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Topic: Customer Behavior

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Ethical Consumerism: The Implications For Business

Posted by Michele on 2000 Points
I need to get a paper together for a conference on the 8th March. Could you help me add depth to it by answering any of the following questions:

Defining an ethical consumer
To what extent do you agree with this definition?
An ‘ethical consumer’ looks for products which, above all, are both friendly to the environment and also to the people who produce them.

An ethical consumer is therefore aware of the consequences of production, consumption and disposal. They have clear expectations of how they expect a company to behave and expect ethical companies to conform to ethical standards.

Defining an ethical consumer’s behaviour
To what extent do you agree with this definition?

Ethical consumers reward ethical companies by both remaining loyal in the face of increasing brand choice, and paying a premium for their products or services. They punish unethical companies through avoiding their offerings, only purchasing from them at discounted prices, or public boycotts and mass action.

The role of culture in determining values, ethics and behaviour
To what extent do you agree with the following argument?
A unique culture exists when a group of people share a distinctive set of beliefs, norms, customs and values. Values (the common basic convictions of right and wrong) are the key building blocks of ethical beliefs and that these values are learnt through socialisation.

Therefore, what is seen to be appropriate behaviour in one culture may not be appropriate in another cultural context.

Key questions
Exactly what do consumers care about, how much do they care and under what circumstances are they likely to care?

What are the ethical dimensions used by consumers to evaluate corporate behaviour?

Do these dimensions differ across industry sectors?

Do all purchases require the same amount of ethical consideration?

Does culture impact on the kinds of ethical issues consumers care about?

Does culture impact of the ways consumers will reward ethical companies and punish unethical ones?

Are you aware of any examples of ethical consumerism?
What are the consequences of ethical consumerism for companies?

Are you aware of any examples of companies adjusting their behaviour in light of this trend?

  • Posted by Peter (henna gaijin) on Accepted
    I think the unique culture part may require some addition to the definition stating that it is a large group and that they have held these beliefs for some time. 2 people who come together wouldn't make up a culture, but a tribe could.

    You could always consider this as an economist would - ethical consumers are incorporating the added costs to the environment, community, etc. into their decision of what product to buy. They place a cost on the various aspects beyond what they actually have to pay money for.
  • Posted on Accepted
    Great topic - sounds somewhat academic. Consumers will say they care greatly about a lot of things. But when it comes down to it, in general, over 50% of the purchase decision is based on emotions and the rest is price driven. Sure there are differences across cultures and industries, but you need highly, continually involved consumers for them to exhibit actual ethical behavior (as per your definition). Consumers are looking for what is in it for them. If they get the added benefit of "feel good" from the purchase then that is just a fringe benefit. I will be interested in seeing how the rest of the experts respond to your questions. Good luck.
  • Posted by Sans Prix on Accepted
    Michele,

    Why don't you visit the ETHICAL PRICING PROJECT at www.ethicalpricing.info ?

    We have an online survey on the site, some of the questions touching on one or two of the topics you've mentioned above.

    Contact me privately (jon@sansprix.com.au) if you'd like some details on the responses to date.

    Everyone else...we'd love some more responses to the survey...especially from those of you in North America.


  • Posted on Accepted
    An ethical consumer is therefore aware of the consequences of production, consumption and disposal. They have clear expectations of how they expect a company to behave and expect ethical companies to conform to ethical standards.

    Well I partly agree with the above definition. Most ethical consumer (in my view) are not aware of the consequences of production, consumption and disposal but would act negetivly towards the company if they are made aware about the negetive consequences of production, consumption and disposal of the products by the company.

    I totally agree with your definition of the ethical consumer’s behaviour.

    I also beleive that culture does determine values, ethics and behavious.

    I think the personal ethical dimesion is also used by the consumer to evaluate corporate behaviour.

    Dimensions differ across Industry, Country, culturs, etc.

    Not all purchases are given the same amount of ethical consideration.

    Yes culture impacts on the kinds of ethical issues consumers care about and the ways consumers will reward ethical companies and punish unethical ones.

    People bycotting to buy footballs made by poor child labourers in Pakistan is an example of ethical consumerism.

    I am not aware of any examples of companies adjustiong to this behavoiur in the light of this trend but I am sure there are examples of such companies.

    Hope that helps.
    Sanjeev Kumar Vyas.
  • Posted by eugene on Accepted
    Hi Michelle,

    I would agree with your definitions above but i believe there's a huge difference between theory and reality.

    As most of the experts above have shared, price remains one of the most (if not the most) important factor when making a purchase. Factors like convenience and hygiene also play important roles and probably more than that of "ethics".

    The media, NGOs and / or even the government's efforts at promoting the concept of 'ethical consumerism' definitely plays a big role in consumer education.

    Peer pressure would probably be one of the strongest advocates of 'ethical consumerism' e.g. if all my friends and relatives are boycotting a particular company for ethical reasons, i'd probably not buy from them as well.

    Consumer groups can also be pretty effective but as shardman rightly pointed out, large organisations have a well defined process of crisis management and tend to be very good at PR work.

    I would think this will be a tough and long battle, and will have to start with kids in school. As the saying goes, old habits die hard, so are consumers' behaviour.

    Even though its a well accepted fact that cigarette harms us, many still continue smoking...

    My $0.02 worth.

    Good luck.
  • Posted on Accepted
    Hi Michele,

    To what extent do you agree with this definition?

    More or less agree, although I think your definition is good, it is a little loose, I'm thinking more like "an ethical consumer's goal is to always try to do so, regardless of product or service, in a manner that minimizes the use of all resources in the production/consumption/disposal chain."

    I think "minimizing" is a more relevant issue in this context than being "friendly".

    An ethical consumer is therefore aware of the consequences of production, consumption and disposal. They have clear expectations of how they expect a company to behave and expect ethical companies to conform to ethical standards.

    - I like this statement.

    Ethical consumers reward ethical companies by both remaining loyal in the face of increasing brand choice, and paying a premium for their products or services. They punish unethical companies through avoiding their offerings, only purchasing from them at discounted prices, or public boycotts and mass action.

    - I like this too except for the "discounted pricing" because it negates the high value of the others, and a truly ethical consumer just plain won't by regardless of price. Think fur coats.

    To what extent do you agree with the following argument?
    A unique culture exists when a group of people share a distinctive set of beliefs, norms, customs and values. Values (the common basic convictions of right and wrong) are the key building blocks of ethical beliefs and that these values are learnt through socialisation.

    Therefore, what is seen to be appropriate behaviour in one culture may not be appropriate in another cultural context.

    - I agree, this is a fairly standard and accepted definition.

    Exactly what do consumers care about, how much do they care and under what circumstances are they likely to care?

    - Most care about value to price. Generic drugs are a good example. Consumer electronics. Table wine.

    What are the ethical dimensions used by consumers to evaluate corporate behaviour?

    - The reality is most consumer will only base these off of what they hear in the press. If they hear nothing, they make no judgement, but let one lab animal die and nobody wants to buy their shampoo.

    Do these dimensions differ across industry sectors?

    - Absolutely. Killing primates in crash tests is O.K., but not for testing consumer products like the mentioned shampoo.

    Do all purchases require the same amount of ethical consideration?

    - Nope, depends on the impact that a ill tested product could have.

    Does culture impact on the kinds of ethical issues consumers care about?

    - Absolutely.

    Does culture impact of the ways consumers will reward ethical companies and punish unethical ones?

    - Absolutely.

    Are you aware of any examples of ethical consumerism?
    What are the consequences of ethical consumerism for companies?

    - See next answer.


    Are you aware of any examples of companies adjusting their behaviour in light of this trend?

    - Years ago many cosmetic manufacturers, including Mary Kay, stopped using lab animals for testing. Sales increased dramatically and the negative boycotting stopped, doing wonders for their image.

    Sorry for the brevity Michele, but I hope that helps!
  • Posted by koen.h.pauwels on Accepted
    My 2 cents:

    1) Defining an ethical consumer
    I am not sure ethical consumers have CLEAR expectations of how a company should behave: 'do the right thing' may mean different things in different situations and to different ethical consumers

    2) behaviour:
    Even if the ethical consumer is not in the market for the company's products, s/he may defend the ethical company against negative publicity eg accounting scandals, sweatshop practice rumors, antitrust cases
    It is very instructive to read Scott Bedbury's book on ' a new brand world' on how everything matters for your brand's image and how companies such as Nike versus Microsoft take versus leave opportunities in this regard

    Hope this helps
  • Posted by koen.h.pauwels on Accepted
    Oops, forgot to answer your key questions

    1) cultural differences: beyond those, people also differ in which ethical frameworks they use,such as:
    a) Consequences: greatest good for most people (utalitarian)
    b) Duty: what are the roles and responsibilities in this ethical situatinon?
    c) Values: what do these actions tell us about who the company is and wants to become?
    c) Caring: who is the most vulnerable party we shoud care about (feminist ethic)

    2) the food companies and fast food chains are key recent examples: with Kraft announcing they would no longer target kids with certain high-calorie products, Pepsi saying they have implemented this for a long time, and fast food chains bringing out healthy menus
  • Posted by telemoxie on Accepted
    Michele - here are a few thoughts - hope they help. Good luck with your paper - Dave

    An ‘ethical consumer’ looks for products which, above all, are both friendly to the environment and also to the people who produce them - DISAGREE - ETHICAL CONSUMERS LOOK FOR COMPANIES WHO MEET THESE CRITERIA, NOT PRODUCTS.

    An ethical consumer is therefore aware of the consequences of production, consumption and disposal.
    DISAGREE - CONSUMERS GENERALLY HAVE NO WAY TO KNOW THIS.

    They have clear expectations of how they expect a company to behave - DISAGREE - MANY LACK BUSINESS EXPERIENCE, MOST THEY HAVE AN UNMET DESIRE FOR COMPANIES

    Values (the common basic convictions of right and wrong) are the key building blocks of ethical beliefs and that these values are learnt through socialisation. DISAGREE - THIS IS A PHILOSOPHICAL QUESTION - I PERSONALLY BELIEVE FOLKS HAVE A CONCIENCE, THAT THERE ARE FUNDAMENTAL PRINCIPLES OF RIGHT AND WRONG INDEPENDENT OF CULTURE. WAS THE TREATMENT OF THE JEWS BY THE NAZIS IN WORLD WAR II "RIGHT" BECAUSE WITHIN THE GERMAN HIGH COMMAND IT WAS A "VALUE LEARNED BY SOCIALIZATION" ? "RIGHT" AND "WRONG" ARE UNIVERSAL TRUTHS, AND IS NOT BASED ON CULTURE.

    Exactly what do consumers care about, how much do they care and under what circumstances are they likely to care? MOST DO NOT CARE NEARLY ENOUGH TO MAKE A SIGNIFICANT DIFFERENCE - THEY ARE PROBABLY MOST LIKELY TO CARE IN THE CASE OF UNITED ACTION AGAINST A COMPANY, E.G. A BOYCOTT.

    What are the ethical dimensions used by consumers to evaluate corporate behaviour? DO YOU MEAN THE TYPES OF BEHAVIOURS CONSUMERS EVALUATE? I BELIEVE CONSUMERS REWARD BUSINESSES WHO PARTICIPATE IN COMMUNITY AND BUSINESS GROUPS, MAKE GIFTS TO CHARITIES, HELP THOSE LESS FORTUNATE, AND ARE NOT TOO TERRIBLE IN THE ENVIRONMENTAL AREA.

    Are you aware of any examples of ethical consumerism?
    What are the consequences of ethical consumerism for companies? INTERESTING QUESTION. THE PREVIOUS QUESTIONS ALL SEEMED TO IMPLY THAT "ETHICAL CONSUMERISM" WAS A HUGE AND GROWING TREND. NOW THIS QUESTION ASKS WHETHER WE ARE EVEN AWARE IT EXISTS. MAYBE STARKIST TUNA WITH THEIR "DOLPHIN SAFE" ADS ARE EXAMPLES, "LOOK FOR THE UNION LABEL" - "MADE IN AMERICA" - "NO ANIMALS WERE HARMED DURING THE PRODUCTION OF THIS FILM" . IN MY OPINION, THE BIGGEST CONSEQUENCE IS YET TO COME - CONSUMERS NEED A WATCHDOG ORGANIZATION WHICH WILL PROVIDE A STAMP OR LOGO TO HELP THEM IDENTIFY COMPANIES WHO ARE BEHAVING RESPONSIBLY... SUCH A PROGRAM COULD QUICKLY MULTIPLY THE EFFECTS OF "ETHICAL CONSUMERISM"

    Are you aware of any examples of companies adjusting their behaviour in light of this trend? - IT SEEMS TO ME THAT SOME COMPANIES ARE DIVESTING THEMSELVES OF ORGANIZATIONS INVOLVED IN UNETHICAL PRACTICES.

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