Monday, August 22, 2011

Luxury Brands Hurt By Doing Good

When Robert Egger spoke at our Annual Forum 2011, he made several comments about the purchasing power of the consumer and the shrinking gap between donating and spending money. That is, more than ever individuals are able to make socially responsible purchasing decisions in their everyday spending. If you want to order a pizza, you might choose to order from Galactic Pizza because they have a socially good vision behind their “planet saving pizza." To quote Egger, “It is time to get past the notion of transparency as it relates to .com or .org, but to take it to the next level.”

In general, it has been the belief that Corporate Social Responsibility (CSR) improves a product’s performance with consumers. However, in a recent study “Doing Poorly By Doing Good,” research shows when people saw an advertisement for a luxury brand associated with a social cause that the group reacted more negatively than if the advertisement stood alone without a connection to social good. In a time when “being green” or promoting a good cause in conjunction with your product usually does nothing but help the bottom line, it is strange to see luxury brands performing negatively in the world of CSR.

So why isn’t this school of thought working for luxury brands? Does the message not feel authentic? The authors of the study suggest that perhaps consumers felt “something just didn’t seem right” and that there was too much conflict with the ritzy image already associated with the luxury brands.

Do you shop to support causes (luxury or otherwise)? If so, what are some of your tips to keep in mind as you make your purchases?

Here are some pointers to consider when shopping to support a cause:
  • Research the organization being helped by your purchase. You can always use the Charities Review Council’s list of most trustworthy nonprofits to find information about charities.

  • Find out how much money actually goes to the cause.

  • Find out what types of programs the funds raised will support.

  • Learn more about the business practices of the company. Are they consistent with your values?

From yogurt to clothing to Rolex Watches, it is important to remember that you are not only making a purchase but an investment. Take charge and be an informed shopper.

1 comment:

Anonymous said...

I guess I'm not surprised that there is a conflict between selling luxury goods (spending extra money for unneeded self-pampering/self-aggrandizement) and promoting social causes (spending money on the broader community based on a feeling of solidarity). A recent study has also shown that wealthy people (the customer base for luxury goods) on average have less empathy than other people, and thus would be less interested in helping others. Reminding people of their responsibility to others just kills the narcissistic buzz of lavishing luxury on themselves.