The time when companies could simply turn a blind eye to ethical principles and sustainability in the pursuit of profit is long gone. Entrepreneurs need to think not only about how they make money but also about how it affects their reputation and public perception.
Now, ethics and sustainability are at the center of strategy. But why is this so important, and how can these concepts enhance audience trust?
Some may think that adhering to ethical and sustainable standards is an additional cost and complexity. But in reality, it is an investment in the future. Companies that neglect these aspects risk losing consumer trust, facing reputational risks, and missing the chance to become market leaders.
Moreover, in the context of growing interest in social and environmental issues, adhering to ethical standards becomes not only a matter of reputation but also a competitive advantage. Consumers are willing to pay more for products made with care for the planet and people. Thus, adhering to ethical and sustainable standards is not only the right step but also strategically beneficial.
What is ethical marketing?
Ethical marketing is based on the principles of honesty, transparency, and respect for the consumer. This means that a company should avoid deceptive practices, manipulation, and misleading advertising promises.
Ethical marketing includes:
- Honesty in advertising materials: Products and services should be presented in a way that the information about them is accurate and does not mislead the consumer.
- Respect for personal information: Ethical companies care about protecting their customers' data and use it only with their consent, as well as ensuring the secure storage of information.
- Transparency in business processes: Consumers want to understand how products are made, where materials come from, and how goods are tested.
The difference between traditional and ethical marketing
Traditional marketing focuses on achieving specific, measurable results in the short term. The main goal is to increase sales and attract new customers. How is this achieved? The main tools are advertising, discounts, special offers, and limited-time promotions.
For example, imagine a large supermarket holding a sale for a holiday. They use bright advertising to attract customers' attention: “50% off all products!” This grabs attention and encourages people to make a purchase right now. This approach effectively attracts a flow of customers and increases sales volume, but it focuses on short-term results.
Traditional marketing is more focused on how to sell a product quickly and on a large scale. Ethical marketing, on the other hand, is oriented towards long-term relationships with customers based on honesty and responsibility.
To clearly see the difference between traditional and ethical marketing, let’s consider the example of two companies selling organic cosmetics.
Company A (Traditional marketing): It uses aggressive advertising campaigns, discounts, and promotions. It advertises its products on social media and television, offering significant discounts on new products. While this attracts buyers, for most of them, it is a one-time purchase.
Company B (Ethical marketing): This company emphasizes transparency and social responsibility. It provides detailed information about the production process and ingredients. As a result, customers who value honesty and social initiatives become loyal fans of this brand and are willing to support it even in the absence of discounts and promotions.
Practical application of ethical marketing
Global example: Unilever
The company has implemented the Unilever Sustainable Living Plan, which covers three key aspects: improving people's health and well-being, reducing environmental impact, and enhancing livelihoods through sustainable business practices.
Unilever actively works to reduce the carbon footprint of its products. For example, the company has implemented technology that reduces water consumption in the production of its products. They also aim for all packaging materials to be recyclable or reusable by 2025.
What is sustainable marketing?
Sustainable marketing, on the other hand, focuses on the long-term impact of business on the environment and society. Sustainable marketing includes the following elements:
- Environmental responsibility: This relates to both material selection and optimizing production processes.
- Social responsibility: Companies should consider their impact on the community and contribute to improving working conditions.
- Economic sustainability: This includes creating sustainable business models that not only generate profit but also contribute to the long-term development of society.
Research shows that consumers are increasingly oriented towards brand values rather than just their offerings. According to a Nielsen study (an American company conducting marketing measurements in the consumer goods industry), 66% of consumers are willing to pay more for products and services from companies that actively support social and environmental initiatives.
Risks to brand reputation
Unethical marketing represents one of the most serious threats to a brand. Let’s break down how this happens and what consequences companies using such methods may face.
Unethical marketing is the use of deceptive or manipulative strategies to achieve goals.
Firstly, such behavior destroys trust. If a customer finds out they have been deceived, they will not only be disappointed but will likely share their experience with others.
Secondly, companies will face legal consequences. Most countries have strict laws regulating advertising and consumer rights protection. Violating these norms can lead to fines and lawsuits, which, in turn, further undermine reputation.
One prominent example is the situation with Volkswagen in 2015. The Volkswagen scandal, known as "Dieselgate," was one of the most significant corporate crises in history.
It all began in September 2015 when the U.S. Environmental Protection Agency (EPA) accused Volkswagen of manipulating emissions tests for diesel vehicles.
Volkswagen used special software that could recognize when a vehicle was undergoing emissions testing and accordingly change the engine's operating mode to meet environmental standards. In real-world conditions, the engine emitted far more pollutants than claimed.
Volkswagen admitted that 11 million vehicles worldwide were equipped with software that manipulated emissions tests. The crisis led to significant financial losses for the company, including fines, compensation to car owners, and costs to rectify the issue. In addition, several high-ranking company executives were charged and convicted, including former CEO Martin Winterkorn.
Examples of companies that have suffered from such practices underscore the importance of adhering to ethical standards. To minimize risks, companies should develop and implement clear ethical norms, conduct regular audits, train employees, use feedback systems, have crisis management plans, and actively participate in social initiatives.
The importance of customer trust
Customer trust is a critically important factor for the successful operation of a business.
A study conducted by Harvard Business Review shows that companies with high levels of customer trust have, on average, 27% higher repeat purchase rates compared to companies with low trust levels.
Additionally, a Nielsen study found that 92% of consumers trust recommendations from acquaintances more than any other form of advertising. This confirms that trust in a brand not only increases the likelihood of repeat purchases but also contributes to organic growth through positive reviews and recommendations.
Customer trust is not just an element of a successful business strategy but a fundamental factor determining long-term financial stability and competitiveness. Investments in building and maintaining trust, such as through transparency, honesty, and high-quality service, have long-term and significant benefits for businesses.
What should be taken into account?
When developing an ethical marketing strategy, it is important to consider several critically significant factors:
- Ethical norms and standards. It is important to honestly represent products and services, avoiding manipulation and exaggeration.
- Transparency and honesty. The company should openly communicate how it operates, where it gets information, and how it uses consumer data.
- Long-term planning and sustainability. Short-term gains should not take precedence over the sustainable development of the company and its reputation. This includes investments in environmentally friendly technologies, social responsibility, and maintaining high quality standards.
- Readiness for change. The market and consumer expectations may change, so it is important to regularly review and update your strategy.
These principles will help create a strategy that is oriented towards long-term success.
If you want your customers to trust you and return again, make sure your marketing is honest and open. Do not deceive or hide information. Honesty and transparency will attract people and help build long-term relationships. Start doing the right thing—it is beneficial.
