Katie Attenborough

The Importance of Corporate Ownership in Making Ethically Minded Purchasing Decisions.

Katie Attenborough

To be considered in part for the award of MSc International Business

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Katie Attenborough

Literature Review

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Katie Attenborough Introduction and outline to the Literature Review The growth of ethical consumerism has been documented in many academic articles, books and throughout the media. As the behaviour of businesses and their impact on the environment become more apparent (Prothero et al, 1992), through greater awareness with the ease of communications in the global marketplace, consumers are able to be more discerning with their choice of purchases. With the rise of the internet giving consumers even more choice in an ever increasingly competitive environment (Dunphy et al, 2003), consumers are able to be more demanding and pay attention to the softer aspects of the products or services that they are interested in, such as social responsibility or sustainable development issues (Begg, 2003). Through this project the relationship between ethical consumers and corporations will be examined, with a view to try and identify the importance of corporate ownership. In particular, a business case study concerning the takeover of The Body Shop by the global cosmetics firm LOreal will be examined to give a more in depth perspective on the importance of corporate ownership to ethical consumers. First, a definition of an ethical consumer will be given, looking at the different types of ethical behaviour and opinions held by consumers. The rise in ethical consumers will then be covered, looking at all the different aspects of ethical consumerism and how this niche market is growing and changing today. Particular markets where ethical consumerism is more prominent will be looked at, in particular the food, clothing and cosmetics industry. The role of ethical consumerism in relation to the cosmetics industry will be looked at in more details, linking to the case study of the LOreal takeover of The Body Shop. The advantages and drawbacks associated with ethical consumer management will be looked at, to see how corporations can benefit from or be damaged by this growing faction of consumers. The introduction of ethical products/product ranges will be looked at, in particular looking at how important a factor corporate ownership is to the ethical consumer. Socially responsible marketing will then be investigated, leading to the next

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Katie Attenborough main area of research within this literature review. This section will cover the various ways in which corporations use and create socially responsible marketing, and look at the documented responses by consumers. The use of a corporate brand to differentiate an organizational from an ethical standpoint will be looked at, looking at relevant business examples, particularly The Body Shop. The importance of corporate identity, of which corporate ownership is integral aspect of, will be introduced The importance of marketing and branding as outward manifestations of a corporations identity will be examined, and then further research on the importance of socially responsible marketing and branding will be given as a whole when looking at the significance of ethical consumerism. What is an ethical consumer? To examine the relationship between ethical consumers and corporations first the idea of ethical consumers needs to be defined so that different characteristics and behaviours of this consumer type can be explored, to examine the relationship and implications on business from this growing consumer group. Marsden et al (1998) highlight the fact that although large amounts of research have been completed in consumer behaviour, consumer responses can not be easily predicted with any degree of accuracy. Buttle (1994, p9) observed that Consumer behaviour is a black holeWe cannot predict consumer responses. The prediction of ethical consumer behaviour is not within the scope of this study, but by trying to define the ethical consumer, factors which will affect the opinions of the consumers on the corporation can be uncovered, particularly looking at the importance of corporate ownership. If consumer behaviour is such a mystery, is it then possible to try and define any type of consumer? Blackwell et al (2001) suggest that no consumer usually fits into one consumer type, but that different consumers exhibit behaviour and opinions that can be attributable to several different types of consumers. It can be theorized then, and from evidence gained through this literature review, that it is not possible to strictly define an ethical consumer, but that different views of ethical consumerism can be used to create an ethical profile, of which ethically minded consumers may exhibit some or all of the

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Katie Attenborough behaviours and opinions at any given time. Blackwell et al (2001) also point out that very rarely are consumers consistent with their attitudes and actual purchasing behaviour. Bowerman (2000), Strong (1996) and Shrum et al (1995) among others point out that this is particularly relevant when looking at ethically minded consumers, as many consumers claims that they purchase ethically, but actually purchasing behaviour shows otherwise. Research highlighted in Bowermanss 2000 article suggests that 80% of consumers claim that they shop or invest money ethically, but only 30% of consumes actually do. Though this research is now over 6 years old, other scholars such as Shaw et al (2005), Mohr et al (2001) and Hurst (2006) all echo this sentiment. Social desirability bias (where consumers want to be seen as acting ethically) may be accountable for much or at least some of this discrepancy. Bu increasing actual sales through ethical product lines or socially responsible marketing is only one of the reasons corporations are responding to the apparent growth in ethical consumers, which will be discussed in more depth later in this chapter. So, from this alone, a definitive definition of an ethical consumer may not be possible, but by looking at current research, a profile of behaviour and/or attitudes of ethically minded consumers may be drawn. For the purpose of this study, the term ethical consumer will be used as an umbrella term to cover other descriptions such as green consumers, environmental consumers, socially responsible/conscious consumers and morally bound consumers. Historically, the term unethical consumer was used more than ethical consumer (Rallapalli et al, 1994) when looking at consumer attitudes towards making purchases from black markets, purchasing stolen goods or profiting from known unethical behaviour by firms (for example being able to buy lower cost products as the company sidestepped certain legal requirements. In this context the term ethical consumer would be used to describe those consumers who boycotted this type of behaviour, and did not want profit from the illegal and/or unethical actions of corporations. As will be discussed in greater details later in this chapter, this introduces the idea that consumers are more likely to take action in response to poor corporation behaviour then to reward corporations for good behaviours, or that when buying from corporations considered

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Katie Attenborough unethical, consumers often judge that the low price they pay (or reluctance to pay a premium) from these unethical corporations is punishment for that corporations actions (Carrigan et al, 2001). Mintel (1994) used the term ethical consumer (or green consumer) to describe consumers who considered environmental issues, animal issues and ethical issues such as labour exploitation, oppressive regimes and armaments when purchasing. Elkington et al (1989, p7) describes a green consumer as one who evades products that are likely to endanger the health of the consumer or other; cause significant damage to the environment during manufacture, use or disposal; consume a disproportionate amount of energy; cause unnecessary waste; use materials derived from threatened species or environments; involve unnecessary use or cruelty to animals; adversely affect other countries. Strong (1996, p5) suggests that one of the main concerns of ethical consumers is the people aspect of manufacture, use and disposal. Strong states that ethical consumerism refers to buyer behaviour that reflects a concern with the problems of the Third World, where producers are paid low wages and live in poor conditions simply to produce cheap products for western consumers and profits of multinational companies..ethical consumerism incorporates all the principles of environmental consumerism and more taking on board the people element of ethical consumerism. Anderson et al (1972, p24) suggest that socially responsible consumers are those which accept the consumer-citizen concept to a degree, meaning that they buy as individuals concerned not only with their personal satisfactions, but also with societal and environmental well-being. Brown et al (1998) completed further research on ethical consumers by surveying a small sample of American consumers. From this Brown was able to identify two sub-segments of ethical consumers namely product seekers and recyclers. Product seekers were identified as those consumers who were actively seeking more ethical ways of purchasing, but were not able to find the products they wanted, and/or did not believe that the products they did find that were advertised as being more ethical actually were, due to lacking evidence to support the advertisers claims. Recyclers

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Katie Attenborough were identified as those consumers who had a noticeably higher awareness of and sensitivity to environmental issues, and were willing to make adjustments to their lifestyles regarding purchase decisions based on their concerns. Though this information on ethical consumers by Brown et al (1998) is from a very small American sample from over 8 years ago, it does highlight the fact that there are different types and degrees of ethical consumerism. Again, this supports this researchers idea that there is no static profile of an ethical consumer, but a set of characteristics and behaviours which ethically minded consumers may exhibit at various times throughout their purchasing. Rallapalli et al (1994) researched further into consumer personality traits and the relationship between them and ethically minded consumer behaviour. The research was completed using only a small sample of American students from one university, so can not be used to make any generalisations, but can be used as a starting point to examine if certain personality traits are more likely to illicit more ethical responses in purchasing behaviour. From the study, a high need for autonomy in the individual correlated with the individual being less or not at all concerned with corporations involved in unethical or illegal behaviour. Also, an individuals need for social desirability was found to be linked with concerns over situations involving social responsibility. Those individuals who had a high need for social desirability tried to avoid circumstances where they may be seen to be socially irresponsible, including unethical purchasing attitudes or behaviour. Aggressiveness and high risk propensity were both found to be traits belonging to individuals that were willing to engage in less socially desirable or unethical behaviour. Though these traits outlined by Rallapalli are useful to correlate which personality traits are more cohesive with ethical consumerism, it is not within this study to further this research, as though more information on the personality traits that encourage or founder ethical consumerism is required, it is not feasible within this study. The more tangible factors affecting ethically minded consumer attitudes towards corporate identity and ownership affecting the relationship between the consumer and the corporation are to be

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Katie Attenborough examined. Information on how specific personality traits may affect these attitudes and relationships are not to be included. Bhattacharya et al (2004) examine consumer characteristic that effect consumers response to corporate social initiatives. As part of this they identify that some ethical consumers have a certain affinity with specific causes, and these often shape their purchasing opinions and behaviour. For example, if a specific individual is especially interested in animal welfare, that individual will be more likely to incorporate that into their purchasing decisions. This is linked with what Bhattacharya terms attachment, where consumers feel some sort of attachment or identification with a corporation. This may be because the corporations is linked with a cause they feel strongly about, may be less tangible, such as the consumer feeling the specific corporation values the same morals they do. This may be a clear link to the importance of corporate ownership by ethically minded consumers. If customer-company identification is an important factor mitigating consumer response, this can be seen to indicate that corporate ownership is an important factor to consider for some ethically minded consumers. So, ethically minded consumer behaviour is also linked to awareness and an affinity with ethical/environmental causes linked to the corporation, and the extent to which the consumer identifies with the corporation. Shaw et al (2002) further discuss the importance of self-identity in ethical consumer choice. Shaw proposes that ethical consumption is an outward manifestation of consumers who feel an ethical obligation to make these purchases, further defining their self-identity. As Bhattacharya et al (2004) have highlighted the importance of consumers identifying with the corporation; this further highlights the importance of corporate identity to ethically minded consumers. In particular, as already highlighted, this researcher is particularly interested in the importance given to corporate ownership by ethically minded consumers. Further definition of corporate identity and corporate ownership will be given later in this literature review.

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Katie Attenborough A Mori survey commissioned by the Co-operative Bank, whose results are used in mainstream publications such as Keynote reports on ethical consumers (2005) and by the BBC, identified five groups of consumers with different ethical attitudes. These were: 49% do what I can consumers price more important than ethics 22% look after myself consumers no interest in ethical shopping 18% conscientious consumers shop ethically if they can 6% brand consumers motivated by fashion 5% global watchdogs ethics are crucial

Peattie (1992, p120) outlined a framework produced by Marketing Diagnostics which also defined the different types of ethical consumers: Green activists members or supporters of environmental organisations(5-15% of population) Green thinkers will look for new ways to help the environment and seek out green products and services (p to 30% of population including activists) Green consumer base included anyone who has changed their consuming behaviour in response to green concerns (45-60% of population) Generally concerned people claiming to be concerned about green issues (included almost 90% of population) Peattie (1992) also establishes that ethically minded consumers are inconsistent, and that a given consumer may behave in a manner fitting all four of the given profiles given above depending on the market and product. The degree of ethically minded behaviour exhibited by a consumers for a given purchase will depend on "their own behavioural attitudes, the profile of the given product and the green issues with which it is linked: and the availability, credibility and quality of potential green substitutes" (Peattie, 1992, p119). Looking at the work by both Shaw et al (2000) and Bhattacharya et al (2004) the amount of information known by the consumer relating to that given purchase will also be a large factor.

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Katie Attenborough Again, this shows that it is not possible to create a definitive definition of an ethical consumer, but does help to describe a spectrum of ethically minded consumer behaviour. Generally, factors affecting consumer behaviour can be put into at least five different categories. These factors are termed by Peattie (1992) and Blackwell (2001) as: Demographic including age, sex and nationality Personal and Psychological level of education, lifestyle, motivation, values and belief system, personal circumstances Sociocultural family influence, peer group influence, national/local cultural norms, status and role within society General environmental economic climate, security of employment, political stability, climate, weather and season Informational - this covers the amount and nature of information that the consumer may have gathered about a specific corporation and its products, and includes (Peattie, 1992 p117): 1. advertising and promotion of the company and its competitors 2. word of mouth 3. the media 4. trade press and consume publications 5. past experience of the company and its products 6. information deduced from other factors such as product price, distribution channels used and experience of similar products and companies As it is not feasible within this study to be able to accurately measure the personality traits or actual purchasing actions taken by ethically minded consumers, the given factors affecting consumer behaviour could be scrutinised to see which would be most easily measured and which could be thought to have the most impact on the consumers perceptions of corporate ownership and how it may affect their opinions in ethically minded purchasing. From the factors described above, informational factors seem to be the most relevant relating to the customer-corporation relationship, so these are to be used to produce a framework in which to examine their relevance and importance to ethically minded consumer views on corporate ownership.

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Katie Attenborough

Bhattacharya et al (2001), Carrigan et al (2001) and Creyer (1997) among others suggest that those ethical consumers who actually follow through with their ethical attitudes to their purchase behaviour often have more disposable income then those who are ethically minded but do not purchase with that in mind, or those consumers who are not concerned with ethical issues. As will be discussed in more detail later, corporations are starting to use ethical product lines, socially responsible marketing and behaviour to differentiate themselves in the competitive marketplace. In general, consumers are more apt to pay a premium for differentiated products, and so may be more willing to pay that bit extra for ethical goods. This has been shown in the growth of ethical products in certain industries which will be covered in the next section.

The Growth of Ethical Consumerism Doane (2001) states that the ethical consumer market had a market share growth between 15% and 18.2% (from $4.8 billion to $5.7 billion) in selected sectors, including organic food, between 1999 and 2000 in the US. Measurement of ethical purchasing in the UK has been problematic as there is no central authority to collect and analyse ethical spending (Keynote, 2005). This changed in 2001 when the Co-op Bank, partnered with the New Economics Foundation (NEF), set up the first ethical purchasing index (EPI). The EPI is used to measure spending in several different sectors, including transport, food and cosmetics. The definition of ethical used is as personal consumption where a choice of product or service exists which supports a particular ethical issue. The Co-op Bank and the NEF recognised that this definition may have caused under reporting of the total role that ethically-minded purchasing has in the UK market. To rectify this, the Ethical Consumer Research Association (ECRA) was commissioned to provide advice on what should be measured and reported upon. The Co-operative Report is referred to heavily in this section, as this author believes that it is a very important piece of literature relating to current trends in ethical consumerism. The information contained within the Co-operative report has been used in other major business publications such as Keynote

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Katie Attenborough and Morri reports, and also by media giants such as BBC News and Sky News as part of their reports on ethical consumerism. In 2002 the EPI found that ethical consumption in the UK alone was worth 19.86 billion. On October 21st 2003 the Index stood at 125 points, which indicated a rise by 25 points from the baseline in 1999. This jump in the index represents a 2 billion growth in ethical sales in the previous two years (Keynote, 2005). But, when looking at the market as a whole, it is estimated that the ethical goods and services market share is fewer than 2%. But even though this may still be viewed by some as a niche market, with its continued growth, the growing strength of consumers and the increasing importance of ethical issues in the marketplace all mean that corporations are having to take integrate the surrounding issues of sustainable development and ethically minded consumers into their business, and many have begun to make this an integral part of their organisation, as scholars and prominent business people recognise that responding to these issues will be a key skill required for their very survival. Description Food (including fair-trade & organic) Green Household Goods Personal Items (including cosmetics) Responsible Tourism Green Housing Green Transport (including grants for purchase of clean-fuel vehicles) Charitable Donations Buying for Reuse Ethical Boycotts Local Shopping Public Transport Ethical Banking Ethical Investment Spending (/m) 1770 1473 187 107 33 21 3309 1255 2582 1568 162 3886 3510

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Katie Attenborough Total 19 863

Table 1: Ethical Consumerism in the UK (m) 2002 from The Co-operative Bank

Table 1 shows in more detail where the estimated 19.96 billion was spent. Approximately 6.9 billion was spent on ethical good and services, while 7.4 billion was to ethical financial services. It also shows that 2.58 billion was lost by corporations due to consumer boycotts, with research from The Co-operative Bank showing that 52% of people claim to have avoided at least one product because of ethical obligations. Many scholars, including Creyer (1997), Doane (2001) and Carrigan (2001) all highlight the fact that consumers are much more willing to punish bad ethical behaviour by corporations than to reward good ethical behaviour. This will be discussed further in the next section outlining the different responses that corporations have to the growth in ethical consumerism. This 2.58 billion was part of the ethical invisibles section that the ECRA suggested should be included. This was also aided by the Future Foundation which created the Ethical Consumer Panel (ECP) which was used to inspect a range of consumer behaviours which were not covered by the EPI. It also included other behaviours such as spending on public transport for environmental reasons, buying for re-use and shopping to support the local community. These were highlighted by the 400 members of the ECP as behaviour exhibited where ethical issues are the prime motivation. This covers the remaining 5.6 billion of annual ethical consumerism. The Fairtrade sector has been the fastest growing sector related to ethical consumerism. Purchases of Fairtrade tea and coffee grew from 24.5 million in 2001 (Co-op Ethical Consumerism Report 2003) to 30.3 million in 2002, with a market share increase from 2.3% to 2.4%. Overall Fairtrade ground coffee now has greater than 14% of the ground coffee market in the UK. Other Fairtrade products, such as honey, chocolate and bananas saw a huge growth in purchases from 2001 to 2002, from 23.8 million to 29.2 million, a rise of 23%.

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Katie Attenborough

Included in the ethical food sector are vegetarian and meat alternatives, free range eggs and organic foods. It can be argued that these items are not on the only increase because of purely ethical reasons, but also due to the increase in healthy foods and lifestyles, but have still been included in the Co-operatives study. 5% of the population in the UK are vegetarian, and of these approximately 51% claim that moral or ethical reasons are their main motivation. Figures show that sales of vegetarian products and meat alternatives rose by 6% in 2002, but this was offset by a rise of 13% in meat sales. Free range egg sales have continued to increase over the past 5 years, even in 2002 when egg sales in general fell, the sales of free range eggs rose to 209 million. 86% of people questioned in the Co-operative study claimed they opposed the use of caged egg production, and in 2003 free range eggs account for 40% of total egg sales in the UK. Organic foods have also seen impressive rises in sales in the past few years, from 390 million in 1999 to reach 920 million in 2002. The Co-operative study found that when asking what types of purchasing activity people claim to do for ethical reasons, buying organic foods can out as the number one activity. The market share occupied by organic foods rose from 1.3% in 2001 to 1.5% in 2002 which represented a 13% increase in sales. Green household goods have also been on the increase as documented by the Cooperative study, and are split into three significant groups: Forestry Stewardship Council (FSC) wood and timber products, Energy efficient household appliances and Ecocleaning products. FSC products are concerned with making sure a sustainable timber source is maintained, and also trying to create products which are carbon dioxide neutral. Sales of FSC products reached 636 million in 2002, which indicates an increase of 80% from the 351 million sales in 1999. Energy efficient household appliances have seen a dramatic increase in sales, so much so that only sales of A grade energy efficient products were used in the Co-operative study, which count for 40% of total sales of new appliances (a total revenue of 829 million in 2002). As with green foods, it is not the increase in sales of these products is not down just to the increase in ethically minded consumer behaviour, but also down to the increase in energy prices, where consumers are now trying to find the most efficient products available to save them money, and also due

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Katie Attenborough to some of the governments new initiatives to try and reduce the amount of energy the public uses, using increased media attention through campaigns in national newspapers, magazines and television. Eco-cleaning products have also seen a large increase, from the increase in the number of kitchen towelling products made from recycled paper to cleaning products that do not effect wildlife once they have been disposed of, which amounted to 8 million in 2002. The number of green personal items purchased has also increased over the last 10 years. The Co-operative study has attributed this to the growth in consumers (known to be more than 80% questioned on the issue) that are against animal testing for cosmetics. The UK ended cosmetics animal testing for finished products and ingredients in 1998, but many companies still test their products abroad where it is still legal. The British Union for the Abolition of Vivisection (BUAV) has recently won q thirteen year long campaign to ban cosmetics animal testing in the European Union, but this will not come into force until 2009. The number of products approved under the Humane Cosmetics Standard (HCS) which are genuinely not tested on animals has increased in the last five years, and sales of this products totalled 187 million in 2002, showing a 4% growth from the previous year. Even so, sales of products approved by the HCS account for only 2% of total cosmetics sales in 2002, but the continuing success of businesses like The Body Shop (discussed in greater detail later), Beauty without Cruelty and Faith Products highlight the continued growth of this sector today. It is this sector that this author is particularly interested in, and the new issues that have arisen when The Body Shop, which sites its stance against animal testing as one of it core values, has been taken over by the cosmetics giant LOreal, which has a long history of using animal testing and still continues to use ingredients which have been tested on animals. This author intends to see if this change in ownership effects consumers views on continuing to purchase at The Body Shop, to see how important the issue of corporate ownership is to ethically minded consumers. Information on both these companies will be given in greater detail in a case study later in this report.

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Katie Attenborough As international travel becomes cheaper and people have access to greater amounts of disposable income the tourism industry has become one of the fastest growing industries in the 21st century (Begg, 2003, the number of international tourists is expected to double by 2020 to 1.6 billion. As different operators look for ways to differentiate themselves from the competition the promotion of responsible tourism has increased dramatically. In 2002 the tourism market took fell back by 7% in the UK, but money spent with responsible tour operators grew by 3% that year to 81 million (The Co-operative Ethical Consumerism Report 2003). Spending on UK environmental tourist attractions was also up by 31%, with spending at 25 million. Green house spending as defined by the Co-operative report is made up of green mortgage repayments and green energy sales. The report terms green mortgage repayments as the rising star of ethical consumption, different green mortgages have different features such as a certain amount of interest being donated to charity, and many include carbon offset, where the mortgage provider will offset a certain amount of the carbon dioxide produced by the property during the life of the mortgage (The Cooperative Report, p12). Green energy sales are also increasing, for both private and business use. In 2002 total green energy sales were 14.6 million. New energy firms are being set up in the UK which only use renewable sources for their energy production. New degree programs are being set up at universities across the UK to produce graduates that have the necessary skills to create and maintain renewable energy sources as mainstream energy firms look for new ways to improve their renewables sector. BP recently launched a high-profile campaign where it changed its brand from British Petroleum to Beyond Petroleum; to signify the importance it is giving its sustainable energy sources. Large companies like BT are using the switch to green energy sources as part of their corporate social responsibility activities. As oil prices continue to rise, the total of green energy sales can also be expected to rise. Included within ethical consumerism the Co-operative report also included economic contribution through re-use and recycling, by measuring revenue from second hand markets including charity shops, second hand furniture shops. From research conducted

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Katie Attenborough as part of their report, 24% of people shopping at charity shops claimed their main factor in shopping there was to support the given cause. 17% of people questioning buying second hand goods claimed this was because it is better for the environment to re-use. Using only these percentages of revenue, total spending on second hand goods for ethical reasons amounts to 1255 million. Local shopping is also included in ethical consumer behaviour by the Co-operative study and by Peattie (1996). Over 80% of all consumers shop regularly at local independent stores and according to the Co-operative report this accounts for 11% of their total weekly spend. Research has shown that 19% of consumers state that supporting their community is the for front reason for them shopping locally, and from this, it is estimated that sopping at local independent stores for ethical reasons generated 1568 million in 2002. The idea of public transport being used as a form of ethical consumerism has been discussed by organisations such as Greenpeace, been encouraged by the government and is outlined as another factor contributing to the growth of ethical consumerism in the Cooperative ethical consumerism report. From the Co-operative report, one out of five commuters are aware of reducing their carbon footprint through using public transport, and from those questioned 4% cited this as their primary incentive. This portion of commuters whose main motivation is doing their bit for the environment is estimated to have attributed 162 million to ethical consumerism. Ethical investments and banking is a sector of ethical consumerism that has received increasing media and consumer attention in the last decade. Ethical investments are also known as socially responsible investments (SRIs), which is a more recent label, but can also been known as sustainable investment, socially aware investing, conscious investment and mission based investment. There are two main approaches to ethical investments, the first a form of boycotting, where the investor can stop investing in ethically bad firms and buy more shares in ethically aware firms. The second is the use of certain tools or practices by investors to assimilate ethical features into their investment decisions.

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Katie Attenborough Margolis et al (2003) suggested that socially responsible as ethical consumer behaviour can have a real impact on the way in which corporations conduct their business. As certain ethically minded investors modify their behaviour as they are motivated to conduct ethical investments new tool and practices to perform socially responsible investing come about, and as these are implemented by a growing number of investors this can then promote changes in corporate behaviours. Socially screened mutual funds have quadrupled in number from 1995 to 2005 in the US, with the total assets this corresponds to growing from $12 billion in 1995 to $179 billion in 2005. The UK market has also developed greatly in the last 10 years, particularly when compared to their European counterparts. The UK has twice as many socially responsible investment funds then Italy, and over 20 times as many as Spain in 2002 from figures in Dillenberg et al (2003). It can be viewed that this increase in socially responsible investments is an indicator of the growing importance of corporate ownership for ethically minded consumers. Domini et al (1984) suggest that ethical investing takes this feeling that our finances are a reflection of ourselves and carries it to a logical conclusion. Socially responsible investors are able to utilise their rights as shareholders to initiate positive change in the corporations they invest in, so is a positive use of corporate ownership specifically useful for ethically minded investors. It could be logically followed on that ethically minded consumers invest in companies they feel represent their own ethical beliefs by making purchases their, so would again point out the importance of corporate ownership to these types of consumers. But as outlined by Strong (1996), consumers are much more likely to take action in response to negative behaviour or attributes they see in corporations. This brings us to the final sector outlined by the Co-operative Ethical Consumer Report, the importance and growth of ethical boycotts. 52% of consumers claim to have boycotted at least one product in the last 12 months, and two thirds of these consumers claim not to return to that brand once they have boycotted it. Information gained from the Co-operative report at this time suggested that consumers switching brands because of ethical reasons had a value attached of 2.6 billion. Of this 787 million is attributed to consumers switching grocery products for ethical reasons, also linked to the growth in the Fairtrade and

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Katie Attenborough Organic food sector. 454 million is linked to transport boycotts, the majority of which is attributed to petrol retailers. This will be expanded upon in the next section, looking at the effect these boycotts have on corporations and what their responses are to them. Peattie (1992) outlines six major driving forces behind the growth of green consumerism. Heightened awareness of ethical and sustainable development issues among people as a whole is one of the leading factors, also supported by Begg (2003), Brown (1998) and Dunphy (2003). Greater awareness has been linked with the increased media coverage of these issues, which leads to the next driver, improved amounts of information that consumers are able to access to help them make more informed purchasing decisions. Increased media coverage, the growth and increased power of consumer organisations and the use of the internet have all enabled consumers to gain access to a greater depth of information on a wide range of products and companies. Many green organisations have been able to galvanise support through these avenues over the last decade, such as the Stop Esso campaign, and the Nestle boycott, so not only does the increased information give consumers the ability to purchase ethical goods and services, but also allows them to boycott those goods or services which they see as unethical. Membership of pressure groups and other organisations concerned with environmental, social and ethical issues has also risen, with Strong (1996) showing considerable growth particularly between 1981 and 1992. This can be seen to be a cause and an effect of the increase in media attention. Greater access to information has also allowed consumers to become aware of the increasing number of ethical substitutes that are now available for traditional products and services. As more consumers look for greener alternatives to traditional products and services, corporations become more aware of this, and the number of alternatives increase, and so drive forward green consumerism. The Ethical Consumerism Report 2003 produced by the Co-operative Bank suggests that ethically minded consumers act as innovators in getting new green products to the marketplace. But, as already stated, when last measured by the EPI ethical goods and services accounted for fewer than 2% of the total marketplace. If more significant progress is to be made, supply side influences or

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Katie Attenborough government intervention may be needed for some of these products and services to be able to be adopted by the mass market. As corporations make green alternatives more widely available, the widespread use of ethical and sustainable advertising proliferates, which Peattie (1992) highlights as another major driver of green consumerism. As the number of green product substitutes rises, so does the use of green advertising themes increases. Over the past decade, the rise in the use of ethical marketing has seen a substantial increase, recognised by Peattie (1992 & 1995), Bhattacharya (2001) and Bussey (2006) as a driver of ethical consumerism. There are many different ways that firms can introduce ethical issues into their marketing mix, and these will be discussed in more detail later in this literature review. It has also been recognised that many more environmental and social charities are creating larger marketing budgets to raise funds for their various causes. This rise in their use of green marketing has also lead to greater awareness of social and environmental issues among consumers, which in turn has lead to the increase in ethically minded consumers. As stated above, Strong (1996) has shown a sharp increase in the number of members of these types of organisations, giving these organisations a larger budget to utilise on their marketing. Peatties sixth driving force identified is the shift in values in todays society. Many scholars have defined the eighties as a decade very much focused on consumption, while the nineties has been viewed as a more caring green decade (Carrigan, 2001). This has been seen to continue into the new millennium, where generally consumers are thought to be much more concerned with the greater impacts of their consumption. Strong (1996) also highlights this evolution of the consumer. Strong suggests that not only are consumers concerned with the price, quality and delivery of products and services, but are also concerned about the ethical dimension of the marketing exchange (Strong, 1996, p3). As consumers become more discerning about their purchases, not only are the amount of customers making ethical purchases increasing, but these customers are also challenging business to guarantee the ethical claims they make about their products and services.

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Katie Attenborough Corporate Response to the Growth in Ethical Consumerism As the previous section has outlined, the growth in ethical consumerism over the past few years has become extremely apparent, such to the extent that businesses no longer have the luxury of ignoring it. Though many businesses over the past decade have found niche markets within ethical consumerism, some of which have reached mainstream success (see information on The Body Shop), most businesses have been slow on the uptake of responding to this change in consumer needs. Daft (2001) outlines how important it is for a business to monitor and respond to its operating environment, but how many businesss have previously ignore the rise in ethical consumerism, as they were unable to see how this would make a real impact on their business, and often only gave this area lip service without any real thought going in to how responding to ethical consumerism could add to their business. Daft (2001) also outlines that many businesses only took reactive behaviour when the negative consequences of ethical consumerism affected their business, when a more proactive approach is required. This section will outline the importance of a businesss operating environment, how the rise in ethical consumerism has had significant impacts on many different industries, and how corporations are responding to this. To define an organizations environment a boundary must be drawn between the organization and the environment. The concept of an environment is created by drawing a boundary at some level within a system of relations, thereby separating a particular element from the rest of the system. (Morgan, 1989:72). By looking at the environment as a separate entity from the organization it can be mapped and split into sub-sectors. Organizational theorists have used this border line to emphasize the significant connections between an organization and its operating environment, and to make these connections easier to analyse and define. This may make the range of environmental forces easier to deal with individually, but these influences are dynamic, not static within the environment, so it must always be noted that any model used to map an organizations environment must be used critically, as all the environmental factors will later need to be reintegrated within the environment as a whole, and also into the

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Katie Attenborough context of how they interact with the organization within the environment. Dawson (1996:81) states that to speak of an organization is thus to speak of the environment as well.

Generally an organizations environment can be split into two different areas as discussed by Daft (2001), Dill (1958), Morgan (1989) and Bedeian (1984). These are the task environment and the general environment. Dill (1958) defined the task environment as the components of an organizations environment that are significant or potentially significant to the organizations objectives. These include everyday elements such as interactions between an organization and its clients, competitors and the government. The general environment involves forces that have a wider effect, and do not directly effect the organization but shape the wider environmental landscape. The rise in ethical consumerism has impacts on the business through its task and general environment. Initially, as consumers become more aware of ethical and sustainable development issues, they create new criteria to judge the products and services they buy against. Though many businesses were not willing to change their practices based on this only (particularly as evidence as cited by Strong (1996) and Bhattacharya (2001) outline the difference in consumer opinions and actual purchasing behaviour), many businesses have seen how the continuing effects of this growth have effected other areas of their business. Begg (2003) outlines the ways in which various governments from across Europe and the rest of the world are encouraging businesses to take advantage of this growth in ethical consumerism, and are trying to make businesses in general more focused on sustainable development, especially through the changing the use of taxation. Many governments, including that in the UK offer tax cuts or deductible allowances for such things as reducing waste to landfill, using a certain amount of recyclable material, and using up to date energy saving technology in certain manufacturing sectors. Tax incentives are also used to try and get businesses to reduce the amount of energy that they use, and many businesses, such as British Telecoms have taken that a step further by increasing the amount of energy they use which has been sourced from renewables.

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Katie Attenborough Many companies are using the growth in ethical consumerism to differentiate themselves in the market place. As shown from the research already quoted, consumers are often willing to pay more for goods which fulfil their ethical obligations. Therefore, many firms are using this to create premium products that are ethically sound and appeal to these types of consumers. Two such examples are The Body Shop in the health and beauty sector, and Green and Blacks in the food industry. Both these organisations will be analysed in further detail later in this report. Companies that use differentiation as a strategy to get ahead in the marketplace often uses their own company identity/image as a source of differentiate that is easily assessable by consumers (Peattie, 1995). This can be done by using ethical products, or ethical marketing or branding. The use of ethical or green marketing and branding has seen a sudden surge in the past few years as the increase in ethical consumerism receives more media attention, and it becomes more apparent to corporations that these new demands by consumers are not going away. A later section in this literature review will look at in more detail how organisations are using these tools to appeal to this new consumer profile. First, the impact of consumer boycotts will be looked at in more detail, and how this in particular has caused many different corporations to re-evaluate the threats and opportunities arising out of the growth in ethical consumerism. As outlined in the Cooperative report, 52% of consumers claim to have boycotted goods or service for ethical reasons and this has a value attributed to it of 2.6 billion. The growth in specific consumer organisations which target specific industries or even specific companies has seen dramatic growth, and received growing media attention in the last few years. Some organisations are even going to extreme lengths to try and combat what they believe to be unethical behaviour exhibited by corporations, using some illegal activities to try and reach their aims. Historically, most corporations when faced with this type of confrontation have chosen to ignore it, and try and diffuse the media attention that may arise. But today, many organisations no longer have that option, and the use of the internet as a tool to distribute information to consumers to encourage them to take part in

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Katie Attenborough a given boycott has meant corporations faced with this kind of conflict have to try and take proactive measures before it reaches a level that can have a critical impact on their business. One example which is extremely useful in looking at how the power of boycotts has grown is the Shell Brent Spa incident. In 1995 Shell UK was planning to sink the Brent Spar, a decommissioned floating oil storage facility in the North Sea, into the Atlantic Ocean. On April 30th 1995 the environmental group Greenpeace lead protests against Shells plans by boarding the Brent Spar, under the banner The sea is not a garbage can (Winsemius et al 2002). The British government strongly supported Shells disposal plans, and Shell also had the support of the Dutch, German and Norwegian governments among others. But Greenpeace claimed that the sinking of the Brent Spar was potentially very dangerous to the environment, and heightened media coverage of this incident continued for two months in the UK and in other countries. Protests took place in the UK and Germany, where opposition was strongest and Shell faced a major decline in petrol sales. Even though Shells plans were recognised as the best solution economically and environmentally by Shells scientists and independent technicians, the emotional response that Shell UK encountered caused the Shell group to rethink its position, and open up stakeholder dialogue to try and find a solution that would suit all parties. Hemmati (2002) states that the Brent Spar episode is perceived by industry and government as a defining moment in the relationship with environmental groups and the general public. Hemmati continues by suggesting that this incident marked a perceptible change towards a more open dialogue between non-government organisations (NGOs), the public and corporations. The Brent Spar incident can be regarded as a crucial event that motivated Shell to seek a more open dialogue with its stakeholders. Non-market issues such as managing stakeholders is an important part of Shells developing strategy, born in large by the experience surrounding the Brent Spar. In his speech at the Birkbeck lecture (2004), Shell UK Chairman James Smith stated Brent spar.shook us hugely

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Katie Attenborough and undermined trust throughout our stakeholder community. He also states company actions today are subject to more public scrutiny, and that Shell is now trying to engage beforehand with their stakeholders, not get into a defensive posture after the event. This illustrates that stakeholder management is a significant motivation in engaging in more stakeholder dialogue with regards to sustainable development. Hemmati (2002) shows how stakeholder dialogue is an extremely important tool to use in creating a proactive approach to ethical and sustainable development issues within a corporation. Many corporations have learned from the Brent Spa incident and often encourage company executives to set up networks with local and national organisations that have vested interests in their company and/or industry sector. Oil companies in particular have seen how boycotting and public demonstrations can have an impact not only on the companys image but also on the bottom line. But opening a dialogue with stakeholders over important issues is useless unless the stakeholders involved feel like their opinions and interests are really causing changes. Mark Wade, a high-level manager within Shell, said Shell was badly shaken by these events (at Brent Spar)we had to find out what had gone wrong quickly-because this was simply unacceptable to us (Wei-Skillern, 2004). The events described at Brent Spar led to the initiation of the Societys changing expectations project, which was a highly developed examination of the views of the companys stakeholders. By gaining a better understanding of their stakeholders expectations, Shell wanted to develop their current strategy to reflect these expectations. From the feedback from the dialogues created with various stakeholders, top Shell managers realised that the company was being held accountable not only for its financial performance, but for its environmental and social performance as well. Shell had come to accept that NGOs and public opinion had become an important part of their business landscape, and that they would benefit from learning from them and therefore building relationships with them, so that events such as the Brent Spar would not happen again. John Jennings, Chairman of Shell Transport and Trading stated in 1997 that we should use the increasing scrutiny of NGOs as a tool to strengthen our performance, including those who wish we were not here (Zadek 2001).

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Katie Attenborough Smart (1992) suggests that companies such as Shell must learn that closer co-operation with governments and NGOs is to become inevitable. Schaltegger highlights how the more independent stakeholders are from the management of the corporation, the more extreme their political claims can be. As seen with the case at Brent Spar, as Greenpeace had low dependency on Shell they were able to be uncompromising on their opposition. If Shell is able to maintain relationships with organisations such as Greenpeace, their inter-dependency will protect them from extreme opposition, and they will be able to build up a reserve of goodwill, which may help them in future conflicts. This again outlines the fact that Strong (1996) brings up, that consumers are much more likely to react to negative information about a company them they are to react to positive information. Many corporations may not see the advantage of marketing themselves that appeals to ethical consumers, but many more will see the benefits of taking a proactive approach to dealing with negative attributes. So, use of good ethics can be used by corporations as a way of differentiating themselves in the marketplace, and to protect themselves against action from independent stakeholders while managing their corporate image. Now many corporations are using corporate social responsibility reports to make information available to others within and external to the firm regarding their ethical and sustainable development ideals, as lack of information is a significant barrier to maintaining stakeholder dialogue. Institutions such as the Global Reporting Initiative (GRI) have been set up to create guidelines for corporations to improve the quality and transparency of their corporate social responsibility reports. The ambiguousness of what people today believe to be morally correct varies greatly between different generations and other societal groups. Because of this businesses are coming under pressure to define their ethical standards, and identify these formally in a code of practice. The GRI's vision is that reporting on economic, environmental, and social performance by all organizations is as routine and comparable as financial reporting (see GRI website). Sustainability indexes have been created across the globe to try and rank companies in terms of their sustainability, to introduce a more competitive aspect to achieving good ethical standards and sustainable development policies. The Dow Jones Sustainability Index (DJSI) was created in 1999 (see DJSI

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Katie Attenborough website) and were the first indexes to track the financial performance of the leading sustainability-driven companies worldwide. Companies are also using their corporate social responsibility reports as tools to help them manoeuvre in their given market, and to help them broach new markets. These new markets do not even have to be within ethical consumption. Many organisations are now using their ethical and sustainable development ideals to help mitigate their liability of foreignness when first entering foreign markets. Luo (2002) and Zaheer (1995) both acknowledge that by advertising their stringent ethical values and showing their environmental awareness, companies are able to reduce the amount the effects of liability o foreignness they may experience when beginning trading in a new environment. By showing that the company is taking a greater responsibility within the society in which it operates, promoting their ethical standards is an excellent way of encouraging reticent clients and business partners in a new environment. Also in a competitive aspect, many businesses are using ethical incentives as a way to involve their customers in their attempts to improve their own ethical standards, and this way publicise the work they are doing to try and build up their reputation. Tesco have recently announced that they will be encouraging customers to waste fewer carry bags in the name of sustainable development by introducing green club card points, so that customers can save up for rewards by recycling their Tesco carrier bags. Not only does this shift some of the responsibility of the company, involves customers but is also a great way of receiving media attention for their efforts (see BBC News article, August 4 2006). Soon after Tesco initiative was announced, the news came out that Asda, and significant rival, was undertaking a very similar scheme. When asked by reporters from the BBC if Asda was only responding to Tescos initiative in a competitive way, and that they were not really doing it in the interests of sustainable development, an Asda spokesman replied that of course they were trying to keep up with Tesco, and that it would be stupid to refute that, but they were still advocating sustainable development. This brings up the interesting view of whether consumers are likely to be as impressed by a corporation who is obviously initiating in corporate social responsibility activities as a part of keeping up

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Katie Attenborough with its competitors more or as much as to help the environment. This will be discussed in more details in the case study section. As first discussed in this section, a corporations operating environment is inextricably linked to the way that it conducts its business, noticeably so when operating in an environment that may produce hostile public reactions to the work of the corporation. Dawson (1996), p81 states that to speak of an organization is thus to speak of the environment as well. This again highlights how integral the operating environment is to an organisation, and can also be interpreted that the operating environment is a part of the organisations corporate identity. Corporate identity has been interpreted by many scholars and leading business figures in variety of ways, and it is not within the scope of this assignment to fully explore these, but the next section in this literature review will look at the importance of corporate identity from the view of the consumer, and will further look at the different factors that comprise corporate identity and how important these are in influencing the purchasing habits of consumers.

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Katie Attenborough Corporate Identity

Marketing National Identity Factors in Corporate Identity Corporate Ownership

Corporate Culture Products/Services

Corporate Brands

The diagram above shows a very simplified view of how corporate ownership is an important factor in corporate identity. Corporate identity can mean many things to different people, and academics have not reached any agreements on the specific definition of corporate identity. Corporate identity is viewed by some (Melewar, 2003) as an intangible aspects to an organisation, which can be carefully managed and become an asset, or poorly managed and become a liability. There are many different factors that contribute to corporate identity, some of which are not relevant to every organisation, and some more so than others depending on the type of business. These factors are in the most part inter-related, so it is very difficult to gauge which factor has what impact on corporate identity and how to manage these. Corporate identity is not just an academic idea, but is created by and around and organisation within its own marketplace.

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Katie Attenborough This authors particular interest is the importance of corporate ownership, which is a factor in corporate identity. Corporate ownership itself is hard to define, as it can relate to a number of different factors. Consumers often see the more tangible aspects of corporate ownership through an organisations marketing mix. Ethically minded consumers are often more informed then the average consumer, so greater knowledge on the product and/or industry could affect the impact of the marketing on that particular consumers, and therefore change their opinion of the corporation.

Look at the importance of corporate ownership, as seen from the view of the consumer through marketing and branding by the corporation. Look at how ethical consumers often have more information on a corporation, therefore corporate identity also a factor by itself.

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Katie Attenborough

Case Study The Body Shop and LOreal

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Katie Attenborough Introduction to the Case Study As outlined in the literature review, the growth of ethical consumerism is of particular interest to this author, and how corporate ownership effects the purchasing decisions of ethically minded consumers. To look at this in more detail, the takeover of The Body Shop by the cosmetics giant LOreal will be used to look at this in more detail. By doing this, this author hopes to analyse the various different responses to the takeover, and see to what extent this change in corporate ownership effects purchasing decisions at The Body Shop. To analyse this fully, this next section of the report will give a brief history of each organisation, and outline their main corporate activities. The details surrounding the takeover will then be examined, and the predicted responses to this will be given with respect to the differing aspects of the two companies. The Body Shop - a historic view The Boy Shop first opened in 1976 in Brighton by Anita Roddick, the founder. Anita Roddick sold various health and beauty products made from natural ingredients, as she was unable to afford the more expensive chemical ones, and encouraged her customers to bring their bottles back and recycle them as she was on such a small budget that buying more packaging was a real problem. Anita Roddick has always stated that though creating a business that did not make her give up her own morels was always central to her business conduct (Roddick, 1992), most of the decisions she made in those early days were centred around the fact that she had very little budget to play with. As her customers began to value the care that was taken in preparing the products her client base grew, and in 1978 the first overseas franchise in Brussels opened. In 1985 the company went public, and its growth was so great that at this stage another two franchises were opening every month. By 1990, The Body Shop was trading in 39 different countries, with requests for franchises ever growing (see The Body Shop website). 1990 was also the year in which The Body Shop Foundation was set up, a charity which funds human rights and environmental protection groups. This charity ran various

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Katie Attenborough initiatives to help enforce human rights around the world, aid other charities in protecting endangered wildlife and also ran a number of projects helping the vulnerable in the UK. In 1991 The Big Issue project was set up, which was a huge success, and in 1998 The Body Shop Foundation part-funded the launch of The Big Issue in the US. In 1995 The Body Shop created The New Academy of Business, initiated by Anita Roddick. A new management degree was founded at The University of Bath in the UK, which focused on dealing with social and environmental issues related to business. As well as creating opportunities to teach others about making social and environmental issues a core part of a business, Anita Roddick created more opportunities to use The Body Shop as an example of how a business could be used within high ethical and environmental standards. In 2001, The Body Shop UK region and the service centre head offices switched over to Ecotricity, meaning that their electric and power sources were provided by renewable sources, which is set to be rolled out across all stores when possible. The Body Shop continued to promote the use of renewable energy, and in 2002 joined with Greenpeace International to run a global campaign promoting the use of renewable energy sources. Over six million signatures were gained in support of the campaign and these were presented at the World Summit for Sustainable Development in Johannesburg. The Body Shop has instigated a number of very successful campaigns. These include the campaign against animal testing. In 1997 The Body Shop was the first international cosmetics company to sign up to the Humane Cosmetics Standard supported by leading international animal protection groups. In 1998, The Body Shop collaborated with Amnesty International to celebrate the 50th Anniversary of the Universal Declaration of Human Rights by launching a global campaign to draw attention to the dilemmas encountered by human rights defenders across the world, and encouraged people to Make their Mark for human rights, which saw over three million people take part. The Body Shop has receive acclaim from business leaders, activist groups and governments around the world for the success of its various campaigns, and how they

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Katie Attenborough have been integrated as part of its core business. In 2003, founder Anita Roddick was appointed as a Dame of the British Empire as part of the Queen's Birthday Honours. Other more recent accolades have included recommendations from British Union for the Abolition of Vivisection (BUAV) and an award for achieving higher standards of animal welfare in the cosmetic category at the first annual awards of the Royal Society of Prevention of Cruelty to Animals in the UK. In 2006 The Body Shop won PETA's Proggy (progress) awards for our commitment to avoid animal testing. It was in March of the same year (2006) that The Body Shop announced its takeover by LOreal. The Body Shops Core Values When looking at The Body Shops website, leaflets given out in their stores, or any reports on the company, great emphasis is placed on the importance of passion and the firms five core values. On the firms website passion is defined as thus: All our products are made with a love of life, respect for the world we live in, a spirit of individuality, and commitment to trading fairly. In a word, passion. The five values which The Body Shop is run on are integral to the running of the firm. In the words of The Body Shop website, the five values are our DNA and govern all that we do, from reducing our carbon footprint to ordering our envelopes. To us, there is no other way to work. After all, when you believe in what you do, you do it better. The five values are outlined below and then discussed in greater details: Against Animal Testing The Body Shops commitment to being a cruelty free cosmetics retailer Since its creation, The Body Shop has refused to use ingredients or products that have been tested on animals. It has been a leader in this area, and has successfully petitioned the UK government to stop animal testing for cosmetic purposes. In 1998 the UK government ended cosmetic testing on animals by refusing to issue or renew any animal testing licenses. The Body Shop has always been very careful in screening all of the

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Katie Attenborough ingredients that it buys to make sure these have not been tested on animals, as many companies state that their products are not tested on animals, but this can often mean that the ingredients used to make the final product may have been tested on animals. The Body Shop has never tested or commissioned testing of its ingredients or products on animals. It has also placed restrictions on their suppliers' use of animal tests by refusing to buy any ingredient that has been tested on animals for cosmetic purposes after the 31st December 1990. Some extreme action groups have questioned The Body Shops claims that their products are not tested on animals, but The Body Shop has issued various statements detailing that some of the ingredients they use may have been tested on animals in the past, and that it is not always possible to find ingredients that have not at one point or another been tested on animals somewhere. By trying to create as much transparency as possible The Body Shop is able to gain greater trust from its consumers and from many of its critics. Support Community Trade The Body Shops commitment to fair trade The Body Shop has supported the fair trade movement by sourcing the majority of their materials from marginalised communities across the world. They ensure that a fair and reasonable wage is paid to their suppliers, and also give out relevant business advice if needed. The Body Shop has made this commitment to fair-trade as its founder Anita Roddick was disgusted by the way that large multinational and other smaller firms took advantage of suppliers in third world countries to increase their own profits while poverty continued in these areas (Roddick, 1992). As part of this, The Body Shop aims to build sustainable trading relationships, not moving to cheaper and cheaper suppliers like many large multinationals are apt to, leaving behind unemployment and devastated communities. Activate Self Esteem The Body Shops commitment to their customer One of Anita Roddicks personal views which she passed onto The Body Shop was the aversion to the images of beauty portrayed by the media and large multinational

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Katie Attenborough cosmetics firms. Roddick (1992) has made several scathing remarks about firms such as Este Lauder and LOreal who she feels have helped to pressure women into trying to obtain unattainable beauty, by making them feel as if they should not be satisfied with their own appearance. This issue has received heightened media coverage over the past few years, and the company Dove has taken advantage of this by creating the Campaign for Real Beauty. This was inspired in part by The Body Shops own campaign Ruby which was based on a real looking doll with the caption "There are three billion women in the world who don't look like supermodels and only eight who do". More recently The Body Shop has used this campaign to highlight the importance of self-respect, and has drawn attention to the high number of women in abusive relationships, and helped fund counselling centres and half way houses for those women who need it. Defend Human Rights The Body Shops commitment to ethical trade and defending basic human rights As a base of their commitment to human rights, The Body Shop ensures that wherever and with whoever they trade, human rights are respected and upheld. Business systems are in place to monitor suppliers to make sure that materials are sourced from places where the workers human rights are upheld, such as making sure the workers do not work excessive hours, and have an adequate wage. The Body Shop has also collaborated with the Ethical Trading Initiative in the UK to create and uphold ethical trading standards to make sure that they do not use materials sourced from exploitative means. The Body Shop is a member of SEDEX (Supplier Ethical Data Exchange), and collaborates with the Ethical Trading Initiative and other similar organisations across the world to ensure that their primary suppliers are screened to strict ethical standards. Protect our Planet - The Body Shops commitment to protecting the environment and supporting sustainable development

As already outlined, The Body Shop is already using renewable energy sources to meet its energy requirements, and also works to minimise waste by carefully designing all its

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Katie Attenborough packaging to maximise re-use and recycle and minimise waste. The Body Shop also promotes the use of sustainable wood sources, in partnership with the Forest Stewardship Council. Also, The Body Shop has implemented a planting programme, and the business aims to be carbon neutral by 2010. Palm oil-based ingredients are an important part of many toiletry products. Since 2004, The Body Shop has taken a primary position in addressing the serious social and environmental impacts of palm oil production which include deforestation, biodiversity and the rights of indigenous populations. To address these issues, The Body Shop is active in the Roundtable on Sustainable Palm Oil, a non profit organisation whose members represent major players along the palm oil supply chain, including the oil palm growers, palm oil processors and traders, consumer goods manufacturers, retailers, banks and investors. LOreal a historic view LOreal also began as a very small company run by its founder Eugene Schueller, a young French chemist in 1907. Schuellers business began after he created an innovative hair colorant, called Aurole, which he sold to local Parisian hairdressers. The company became registered in 1909 under the name Socit Franaise de Teintures Inoffensives pour Cheveux ("Safe Hair Dye Company of France"), which was to become LOreal in the future. Schuellers founding principle was very simple, namely research and innovation in the interest of beauty. In 1920 the company employed three full time chemists, and by 1950 this had risen to around 100. This continued to grow, when in 1984 LOreal employed over 1000 chemists. Today, the company employs over 2000. LOreals Core Business Though LOreal started by producing and marketing hair colorants, today the firm has over 50 different brands, all of which fit into four different types of product that the form produced. Mass market products, such as high street cosmetics like Garnier and Maybelline New York Accounted for 54.8% of LOreals profits in 2003 (amounting to 7.506 billion). Luxury products accounted for the next largest section of its profits

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Katie Attenborough (25.1%, equalling 3.441 billion) which includes brands such as Cacharel, Lancme, and today, The Body Shop. Professional products produced by LOreal are fast becoming a major source of income for the firm, which in 2003 accounted for 13.9% (1.9 billion in profit). The Matrix and Redkin brands within this sector are gaining more recognition from the professional cosmetics marketplace, and are set to achieve significant growth in the coming years. (New York Times, 2005). Active cosmetic brands account for the remaining 5.5% of LOreals products (totalling 0.749 billion). Though LOreals prescribed main business activity is researching and creating innovative cosmetics, marketing is a huge part of what LOreal do. LOreals famous advertising slogan because Im worth it has recently changed to because youre worth it, but is still one of the most well know advertising slogans across Europe and America. Vast amounts of LOreals revenue is feed back into its marketing departments across its operating sectors (the company trades across 130 countries), and its famous advertising slogan is supported by a wide range of well known celebrities, including Penelope Cruz, Charlize Theron, and the extremely well known series of advertisements produced starring Jennifer Aniston. From the core business values, even though The Body Shop and LOreal operate in the same industry, their approach to corporate social responsibility is very different. But recently, LOreal appears to have been taking amore proactive approach to this area. As per LOreals Sustainable Development Report 2006 shows, LOreal has now reached a standard where it has been included in various sustainability ranking systems, such as the Ethical Pioneer Index and the Ethical Excellence Index. More recently, LOreal has been chosen to be included in the Dow Jones Sustainability Stoxx index, which lists the companies with the best performance in terms of social and environmental responsibility in Europe and in the Euro zone. This then leads on, to the announcement that LOreal made in March this year (2006), of the acquisition of The Body Shop

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Katie Attenborough LOreal takeover of The Body Shop On 17th March 2006 The Body Shop and LOreal reached an agreement on the terms of a recommended cash offer to be made by JPMorgan Cazenove on behalf of LOreal for the entire issued and to be issued share capital of The Body Shop (LOreal: Recommended Cash Offer 2006). Information regarding a possible takeover had been picked up by the media before this date, where the many different opinions were already forming as to the nature of this takeover. Media sources from Ethical Consumers magazine, the BBC and The Times all immediately outlined what they believed to be controversial aspects to the takeover, due to the contrasting value systems in place in each firm. Ethical; Consumer magazine and other sources also picked out concerns regarding LOreals relationship with the multinational firm Nestle (covered in detail in the next section). In a letter by Adrian Bellamy, the Executive Chairman of The Body Shop International PLC, he outlined his full backing of the LOreal offer by highlighting The Body Shops significant growth in the last few years, and stated that LOreal could be used as a vehicle to propel the firm to further increase its profits through LOreals already substantial network (LOreal: Recommended Cash Offer 2006). As a one line added on to this statement, Bellamy also stated that the planed takeover was an opportunity for the furtherance of The Body Shops employees and values within a world class cosmetics company. Set out in the Recommendation document were LOreals reasons for making the offer. These were highlighted as brand, and expertise in distribution. The importance of brand was set out in page 14 of the document as the leading position in the high-growth environmentally conscious consumer segment which would be an appealing addition to LOreals product range. Expertise in distribution is used to describe how LOreal aims to profit from the increase in profits from The Body Shops new ways of purchasing including Body Shop at Home and Body Shop online. Clearly conveyed in the document was the expected increase in profits for LOreal and The Body Shop after the takeover.

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Katie Attenborough Conflicting Values and The Nestle Connection After the takeover was announced, the media and consumer backlash began, with negative comments made in publications such as Ethical Consumer, and green consumer forums online. Organisations which supported The Body Shop through its causes, such as the British Society of the Abolition of Vivisection voiced their concerns over the seemingly conflicting values of the two firms. As set out earlier, The Body Shop has long been an advocate of prohibiting the use of animal testing for cosmetic purposes. But LOreal has a know history of using animal testing in its own research. Though LOreal claims that none of its products have been tested on animals in over 10 years, it still uses animal testing to test specific ingredients that it uses within its products. Prothero et al (1992) sights the debate against animal testing as one of the main factors impacting on ethical cosmetics and health and beauty products. This is the first of many contradictions which has many ethically minded consumers scrutinising the takeover. LOreal also has a poor history in using harmful chemicals during research and in producing its products. As outlined earlier, The Body Shop aims to use as many natural ingredients as possible in its products, with over half of its 900 products containing at least one naturally made ingredient sourced from Fairtrade communities. The Body Shop has also voiced its commitment to protecting the planet, through which it tries to minimise the impact it has on the planet by trying not to use harmful chemicals. LOreal has been seriously criticised in the past for its use of various chemical which are hard to dispose of and potentially damaging to the environment, but LOreal has not done anything to reduce these, as often the more harmful chemical ingredients are the cheapest ones available, therefore keep the cost of production down. Packaging, including marketing is another major contradiction that exists between the two firms. As part of The Body Shops active self-esteem campaign, no product can claim or insinuate it can provide miracle beauty cures. The Body Shop has always

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Katie Attenborough maintained that it is a health and beauty company, not a cosmetics company. Anita Roddick has indeed made several remarks about large cosmetic companies, and has even made extremely negative remarks about LOreal and the image it portrays of how women should look. As described before, LOreal uses extravagant marketing, using famous Hollywood actresses to promote its goods, promoting a certain image of beauty for woman which Anita Roddick has previous described as dangerous (Roddick, 1992). Anita Roddick has always maintained that The Body Shop does not have marketing department. There have never been any Body Shop commercials, and the company does not use marketing in the most common sense. Instead, The Body Shop promotes the causes that it is supporting, and as such raises its own profile among its consumers. This way The Body Shop uses this money spent on promoting the cause, not its products, and so this money goes directly to helping to support the cause, which is again in complete opposition to the millions of dollars spent each year on LOreals advertising budget. Also linked with packaging is the way in which The Body Shop uses recyclable materials, and encourages consumers to recycle the packaging used for their products. In contrast, LOreal has been pointed out in the past for using unnecessary packaging, causing greater waste, though in more recent years it has tried to increase the amount of recycled material used in its packaging. One factor that was pointed out by Ethical Consumer Magazine, The Times, BBC News and generally among ethically minded consumers in newspapers and on the internet, was the connection between Nestle and LOreal, now tying The Body Shop to Nestle also. Nestle owns 26% of LOreals stock. This does not give Nestle direct ownership of LOreal, as it owns less then 50% of LOreals shares, and according to the UKs Financial Act this means that the companies are not even associated financially (just taking into account the 26% of shares owned by Nestle). But LOreal has long been identified as being under Nestls umbrella of ownership; this may be through significant voting power not linked to the share value. LOreal is also linked with Nestle via two joint ventures, one creating Laboratoires Inneov, which researches into nutritional cosmetics, and the other creating Galderma, which is researching into dermatology.

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Katie Attenborough Nestle is the worlds largest food and beverage company. It produced a huge range of products, ranging from confectionary, mineral water, baby milk and cereals. Nestle purchased a shareholding in LOreal in 1974, and was its first investment in a cosmetics firm and non-consumables, to diversify its portfolio. Though Nestle claims to have a strong corporate social responsibility policy, it has often been surrounded by controversy regarding some of its business activities, particularly relating to the promotion of its baby milk, and is the most boycotted company in the UK, and one of the most boycotted in the world. The most controversial aspect of Nestle business policies is to do with its marketing of baby milk formulas, starting in the 1970s. This has cantered on its apparent recommendations for nursing mothers to switch to its baby formula milk products, leading to the alleged deaths of about 1.5 million babies each year as a result of the formula being mixed with contaminated water. Allegedly, Nestle has violated the International Code of Marketing of Breast-milk Substitutes by using babies in its advertising, and encouraging young mothers to switch from nursing their children themselves to using their formula. This has lead to the formulation of the Baby Milk Action - a boycott group that stretches across over 20 countries, campaigning against Nestls aggressive use of marketing baby formula. Many commentators on the takeover were extremely critical that The Body Shop with its ethical values supposedly at the core of its business was now, as suggested by some, falling into the hands of the enemy. Ethical Consumer magazine uses an ethiscore, which is an online ethical shopping guide to the most ethical brands. Before the takeover The Body Shop had a quite high ethiscore of 11 points (out of 20), but its predicted score after the takeover plummeted to 2.5. This is entirely down to its association with LOreal and Nestle. It is this that highlights so well the importance given to corporate ownership. According to Ethical Consumer magazine, The Body Shops whole ethical image will be ruined by the change in corporate ownership. It is this aspect that interests this author and this case study will be used to analyse ethically minded consumer reactions to the importance of corporate ownership.

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Katie Attenborough

Methodology

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Katie Attenborough Research Goals As already explained in the introduction to the literature review, the aim of this study is to examine the importance of corporate ownership when purchasing across a range of ethically minded consumers, by use of a business case study. The initial ideas for this investigation came from the case study itself the LOreal takeover of The Body Shop. This author wanted to find out if the change in ownership had had any significant effect on the opinions of consumers, particularly surrounding the issues of a firm famous for its good ethics being taken over by a firm with a grey history in this area. This author was also particularly interested in the relationship between LOreal and Nestle, a significant shareholder in LOreal, as Nestle is well know for its ethically questionable policies. By looking at consumer responses to this particular business example, this author hopes to extract relevant information on the importance of corporate ownership to ethically minded consumers that may be used to indicate more general opinions on the importance of corporate ownership. With the available times resources and other resources available, this author is aware that the results gather from this investigation will not be sufficient to make any generalisations, but rather can be used to indicate starting points for further investigation into this area, and to investigate opinions related to this specific business case. Using the case study in question is a feasible task, which this author believes will bring up a range of interesting issues which will give plenty of interesting results, which will be able to be analysed feasibly in the timeframe available. Methods of data capture After completing the initial research into the case study and more generally on ethical consumerism, a map was created, to look at the corporation-consumer relationship, and how corporate ownership fit into this with relation to the consumer. By doing this, the relevant factors affecting this could be assessed, and from this, the factors that needed to be measured or aspects that needed to be expanded could be identified. The map created is shown below:

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Katie Attenborough

Consumer

CustomerCorporate Relationship

Corporation

Multipliers effecting impt of corporate identity Profile Awareness Interest in specific cause Moderators Negative associations Identity cross over Product range Price

Positive associations Customer loyalty Stakeholder management Goodwill Behaviour modification

Negative associations Increased scrutiny Consumer boycotts Reputation and brand damage

Mediators of corporate image CSR activities Socially responsible marketing Corporate brand Reputation Business environment company reaction to industry specific problems Corporate Ownership

Though the diagram above is a very simplified diagrammatic representation of the factors contributing to the type of relationship that occurs between a consumer and the corporation, it does help and identify various aspects that affect this relationship. From this, factors which are feasible to cover in this investigation are examined. This author decided that one type of factors about the consumers would be investigated, to see how this varied with the varied opinion on the importance of corporate ownership. With the resources available this author decided that a profile of a given consumer could be built up by looking at that consumers ethically minded purchasing behaviour, and that specific consumers awareness of the companies involved in the case study (this corresponds with factors under profile in the box marked multipliers on the diagram). This also fit in with other information gathered in the literature review, where Peattie (1992) stated that informational factors were significant in determining ethically minded consumer behaviour and the different ways in which consumers viewed a given corporation.

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Katie Attenborough Once the information that was to be captured had been decided upon, a method of extracting this had to be devised. At this point it should be clearly highlighted that even though the information to be gathered had been decided upon, a reflexive approach was taken in gaining this data. It was decided that first a questionnaire would be created to measure a given consumers ethical activities, and then gather information on that consumers opinions on the companies involved in the case study, and the actual takeover itself. The questionnaire was distributed to family and friends, and also by emailing other students at The University of Nottingham. As discussed in the evaluation, this would not ensure that a representative sample was reached, but was manageable with the resources available. A sample survey was produced and given to a small test group. A few modifications changing the layout of the questionnaire to make it easier to answer. To make the questionnaire as simple as possible, thereby getting as higher return rate as possible, the first section of the questionnaire was designed to be a simple exercise in ticking for the respondent. A copy of the final questionnaire can be found in the appendices. This section was used to measure the ethicalness of the given consumer. From the research completed in the literature review this author is aware that it is not accurately possible to categorise a consumer in any given area, as consumers in general often behave differently in different circumstances and depending on the type of product they are buying. The term ethicalness shall be used to express how often the respondent claimed to take part in ethically minded activities described in the questions. A scale of timely answers was provided so that all the consumers responses would be able to be analysed in the same way. A score was set down for each question (Always =5 to Never=1) and the resulting final score gained by the consumer would be used to give them an ethical rating. Again, it must be pointed out that this author is aware this is a very crude way of analysing consumer responses, but to gain feasible responses that could be easily identified and used in this study; a very simple method had to be employed. It is also useful to point out at this stage that the possibility of social desirability bias affecting the results was regarded, but as there is no clear way to guard against this, awareness of this at this stage will be sufficient, and then will be discussed in greater detail in the results section of this investigation. One way to offset this was to provide a number of

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Katie Attenborough questions that provided the respondent with an answer that required them to choose between an ethically attractive option and a price option. These could then later be compared to those questions where an ultimatum was not given, to see if there were any real contradictions which may indicate social desirability bias. It was decided that to try and gauge the importance of corporate ownership without giving the respondents any prompts, a blank open ended question would have to be used. This was given in the form of asking the consumer to define corporate ownership, and then stating how important a factor this was in their purchasing. Information regarding the consumers purchases at The Body Shop and LOreal were then recorded. This would be used to gauge the reasons consumers gave for shopping at each of these companies, and to see if these were related to the consumers ethical score gained in the first part of the questionnaire. One question was included regarding the Nestle boycott, no information on the boycott was given, so as to not bias later answers by consumers who were not aware of the boycott. The question was created so that those consumers that were aware of the boycott where asked to show if and to what extent they agreed with it. Five statements regarding the LOreal takeover of The Body Shop were given in the final question, from which the consumer could pick one that most reflected their own opinion on the matter. These statements were prepared after research into the various media responses that had been expressed already. A space was left for consumers to add their own opinion and comments to this question if they felt that none of the statements expressed their opinion or if they just wanted to clarify their opinions more. At the end of the questionnaire the respondent was asked to indicate their age and sex, the information will be used to gauge the profile of the respondents. From the answers given, some respondents were contacted and asked to give further opinions on the answers they had already given. Where appropriate, these have been added to the written answers, as seen in the appendix. It was not possible or feasible given the resources available to conduct a large number of more in-depth interviews.

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Katie Attenborough

Results and Discussion

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Katie Attenborough Results and Discussion The complete raw data collected from the questionnaires can be found in the appendix at the end of this investigation. This includes complete answers given by every respondent to the questionnaire. Also, all the longer written answers supplied by the respondents are supplied in another part of the appendix in full. Overall, 60 responses were generated from the questionnaire. These have been used to quantify the information, and create graphical data to display the results generated.

Overview of responses for Ethical Scoring Questions

70

60

Number of anwers received

50

40

30

20

10

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 Question Number Always Often Sometimes Rarely Never

Figure 1 Figure 1 above shows the different answers given to the first 18 questions in the questionnaire. These question made up the first part of the questionnaire that was used to create an ethiscore to indicate to what extent did the respondent take part in ethically minded behaviour. As discussed in the methodology, it is not possible to create an ethiscore like this and accurately describe the extent to which a person is an ethical consumer, especially as consumers behave in different ways in different circumdtances, so may act in an ethical manner in one situation, but not in another.

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Katie Attenborough Social desirability bias can be a problem using these types of questionnaires, which is why questions posing a dilemma/ultimatum type answer were chosen so that the respondents had to make a conscious decision to choose between price and ethics. Usually with these types of questions were participants are asked to choose from a number of variables, the extreme choices (i.e. the lowest and highest) are rarely chosen. By looking at the graph it is obvious that the options Often and Sometimes were the most used, and the Never option only occurred in six out of the 18 questions. The Always answer was used more often then its opposing extreme the Never answer, partly due to the fact that even though this answer is an extreme, it is a positive extreme. Again, social desirability bias may be partly causing this as well, as it may skew the registered responses towards the more positive side. Each question was scored individually, and this was then added up to get the individuals ethiscore. These ranged from a low of 38 points to a high of 83 out of a possible 90 points. The literature review was used to point out how difficult it is to define an ethical consumers, and this author used the phrase ethically minder consumer behaviour to describe the different types of consumers where ethical often played an important part in their purchasing decision For the purposes of this investigation it was necessary to split the consumers up so that the relationship between the extent of ethically minded consumer behaviour could be measured against the importance of corporate ownership with relation to the case study. The ethiscore was then used to split the respondents up into three groups, those scoring from 0 to 49 points (Consumer type 1) who exhibited the lowest amount of ethically minded consumer behaviour out of those questioned, those scoring 50 to 65 points, who were middle of the range when it came to ethically minded behaviour (Consumer Type 2), and those scoring above 65 points (Consumer Type 3).

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Katie Attenborough

Types of consumers by 'ethiscore'

0-49 66-90

50-65

Figure 2 Figure 2 shows the number of different consumer types. 15 out of the 60 respondents were counted as type 1 consumers, as they scored less than 50 points in the ethiscore. 24 out of the 60 were classed as type 2 consumers, who scored between 50 and 65 points. 21 of the remaining respondents were classed as type 3 consumers, as they scored over 65 points n the ethiscore. It would be a much more accurate way to look at the ethiscore in a way of ranking the consumers that took the questionnaire, providing more of a linear progression from consumers who do not exhibit much ethically minded behaviour, to those that do. But for analysis purposes in this investigation it is not as feasible to do individual case studies for each consumer response. Over all, the weighting was nearly evenly split, with the majority of those replying coming under type 2 consumers. There are 6 more type 3 consumers then there are type 1, this could be due to social desirability bias, or, genuinely down to an increase in the growth of ethical consumerism. It is better to assume for these purposes that it is a mixture of the two.

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Katie Attenborough

Top 3 Factors in Purchasing at The Body Shop

40

35

30

25

20

15

10

0 No animal testing Natural ingredients Not exploiting workers Recycled packaging Good quality Wide range of products products Ethical reputation Price Other

Figure 3 Out of the 60 people questioned, 55 of them had made at least one purchase from The Body Shop. The higher the figure the better, as one of the main aims of this study is to look at the importance of corporate ownership with relation to the takeover of The Body Shop. Figure 3 shows the distribution of reasons given for purchasing from The Body Shop, as discussed in the case study section, those reason which can be seen to be extensions of The Body Shops own values seem to be more important to consumers when making heir purchases. The only contradiction with this is the factor of not exploiting workers. From the feedback received from the survey, some have indicated that this is seen as a secondary factor, as is not directly related to the product consumer interface, such as natural ingredients and recycled packaging might be. The two most picked factor of the three were natural ingredients and good quality products. It could be argued that these are not factors that may be associated with ethical purchases straight away. If this is the case, it could be viewed that although as an ethically based firm, many people purchase from The Body Shop for other reasons.

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Katie Attenborough

Top 3 Factors in Purchasing from L'Oreal

40

35

30

25

20

15

10

0 No animal testing Natural ingredients Not exploiting Celebrity Good quality Wide range of workers endorsements products products Ethical reputation Price Other

Figure 4 Figure 4 shows the spread of factors chosen for shopping from LOreal. These are skewed differently from those factors chosen for The Body Shop. By choosing these questions, the author wanted the respondents to give more rational thought as to why they did decide to make certain purchases from these two companies. By doing this, when asking about how the takeover may effect the consumers future purchases from The Body Shop, they would have already just has to thing about the reason that they shop there, and would be better able to rationalise if any of those factors would be affected by the takeover. As expected, the factors chosen for purchasing product from LOreal were very different for those chosen for The Body Shop. The same factors were chosen for each one, apart from one, where recycled packaging was swapped for celebrity endorsements. This was a subtle try to invoke in the consumer a realisation of the different types of marketing used within each firm.

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Katie Attenborough The level of awareness of the particular respondent to both The Body Shop and LOreal are important in answering these questions. Animal testing often brought out the most extreme answers from people, as in if respondents were going to put down animal testing as an important factor in their purchase, it was more often then chosen to be the most important factor overall.

Most Important Factor in Body Shop Purchases by Consumer Type

18 16 14 12 10 8 6 4 2 0 No animal testing Natural Ingredients Not exploiting Recycled packaging Good quality Wide range Ethical reputation Price other

Consumer Type 1

Consumer Type 2

Consumer Type 3

Figure 5 Figure 5 shows the spread of factors chosen as the most important to consider when making a purchase at The Body Shop. It clearly shows that ethical reputation was considered as the most important factor by the majority of type 3 consumers (those shown to be more involved in ethically minded consumer behaviours) as could well be expected, while type 1 consumers often chose factors such as natural ingredients, price and quality, which are not as closely associated with ethical reasoning.

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Katie Attenborough

Most Important Factor in L'Oreal Purchases by Consumer Type

20 18 16 14 12 10 8 6 4 2 0 No animal testing Natural Ingredients Not exploiting Celebrity Good quality endorsements Wide range Ethical reputation Price other

ConsumerType 1

Consumer Type 2

Consumer Type 3

Figure 6 Figure 6, which shows the distribution of factors considered most important when purchasing from LOreal shows a clear difference from those in figure 5. Not only are the number of type 3 consumers claiming to buy from LOreal much lower than for The Body Shop, but no factors that can be associated with ethical reasoning are chosen as the forefront reason for purchase. Quality, price and range of products are all very general factors which can be attributed to many different types of purchasing. This would indicate that either the consumers questioned did not believe that LOreal was an ethical company, and so the ethically based factors did not apply, or they just did not associated them with LOreal, instead choosing more generic factors.

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Katie Attenborough

Reactions to Nestle Boycott by Consumer Type

25

20

15

10

0 Disagrees Agrees Agrees and takes part to some extent Consumer Type 2 Agrees and takes part fully Consumer Type 3 Not Aware

Consumer Type 1

Figure 7 Figure 7 shows the results pertaining to the response to the Nestle boycott question. Again, the answers to this question themselves are not an important factor by themselves, but served to reminder consumers as they were completing the questionnaire what the importance of Nestls relationship was. Even if consumers had not heard of the boycott, this question will have made them aware that a boycott was taking place, and this would then be at the forefront of their mind when answering the question about their reactions to the takeover.

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Katie Attenborough

Reaction to takeover by Consumer Type

25

20

15

10

0 a b c Consumer Type 1 d Consumer Type 2 Consumer Type 3 e Other

Figure 8 Figure 8 is very significant as it shows the response to the actual takeover itself. From this it is easy to see that the majority of those questioned believed that the takeover was irrelevant as The Body Shop would continue its good work. This was most relevant to those type 3 consumers, closely followed by type 1 consumers. Type 2 consumers appeared to be much more concerned about LOreals connection to The Body Shop, though the individual comments need to be looked at to see why this is. Majority of people who wrote extra comments stated that they were worried that a company like the Body Shop had been taken over by an ethically questionable firm, but were unsure if this would affect their future purchases. Several people wrote that the Body Shop was continuing with the social and environmental projects that it was running before the takeover so felt that a change in ownership had little relevance in their decision to shop there. Two people commented that the social and environmental projects that the Body Shop were involved in were extras associated with their purchase, but they were not major

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Katie Attenborough factors in their purchases, as they felt the goods sold at the Body Shop were good quality, and so its takeover by LOreal was irrelevant to them. Several people were concerned that Nestle was now profiting from the Body Shop, one suggesting that the profits that Nestle will be making from the Body Shop may cancel out the good that the Body Shop does. Two people made general comments that they were worried that large multinationals were taking over firms like the Body Shop in an attempt to add to their own socially responsible image in the easiest way possible, and were not truly concerned with upholding the brought-out companies values. Several comments were made as to the trustworthiness of LOreals claims that the purchase of the Body Shop was to learn from its CSR activities, and was an attempt by LOreal to pacify some of its critics. Two comments were made that implied the commenters were open to the possibility that LOreal was really trying to make improvements to its social responsibility and were waiting to see what happened. Three comments were made regarding Anita Roddick, implying that she had betrayed the Body Shop after making very public negative comments on LOreal in the past; this also raises questions on the ownership of the Body Shop, as Roddick is no longer owner, but seems to be placed with the blame by these comments. Other comments suggested that Body Shop had opened itself up to greater scrutiny by stakeholders by being so vocal about its social and environmental activities, and should be prepared for that. LOreals connection to animal testing was brought up several times as being in complete contradiction with one of the Body Shops core values. The response given to the question of corporate ownership was extremely varied, and out of the 60 people questioned only 18 responded to the question at all. Out of these, several

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Katie Attenborough only commented that they did not know what corporate ownership was. Several commented on the importance of prior knowledge about the firm. This agrees with information found in the literature review, as knowledge is key in the construct of corporate identity by an individual, with corporate ownership an important factor. Responsibility was an important issue that came up connected with corporate ownership and its importance when making an ethically minded purchasing decision. When making ethical purchases, as shown in the literature review, the consumer no longer just thinks about the direct consequence of buying that product or service, but is now more interested in the more intangible surrounding issues. Factors such as human rights, supporting employees in third world countries and further implications of the purchase are all considered. This is why responsibility taken by the company is such an important aspect. Corporate ownership is more likely to become a more importance issue in relation to the amount of information that the specific consumer has about the firm in question. When little is know about the firm, corporate ownership may not be a big issue as the consumer does not know enough to create an informed opinion. In the case of large firms such as Nestle and LOreal, consumers often have at least a minimum level of knowledge about the company, and depending on what they have actually heard (good or bad) will affect the importance of corporate ownership. Like corporate social responsibility in general, a consumer is much more likely to take action if they have heard negative things about a firm, therefore corporate ownership could be though to be more important for consumers wanting to make an ethically informed purchase, and have heard negative things regarding a company they were looking at with the possibility of making a purchase. Consumers do take proactive steps when positive information regarding a companies ethical standards is known, but often to a lesser extent then if the knowledge was negative. Therefore, the importance of corporate ownership is not only linked to the amount of information that the consumer has on the firm, but also to the type of information. Corporate ownership is more likely to be an issue with a consumer who has heard negative aspects about a company, then if they have no prior knowledge.

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Katie Attenborough The importance of corporate ownership also seem to be related to the type of product to be purchased, and how important the consumer views the possible purchase to be. One respondent wrote how corporate ownership was possibly more important when making cosmetic purchases, as she was worried about the type of products she could use on her skin, therefore the producing company is an important aspect, as often consumers will sometimes have pre-approved list of companies in their sub-conscious when planning a specific purchase. As described in the literature review, supporting local shops is another form of ethically minded consumption. One respondent remarked that corporate ownership was important to him in the way that he often made a conscious decision to avoid certain larger stores and supermarkets to make sure he purchased from his local stores to support his local community. Therefore, because this particular issue is of importance to this consumer, corporate ownership takes the form of the difference between large multinationals and smaller firms. This brings us to the major conclusion that can be reached from the research thus far. The importance of corporate ownership to ethically minded consumers depends completely on how that consumer actually defines corporate ownership, and what issues are particularly important to them. Different people will define corporate ownership in different ways, and will then factor this into their purchasing decisions in different ways. This is shown through the case study by the way in which people reacted differently to the takeover of The Body Shop by LOreal.

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Katie Attenborough

Evaluation and Future Research

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Katie Attenborough Evaluation of Investigation and Future Research Objectives. Overall this author feels that the main aims of this assignment have been achieved in as much detail as was feasible taking into account the available resources. To recap, this author started out by looking at how important the factor of corporate ownership was to ethically minded consumers in purchasing decisions. From research carried out in the literature review, the definition of ethically minded consumers was found to be extremely broad, and, as with other consumer categories, found it is not possible to accurately label any consumer at any given time, as consumers exhibit different behaviours and opinions at different times. Also, as discussed previously, it has been shown that consumers opinions often differ to actual consumer behaviour. Therefore, one possible avenue of future research following on from this investigation is to investigate the relationship between consumer opinions and actual behaviour regarding ethically minded purchases, and to expand this to investigate if consumer opinions on the importance of corporate ownership are integrated into their actual purchasing behaviour. Also, as described in the literature review, though marketing executives create static models where consumers make informed rational decisions regarding their decision to purchase, research has shown that purchasing is in fact an irrational activity, where linear decision making is rare. Marketing research has also shown that while some factors involved in the decision making process (for example price) are more rational, other factors, such as the consumers gut feeling are more intangible and hard to measure in a quantifiable way. Future research could be used to explore the factors considered by ethically minded consumers (including corporate ownership), to try and define which factors form part of the rational decision making process, and which are more intangible, making up part of the consumers gut feeling. From this investigation, an argument could be made that factors such as ethical obligation and corporate ownership could be both part of the consumers rational decision making process and part of their gut feeling. Many ethically minded consumers have stated in this research that they make a conscious effort to look at the company making the product they are intending to purchase, and many may base use this to form part of their rational decision. But others have shown that

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Katie Attenborough they often do not make a conscious effort to choose, or not choose, a certain company. If future research could ascertain a profile of consumers that used corporate ownership as part of their rational decision making purchase, then companies may be able to target their marketing more accurately and with more success. If greater resources were available and with further time allowances, this author believes that this study could have been extended greatly by creating a profile of respondents in much more details, to try and identify patterns in consumer profile and their opinion on the importance of corporate ownership. As already discussed, the majority of the respondents questioned in this study were students studying at The University of Nottingham, and due to the limited number questioned, it was not feasible to try and create a meaningful profile some this small sample, so only very limited information on the respondents was taken (sex and age). With greater resources, a larger more varied population could have been sampled, and greater information on the respondents themselves could have been gained. This would be an excellent way to continue the research started in this investigation, to see if and how consumer profiles were linked to the consumers response to the importance of corporate ownership. Further research could also be generated by completing more in-depth interviews with appropriate respondents, to further clarify their views, and would be particularly useful to delve into the more complicated definition of corporate ownership discussed. The different types of corporate ownership could be investigated, to see if different definitions of corporate ownership meant very different things to different consumers, and how each one of these effected their purchasing decisions. Though media research has been carried out aid in the creation of the questionnaire used and throughout the literature review, it was originally intended to look at the relationships between the various views put across by respondents and similar views expressed in the media, to see if these could be defined any further, and to see what sort of corresponding relationship these had to the type of media and the type of consumer. Because the definition of corporate ownership itself is very hard to clarify, and different consumers

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Katie Attenborough have their own definitions of it, it is very hard to find media evidence that corresponds with a given respondents view. Though these can be generalised, as this information is taken relating to a given case study, it is not pertinent to generalise these in any way, as they are only relevant o this particular case. Therefore, future research could be used to try and draw more generalised conclusions from this research without loosing any of the details, by completing further more in depth research with a greater number of consumers. In relation to that, difference in cultural ideas have been left out of this assignment, again due to limitations, and the difficulties in trying to find the appropriate consumers to question. Another avenue for future research would be to look at how cultural difference affects a consumers opinion of the importance of corporate ownership. This particular case study has looked at the takeover of a firm, and as brought up by one individual, it may be pertinent to research further into how corporate takeovers, mergers and strategic alliances change consumers opinions on corporate ownership, and how this relates to ethical consumerism, as already outlined, ethical consumerism can take the form of consumers supporting their local shops, so the intrusion by a larger more powerful firm will have a direct impact on their purchasing behaviour. The more financial aspects of this could also be addressed, looking at the different ways in which companies can be associated, and if these have an affect on consumer opinion. As stated in the case study, Nestle does not own a majority shareholding in LOreal, and yet the two are often associated, they are not technically associated though finance law. The differenced between these could also be researched further. Through this investigation, the various different ways in which people define corporate ownership has been shown, and of particular interest to this author. Before gaining the information from consumers regarding the importance of corporate ownership, this author assumed that a companies marketing and/or branding would constitute a large part of this definition. But, from the answers received, only one respondent out of 60 mentioned branding/marketing without prompting regarding the importance of corporate

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Katie Attenborough ownership. Further research could be carried out to find out the importance of ethically based branding/marketing to ethically minded consumers, and how consumer opinions on this may affect their purchasing opinions and behaviour. From the research on ethically minded consumers, Peattie (1992 & 1996) pointed out that ethical consumers are often more informed about the products they buy, and also more critical of corporate marketing/branding. Further research could then be carried out to ascertain how much and what type of information that an ethically minded consumer has on a particular product affects the level of scrutiny they exhibit regarding company marketing/branding related to that product or other products in the same range/sector. This could be used to help corporations ascertain the best type any quantity of information to include with their products packaging and marketing campaigns. This final chapter has looked at the various ways in which this investigation could be improved upon or extended given available resources. If ethically minded consumerism continues to grow at the current rate, this type of research will become more important as corporations try to learn what relevant factors that are relevant to ethical consumerism do they have any control over, and if so how do they use that to their advantage. This case study has highlighted that not only are corporate ethical policies becoming points of differentiation, they are becoming more important to achieve a sustainable competitive advantage in todays marketplace, irrelevant of industry (though some industries feel the effects more than others).

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Katie Attenborough

References

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Katie Attenborough Anderson, W Thomas & William H Cunningham. (1972). The Socially Conscious Consumer. Journal of Marketing Vol 36, July. Anonymous. (2003). Is there such thing as an ethical consumer? CSR from a purchasing perspective. Strategic Direction Vol 19 Issue 6. BBC 11/08/06). Bedeian, Arthur. G. (1984). Organizations Theory and Analysis, Test & Cases. CBS College Publishing. Begg, David and Damian Ward. (2003). Economics for Business. McGraw-Hill Education. Bhattacharya, CB & Sanker Sen. (2001). Does Doing Good Always Lead to Doing Better? Consumer Reactions To Corporate Social Responsibility. Journal of Marketing Research Vol 38 Issue 2. Bhattacharya, CB & Sanker Sen. (2004). Doing Better at Doing Good: When, Why and How Consumers Respond to Corporate Social Initiatives. California Management Review Vol 47 No. 1. Blackwell, Roger D; Paul W. Miniard & James F. Engel (2001). Consumer Behaviour. Harcourt College Publishers/South-Western. Bowerman, Karen. (2000). Shoppers put price before ethics. BBC News Online. Published 18/10/00. http://news.bbc.co.uk/1/hi/uk/977581.stm. (accessed 27/06/06). News (2006). Bag incentives for Tesco shoppers.

http://news.bbc.co.uk/1/hi/business/5244708.stm Published on 04/08/06. (accessed on

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Katie Attenborough Brown, Joseph D & Russell G Wahlers. (1998). The Environmentally Concerned Consumer: An Exploratory Study. Journal of Marketing Theory and Practice, Spring 1998. Brown, Tom J & Peter A Dacin. (1997). The Company and the Product: Corporate Associations and Consumer Product Responses. Journal of Marketing Vol 61 Jan. Bussey, Noel. (2006). Is it important to be an ethical brand? Campaign: Teddington. Published 17/03/06. Buttle, F. (1994). Editorial: Special Issue on New Paradigm Research in Marketing. European Journal of Marketing 28 8/9. In Marsden, David & Dale Littler. (1998). Positioning Alternative Perspectives of Consumer Behaviour. Journal of Marketing Management Vol 14. Carrigan, Marylyn & Ahmad Attalla. (2001). The myth of the ethical consumer do ethics matter in purchase behaviour? The Journal of Consumer Marketing Vol 18 Issue 7. Co-operative Bank. (2003). The Ethical Consumerism Report 2003 www.cooperativebank.co.uk (accessed on 27/06/06). Crane, Andrew. (1998). Exploring Green Alliances. Journal of Marketing Management Vol 14. Crane, Andrew. (2001). Unpacking the Ethical Product. Journal of Business Ethics 30. Creyer, Elizabeth H, Ross Jr & T William. (1997). The influence of firm behaviour on purchase intentions: Do consumers really care about business ethics? Journal of Consumer Marketing Vol 14 Issue 6. Daft, Richard L. (2001) Organization Theory and Design. South-Western College

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Katie Attenborough Publishing. Dawson, Sandra. (1996). Analysing Organisations. MacMillan Press Ltd.

Dill, W.R. (1958). Environment as an influence on Managerial Autonomy. Administrative Science Quarterly 2, 409-43. Dillenberg, S; T Greene and H Erekson. (2003) Approaching Socially Responsible Investment with a Comprehensive Ratings Scheme: Total Social Impact. Journal of Business Ethics 43 (3). Doane, J. (2001). Taking Flight: The Growth of Ethical Consumerism. John Wiley & Sons Ltd. Dow Jones Sustainability Index. http://www.sustainability-index.com/ (accessed on 11/08/06). Dunphy, Dexter C. Andrew Griffiths and Suzanne Benn. (2003). Organizational change for corporate sustainability: a guide for leaders and change agents of the future. London: Routledge Elkington, J & J Hailes. (1989). The Green Consumers Supermarket Shopping Guide. In Strong, Carolyn. (1996). Features contributing to the growth of ethical consumerism a preliminary investigation. Marketing Intelligence & Planning Vol 14 Issue 5. Ethical Consumer. (2006). Body Shops shares rise as its ethical rating plummets. Published 17/03/06. http://www.ethicalconsumer.org/bodyshop_loreal.htm. (accessed 27/06/06). Global Reporting Initiative. http://www.globalreporting.org/ (accessed on 11/08/06).

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Katie Attenborough Hemmati, Minu. (2002). Multi-stakeholder processes for governance & sustainability. Earthscan Publications Ltd. Hurst, Rosey. (2006). Ethics and the purchaser. Supply Management Vol 11 Issue 5. Keynote Market Research Reports. (2005). The Green and Ethical Consumer. Kraus, Mangery; Ellen Mignoni & Chrystine Zacherau. (2004). Communicating CSR: Talking to People Who Listen. http://www.apcoworldwide.com (accessed 27/06/06). LOreal: Recommended Cash Offer by JPMorgan Cazenove Limited on behalf of LOreal for The Body Shop International PLC 2006. Available via http://www.loreal.com LOreal: Sustainable Development Report 2006. http://www.loreal.com/_en/_ww/group/Img/LOREAL_RDD_GB.pdf (accessed on 11/08/06) Luo, Yadong: Oded Shenkar & Mee-Kau Nyaw. (2002). Mitigating liabilities of foreignness: Defensive versus offensive approaches. Journal of International Management 8 (283-300). Maignan, Isabelle & OC Ferrell. (2004). Corporate Social Responsibility and Marketing: An Integrative Framework. Journal of the Academy of Marketing Science Vol 32 No 1. Margolis, Joshua D & James P Walsh. (2003). Misery Loves Companies: Rethinking Social Initiatives by Business. Administrative Science Quarterly Vol 48. Marsden, David & Dale Littler. (1998). Positioning Alternative Perspectives of Consumer Behaviour. Journal of Marketing Management Vol 14.

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Katie Attenborough Martin, Bridget & Antonis C Simintiras. (1995). The impact of green product lines on the environment: does what they know effect how they feel? Marketing Intelligence and Planning Vol 13 No 4. Melewar, TC. (2003). Determinants of the corporate identity construct: a review of the literature. Journal of Marketing Communications Mintel. (1994). The Green Consumer Report. In Shaw, D; E Grehan, E Shiu, L Hassan & J Thomson. (2005). An exploration of values in ethical consumer decision making. Journal of Consumer Behaviour Vol 4, 3. Mohr, Lois A; DJ Webb & KE Harris. (2001). Do Consumers Expect Companies to be Socially Responsible? The impact of Corporate Social Responsibility on Buying Behaviour. The Journal of Consumer Affairs Vol 35 No 1. Morgan, Gareth. (1989). Creative Organisation Theory: A Resource book. Sage Publications Inc.

New Media Age. (2006). Body Shop seeks agency to combat sell-out claims. Published 13/04/06. New Media Age, London. New York Times. (2005). http://jobs.nytimes.com/texis/company?compid=43133b7c57c100 (accessed on 11/08/06).

Peattie, Ken. (1992). Green Marketing. Longman Group UK Ltd Peattie, Ken (1995). Environmental Marketing Management. Financial Times Management.

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Peattie, Ken & Andrew Crane. (2005). Green Marketing: legend, myth, farce or prophesy? Qualitative Research: An International Journal Vol 8 No 4. Prothero, Andrea & Pierre McDonagh. (1992). Producing Environmentally Acceptable Cosmetics? The Impact of Environmentalism on the United Kingdom Cosmetics and Toiletries Industry. Journal of Marketing Management Vol 8. Rallapalli, Kumar C; SJ Vitell, FA Wiebe & JH Barnes. (1994). Consumer Ethical Beliefs and Personality Traits: An Exploratory Analysis. Journal of Business Ethics Vol 13 Issue 7. Rigby, Elizabeth. (2006). Retailers see all their activities through green filter ethical consumers. Financial Times. Published 12/06/06. Roddick, Anita (1992). Body and Soul. London: Vermillion publishings. Schaltegger, Stefan; Roger Burritt & Holger Petersen. (2003). An Introduction to Corporate Environmental Management: Striving for Sustainability. Greenleaf Publishing Ltd. Shaw, Deirdre & Edward Shiu. (2002). The role of consumer obligation and self-identity in ethical consumer choice. International Journal of Consumer Studies Vol 26 Issue 2. Shaw, D; E Grehan, E Shiu, L Hassan & J Thomson. (2005). An exploration of values in ethical consumer decision making. Journal of Consumer Behaviour Vol 4, 3. Shrum, LJ; John A McCarty & Tina M Lowrey. (1995). Buyer Characteristics of the Green Consumer and Their Implications for Advertising Strategy. Journal of Advertising Vol 24 Issue 2.

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Katie Attenborough Smart, Bruce. (1992). Beyond Compliance: A new industry view of the environment. World Resource Institute. Smith, James. (2004). Sustainable development as a basis for business success. Speech by Shell UK Chairman at the Birbeck lecture (9th November 2004), London, UK. Stoll, Mary Lyn. (2002). The Ethics of Marketing Good Corporate Conduct. Journal of Business Ethics. Vol 41 Issue 1/2. Strong, Carolyn. (1996). Features contributing to the growth of ethical consumerism a preliminary investigation. Marketing Intelligence & Planning Vol 14 Issue 5. The Body Shop website. http://www.thebodyshopinternational.com (accessed on 11/08/06). Times Online (2006). Customers demand fair trade from big business. Published 23/05/06. Vitell, Scott J & James Muncy. (1992). Consumer Ethics: An Empirical Investigation of Factors Influencing Ethical Judgments of the Final Consumer. Journal of Business Ethics Vol 11 Issue 8. Vitell, Scott J. (2003). Consumer Ethics Research: Review, Synthesis and Suggestions for the Future. Journal of Business Ethics Vol 43 Issue 1/2. Winsemius, Pieter & Ulrich Guntram. (2002). A Thousand Shades of Green: Sustainable Strategies of Competitive Advantage. Earthscan Publications Ltd. Zadek, Simon. (2001). The Civil Corporation: The New Economy of Corporate Citizenship. Earthscan Publications Ltd.

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Katie Attenborough Zaheer, Srilata. (1995). Overcoming the liability of foreignness. Academy of Management Journal Vol. 38 Issue 2 (p341-364).

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Katie Attenborough

Appendices

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Katie Attenborough Ethical Consumerism Research MSc International Business Please check one box to answer each question (mark an X in the relevant box) Always Often Sometimes Rarely Never (a) (b) (c) (d) (e) 1. I consider a companys environmental record when purchasing products/services 2. I avoid purchasing products from companies that have a reputation for being socially irresponsible 3. I purchase products from companies that do not use animals for product tests 4. I purchase fair trade coffee rather than other brands of coffee 5. I purchase other fair trade foods rather than other brands 6. I purchase free range eggs rather than eggs from caged hens 7. I am willing to pay more for products/services from companies which are ethically sound 8. Given the choice between purchasing from an ethical firm and an ethically questionable firm I would chose the ethical firm irrespective of price 9. Given the choice between purchasing from an ethical firm and an ethically questionable firm I would chose the ethical firm if the price was only slightly more 10. I would pay premium for a purchase from an ethical company even if cheaper products were available from other firms 11. I would purchase from an ethically questionable firm if the price was right 12. Whether a firm is ethical or not is a significant factor on my purchase decision 13. I boycott those firms I feel exhibit unethical behaviors

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Katie Attenborough

Always Often Sometimes Rarely Never (a) (b) (c) (d) (e) 14. Firms with ties to charities or issues I am interested in are more appealing to me and this influences my purchases 15. Ethical and environmental issues are important factors I consider when buying health and beauty products 16. I buy health and beauty products that have not been tested on animals 17. Specific firms/brands are important to me when making health and beauty purchases 18. I would change brands if I found out the firms making the health and beauty products I use were involved in unethical activities 19. How would you define corporate ownership? Is it an important factor to consider when making a purchase?

20.(i) Have you ever made a purchase at The Body Shop? Yes No (ii) If yes, what were the main factors influencing your purchase? (Check up to 3) a) Not tested on animals f) Good quality products b) Natural Ingredients g) Wide range of products c) Not exploiting workers h) Ethical Reputation d) Recycled packaging i) Price e) Other (please specify) (iii) What was the most important factor? (Please check only 1) a) Not tested on animals f) Good quality products b) Natural Ingredients g) Wide range of products c) Not exploiting workers h) Ethical Reputation d) Recycled packaging i) Price e) Other (please specify)

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Katie Attenborough 21. (i) Have you ever purchased a LOreal product (or one of its associated brands)? Yes No (ii). If yes, what were the main factors influencing your purchase? (Check up to 3) a) Not tested on animals f) Good quality products b) Natural Ingredients g) Wide range of products c) Not exploiting workers h) Ethical Reputation d) Celebrity endorsements i) Price e) Other (please specify) (iii). What was the most important factor? (Please check only 1) a) Not tested on animals f) Good quality products b) Natural Ingredients g) Wide range of products c) Not exploiting workers h) Ethical Reputation d) Celebrity endorsements i) Price e) Other (please specify) 22. (i) Are you aware of the Nestle boycott? Yes No (ii) If yes, do you agree with the boycott and have you taken part in the boycott? (Please check only one) a) No I do not agree with the boycott b) Yes I agree with the boycott c) Yes I agree with the boycott and I have taken part in it to some extent d) Yes I agree with the boycott and take part in the boycott of all Nestle products and its associated brands 23. In April this year LOreal made a formal cash offer to purchase The Body Shop which has been accepted. LOreal is partly owned by Nestle. LOreal has suggested that its takeover of The Body Shop will be used to help LOreal perform better ethically and open itself to new markets. It has declared that The Body Shop will continue to operate as its does without its interference. Please select from the following which best fits your opinion on this. There is space for further comments. a) I believe that The Body Shops values have been seriously damaged by Nestls connection, and it will effect my possible future purchases from The Body Shop b) I believe that The Body Shops values have been seriously damaged by Nestls connection, but it will not effect my possible future purchases from The Body Shop c) I believe Nestls connection to The Body Shop is irrelevant as The Body Shop will continue its positive work d) I am disappointed with the takeover but do not believe it will effect my purchase behavior e) I am more worried about LOreals connection with its poor ethical history than Nestls affiliation with The Body Shop.

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Katie Attenborough Please write in any other views you would like to express or word your own answer to the last question if none of the above answers fit your views

Are you? Male Age? a) Under 18 b) 18-24 c) 25-39 d) 40-65 e) Over 65

Female

Thank you for completing the survey. The information gathered will be used to help assess how important corporate ownership is to ethically minded consumers, using the LOreal takeover of The Body Shop as a case study. Please save your answers and email them to me at klc.attenborough@gmail.com

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Katie Attenborough Written Survey Responses Respondent Number 2 Q&A 19: The company that makes the product, usually it does not make a difference to me unless they have a very bad or very good reputation 23: I think The Body Shop does a great deal of good work for various causes, so being taken over by another company will not change that if it is left to operate as it was already. 19: Im not sure what corporate ownership means, but if you mean the people who own the company, i.e. the shareholders, its not something I give much thought to when making purchases. 23: I dont like the idea that Nestle know owns part of The Body Shop as I know Nestle has a poor social record but I think I will still shop at Body Shop as often as before. 23: I have not purchased from the Body Shop but I am aware of the charities it is involved in, overall Body Shop is a business and wants to make money, so I dont see why it being taken over will have any effect on the work it does, especially if LOreal says that it wants to learn from this aspect of how the Body Shop does business. 23: I dont shop at the Body Shop, I think that they use their affiliations with various causes to market their products, and the takeover is another business decision to further their profits. 19: The name of the company that makes the product (?). If they have a very good reputation or I have heard something about them from a friend it may be a more important factor in that particular purchase. 23: I am worried the takeover as I think they have conflicting values and I am worried this will lead to the decline of the Body Shops ethical values as LOreal will put more pressure on them to make a profit. 19: I define corporate ownership as the organization which owns and manufactures the products. If the firm making the product has a bad ethical record then I would not buy it unless there were no alternatives. 23: I was very skeptical when I heard the news about the takeover, but I am currently still shopping at Body Shop but I am looking out for negative changes that the takeover may cause. 19: I do not know what corporate ownership means. 23: When buying health and beauty products I always try and buy from companies that do not test on animals as it is something I think is particularly important, that is one of the main reasons I buy from the Body Shop as it is one of its

8 10

12

13

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Katie Attenborough company values. I know that LOreal has a bad track record in animal testing, and though they no longer test their products on animals I believe they still buy ingredients which have been tested, and are worried about the difference in their values. 19: No idea what is corporate ownership. 23: I dont think that the Body Shops image would be damage by this takeover. Maybe a little bit, but not severely. Due to LOreal has good reputation that they respect the brands they purchase, like it took them a long time to understand the culture of Shu Uemura then officially market the brand. Therefore, I would consider this takeover is a positive transaction for both LOreal and the Body Shop. LOreal Group could learn from the Body Shop how to build up an ethical reputation, and the Body shop could learn from the strong marketing skill from LOreal Group. 19: To me, corporate ownership is when a company is held responsible for its impact on society and the environment. This is a very important factor to be taken into account when purchasing something as without it there would be significant negative effects on the environment and the quality of life. Without it, there would be an increase in illegal/unethical activities by the larger corporations. 23: I love buying from the Body Shop as the products are great quality and it also makes me feel that I am helping in there social and environmental causes. Anita Roddick is someone that I have looked up to because of the way she has not let her own ethics be sidetracked by her business, but I feel she has betrayed Body Shop customers by agreeing to the takeover, especially as she has made many negative public comments on LOreal and other similar firms in the past. I will still continue to shop at the Body Shop as long as its own values remain the same. 19: Depending on the type of item I am buying the company can be an important factor. I like to think I am buying good quality products so I will often pay more for products from companies that I know are good quality, and are not harmful to the environment. With all the media attention environmental issues are getting lately, I dont want to feel guilty about my purchases. 23: Usually price is the main concern I have when shopping because I have a very small budget. Though I feel it is a strange decision for Body Shop to allow the takeover, I believe any businesss first concerns are for its financial performance. With the greater importance placed on corporate social responsibility these days, I think that LOreal may really be trying to use Body Shops expertise on these issues to make sure its own financial performance does not suffer in the future.

14 16

19

20

21

22

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Katie Attenborough 23 When I first heard about the LOreal takeover I was very surprised that a firm like the Body Shop would be taken over by an ethically questionable firm, but as Body Shop have stated they will not be changing the way that they do business Im not sure if it will affect my future purchases. 19: I prefer to buy health and beauty products from companies that I know or have been recommended to me, as I am careful what sort of products I use on my skin, so corporate ownership is important in those purchases, but other products like household goods I am not so bothered about the company brand. 23: I like buying products from the Body Shop as they are really good quality, the fact that the Body Shop is involved in so may good causes is like a great extra with my purchase, but not a major factor, so I think the takeover wont effect my purchasing there. 21 (ii & iii): I have made a purchase from LOreal in the past but do not buy from them any more. 23: I am quite skeptical about LOreals claims of wanting to learn from the Body Shop as I think it may be LOreals way of trying to overcome its criticisms without actually taking any real actions. 19: To me corporate ownership refers to whether the company is public or privately owned. Publicly owned companies have a responsibility to serve the public where as private firms have to take into account the needs of the shareholder and often have financial goals at the forefront of their agendas. If a particular company has well known shareholders, or is partly owned by another company then this may be a factor to consider. 23: The takeover has defiantly changed my opinion of Body Shop, as Nestle will now be profiting from them, it makes me worry that the good work that the Body Shop does may be cancelled out by the unethical business Nestle conducts using profits gained through the shares in LOreal. It makes me question Body Shops values, as to how they can claim that their values will continue to be the same. Obviously the money and resources they will be getting from the takeover mean more to Body Shop then upholding its values. 23: Im worried that LOreal may be using the purchase of the Body Shop to pacify its critics. I always try and buy products that have not been tested on animals, and through charities I am involved in I am aware of the previous tactics that LOreal has used to try and make it appear as if their products are animal friendly. I think that LOreal needs to prove that the comments it has made about using the Body Shops expertise to improve its environmental record, if it is to be trusted by consumers.

25

26

27

32

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Katie Attenborough 35 23: I shop at Body Shop because of the good quality items that are not available elsewhere. I like to think that my purchase will help the environment but it is not one of my main concerns with health and beauty purchases, so I dont think the takeover will change my opinion of their products. 19: The term corporate ownership implies corporate responsibility to me. A corporation needs to be responsible for the products that it puts out into the marketplace, from the way in which it sources and manufactures them to how they are sold. I think it is very hard to make corporate ownership an important factor in purchasing as there is so many different products available, and information on the specific corporations can be scare on this subject, especially if the corporations knows that consumers may not be happy with the way it is producing. 19: Corporate ownership refers to the power of the shareholders. I dont really think it has an impact on my purchases as its not something that I would think has a direct impact. 19: Corporate ownership refers to the specific company that made the product, and to any parent or other company associated with it. If I have heard good comments about a particular company then it may be a more important factor as I would be more inclined to purchase from them, and vice versa. 19: I think it refers to a particular well known brand or person associated with the company. I know my kids think that Tony the Tiger owns Kelloggs! Brands can be very important depending on the product, I would only buy certain brands of medicine for myself and family, and brands are usually more important with larger purchases such as electrical goods or cars, were they would be a more important factor then it would be when I do food shopping. 23: I love shopping at the Body Shop and it gives me peace of mind to know none of the products have been tested on animals and that I am helping the environment in some small way. 23: As long as the Body Shop continues to do its good work then I will continue to support them by shopping there. 23: I am against animal testing so I am quite worried that LOreal has taken over as I know they have a very poor history in this area, even though they claim they want to learn from the Body Shop because they are such a large firm they may want to change Body Shops practices to try and cut costs to make greater profits. 19: To me this means the difference between purchasing from a large multinational and from a local shop or restaurant. When possible I prefer to shop with smaller local stores as usually I am able to see or even know the owner and it makes me feel

36

39

43

44

46 47 48

49

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Katie Attenborough better as I know they make a real effort with their customers, and my purchase means much more to them then if I brought from a larger firm. 21 (ii)e: Good value for money, not just price itself

52

58

60

19: Management and employees working in harmony to achieve the same corporate objectives. Profit is an important aspect but not at the expense of wasting world resources for future generations. 21 (ii)e: Ease of availability 23: As a nation humans need to conserve the world environment and avoid further extravagant loss of natural resources. The profit making (share dividend) conglomerates will always endeavour to make profits at the cost of using raw materials. There will be a need to mind replacement, manufactured materials, and research will need to be funded. Balance needs to be struck but managed by whom World Governments have failed to give confidence that they can influence this matter despite so called agreements at Kyoto and other World meetings. 19: I dont know much about business but Id say corporate ownership makes me think of big business and high profits at any cost. So I would define it as a large powerful company owing very strong, high selling products. It does sometimes effect my purchasing, especially when it comes to fair trade products. I look to find especially food products that I consider ethically traded. I guess it is because they are slightly more affordable than ethically produced clothing and beauty products. For example a fashionable pair of ethical jeans can cost upwards of 90 but organic, fair trade chocolate costs 1.70. 23: I believe that the take over will not make much difference to The Body Shops profits as I think the majority of the general public are not that ethically minded. It is a similar situation to Cadburys takeover of Green & Blacks the organic/fair trade chocolate company. Even though it is an undesirable link maybe some of the good ethics of the small company will filter through to the larger parent company, though actually thats probably quite unlikely. 19: This refers to the shareholders, board of directors, CEOs and parent company if applicable. 23: Im generally worried about the seemingly normal process of large multinational firms taking over smaller firms to add to their portfolio, I really dont think that LOreal wants to take on

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Katie Attenborough The Body Shops ethical standards, as if that were the main reasons, why wouldnt they start a strategic alliance instead? It is easier for these large companies to takeover other companies that have a piece of the market share that they want, but usually end up turning those companies into other versions of themselves then really learning anything from them.

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Katie Attenborough Raw Data from Survey Responses

Respondent Number Question Number 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 (i) 20 (ii) 20 (iii) 21 (i) 21 (ii) 21 (iii) 22 (i) 22 (ii) 23 Other comments Sex Age R1 c c b d d b c c c b d b c d c d b c N Y b,f,i f Y d,f,i i N na c N M b R2 b b c c d a b b b c a b b b c b b b Y Y a,d ,h h Y a,f, i f Y c d Y F b R3 c b c c d b b b a b a b b b b b b a Y Y a,b,h h N na na Y b e Y F c R4 c d d d d c d d c c c d c c d c b c N Y f,g,i f Y f,g,i i N na c N F b R5 c c c d d c d d d d c d c c d c b c N Y b,f,i b Y d,h,g g Y b d N M c R6 d c c d e d d d c d c d c d d c b c N N na na Y f,g,i i N na none Y M c R7 c b c c d b c d b c c c c c c b b c N Y b,d,f b Y f,g,i f Y c d N F b R8 c c c d d c c d c c c d c d c c c c N N na na N na na N na none Y M b R9 c c b d d b c c c b d b c d c d b c N Y b,d,h h Y d,f,i i N na c N F b R10 b b b c c b b c b b a b b b a b b a Y Y a,c,d a N na na Y d e Y F c

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Katie Attenborough

Question Number 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 (i) 20 (ii) 20 (iii) 21 (i) 21 (ii) 21 (iii) 22 (i) 22 (ii) 23 Other comments Sex Age

R11 c c c d d c d d d d c d c c d c b c N Y b,f,i b Y d,h,i i Y b d N F c

R12 a a a b c a a b a b a a b b b a a a Y Y a,c,g g N na na Y c none Y F c

R13 d c b d e c c e d c c c c b b a b a Y Y a,b,i a N na na Y b e Y F b

R14 c d d d d d d c d d b d c c c d c b Y Y b,d,f b N na na N na c N M b

R15 d c c e e c e e d e c b c c c c b d N Y b,f,g b Y b,f,g f N na c N F c

R16 c b c d d d b c a c b c d c c c d b N Y a,f,h f Y f f N na c,e Y F c

R17 d d c e e d d e c d c d d d d c c d N N na na Y d,f,g g N na c N M b

R18 c c b d d b c c c b d b c d c d b c N Y b,f,i f Y d,f,i i N na c N M a

R19 c b b c c c c b a c d a a a a b b a Y Y b,f,h f Y a,f,g f Y b c N F b

R20 b b a b c a b c a b a b a b b a b a N Y a,b,d b N na na Y b d Y F c

R21 a a a b c a a b a b a a a b b a a b Y Y a,d,f f Y d, f, g f N na c N F d

R22 d c c d e c d d c d b d d c d c c c N Y f,h,i i Y d,f,i i Y b c Y M b

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Katie Attenborough

Question Number 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 (i) 20 (ii) 20 (iii) 21 (i) 21 (ii) 21 (iii) 22 (i) 22 (ii) 23 Other comments Sex Age

R23 b b b b c b b c b c b b b b c b b b N Y b,f,h h N na na Y c b Y F c

R24 b c b d d c b c b c b c c c c b b c N Y b,h,i h N na na Y b d N F b

R25 c c c b d b c c b c b c c c c b b c Y Y b,f,i f Y f,g,i f Y b c Y M c

R26 b a a b c b b b a b a a b b b a b a N Y a,b,d b Y other other Y c e Y F b

R27 a a a b c a a b a b a a a a b a b a Y Y a,c,h h N na na Y b a Y M c

R28 b b b d d c b c b c a b b b c b b b N Y b,d,f b Y f,g,i f Y Y d N F b

R29 c c b d e c d c c d c c c c c c c c N Y b,d,f f N na na N na c N F a

R30 c c b e e e c c c c c c c b c c c c N Y a,d,i a N na na Y b d N F a

R31 d d c e e d d e c d c d d d d c c d N N na na Y d,f,g g N na c N M a

R32 c b a c d b b b a b a b b b b a b a N Y a,d,h h N na na Y b e Y F b

R33 c c b e e d c c c c b c c c c b c c N Y a,d,i d N na na N na c N F b

R34 c c c d d c d d d d c c c c d c b c N Y b,f,i b Y d,h,i i Y b d N F c

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Katie Attenborough

Question Number 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 (i) 20 (ii) 20 (iii) 21 (i) 21 (ii) 21 (iii) 22 (i) 22 (ii) 23 Other comments Sex Age

R35 c c b d d c c c b c b c c c c c b c N Y b,f,i f Y f,g,i f N na c Y F b

R36 b a b b c b b b a b a a b b b b b a Y Y a,b,d b Y other other Y c e N F b

R37 d c c e e c e e d e c b c c c c c d N Y b,f,g b Y b,f,g f N na c N F b

R38 d c c d e c d d c d b d d c d c c c N Y f,h,i i Y d,f,i i Y b c Y F b

R39 c b c c c b c b a b a b b b b b b a Y Y a,b,h h N na na Y b e N F c

R40 c b c c d b c d b c c c c c c b b c N Y b,c,f b Y f,g,i f Y c d N M b

R41 b b b d d c b c b c a b b b c b b b N Y b,d,f b Y f,g,i f Y Y d N F b

R42 c c b d d b c c c b d b c d c d b c N Y b,d,h h Y d,f,i i N na c N F b

R43 b a b b c b b b a b a a b b b b b a Y Y a,c,d d Y other other Y c e N F b

R44 b b a b c a b c a b a b a b b a b a Y Y a,b,d b N na na Y b d N M c

R45 b a b b c b b b a b a a b b b b b a N Y a,b,d b Y d,f,i i Y c e N F b

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Katie Attenborough

Question Number 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 (i) 20 (ii) 20 (iii) 21 (i) 21 (ii) 21 (iii) 22 (i) 22 (ii) 23 Other comments Sex Age

R46 b b c c d a b b b c a b b b c b b b N Y a,d,h h Y a,f,i f Y c d Y F b

R47 c b a c d b b b a b a b b b b a b a N Y a,d,h h N na na Y b e Y F b

R48 a a a b c a a b a b a a b b b a a a N Y a,c,g g N na na Y c e Y M b

R49 c b b d c b c b b d c c b d d a d a Y N na na Y e,f,i f Y c d N M b

R50 c c b d e c d c c d c c c c c c c c N Y b,c,f f N na na N na c N F b

R51 b b b d d c b c b c a b b b c b b b N Y b,d,f b Y f,g,i f Y Y d N M b

R52 c c b d c a c b a c a c b b b a b a Y Y a,b,h b Y d,e,f f N na b Y M d

R53 c c b d d b c c c b d b c d c d b c N Y b,d,h h Y d,f,i i N na c N F c

R54 c c b d d b c c c b d b c d c d b c N Y b,f,i f Y d,f,i i N na c N F b

R55 c c c d d c d d d d c d c c d c b c N Y b,f,i b Y d,h,g g Y b d N M b

R56 c b c c d b c d b c c c c c c b b c N Y b,d,f b Y f,g,i f Y c d N M b

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Katie Attenborough

Question Number 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 (i) 20 (ii) 20 (iii) 21 (i) 21 (ii) 21 (iii) 22 (i) 22 (ii) 23 Other comments Sex Age

R57 d c c e e c e e d e c b c c c c b d N Y b,f,g b Y b,f,g f N na c N F b

R58 c b c a c b c c b d b c c c c b b b Y Y b,c,h h Y f,g,i f Y c a Y F b

R59 c c b d e c d c c d c c c c c c c c N Y b,d,f f N na na N na c N M b

R60 b b a d d b c b a c a b b b b a b b Y Y a,b,h h Y e,f,i f Y c e,f,i Y F b

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Katie Attenborough

Consumer Type 1 2 3 All

Factors for Body Shop No animal Natural testing Ingredients 0 4 19 23 Factors for L'Oreal No animal Natural testing Ingredients 0 0 3 3 Most important factor for Body Shop No animal Natural testing Ingredients 0 2 1 3 7 5 5 17 3 0 0 3 7 18 11 36

Not exploiting 0 3 5 8

Recycled packaging 1 10 12 23

Good quality 10 14 3 27

Wide range 4 0 2 6

Ethical reputation 2 5 11 18

Price 6 9 0 15

other 0 0 0 0

Consumer Type 1 2 3 All

Not exploiting 0 0 0 0

Celebrity endorsements 7 6 3 16

Good quality 9 16 7 32

Wide range 9 10 2 21

Ethical reputation 3 1 0 4

Price 6 15 4 25

other 0 1 5 6

Consumer Type 1 2 3 All

Not exploiting 0 0 0 0

Recycled packaging 0 1 1 2

Good quality 1 9 2 12

Wide range 0 0 2 2

Ethical reputation 0 4 10 14

Price 2 0 0 2

other 0 0 0 0

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Katie Attenborough

Consumer Type 1 2 3 All

Most important factor for L'Oreal No animal Natural testing Ingredients 0 0 0 0 Nestle Boycott 0 0 0 0

Not exploiting 0 0 0 0

Celebrity endorsements 0 0 0 0

Good quality 3 11 6 20

Wide range 3 0 0 3

Ethical reputation 0 0 0 0

Price 6 5 1 12

other 0 0 3 3

Consumer Type 1 2 3 All

a 0 0 0 0

b 6 7 8 21

c 0 5 10 15

d 0 0 1 1

Not Aware 9 12 2 23

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