Why do developing markets care more about brands and ethical messages than us?
Across our global network we’ve been puzzling about why there is such a disparity in results on our Meaningful Brands Index between developed markets and developing markets – put simply people in China, India and South America are much more positive about brands and branding than those in the US, UK and Germany.
In Latam and APAC consumers would care if 53% of the brands ceased to exist, compared to just 12% in Europe and 18% in the US (with the UK second lowest at just 5%).
Additionally, in developing markets people are much more likely to base their purchase decisions on environmental, social or ethical aspects of products and services – somewhat counterintuitive as the move towards more ethical consumerism has been a developed market trend over the last 30 years.
We felt this was counterintuitive so wanted to find out why? Digging deeper into the reasons why people say they don’t buy on the basis of a brand being more ‘meaningful’, we see a clear knowledge gap across all markets with people agreeing that ‘from the information available, it is difficult to know if a particular product is more responsible than another”.
However, price (defined by the statement “they are more expensive”) is a key determinant in developed markets with developing markets citing availability (“In my area they are not broadly available”) as the key reason not to purchase a more meaningful or ethical product.
Credibility (“I do not believe what the company/product says about its environmental and social responsibility”) is also a key aspect in developed markets and not in developing.
The former have more choice and also display more cynicism towards brands so any inconsistency between what a brand says and how it behaves is more quickly exposed in a developed market. All these markets have experienced a similar proliferation of media and have social networks too (albeit a little more controlled in some Asian markets) so why is the behaviour so different?
To answer this question, we considered 2 hypotheses:
1) Marketing saturation
2) The rate of economic growth as drivers of this behaviour.
We found a positive correlation with the % of GDP spent on advertising and purchasing based on ethical, social and environmental aspects. Put simply, we believe the high rate of advertising (also an indicator of more brand choice) over the last decades in developed markets has led to increased consumer cynicism over business’ motivations and confusion over ‘what makes a responsible product’’.
Contrast that with developing markets – many ‘Western’ brands are seen as trustworthy and seen as having higher social and environmental standards than local brands.
We also found a positive correlation with the economic growth rate in the market. The sluggish economy in developed countries has reduced people’s willingness to pay a premium for more responsible products especially as they are very cynical about whether the stated claims are true. Conversely, in developing markets ‘Western’ brands are seen as an engine of growth and a driver of the rise in living standards – hence their positive perception.
So having proven these as macro trends – how might brands in developed countries change their communications behaviour?
Our hypothesis at MPG Media Contacts is that hyper-competition leading to marketing saturation and sluggish economic growth, has led to people’s start point for corporate communication as cynicism. If the company’s motivation is not made clear and is not authentic, the message will be treated with suspicion.
With this insight, it is better for companies to commence communication in this area with their short-term business goal clearly outlined. Transparency is key – linking and exposing the short term business motivation for entering a “meaningful” space seems to be a tactic that works.
If you want to hear more on this topic then we will be talking at the Sustainable Brands conference in London
http://www.sustainablebrands.com/events/sblondon on the subject of Sustainable Brand Perception versus Performance: Reducing the Gap.
Meaningful Brands Research was undertaken in the following markets:
Developed Markets – UK, Germany, US, Spain, France, Italy
Developing Markets – China, India, Mexico, Chile, Columbia, Argentina, Brazil