New research from Mintel has revealed that ethics continues to grow in importance when it comes to a company’s reputation, especially considering that public opinion can now go viral in an instant.
New research from Mintel reveals that 56% of U.S. consumers stop buying from companies they believe are unethical. What’s more, over one third (35%) of consumers stop buying from brands they perceive as unethical even if there is no substitute available and 27% stop purchasing even if they think the competitor offers lower quality. Overall, more than three in five consumers feel that ethical issues are becoming more important (63%).
Some 34% of consumers tell others when they perceive a brand to be making ethical actions or actions that are honest, fair and responsible, while another 29% of consumers take to social media to share their support of ethical companies. However, the likelihood to stop buying from “bad” brands is not met by the likelihood to support “good” brands, with just 45% of consumers buying products from companies they perceive as ethical. Despite 58% of consumers agreeing that buying ethically produced products makes them feel good, there is skepticism toward company ethics. Half of Americans agree that marketing products as “ethical” is just a way for companies to manipulate consumers (52%) and that many companies behave ethically in one area while behaving unethically in another (49%). Additionally, one third of consumers report that a company’s ethics rarely or never influence whether they purchase the company’s products (31%).
Many brands are using ethical icons and terms on product packaging to communicate ethical practices, but Mintel research shows that this method leads to confusion among consumers. Some 68% of Americans are confused about what certain ethical icons mean, with nearly half (46%) confused about the meaning of certain ethical terms. For example, despite Halal being the most recognizable icon, just 20% of consumers report that they know what it means. What’s more, only 10% of consumers know what the icons for Fair Trade USA and Cruelty Free International mean.
“When corporate social responsibility went mainstream in the early 2000s, incorporating social initiatives and linking to ethics was an effective way to attract attention and promote brand loyalty. Now, with more than half of consumers willing to stop supporting unethical companies, it’s become the norm and is often expected by consumers. These efforts are no longer differentiators and can even draw skepticism among consumers,” said Lauren Bonetto, lifestyles and leisure analyst at Mintel. “Brands have attempted to boost their ethical reputations by using icons, but these are only effective for reaching the most engaged consumers. Brands must consider alternative methods to showcase their ethical efforts, such as content marketing showing the full scope of a brand’s actions and participating in related grassroots efforts.”
Size Matters: Small brands are more trusted than big brands
As described in Mintel’s North America 2016 Consumer Trends, following the global financial crisis, consumers exchanged the “bigger is better” mantra for right-sized purchases and supporting small businesses, which led to an explosion in craft products and increased intrigue about a product or brand’s origins. One way big brands are trying to appeal to these consumers is by entering the craft and niche markets and by sharing genuine stories about the brand to form relationships with consumers and give them the security that the brand’s products are worthy of their investment and loyalty.
More than two thirds (70%) of Americans are at least sometimes influenced to purchase products based on a company’s ethics, and according to Mintel research, a company’s size stands to help or hurt its ethical image due to consumer notions about the relationship between size and ethical behavior. Half of consumers say they trust small companies to do the right thing (49%), while big businesses (36%) are much less likely to be trusted. The most commonly considered factor when determining a company’s ethics is employee treatment (48%), followed by where its products are made (34%) and if the brand or product is environmentally friendly (33%). Consumers are more likely to consider outreach in local communities (22%) over national (18%) or global (13%) outreach.
“Consumer attitudes toward big businesses have shifted with many wondering if a company’s success is coming at the expense of others. While often popular for their lower prices and brand recognition, big companies may be criticized for the treatment of their employees and product sourcing. Companies can combat these concerns by launching regional brands, working with local suppliers and being proactive with community outreach,” concluded Bonetto.