• Sunday, July 21, 2024
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Business strategy in economic uncertainty

Business Strategy

It is only January, but already there are signs that unlike previous years, 2016 would be a tougher year to do business in Nigeria. In November 2015, inflation rate rose to 9.4%. And judging by media reports, CBN’s recent defence of the naira is having an undesirable impact on trade. Also, the signs that businesses should brace themselves up for tough economic times even punctuate certain sections of President Muhammadu Buhari’s budget speech.

‘‘By June 2014’’, President Buhari said,‘‘oil prices averaged $112 per barrel. But as at today, the price is under $39 per barrel. This huge decline is having a painful effect on our economy.Consumption has declined at all levels. ’’

Though the primary aim of production is consumption it does not imply that whatever means firms employ to increase purchases is justifiable. When legal, ethical, or economic questions are asked of the quality of increased consumption, the end doesn’t always justify the means. Also, the idea that legal and ethical (i.e. social) concerns are mutually exclusive from economic ones, is now thankfully, dated. Just ‘doing good’- being socially responsible, is outmoded.It is now fashionable and strategic for firms to incorporate social causes into their marketing strategies.

The concept behind a firm tackling ‘‘social needs within the frame work of business strategy’’ is the focus of a recent paper by four scholars—Godson Ikiebey, Rita Omovbude, SegunShogbanmu, and OlutayoOtubanjo—all of the Pan-Atlantic University, Lagos. The paper, published in a British journal, The Marketing Review, is titled The meaning and uses of cause-related marketing.

Cause-related marketing (CRM) is a Corporate Social Responsibility (CSR) initiative. Like its parent concept, it originated in the United States in the 1980s. CRM is a marketing activity in which a firm promises to contribute to a cause each time customers make purchases. From a communications perspective CSR activities are usually understated. Not so with CRM. Firms utilise their entire arsenal of communication to coax customers to donate to a cause through consumption.This is done chiefly by advertising, which is the more popular means of getting customers to associate their buying behaviour with having an impact on society, or the environment.

This explains why the paper’s concern is showing how marketing managers in Nigeria interpret CRM. It did this by analysing two CRM ads. The aim of the authors’ analysis is to uncover what each sign, symbol, picture, or text, in the ads mean within Nigeria’s socio-cultural environment, and to juxtapose this with internationally recognised definitions of CRM. Their findings indicate a consistency, and ‘‘demonstrates that even in emerging economies and non-Western cultures, CRM also helps in the promotion of corporate and product brand images.’’

In a CRM ad, the firm proposes a partnership with the customer in order to solve a social problem. Arguably, the paper’s most insightful proposition is the impact customers’ perception of a firm’s brand image has on the success of CRM campaigns. Only two possible attributions are investigated by the authors. These are namely, sincerity and excitement. Sincere brands are in for the long haul, and therefore good CRM partners. Exciting brands are bad CRM partners because excitement is transitory and portends an unsustainable relationship. Of course, the implication is that the authors favour strategic CRM campaigns.

Globally, both in practice and in academic research, CRM campaigns according to the authors, have four major uses: to increase sales, to build brand equity, to build brand image, and for brand positioning.

It is futile to think that a firm’s desire to increase its market share can solve our national consumption problems. Such macroeconomic concern is the domain of government policy. But there are clear microeconomic incentives for firms that engage in CRM. When the paper’s lead author, Godson Ikiebey, a researcher with First Bank Sustainability Centre at the Lagos Business School was contacted, he said: ‘‘the current socio-economic uncertainty presents businesses with an opportunity to create new markets through innovative products and services.’’By ‘doing good’ a successful CRM campaign helps businesses to ‘do better’ profit wise. Which is why Ikiebey said that “with innovative products or services designed to solve problems of inequality, poverty, skills development, education and wealth creation, businesses can increase their market share despite the prevailing or looming economic crunch.”

In tough economic times the inequality gap becomes wider, and the skill set people need to take themselves out of poverty more vital. By partnering with NGOs and government institutions which champion causes which seeks to breach the inequality gap, reduce poverty, develop skills, create wealth or educate people, businesses stand to make gains that would impact on their balance-sheet, on society, and help to achieve sustainable development.

Ettobe David Meres