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The profit in corporate social responsibility

Friday, September 21, 2018

The last quarter of 2017 into the first quarter of 2018 saw Nike taking a hit in their bottom line due to numerous scandals centred on sweatshops, and misbehaving executives, especially in North America.

Sales dropped to a record low in February 2018; by -6 per cent according to Forbes, 11 executives either left or were dismissed due to the scandals and the public perception of the brand was left in shambles amid poor pricing decisions in its flagship “Jordan’s” sneakers, and protests of a more-socially-conscious consumer.

On September 3, 2018 the company decided to launch a very calculated socially charged campaign featuring former National Football League quarterback turned activist Colin Kaepernick.

The campaign entitled “Just Do It,” carried a very clear and compelling message: “No matter what your dreams are, stand up for something and just do it!”

Kaepernick rose to notoriety in previous months with a silent protest during the National Anthem of the United States by kneeling; this protest specifically acknowledging the treatment being doled out to black Americans by the American Police and Judiciary.

Putting this protest on the backdrop of an extremely divided and politically-charged America, led to the denouncement of Kaepernick by some members of the public, including the President Donald Trump, and his eventual termination from the NFL.

Why is this important?

Because Nike saw an opportunity to align its corporate social responsibility (CSR), with civil rights in an effort to turn around their overall image as a socially irresponsible company.

They also took a calculated risk that the marketing strategy would not only resonate with the core purchasers of their products, but the negative vitriol that would come from the campaign would guarantee the brands prominence in the media, for free.

All press is good press, as proven by the success of the Trump Campaign to win the US election, and using this template as the driving force of their CSR campaign, they hedged their bets and it worked.

In less than two weeks, the campaign has already blotted out the memory of the previous years’ worth of scandal that devastated the company’s bottom line.

As a matter of fact, the company gained upwards of US$165 million in earned media in four days, as indicated by a CNBC report on September 6, 2018.

In today’s market and economy earned media is ideal as it brings eyes on your brand for which you did not have to pay.

Nike is not only standing by the campaign wholeheartedly, with above the line campaigning, they are also aggressively defending their position with deployed guerrilla marketing techniques, especially via social media.

An example of this comes in the form of a notice they posted on their touch points on how to safely dispose of their products in the wake of Americans cutting and burning items with the Nike Swoosh; it seems they are all in regardless of any backlash.

It seems to be paying off for the company, even though an initial knee jerk reaction to the media storm around the ad, and the numerous outcries of protest may have given a short drop in the stock value of Nike last week, as of September 12, 2018 Nike posted a 5.80 point increase in the stock value of the company.

Further to this there was a 45 per cent increase in investment by millennial investors into the company, which is the core consumer of their products.

The brand has also seen stellar growth in online and brick and mortar sales—turning around their profit margins from a previously disastrous year.

Trinbagonian brands can take quite a bit of knowledge from the use of CSR and the leveraging of sportsmen and women into their advertising.

While the socioeconomic factors of North America do not always ring true in our context, we have seen the power of social media and guerrilla marketing having great effect on the national conversation.

With investors and consumers becoming more educated and technologically savvy, can the conservative and traditional models of marketing survive?

We are seeing that purchasers are aligning themselves more with brands who represent their ideals, and their moral codes, yet many companies here do not harness their CSR initiatives beyond the odd newspaper article or TV blitz.

Nike is showing us now that making strong moral statements about your company can and will positively impact your bottom line and even a perceived misstep can gain a brand significant market share in earned media.

Perhaps it’s time for local companies to begin looking at developing awareness campaigns and endorsements that do not only have great social impact but can also harness great economic value in endearing a discerning investor or consumer to lift Nike’s bottom line.

Now is the time to realise profit through corporate social responsibility.



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