Consumers want companies to pursue social purposes and marketers say their firms are responding to improve their bottom line. That’s according to the American Marketing Association New York’s (AMA NY) Future of Marketing survey.
Based on data gathered from online polls of 506 consumers and 411 marketers around the US in August 2021, the report highlights the importance of corporate purpose in influencing purchase intentions and reveals consumer and marketer attitudes towards post-COVID marketing.
Consumers say the top purposes they want companies to pursue are fair employment, anti-racism, corporate citizenship and environmentalism, and that they’d be willing to pay more for a product based on a company’s actions on purpose.
“These findings underline what marketers should have learned after a couple of years of social turbulence: your customers are interested in what your firm is doing about issues they care about, not just what you’re selling – and you’d better respond to them,” said AMA NY president Jason Revzon.
- The most important purpose that companies should be promoting is how to be a good employer with fair pay and labor practices.
- After fair employment, consumers believe companies should promote racial equity, corporate citizenship in their communities and environmental sustainability.
- Gen Z consumers rank racial and environmental justice as corporate priorities higher than older generations do.
- Minorities believe racial equity is the most important social goal companies should act on.
- Companies are listening to consumers’ needs and responding to those that are promoted most heavily.
- Males, baby boomers and upper-income consumers stress corporate action for democracy.
- Females, younger individuals and low-income consumers feel companies should promote women’s rights.
- Consumers and marketers agree that “purpose packs a punch at checkout”
- Purpose has a noticeable effect on corporate image.
- Consumers punish companies that aren’t particularly focused on purpose.
- Many customers report being willing to pay higher prices for products from companies that align with the customer’s stance on socio-political issues.
- Some consumers remain skeptical about the sincerity of corporate commitments.
- Buyers want independent sources of information on company performance on purpose.
- Purpose matters, so pay attention and analyze by target demographics.
Purpose has become an essential part of marketing for companies that want to retain and gain customers, especially in the US where social, environmental and political issues are at the center of many people’s lives.
According to AMA NY’s findings, marketers must convey profit isn’t their only pursuit. Ironically, marketers’ primary motivation for doing good in the world is, usually, to drum up more business.
That makes sense given that regardless of age, gender or race, consumers have affirmed that a corporation’s purpose will have an effect on its public image and bottom line.
The survey shows there exists a noticeable gap between the issues marketers believe companies are addressing and those that consumers feel companies should be addressing. For example, both marketers and consumers agree that being a good employer is the top-most purpose companies should be promoting. While 47 percent of marketers believe companies are addressing this purpose, only 34 percent of consumers believe the same.
That same gap for racial equality is 10 percent, for giving back to the community it’s 19 percent and for sustainability and for a company’s environmental impact it’s 14 percent. At 25 percent, the largest disparity between marketers and consumers is diversity and inclusion in the workplace. Because there are so many issues people could care about, AMA NY suggests companies looking for alignment listen to the specific concerns of their customer base.
Marketers have responded to the public’s sentiment by showing concern for purpose, but consumers believe independent verification of such pursuits would help the company’s credibility and therefore its bottom line.
Not all consumers are interested in the same issues. For example, Gen Z consumers—comprised of equal parts white and non-white individuals—prioritize social justice and sustainability rather than workplace purposes. They rank racial equality first (35 percent); followed by sustainability (31 percent); diversity, equity, and inclusion ( 27 percent) and women’s rights (22 percent).
Millennials, on the other hand, prioritize a good employer (34 percent), followed by corporate citizenship (30 percent), sustainability (25 percent) and racial equality (23 percent).
For Gen X consumers the list goes as follows: a good employer (35 percent), racial equality (30 percent), corporate citizenship (25 percent) and sustainability (20 percent).
Baby boomers prioritize a good employer (40 percent), sustainability (28 percent), democracy (27 percent) and corporate citizenship (24 percent).
Just as purpose priorities shift with age, race and ethnicity also have an effect. White consumers rank good employer first (38 percent), followed by corporate citizenship (27 percent), sustainability (26 percent) and racial equality (22 percent).
Black consumers are more interested in racial equality (32 percent), followed by DEI (30 percent), good employer (24 percent) and corporate citizenship (24 percent).
Latino consumers also feel racial equality is the most important purpose for companies to address at 34 percent, followed by good employer (28 percent), sustainability (25 percent) and women’s rights (25 percent).
Some marketers reported that their companies are active on lower-tier issues. About 35 percent say they’re seeking to promote women’s rights, 31 percent to protect voting rights and democracy, 29 percent to support criminal justice reform and 27 percent to advance LGBTQ+ issues.
Sixty-eight percent of consumers in the US report being more likely to purchase from companies taking action on the social issues they care about. Twenty-nine percent go a step further and say they’re much more likely to do so, with income and area of residence (urban vs. rural) affecting that decision.
Of the consumers that are much more likely to buy from companies they view as purpose-driven:
- 15 percent earn under $25,000 per year
- 25 percent earn between $25,000 and $50,000 per year
- 35 percent earn between $50,000 and $125,000 per year
- 51 percent earn over $125,000 per year
Companies hear consumers loud and clear, with 80 percent believing customers are likelier to purchase from companies addressing the purposes they value and 50 percent believing customers are much more likely to do so. These sentiments remain consistent regardless of the size of the company or in which sector(s) they operate.
Nevertheless, AMA NY found that it’s the fastest-growing companies that are most likely to believe purpose matters—65 percent of those growing by 15 percent or more per year versus 37 percent of those not growing or growing by under 10 percent per year. In total, 56 percent of marketers say that purpose has helped their company become more profitable.
Not only does purpose-driven action impact the bottom line, but it also affects consumers’ perceptions. Seventy-two percent of consumers say they view firms that act on social issues in a more positive light – this holds true across age, sex, income, educational level and race. And as much as 69 percent of the survey respondents say they would be less likely to buy from a company that does poorly.
Some customers are willing to go so far as to pay higher prices for products from firms doing well on issues they care about. Forty-eight percent of consumers in the US report the willingness to do so, while 41 percent wouldn’t be willing – with income, area of residence and race playing critical roles in the decision.
Of those consumers willing to pay more for a product based on the corporation’s actions on purpose:
- 34 percent earn under $25,000 per year
- 48 percent earn between $25,000 and $50,000 per year
- 53 percent earn between $50,000 and $125,000 per year
- 64 percent earn over $125,000 per year
- 70 percent are Gen Z
- 63 percent are millennials
- 50 percent are Gen X
- 24 percent are baby boomers
Marketers‘ perceptions of consumers’ willingness to pay more, on the other hand, vary by industry and the growth rate of the company:
- 37 percent of companies are in retail
- 39 percent are in business services
- 44 percent are in consumer, durables
- 48 percent are in producer, durables
- 52 percent are in consumer, non-durables
- 68 percent are in consumer services
For these marketers:
- 33 percent are in companies that grow by less than 10 percent per year
- 49 percent are in companies that grow by 10 to 15 percent per year
- 57 percent are in companies that grow by over 15 percent per year