Wednesday, 14 January 2015 22:00

Research identifies critical factors in consumer boycotts

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Company executives need to be aware of three critical factors when it comes how consumer boycotts may play out, says new international research on the subject.

Writing for the Canadian-based Network for Business Sustainability, an organisation of global academic experts and business leaders aiming to improve the sustainability of business, Professor N. Craig Smith of Insead Business School notes that one of the key lessons from the research is that “any boycott, no matter how illogically conceived or badly executed, can wreak long-term havoc on a company’s reputation – even if it does not hit short-term sales”.

Smith says the following are the key factors company executives must be aware of when facing consumer boycotts.

 

1. Boycotts Rarely Hit Short-Term Sales

Boycotts rarely reduce short-term sales, but can achieve their goals in the long-term, he observes.

“Take the mass desertion of Barclays Bank’s student customers in the 1980s, when the bank was accused of supporting apartheid in South Africa. No loss, you might think, as students have very little money. But students turn into well-paid professionals with credit cards and mortgages. Barclays eventually pulled out of South Africa. The boycott was one factor in the decision, alongside others for sure. Nonetheless, the legacy of the boycott lives on, with Barclays still today being shunned by many of those former student boycotters.”

Referring to a prominent boycott last year – in which environmental group Greenpeace targeted Lego, the international toy company, in an effort to embarrass Shell for its involvement in Arctic oil drilling – Smith says Greenpeace was successful in breaking the long-standing Shell-Lego partnership in only a few months of campaigning. “Yet we suspect sales in an all-out boycott would not have been hugely affected, at least in the short-term.”

2. Successful Boycotters Go for Easy Targets

History shows that successful boycotts nearly always focus on high-profile products that consumers can easily do without. Lego was both, Smith notes in his article.

He believes the company was particularly vulnerable when Greenpeace launched its campaign in July 2014, as the Hollywood-made ‘The LEGO Movie’ was due for release on DVD. In addition, consumers did not necessarily need to purchase a Lego construction toy.

“Customers have alternatives – [they can buy] non-construction toys or a cheap Canadian clone called Mega Bloks. In contrast, it’s hard to do without your car. Greenpeace knew it couldn’t ask consumers to boycott all the major oil companies involved in Arctic drilling. Shell is not the only one [involved in Arctic drilling] …”

Smith believes Lego’s risk managers should have known they were vulnerable. “Maybe they thought about boycott risk each time the marketing team renegotiated the Shell deal [to sell co-branded Lego toys at Shell filling stations in 26 countries]. But they didn’t seem to have any plan for rapidly regaining the moral high ground.”

3. Successful Boycotts Focus on a Cause that is Central to Your Business

Effective boycotts nearly always focus on a cause that is central to the target company’s business. Those without such focus often fail, the researchers observed.

“In 2011, the CEO of US fast-food restaurant Chick-fil-A made controversial statements on same-sex marriage, resulting in a boycott. But a backlash came [via the] Chick-fil-A Appreciation Day movement – and sales briefly rose.” He believes that’s because the issue of same-sex marriage wasn’t central to the company’s chicken-focused business.

“So, perhaps Lego executives shouldn’t have worried. Drilling for Arctic oil isn’t central to the toy business. Or is it?” Smith asks.

“Greenpeace focused its campaign on the marketing tie-in between Lego and Shell. But Lego’s links to oil run deeper, as do its environmental responsibilities. Lego’s bricks are actually made out of crude oil, [not] from recycled plastic.

 

“Today, Lego is much more than a toy company. It is an entertainment giant [which is] as global as Shell. But its plastic bricks, with their educational overtones, give Lego its ethical respectability. Most of Lego’s CSR and philanthropy focuses on children. The environment seems to be [the company’s] weak spot; and one at the heart of its business. Had Greenpeace’s petition turned into an all-out boycott, it might well have damaged the Lego brand in the long-term.”

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