Dr. Eugenia Jones signing in for this month’s look at biotechnology and medical device marketing for the Technology Marketing Center.
I love the change of seasons and nothing marks winter better than the peal of bells as the Salvation Army rings in the holiday seasons and asks, without uttering a word, for your spare change to help those in need. Like many of my fellow Americans I also marked the change in seasons by traveling over the Thanksgiving holidays. Heading back to the Midwest I found myself on a long layover in the airport lounge so I picked up a copy of the LA Times, and flipped to the business section where there was a lengthy article on charity and marketing by Michael Hiltzik. Since philanthropy, innovation and strategic marketing are three of my favorite topics the LA times article has prompted me to post another article about corporate philanthropy.
The LA Times article is one of many recent commentaries questioning the motives behind corporate responsibility and in particular philanthropy. These articles warn readers to be skeptical, corporations are out to make money, and they offer a few examples of how corporate giving fails, finishing with the sage old warning caveat emptor. News organizations focus on the topic because corporations taut their responsible behaviors as a means of positioning themselves and their products in the marketplace. Socially responsible brands become associated with credibility, sustainability, and are seen by consumers as active members serving a community rather than outside forces acting on a community. Increasingly consumers expect the products they purchase to be “socially responsible” and they are willing to pay a premium for that behavior: if you have doubts drop by a grocery store produce section and price conventional versus organic goods.
That’s all well and good for products sold direct to consumer but does this hold true for business-to-business sales as well? To answer this question you need look no further than the Dow Jones Sustainability Index or CR’s 100 best Corporate Citizens rankings to understand the impact of good citizenship. Companies are ranked according to behavior in areas such as governance and finances, employee relations and philanthropy, as well as environment, climate change, and human rights. Top scoring companies are sound investments because they are more likely to maintain their economic performance; behaviors which also make them ideal partners, suppliers, and/or consumers of your products. For example if I manufacturer drug-releasing stents (see earlier post) I am better off partnering with Abbott Laboratories than with Pfizer who was recently fined $2.5 billion, by the U.S. DOJ for illegal marketing practices and who will likely face difficulty selling products to my target market. Alternatively, if I supply raw materials to Pfizer and products are pulled from the market or lose market share, the company’s demand for my goods will be lower. In addition to the economic impact, vetting a vendor’s social responsibility will have a direct impact on your company’s sustainability rankings.
Many corporations are hiring executive level corporate responsibility officers (aka as corporate compliance officers) to integrate sustainability into their business practices and strategies. Corporate “social responsibility” is what happens when you vote with money. If you or anyone you know has ever boycotted a product because it is made in factory that uses child labor, or pollutes groundwater, or refuses to allow unionization then there was likely an alternative product in the same or adjacent markets, whose producers were better behaved, and those producer will eventually use this information to differentiate their products and gain market share.
So why the proliferation of articles critical and cynical of corporate responsibility practices? We could let ourselves off the hook, throw up our hands, and insist that if it involves money there will always be the conspiracy theorists who suspect malicious intent, but I think we miss the point. Take for example articles bemoaning the vast sums of money spent by companies on the Product Red advertising campaign in contrast to the amount of money given to AIDS charities as a result of the campaign. The corporations involved failed to deliver the message in the correct context allowing the nay-sayers to frame a discussion using false pretenses. In the beginning of the campaign the following message should have been conveyed:
As a company concerned about AIDS we are going to use part of our normal advertising budget to not only promote our products but to increase awareness about this deadly disease, and to help all of us fight AIDS we will donate a portion of the profits from products specially marked with a red ribbon to charities fighting AIDS.
In other words, we were going to spend this money anyway, so we decided we would rather do it while doing something good for our community, like what you do when buy shoes from companies that don’t use sweat shops. Now when journalists publish an article about corporate charitable campaigns they can focus more on the charities and the contributions than the budget.
As you work on next year’s strategies don’t forget to plan your philanthropic activities. Until next year.
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