Marketing and selling in tough economic conditions:

Corporate responsibility and marketing strategy

CSR or CR is now a buzz word in corporate circles in Sri Lanka. Many organizations engage in CSR/CR activities in order to gain business mileage and build corporate brands. I have been asked many times my views relating to CSR/CR being used as a marketing strategy. In this brief article, I will endeavour to shed some light into this aspect.

Prasanna Perera, Marketing and Management Consultant, Chartered Marketeer, CIM U.K.

Q: Has CSR changed to CR?

Yes, that is correct. CR or Corporate Responsibility incorporates not only the social dimension but the community and environment aspects as well. Hence, CR is a better suited term.

Q: Why do organizations carry out CSR/CR activities?

There are certain organizations that carry out CSR activities, to build corporate image, reputation and goodwill. There is nothing wrong about it, as long as cheap publicity is not the motive. The purpose of CSR/CR is to provide a meaningful contribution to society, as a responsible corporate citizen. Hence, creating a PR blitz will create the wrong impression, about the motive. Other organizations carry out CSR activities, in the true spirit of the word i.e. to provide a service to society and the community. Hence they do not want undue publicity and commercial mileage.

Either way, CSR/CR should be carried out primarily to provide a service to society. If some publicity is obtained, it is of secondary importance.

Q: Can CSR be incorporated into the marketing strategy of an organization?

Yes, it is possible. CSR can be incorporated into the corporate and / or marketing communications strategy of the organization. CSR could be incorporated into the product strategy as well.

Q: How can CSR initiatives indirectly help in marketing products and services of a given organization?

Although marketing primarily targets customers and consumers, other stakeholders are indirectly targetted.

In the case of CSR, it is targetted at all stakeholders.

Hence, CSR activities are noticed and if appreciated, creates enormous goodwill for the organization and the products / services marketed.

This goodwill results in consumer loyalty and trust, and increased demand.

Q: Shareholders are generally against CSR initiatives, since they believe that unnecessary resources are utilized, at their expense. Your thoughts on this?

Yes, this is correct. Shareholders' prime motive is profit maximization and the dividend. Hence they do not see the need to engage in CSR activities.

However, if CSR initiatives are planned based on the organization's vision and mission, then shareholders will reap greater benefits in the medium to long term. This is as a result of the goodwill that is created and the enhancement of corporate brand value.

Q: How should an organization select CSR activities to engage in?

Any CSR initiative should be in-line with the vision, mission and values of the organization. For example if a company is operating in the knowledge business, then all CSR activities should be related to education. In this way, the company can easily reject CSR initiatives that are outside their core business.

Once the CSR initiatives are identified, all stakeholders must be educated and informed.

This will enable the company to execute the CSR initiatives without unnecessary barriers.

Q: Do CSR activities add value to the corporate brand or product brands?

In fact CSR adds value to both. Generally the corporate brand is enhanced, followed by the product brands. As the brand equity increases, customer loyalty starts to grow, resulting in high sales volumes and profits. The ultimate beneficiary is the shareholder. (In the medium / long term).

Q: Who is responsible for CSR/CR activities in an organization?

In larger organizations, CSR Managers are responsible. In the case of smaller organizations, Marketing Managers take responsibility. Either way, there has to be leadership and planning to carry out CSR activities effectively.

Q: Is CSR the same as the TBL (Triple Bottom Line)?

TBL refers to economic, social and environmental initiatives, that are engaged in simultaneously. It is currently a kind of balanced scorecard that captures in numbers and words the degree to which any company is or not creating value for its shareholders and for society. Since, TBL addresses social concerns, CSR activities can be aligned to it. However, CSR is not the same as TBL.

Q: Any advice to organizations engaging in CSR/CR initiatives

Do not carry out CSR activities in an ad-hoc manner. Develop a clear plan with budgets allocated. (This should include the objectives to be attained). All CSR initiatives should be measured to judge their effectiveness. Surveys amongst all stakeholder groups should be conducted. Do not advertise and make commercial value of CSR initiatives. Let WOM (word-of-mouth) do the talking, supported by limited PR initiatives.