THE IMPACT OF CORPORATE SOCIAL RESPONSIBILITY PROJECTS ON CUSTOMER LOYALTY IN CLOTHING SECTOR

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1 THE IMPACT OF CORPORATE SOCIAL RESPONSIBILITY PROJECTS ON CUSTOMER LOYALTY IN CLOTHING SECTOR ABSTRACT Pelin Ofluoğlu, Turan Atılgan Ege University Textile Engineering Dept. Changes which have come along within the globalization presented the fact that companies have a social mission as well as their economical duties. Society is now expecting some social benefits from companies gaining profit and maintaining its persistence. In the environment of rising competition, corporate image is also standing as a distinguishing element in addition to the factors such as quality of product, price and quality of service. Building a strong and a long-termed corporate image is enabled by showing the social responsibility considerations to the society. This study aims to analyze the importance of social responsibility for consumers according to a survey which is conducted in the hinterland of Izmir province. Moreover, evaluations of consumers about the social responsibility projects of LCW which is a clothing brand in Turkey are analyzed. Key Words: Social responsibility, customer loyalty, clothing sector 1. INTRODUCTION Companies are in interaction with the society that they are involved in both materially and also morally. Changes derived from the globalization introduced the fact that enterprises have a social mission within their economical contributions to the society. Today, people expect social benefits from companies which make profit and ensure their continuity. Contributing to society in terms of its economic, social and cultural structure will both prosper the living conditions and also reflect credit on some vital criterions for the companies such as increased sales by effecting the perception and reliance of customers. Some of the reasons why companies have started to get more involved in social responsibility projects in recent years can be considered as the following: The growing level of education and awareness, the growing power of non-governmental organizations by having the support of public, the advantages such as the 89 th article of the income tax law number 193 of Turkish taxation system provided by the government to companies and grants in order to promote these activities under the frame of European Union Projects. The goal of this study is to analyze the importance of social responsibility according to the consumers residing in Izmir and furthermore the evaluations of consumers about the social responsibility projects of LCW which is a clothing brand in Turkey are investigated. 2. SOCIAL RESPONSIBILITY CONCEPT AND CUSTOMER LOYALTY Social responsibility campaigns rather than being an entirely new idea, in fact is a practice whose time has already come [1]. Social responsibility projects which are constituted for different needs of public such as education, health, awareness can be described the contemporary and corporate structure of benevolence which is one of the main characteristics of Turkish society. In the environment of rising competition, corporate image is also standing as a distinguishing element in addition to the factors such as quality of product, price and quality of service. Building a strong and a long-termed corporate image is enabled by showing the social responsibility considerations to the society. 439

2 The related literature highlights the fact that social responsibility projects affect the purchase intentions of customers in a positive way and furthermore, these projects are of prime importance in satisfying and appealing to shareholders [2,3,4]. The studies conducted in Turkey also supported previously mentioned observations. According to the literature, corporate image can be invigorated through these projects. Moreover, customer loyalty has proven to be positively influenced by the corporate image [5,6,7]. Enhancing the brand recognition of products and services, building and improving customer loyalty constitute some of the main objectives of companies marketing activities, because creation of the brand recognition and customer loyalty are seen as the mediating factors of enhancing market share and also achieving a sustainable competitive advantage [8]. Perceived corporate image and social responsibility concept of a company which is correlated with the respect and care by the society have a strong relation according to previously conducted studies. Furthermore, perceived image was observed to be reflected on customer loyalty in a positive manner [3]. 3. THE RESEARCH METHOD In accordance with the aim of this research which is investigating the customer point of view about social responsibility projects a field research is employed. Within this research, a survey in the hinterland of Izmir province by using face to face interview method during the period of April 2013-May 2013 is conducted. Izmir province population according to the Turkish Statistical Institute s address based population registration system results in 2011 is Accordingly, sample size is calculated as 339 at 99% confidence interval with 7% error margin. The consumers who would constitute the sample are determined according to snowball sampling. After the evaluation of the sent-back questionnaire forms, 340 of them are incorporated into the research. Questionnaire form consists of 4 sections and 20 questions in total. The first section comprises of four questions about demographic characteristics. In the second section, consumers are asked to sort their most important criterions in terms of a purchase decision. In the third section, the desired areas which consumers would like to see social responsibility projects in are required to be indicated and the last section consists of 14 questions related to evaluations of social responsibility projects conducted by LCW and other companies. Afterwards, the collected data are evaluated with SPSS 16.0 programme. At the beginning of statistical analysis, the reliability of the questionnaire is measured and the reliability coefficient α is found as 0, 82. Moreover, the reasons why company of LCW is chosen for the study as an example in clothing sector are that LCW has the biggest retail chain in the field of clothing in Turkey; it has the largest share in the market, and also being selected as Lovemark among its rivals in the last four years consecutively. 4. GENERAL FINDINGS OF THE RESEARCH Firstly, the questions which based upon the demographic specifications of the participants are analysed (Table 1). 440

3 Table 1. The distribution of the participants according to their demographic specifications Gender Age Group Monthly Income (TL) Education Level Frequency Percent Valid Percent Women ,4 55,2 Men ,1 44,8 Missing 5 1, ,6 30, ,6 22, , ,1 9,2 46 and over 65 19,1 19,2 Missing 2 0, ,4 40, ,5 27, ,4 17, ,8 12, ,1 2, and over 1 0,3 0,3 Missing 9 2,6 - Primary school 10 2,9 3 Secondary school 31 9,1 9,3 High school 94 27,6 28,2 Undergraduate ,3 54,7 Graduate 16 4,7 4,8 Missing 7 2,1 - According to data, % 55 of the participants is women and the remaining % 45 is men. Approximately, %31 of the participants is at the age of between 15 and 21, %23 is at the age of between 22 and 26 and % 20 is at the age of 46 and over. When monthly income of the participants is considered, % 41 has up to 1000 TL income level, %28 has an income between 1001 and 2000 TL, whereas %18 has an income between 2000 and 3000 TL. When the age distribution and the majority of participants that include students, new graduates, unemployed and retired consumers are taken into consideration, the distribution of income can be taken for granted. Accordingly, this distribution is consistent with the realities of Turkey and it also reflects the target audience of LCW. Approximately, %55 of the respondents has undergraduate and %28 has high school education level. The development and progress in the education level ensure consumers to be more conscious and therefore, it can be deduced that they are likely to have the same awareness about social responsibility projects. The survey offers ten criteria while giving a purchase decision and participants are required to choose their agreement levels for each of the criterion. The findings are given in Table 2. (In quinary likert scale I absolutely agree is coded as 5, I agree is coded as 4, I have no idea is coded as 3, I don t agree is coded as 2 and I don t agree absolutely is coded as 1.) 441

4 Table 2. Importance levels of purchase decision criteria of goods according to participants Criteria N Mean Std. Deviation Price 340 4,8 0,45 Quality 340 4,8 0,47 Brand 340 4,2 1,03 Advertisements 340 3,8 1,17 Promotions (Discount, etc.) 340 4,3 0,90 Previous experiences about the brand 339 4,4 0,78 Corporate image of the company 339 3,8 1,13 Awareness of the brand in social responsibility 340 3,9 1,01 Sales person 340 3,41 1,317 Advices and recommendations 340 3,33 2,601 According to Table 2, participants consider the following criteria while giving a purchase decision: Price and quality (Average=4,8), previous experiences (Average=4,4), promotions (Average=4,3), brand (Average=4,2), awareness of the brand in social responsibility (Average=3,9), advertisements and corporate image (Average=3,8), sales person (Average=3,41), advices and recommendations (Average=3,33). Accordingly, awareness of a brand in social responsibility is the sixth criterion among these ten purchase decision factors according to their importance level given by participants. This fact shows that consumers interest in social responsibility projects still is not at the desired level. This result may stem from the general education and income level of consumers which direct them towards a more price-oriented decision making and also companies not sharing their social responsibility projects sufficiently. The participants are required to choose an area that they would like to see social responsibility projects mostly in between eight offers and they are also asked to indicate if there are other areas that need these projects to be applied. The findings are given in Table 3. Social Responsibility Project Areas Table 3. Areas that participants would like see social responsibility projects Frequency Percent Valid Percent Education 96 28,2 28,2 Health services 56 16,5 16,5 Environment Social issues (Unemployment, inequality, etc.) ,8 38,8 Consumer awareness 12 3,5 3,5 Ethical values 5 1,5 1,5 Sports 9 2,6 2,6 Culture and arts 9 2,6 2,6 Other 1 0,3 0,3 None of the above I don t know/ Have no idea 3 0,9 0,9 Total

5 Approximately %39 of the participants indicated that they would like to see social responsibility projects in social issues, %29 in the field of education and %17 would like to see these projects in the field of health services. Data show that consumers expect that social responsibility projects should be conducted in social issues including unemployment, inequality and so on because of the unsatisfied basic needs of the society according their opinion. Companies will be able to eliminate the inequality between men and women, raise the domestic revenue and contribute to society to be more informed and educated by providing employment areas. Providing housewives part-time employment opportunities and vocational training courses are some of the examples that can be applied in this area. In order to analyze the impact of social responsibility projects on customer loyalty, several hypotheses are tested within the study. Firstly, participants are required to indicate their opinions whether social responsibility projects have a positive impact on corporate image of companies (Table 4). H1: There is a statistically significant difference (at 95% confidence interval) between participating women and men in aspect of perceived corporate image of the companies conducting social responsibility projects. Table 4. Participating women and men in aspect of perceived corporate image of the companies conducting social responsibility projects N Mean Std. Deviation t df p Women 185 4,50 0,59 1, ,19 Men 150 4,42 0,62 Due to Table 4 which indicates that p > 0.05, H1 is rejected. There is not a statistically significant difference between participating women and men in aspect of perceived corporate image of the companies conducting social responsibility projects. Accordingly, both genders accept the positive impact of social responsibility projects on perceived corporate image. Participants are required to indicate their opinions whether social responsibility projects have a positive impact on the purchase decision where two similar goods have the similar price and quality properties. H2: The participants within different age groups differ significantly (at 95% confidence interval) in aspect of preferring the brands that conduct social responsibility projects where two similar goods have the similar price and quality properties. 443

6 Table 5. Participants within different age groups in aspect of preferring the brands that conduct social responsibility projects where two similar goods have the similar price and quality properties Std. Age Groups N Mean F df Deviation 1 df 2 P ,73 0, ,74 0, ,73 1, ,53 0,92 2, , and over 65 4,12 0,83 Due to Table 5 which indicates that p < 0.05, H2 is accepted. Accordingly, the preferability of the brands that conduct social responsibility projects where two similar goods have the similar price and quality properties vary within different age groups. Owing to the results of Duncantest, especially the participants with the age of 46 and over are separated from other age groups and social issues become an important decisive factor in purchasing for this group. Participants are required to indicate their opinions whether they are willing to pay more for a brand among others because of its social responsibility projects. Accordingly, t and ANOVA tests show that the participants within different gender, age, income and education groups do not differ significantly (at 95% confidence interval) with respect to their willingness to pay more for a brand among others because of its social responsibility projects (Gender: t= -1,253, df=303, p= 0.211; age: df 1 = 4, df 2 =333, F= 0,792, p= 0.531; education: df 1 = 4, df 2 =328, F= 0,684, p= 0.604; income: df 1 = 5, df 2 =325, F= 1,393 p= 0.226). Finally, the participants are required to mention their ideas about social responsibility projects conducted by LCW and their perspective is tried to be reflected accordingly. Table 6. Participants with respect to opinions about social responsibility projects conducted by LCW Std. N Mean Deviation I try to follow the social responsibility projects of LCW ,5 1,1 LCW should release its corporate social responsibility projects to the public through advertisements ,8 0,82 Social responsibility projects of LCW demonstrate the fact that company administration activities are successful ,9 0,67 I am enthusiastic about supporting the social responsibility projects of LCW through purchasing transactions (for instance, for the welfare of children in need of help) ,8 0,79 Since I believe that LCW is a socially responsible company, I recommend the products of it to consumers around me ,9 0,72 In accordance with Table 6, social responsibility projects of LCW are not followed frequently by the participants (Average=2,5). Social responsibility projects of LCW demonstrate that company administration activities are successful according to participants. Furthermore, participants agree that companies should inform the public about their social responsibility 444

7 projects with the average response mean of 4. This situation demonsrates that consumers tend to rely on companies that carry out social responsibility projects and also they would like to have knowledge of these projects. Participants stated that if they are informed of these projects, they would like to contribute to them personally (Average=3,8). Furthermore, the percentage of participants who agree that LCW is a socially responsible company and therefore volunteer to promote the company by recommending its products is considerably high (Average=3,9). 5. RESULTS AND GENERAL EVALUATION At the macro level, social responsibility projects is directly proportionate to the development of countries. One of the indicators of civilization is the concrete steps taken for the wellbeing of society and its surrounding. On the other hand, at the micro level, companies being responsive to society s problems provide contributions towards becoming a civilized society and contributions to themselves. In addition, these projects will also make a contribution to their corporate image and also sales. A better environment and society which is built with the contributions of companies will also mean more confidence and trust of customers and employees. Campaigns and projects which appear to be costly could provide both loyalty and confidence, and also more profit to companies over the long term. In addition, the firms brand value, thus an increase in the market value may be encountered. Thereby, these projects are of an significant importance in ensuring the support of both consumers and also investors. In highly competitive clothing sector, conducting social responsibility projects is one of the distinguishing ways. Accordingly, this study proves that consumers intend to choose responsive brand which has strong social aspect of work in this area while comparing two similar products/services. In particular, this condition has of more importance for the consumers within the age of 46 and over. Brand of LCW undertakes various social projects within the areas of unemployment, inequality and education which are also demanded by consumers. The findings of the research present that consumers are willing to be more aware of companies social projects and they even would like to contribute. Furthermore, consumers state that one of the reasons that they recommend the products of LCW is that the company focuses on social issues and takes some serious and concrete steps. This situation may stem from customer loyalty and it is considered to be an important factor in the direction of attracting new customers. REFERENCES [1] Yaman, Y., Social Responsibility Campaigns, EDAM Seminar of Social Responsibility Campaigns (in Turkish), 2002 [2] Pirsch J. et al., Influence of Corporate Social Responsibility on Loyalty and Valuation of Services, Journal of Business Ethics, 2007, Volume 70, pp [3] Maden, C. vd., Linking corporate social responsibility to corporate reputation: a study on understanding behavioral consequences, 8th International Strategic Management Conference, 2012 [4] Salmones M. et al., Influence of Corporate Social Responsibility on Loyalty and Valuation of Services, Journal of Business Ethics, 2005, Vol.61, pp

8 [5] Devrani T., Personal Value Harmony, Identification of Customer-Company and Customer Loyalty Relation: An Applied Research, Gazi University Institute of Social Sciences, Department of Business Administration, Doctoral Dissertation, 2008 [6] Özdemir, H., The Effect of Corporate Social Responsibility on Brand Image, İstanbul Ticaret Üniversitesi Sosyal Bilimler Dergisi, Spring 2009, Vol. 8, No.15, pp [7] Göksu, F., The Effect of Corporate Social Responsibility Applications on Brand Image (A research in petroleum enterprises), PhD disertation, Marmara University Institute of Social Sciences, 2006 [8] Doğan, S.Y., Social Responsbility Concept and Institutional Image Relation in Managements: A Research Intended for Bank Clients in Balikesir, PhD disertation, Erciyes University, Institute of Social Sciences,