Shoppers increasingly want meaning from their purchases.
That power of purchase shows up in the popularity of brands like Patagonia, which donates at least 1 percent of its sales to grassroots organizations combating climate change; United By Blue, which removes one pound of trash for every item purchased; and TOMS shoes, which heads efforts to do everything from curbing bullying to providing access to clean water—just to name a few of these “feel good in the checkout cart” companies. Corporate social impact has found a foothold in popular culture and seemingly held on tight.
Here, Patti Williams, a professor of marketing at the Wharton School, who studies consumers’ emotional responses and strategic brand management, discusses this trend, what—or who—catalyzed it, and whether it’s poised to continue.
Social impact brands keep not just emerging but appear to be doing well. We have one on campus, United By Blue. What qualifies, today, as a social impact brand? How do you begin to think about that?
That’s a good question. So, here’s how I think about it. First of all, having social impact is not new. Firms have been doing ‘corporate social responsibility’ (CSR) for a long time. I think what is different about these brands is that their social impact is front and center in the way they go to market, not only from a marketing communications perspective, but often built directly into their business model, as opposed to ‘We give 10 percent of our proceeds at the end of the year away.’ For these social impact brands, every single transaction is correlated with some sort of social benefit.
Which is interesting, because it suggests donating isn’t enough? That you need to be doing something extra, as a company? Why would donating not be enough?
I think there is a clear desire among consumers for their actions to directly have a positive benefit outside of their own tight circle, if you will. I think they are looking to see a direct reaction to their action, rather than an indirect action. They want their individual purchase behaviors to have a direct positive impact on the world, rather than an indirect positive impact, which is, ‘I buy something, you earn some profit from it, and at the end of the year you might decide to give to a particular cause.’ There’s a value in that directness, in and of itself. And I think there’s a value in transparency that I know when I buy from TOMS what they’re going to do on my behalf, what that direct action will be, as opposed to waiting until the end of the year and not having a sense of how that circle gets completed. In the past, a lot of the CSR strategy lived in the corporate brand as opposed to the consumer-facing brand. It was often associated with how we’re doing good in an annual report or an annual campaign, what our employees care about, and now it’s just more front and center for consumers than it has ever been.
Does that imply some lack of trust between consumer and most brands?
I don’t think this is predicated on a lack of trust, but I do think what this does is enhance trust. I think it’s about consumers who want to purchase not just physical attributes of products or services, but purchase things that are consistent with and help expand upon their own values and beliefs. A brand putting its values and beliefs front and center as part of every transaction makes it easier for consumers to do that.
Why now for this to gain traction?
Good question. There’s an interesting book called ‘Firms of Endearment,’ and essentially what it says is consumers have always cared about not just if the product performs well but that it helps them be the kind of person they want to be, helps them connect with other people they want to connect with. Thinking from a Maslow’s hierarchy perspective, this book argues increasingly consumers are interested in transcendent values—this notion of self-actualization, and what it means to find my place in the world in even very mundane, everyday activities. And I think it’s part of economic development, part of a changing cultural ethos about what matters to us.
That’s pretty heavy for buying something like a water bottle. [Laughs]
Yeah, you know, most products today are pretty good. Every water bottle is going to do a pretty good job. So now the way I can make a water bottle purchase something that has more value is by connecting it back to my values, even if the functional attributes of it are all pretty good. And I think that’s really partly economic development, right? When there aren’t that many good options to choose from, we care about the quality of the options. But when there are lots of quality options, we start to think quality takes on different characteristics beyond just product attributes.
Anything generational about this?
A lot of the literature suggests it’s generational, that millennials are really driving this. I think that’s probably true, but I hesitate in a couple ways. One, I don’t think millennials are just one group. There are multiple subgroups, or segments, within any millennial cohort. And I don’t think it’s just millennials. I think their parents care about this, to an increasing degree, and I think Gen Z cares about it as well. Though, I think it definitely catches fire in culture with the adulthood of the millennial generation, but is driven by a number of factors and different consumers.
Is it difficult to make money with this model? Going through the stress of having all this extra transparency, even?
I don’t think it’s difficult for them to make money. I think it requires a business model where this is built in from the beginning, into your pricing structure, as opposed to added on. I think that’s why some legacy companies struggle with this. Because to add it in now might mean to reduce their margins on any individual sale, as opposed to having them built into that margin and the business model from the beginning.
How are these legacy brands adapting?
In a couple ways. Some legacy brands struggle a little bit with the fact that young upstart brands get all the credit for social impact when many of the legacy brands have been giving millions of dollars over many years in social impact. They perhaps haven’t gotten credit in part because it happened separately, behind the scenes, was more feel-good within the organization, and they never made it a central part of their value proposition. I think sometimes they’re frustrated that upstart brands, which they perceive as doing less, get more credit. Many of them are going out of their way to either give their social impact initiatives a higher profile, or to invest their products and services with social impact initiatives. I think you see Gillette doing that, for example. Speaking to a redefinition of masculinity and the #MeToo movement—it’s never been a part of the Gillette brand overtly in the past, and you can see them stepping into that space a little bit to make themselves relevant to a generation that might care about that.
Around now you see Pride advertisements, and it’s interesting to hear conversations about what’s ‘authentic.’ Companies that slap a rainbow on a product as opposed to brands that donate to organizations [the LGBTQ community] might recognize and trust. It’s interesting to see that in action.
I think those questions of authenticity are really challenging. In my own branding class, sometimes students struggle with a legacy brand that now steps up and tries to put a social-impact initiative at the center of their value proposition. The students will say, ‘It’s not authentic. They just added it on because they know they need to.’ But then the legacy companies are sort of stuck. Because if they need to and they don’t add it on, then what do they do? Can you now adopt it and have it be authentic if it wasn’t part of your approach from the beginning? It’s a really interesting question and I think brands really struggle with this. They have to make really good choices about what kinds of stands they take and where they take them to make those actions authentic. And consumers have to give them permission to add this into their value proposition in ways that it might not have been present in the past.
I don’t think there’s a good solution there. But it’s a switch-up from the way things seemed to be—if a brand took a stance on anything it would be this big kerfuffle, and now if they don’t it’s almost like they’re banished from store shelves.
Exactly.
Is there a good example of an all-around solid social impact brand?
We think a lot of Warby Parker here at Wharton—that social impact orientation was part of the founding of the organization from the very beginning, and that they’ve delivered on it to a great degree. TOMS is a great example. United By Blue is a nice example.
You mentioned Gillette?
I wouldn’t say Gillette is doing a good job, but they’re trying to do it.
An interesting one that also has a Penn connection [is] the Estée Lauder Companies, the MAC brand. Part of their portfolio, really, was founded with an orientation toward the gay community, and at a time when AIDS was underresearched and treated. With their Viva Glam products, they’ve given tens of millions of dollars to AIDS research. They’ve now expanded their social mission recently. But it’s an example of a brand that’s been doing this for more than 20 years but I think probably doesn’t get enough credit for it, because it was more to the side of the brand and not the center of it.
Will this trend continue or even expand?
I think it is poised to continue. I think there are a variety of ways it will continue. I don’t think every brand has to be giving things away to people who don’t have access to something along those lines, but I think brands are being pushed to have a social conscience. That could be standing up for issues—you saw a lot of brands take out an ad in the New York Times, for example, around abortion rights. I think you’re getting it with the gay community and Pride and what that means. Part of this is a push from consumers and employees. Brands are increasingly expected to have a social and moral perspective. And sometimes that will be tied directly to some sort of impact to the environment, to other individuals, and sometimes I think it’s just going to be applied to ideas, as a culture.
