Firm-Based Advocacy: Customer Preference Issues within and across Organisation. Types

Transcription

1 Page 1 of 12 ANZAM 2012 Firm-Based Advocacy: Customer Preference Issues within and across Organisation Types ABSTRACT This paper further develops the concept of firm advocacy via a typology of firm action. Firm advocacy entails firms acting as advocates for their customers distinct concerns within the category, or on broader social issues. We take firm advocacy as a marketing term, drawing on customer preference and relationship marketing concepts. As such, firm advocacy very importantly focusses on customer preference for a specific issue to be addressed by the firm, but also in understanding the level of involvement of customers in participating in this problem solving. This paper moves the concept forward by developing and proposing four distinct types of firm-based advocacy action. It discusses this typology in relation to customer preference and also in relation to differences in customer preference across industry types. Keywords: Firm advocacy, Firm-based advocacy, Corporate Social Responsibility, Relationship Marketing, Community Partnership, Social Innovation. Ingrid O Brien Business School, University of Western Australia, Perth, Australia @student.uwa.edu.au Dr Wade Jarvis Business School, University of Western Australia, Perth, Australia wjarvis@biz.uwa.edu.au Professor Geoff Soutar Business School, University of Western Australia, Perth, Australia Geoff.soutar@.uwa.edu.au

2 ANZAM 2012 Page 2 of 12 Firm-Based Advocacy: Customer Preference Issues within and across Organisation Types In recent years, the strategies employed within the corporate social responsibility (CSR) field has grown substantially to include cause-related promotions, advocacy advertising, alliances with nonprofit organisations, socially responsible employment and manufacturing practices as well as corporate volunteerism in community activities (Menon & Kahn, 2003). It appears a sensible approach. As organisations are becoming increasingly sophisticated, achieving a sustainable competitive advantage is challenging and research suggests there is some advantage to be gained from CSR-related initiatives (Brammer & Millington, 2006; Du, Bhattacharya, & Sen, 2007, 2010). However, others argue that realising meaningful benefits from social initiatives is not guaranteed (Ginsberg & Bloom, 2004; Kitchin, 2003). In some cases such an approach has found to be counterproductive and resulted in stakeholder cynicism (Bigné-Alcañiz, Currás-Pérez, & Sánchez-García, 2009; Mayer & Scammon, 1993). Clearly more work needs to be done to determine which CSR strategies will deliver the greatest competitive advantage to firms. We know that people are looking for organisations to be responsible, but the question remains, responsible about what?. On the basis of previous research, we propose a new customer-based concept of CSR firm advocacy. Developing an issue typology for advocacy, we identify a number of components to this strategy in order to ensure organisations attain meaningful consumer preference. FIRM ADVOCACY Throughout history some of the great advocates, such as the Suffragettes, Martin Luther King and Nelson Mandela, have been associated with advancing an iconic social issue. Over time, organisations have also been established to advocate on behalf of their members. The most significant

3 Page 3 of 12 ANZAM 2012 example of this is the American Association of Retired Persons (AARP), which has more than 40 million members and generates $625 million in membership fees. While its core activity is advocacy, the AARP also provides a number of products, services and benefits to its members. In 2003, it generated more than $300 million in revenue from co-branding with companies selling products. Interbrand valued AARP s brand at $6.5 billion. Clearly, the AARP has established a successful business with advocacy as a core component of its strategy. There is less certainty, however, as to whether organisations that have products or services as their core business can implement a firm advocacy strategy that enhances their brand and firm performance. In line with relationship marketing theory and the concept of customer empowerment, advocating on the correct issue may mobilise customers, and indeed all stakeholders, to advance the issue and enhance the firm s overall relationship with its customers. It is surprising then, that within the field of marketing, there has been little research into firm advocacy. Urban (2004, 2005) was one of the first to investigate customer advocacy, defining it as an organisation becoming a faithful representative of customers interests by giving them open, honest and complete information about their product or service offerings. Given the traditional definition of advocacy, it is surprising existing research into firm advocacy has principally focused on improving relationships with customers and the better provision and use of products, with virtually no incorporation of social improvement or utility, especially as a firm s ethical performance is considered important in today s environment (Maon, Lindgreen, & Swaen, 2010). Extending the concept further, engaging customers in an advocacy issue may also generate greater benefits for the firm. Normann and Ramirez (1993) suggested mobilising customers is a critical component to creating value and that creating customer experiences is less about products and more about the relationships customers have with a total offering. Prior research suggests there is potential to create customer value if a firm can engage their consumers in creating a better product or service (Payne, Storbacka, & Frow, 2008). Arguably, an advocacy strategy can create a greater perception of value if customers have been actively engaged in addressing the advocacy issue.

4 ANZAM 2012 Page 4 of 12 Drawing on this past research, firm advocacy can be defined as an organisation s use of its power and influence to engage and mobilise people to achieve benefits for the consumer and the firm, beyond merely the direct, functional product. When determining consumer preference for firm advocacy, there are three areas for consideration: 1. Is preference for the issue tied to the scope of the issues and alignment to the organisation? 2. To what extent are consumers willing to be engaged in addressing the issue(s)? 3. Is such a strategy seen as legitimate or altruistic in the eyes of consumers for only some kinds of organisations? ISSUE TYPOLOGY When implementing an advocacy strategy, the key decision for an organisation is which issue(s) to pursue. Based on the literature we are able to develop a new issue typology for advocacy, principally focusing on the specific characteristics of the issue. To date, research has focussed on the impact cause-related marketing has on consumer attitudes and behaviour (Westberg & Pope, 2005) rather than the actual type of different causes that could be supported. A typology of advocacy actions is presented in Table 1. Table 1 ALIGNMENT OF ISSUE Relevant Not Related Local Parochial Advocacy Community Leadership SCOPE OF ISSUE Global Global Commitment International Citizen

5 Page 5 of 12 ANZAM 2012 This approach creates a number of mutually exclusive actions that an organisation could develop when implementing an advocacy strategy. Simply, the issue chosen could be undertaken globally (e.g. supporting children around the globe) or locally (e.g. supporting children around Western Australia), it could be relevant to the organisation s business (e.g. a bank helping improve financial literacy among the disadvantaged) or they could decide to pursue issues that are not related to their core operating purpose (e.g. an internet company addressing child poverty). The scope and focus of the issues can range from local to global. Waddock and Boyle (1995) described the changing ways in which firms define their communities; largely driven by the effects of globalisation. No longer can firms operate in, and serve, one community. Global competition means organisations can be located on a variety of sites and have customers in different locations. This makes the definition of an organisation s community complex, and as such, there is value in investigating whether advocacy strategies are impacted by the reach of the issue being addressed. Alignment is the degree of similarity and compatibility between an organisation s mission or purpose and the social issue as perceived by consumers (Bigné-Alcañiz et al., 2009). Aligned with attribution theory, research suggests that fit is important as it positively influences stakeholders attributions (Du et al., 2010; Menon & Kahn, 2003; Rifon, Choi, Trimble, & Li, 2004; Simmons & Becker-Olsen, 2006). However it is not as straightforward as suggesting a cosmetics brand would be best to focus its CSR activities in the area of women s health. Studies have also shown that a low fit may lead to more favourable attributions as it appears more genuine (Bloom, Hoeffler, Keller, & Meza, 2006; Menon & Kahn, 2003). Bigné-Alcañiz et al. (2009) states that there is insufficient empirical evidence to prove that better fit provokes more positive consumer responses, and quotes several studies that have shown that moderate fit levels are able to improve the effectiveness of a CSR campaign (Barone, Norman, & Miyazaki, 2007; Lafferty, 2007; Menon & Kahn, 2003). Rather than looking at alignment between organisation purpose and issue, we need to look more widely to include the brand and its values and associations, product dimensions, affinity with specific

6 ANZAM 2012 Page 6 of 12 target markets and personal involvement of a company s personnel (Bigné-Alcañiz et al., 2009; Menon & Kahn, 2003). The culmination of these results suggest that for not-for-profit organisations, strongly aligned issues are considered more favourably, but in the case of for-profit organisations, more positive attributions may be attained where CSR activities appear removed from the purpose or operation of the firm. As described in Table 1, this approach creates a number of mutually exclusive advocacy actions that an organisation could develop when implementing an advocacy strategy: Parochial Advocacy. Community Leadership. Global Commitment. International Citizen. Using this typology, Table Two provides an example of the various advocacy issues that an organisation, such as the Royal Automobile Club (RAC), might pursue. Table 2 ALIGNMENT OF ISSUE Local Relevant Parochial Advocacy Not Related Community Leadership SCOPE OF ISSUE State Government rebates for gasfuelled vehicles Quality of Perth s Waterways Global Global Commitment International Citizen International standard for child restraints Child poverty

7 Page 7 of 12 ANZAM 2012 An interesting component of this model may be that in line with customer preferences, a firm may take on more than one of these actions at any point of time. For example, a group of consumers may have strong preference for both local, relevant action, but also for global, relevant action as well. ENGAGEMENT The next component of the advocacy strategy is whether to get customers engaged in helping address the issue (e.g. sign a petition, donate money, march on parliament). Urban (2004) and Lawer and Knox (2007) incorporated engagement with customers as part of their advocacy approach. Their view of engagement is aligned with the theory of co-creation suggested by Prahalad and Ramaswamy (2004). They contend that establishing a meaningful level of engagement with the consumer, driven by the organisation, creates value (Ramaswamy, 2009). Much of this work has been product and firm centric, focusing on using co-creation to help build a better product. An alternative view is presented by Vargo and Lusch (2004), who suggested allowing customers to be co-creators of value is a key foundational proposition of service-dominant logic, a view supported by Desai s (2009) research into the value co-created between social marketers and consumers. Like advocacy, cocreation has been enhanced by the emergence of connected, informed, empowered and active consumers. Desai (2009) suggested empowered customers are more likely to be active partners with firms, willingly collaborating and participating in co-creation. On the basis of this prior research, it seems reasonable to predict that engaging customers in an advocacy issue will generate greater benefits for the firm. Normann and Ramirez (1993) suggested mobilising customers is a critical component to creating value and that creating customer experiences is less about products and more about the relationships customers have with a total offering. Arguably, an advocacy strategy can create a greater perception of value if customers have been actively engaged in addressing the advocacy issue. An example can be seen in the AARP. As an advocacy organisation, AARP pursues a number of issues on behalf of their members and regularly engage their members in helping advance these issues. For example, the AARP is urging Congress to

8 ANZAM 2012 Page 8 of 12 pass a Cost-of-Living Adjustment and, to help make this happen, the AARP is asking members to write to their Representatives and Senators in support. Such engagement and mobilisation can enhance an organisation s performance. ORGANISATION TYPE Organisational sponsorship of advocacy issues may be scrutinised differently by consumers, depending on the apparent motive of the advocating organisation. A number of studies researching organisational sponsorship of advocacy advertising within the general source credibility literature have found non-profit and government sources are perceived to be more credible than commercial sponsors (Haley, 1996). Further, other studies have found messages were substantially more believable when attributed to a business with a vested interest in the public issue (Haley, 1996). Results from other studies (Bhattacharya & Sen, 2004; Du et al., 2007; Quelch & Jocz, 2009) also suggest an advocacy strategy will be more accepted by customers if it is in line with its core business, and is not motivated by profit. An not-for-profit example can be found in the Federation Internationale de l Automobile (FIA), the governing body for world motor sport, which represents more than 100 million motorists worldwide. FIA clubs helped gather a million signatures in support of a proposal to create the first-ever UN road safety summit, which were submitted to UN Secretary General Ban Ki-moon. The United Nations supported the call and the first ever global Ministerial summit on road safety was held in Russia in This is not to say however that advocacy strategies will only be looked at favourably if undertaken by not-for-profit organisations. An alternative example of a for-profit organisation advocating for its community can be found in Novo Nordisk. As a manufacturer of pharmaceutical products, the company is a world leader in diabetes care. Novo Nordisk is committed to using its expertise, competence and influence to improve the level of care offered, such as helping establish the World Diabetes Foundation and working with the World Health Organization to improve diabetes care in developing countries. The type of organisation may moderate the influence an advocacy strategy has

9 Page 9 of 12 ANZAM 2012 on performance. Recent research suggests that consumers may take a more complex approach to judging CSR activities and are able to process and reconcile mixed CSR motives (Du et al., 2010). CONCLUSIONS AND SUGGESTIONS FOR FURTHER RESEARCH The literature to date suggests that if an organisation were looking to develop an advocacy strategy, they should choose an issue which is aligned to their core purpose. It is also likely that not-for-profit firms are more likely to enjoy greater levels of support (engagement) for their action in comparison to their for-profit counterparts. This is not to say that the strategy is irrelevant for for-profit organisations. Rather this manuscript suggests that they simply need to approach their issue selection strategically. In the past, it has seemed that the for-profit sector has approached this issue by focussing on non-relevant issues, whether they be local or global. Furthermore, when considering consumer preference for CSR activity, focusing solely on the organisation seems to address only one half of the equation. To date there has been very little literature dedicated to the effect of differences in consumer preference, whether it be differences in the preference structure of the advocacy issues and/or what part consumer demographic and psychographic characteristics might play in explain these preference responses (Bigné-Alcañiz et al., 2009). For example, we do know that personal values influence ethical consumption behaviour (Sen & Bhattacharya, 2001), however to date we are unable to make accurate predictions about the strength of the relationship between values and consumption, particularly when considering the impact of brand relationship. Clearly more research is required to better understand consumer preferences for CSR activities for particular organisation types.

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