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Dec 9, 2019 Business Administration Faculty Research in Education

Can luxury brands also be socially conscious?

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Corporate social responsibility (CSR) is becoming an important marketing tool for companies worldwide; many consumers today expect corporations to prioritize the well-being of society and the world around them. The Business Roundtable – comprising nearly 200 chief executives from some of the nation’s largest companies like Amazon, Walmart, and Apple – recently broke with long-held corporate doctrine and issued a statement saying companies must think intentionally about their role in society, which includes protecting the environment.

Historically, luxury brands have failed to successfully incorporate CSR initiatives, largely because they promote two seemingly incompatible values: self-enhancement (which is promoted by luxury brands) and self-transcendence (benevolence and social concern shared by those pushing corporate social responsibility). Now for the first time, a Gies College of Business professor is proposing a solution that could help the world’s most luxurious brands join the CSR movement. In their study “Value instantiation: how to overcome the value conflict in promoting luxury brands with CSR initiatives” Gies professor Carlos Torelli and his coauthors provide a roadmap to help luxury brands successfully integrate CSR into their corporate strategy.

“Luxury brands have traditionally lagged behind in CSR for natural reasons,” said Torelli, professor of business administration and an expert in global brand management. “When we think about brands through a value-based framework in that the values brands endorse are the same values people endorse, it becomes clear that self-enhancement and self-transcendence are not compatible. This is why CSR actions sometimes backfire because they promote these incompatible values. This is a big reason why luxury brands are some of the last to come to this game.”

So what can luxury brands do to successfully incorporate CSR into their marketing strategies. Torelli’s research introduces two approaches to bringing self-transcendence values into a culture of self-enhancement. The first is showing consumers an example of a successful celebrity who is synonymous with philanthropic activities. In this study, when participants were presented with the example of Brad Pitt and Angelina Jolie, who regularly engage in philanthropy, they responded more positively to the luxury brand they were evaluating.

The second tactic is encouraging consumers to visualize themselves engaging in philanthropic activities while also pursuing self-enhancement values. When consumers were told that purchasing “your own” pair of luxury sunglasses can help out others in need, they responded more favorably to the luxury brand in question.

“We found overwhelming evidence that instantiating self-transcendence values in the context of self-enhancement values through a prominent example or through visualizing one’s own philanthropic behavior is an effective way to mitigate any negative effects of incorporating CSR appeals into luxury brands,” said Torelli.

Torelli offers two strategies for luxury brands, who are looking to successfully incorporate CSR into their brand platform. The first is utilizing a celebrity spokesperson, who is also famous for philanthropy, like Bill Gates or Oprah Winfrey. The second is using a sub-brand that is easily differentiated from the main brand. It’s a good way to segment the customer base and expose CSR to the segment of consumers most likely to respond favorably.

“This is not a short-term strategy,” Torelli cautioned. “Companies need to show that they’re committed to this cause over the long run. They also need to be careful in designing and communicating the campaign. If you have a segmentation strategy in your portfolio, pay careful attention to your target audience, and pick the one most likely to respond favorably. Start small and build from there.”

“Value instantiation: how to overcome the value conflict in promoting luxury brands with CSR initiatives” by Carlos Torelli (University of Illinois, Gies College of Business), Ji Kyung Park (University of Delaware), Alokparna (Sonia) Basu Monga (Rutgers University), and Deborah Roedder John (University of Minnesota) was published in the November 2019 issue of Marketing Letters.