Assessing the Impact of Corporate Social Responsibility (Csr) on Brand Equity for Coca Cola-India
1.1 Background Information
The onset of the globalization period and firm rivalry issue of trade associations in auctioning their activities has moved to corporate social responsibility (CSR). However, the recent suitable slogan for the formation of numerous products is “doing good” (Sen & Bhattacharya 2001, pp. 225-243). Due to the current financial decline and calamity in banks, clients want to be linked with brands that are purposeful other than creating gains. CSR has been described as the perception where associations of enterprises create intentional options to safeguard and revere the interest of an extensive variety of stakeholders and to boost dirt-free work surrounding and an improved society in the course of a lively association with each person (Muniz & O'Guinn 2001, pp. 412-432). CSR is a benevolent dedication upheld by business associations to control the position they hold in the society in a responsible manner (Smith 2003, pp. 52-76). Among the aims of CSR is to include to a sustainable growth operating with workers, the remote societies, and the kin, in addition to developing their value of being (Yoon et al. 2006, pp. 377–390). CSR is principally collaboration among administrations, satisfying enterprises and community, multiplicity, sustainability, compassion and ethical savings in the midst of related aspects (Andreasen & Minette 2001, pp. 95-124).
The system of Coca Cola in India includes Coca-Cola India Pvt Ltd, Franchise bottling operations, and Hindustan Coca-Cola Beverages Pvt Ltd. The system comprises 150,000 indirect employees. Coca-Cola India is founded on two main assets: people and brands. Its impact in the carbonated drinks area has been felt in the Indian market as it gives customers the pleasure of the high-standard drinks for refreshment, nutritional needs, and dealing with hydration. Operations include bottling managed through the company and also franchises (Coca-Cola-India 2010). There is a network of 21 contract packers engaged in the manufacturing of a wide range of products. The company offers juice and juice drinks, packaged water, spanning sparkling drinks, tea, energy drinks, and coffee. Internationally, the company provides 3300 beverages. The company engages in a corporate social role. For instance, the Jain Irrigation’s Sustainable Agriculture Initiative reaches out to 50,000 farmers. The company has also been involved in recharging underground water and at the same time utilizes less water.
Companies are taking different options to direct the flow of their goods to the consumers. For Coca-Cola India, the wake of globalization has induced a lot of competition with its competitors, such as Pepsi and other soft drinks manufacturing companies. This has challenged the company to include the roles of corporate social responsibility (CSR) in the recent years. In order to create a good Coca-Cola brand equity, the company employs CSR.
1.2 Significance of the Study
The main purpose of the study was to address some areas in the CSR activities to realize the full potential in a very competitive world business. The value of a brand shown through CSR is ever on the increase as other exclusive market cap contributors like corporate brand value-promotion and the entire industry where a company carries out its operation seems to be going down (Keller & Lehmann 2006). The connection between CSR and the image of a company brand has become a very strong familiarity for consumers. Therefore, the study presented research propositions and drew conclusions based on the informed content concerning the previous, present and future developments in the concept of CSR.
1.3 Research Questions
Research questions are the tools that are used to give purpose and direction to the study. The questions that will guide the study are:
i. What are the efforts made by Coca-Cola India in creating brand equity?
ii. Why is corporate social responsibility important in creating brand equity?
iii. Why should Coca-Cola India take up a corporate social role?
iv. What is Coca-Cola’s perception of CSR?
1.4 Aims and Objectives
The aim of this dissertation is:
To delineate CSR and brand equity;
To find out the relationship between CSR and brand equity;
To highlight the usefulness and challenges of CSR in Coca-Cola India. Is the implementation worth the effort?;
To point out Coca-Cola’s view of CSR.
The world has experienced a major economic downturn in the recent years. Consumers now want to be allied with company brands whose focus is not entirely on profit alone. The CSR concept has been adopted by companies to promote sustainable development working along with local communities and taking a corporate social role in improving their life quality (Basil & Weber 2006). Research shows that many customers in a given region will go for brands that are connected to a good cause (Grau, Garretson & Pirsch 2007). A new concept of co-ordination has been enhanced through companies were plans considering consumers in their decision making is being realized. Pepsi Refresh is one such example just like Coca-cola India.
2.1 Corporate Social Responsibility
Corporate social responsibility has been a concept of cooperation existing between governments, society and businesses, conditions of labor, philanthropy, sustainability and ethical empowerment amongst various factors. Corporate social responsibility has been taken as the view held on the community as the very reason of business existence and not just for any other party. Connecting opportunities with company responsibility can be of great help to companies in identifying methods of advertising new products. Private companies have been involved in CSR as a means of strengthening their brands. The value of a brand shown through CSR is ever on the increase as other exclusive market cap contributors like corporate brand value-promotion and the entire industry where a company carries out its operation seems to be going down (Keller & Lehmann 2006). The connection between CSR and the image of a company brand has become a very strong familiarity for consumers. This implies that, for a company to be well known in the society where it operates, the activities of CSR must be seen to strengthen the image of the brand. Making free donations as a CSR activity has been very profitable for companies in promoting their brands. Coca-cola India has been awarded for its role in CSR activities of promoting the welfare of farmers among other things (Coca-Cola-India 2010).
Consumers are largely expecting organizations to make a much larger contribution to the society more than was the case in the past (Mohr, Webb & Harris 2001; Nan & Heo 2007). Studies have shown that consumer decisions to make purchases are impacted positively when the company is seen to engage in socially responsible projects (Keller 2008). This study was based on the goodwill of the public index. India got 119 points in the same index when compared with the international mean of 100 (Maneet & Sudhir 2011). CSR is not just an activity of philanthropists in assisting heath centers, schools and cleaning the environment (Greenley, Hooley & Rudd 2005). It is a concept that touches on matters of character and conduct where integrity and responsibility overlap in the activities and ethos of the company.
According to Maneet and Sudhir (2011), about the leading organizations in India take part in corporate social programs in education, livelihood creation, health, skill development and promoting the sections of the society that are weak. Tata Group and Bharti Enterprises are some of the companies that have been on the lead in CSR activities. Unilever being a multinational company uses micro enterprises to purposefully enhance consumer goods penetration in the rural regions. IT companies like TCS and WIPRO have established software that aim at helping teachers and pupils in learning institutions all through the nation of India to further the learning cause. Literacy amongst adult has been a huge factor in promoting learning levels kin societies that are remote. Coca-cola India has not been left behind as well in an effort of staying ahead of competition amongst its competitors. The need for CSR activities by companies and organizations in India cannot be over-emphasized. Banks and companies of insurance are making huge strides to reach out to migrant laborers to help them through development schemes and micro-credits as well.
Among the factors that strengthen the economic worth of a certain brand to the proprietor of the brand is brand equity (Hoeffler and Keller 2002, pp. 78-89; Kapferer 2004, pp. 25-33). Constituents that can be included in brand assessment encompass: income margins, varying market share, detection of trade signs by the client, besides other observable constituents like brand speech, links created by customers, customers’ attitude on issues of value and other related brand ideals (Aaker and Erich 2000, pp. 10-15; Nan and Heo 2007, pp. 63-70). The existence and sustainability of an enterprise depends on the way in which the enterprise is accountable to the community it works in. Commitment to the formation of brand equity is simplified by the company’s creation of positive brand image in the mind of the clients. CSR has been defined by diverse issues. It has been expressed as the progressing dedication created by enterprises to act in a moral way and endorse financial growth while improving the value of being of the workers and the families not leaving behind the remote society and neighbourhood ((Basil and Weber, 2006, pp. 61-72; Strahilevitz 2003, pp. 77-92).
However, CSR has been considered the upheld perception in relation to the society as the initial reason for the survival of enterprise and not simply any stakeholder (Grau and Folse 2007, pp. 19-33). Studies indicate that a greater number of customers in a certain area would move to the brand that is associated with good progress. A raising idea of collaboration has been supported by associations where they are providing tactics that will consider the clients by providing a chance for co-decision and coordination as it has applied to Pepsi Refresh. Another brand adopting the system of coordination is IKEA, which offers free solar lamps to the UNICEF, when it puts up Sunnan energy-efficient lamps with solar boards for sale. Although there are hidden charges in the course, a major and considerable differentiation is created by means of related plans. Connecting chances with accountability can assist enterprise associations to discover recent means of providing fresh goods to numerous clients (Grau et al. 2007, pp. 69-91; Greenley et al. 2005, pp. 1483-1494).
2.2 Marketing through Corporate Social Responsibility
In various business associations, marketing sectors have indicated a rising interest in appliance of CSR line ups. Formerly, CSR line ups have been important in the creation of brand equity. The work of CSR is evident in that it builds brand familiarity, develops the outlook of the brand, institutes the reliability of the brand, stirs up the opinion of the brand, creates essence of brand society, and also brings out brand commitment (Fry and Polonsky 2004, pp. 1303-1306). Several areas of CSR that contain information on its flourishing function and utilization of full prospective in trade have been highlighted. However, CSR line-ups have been surrounded by several questions that include how they cover their effects, the source enterprise to select, and the how CSR programs ought to be branded (Simmons and Becker-Olsen 2006, pp.154-169). As a result, it is essential to forward review proposals and lay down conclusions founded on well known information regarding the previous era, recent and coming guidelines in the CSR idea.
An imperative back-up of CSR is made available to enterprises by government projects which have a greater impact on the brand outlook of the enterprise. Although commercial nations engage in CSR actions, the central administration can work on the outline to enumerate the CSR schemes of business associations leading to advanced progress. Among the means of catching the attention of enterprises to CSR is through development of a scheme of CSR credits likened to the carbon credits scheme provided to associations for environmental proposals. This creates a strong base for the negotiating power of the enterprise in the trade of its products (Keller 2008, pp. 20-22).
Trade associations that have initiated CSR activities in their functions are enjoying numerous reimbursements as well as improved brand outlook (Gürhan-Canli and Batra 2004, pp. 197-205). Enterprises in which accountability is their chief value and is held in all concepts of the company have a good basis of progress. CSR proposals do not simply entail humanity but convert information into realistic policies of enterprises (Catherine and Donald 2006, pp. 207-211). Efforts from CSR do not simply regard provision of finances but are about moral integration and communal activities of conducting trade that aid clients in creation of an imperative brand outlook (Ellen et al. 2000, pp. 393-406; Forehand and Grier 2003, pp. 349-356). Due to rising knowledge of CSR, several business associations have enhanced a basic knowledge of moral standards and business administration (Ellen et al. 2006, pp. 147-157).
2.3 Corporate Social Responsibility and Brand Equity
A greater number of private enterprises do not clinch on CSR because it is their only option, but because of its effective perception that reinforces their brands (Lafferty and Goldsmith 2005, pp. 423-429). The brand value rate of the CSR has been seen to trend upwards as all the other elite providers to trade limit, commercial brand value-announcement and the sector in which a business association works are seen to turn down. The connection amid CSR and brand outlook is powerful in terms of awareness and not in the perspective of favourability (Pracejus and Olsen 2004, pp. 635-640). Consequently, if an enterprise is renown in the society that it works, its CSR operations will boost its brand outlook more than would be the issue for an enterprise without such identification (Smith and Matthew 2000, pp. 304-322). Through this, enterprises now understand the significance of creating contributions, a CSR activity that would aid in brand image enhancement.
A 2009 cone-Inc study showed that a greater number of customers were expecting a great deal of wider donations to the society compared with the previous years (Youn and Kim, 2008, pp. 123-137). Another study specified that the preferences of customer purchase had a positive impact in the course of communally accountable schemes. The research was established on a communal concern index in which India attained 119 points contrasted to a global average of 100 (Maneet and Sudhir 2011, pp. 1-8). However, CSR is not simply a humanitarian action of giving aid to schools, treatment centres and fixing trees (Menon and Kahn 2003, pp. 316-327). It is a comprehensive perception regarding on issues of behaviour and personality, in which accountability and reliability work with each other in culture and operations of the enterprise. Harmonization and cause –related auctioning aid in advancing rivalry, which in away results in commercial modernization (Greening and Turban 2000, pp. 245-280). This is very crucial in the institution of sustainable goods and improvement of sustainable utilization.
Nearly all thriving enterprises in India participate in CSR line ups in the departments of wellbeing, formation of employment, training, empowerment of weaker communal parts and knowledge improvement. Outstanding efforts have been observed from Bharti enterprises and Tata association in the midst of others as depicted by Maneet and Sudhir (2011, pp.1-8). This is an important way of indicating enterprise’s concern, after initialization of creative systems of generous contribution to the public, which is a benevolent of brands. The progress of farmers has been made a vital element of business policy by corporate enterprises like ITC. This is aimed at improvement of livelihood in remote societies. Other multinational companies like Unilever utilize huge enterprises to tactically enhance the access of client goods in remote areas. IT enterprises like WIPRO and TCS have established software to aid students and teachers in extension of learning courses in India (Maneet and Sudhir 2011, pp. 1-8). The adult education software has been a leading concern in dealing with the uneducated in rural areas. Street hawkers and migrant manual workers are targeted by cover enterprises and banks through aid in micro- credits and relevant systems (Youn and Kim, 2008, pp. 123-137).
Additional affirmative judgement and reaction regarding the brand that has influenced the mind of the client is brought about by the brand’s introduction to a well- visualized promotional plan. A promotional plan centred on the association of brands with a communal basis has a greater attraction rate (Youn and Kim, 2008, pp. 123-137). The more a certain proposal assists or, on the converse, harms a specified brand will be verified by the traits of the targeted market. An elevated extent of attraction can enhance the progress of a promotional proposal that endorses the life of clients handling the proposal as an important and imperatively subjective feature of the brand. Similarly, a promotional proposal enhances the likelihood of clients handling the proposal as an important and imperatively subjective feature of the brand (Isabelle and David 2002, pp. 497-514). Clients weigh a trade style of a brand as a pessimistic element when the promotional proposal does not talk about an organization. Clients give positive regard to a brand that is in union with organizations with a basis like survey on cancer, tragedy management or reinforcement of ecological security. Furthermore, a communal-cause association may also encompass a “halo effect” on the outlook of the brand and other features like value or integrity.
Proposals in which the notion following the association of the brand can be realized easily by a good number of clients usually produce a high imperative impact on brand opinion and preference of the client compared to proposals with frail foundations. A brand that enhances a greater communal foundation is more likely to be alleged by clients as opportunistic and seeking trade profits. In spite of the approach used: enduring general attraction promotion or specified communal promotion, business associations ought to understand that each brand is very distinctive. For example, a low- based communal proposal in promotion could thrive in one brand and have a reduced impact on the outlook of a different brand (Keller and Lehmann 2006, pp. 740-759). Suggestions have thus been forwarded for enterprises to carry out careful studies to sieve and approve concepts for attraction proposals of promotion that are not in favour of each and other types or promotion proposals.
Controlling communally accountable conduct is essential due to its outcome on the discernment of the brand outlook. The enhancement of a brand associated with communal and moral values boosts its significance (Luo and Bhattacharya 2006, pp. 1-16). These associations convince the clients in their assessment of enlarged brand trustworthiness and commodities. Numerous practical business associations examine client contentment directly in order to provide products that are fast moving. However, individuals could convey their gratitude and integrity of the CSR activities through continued purchase of its commodities (Lichtenstein et al., 2004, pp. 16-32). However, the outlook of business conduct could be conditioned by the awareness and the knowledge of consumer and that of the company as a result of their contact with the enterprise and their integrity (Keller 2003, pp. 595-600). Clients’ skills may permit them to create tough values and a comprehensive cognitive organization which translates to probable orientation systems to form several assessments, as a correspondence to lesser alertness level.
2.4 Enhancement of Firm Reputation
The alternative for management value and the device for the establishment and attraction of better valued employees is the CSR (Klein and Dawar 2004, pp. 203-217). A well built CSR is an elusive advantage that offers stakeholder values like organization, individuals’ knowledge of organization, brands integrity, commodity integrity, and expressive request (Kevin and Donald 2006, pp. 11-12). It is an elusive asset of worth that quickens purchase recurs through trustworthy clients and aids in maintaining excellent examples for the intention of improving output and finally develops success (Brammer and Pavelin 2006, pp. 435-455). Ecological marketing is an excellent advance of improving the character of an enterprise. Due to increased ecological knowledge and victorious organization indicating dedication to the shareholders, enterprises have obtained numerous advantages (Greenley et al., Rudd 2005, pp. 1483-1494). The reputation of an enterprise is also related to economic act of the firm. The enterprise obtains enduring gains while at the same time enhancing victory in enterprises through corporate social responsibility. This is achieved through the establishment of communal donation and the general value.
A relevant essential element of CSR is that it provides a path for numerous communally accountable shareholders in the improvement of CSR amid stakeholders (Mohr et al. 2001, pp. 45-72). The CSR activity forms an emotional association with clients and additionally creates organizations involving the brand, its CSR proposals and the addressees as well. The advancement of brand outlook with the aid of CSR proposals encourages imperative remarks and therefore has an affirmative effect on the brand, as the enterprise is clear regarding its exterior relations and interior operations with obtained association (Lafferty 2007, pp. 447-453). The benefits of utilizing CSR in branded substance create a broader extent. It mostly aids in the creation of brand name and therefore referred to as an instinct of demarcation (Lafferty 2007, pp. 447-453).
2.5 CSR Value
The advantages of initializing CSR by business associations in branded content create a broader extent. The main important one is that it aids in the formation of brand name and the reality that it an instinct of demarcation. Additionally, it persuades the client reliability and integrity. In situations when users observe brands speaking on issues that are important to them, it reflects that they are going to proceed with the purchase of such commodities. CSR proposals can be very effective in the development of essential associations with its clients, thereby shifting client trustworthiness to them, since they are perceived as developers of enterprises in specified regions.
The communal canvas results in being the means of expanding the quantity of the information regarding the brand. A chance for the brands to achieve greater canvases is reflected in several states. Perhaps numerous brands would be required to attain such conditions. CSR is not an attention-grabber of marketing, although it is among the steps in which associations can relate marketing and purchase to aid in fulfilling their task in enhancement of sustainable conduct. It is a huge donation in which shareholders, businesses, and clients can take quantifiable steps to livelihood. The necessity for added focus on the notion of corporate social responsibility and the client –company relation is obligatory. It has been discovered that numerous companies put information regarding their marketing in websites, although it may not be an efficient means of relaying such information since some clients may never get access of it. However, CSR activities to the brand may not be concurrent since information is hereby not relayed in a direct channel. All people like making a difference in the lives of fellow human beings, which allows us to donate. This could be achieved through purchase or marketing. CSR, which is perceived as the solution to advertising difficulties, is similarly an action that makes it easy for business associations to create outstanding distinctions.
This chapter dealt with a general overview of corporate social responsibility draw from various literature sources. There seems to be a lot of cohesion in highlighting the impact of CSR in marketing and in business organizations generally. It is highly agreed that corporate social responsibility has been taken as the view held on the community as the very reason of business existence and not just for any other party. Connecting opportunities with company responsibility can be of great help to companies in identifying methods of advertising new products. The chapter also highlights CSR efforts in marketing, creating brand equity, firm reputation and its value to business processes and procedures.