Recently I had a coffee or two with one of my former MICM students. She is Turkish and with another alumni – from Indonesia – she had discussed the importance of CSR (Corporate Social Responsibility) and the difficulty to get this introduced in companies. Why is CSR so important for communication and marketing people now? I think it is related to the stage of development of the economy in a country, therefore you can predict what kind of jobs can be expected in your country.
Managers often feel that they have to do something with CSR, because everyone is talking about it. Communication and marketing people then are asked to give a twist to products and brands, hoping that this will result in a more green and responsible image. But this is difficult – if not impossible – when the organizational strategy is solely based on making profit and shareholder value. The basic principle of PR is still very true:
Be good and tell it.
Unilever is a big company where management understands better how to integrate CSR in the whole strategy. For years now, they improve their food by reducing the amount of salt, fat and calories; and they develop shampoo that can be used with no or little water, thus helping to reduce the use and pollution of water worldwide – especially in developing countries.
TNT is another big company which does not just tell that it promotes CSR but really brings this into practice. Some years ago CEO Peter Bakker decided that TNT could help people in poor countries by applying its expertise in logistics. Thus it joint forces with UN’s World Food Program and started to help bringing food to the people, because often the amount of food is not the problem, the problem is that it is waiting in the wrong places: it is rotting in warehouses at a harbor, while people are starving inland.
Both companies do good but they don’t tell it. Most people don’t know that these companies are doing good. Useless effort? No, it is inevitable that sooner or later big companies will be confronted with large issues. Then, companies who already adopted a ‘CSR proof strategy’ then will have a competitive edge. For example because of legislation in countries, inspired by UN guidelines; or because consumers prefer products from a strong ‘good’ brand.
One important aspect of a strong brand is that people voluntarily talk about it. Such as mentioning the brand in a blog 😉
People mainly base their opinions on informal communication, formal communication can only adjust informal communication.
Pyramid of needs & Pyramid of Functions in Organizations
It is rational for companies to be the first to have a ‘CSR proof strategy’, but why is CSR so important now? I think that this is related to the needs people have: the more basic needs are fulfilled, the more immaterial needs we have. This is basically what Maslow visualized in his pyramid of needs.
Consequently, when an economy becomes more mature and basic needs are fulfilled, companies should produce goods and services which fulfill these more immaterial needs. This explains why in the beginning of the industrial revolution every product created its own demand. Apparently producing goods was enough to fulfill needs. Later, more products entered the market and companies had to do more effort to sell products; next to Producing, Sales was introduced as an organizational function. These two functions form the basic stages of the Pyramid of Functions in Organizations.
The rise of marketing
The next stage developed when companies discovered that it is easier to sell products that people really want or need in stead of products which the company just happens to make. Companies had to find out what consumers wanted and needed, so they had to do market-research, develop, produce and sell products that fulfill wants and needs – in a profitable way. In other words, the company had to interact with the market, the Marketing function was born.
Globalization promoting advertisement
Marketing worked for a while, but more and more products entered the market – partly as a result of globalization which reduced the world to a global village with many companies who are all very good in marketing. Mass-production and mass-consumption started in the West, but Japan was a quick learner who also employed managers with MBA‘s.
But Japanese products had a bad quality image and this hampered sales. Therefore manufacturers of audio equipment ‘borrowed’ the good image that they had on the professional market. They did this by making products that looked as if they came directly from a studio, including the handles for the quick replacement of a unit – useless at home but vital in a studio. For example this Sansui hi-fi from 1978.
Production, Sales and Marketing were no longer enough for companies to survive. From then on it was all about image. And creating images is what Advertisement does. Nowadays people don’t buy products but they buy images of products. And a brand is very strong instrument to help create a positive image.
For example, put a Nike swoosh on a T-shirt, produced in China for 2 euro, and people are willing to pay 30 euro for it. Nike is a big branding company, but it doesn’t own factories, its main business is producing an image.
Nowadays however, it is not enough to apply advertisement in order to create an image. Advertisement has to be integrated with sponsoring, direct mailing etc. Therefore it actually is not correct to talk about ‘advertisement’, we should say ‘integrated marketing-communication‘, IMC or marketing-communications, which is the whole of communication instruments that help realizing marketing objectives. But the word advertisement is better known, therefore I have put this in the pyramid.
Stakeholder-power leading to CSR
Nowadays the image of a product or brand that people hold is not only influenced by the company but also by other stakeholders, such as pressure-groups, investors, bloggers, etc.
A brand is no longer owned by the company but by everyone.
Therefore, in order to adjust images companies try to influence how people talk about its products and its brands. This is necessary because people try to put products and brands into context and search for information. Unilever and TNT are good at providing this context, as you can read in the beginning of this post.
People are no longer interested in products – we have enough of them – people are interested in the company and the story behind the product: the context. People want to know: is it healthy, is it produced without polluting the world, is it produced without child-labor or slavery?
Companies answer these questions by telling the stories behind products and brands. If the stories are good and well-told others voluntarily will re-tell them. CSR is about these kind of stories and PR is about telling them.
As you can conclude from the Pyramid of Organizational Functions above, PR alone is useless – or at least not very effective – if the rest of the organization is not good.
PR should be integrated with Advertisement, Marketing, Sales and Production.
Predicting macro trends in the job market
If products are good and are produced well (that is: healthy for the consumer and healthy for the rest of the world) then the base of the pyramid is good and the rest of the organization can build on it. We see that in an economy companies provide products, in later stages they sell them and improve them, then add immaterial value to it and put them into a context. All these stages ask for specific functions – and associated jobs – these functions should be integrated.
Then the organization is good and tells it.
The Pyramid of Functions in Organizations can be used to predict what kind of jobs can be expected, considering developments in economy. For example, in Turkey, Indonesia or China more jobs can be expected related to PR, Corporate Communication and Corporate Social Responsibility.