How ethical behaviour can influence customer behaviour

To investigate the central issues of concern, this study examines the effects of three variables on brand and organizational attitudes and purchase intentions: level of concern toward various types of positive and negative, ethically charged business practices e. Specifically, level of concern was measured via a battery of scale items. Respondents were then categorized as either high or low concern subjects. The ethical practices examined were either associated with 1 a brand practice, i.

In addition, the link between the brand and parent organization, i. Thus, the overall design was a 2X2X2 between-subjects' design, with level of concern high or low , practice brand, organizational and link known, unknown as the three independent variables. Subjects were eighty undergraduate business students enrolled in a mid-size eastern university.

Each subject was randomly assigned to one of the four treatments. Subjects participated in the study as part of a voluntary in-class exercise. Each subject was given a cover story in the form of a newspaper article which focused on either a brand or organizational "unethical" practice.

In addition, the article either did or did not provide information connecting the brand and the organization. Following the newspaper article, subjects completed a questionnaire assessing purchase intentions for Star-Kist and other brands, attitudes toward Star-Kist and Heinz, and overall level of ethical concern for numerous practices.

Upon completion of the questionnaire, subjects were fully debriefed. However, concern for unfair organizational employment practices had only a directional, but nonsignificant affect on attitude toward the organization Heinz when the practice was organization-based i. Specifically, an average attitude rating of 4. Additionally, no support was found for hypothesis 1b. However, no effect on attitude toward the organization was observed.

Finally, the results support hypothesis 3a. However, hypothesis 3b could not be examined for the reason stated above. By incorporating respondents' different levels of ethical concern, this research goes beyond a conventional attitude-purchase intention study.

The antecedents of purchase intention are found to have important and separate effects, with intensity of ethical concern manifest in brand attitude and attitude toward the organization.

This encourages our belief in the usefulness of research examining ethical concerns in purchase behavior. Concern about business practices that are brand-based is manifest in brand attitudes and, in turn, purchase intentions for the target brand. More surprising perhaps, is that brand-based business practices do not appear to influence attitude toward the organization, even though the link between the brand and the organization is known.

While attitude toward the organization affects purchase intention, if this attitude is unaffected by brand-based business practices, products other than the target brand will not suffer. If this preliminary finding can be confirmed, it has interesting implications for branding strategies. A rationale for individual branding is the reduced exposure to problems with one brand affecting the firm's other brands. This may not hold. Conversely, pressure groups identifying a brand-based practice of concern would have little to gain from attempting to organize boycotts of all the organization's brands.

Organization-based practices appear to have less impact than brand-based practices. Again this questions conventional wisdom on branding. Organization-based practices had much less effect on brand attitudes and no effect on attitude toward the organization. However, an alternative explanation may lie in the respondents' strongly favourable attitude toward Heinz, suggesting an alternative organization may need to be chosen in future studies.

Customers have a greater affective commitment and emotional attachment to those brands they see as being more 'ethical' than others. Furthermore, committed customers are less sensitive to price differences in relation to competitors and are willing to pay more. They are also more likely to blame service failures on external factors or even themselves, thereby becoming more forgiving of poor brand performance. A company embracing ethical behaviour transmits trust to customers.

This positive behaviour boosts a customer's perception of quality service rendered by the company. When customers recognise a company as ethical, they perceive the brand's service excellence as superior compared to its competitors. Customers value being treated in a helpful manner by a company's employees. Brands with staffers who show empathy elicit greater positive emotions from customers, raising relationship satisfaction and commitment to the brand. Empathic employees are also better at understanding customer needs and so are more able to personalise their services for each client.

Compared to their counterparts, ethical brands benefit from higher levels of loyalty and customers' strong commitment to repurchase a company's products or services. The emotional commitment that people develop toward a service provider boosts customer retention and loyalty and prevents the search for alternatives among competing brands.

Brands that behave ethically make customers' more loyal. The findings confirm that greater loyalty also boosts positive conversations about the brand. When customers are loyal to a brand, they are more likely to share their positive feelings with others, thus 'spreading the good word' about the company and its products and services.

Increasingly, people are being more mindful of how they spend their money and they want to feel confident in their choices. Greater transparency offers reassurance that their money is going to an organisation that fits with their own values. Having a strong ethical code and not engaging in aggressive tax avoidance can result in increased profits for businesses, as well as a reduction in the tax gap because consumers are displaying an appetite for engaging with companies who are good corporate citizens.

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