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Methodology on unethical behavior affecting branding of companies

In this chapter will give the reader detailed information in order to make an estimate of the reliability and validity of the methods used. Further data collection methods, tools used to collect data and data analysis methods will be presented.

5.1 Research Purpose

This research purpose of the topic “How unethical behavior affects branding of companies” is explanatory in nature because I want to explain the relationships between variables ie. Unethical behavior and how it affects branding of companies. However this thesis is also exploratory as I was not able to find similar studies that focus on the above mentioned problem. I have also worked on the domain of religion and how it can provide guidelines for today’s business scenario. Towards the end of the thesis I have provided my own conclusions by answering the research questions.

5.2 Research Design and Approach

This section of methodology specifically deals with how the research was designed and what approach was utilized.

I have used the survey approach, which are basically quantitative in nature. Surveys are advantageous when the research goal is to be predictive about certain outcomes. Extensive literature review has been done in the subject matter and drawing conclusions from it will be a part in data analysis chapter. Apart from that additional information will come from my surveys that were conducted regarding how unethical behavior affects consumers and what they feel about ethical brands. This study has a quantitative approach.

Also reviewing the work of others is a component of this research. It will enhance the understanding of what has gone before where research into unethical behavior and branding has gone before.

In the qualitative section by analyzing the religious aspect of ethical conduct, other specific attributes can be added to the model is going to be discovered.

4.3 Data Collection

Due to the fact that this research is both a quantitative and a qualitative one, interviews with consumers in the way of giving them a brief about the current situation and filling of questionnaires was done. The questionnaire contained 27 points and survey was conducted for 68 consumers. For the qualitative part, physical artifacts evidence method, by way of insight into religion of different cultures was used.

Since not much secondary data is available, primary data has been used to prove the hypothesis. But recent happenings have been quoted in the thesis wherever possible.

Library method was used to collect information regarding literature research and background. In this process XXXX articles, thesis reports and books mainly about branding, religion, ethics were collected via internet and from online databases like :EBSCO, Emerald Insight, SAGE journals, Jstor, Springer, Brittanica online encyclopedia were collected.

4.4 Sample Selection

The study took place in the city of Bangalore, capital of Karnataka state in India. The sampling technique used was non probability sampling, which relies on the personal judgment of the researcher. Under non probability sampling techniques, convenient sampling was used to obtain a sample of convenient units. I have used final year MBA students, who are on the verge of becoming future managers.

4.5 Collection and tabulation of data

For data collection the research instrument- questionnaire was used. The questionnaire consisted of 33 variables and 4 demographic variables.

Questionnaire was administered by handing over the questionnaire to MBA students.

The questionnaire consisted of 33 questions relating to attributes like awareness of consumer about various issues, involvement of consumer, expectation from the firm, intent to reward, intent to punish etc.

23 items could be evaluated by Likert scale that consisted of the 5 points mentioned below

Testing of hypothesis 1

The hypothesis for this case is

H0: R2 (Reward) = 0

H1: R2 (Reward) > 0

As we saw from the value of R2 in Table: XXX it is significant at .319

So reject null hypothesis.

This can also be proved by F Statistic in ANOVA table

Calculated F value = 4.058 and Critical value of F with 3 and 26 degrees of freedom is 2.98 at α =0.05 .

Hence the calculated F value exceeds the critical value obtained from Table XXX in statistical appendix.

Hence we reject H0 (null hypothesis) and accept H1

Accept H1:

Awareness of issues, involvement of consumers and expectations of consumers from the firm can predict the intent to reward firms.

Multi regression model

This can be explained by the formula

Ŷ (Reward) = .533 + .156 (Awareness) + .072 (Involvement) + .627 (Expectation)

It was found that expectation of consumers from brands significantly affected their decision to reward the firm.

Accuracy of results

To estimate the accuracy of predicted values Ŷ SEE( Standard Error Estimate) is calculated. This statistic is the standard deviation of the actual Y values from predicted Ŷ values.

SEE for hypothesis can be found from table xxx which is 0.65.

Also table xxx gives us the accuracy of multicollinearity in our multiple regression model. Tolerance should be more than 0.1. It meets the given criteria.

4.9.2 Hypothesis 2

Multiple regression analysis using SPSS was carried out to see if independent variables like

Awareness of issues, involvement of consumers & expectations of consumers significantly predicted the intent to punish the firm.

H0: The intent to punish firms by consumers is not related to the awareness of issues, involvement of customers and expectations of consumers from the firm.

H1: Awareness of issues, involvement of consumers and expectations of consumers from the firm can predict the intent to punish firms.

Testing of hypothesis 2

The hypothesis for this case is

H0: R2 (Punish) = 0

H1: R2 (Punish) > 0

As we saw from the value of R2 in Table: XXX it is significant at .473

So reject null hypothesis.

This can also be proved by F Statistic in ANOVA table

Calculated F value = 7.783 and Critical value of F with 3 and 26 degrees of freedom is 2.98 at α =0.05 .

Hence the calculated F value exceeds the critical value obtained from Table XXX in statistical appendix.

Hence we reject H0 (null hypothesis) and accept H1

Accept H1:

Awareness of issues, involvement of consumers and expectations of consumers from the firm can predict the intent to punish firms.

Multi regression model

This can be explained by the formula

Ŷ (Punish) = .054 - .246 (Awareness) + .615 (Involvement) + .750 (Expectation)

It was found that expectation of consumers from brands and their involvement in buying the brands significantly affected their decision to punish the firm.

Accuracy of results

To estimate the accuracy of predicted values Ŷ SEE( Standard Error Estimate) is calculated. This statistic is the standard deviation of the actual Y values from predicted Ŷ values.

SEE for hypothesis can be found from table xxx which is 0.643

Also table xxx gives us the accuracy of multicollinearity in our multiple regression model. Tolerance should be more than 0.1. It meets the given criteria.

4.9.3 Research question three

A Pearson product moment correlation coefficient was computed out to assess the relationship between Awareness of issues(Variable 1) and Involvement of consumers ( Variable 2 )

Table: xxx

There was a positive correlation between the two variables r= .417, n=68, p=0.00

CHAPTER 5

CONCLUSIONS AND RECOMMENDATIONS

Based on the previous 4 chapters I will provide the answers to my research questions. First I will present the findings of my research questions and after that the conclusions I have derived based on analysis of data. Finally I will present the implications for managers, theory and further research.

This research was designed to answer the following research questions

If unethical behavior of a company has a negative impact on consumers?

How unethical behavior affects the branding of a company?

How can ethics be inculcated in the present model of branding/ corporate strategy?

Learning from the past authors like Plato, Immanuel Kant, David Hume and the religious scripts of India.

The major findings of this research are highlighted below:-

The tendency of consumers to reward the firm for its ethical action which was tested using multiple regression analysis revealed that awareness of issues and involvement of consumer’s played less significant roles in deciding the tendency of the consumer’s to reward the firm.

Whereas consumers tend to involve themselves more when it comes to punishing the firm.

Expectations of consumers played a major role in deciding whether to reward or punish the firm. This is in agreement with the research (University of Bath 2010). Today when brands promise something to customer’s like for example L’Oreal “You’re worth it” or for a tire company “More than tires we deliver peace of mind”, consumer’s expectations increase and if they are not satisfied they tend to punish the brand.

Awareness and involvement of consumers were positively correlated, indicating that as awareness of issues increases consumer’s were likely to involve themselves in brand purchase decision by seeking information from the internet, involving in social networking sites, discussing with fellow colleagues.

Although consumers want to punish the erring brands but cost was found as a major barrier while considering purchase of ethical brands indicating that ethical brands must strive to get the cost of their products close to the prices of the other brands. This can be achieved by better supply chain management, efficient production processes, increasing awareness about their brand in the minds of consumers.

A large number of consumers who were not purchasing ethical brands now, agreed to buy ethical brands in the future but they wanted to know what the ethical companies are doing.

Consumer’s preferred the following set of attributes for a ethical product:

Type of label: ecological label

Promotion media: Television

Distribution: Shopping malls

Price: Equal to other brand

Design: Normal design

Issuer of labels: Indian Government

Type of information on products: Use of symbols which are easy to understand

Although these were the attributes that received the highest responses from consumers, but that does not mean that other attributes are less important and should be ignored. This has implications for the company (price, type of information, promotion media), the government (type of labels, type of information on products) and distributors (effective supply chain management to make sure right goods are at the right place on the right time).

2.How unethical behavior affects the branding of a company?

Unethical behavior on part of the company can affect its branding. As seen from the survey findings consumers on being aware about the unethical practices of an organization are more involved in discussion about the brands (via social networking, discussion with friends, reading more journals, internet etc). In today’s era when many people are using modern media of communication, like internet, 3G enabled mobile phones, information spreads quickly and the negative perception towards a particular brand keeps building in the society.

Brands are no longer the property of the organization. They are determined by consumer expectations. Consumers today want to know the organization behind the brand. As depicted from survey results unethical practice of a particular brand affects the consumer’s perception towards the organization and they might boycott its products. This is in agreement with the research done by (Smith, Craig.N, Klein, G.J & Andrew, J 2002) in which they stated that consumers will disassociate themselves from the company doing wrong.

How can ethics be inculcated in the present model of branding/ corporate strategy?

After reviewing the earlier brand models mentioned in Figure XXX, I discovered that none of the models expressed the word ethics. Although it is believed by many that the word ethics is contained in variables in the model like values, brand promise. Today when we are confronted by unethical behavior of many companies, I believe that the word ethics should have a prominent space in the model which should not only provide the guidelines for ethical practices but also consist of an EBSC( Ethical Balance Score Card) to determine if the brand meets the ethical expectations. In today’s demand economy where the benchmark of company is quality of time and there is increased sense of interaction between the consumers and the organization, some of the old variables of branding models can be reshaped to meet today’s demand.

Learning from the past authors like Plato, Immanuel Kant, David Hume and the religious scripts of India.

As mentioned in the literature review Figure: XXX, ethics is said to begin where the law ends. There is no definite consensus on whether something is right or wrong. Religion can provide guidance in the so called ‘grey areas’ of business. Although one has to note that although different religions may have different perspectives but there are some universal values mentioned in each religion, which can provide guidance. For example the Hindu cardinal principles of Sarvodaya (welfare for all), dharma (Social or moral duty) , satya ( truth) and ahimsa (non- violence) are universal across religions.

As we have seen in case of this research that both the mentioned religions Hinduism and Christianity have equal views on various unethical practices.

Since branding has definitely been inspired by the world of religion ( Daye Derrick & VanAuken Brad 2007). Components like clear vision, power from the enemy, authenticity, perfection, rituals & sensory appeal prove the association between the two. Since branding has been inspired by religion I think that definitely it can provide guidance for various issues. Religion has previously been used to support business ethics ( Porth 1997). (Emerson, Tisha L. N. and Mckinney, Joseph A. (2010) ) recently found out that business professionals with higher levels of religious importance are significantly less accepting of ethically questionable behavior.

Managerial implications:

This thesis aimed at finding the effect of unethical behavior on branding. Indian companies and companies who want to expand in India can learn many lessons from this research.

Today when brand relationship theory is based on a dyadic brand consumer relationship, wherein both parties are equal contributors in brand value creation. An effective brand model therefore should not only provide information on everything a brand does but should also describe consumer’s attitude toward the brand. It should be future oriented. Answering the 7 H’s (Author) will help future managers design an effective brand model for their organization.

How do we stay relevant in a changing marketplace?

How do we optimize our brand to drive profitable growth?

How are our customers making buying decisions?

How can we innovate to ensure competitive advantage?

How can we ensure our employees deliver our strategy?

How do we deliver a truly valued customer experience?

How do we build operational effectiveness and alignment? ( Source: Author)

Also in today’s increased era of consumer involvement and the evolving social media networking sites like facebook, twitter etc, information about the negative perception towards any brand spreads much more quickly than the earlier era. Branding model should provide for interaction between the consumers and the organization.

Since the outbreak of negative perception about a brand is much faster these days, managers should consider developing appropriate counter reactive strategies to react to the crisis, so that damage due to negative image is minimal.

The mere presence of a code of ethics is not enough. All the companies have a code of ethics in place these days but in spite of that unethical practices occur. Incorporating religious teachings of various religions into code of ethics guidelines will help in better understanding of ethics to the employees.

Managers should also take efforts in developing the ethical brand.The mentioned set of attributes lay down new tasks for managers to develop an ethical brand. Various challenges like association with fair trade foundation, developing appropriate supply chain measures, developing appropriate product information( symbols easy to understand) etc lie ahead for the managers.

Implications for future research

This thesis has covered the effects of unethical behavior on branding of companies. But since the thesis was focused on FMCG products, future research can address the same across services industry or B2B industries.

This thesis suggested the use of EBSC( Ethical Balanced Score Card) for measuring ethical performance and implementing changes when deviations are found. Future research can address this issue by devising a method to measure ethical performance. Balanced score cards often face the problem of measuring performance aspects which are qualitative in nature. Future research will enable to know the various metrics of an EBSC. This can be then incorporated into the corporate annual report.

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