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EURO RSCG WORLDWIDE




                                                     VOL 4 | 2008




                                                  BR AND
                                        OR AT E
                                C ORP
                         T HE
                     F
             UR EO
     E FUT
TH
For almost a decade Euro RSCG
  has been creating impactful and
  provocative work for EDF. The
  current print campaign has been
  cited by the APPM (News Magazine
  and Press Awards).




Choosing a world with less CO2.
Because greenhouse gases are the main cause of global warming, EDF has chosen to produce energy that
generates very little CO2. To achieve this objective EDF is developing and renewing Europe’s leading nuclear
power and hydroelectric production facilities and investing heavily in renewable energy.




                                           The future: it's in the choices we make every day
the future of the corpor ate br and | vol 4




Introduction: Rethinking the Role of the Corporation   2


                   More Power, More Responsibility     3


                          A New Way to Do Business:    10
    Five Rules for the Corporate Brand of the Future
2




→ INTRODUCTION: RETHINKING THE ROLE OF THE CORPORATION
 The corporate titans of earlier centuries would hardly recognize the modern-
 day business world. Over the past century, we’ve seen corporations grow far
 larger, more global, and more powerful–but, at the same time, more beholden
 to multiple stakeholders, including the general public. Companies have
 moved from primarily individual or family owned to shareholder owned and
 board governed. Once omnipotent, chief executives now serve at the will of a
 committee and are subject to the scrutiny and criticisms of people both within
 and outside corporate walls. Profits are still at center, but they’re no longer the
 only goal; CEOs of publicly traded companies are under tremendous pressure
 to meet the needs of all stakeholders, not just shareholders.

                    The new pressures corporations face are due in large part to          to the Internet and the democratization of media, corporations
                    a growing awareness of the impact—good or bad—these                   feel more approachable and accountable. Ordinary citizens
                    organizations can have on local, national, and international          can find out just about anything they want about companies
                    affairs as well as on people’s everyday lives. Corporations have      online, a platform that also allows consumers to “talk back”
                    grown so large that 37 of the world’s 100 largest economies           to big business through blogs, message boards, product
                    are now businesses rather than nations, according to Swedish          reviews, and the like. The entire relationship between
                    economist Johan Norberg. Greater size more often than not             consumers and companies is changing as people rethink
                    translates into greater power, and that’s a real issue at a time      the role corporations can and should play within local
                    when consumer confidence in corporations is at record lows. The       communities and society as a whole.
                    2007 Gallup Poll found that only 18 percent of respondents had
                                                                                          This issue of Prosumer Report explores the future of the
                    a “great deal” or “quite a lot” of confidence in big business. This
                                                                                          corporate brand, with an emphasis on evolving consumer
                    lack of faith should come as no surprise given the past decade’s
                                                                                          expectations and demands. It draws on findings from Euro
                    string of corporate scandals, ranging from accounting fraud
                                                                                          RSCG Worldwide’s 2007 Future of the Corporate Brand
                    and abusive working conditions to contaminated food and
                                                                                          Study. The online survey was conducted by Market Probe
                    potentially lethal toys. Corporate corruption and malfeasance
                                                                                          International in three markets: the United States (n=700),
                    have moved beyond news headlines and into the broader
                                                                                          the United Kingdom (n=700), and France (n=450). Prosumer
                    culture, thanks to a steady slate of films focused on the evils
                                                                                          breakouts are included throughout the report to provide
                    of Big Business (e.g., Lord of War, The Constant Gardener,
                                                                                          insights into the influence these leading-edge consumers are
                    Syriana, Michael Clayton).
                                                                                          wielding among the general public and within the corporate
                    In this new environment, the public is more wary of corporations      world.
                    but also has higher expectations of them. Even as some
                    companies have duped investors and ripped off or endangered
                    customers, others have taken a leading role in important issues
                    of the day, including the environment and human rights. Thanks
3   t: total   p: prosumers   o: other


                                                 us             uk             france




      More Power,
      More Responsibility
       As the influence of corporations grows and the power of nations decreases,
       companies are expected to take on roles once relegated to government. This is
       especially the case in those areas in which government intervention has been
       seen as weak or ineffective. In the aftermath of Hurricane Katrina, for instance,
       87 percent of Americans polled by Cone, Inc., expected corporations to play a
       major role in rebuilding affected areas. Nearly two-thirds (62 percent) agreed
       companies are better able than government agencies to respond effectively
       to disasters.



       businesses bear as much responsibility    On a broader scale, corporations are now regarded as
       as governments for driving positive       important facilitators of social progress. In each of
       social change
                                                 the three markets surveyed, large majorities agreed
                                                 businesses bear as much responsibility as government
                                                 for driving social change. What once might have been
    t : 72%       71%         80%                the view of a leftist fringe is now mainstream thinking.
                                                 Reducing extreme poverty around the globe is one
    p : 82%       83%         67%
                                                 area in which corporate involvement is particularly
    0 : 70%       68%         79%                expected. In 2000, the United Nations pledged in its
                                                 “Millennium Declaration” to halve the proportion of
                                                 the world’s people living in extreme poverty by 2015.
                                                 It’s an objective that is in no way feasible without
                                                 the concerted involvement of many of the world’s
                                                 largest companies. It’s a huge undertaking, but one
                                                 with an enormous upside for business. Multinational
                                                 companies have already benefited greatly from the
                                                 creation and growth of upper and middle classes
                                                 in developing countries. But the real promise of
                                                 globalization lies not among the people who currently
                                                 consume, but among the billion or more others who
                                                 have thus far been excluded from the consumption
                                                 process. If this change is to take place, corporations
                                                 will need to drive it.
What’s a Prosumer?
Prosumers are the most influential men and women
within any market. Empowered by new technologies
and improved access to information, they have tipped
the scales of power away from manufacturers and
retailers, and toward themselves. They are highly
knowledgeable and demanding consumers who expect
their brand partners to acknowledge their value and
treat them accordingly. Prosumers typically make up
15 to 25 percent of any market. Euro RSCG Worldwide has
made them an ongoing focus, because, beyond their own
economic impact, prosumers influence the brand choices
of others. Simply put, what prosumers are doing today,
mainstream consumers are likely to be doing six to
18 months from now.

KEY PROSUMER TRAITS:

  » Embrace innovation — curious             » Are marketing savvy and plugged
   to try new things, challenges,              in to multiple media sources
   and experiences
                                             » Demand top-notch customer service
  » Keen on new technology and gadgets         and access to information
  » Transport new attitudes, ideas,          » Proactively seek to maximize control
    and behavior — they are “human media”      over their lives through information,
                                               communication, and technology
  » Pursue timeless value
                                             » Constantly seek information and
  » Recognize their value as consumers and     opinions; eager to share their views
    expect brand partners to do likewise       and experiences with others
5   The Tables Have Turned
    “Big Brother is watching you.” It’s a phrase taken from George Orwell’s
    1984 and has been in frequent use over the last half century. Whether
     referring to the government or big business, the phrase has suggested ongoing
     surveillance–and control–of the general population by overly powerful and intrusive
     authority figures. Today, Orwell would likely be surprised by the extent to which the
     tables have turned on corporations. For all the fears of big business tracking consumer
     movements with digital cookies and RFID tags, the truth is that consumers are
     keeping equally close (if not closer) tabs on corporations. Anyone with Internet
     access can easily look up an annual report, track corporate movements, and
     contribute to conversations about what a particular company or industry is doing
     right or wrong. jetBlue learned the hard way how easily an angry customer armed
     with a video-enabled phone can spread the word about corporate transgressions
     or errors in judgment.


    Having witnessed the damage big business can              corporations have become a more
    cause when left unchecked, a growing number of            important part of our culture
    people feel they have a right to monitor corporate
    actions and take companies to task when they step
    out of line. A majority of respondents in each of
                                                           t : 54%       53%        63%
    the three markets acknowledge corporations’
    increased cultural role and say they have become       p : 66%       65%        67%
    more interested in corporate conduct and brand
    image over the past few years. Significant             0 : 51%       50%        61%

    proportions, including more than half of
    leading-edge prosumers, had actively sought out           i have become more interested in
    information about a company’s ethics in the few           corporations’ conduct and brand
    months prior to the survey.                               images over the past few years

    Whether protesting the treatment of chickens
    by KFC or denouncing Apple’s rapid discounting
    of its new iPhone, ordinary people now have the        t : 64%       53%       51%
    wherewithal to force corporations to respond
    to their complaints and demands. This puts             p : 80%       75%        64%

    significant power in the hands of consumers who
    take the time to blog about a company, post a          0 : 60%       50%        47%

    video about poor customer service on YouTube,
    or slam a product on a customer-review site.              within the last few months, i have
    Consumers can now look beyond the glossy ads              actively looked for information on
    and rosy product statements, and find a very              the reputation or ethics of a company
    different truth. Euro RSCG’s survey shows that
    substantial numbers of consumers have already
    changed their minds about a potential purchase
    as a result of information in blogs and other online   t : 37%       38%        53 %

    forums. The fact that prosumers score higher on
                                                           p : 56%       55%        72%
    this count indicates it’s a trend likely to grow
    stronger.                                              0 : 33%       35%        47%



                                                              over the last year, non-branded blogs or
                                                              forums made me change my mind about a
                                                              product or service i had intended to buy




                                                           t : 20%       26%        40 %


                                                           p : 36%       36%        43%


                                                           0 : 24%       24%        39%
7




       Ethical Consumption: Survival of the Fairest
     “Can you have an impact by making none at all? Why not?”
       That’s more than just a tagline from Toyota’s new advertising campaign.
       Consumers in the developed world are more aware today of the negative
       consequences of capitalism and mass consumption. And they’re under
       increasing pressure (societal and self-imposed) to limit the damage caused
       by their personal consumption choices. This means making the “right”
       purchase decisions and also influencing the behaviors of companies
       hoping to obtain their business. In the United States and France, eight
       in 10 consumers believe they have a responsibility to censure unethical
       companies by avoiding their products. In all three markets, a majority have
       already made a purchase decision based on a company’s conduct. Once again,
       prosumers are taking the lead.

       as a consumer, i have a responsibility to      i have made a purchase decision
       censure unethical companies by avoiding        based on a company’s conduct
       their products



                                                   t : 65%       58%        69%
    t : 80%       69%        81%
                                                   p : 80%       73%        81%
    p : 87%       79%        85%

                                                   0 : 61%       55%        65%
    0 : 78%       66%        80%
8




    In this new context of doing business, companies have            corporate reputation on social
    no choice but to adapt. More and more, consumers are             and environmental responsibility
                                                                     is a key driver of confidence
    factoring issues of ethics and social and environmental
    responsibility into their purchase decisions—and
    that applies to shareholding as well as personal
    consumption. Morningstar reports there are 130                t : 80%       76%        86%
    socially responsible investment funds today, with
    $48.8 billion in assets, up from just 39 funds with           p : 88%       87%        91%

    $5.4 billion in assets a decade ago. Natural selection
    is beginning to favor those companies that are                0 : 78%       73%        84%

    integrating high ethical standards into
    their policies and practices.
                                                                     ethical conduct is a key factor
    How are these good intentions translating in the real            for good business
    world? A 2004 report prepared for Wal-Mart
    by McKinsey and Co., found that as many as
    8 percent of Wal-Mart customers no longer shop there
    because of “negative press.” The consultancy concluded        t : 91%       76%        91%
    the retail giant could gain 8 percent in financial value if
    it were to improve its image to the level of competitor       p : 96%       87%        95%

    Target. Whether directly correlated or not, Wal-Mart
    has since taken a leadership role in such areas as organic    0 : 90%       73%        90%

    food, lower prescription prices, and sustainability.
    Among other pledges, the company has committed to
    reducing the energy needs of its existing stores                 the most successful and profitable
    20 percent by 2009 and its overall CO2 emissions                 businesses in the future will be
                                                                     those that practice sustainability
    25 percent by 2012.
    Once dismissed as unaffordable and unwise,
    sustainable practices are now viewed by many, if not
    most, companies as a competitive advantage. And               t : 69%       73%        79%

    there’s a growing body of evidence to back that up:
                                                                  p : 78%       87%        88%
    When investment research and advisory firm Innovest
    back-tested a hypothetical portfolio of its Global 100        0 : 66%       70%        76%
    Most Sustainable Firms against the MSCI World Index
    from December 1999 through December 2005, it
    found the Global 100 outperformed the broader index
    by 7.11 percent. Numerous other studies corroborate
    that positive environmental and social performance
    can create financial success—increasing investor
    confidence, strengthening brand recognition, and
    boosting stock performance and competitiveness. GE’s
    recent ecomagination initiatives, including a
    pledge to double investment in clean technology
    by 2010, have been credited with helping to increase
    corporate earnings 11 percent in 2006.
10




                A New Way to Do Business
                Business as usual, as practiced in the last century, is insufficient in
                today’s environment. Corporate strategies—including branding
                strategies—must take into account the value accrued by a reputation
                for social responsibility, as well as the very real disadvantages faced
                by those companies that fall short in this regard. Where once CSR
                activities were an adjunct relegated to the PR department, now they
                are a core component of competitive business. Whether they regard
                these practices as “caring capitalism” or pure self-interest, the most
                successful companies of tomorrow will infuse elements of social and
                environmental responsibility throughout their operations, from
                human-resources practices and customer service to supply chains,
                retail venues, and packaging.


5 Rules for     RUL E 1: H AVE A PURPO S E                  it is important that companies stand
                                                            for something other than profitability
                BEYOND P ROF I T
the Corporate
                Consumers in the three markets
Brand of        surveyed have made it clear:
                                                         t : 86%       81%       89%



the Future      Business can no longer be just           p : 96%       86%       95%


                about profit. More than eight            0 : 83%       80%       87%


                in 10 respondents believe it’s
                important for a company to stand for        the most important duty of a ceo is
                                                            to generate profits for shareholders
                something other than profitability,
                and only around one-third consider
                shareholder profits the most important   t : 37%       33%       33%

                responsibility                           p : 40%       40%       34%

                of the CEO.                              0 : 36%       32%       33%
11   Look at the most successful brands that have
     emerged in recent decades, and you’ll find a
                                                                    innovation is an important
                                                                    factor for good business
     common thread: Most of these companies have
     been built on a strong and clearly articulated set
     of beliefs and values. In the space of a decade,           t : 84%             81%                95%
     Google went from a college research project to a
     company with a brand value estimated at more than          p : 87%             92%                100%
     $17 billion, all while seeking to live by its credos of
     “Don’t be evil” and “Work should be challenging, and       0 : 83%             79%                93%

     the challenge should be fun.” Whole Foods Market
     has built its brand on a simple philosophy of “whole
     foods, whole people, whole planet”—and, in doing               a vision is an important
     so, has managed to become the world’s fastest-                 factor for good business
     growing retailer. Starbucks hasn’t just cornered the
     world coffee-experience market; it’s done so while
     promoting such values as Fair Trade, a respectful
     work environment, diversity, and community                 t : 80%             75%                94%

     involvement.
                                                                p : 82%             84%                98%

     Three very different companies, but each one has
     turned strong beliefs into a winning proposition.          0 : 79%             73%                93%


     These companies don’t just stand out because they
     are values centered; they stand out because they
                                                                    profitability is an important
     are creating new ways of doing business—and                    factor for good business
     that is something today’s consumers value.
     Both “innovative” and “visionary” are qualities
     considered essential components of good
     business in each of the markets surveyed. In               t : 72%             64%                80%
     fact, respondents ranked both those factors above
     profitability. This makes sense at a time when             p : 73%             75%                82%

     consumers expect corporations to operate to the
                                                                0 : 71%             62%                79%
     benefit of society at large and not just line the
     pockets of executives and shareholders.




                                         “Our communities project started out with thinking about
                                          our mission—bringing health through food to a maximum
                                          number of people—and our growing experience in
                                          developing countries where that mission is often a huge
                                          challenge. How can you bring products to a majority of
                                          people when a third or a half of the population live below
                                          the poverty line? Thinking along those lines has led us
                                          to launch successful initiatives with our Affordability
                                          Programs, putting our products and the health benefits
                                          they provide within the reach of people
                                          with very limited resources in China, Indonesia
                                          and other countries.”
                                                                          –CEO Franck Riboud,
                                                                    Danone Annual Report 2006
12      RULE 2: TREAT EMPLOYEES WELL
        Inequitable treatment of employees was one of the major concerns expressed
        by survey respondents, particularly in France. This reflects escalating frustration
        over the widening gap between executive and mid- and bottom-tier salaries.
        Twenty years ago, the ratio of CEO pay to average worker pay was approximately
        10:1; today, it’s 282:1. In some industries, executive paychecks could be described
        as obscene. In 2006 alone, for example, the top 25 hedge-fund managers took home
        a combined $14 billion. A report in Alpha magazine noted that this was more than the
        gross domestic products of Jordan or Uruguay that year. Three of the managers took
        home in excess of $1 billion for their 52 weeks of labor.



        big corporations do not share enough
        profit with all employees




     t : 59%          52%            75%


     p : 55%          62%            82%


     0 : 60%          49%            72%




        companies aren’t doing enough to respect
        the rights and needs of employees




     t : 48%          39%            68%


     p : 49%          42%            73%


     0 : 47%          38%            66%




        Some values-led corporations are working to boost
        compensation at the lower end and constrain it
        at the top. Whole Foods Market caps executive
        salaries at 16 times the average pay of all full-time
        workers. The cap was originally set at eight times the
        average pay, but has since been increased to bolster
        executive retention. CEO and founder John Mackey
        reduced his salary to $1 in 2007 and has forgone
        all future stock options and other compensation.
        Approximately 93 percent of stock options granted
        by Whole Foods has gone to employees who are not
        executive officers.
14   RULE 3: PROTECT AND PROMOTE THE                            i find i admire businesses and business
                                                                leaders more these days
     GREATER GOOD
     The last few years have seen record-
                                                             t : 18%       27%        20%
     shattering largesse on the part of
                                                             p : 19%       42%        14%
     corporate moguls. Microsoft’s Bill Gates
     has used his foundation to channel                      0 : 18%       23%        22%


     billions of dollars toward healthcare
     and education around the globe, a                          over the past five years companies
                                                                and corporations...
     cause to which investor Warren Buffett
                                                                have become more profitable
     has pledged stock worth in excess of
     $30 billion. Virgin founder Sir Richard
     Branson has pledged $3 billion to                       t : 80%       80%        79%

     fight global warming, while Intel                       p : 85%       84%        85%

     cofounder Gordon Moore has invested                     0 : 78%       79%        77%

     some $5 billion in causes related to
     conservation and science. Despite these
                                                                have become better positioned
     high-profile cases, only about one-fifth                   to create positive social change

     of Euro RSCG survey respondents in the
     U.S. and France, and around a quarter of
                                                             t : 62%       63%        48%
     the sample in the U.K. claim to admire
                                                             p : 76%       76%        45%
     business and business leaders more
     today.                                                  0 : 59%       60%        48%




     Why the disconnect? The consensus appears to be            have raised their standards
     that corporations have benefited enormously from
     increased profits and power but that most have
     not used those things to the benefit of anyone
     but themselves. Eight in 10 respondents to Euro         t : 39%       48%        58%

     RSCG’s study note the increased profitability of
                                                             p : 46%       67%        61%
     corporations, and more than six in 10 in the U.S. and
     U.K. consider companies better positioned to effect     0 : 37%       44%        57%
     social change. In sharp contrast, only a minority of
     respondents in at least two of the three markets
     believe corporations have raised their standards,
                                                                have become more accountable
     become more accountable, or become more
     philanthropic. Nearly one-third of the sample
     in the U.S. and U.K., and just under half of
     French respondents believe corporations in
                                                             t : 44%       57%        33%
     general have failed to make meaningful charitable
     contributions. And around a third in the U.S. and       p : 47%       62%        39%
     U.K., and seven in 10 in France believe companies
     aren’t doing enough to prevent discrimination           0 : 43%       56%        32%

     based on age, gender, race, or other grounds.

                                                                have become more philanthropic




                                                             t : 29%       29%        8%


                                                             p : 34%       40%        3%


                                                             0 : 28%       27%        10%
15




     French respondents, in particular, believe                  companies aren’t doing enough
     corporations should be doing much more to                   in terms of...
     drive social change. They want to see corporate             working ethically with governments
     executives work with governments to address key             for the good of society
     global issues, and they want to see more progress
     in terms of helping developing countries through
     trade. What they don’t want to see is corporations
     interfering in political affairs for their own selfish   t : 46%       41%        60%

     benefit.
                                                              p : 48%       49%        69%


                                                              0 : 46%       39%        57%




                                                                 encouraging mutually beneficial
                                                                 trade with developing countries




                                                              t : 25%       36%        63%


                                                              p : 28%       42%        74%


                                                              0 : 24%       35%       59%




                                                                 bringing about positive social change




                                                              t : 40%       35%       57%


                                                              p : 42%       41%       63%


                                                              0 : 40%       33%       55%




                                                                 companies should avoid political actions
                                                                 (lobbying, contributions, etc.) that
                                                                 interfere with the democratic process




                                                              t : 52%       32%       58%


                                                              p : 59%       41%       68%


                                                              0 : 50%       30%       54%
16




        When the samples were asked on which issues companies
        should focus their philanthropic efforts, the clear winners
        were the environment (U.K. and France) and health (U.S.).
        Corporate sponsorship of cultural and sporting events,
        while common, is deemed far less important.


        when a company is allocating funds for
        philanthropic purposes, which of the
        following should receive first, second,
        and third priority?

        health                                                        social issues




     t : 54%          49%            35%                         t : 20%            19%     28%


     p : 63%          63%            49%                         p : 17%            18%     31%


     0 : 51%          51%            34%                         0 : 21%            20%     27%




        environment                                                   infrastructure in less-developed regions




     t : 43%          51%            56%                         t : 7%             15%     13%


     p : 43%          53%            59%                         p : 7%             18%     14%


     0 : 43%          51%            55%                         0 : 7%             14%     13%




        education                                                     culture/art




     t : 38%          30%            17%                         t : 5%             3%      7%


     p : 37%          26%            23%                         p : 2%             3%      5%


     0 : 38%          30%            15%                         0 : 5%             3%      7%




        research                                                      sports




     t : 33%           29%           39%
                                                                 t : 1%             4%      5%

     p : 31%           29%           33%                         p : 0%             3%      3%


     0 : 33%           29%           41%                         0 : 1%             4%      6%
17   RULE 4: THINK ABOUT THE ENVIRONMENT BEFORE,
     NOT AFTER, YOU’VE DAMAGED IT
     We’ve seen a real shift in the past couple of years, as people who never before thought
     about such things have started bringing reusable bags to the grocery store, replacing
     incandescent bulbs with CFLs, and paying attention to recycled content. This change in
     attitude can be traced in large part to concern over global warming. Unlike some other
     eco-threats (e.g., rainforest destruction, endangered species), global warming offers
     plenty of scope for individual accountability and action. Numerous websites offer
     “carbon calculators” for measuring and tracking one’s carbon footprint, and there’s a
     growing market of products geared toward responsible living. In the United States,
     some credit for this increased awareness can rightly go to Al Gore’s An Inconvenient
     Truth, the fourth-highest-grossing documentary film ever. The movie clearly reached
     a receptive audience: A companion book authored by Gore spent 38 weeks on the New
     York Times bestseller list, including four weeks at #1. In France, environmentalist
     and TV host Nicolas Hulot has spent the last 20 years speaking out against eco-
     destruction; his latest book, Pour un Pacte Ecologique (“For an Ecological Treaty”),
     also a bestseller, is considered to have had a significant impact on France’s 2007
     presidential race.


     Consumers expect companies to share their                  companies aren’t doing enough in terms of...
     environmental concerns and aren’t yet satisfied
                                                                making environmental impact
     with the results. Substantial minorities in the            a core factor in corporate decisions
     U.S. and U.K., and a clear majority of respondents
     in France think corporations are falling short in
     terms of factoring the environment into their
     business decisions and paying fair value for their      t : 47%              42%              68%

     use of natural resources. This is of considerable
                                                             p : 49%              51%              77%
     importance given that more than three-quarters of
     respondents in each market are less likely to trust a
                                                             0 : 46%              40%              65%
     company with a poor reputation for environmental
     and/or social responsibility.
     Toyota has emerged as a leader in this area,               paying fair value for the company’s
                                                                use of natural resources
     not just in terms of being eco-conscious but
     also because of its success in rebranding itself as
     such. The company has managed to capture
     75 percent of the hybrid automotive market and is       t : 42%              43%              63%
     now extending its green approach to energy use,
     recycling, and emissions offsets at its plants and      p : 49%              49%              74%

     other facilities. Its consumer outreach efforts have
     included an extensive education and awareness           0 : 41%              42%              60%

     tour, billboards touting gallons of gasoline saved
     by hybrid drivers, and sponsorship of the Sundance
                                                                r e p u t a t i o n f o r e n v i r o n m e n t a l a n d/o r
     Channel’s The Green—ongoing programming                    social responsibility is a somewhat
     dedicated to environmental issues.                         or very important factor in my decision
                                                                to trust a company




                                                             t : 80%              76%              86%


                                                             p : 88%              87%              91%


                                                             0 : 78%              73%              84%
we face challenges
all over the world.
in Africa, it’s malaria.



                 Today, Africa’s economies are growing and contributing
                 significantly to the world’s energy supply.

                 But millions of African lives are still being affected by malaria,
                 a preventable disease that’s spread by infected mosquitoes.

                 With a presence in Africa for more than 100 years, ExxonMobil
                 is working to drastically cut the number of malaria cases
                 through sustained financial and on-the-ground support.

                 As people around the world mark Africa Malaria Day this year,
                 we’re partnering with many groups, including governments
                 and international health organizations, to combat malaria and
                 save lives. These efforts include everything from developing
                 new drugs to distributing insecticide-treated nets to places
                 where they’re desperately needed.

                 Because if we work together, we can all help ensure Africa
                 has a brighter future.
Euro RSCG has been the AOR for Veolia
since 2006. The current corporate
campaign has won several awards,
including an Effie for corporate
communication (2007) and best
Internet campaign ( Le Journal du
Net, 2007). The campaign launched
in Europe and will expand to the U.S.,
Australia, and the Middle East in 2008.
20   RULE 5: RESPECT
     CONSUMERS’ POWER
                                              public opinion should drive a
                                              company’s conduct and overall strategy



     Today’s consumers know more about
                                           t : 57%       63%        66%
     business and brands–and want
                                           p : 65%       70%        64%
     to be kept in the loop. Beyond
     knowing what their specific brand     0 : 53%       61%        66%


     partners are up to, they expect
     corporations in general to be            businesses need to open a
                                              dialogue with their consumers
     forthcoming about their activities,
     impact, and goals. Beyond that,
                                           t : 80%
     they believe companies should                       78%        92%


     behave according to the will of the   p : 94%       89%        98%


     people. Welcome to the Consumer       0 : 77%       75%        90%


     Republic!
                                              businesses must inform and
                                              educate their consumers




                                           t : 78%       72%        91%


                                           p : 90%       83%        96%


                                           0 : 75%       70%        89%




                                              businesses must be completely
                                              open and transparent




                                           t : 65%       80%        82%


                                           p : 70%       88%        88%


                                           0 : 63%       78%        80%




                                              it’s a positive thing for businesses
                                              to publicize their corporate social
                                              responsibility works, charitable
                                              contributions, etc.




                                           t : 73%       70%        76%


                                           p : 88%       84%        83%


                                           0 : 70%       67%        74%
22      To keep its customers and others informed, Stonyfield
        Farm has hired a former journalist to run blogs on
                                                                       Open communication with consumers and other
                                                                       stakeholders is also important when things go
        topics related to sustainability and health. GE made           wrong. The modern-day consumer expects business
        spreading the word to the public the fourth pillar of its      leaders to be up front about corporate misdeeds and
        ecomagination initiative. It’s been accomplishing this         other crises, and to be proactive about undoing the
        through its website and public forums, and has even            damage caused. Advertising comes into play here,
        invited customers to take part in “dreaming sessions”          but the most important factor, according to the study
        focused on devising potential solutions to specific            respondents, is for the CEO to take ownership of the
        issues. Purchases made with GE’s Earth Rewards credit          crisis and accept responsibility for fixing it fast.
        card earn greenhouse gas emissions credits, helping
        cardholders reduce their personal carbon footprints
        and feel they’re contributing to the fight against
        global warming.




        when a corporation has been going
        through a crisis, what is the best
        way to rehabilitate its image?

        ceo acknowledging the crisis                                   rebranding the company, as no one will
        and taking immediate action                                    ever entirely forget the wrongdoing




     t : 47%           39%            35%                           t : 3%           3%             5%


     p : 57%           35%            39%                           p : 5%           3%             4%


     0 : 45%           40%            34%                           0 : 2%           4%             5%




        an advertising campaign admitting                              editorial and pr stories explaining
        problems and showing how they will                             the company’s actions
        make amends



                                                                    t : 2%           4%             4%
     t : 23%           29%            29%
                                                                    p : 5%           5%             4%
     p : 14%           35%            29%
                                                                    0 : 2%           4%             4%
     0 : 25%           27%            29%



                                                                       other
        having the ceo available to
        answer the public’s questions

                                                                    t : 3%           2%             2%


     t : 10%           10%            15%                           p : 3%           1%             4%


     p : 10%           14%            14%                           0 : 3%           3%             2%


     0 : 10%           10%            15%




        continuing direct donations
        to make amends as part of a
        long-term commitment




     t : 5%            5%             6%


     p : 4%            7%             5%


     0 : 5%            5%             7%
23




     CONCLUSION: CORPORATIONS AT A CROSSROAD
     Today, corporations are at a crossroad. Companies that believe the new realities
     are no more than a phase will continue to treat brand values as an adjunct
     issue to be appended to their annual reports. They’ll donate money to
     worthwhile causes, but those philanthropic goals won’t be reflected in
     their corporate behavior. And they’ll continue to put off reform until the
     regulators mandate change. As a consequence, they will lose out on the
     considerable competitive advantage a better-than-average reputation brings.


     Those corporate brands that will own the future          As a growing segment of the business world
     will behave quite differently: For them, social          has come to realize, we have entered an era in
     responsibility will be manifest throughout the           which it’s no longer enough for companies to
     brand and communicated in a single-minded vision.        simply provide products and services, and operate
     Corporate values will be pushed downward and             within previously accepted standards of behavior.
     outward from the board level and delivered in            Consumers are asking their corporate partners to
     actions, not words. These companies will avoid           make a positive contribution to the world, while
     recriminations over “excess success” by creating         also helping them feel good as individuals about
     profits that are purpose-driven. Their business          the impact of their own consumption choices.
     decisions will create financial wealth—for the           People want to continue to enjoy the pleasure of
     company and its shareholders—as well as social           consumption, while also knowing their purchases
     wealth for the larger population. These future-          are contributing to the greater good—or at
     focused companies won’t need to resist government        least not detracting from it. The most successful
     regulation or popular pressure; they’ll serve as         corporate brands will be those that address these
     standard-bearers, working in concert with NGOs           twin pulls of selfishness and altruism, and help
     and other stakeholders to build new, more ethical        consumers feel that what’s good for them is also
     practices. And they’ll invest in internal and external   good for the world.
     communications to drive meaningful change.
“Breathe in, breathe out…With us, choosing
                                                                                mass transportation means choosing to
                                                                                produce 10 times less greenhouse gases
                                                                                and to consume five times less energy than
                                                                                if you were driving your car. Love the city.”
                                                                                RATP has been a client of Euro RSCG’s
                                                                                since 2006.




Inspirez, expirez...
Avec nous, choisir les transports en commun, c’est choisir de produire 10 fois moins de gaz
à effet de serre et consommer 5 fois moins d’énergie que si vous utilisiez votre voiture.
Prosumer Reports is a series of thought leadership publications by Euro RSCG Worldwide – part of a
global initiative to share information and insights, including our own proprietary research, across the
Euro RSCG network of agencies and client companies.

Euro RSCG Worldwide is a leading integrated marketing communications agency and was the first
agency to be named Global Agency of the Year by both Advertising Age and Campaign in the same year.
Euro RSCG is made up of 233 offices in 75 countries and provides advertising,marketing, corporate
communications, and digital and social media solutions to clients, including, Air France, BNP Paribas,
Charles Schwab, Citigroup, Danone Group, Heineken USA, IBM, Kraft Foods, Lacoste, L’Oréal, Merck,
PSA Peugeot Citroën, Pernod Ricard, Reckitt Benckiser, sanofi-aventis, and Volvo. Headquartered
in New York, Euro RSCG Worldwide is the largest unit of Havas, a world leader in communications
(Euronext Paris SA: HAV.PA).

For more information about Prosumer Reports, please visit www.prosumer-report.com or contact
Naomi Troni, global chief marketing officer, at naomi.troni@eurorscg.com.

Follow us on Twitter @prosumer_report

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The Future of The Corporate Brand

  • 1. EURO RSCG WORLDWIDE VOL 4 | 2008 BR AND OR AT E C ORP T HE F UR EO E FUT TH
  • 2. For almost a decade Euro RSCG has been creating impactful and provocative work for EDF. The current print campaign has been cited by the APPM (News Magazine and Press Awards). Choosing a world with less CO2. Because greenhouse gases are the main cause of global warming, EDF has chosen to produce energy that generates very little CO2. To achieve this objective EDF is developing and renewing Europe’s leading nuclear power and hydroelectric production facilities and investing heavily in renewable energy. The future: it's in the choices we make every day
  • 3. the future of the corpor ate br and | vol 4 Introduction: Rethinking the Role of the Corporation 2 More Power, More Responsibility 3 A New Way to Do Business: 10 Five Rules for the Corporate Brand of the Future
  • 4.
  • 5. 2 → INTRODUCTION: RETHINKING THE ROLE OF THE CORPORATION The corporate titans of earlier centuries would hardly recognize the modern- day business world. Over the past century, we’ve seen corporations grow far larger, more global, and more powerful–but, at the same time, more beholden to multiple stakeholders, including the general public. Companies have moved from primarily individual or family owned to shareholder owned and board governed. Once omnipotent, chief executives now serve at the will of a committee and are subject to the scrutiny and criticisms of people both within and outside corporate walls. Profits are still at center, but they’re no longer the only goal; CEOs of publicly traded companies are under tremendous pressure to meet the needs of all stakeholders, not just shareholders. The new pressures corporations face are due in large part to to the Internet and the democratization of media, corporations a growing awareness of the impact—good or bad—these feel more approachable and accountable. Ordinary citizens organizations can have on local, national, and international can find out just about anything they want about companies affairs as well as on people’s everyday lives. Corporations have online, a platform that also allows consumers to “talk back” grown so large that 37 of the world’s 100 largest economies to big business through blogs, message boards, product are now businesses rather than nations, according to Swedish reviews, and the like. The entire relationship between economist Johan Norberg. Greater size more often than not consumers and companies is changing as people rethink translates into greater power, and that’s a real issue at a time the role corporations can and should play within local when consumer confidence in corporations is at record lows. The communities and society as a whole. 2007 Gallup Poll found that only 18 percent of respondents had This issue of Prosumer Report explores the future of the a “great deal” or “quite a lot” of confidence in big business. This corporate brand, with an emphasis on evolving consumer lack of faith should come as no surprise given the past decade’s expectations and demands. It draws on findings from Euro string of corporate scandals, ranging from accounting fraud RSCG Worldwide’s 2007 Future of the Corporate Brand and abusive working conditions to contaminated food and Study. The online survey was conducted by Market Probe potentially lethal toys. Corporate corruption and malfeasance International in three markets: the United States (n=700), have moved beyond news headlines and into the broader the United Kingdom (n=700), and France (n=450). Prosumer culture, thanks to a steady slate of films focused on the evils breakouts are included throughout the report to provide of Big Business (e.g., Lord of War, The Constant Gardener, insights into the influence these leading-edge consumers are Syriana, Michael Clayton). wielding among the general public and within the corporate In this new environment, the public is more wary of corporations world. but also has higher expectations of them. Even as some companies have duped investors and ripped off or endangered customers, others have taken a leading role in important issues of the day, including the environment and human rights. Thanks
  • 6. 3 t: total p: prosumers o: other us uk france More Power, More Responsibility As the influence of corporations grows and the power of nations decreases, companies are expected to take on roles once relegated to government. This is especially the case in those areas in which government intervention has been seen as weak or ineffective. In the aftermath of Hurricane Katrina, for instance, 87 percent of Americans polled by Cone, Inc., expected corporations to play a major role in rebuilding affected areas. Nearly two-thirds (62 percent) agreed companies are better able than government agencies to respond effectively to disasters. businesses bear as much responsibility On a broader scale, corporations are now regarded as as governments for driving positive important facilitators of social progress. In each of social change the three markets surveyed, large majorities agreed businesses bear as much responsibility as government for driving social change. What once might have been t : 72% 71% 80% the view of a leftist fringe is now mainstream thinking. Reducing extreme poverty around the globe is one p : 82% 83% 67% area in which corporate involvement is particularly 0 : 70% 68% 79% expected. In 2000, the United Nations pledged in its “Millennium Declaration” to halve the proportion of the world’s people living in extreme poverty by 2015. It’s an objective that is in no way feasible without the concerted involvement of many of the world’s largest companies. It’s a huge undertaking, but one with an enormous upside for business. Multinational companies have already benefited greatly from the creation and growth of upper and middle classes in developing countries. But the real promise of globalization lies not among the people who currently consume, but among the billion or more others who have thus far been excluded from the consumption process. If this change is to take place, corporations will need to drive it.
  • 7. What’s a Prosumer? Prosumers are the most influential men and women within any market. Empowered by new technologies and improved access to information, they have tipped the scales of power away from manufacturers and retailers, and toward themselves. They are highly knowledgeable and demanding consumers who expect their brand partners to acknowledge their value and treat them accordingly. Prosumers typically make up 15 to 25 percent of any market. Euro RSCG Worldwide has made them an ongoing focus, because, beyond their own economic impact, prosumers influence the brand choices of others. Simply put, what prosumers are doing today, mainstream consumers are likely to be doing six to 18 months from now. KEY PROSUMER TRAITS: » Embrace innovation — curious » Are marketing savvy and plugged to try new things, challenges, in to multiple media sources and experiences » Demand top-notch customer service » Keen on new technology and gadgets and access to information » Transport new attitudes, ideas, » Proactively seek to maximize control and behavior — they are “human media” over their lives through information, communication, and technology » Pursue timeless value » Constantly seek information and » Recognize their value as consumers and opinions; eager to share their views expect brand partners to do likewise and experiences with others
  • 8. 5 The Tables Have Turned “Big Brother is watching you.” It’s a phrase taken from George Orwell’s 1984 and has been in frequent use over the last half century. Whether referring to the government or big business, the phrase has suggested ongoing surveillance–and control–of the general population by overly powerful and intrusive authority figures. Today, Orwell would likely be surprised by the extent to which the tables have turned on corporations. For all the fears of big business tracking consumer movements with digital cookies and RFID tags, the truth is that consumers are keeping equally close (if not closer) tabs on corporations. Anyone with Internet access can easily look up an annual report, track corporate movements, and contribute to conversations about what a particular company or industry is doing right or wrong. jetBlue learned the hard way how easily an angry customer armed with a video-enabled phone can spread the word about corporate transgressions or errors in judgment. Having witnessed the damage big business can corporations have become a more cause when left unchecked, a growing number of important part of our culture people feel they have a right to monitor corporate actions and take companies to task when they step out of line. A majority of respondents in each of t : 54% 53% 63% the three markets acknowledge corporations’ increased cultural role and say they have become p : 66% 65% 67% more interested in corporate conduct and brand image over the past few years. Significant 0 : 51% 50% 61% proportions, including more than half of leading-edge prosumers, had actively sought out i have become more interested in information about a company’s ethics in the few corporations’ conduct and brand months prior to the survey. images over the past few years Whether protesting the treatment of chickens by KFC or denouncing Apple’s rapid discounting of its new iPhone, ordinary people now have the t : 64% 53% 51% wherewithal to force corporations to respond to their complaints and demands. This puts p : 80% 75% 64% significant power in the hands of consumers who take the time to blog about a company, post a 0 : 60% 50% 47% video about poor customer service on YouTube, or slam a product on a customer-review site. within the last few months, i have Consumers can now look beyond the glossy ads actively looked for information on and rosy product statements, and find a very the reputation or ethics of a company different truth. Euro RSCG’s survey shows that substantial numbers of consumers have already changed their minds about a potential purchase as a result of information in blogs and other online t : 37% 38% 53 % forums. The fact that prosumers score higher on p : 56% 55% 72% this count indicates it’s a trend likely to grow stronger. 0 : 33% 35% 47% over the last year, non-branded blogs or forums made me change my mind about a product or service i had intended to buy t : 20% 26% 40 % p : 36% 36% 43% 0 : 24% 24% 39%
  • 9.
  • 10. 7 Ethical Consumption: Survival of the Fairest “Can you have an impact by making none at all? Why not?” That’s more than just a tagline from Toyota’s new advertising campaign. Consumers in the developed world are more aware today of the negative consequences of capitalism and mass consumption. And they’re under increasing pressure (societal and self-imposed) to limit the damage caused by their personal consumption choices. This means making the “right” purchase decisions and also influencing the behaviors of companies hoping to obtain their business. In the United States and France, eight in 10 consumers believe they have a responsibility to censure unethical companies by avoiding their products. In all three markets, a majority have already made a purchase decision based on a company’s conduct. Once again, prosumers are taking the lead. as a consumer, i have a responsibility to i have made a purchase decision censure unethical companies by avoiding based on a company’s conduct their products t : 65% 58% 69% t : 80% 69% 81% p : 80% 73% 81% p : 87% 79% 85% 0 : 61% 55% 65% 0 : 78% 66% 80%
  • 11. 8 In this new context of doing business, companies have corporate reputation on social no choice but to adapt. More and more, consumers are and environmental responsibility is a key driver of confidence factoring issues of ethics and social and environmental responsibility into their purchase decisions—and that applies to shareholding as well as personal consumption. Morningstar reports there are 130 t : 80% 76% 86% socially responsible investment funds today, with $48.8 billion in assets, up from just 39 funds with p : 88% 87% 91% $5.4 billion in assets a decade ago. Natural selection is beginning to favor those companies that are 0 : 78% 73% 84% integrating high ethical standards into their policies and practices. ethical conduct is a key factor How are these good intentions translating in the real for good business world? A 2004 report prepared for Wal-Mart by McKinsey and Co., found that as many as 8 percent of Wal-Mart customers no longer shop there because of “negative press.” The consultancy concluded t : 91% 76% 91% the retail giant could gain 8 percent in financial value if it were to improve its image to the level of competitor p : 96% 87% 95% Target. Whether directly correlated or not, Wal-Mart has since taken a leadership role in such areas as organic 0 : 90% 73% 90% food, lower prescription prices, and sustainability. Among other pledges, the company has committed to reducing the energy needs of its existing stores the most successful and profitable 20 percent by 2009 and its overall CO2 emissions businesses in the future will be those that practice sustainability 25 percent by 2012. Once dismissed as unaffordable and unwise, sustainable practices are now viewed by many, if not most, companies as a competitive advantage. And t : 69% 73% 79% there’s a growing body of evidence to back that up: p : 78% 87% 88% When investment research and advisory firm Innovest back-tested a hypothetical portfolio of its Global 100 0 : 66% 70% 76% Most Sustainable Firms against the MSCI World Index from December 1999 through December 2005, it found the Global 100 outperformed the broader index by 7.11 percent. Numerous other studies corroborate that positive environmental and social performance can create financial success—increasing investor confidence, strengthening brand recognition, and boosting stock performance and competitiveness. GE’s recent ecomagination initiatives, including a pledge to double investment in clean technology by 2010, have been credited with helping to increase corporate earnings 11 percent in 2006.
  • 12.
  • 13. 10 A New Way to Do Business Business as usual, as practiced in the last century, is insufficient in today’s environment. Corporate strategies—including branding strategies—must take into account the value accrued by a reputation for social responsibility, as well as the very real disadvantages faced by those companies that fall short in this regard. Where once CSR activities were an adjunct relegated to the PR department, now they are a core component of competitive business. Whether they regard these practices as “caring capitalism” or pure self-interest, the most successful companies of tomorrow will infuse elements of social and environmental responsibility throughout their operations, from human-resources practices and customer service to supply chains, retail venues, and packaging. 5 Rules for RUL E 1: H AVE A PURPO S E it is important that companies stand for something other than profitability BEYOND P ROF I T the Corporate Consumers in the three markets Brand of surveyed have made it clear: t : 86% 81% 89% the Future Business can no longer be just p : 96% 86% 95% about profit. More than eight 0 : 83% 80% 87% in 10 respondents believe it’s important for a company to stand for the most important duty of a ceo is to generate profits for shareholders something other than profitability, and only around one-third consider shareholder profits the most important t : 37% 33% 33% responsibility p : 40% 40% 34% of the CEO. 0 : 36% 32% 33%
  • 14. 11 Look at the most successful brands that have emerged in recent decades, and you’ll find a innovation is an important factor for good business common thread: Most of these companies have been built on a strong and clearly articulated set of beliefs and values. In the space of a decade, t : 84% 81% 95% Google went from a college research project to a company with a brand value estimated at more than p : 87% 92% 100% $17 billion, all while seeking to live by its credos of “Don’t be evil” and “Work should be challenging, and 0 : 83% 79% 93% the challenge should be fun.” Whole Foods Market has built its brand on a simple philosophy of “whole foods, whole people, whole planet”—and, in doing a vision is an important so, has managed to become the world’s fastest- factor for good business growing retailer. Starbucks hasn’t just cornered the world coffee-experience market; it’s done so while promoting such values as Fair Trade, a respectful work environment, diversity, and community t : 80% 75% 94% involvement. p : 82% 84% 98% Three very different companies, but each one has turned strong beliefs into a winning proposition. 0 : 79% 73% 93% These companies don’t just stand out because they are values centered; they stand out because they profitability is an important are creating new ways of doing business—and factor for good business that is something today’s consumers value. Both “innovative” and “visionary” are qualities considered essential components of good business in each of the markets surveyed. In t : 72% 64% 80% fact, respondents ranked both those factors above profitability. This makes sense at a time when p : 73% 75% 82% consumers expect corporations to operate to the 0 : 71% 62% 79% benefit of society at large and not just line the pockets of executives and shareholders. “Our communities project started out with thinking about our mission—bringing health through food to a maximum number of people—and our growing experience in developing countries where that mission is often a huge challenge. How can you bring products to a majority of people when a third or a half of the population live below the poverty line? Thinking along those lines has led us to launch successful initiatives with our Affordability Programs, putting our products and the health benefits they provide within the reach of people with very limited resources in China, Indonesia and other countries.” –CEO Franck Riboud, Danone Annual Report 2006
  • 15. 12 RULE 2: TREAT EMPLOYEES WELL Inequitable treatment of employees was one of the major concerns expressed by survey respondents, particularly in France. This reflects escalating frustration over the widening gap between executive and mid- and bottom-tier salaries. Twenty years ago, the ratio of CEO pay to average worker pay was approximately 10:1; today, it’s 282:1. In some industries, executive paychecks could be described as obscene. In 2006 alone, for example, the top 25 hedge-fund managers took home a combined $14 billion. A report in Alpha magazine noted that this was more than the gross domestic products of Jordan or Uruguay that year. Three of the managers took home in excess of $1 billion for their 52 weeks of labor. big corporations do not share enough profit with all employees t : 59% 52% 75% p : 55% 62% 82% 0 : 60% 49% 72% companies aren’t doing enough to respect the rights and needs of employees t : 48% 39% 68% p : 49% 42% 73% 0 : 47% 38% 66% Some values-led corporations are working to boost compensation at the lower end and constrain it at the top. Whole Foods Market caps executive salaries at 16 times the average pay of all full-time workers. The cap was originally set at eight times the average pay, but has since been increased to bolster executive retention. CEO and founder John Mackey reduced his salary to $1 in 2007 and has forgone all future stock options and other compensation. Approximately 93 percent of stock options granted by Whole Foods has gone to employees who are not executive officers.
  • 16.
  • 17. 14 RULE 3: PROTECT AND PROMOTE THE i find i admire businesses and business leaders more these days GREATER GOOD The last few years have seen record- t : 18% 27% 20% shattering largesse on the part of p : 19% 42% 14% corporate moguls. Microsoft’s Bill Gates has used his foundation to channel 0 : 18% 23% 22% billions of dollars toward healthcare and education around the globe, a over the past five years companies and corporations... cause to which investor Warren Buffett have become more profitable has pledged stock worth in excess of $30 billion. Virgin founder Sir Richard Branson has pledged $3 billion to t : 80% 80% 79% fight global warming, while Intel p : 85% 84% 85% cofounder Gordon Moore has invested 0 : 78% 79% 77% some $5 billion in causes related to conservation and science. Despite these have become better positioned high-profile cases, only about one-fifth to create positive social change of Euro RSCG survey respondents in the U.S. and France, and around a quarter of t : 62% 63% 48% the sample in the U.K. claim to admire p : 76% 76% 45% business and business leaders more today. 0 : 59% 60% 48% Why the disconnect? The consensus appears to be have raised their standards that corporations have benefited enormously from increased profits and power but that most have not used those things to the benefit of anyone but themselves. Eight in 10 respondents to Euro t : 39% 48% 58% RSCG’s study note the increased profitability of p : 46% 67% 61% corporations, and more than six in 10 in the U.S. and U.K. consider companies better positioned to effect 0 : 37% 44% 57% social change. In sharp contrast, only a minority of respondents in at least two of the three markets believe corporations have raised their standards, have become more accountable become more accountable, or become more philanthropic. Nearly one-third of the sample in the U.S. and U.K., and just under half of French respondents believe corporations in t : 44% 57% 33% general have failed to make meaningful charitable contributions. And around a third in the U.S. and p : 47% 62% 39% U.K., and seven in 10 in France believe companies aren’t doing enough to prevent discrimination 0 : 43% 56% 32% based on age, gender, race, or other grounds. have become more philanthropic t : 29% 29% 8% p : 34% 40% 3% 0 : 28% 27% 10%
  • 18. 15 French respondents, in particular, believe companies aren’t doing enough corporations should be doing much more to in terms of... drive social change. They want to see corporate working ethically with governments executives work with governments to address key for the good of society global issues, and they want to see more progress in terms of helping developing countries through trade. What they don’t want to see is corporations interfering in political affairs for their own selfish t : 46% 41% 60% benefit. p : 48% 49% 69% 0 : 46% 39% 57% encouraging mutually beneficial trade with developing countries t : 25% 36% 63% p : 28% 42% 74% 0 : 24% 35% 59% bringing about positive social change t : 40% 35% 57% p : 42% 41% 63% 0 : 40% 33% 55% companies should avoid political actions (lobbying, contributions, etc.) that interfere with the democratic process t : 52% 32% 58% p : 59% 41% 68% 0 : 50% 30% 54%
  • 19. 16 When the samples were asked on which issues companies should focus their philanthropic efforts, the clear winners were the environment (U.K. and France) and health (U.S.). Corporate sponsorship of cultural and sporting events, while common, is deemed far less important. when a company is allocating funds for philanthropic purposes, which of the following should receive first, second, and third priority? health social issues t : 54% 49% 35% t : 20% 19% 28% p : 63% 63% 49% p : 17% 18% 31% 0 : 51% 51% 34% 0 : 21% 20% 27% environment infrastructure in less-developed regions t : 43% 51% 56% t : 7% 15% 13% p : 43% 53% 59% p : 7% 18% 14% 0 : 43% 51% 55% 0 : 7% 14% 13% education culture/art t : 38% 30% 17% t : 5% 3% 7% p : 37% 26% 23% p : 2% 3% 5% 0 : 38% 30% 15% 0 : 5% 3% 7% research sports t : 33% 29% 39% t : 1% 4% 5% p : 31% 29% 33% p : 0% 3% 3% 0 : 33% 29% 41% 0 : 1% 4% 6%
  • 20. 17 RULE 4: THINK ABOUT THE ENVIRONMENT BEFORE, NOT AFTER, YOU’VE DAMAGED IT We’ve seen a real shift in the past couple of years, as people who never before thought about such things have started bringing reusable bags to the grocery store, replacing incandescent bulbs with CFLs, and paying attention to recycled content. This change in attitude can be traced in large part to concern over global warming. Unlike some other eco-threats (e.g., rainforest destruction, endangered species), global warming offers plenty of scope for individual accountability and action. Numerous websites offer “carbon calculators” for measuring and tracking one’s carbon footprint, and there’s a growing market of products geared toward responsible living. In the United States, some credit for this increased awareness can rightly go to Al Gore’s An Inconvenient Truth, the fourth-highest-grossing documentary film ever. The movie clearly reached a receptive audience: A companion book authored by Gore spent 38 weeks on the New York Times bestseller list, including four weeks at #1. In France, environmentalist and TV host Nicolas Hulot has spent the last 20 years speaking out against eco- destruction; his latest book, Pour un Pacte Ecologique (“For an Ecological Treaty”), also a bestseller, is considered to have had a significant impact on France’s 2007 presidential race. Consumers expect companies to share their companies aren’t doing enough in terms of... environmental concerns and aren’t yet satisfied making environmental impact with the results. Substantial minorities in the a core factor in corporate decisions U.S. and U.K., and a clear majority of respondents in France think corporations are falling short in terms of factoring the environment into their business decisions and paying fair value for their t : 47% 42% 68% use of natural resources. This is of considerable p : 49% 51% 77% importance given that more than three-quarters of respondents in each market are less likely to trust a 0 : 46% 40% 65% company with a poor reputation for environmental and/or social responsibility. Toyota has emerged as a leader in this area, paying fair value for the company’s use of natural resources not just in terms of being eco-conscious but also because of its success in rebranding itself as such. The company has managed to capture 75 percent of the hybrid automotive market and is t : 42% 43% 63% now extending its green approach to energy use, recycling, and emissions offsets at its plants and p : 49% 49% 74% other facilities. Its consumer outreach efforts have included an extensive education and awareness 0 : 41% 42% 60% tour, billboards touting gallons of gasoline saved by hybrid drivers, and sponsorship of the Sundance r e p u t a t i o n f o r e n v i r o n m e n t a l a n d/o r Channel’s The Green—ongoing programming social responsibility is a somewhat dedicated to environmental issues. or very important factor in my decision to trust a company t : 80% 76% 86% p : 88% 87% 91% 0 : 78% 73% 84%
  • 21. we face challenges all over the world. in Africa, it’s malaria. Today, Africa’s economies are growing and contributing significantly to the world’s energy supply. But millions of African lives are still being affected by malaria, a preventable disease that’s spread by infected mosquitoes. With a presence in Africa for more than 100 years, ExxonMobil is working to drastically cut the number of malaria cases through sustained financial and on-the-ground support. As people around the world mark Africa Malaria Day this year, we’re partnering with many groups, including governments and international health organizations, to combat malaria and save lives. These efforts include everything from developing new drugs to distributing insecticide-treated nets to places where they’re desperately needed. Because if we work together, we can all help ensure Africa has a brighter future.
  • 22. Euro RSCG has been the AOR for Veolia since 2006. The current corporate campaign has won several awards, including an Effie for corporate communication (2007) and best Internet campaign ( Le Journal du Net, 2007). The campaign launched in Europe and will expand to the U.S., Australia, and the Middle East in 2008.
  • 23. 20 RULE 5: RESPECT CONSUMERS’ POWER public opinion should drive a company’s conduct and overall strategy Today’s consumers know more about t : 57% 63% 66% business and brands–and want p : 65% 70% 64% to be kept in the loop. Beyond knowing what their specific brand 0 : 53% 61% 66% partners are up to, they expect corporations in general to be businesses need to open a dialogue with their consumers forthcoming about their activities, impact, and goals. Beyond that, t : 80% they believe companies should 78% 92% behave according to the will of the p : 94% 89% 98% people. Welcome to the Consumer 0 : 77% 75% 90% Republic! businesses must inform and educate their consumers t : 78% 72% 91% p : 90% 83% 96% 0 : 75% 70% 89% businesses must be completely open and transparent t : 65% 80% 82% p : 70% 88% 88% 0 : 63% 78% 80% it’s a positive thing for businesses to publicize their corporate social responsibility works, charitable contributions, etc. t : 73% 70% 76% p : 88% 84% 83% 0 : 70% 67% 74%
  • 24.
  • 25. 22 To keep its customers and others informed, Stonyfield Farm has hired a former journalist to run blogs on Open communication with consumers and other stakeholders is also important when things go topics related to sustainability and health. GE made wrong. The modern-day consumer expects business spreading the word to the public the fourth pillar of its leaders to be up front about corporate misdeeds and ecomagination initiative. It’s been accomplishing this other crises, and to be proactive about undoing the through its website and public forums, and has even damage caused. Advertising comes into play here, invited customers to take part in “dreaming sessions” but the most important factor, according to the study focused on devising potential solutions to specific respondents, is for the CEO to take ownership of the issues. Purchases made with GE’s Earth Rewards credit crisis and accept responsibility for fixing it fast. card earn greenhouse gas emissions credits, helping cardholders reduce their personal carbon footprints and feel they’re contributing to the fight against global warming. when a corporation has been going through a crisis, what is the best way to rehabilitate its image? ceo acknowledging the crisis rebranding the company, as no one will and taking immediate action ever entirely forget the wrongdoing t : 47% 39% 35% t : 3% 3% 5% p : 57% 35% 39% p : 5% 3% 4% 0 : 45% 40% 34% 0 : 2% 4% 5% an advertising campaign admitting editorial and pr stories explaining problems and showing how they will the company’s actions make amends t : 2% 4% 4% t : 23% 29% 29% p : 5% 5% 4% p : 14% 35% 29% 0 : 2% 4% 4% 0 : 25% 27% 29% other having the ceo available to answer the public’s questions t : 3% 2% 2% t : 10% 10% 15% p : 3% 1% 4% p : 10% 14% 14% 0 : 3% 3% 2% 0 : 10% 10% 15% continuing direct donations to make amends as part of a long-term commitment t : 5% 5% 6% p : 4% 7% 5% 0 : 5% 5% 7%
  • 26. 23 CONCLUSION: CORPORATIONS AT A CROSSROAD Today, corporations are at a crossroad. Companies that believe the new realities are no more than a phase will continue to treat brand values as an adjunct issue to be appended to their annual reports. They’ll donate money to worthwhile causes, but those philanthropic goals won’t be reflected in their corporate behavior. And they’ll continue to put off reform until the regulators mandate change. As a consequence, they will lose out on the considerable competitive advantage a better-than-average reputation brings. Those corporate brands that will own the future As a growing segment of the business world will behave quite differently: For them, social has come to realize, we have entered an era in responsibility will be manifest throughout the which it’s no longer enough for companies to brand and communicated in a single-minded vision. simply provide products and services, and operate Corporate values will be pushed downward and within previously accepted standards of behavior. outward from the board level and delivered in Consumers are asking their corporate partners to actions, not words. These companies will avoid make a positive contribution to the world, while recriminations over “excess success” by creating also helping them feel good as individuals about profits that are purpose-driven. Their business the impact of their own consumption choices. decisions will create financial wealth—for the People want to continue to enjoy the pleasure of company and its shareholders—as well as social consumption, while also knowing their purchases wealth for the larger population. These future- are contributing to the greater good—or at focused companies won’t need to resist government least not detracting from it. The most successful regulation or popular pressure; they’ll serve as corporate brands will be those that address these standard-bearers, working in concert with NGOs twin pulls of selfishness and altruism, and help and other stakeholders to build new, more ethical consumers feel that what’s good for them is also practices. And they’ll invest in internal and external good for the world. communications to drive meaningful change.
  • 27. “Breathe in, breathe out…With us, choosing mass transportation means choosing to produce 10 times less greenhouse gases and to consume five times less energy than if you were driving your car. Love the city.” RATP has been a client of Euro RSCG’s since 2006. Inspirez, expirez... Avec nous, choisir les transports en commun, c’est choisir de produire 10 fois moins de gaz à effet de serre et consommer 5 fois moins d’énergie que si vous utilisiez votre voiture.
  • 28. Prosumer Reports is a series of thought leadership publications by Euro RSCG Worldwide – part of a global initiative to share information and insights, including our own proprietary research, across the Euro RSCG network of agencies and client companies. Euro RSCG Worldwide is a leading integrated marketing communications agency and was the first agency to be named Global Agency of the Year by both Advertising Age and Campaign in the same year. Euro RSCG is made up of 233 offices in 75 countries and provides advertising,marketing, corporate communications, and digital and social media solutions to clients, including, Air France, BNP Paribas, Charles Schwab, Citigroup, Danone Group, Heineken USA, IBM, Kraft Foods, Lacoste, L’Oréal, Merck, PSA Peugeot Citroën, Pernod Ricard, Reckitt Benckiser, sanofi-aventis, and Volvo. Headquartered in New York, Euro RSCG Worldwide is the largest unit of Havas, a world leader in communications (Euronext Paris SA: HAV.PA). For more information about Prosumer Reports, please visit www.prosumer-report.com or contact Naomi Troni, global chief marketing officer, at naomi.troni@eurorscg.com. Follow us on Twitter @prosumer_report