In January of this year, Edelman released their annual Trust Barometer Report and distilled the 2014 learning down to one single phrase: “Business to lead the debate for change.” It’s in this context that three recent strategic moves by major brands reveal what large brands must do to lead our future.
1. RISK MITIGATION: This week Chick-fil-A announced that they will commit to using antibiotic-free chickens within five years. While some commentators have questioned why it takes five years to make such an adjustment in terms of their production, the point remains the same: Consumers had voiced their concerns loud enough, for long enough, that the company was forced to respond. Chick-fil-A’s president, Dan Cathy, is focused on his customers and “using the highest quality ingredients”. Obviously, what leadership had in mind was to maintain consumer goodwill, loyalty, and sales at a time when the fast food industry is facing increasing scrutiny in the context of obesity, health care, and nutrition concerns. By committing to antibiotic-free chickens they are mitigating the risk that this growing body of consumer activists will use their social media tools in increasingly effective ways to damage the company’s reputation.
2. REPUTATION ENHANCEMENT: Last week the CEO of CVS Caremark announced that they would no longer sell tobacco products through their network of 7,600 stores. While much was made of the immediate financial costs to the company, the strategy behind it was clear. As the CEO, Larry J. Merlo, explained, “Put simply, the sale of tobacco products is inconsistent with our purpose.” The incongruity between being a health care company and selling tobacco products may seem self-evident, but for too long these inconsistencies have gone unnoticed, unchecked, or unaddressed as brands focused on a ‘profit for profit’s sake’ mentality. Yet, by shifting away from selling tobacco products, CVS Caremark not only gets a first mover advantage, which will continue to pay dividends over the long term, but they have established their credentials to lead the healthcare debate in the future. As such this is a smart strategic in light of growing social crises such as obesity, chronic diseases, and the growing burden on the health care system.
3. TRANSPARENCY – This week we saw the announcement from Kellogg’s that they would make a commitment towards sourcing labeling for the harvesting of palm oil that is used in their products. The move would protect endangered animal species, as well as indigenous peoples and in doing so, they demonstrated a fresh commitment to transparency in the face of rising consumer activism that was most notably seen in recent years with consumer protesting against the harvesting of palm oil by Nestle. Kellogg has demonstrated its awareness that brands can no longer hide behind labels on packaging, entertaining marketing, or empty CSR promises, as consumers armed with the web, social media, and smart phones can easily expose brand duplicity through their own networks. This, in turn, can lead to costly damage to the company’s reputation, a risk to its social license to operate, and a limitation on how inclined its customers are to promote the brand and its products to others.
- The actions taken by Chick-fil-A, CVS Caremark, and Kellogg’s are just the beginning of what will become a tide of adjustments as corporations seek to bring their services, products, and marketing in alignment with their core values. Such alignment not only mitigates risk to the company’s bottom line due to consumer activism, but also positions them for industry leadership based on the values that they share with their customers. As such, these events are another demonstration of what is becoming an increasingly co-creative process between brands and their customers committed to a common purpose. That purpose includes the well-being of the company and society at large and those companies that rise to this challenge will be the ones consumers propel to leadership in the future.