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Effect customers perception brand image of fmcg companies marketing essay

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In the midst of rapid globalisation and increasing access to information, companies are acknowledging the importance of being socially responsible. Corporate Social Responsibility (CSR) broadly includes social, ethical and environmental responsibilities towards the society (Polonsky and Jevons, 2009). It refers to the ‘ triple bottom line’, referring to expanding the traditional meaning of organisational success to accommodate ecological and social performance.

Research shows pursuing a socially responsible mindset leads to numerous benefits (Butler, 2006; Burke & Logsdon, 1996). CSR also increasingly plays an important role in consumer attitudes towards the company and brand as a whole.

The brand of a company plays an essential role in building an identity, differentiating the value offering, and more importantly, drawing a larger customer base. The brand image of a company refers to a customer’s perception of its brand in totality.

In the past couple of years, social responsibility has been incorporated with the entrepreneurial characteristics of an organisation, leading to the conceptualisation of a new term called ‘ Corporate Social Entrepreneurship’ (CSE). It is a relatively new phenomenon related to integrating social considerations into a company’s business operations. CSE is a process aimed at enabling business to develop more advanced and powerful forms of CSR (Austin and Reficco, 2009). Multinational Companies (MNCs) producing Fast Moving Consumer Goods (FMCG) have been particularly active in displaying CSE in order to uplift the rural sections of the developing society.

Being a relatively new concept, the specific impact of Corporate Social Entrepreneurship on the consumer outlook towards the corporate and product brand has yet to be researched in detail. This research attempts to explore this relationship and gain a better understanding of CSE. Adapting the theoretical framework used by Poolthong and Mandhachitara (2009), explained under the literature review, a quantitative study will be conducted to examine the effect of an MNC’s CSE activities on its brand image.

RESEARCH OBJECTIVES

To gain insight into the impact of CSE on customers’ perception of the company’s brand and their brand associations, taking Multinational Companies (MNCs) in the FMCG sector as an example.

LITERATURE REVIEW

Corporate Social Responsibility (CSR)

The concept of Corporate Social Responsibility (CSR) has gained a lot of importance among stakeholders and in the corporate world in the past few years. Modern literature on the concept can be traced back to the 1950s (Bowen, 1953; Eells, 1956; Heald, 1957), while formal definitions came about from the 1970s (Johnson, 1971; Carroll, 1979; Epstein, 1987). The most popular and widely accepted definition of CSR was given by Archie Carroll in 1979:

“ The social responsibility of business encompasses the economic, legal, ethical, and discretionary expectations that society has of organizations at a given point in time” (Carroll, 1979, p. 500).

From a business perspective, this definition forms the basis of CSR, termed as the ‘ Triple P Concept’ of People, Planet and Profit.

In today’s global nature of the corporate environment, firms are increasingly recognising CSR more as a core activity rather than a peripheral one. This growing importance of CSR can be attributed to changing societal expectations, growing affluence of consumers and rapid globalisation (Werther & Chandler, 2005).

BRAND IMAGE

The term ‘ brand’ can be defined as “ a name, term, sign, symbol, or design, or combination of them which is intended to identify the goods and services of one seller or group of sellers and to differentiate them from those of competitors” (Kotler, 1991, p. 442). Brand Image is considered to be an important aspect of marketing and was the first consumer brand perception recognised in marketing literature (Gardner & Levy, 1955). It is defined as “ the perceptions about a brand as reflected by the brand associations held in consumer memory” (Keller, 1993, p. 3). These brand associations refer to perceptions of brand quality and attitudes. The brand image is considered independent of the functional product offering; it gives the product a human element.

‘ The Branding Law of CSR’

Recent literature identifies how a company can differentiate itself and can gain a competitive advantage by linking the brand to CSR (Brammer & Millington, 2006; Du et al., 2007). The brand image of a company is greatly affected by the degree of social responsibility it shows. CSR helps a company establish social legitimacy in the eyes of the customer. In their paper, Werther and Chandler explored strategic CSR as a means of achieving global brand insurance. A CSR driven approach of a firm increases the “ brand-user bond” and reduces the brand’s weakness to other organisational shortcomings (Werther & Chandler, 2005). This relationship between the brand value of a firm and the importance on CSR to it can be represented as ‘ The Branding Law of Corporate Social Responsibility’:

“ The importance of CSR to any organization is directly related, and rises in proportion, to the value of the firm’s global brand” (Werther & Chandler, 2005, p. 321).

CORPORATE SOCIAL ENTREPRENEURSHIP (CSE)

Until recently, an organisation’s involvement in CSR was limited to being certified by social and environmental standards, having a well-established community welfare programme and so on. However, increasing global awareness has led companies to take their social responsibility to the next level. Organisations will have to explore the imagination and initiative of individual employees; and this had led to the emergence of a revolutionary concept that would enable firms to accelerate and develop their CSR initiatives. This term is called ‘ Corporate Social Entrepreneurship’ (CSE). CSE draws from the key concepts of corporate entrepreneurship, and social entrepreneurship. Corporate entrepreneurship refers to identifying and utilizing new business opportunities through innovative use of resources and strategies. Simultaneously, social entrepreneurship was defined by J. Gregory Dees as an “ innovative activity with a social purpose in either the private or nonprofit sector, or across both” (Dees, 1998). However, unlike either of these terms, CSE involves mobilizing organizational resources as well as creating social and economic value. It can be defined as

“ the process of extending the firm’s domain of competence and corresponding opportunity set through innovative leveraging of resources, both within and outside its direct control, aimed at the simultaneous creation of economic and social value” (Austin et al., 2005).

The Multinational Companies are today recognizing the bottom of developing markets, termed as the ‘ base of the pyramid’ as having a higher potential than the saturated developed markets through disruptive innovation (Hart & Christensen, 2002). This forms the basis of CSE, aiming at targeting new sections of the market for economic benefit through social upliftment.

Fast Moving Consumer Goods (FMCG) Companies and CSE

Multinational Companies (MNCs) in the FMCG Industry have been active in CSE initiatives in relation to the rest of the corporate world. Saroja Subrahmanyan and J. Tomas Gomez-Arias, in their paper in 2008, identify the efforts made by FMCG companies to target consumers at the bottom of the pyramid. Hindustan Unilever in India was one of the first companies to introduce products in smaller sizes to the rural section of the country. A network of women from rural backgrounds was formed and they were directed to sell Unilever products in sachets door-to-door. Also, Kissan, owned by Hindustan Unilever, buys farm produce as raw material for its products. Danone, the French company partnered with a number of Non Government Organisations (NGOs) to sell yogurt in Bangladesh and South Africa (Subrahmanyan & Gomez-Arias, 2008).

CONCEPTUAL FRAMEWORK

In their paper in 2009, Yaowalak Poolthong and Rujirutana Mandhachitara studied the effect CSR activities had on perceived service quality and brand effect, and the role of trust in establishing a link between perceived service quality and brand effect in the Thai retail banking sector. Garcia de los Salmones et al. (2005) found a direct relationship between a company’s CSR behavior and the customer’s perception of service quality. In turn, the study by Poolthong and Mandhachitara (2009) displayed a positive relationship between perceived service quality and trust in the company, thus leading to a positive brand effect.

Simultaneously, a considerable number of studies have found a direct relation between CSR and customers’ attitudes towards the company (Bhattacharya and Sen, 2003; Brown and Dacin, 1997), thus representing a positive effect of CSR on brand effect.

Based on this framework, the proposed research study will attempt to gain an understanding of the effect of Corporate Social Entrepreneurship (CSE) on the brand image of an FMCG company (Figure 1).

Adapted from: Poolthong, Y., and Mandhachitara, R. (2009). Customer expectations of CSR, perceived service quality and brand effect in Thai retail banking. International Journal of Bank Marketing, 27 (6), 408-427.

Evident from the corresponding literature, research exploring the concept of CSE is relatively new and has been gradually picking up pace. The specific effect of CSE on the company from the customer’s point of view is yet to be looked into in detail and this study makes an effort to understand the same, giving valuable insight into using strategic CSR and CSE as a marketing tool. Using the framework given above, this study will try to answer the following research questions:

Do CSE activities of a company have a positive relationship with the customers’ perception of company brand image?

How significant is CSE to develop a favourable brand image for an FMCG company from the customer’s point of view?

METHODOLOGY

Luck and Rubin (1987) state that “…a good rule in all research is parsimony; using only meaningful data”. This study aims to explore and evaluate the effect CSE activities has on customers’ perception of brand image, taking the FMCG sector as an example.

This research will first use secondary sources of information to gain insight into role played by MNCs in the FMCG sector with respect to social responsibility. Secondary data plays an important role in establishing a background to primary research (Newson-Smith, 1988). Appropriate journals, articles and other publications will be used to understand previous studies conducted analysing the relationship between social responsibility and brand associations made by consumers. Through this source, a pre-existing questionnaire will be adapted in order to gather primary data.

Being a quantitative study, a survey method will be used by means of a questionnaire. According to John Webb (2003), survey research is appropriate for gathering data on attitudes, opinions, respondent knowledge and awareness etc. After looking for an appropriate questionnaire linking CSR and brand image, it will be adapted to devise an appropriate questionnaire analysing customers’ attitude towards an FMCG company’s CSE initiatives. The possible options available to use questionnaires are personal interviews, telephone interviews, mail questionnaires, and e-questionnaires. Given the time and cost constraints, using an e-questionnaire is the most effective and appropriate method of data collection.

Emailing questionnaires to respondents has become an increasingly popular method of data collection. In this proposed research study, questionnaires will be emailed to the sample population. Alternatively, online survey software like www. kwiksurveys. com or www. freeonlinesurveys. com may be used to create convenient and hassle-free questionnaires. In this case, using an e-questionnaire is the most appropriate due to advantages of instantaneous delivery, quick responses and convenience for the respondent Kumar et al., 1999). Apart from this, increasing global access to the internet enables easy reach to the targeted respondents. However, using this method poses the limitation of respondents interpreting questions differently along with a high risk of not responding.

With regard to the sample size of the study, a total of at least 100 filled questionnaires is aimed at, to minimize the sampling error. Using a judgement sampling technique, consumers of FMCG products on a global level will be identified to fill the questionnaire. Additional respondents will be reached through the snowball sampling, where one respondent may lead the researcher to other potential respondents (Marshall, 1996). The reason behind selecting FMCG consumers for this study is simply based on the high degree of activity of FMCG companies with regard to CSE and the fact that a large number of common people use some variety of an FMCG. This is ensures ease in reaching these consumers, leading to more reliable results.

Based on the data collected, the data analysis software called Statistical Package for Social Sciences (SPSS) will be used to organise and interpret the information. Factor Analysis will be used to reduce the number of variables to a few constructs. Following this, cluster analysis will be used to identify clusters of relevant scales for the proposed research. Regression analysis will then be used to establish the nature and strength of the relationship between CSE and brand image.

Ethical considerations will be made in the process of gathering data. A section describing the key aspects and primary motivation to carry out the research will be put in before the questionnaire. Additionally, complete anonymity of the respondents will be maintained throughout this study.

Supported by the framework proposed by Poolthong and Mandhachitara (2009) and related literature about CSE and brand image of a company, this research proposes to find a positive effect of a CSE mindset of a company on the customers’ perception of the brand in totality. It will enable researchers further explore the nature of Corporate Social Entrepreneurship from the point of view of a customer. Also, FMCG marketers will be able to evaluate the significance of CSE in marketing communications.

GANTT CHART

The following chart outlines the schedule of activities in conducting this master’s thesis. The dissertation period begins in the month of June with the submission of the final dissertation on September 6th 2010.

TASK

Background Reading

Preparation of Literature Review

Desk Research

Collecting Data

Analysing Data

Writing Data Analysis

Preparing Background Information

Writing Research Methodology

Writing Discussion

Writing Conclusion

Revision of Chapters

Completing First Draft

Final Changes and Improvements

Binding

WEEKS

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