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Ravi Dhar is a Yale Professor of Management, Marketing, Psychology, and Director of the Center for Customer Insights at Yale University. He is an expert in consumer behavior and branding and a leader in bringing psychological insights to the study of consumer decision-making.
Green, greener, greenest seems to be the marketing communication credo these days. Not to mention ‘inclusive’, ‘transparent’ and in general, ‘social’. What's behind all that?
‘In a nutshell, Millennials, and the younger Gen Z group and their views on climate change, amongst other things. They are also described as values-driven consumers. That is, consumers who will not buy from brands that do not align with their values. Whether social, political, moral or environmental - issues that matter to consumers must now stand on enterprise agendas. I call it stakeholder capitalism.
To what extent is this new?
‘We have already seen this to some extent, for example in Japan and Germany. The important aspect of this new development is that it is not philanthropy. It is not planting trees and supporting charities after the profit has been made. It is and should be an intrinsic part of the marketing strategy. This is a hard-nosed business strategy. It is about survival in the market of the future. It's that important.
Can we say that how the consumer perceives the company behind the brand, has now become more decisive than ever?
‘The company's reputation has always played a role of course, but look at the huge successes of recent times, such as Airbnb and Uber. Their problem is not, is there a market? Their main problem is, how are we perceived by the community? Is there trust? And that’s true for more and more brands these days.
A new leading role for the marketing communication industry, you would think.
‘Well, marketing communication, storytelling is of course of vital importance. But my main argument is that all is more than ever a task for the CMO. This development offers the CMO the opportunity to anchor his or her place next to the CEO.
So how do you see the role of advertising agencies in this?
‘What you see is that part of their advisory function is being taken over by the McKinsey’s of this world. So where do they find their strength? The CMO must seize this opportunity and the advertising agencies must first and foremost listen very carefully, and develop deep insight into what the client really wants and can do in the field of ESG (environmental, social, and governance) issues. And only then come up with their creative input and with what they do best, storytelling.
“Corporate responsibility should in no way be just sizzle. Above all, it must come from the heart of the company.”
Is the easily fabricated corporate responsibility brand story a too common occurrence in your view?
‘What I want to emphasize is that purpose has become a decisive strategic element. And that you will no longer get anywhere with a nice purpose statement about a better planet. As long as there is demand for such work it might look rosy. But, as Warren Buffet said, "At low tide you can see who's swimming naked". Corporate responsibility should in no way be just sizzle. Above all, it must come from the heart of the company.
You have described it as lipstick on a pig, when it doesn’t.
‘Yes, simply put, just as an example, if Coca-Cola, Pepsi or Dr. Pepper want to add that ESG dimension to the brand they have to talk about all the plastic they use and do something about it. And not talk about something like social justice or gun control. Is your purpose-claim clear, truthful, and tangible to everyone? Where can you make a big difference? That is the key. And that's what advertisers and advertising agencies should focus on.
What would you like to add to this?
‘You have organizations that think they should do all this because of possible future regulation, and you have organizations that truly choose to do it. I am much more interested in the latter. Consumer trust and achieving a preferred position, which is what it is all about, is the end result of all your actions. Companies and advertising agencies that understand that have the future.’
