CSR and Brand Equity
CSR and Brand Equity
CSR and Brand Equity
The Impact of Corporate Social Responsibilities Marketing Activities on the Brand Equity
a.bayoumi (S0900-498)
The German University in Cairo
Abstract
New type of customers start to exist in the market as a result of the continuous increase of
societal concern about environmental issues, accordingly firms creates new type of
communications to interact with such phenomenon. This type of communication is known by
corporate social responsibility (CSR) marketing strategy. The purpose of this study is to explore
the impact of CSR marketing activity on the brand equity of the firm applying this type of
marketing strategy.
Keywords: Corporate Social Responsibility, Sustainability, Strategic CSR, Sustainable
Marketing, Environmental Marketing, Brand Equity.
This paper will try to find out if there is a positive relation between corporate social
responsibility marketing activities and the brand equity. In addition; this paper is structured as
follows. First, we review prior literature on CSR and its main sources, then literature on the
Brand Equity. Second, we explore the relation between applying corporate social responsibility
and the brand equity. Finally, we will describe the conceptual frame work along with the thesis
question, along with a final conclusion of a semi-structured interviews held concerning this
research topic.
Literature Review
(1979), in which he mentioned that there are four categories for CSR activities, Economic
responsibilities; the most important social responsibility of business in the production of goods
and services and the generation of profits, Legal responsibilities: (that shows the corporate
compliance with regulation, Ethical responsibilities a set of societal standards wider than the
legal ones, and finally philanthropic responsibilities that shows the voluntary activities such as
charity donations done by the corporate (Figure 1).
Figure (1)
from the management literature. In the following section we will outline the main viewpoints
that come out of this generous literature (Maignan, 2006).
CSR as social obligation:
As cited by Maignan, 2006; the first standpoint was initiated by Bowen (1953), who
defined CSR as the obligation "to pursue those policies, to make those decisions, or to follow
those lines of action which are desirable in terms of the objectives and values of our society".
The view of CSR as a social obligation has been promoted in later conceptualizations
(e.g., Carroll 1979). Carroll (1997) emphasized different types of social obligations can be
noticed: (a) legal and ethical obligations (b) economic obligations, and (c) philanthropic
obligations.
CSR as stakeholder obligation:
A number of scholars have challenged that the term of social obligation is too broad to
smooth the progress of the effective management of CSR in the mid- 1990s. As Clarkson (1995)
mentioned, society is at "a level of analysis that is both more inclusive, more ambiguous and
further the ladder of abstraction than a corporation itself". Clarkson (1995) and other scholars
(e.g., Donaldson and Preston 1995; Wood and Jones 1995; Jones 1995) argue that businesses are
responsible only toward those who directly or indirectly affect or are affected by the firm's
activities. These are simply called stakeholders and can be regrouped in four main categories (a)
organizational (shareholders, suppliers, employees, customers), (b) community (residents, special
interest groups), (c) regulatory (regulatory systems, municipalities), and (d) media stakeholders
(Maignan, 2006).
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The CSR concept is regarded as a powerful tool for achieving sustainable competitive
profit and also for achieving enduring value for the investors, stakeholders. CSR can be used as
an opportunity for businesses, financial investors, and society. Proper implementation of CSR
practices can shape the perception of customers, investors, local communities, governments,
suppliers and competitors. Many multinationals, like the Tata Group, ITC, DuPont, etc., have
managed to create a better social image in society by providing a better and healthier work
environment to their employees and by providing the best services for their entire society
(Sharma et al, 2011).
As cited by (Sharma et al, 2011), the implementation of CSR practices calls for a
strategic framework. And in order to put together the different perspectives of CSR design,
planning, and implementation into one single strategic framework, we need to develop a
preliminary model that helps in testing of all these practices, also suggests the required changes.
Moreover; the organization shall align its CSR goals and its decisions along with its overall
targets and strategies so that having corporate social responsibility becomes a natural in a day to
day activity (Maon et al., 2008). There are various forces that also affect the implementation of
CSR, as outlined in Figure 2.
Gov. Policies
Philanthropy
Introduction of CSR
MNCs
Ethical Consumerism
Figure (2)
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In addition, Sharma et al added that when the businesses are implementing CSR, they
will gain new business opportunities and may be business partners. Also the firms social image
and reputation will be enhanced. This enhanced reputation will catch the attention of more
customers, which in turn will increase profits. Finally, firms can cut costs and make good
relations with stakeholders.
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overall changing business environment, which include the issues of globalization, image and
reputation; National and supranational governments have been dynamic in promoting CSR. For
example, The European Union promotes CSR in all the member states, in addition the UK
Government has a clear ambitious vision for CSR.
Exploring the links between CSR and marketing; Maignan and Ferrell (2004)
summarized the work of marketing researchers in examining consumer reactions to CSR
initiatives, the importance of CSR among marketing practitioners and the marketing benefits
achieved as a result from corporate social activities. They also explored some specific
dimensions of CSR such as the protection of the environment and the support of charitable
causes (Jones et al, 2007)
Moreover; a continuous growing interest in the ways by which CSR can develop and
enhance brands and in what Blumenthal and Bergstrom (2003) have defined as the convergence
of branding and Corporate Social Responsibility. Bronn and Vrioni (2001) emphasizes that
having a pro-social agenda means having a powerful marketing tool that can build brand image
and brand equity sector , in addition Middlemiss (2003), for example, suggests that CSR is
taking centre stage to provide more sustainable, long term brand value, while Yan (2003) argue
that CSR marks the difference between brands that have captured the imagination of
tomorrows consumers and those that are proving to be causalities. (Jones et al, 2007)
As cited by Jones et al (2007); Ogrizek (2002) has clarified that CSR branding is of
paramount importance to the financial sector while for the retail sector Girod and Michael
(2003) have emphasized that CSR can be considered a key tool to create and sustain
differentiated brand names. Moreover; Blomqvist and Posner (2004) argued that there are three
ways to integrate CSR with marketing namely the integrated, the selective and the invisible
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approaches. The first sees the brand and CSR operating synchronously and it works most
successfully where responsible practices are seen to be a key in driving brand preferences. In the
second CSR is said to manifest itself in much targeted ways and that it can provide
differentiation in a crowded marketplace. Third, while CSR plays an important strategic role
within the company it receives little attention in external communications.
Brand Equity
Brand equity is one of the most significant marketing concepts since the 1980s. Several
definitions for brand equity have been presented over the years, and most of them are consistent
with Farquhars (1989) definition as he defined brand equity as the value added to the product by
the brand itself. (Srinivasan et al, 2005: 1433)
In addition, Aaker (1991) defined brand equity as a set of brand assets and liabilities
linked to a brand, its name and symbol that add or subtract from the value provided by a product
or service to a firm and to the firms customers (as cited by Chen, 2010: 310), Moreover, Keller
(1993) clarified that the differential effect of brand knowledge on consumer response to the
marketing of a brand is totally created by brand equity (as cited by Chen, 2010: 310), In addition,
and according to (Mudambi et al, 1997), brand equity also can be defined as the total value
added by the brand to the core product, thus industrial brand equity is the value added by the
brand to the industrial buyers (as cited by Lai et al, 2010: 459)
As per Chen (2010: 310), there are two perspectives in defining brand equity: the first is
the consumer perspective that clarifies the value of the brand to the consumer (Aaker, 1991;
Keller, 1993; Rangaswamy et al., 1993), the second perspective is the financial one which
highlights the value of a brand to the firm (Simon and Sullivan, 1993).
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Creating brand equity is achieved when buyers perceive meaningful variation among
different brands in a product category; this clarifies the importance of differentiation for the
business. Brand equity has some components that shall be taken into consideration; these
components are brand awareness, brand associations, brand loyalty, brand satisfaction and
perceived quality (Lai et al, 2010: 459).
Brand equity is a major marketing asset (Ambler 2003), which can provoke a unique
relationship differentiating the link between the firm and its stakeholders (Hunt & Morgan 1995)
and encouraging long-term buying behavior. Clear understanding for brand equity, then investing
to build up this intangible asset increases the competitive advantage and drives brand wealth
(Yoo et al. 2000).
As cited by Christodoulides (2009); previous research recognized a positive effect of
brand equity on the following: Consumer purchase intention and consumer preference (CobbWalgren et al. 1995); consumer perceptions of product quality (Dodds et al. 1991); consumer
evaluations of brand extensions (Aaker & Keller 1990; Rangaswamy et al. 1993; Bottomley &
Doyle 1996); shareholder value (Kerin & Sethuraman 1998); consumer price insensitivity
(Erdem et al. 2002).
In addition; Marketing theorists hypothesize that market-based assets, like brands, may
help firms not only to increase returns but also may help to decrease the risks linked with these
returns and accordingly increase their value (e.g., Fornell et al. 2006; Srivastava, Shervani, and
Fahey 1998).
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According to Jones (2005), brand equity is derived from co-creative interactions between
the brand and its stakeholders, this means the more satisfied stakeholders, the more valuable
brand equity, and he considered socially responsible behavior as one of the most proposed
expectations that will affect brand equity (as cited by Lai et al, 2010: 460), In addition and as
indicated by Smith and Higgins (2000) the brand manager uses consumer concern for business
responsibility as a means for securing competitive advantage.
Thesis Statement
Following the same logic, we can deduce that there is a positive relation between the
CSR marketing activities and the brand equity, especially with the increase of the societies
concern about environmental issues.
H1: Firms green marketing activities positively affect the firms brand equity.
CSR Marketing
Activities
Brand Equity
Brand Loyalty
Brand Awareness
Perceived Quality
Brand Satisfaction
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In this research we are going to study the relationship between the CSR marketing
activities as an independent variable and the brand equity as a dependent variable, In addition we
are going to answer the following research question:
Shall firms focus of CSR marketing activities in order to increase its brand equity?
Answering this question is a value added to the literature, which doesnt directly answer
it, and it will help marketing managers to identify their strategy in increasing their companies
brand equity.
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Conclusion
Among all the eight interviewees; around 60% of them are concerned about social
activities done by any of the suppliers they are dealing with, and also they have no problem to
pay a little bit some extra costs for the products just to support suppliers sustain such campaigns,
and help in changing the overall mindset of consumers toward socially responsible attitudes of
corporate. Moreover; 40% feel not only satisfied but loyal for such socially responsible brands,
have a perceived high quality about what they offer, and finally they feel delighted once dealing
with or buying such brands.
CSR practices are becoming necessary for the endurance of every firm. As is evident
from previous literature, foreign multinational firms are implementing CSR practices at higher
levels; also customers prefer to buy their products more than the products produced by
companies who dont apply CSR activities. This finding suggests that there is a great
responsibility for firms to put a hand and adapt their strategies accordingly. The CSR marketing
activities will help firms to improve their social image and market reputation and accordingly
their brand equity.
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References
McWilliams, A., Siegel, D. S., & Wright, P. M. (2006). Corporate Social Responsibility:
Strategic Implications. Journal Of Management Studies, 43(1), 1-18.
Branco, M., & Rodrigues, L. (2006). Corporate Social Responsibility and Resource-Based
Perspectives. Journal Of Business Ethics, 69(2), 111-132.
Chen, Y. (2010). The Drivers of Green Brand Equity: Green Brand Image, Green Satisfaction,
and Green Trust. Journal of Business Ethics, 93(2), 307-319. doi:10.1007/s10551-009-0223-9
Lai, C., Chiu, C., Yang, C., & Pai, D. (2010). The Effects of Corporate Social Responsibility on
Brand Performance: The Mediating Effect of Industrial Brand Equity and Corporate Reputation.
Journal of Business Ethics, 95(3), 457-469. doi:10.1007/s10551-010-0433-1
Siegel, D. S., & Vitaliano, D. F. (2007). An Empirical Analysis of the Strategic Use of Corporate
Social Responsibility. Journal Of Economics & Management Strategy, 16(3), 773-792.
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Chamorro, A., & Baegil, T. M. (2006). Green marketing philosophy: a study of Spanish firms
with ecolabels. Corporate Social Responsibility & Environmental Management, 13(1), 11-24.
doi:10.1002/csr.083
Srinivasan, V. V., Chan Su, P., & Dae Ryun, C. (2005). An Approach to the Measurement,
Analysis, and Prediction of Brand Equity and Its Sources. Management Science, 51(9), 14331448. doi:10.1287/mnsc.1050.0405
Peter Jones, & Daphne Comfort (2007). Marketing and Corporate Social Responsibility within
food industry. British Food Journal
Attachment 1
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Brand equity
Brand loyalty
1. Products and services of this brand are the first choice of us
2. We feel ourselves loyalty to this brand
3. Even with many choices, we will not choose alternative brands
Perceived quality
1. This brand is of very good quality
2. The likelihood that this brand will function well is very high
3. The likelihood that this brand is reliable is very high
Brand awareness/association
1. The name of this provider is well known in our industry
2. We can recognize this brand among competitive brands
3. In comparison to other providers, this company is a leading brand in the industry
4. We have no difficulties in imagining this brand in mind
5. We can recall some characteristics of this brand
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Brand satisfaction
1. Products and services of this brand usually meet our expectations
2. Products and services of this brand are at the desirable level
3. Overall, we are very satisfied with products and services of this brand
4. Products and services of this brand always bring happiness and delights to us
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