Whatever happened to Friedman?s concept that ?business of business is business?! Today, most luxury brands are doing their share of philanthropy and as an expected spinoff, the ultra high net worth individuals are moving towards responsible indulgence. Did you just get a hint of oxymoron leanings there?
Consider Oriflame, which launched the ?Power of Kiss? initiative this February. For each lipstick sold in that month, Rs 6 was to be contributed to Deepalaya to support the cause of girl child education. The campaign launch was a glitzy affair at a five star hotel in Delhi with fashion designer Rohit Bal as the goodwill ambassador of the campaign. It just made one take a little read-between-the-lines exercise: how much would have the entire publicity exercise cost and how many lipsticks will the brand sell in the Valentine month? Oriflame India is also engaged in two other projects with Deepalaya and Hand in Hand for Girl Child development and self-help micro-finance projects for underprivileged women.
Several luxury brands such as Louis Vuitton, Cartier, Swarovski, Rolex, Jaeger LeCoultre, etc, are associating themselves with ?worthwhile? causes. Brand expert Harish Bijoor does agree ?that corporate social responsibility adds value to luxury brands?. Abraham Maslow?s hierarchy of needs might give a clue. ?Luxury brands are bought and franchised by consumers sitting right atop the pyramid of affordability. These are people who have risen above basic needs, social needs and security needs. They are now so economically enabled that they have shifted their focus to social betterment. They are the consumers who have the time to focus on social good. When your stomach is not empty, you can think of higher issues and noble causes,? explains Bijoor. The latest research by Family Bhive, a social networking website for individuals with proven net wealth over ?5 million, found 76.9% of its 600 members considered philanthropy to be ?an important part of their lives?. Given the findings of the research, one ?could assume that any company who supported such (philanthropic) causes would be more attractive to these individuals,? feels Guy Watts, business development executive, Family Bhive Ltd.
And why should the brands not use CSR as a luxury product attribute? ?Brands use CSR as a marketing tool, though subliminally. Any kind of an overt indication could be counter-productive to these brands. They, therefore, practice the art for the subtle and the art of the covert here,? Bijoor further adds. The added premium is a necessity, more so because luxury goods, unlike the general goods, are beyond the ambit of demand-supply economics, as well as the cost price-selling price equation.
So, what do the brands have to say about this? ?CSR definitely serves as a marketing tool, provided it is marketed well and positioned at the right time. Our CSR initiative is always based around a product which directly translates into sales and in turn completes the cycle by contributing to that social cause. It adds credibility to a brand?s image,? feels Sukanya Dutta Roy, country manager, consumer goods business, Swarovski India. The brand raised Rs 25,00,000 at a charity auction held this year in Mumbai for WWF. A share of the profits from the sale of the ?Endangered Wildlife? tiger have been used to establish a Swarovski water school programme to educate local communities on sustainable water management around the catchment area of the Ganges. Tarun Sharma, country head, Jaeger-LeCoultre (JLC), also thinks ?CSR is a very positive marketing tool, it puts a brand in a very honourable position. But I do not see it as directly linked to sales.? JLC, through its global ?Making Time More Beautiful? project, has entered into a three-year partnership with UNESCO?s World Heritage Centre. The proceeds of ?Tides of Time? online auction held last month have been directed to Sundarbans National Park.
Samrath Bedi of Forest Essentials feels ?it makes consumers feel better if they are aware of a brand?s social conscience?. He has just instituted a dedicated CSR budget for the brand, albeit as part of the marketing budget. The ayurvedic brand integrates nature responsibly to make its products in a village in Uttaranchal, where it provides livelihood to locals, especially women.
?Responsible? branding does help. Marti Barletta, CEO, The TrendSight Group, feels that CSR could be one way by which brand managers can affect marketing response of the consumers. ?Helping someone else, which isn?t mission critical for most men, is a plus for women. This isn?t necessarily in a mushy, nurturing way; it?s more that it makes her feel useful, appreciated, and powerful. Emotion-based advertising also has a powerful pull for women,? she says. However, a line divides real efforts from make-do efforts. Philanthropy Action managing editor Laura Starita is quick to make a distinction between luxury brands that engage in ?embedded giving? efforts and those pursuing true CSR initiatives: Embedded giving efforts are almost without exception marketing initiatives, essentially short- term marketing campaigns in which a brand links up with either a cause or a specific charity and gives that charity a portion of the proceeds of any sales. ?They are often very opaque regarding how much of the sale ultimately goes to the charity. And they are dangerous in the sense that they can siphon funds away from real philanthropic engagement because the buyer thinks he or she has already made a donation just by choosing one brand over another,? says Starita. In contrast, in their ideal form CSR efforts are long-term commitments. ?I don?t know of a luxury brand making a long-term commitment of the kind I am referring to,? she adds.
According to Deeper Luxury, a report compiled by WWF, LVMH, Herm?s, L?Or?al and Swatch were the only luxury conglomerates listed in the FTSE4Good index in 2006, but LVMH was expelled for supply chain issues in March 2007. Clearly, commitment doesn?t come easy.
The bottom line, however, remains that any initiative, big or small, does hold the power to make some difference. And to that extent, it must be lauded.