CSR strengthens reputation: Nielsen study

Stakeholders expect companies to focus on health, education. Seven out of 10 respondents willing to pay a premium for products and services to enable a company to fulfil its CSR commitments

Corporate social responsibility or CSR is an effective way of building goodwill for a company, reports afaqs.com quoting a study done by the Nielsen Company among stakeholders in India.

Reliance Industries, Tata Motors and Tata Steel are the companies most admired by stakeholders for their CSR initiatives, according to the latest Nielsen India Corporate Image Monitor 2008, a study designed to measure people’s perceptions of the image and reputation of India’s leading companies.

According to the study, the top three social issues that stakeholders expect companies to tackle are: better health infrastructure (50 per cent); fighting diseases such as HIV/AIDS, malaria, TB, cancer and immunisation programmes (38 per cent); and primary and higher education and adult literacy (30 per cent).

“Any education or other initiative to build health infrastructure will impact the CSR reputation of an organisation significantly,” said Vatsala Pant, Associate Director, Consumer Research, The Nielsen Company.

Environmental protection is now a hygiene expectation from organisations.

“Seven out of 10 members of the general public are willing to pay a premium for products and services to enable a company to fulfil its CSR commitments. Considering the impact of CSR activities on a company’s reputation, organisations will have to plot a developmental path for CSR, integrating it with the rest of the business,” said Pant.

The study revealed that more than 50 per cent of its respondents feel that corporates are honest towards their CSR activities.

The motive behind these activities are seen as: economic and tax benefits (47 per cent), enhancing corporate reputation (45 per cent) and building a competitive advantage (30 per cent).

About 28 per cent of the total respondents thought that charity, either directly or through NGOs, is the best way to demonstrate social responsibility. Other ways of engaging in socially uplifting activities considered beneficial by stakeholders is a written CSR policy (24 per cent), actively involving employees in CSR activities (20 per cent) and community work and providing employment to needy groups (both 12 per cent).

One-third of stakeholders believe that CSR is just a publicity stunt for most corporate houses.

Some initiatives that are not spoken of openly but have a potential to yield big returns on reputation are rehabilitation (especially in times of natural disasters) and building of infrastructure (building roads/ maintaining properties).

Hero Honda’s marketing excellence

Structured macro and micro perception management have helped Hero Honda surge ahead of its rival Bajaj Auto in recent times

There was a time when Bajaj Auto and Hero Honda were neck-and-neck race in the two-wheeler market. In April 2009, Hero Honda’s sales were up 29.5 per cent (as compared to April 2008) to 370,575 two-wheelers while Bajaj Auto’s sales slid 24 per cent. The gap between the two companies increased to over 200,000 in the said month.

However, not so long ago, Bajaj Auto was giving sleepless nights to Hero Honda. In September 2006, it had come close to displacing Hero Honda from the top slot. Hero Honda’s rule as the leader of the Indian motorcycle market, second only to China in size, it looked would soon be history, writes Bhupesh Bhandari writes in Business Standard’s The Strategist....

Left with no choice, it took a decision that changed its face for ever. “We said we will focus on market share rather than profits,” recollects Hero Honda Managing Director and CEO Pawan Munjal.

Result? From a producer of fuel-efficient motorcycles, Hero Honda has morphed into a marketing-led organisation. Advertising campaigns, product refreshes and brand health — walk blindfolded into the Hero Honda office in a crowded south Delhi market and the language spoken there could lead you to mistake it for an FMCG company.

“Every two-wheeler company is focused at the product-end of the story. But all products are similar,” says brand consultant Harish Bijoor. “Hero Honda is the first to go beyond that. It shows in its domination of cricket, selection of youth and style icons, and association with shows like MTV Roadies which improves involvement with the hinterland.”

In those days, all motorcycles and their advertisements looked similar. The diagnosis was that the company’s differentiation in terms of propositioning to customers was weak. That was the first gap that needed to be plugged.

The second step involved discarding the earlier method of product categorization on the basis of engine size. This took the company to unchartered waters of consumer profiling — what is his lifestyle and attitude, what is it that he holds dear in life and so on. As a result, Hero Honda now comes out with new motorcycles, variants and refreshes keeping the customer profile of each segment in mind.

This shows in the commercials. Thus, the advertisement for the Karizma (premium segment) comes with the punch line, “Always game.” The ad for the premium segment Hunk doesn’t talk of speed or power at all — the focus is on the looks even while standing. The CBZ Extreme comes with the promise, “Thinking is such a waste of time.”

“Both the Hunk and CBZ Extreme are 150 cc bikes but talk to different customers,” says Hero Honda Vice-president (sales and marketing) Anil Dua, who joined Hero Honda around September 2006 from Hindustan Unilever. “We have created very sharp positions for all our brands. You can’t substitute one model for another in any advertisement.”

This is important. Hero Honda has a large portfolio of products (13 motorcycles and one scooter), so it has to create distinct position for each so as to avoid customer-confusion and cannibalisation of products.

Around mid-2007, Hero Honda was also quick to realise that there was a huge opportunity waiting to be tapped in rural India. A rural vertical was set up under Dua. Five hundred sales representatives were taken on board for the mission Har gaon, har angan (every village, every courtyard.) These representatives have been given work tasks and not sale targets — they need to meet potential customers and opinion leaders in villages. So far, Hero Honda has mounted three two-month long “waves” through these men. Each wave has resulted in additional sale of 15,000-16,000 motorcycles.