’ expectations and respond to them more effectively. Research reveals that companies that are not actively involved in local activities are less likely to generate additional benefits.
The world of the business rests on the fundamental idea that marketing should generate benefits while the interests and rights of consumers are shifted to the second place. Corporate social responsibility helps to balance between the rights of consumers and the need to increase sales. The rights of customers are widely ignored by the majority of corporations while the integration of CSR into strategic planning motivates the analysis of customers’ needs and wants.
Works Cited
Berkhout, Tom. “Corporate Gains: Corporate Social Responsibility Can Be the Strategic Engine for Long-Term Corporate Profits and Responsible Social Development.” Alternatives Journal 31.1 (2005): 15-20.
Maignan, Isabelle. “Corporate Social Responsibility in Europe and the U.S.: Insights from Businesses’ Self-Presentations.” Journal of International Business Studies 33.3 (2002): 497-515.
Wagner, Cynthia. “Evaluating Good Corporate Citizenship.” The Futurist 35.4 (2001): 16.
Whang, Il-Chung. “Awareness of Social Responsibility by Korean Managers in Marketing Practices: A Sociocultural Explanation.” Journal of International Studies of Management & Organization 28.4 (1998): 19-25.