Growing the Business
Ethics, environment and business
Contents
A pressure group is an organisation that tries to influence how a business behaves. It does not own the business or trade with it; it works from outside to change its decisions. Groups often focus on protecting the environment, consumers, workers, animals or local communities.
How they apply pressure
Pressure groups use several methods, often together:
- Campaigning — running a planned push to raise an issue, such as a clean river campaign against a factory's waste.
- Lobbying — putting their case directly to decision makers, such as meeting council planning officers or a business's directors.
- Publicity — sharing stories, photos or research with the media to turn public opinion against a practice.
- Petitions — collecting signatures to show how many people support a change.
- Boycotts — asking supporters to refuse to buy a business's products until it changes.
Why businesses take notice
A boycott can reduce sales directly, while damaging publicity can put off customers and hurt a business's reputation. For example, if a group called Riverwatch shows that a clothing retailer's supplier is polluting a stream, shoppers may avoid the brand and the retailer may lose summer sales. It might then agree to check its suppliers to protect its image.
Pressure groups are also affected by what a business does. If a business ignores their concerns, a group can attract more supporters and attention. If the business meets those concerns, the group may lose some support and influence because its main complaint has been dealt with.
Pressure groups can influence the marketing mix — the four Ps of product, price, promotion and place. A group may target a business because its product, methods or supplier arrangements are seen as harmful. A business that ignores a well-supported campaign can lose sales and reputation, so it often changes parts of its mix in response.
Product, price, promotion and place
- Product: a campaign may force a business to change product design, materials, ingredients, production methods or the range it sells. A confectionery firm under fire over palm oil, for example, might reformulate its bars and drop the ingredient.
- Price: pressure from a group can change the firm's costs (for example, if it switches to a more costly material), change demand, or change what customers are willing to pay. If a brand is tarnished, customers may refuse to pay a premium.
- Promotion: a group can create negative publicity that damages brand image. This pushes a business to promote its ethical credentials more heavily, and to spend more on marketing to repair trust.
- Place: groups may object to where inputs come from or how products are transported, so a business changes its sourcing, its supply chain (e.g. dropping a supplier) or its distribution — how its products reach customers.
Effects on profit
Responding to a campaign can raise costs, reduce sales if customers reject the changes, or require extra marketing spending, all of which can lower profit. But pressure group activity also creates opportunities: it raises awareness of an issue and can increase demand for ethical or environmentally friendly products, letting the business that responds first stand out.
It is not always a threat. For example, a pressure group criticising a clothing retailer for the amount of unsold stock it throws away could lead it to launch a take-back scheme for old clothes; it then promotes the scheme and attracts shoppers who care about waste.
A pressure group is an organisation that campaigns to change the behaviour of businesses or governments. When it targets a business, it wants that business to change its decisions; when it targets government, it wants the rules themselves to change. A new law affects every competitor and can force expensive changes.
Campaigning for new laws
Groups lobby politicians, publish research and use publicity to persuade government to act. If they succeed, regulation can follow, covering advertising claims, ingredients, emissions or product safety. For example, a group publicises how much sugar is in breakfast cereals aimed at children, and the government restricts their television advertising. Every cereal maker must then reformulate or change its promotion, so its marketing mix changes.
When pressure group action is seen as unethical
Action can be unethical when it involves civil disobedience (deliberately breaking the law), disruption such as members chaining themselves to a company's gates so staff cannot get in, or damage that leaves someone else with a large repair bill, like smashed equipment at a warehouse. Supporters may feel the cause is just, but the public often turns against a group that causes disruption: shoppers side with the business that lost a day's trading, donations fall and media attention moves on. A group with public sympathy has far more influence than one that looks like a bully, so bad behaviour can weaken the campaign itself.
How businesses respond
| Response | What the business does | Possible drawback |
|---|---|---|
| Engage | Meets the group, listens, publishes its own evidence and agrees changes such as switching a supplier | Uses management time and can lead to further demands |
| Change the marketing mix | Alters the product or its materials, its price, how it is promoted, or where it is sold | Often raises costs or reduces profit in the short term |
| Defend | Runs its own campaign explaining its side and correcting unfair claims | Can look arrogant and keep the story in the news |
Which response a business picks depends on whether the group's claims are fair, how much public sympathy the group has, and what the change would cost.