One of the major problems in business is the notion of whether companies should be concerned with other issues than profitability. Adam Smith in 1863 claimed that the process of achieving the overall good for the society is something that will happen inevitably happen because of his idea of the invisible hand of the market. However, more contemporary ideas assert otherwise as they believed that there are a number of conditions that would hinder the invisible hand to work effectively (Mohr and Webb, 2002).
The Body Shop International, PLC is one of the leaders in terms of cosmetic stores focusing in skin and hair care products that are made from natural ingredients. The company is a subsidiary of L’Oreal and has branches to over 50 countries worldwide. On the fiscal year of 2006, Body Shop has total revenue of ? 485. 8 million which marks a total of 15. 9% increase compared to 2005 (Datamonitor, 2007, p. 4). Body Shop’s niche market sector has been famous due to the advent on the use of naturally inspired skin and hair care products.
Body Shop’s product lines range from the use of Vitamin E Moisture Cream, Tea Tree Oil, Banana Shampoo and the likes. The company also advocates the use of aloe vera, jojoba oil, rhassoul mud, cocoa butter etc. Hence it could be said that the company has fully revolutionized the ethical disposition of the cosmetic industry with regard to the use of natural ingredients, and most importantly, the advent against using animals in terms of testing their products (p. 5).
It could also be significantly noted that the Body Shop has been highly commended through the use of its own fair trade program which primarily includes transacting with disadvantaged communities all over the world. For instance, the company is known through its purchases of ingredients such as the blue corn from the Pueblo Indians in New Mexico; it has also been purchasing Brazil nut oil from the Kapayo Indians of the Amazon River Basin (p. 6). 1. 2 Significance of the Study The study is significant in order to know if customers now a days are informed in
terms of the Corporate Social Responsibility (CSR) of multinational companies. In the cosmetics industry, wherein information about how products are produced and are tested is made unknown to the public, it is imperative to know whether consumers at present perceive these factors as relevant at all. More importantly, the implications of emerging ethical issues in the market could be focused upon to significantly contribute on the amount of literature and researches establishing the link between CSR and consumer buying behaviors.
As such, this study is relevant in order to know whether The Body Shop consumers in London did take into consideration the CSR of The Body Shop in terms of their purchasing attitude. 1. 3 Objectives of the Study The objectives of the research are the following: 1. To know from a consumer’s perspective if The Body Shop International PLC have a responsibility to the society. 2. To know how much support does consumers have about the Corporate Social Responsibility (CSR) of The Body Shop International PLC. 3. To know how much do consumers care about The Body Shop International PLC’s level of CSR. 3.
1 To know if customer purchases are affected by the said factor. 4. To know what motives do consumers attribute to the CSR of The Body Shop International PLC. 4. 1 To know if the said motives make a difference to the consumers. 1. 4 Conclusion The implications of the workings of corporations overtime to the society, environment and other living things is something that is of utmost importance at present. In the age where science is triumphed over life and ethics, it is imperative to know whether cosmetic and skin and hair care international companies such as The Body Shop International are doing in terms of their CSR.
More importantly, the study also seeks to establish the link between these CSR programs and know whether this affects consumer buying behaviors. Chapter II Review of Related Literature 2. 1 Introduction The review of related literature deals on: The Cosmetics Industry, Corporate Social Responsibility (CSR), Consumer Buying Behaviors, CSR and Purchasing Decisions, Customer Satisfaction and Customer Loyalty, and The Body Shop International, PLC Values: Against Animal Testing, Support Community Trade, Activate Self Esteem, and Protecting our Planet. 2. 2 The Cosmetic Industry
The European Cosmetic Industry has a total value output of more than 35 billion €. The industry is highly innovative as it has been a custom to replace or reformulate more or less 25% of its products per annum. In addition with this, 150,000 Europeans work within the industry while there are more than additional 350,000 jobs that stem out due to retail, distribution and transport of the said products (European Commission A, 2006). Cosmetic products are generally divided into five categories which are: toiletries, skincare, fragrance and perfumes, hair care and decorative cosmetics (European Commission B, 2006).
Toiletries are composed of products use for bath and shower such as salts, foams, oils, gels and the likes. In addition with this, shaving products, products for the teeth and mouth, soaps, powders etc are included within this category. Toiletries make up 25% of the market share of the Cosmetics Industry (European Commission B, 2006). Consequently, skin care products like creams, emulsions, lotions, gels and oils for the skin and face masks like peeling products belong to the skin care category. Powders, sunbathing products, whitening products and anti-wrinkle cream also belong to this category.
The skin care section comprised 23% of the total market share of the industry (European Commission B, 2006). . The hair care section also gives up the 25% of the total market share for the industry and normally comprised of products for the hair such as tints, bleaches, waving, straightening, fixing, setting, cleansing, conditioning, hairdressing, etc (European Commission B, 2006). . Fragrances and perfumes made 15% and finally, decorative cosmetics made 12%. Make-ups for the eyes, lips, face, and even nail care also belong to this category (European Commission B, 2006).
2. 3 Corporate Social Responsibility (CSR) An organization which closely considers the ethical aspects of doing business seeks to cater to the interests of various stake holders. Such includes not only stockholders and employees but also other groups of individuals that are often composed of customers, suppliers, governments, unions, competitors, local communities, and the general public (Sims, 2003, p. 40). It is often the case that the demands of the stockholders, stakeholders and the outsiders within the organization are in conflict with one another.
For instance, stakeholders expect that the company would be able to do their business in a responsible manner; on the other hand, stakeholders expect that their investments would be returned. Corollary with this, customers are looking forward a return on what they paid for, while suppliers look for dependable buyers. The government wanted companies to follow legislations, while unions seek benefits for their members. The competitors, expected companies to do their business in a fair manner and local communities wanted the aforementioned to be responsible citizens.
Finally, the general public expects organizations to improve the over all quality of human life (p. 40). Table 1: Stakeholder View of Corporate Responsibility Stakeholder Nature of the Stakeholder Claim Shareholders Participation in distribution of profits, additional stock offerings, assets on liquidation; vote of stock; inspection of company books; transfer of stock; election of board of directors; and such additional rights as have been established in the contract with the corporation. Employees Economic, social, and psychological satisfaction in the place of employment.
Freedom from arbitrary and capricious behavior on the part of company officials. Share in fringe benefits, freedom to join union and participate in collective bargaining, individual freedom in offering up their services through an employment contract. Adequate working conditions. Customers Service provided with the product; technical data to use the product; suitable warranties; spare parts to support the product during use; R&D leading to product improvement; facilitation of credit. Creditors Legal proportion of interest payments due and return of principal from the investment.
Security of pledged assets; relative priority in event of liquidation. Management and owner prerogatives if certain conditions exist with the company (such as default of interest payments). Suppliers Continuing source of business; timely consummation of trade credit obligations; professional relationship in contracting for, purchasing, and receiving goods and services. Unions Recognition as the negotiating agent for employees. Opportunity to perpetuate the union as a participant in the business organization. Competitors Observation of the norms of competitive conduct established by society and the industry.
Business statesmanship on the part of peers. Governments Taxes (income, property, and so on); adherence to the letter and intent of public policy dealing with the requirements of fair and free competition; discharge of legal obligations of businesspeople (and business organizations); adherence to antitrust laws. Local communities Place of productive and healthful environment in the community. Participation of company officials in community affairs, provision of regular employment, fair play, reasonable portion of purchases made in the local community, interest in and support of local government, support of cultural and charitable projects.
The general public Participation in and contribution to society as a whole; creative communications between governmental and business units designed for reciprocal understanding; assumption of fair proportion of the burden of government and society. Fair price for products and advancement of the state-of-the-art technology that the product line involves. Source: Sims, 2003, p. 41 These expectations from the aforementioned stakeholders are often in conflict with one another.
For instance, the government and the general public often times have problems in contrast with the company’s creditors and stake holders most especially in terms of the company’s profitability. In effect of this, it is recommended that organizational objectives and strategies will be internally consisted and focused. In relation with this, it has been argued that leaders must be able to create a single-mind and multidimensional approach to the organizations’ aims (p. 42). The concept of Corporate Social Responsibility (CSR) is deeply rooted on the commitment of organizations to continue their business in an ethical manner.
Also, it is relevant as well that the organization will be contributing to economic development of one’s country while at the same time improving the quality of life of not only its employees and its families but also the society where it belonged (Watts and Holme, 1999). One of the central concerns with regard to the necessity of the implementation of CSR by a particular organization is the impact of their decisions and actions within the society. Closely related to this is an organization’s responsibility to the entire society.
As such this means that when aligning certain organizational goals or projects, it would be better if organizations will evaluate first their actions and make sure that they are in accordance to the welfare of the greater good (Parsons, 1954). As such, the impact of an organization’s decision within the society is very vital in CSR. It should be emphasized as well that an organization’s duty should span more than the economic and legal aspects but also assume the good of the majority. Archie Carroll said that an organization’s social responsibility is something that includes the interplay of four important factors.
These are economic performance, adherence with the law, ethical responsibility, good corporate citizenship, and improving the society’s quality of life (Carrol and Buchholtz, 2003). The Body Shop International PLC considers the following as their stakeholders: Customers, Non-Governmental Organizations (NGO), Partners, Franchisees and other business partners (The Body Shop International PLC I, 2007). The Body Shop International PLC gives immense value on their customers and considers them as their primary stake holder. Eighty percent of Body Shop customers are buying in the company because of the aforementioned’s values.
A huge number of the requested information came from the details regarding the take over of L’Oreal, animal testing and chemical use (The Body Shop International PLC I, 2007). Employees and consultants are also important to the company as it directly employs 10,034 people. The company assures that its values and objectives are in accordance with the needs of their consultants and employees, hence providing them trainings, direct communications with the administration, market level dialogues, company intranet and also numerous company magazines that would educate the aforementioned (The Body Shop International PLC I, 2007).
Body Shop’s franchisees are also relevant because majority of them took part in the campaigns of the organizations. The specialty of the said franchisees most specially in terms of the latter’s perception of their own markets is something that helps the company not only to further increase their revenues and also preserving company values. Body Shop suppliers are also assured to follow strict compliance procedures against animal testing. In relation with this, the packaging processes of the products of the company are also assured to be non toxic and for that matter recyclable.
The use of natural ingredients or alternatives to certain harmful chemicals is also taken in utmost consideration. In return with this, the company does its duty to the former by helping their suppliers most especially in marginalized countries to improve their quality of life. Other companies and multi-stakeholder networks of Body Shop are also working in accordance with responsible business practices (The Body Shop International PLC I, 2007). 2. 4 Consumer Buying Behaviors
A person’s terminal values are perceived as one of the major determining factors of consumer buying behaviors. According to Ratneshwar, Mick and Huffman (2000) the most important factors that determine buying behaviors of customers are means-end chain models that “seek o connect product-feature preferences to a consumer’s values” (p. 10). The social identity theory claims that consumer behavior is primarily dependent on these two factors: people take actions to buy products, and it is often the case that they buy products that are consistent with their ideal self images.
Second of which, it is also important to note that the social identity theory claims that every person enacts multiple identities that functions in every social context such as for instance, mother, professor, volunteer, that could be drivers of buying actions (p. 11). The behavioral decision theory that is under the umbrella of the social identity theory claims that choices of consumers are often made in accordance with their attribute values. Closely related to this is the attitude theory which emphasizes consumer expectancies and evaluations on a particular product belief (p.
11-12). The figure below presents consumer goals in terms of their buying preferences. It could be seen that the core reason that determines why such and such consumers buy certain products is primarily due to their life theme and values. In effect of these, their life themes and values deeply influenced how they are going to deal with their life projects, current concerns and consumption intentions. Finally, the benefits sought and the feature preferences are also considered as the end goal of the being and doing hierarchy.