THE IMPACT OF CSR ON CUSTOMER’S SATISFACTION OF FASHION WEAR BRANDS

THE IMPACT OF CSR ON CUSTOMER’S SATISFACTION OF FASHION WEAR BRANDS

By

Course

Tutor

University

City + State

Date

Abstract

Several studies have stressed the need for various companies to incorporate Corporate Social Responsibility (CSR) into their marketing strategy. Besides, nowadays, customers have started to pay keen attention to other issues rather than the quality and the quantity of a product they are consuming. They are keen on whether these companies are committed to various responsibilities in the community. While it can be said that several pieces of research have studied the relation between CSR and other industries such as hospitality, there is no much research on this on other industries such as fashion brands. Therefore, this study is vital since the information gained from it can help fashion brands incorporate CSR in their marketing strategy to boost their brand s as well as survive in the market. The research design for this study is surveys and the method of data collection will be the use of questionnaires. The demographic for the survey will be the youths, which are in the age group 20-25 years. Besides, all genders, both male and female will be involved in the study. Upon the collection of the data, the SPSS software will be employed in analyzing the data. Various analysis methods will be used in the study and this includes simple and multiple linear regression, and two-way ANOVA to test the above-mentioned four hypotheses. The expected outcome for the research is that several SCSR activities such as Ethical CSR, Legal CSR, Economical CSR, and Philanthropic CSR do play a significant role in boosting customer satisfaction, which eventually results in customer loyalty.

Keywords: Corporate Social Responsibility (CSR), survey, customer satisfaction, customer loyalty.

A Study On the Impact of CSR on Customer’s Satisfaction of Fashion Wear Brands

Introduction

Many studies have always emphasized the need for brands and companies to adopt several responsibilities other than only concentrating on profits (Idowu, Vertigans and Burlea Schiopoiu, 2017). As a result, this has led to the development of Corporate Social Responsibility (CSR). These responsibilities are aimed at community development. Due to its rise, CSR has managed to create a space for itself in the administrative sector within corporations given its role in developing the communities within which these companies are operating (McDonald, 2006). The sole responsibility of CSR is to balance profits and the general representation of the company in society (Brown and Dacin, 1997). CSR places interest in various issues such as the environment or other social factors, such as the promotion of equality in society. Currently, there are calls for equality in terms of race, given the existence of racial discrimination as well as the members of the LBGTQ community who are fighting for equality in their space. Therefore, many companies ought to revere the community’s plight on a repertoire of issues to boost customer satisfaction. Besides, they have to ensure that they can address some of these issues, which can be in terms of helping in various community projects that are aimed at promoting these issues. Generally, several companies that prevaricate from these issues do struggle with boosting their image, which in turn, threatens customer satisfaction.

On the other hand, over the past few years, the fashion industry has been on the recent rise (Crane, 2000). The fashion industry is among the leading profitable business in the world (O’Cass, 2004, p.869). Moreover, the rise of social media has managed to drive fashion trends across the world given that they are being driven by celebrities. Nowadays, fashion trends can develop in a particular region in the world, and with no time, it would create waves across the world by being the norm (Mohr, 2013). Currently, several leading fashion brands across the world have managed to make significant strides in the fashion industry. Some of these fashion wears include Nike, Adidas, Fila, Puma, Gucci, Louis Vuitton, H&M, Ralph, and Lauren, among others. However, the fashion industry is considered the leading contributor of pollution across the world (Grappi, Romani and Barbarossa, 2017). Besides, just like in other industries, the fashion industry has to observe corporate social responsibility (CSR). There is a higher likelihood that CSR does affect the customer satisfaction of fashion wear brands. Over the years, many companies have always used CSR to boost their image (Kapferer and Michaut-Denizeau, 2014). In most instances, these companies have managed to attract new customers as well as boost their sales and profits. However, at times, there is no much explanation on whether the reason behind this is due to customer satisfaction. Besides, there is fierce competition among the existing fashion brands and this explains why most of them have managed to depend on CSR to boost their sales.

Also, currently, many customers are paying attention to more than the products that companies or brands are offering (Boshoff and Gray, 2004). Due to this, their point of view has become a feature of organizational structure for many companies. Many customers are keen on the social responsibilities that many companies do play in society. They are keen on companies that give back to society as well as meeting the expectations of society. While there are instances whereby studies have shown that those companies that invest in the community have managed to have positive returns, there are incidences where this is not a guaranteed, especially in terms of customer loyalty (Martínez & Del Bosque, 2013,p.90; Afifah & Asnan, 2015). Generally, there are mixed expectations as far as the impact of CSR on customers’ satisfaction is concerned.

Problem Statement

Over the years, governments and the public at large have placed expectations on companies in terms of CSR. Besides, many companies have also invested a large portion of their resources in ensuring that they do meet the public expectations. However, given the robust changes that have been experienced in the business world, one of these being CSR, there is a need for a study to be conducted to assess its impact on customers’ satisfaction. Moreover, customer expectations and preferences keep on changing with time. Therefore, at one point it might be influenced by the taste and preferences or the CSR of the company providing a given service or a product at another point. For this reason, there are gradual changes in the landscape of both companies or businesses and customers. Besides, while there is much information on the impact of CSR on customer satisfaction in various industries such as technology and hospitality, there is no much information about this in other industries such as Fashion. In other words, the problem statement for this project can be summarized into the following question;

• Is there an effect of CSR on customers’ satisfaction with fashion wear companies?

Significance of The Study

One of the trending conversations currently across the globe is environmental pollution and discrimination based on gender, religion, among others. Therefore, there is a need for a study to assess how companies that observe the above boosts customer satisfaction. On the other hand, while it has been said that indeed nowadays customers are attentive to the general representation of companies when they do buy products or services, to what effect has this notion been practiced by many customers or consumers for that matter. Also, the study would help in highlighting the effect of CSR on the internal and the external environment of fashion wear brands, in this case, the customers. Also, there is no much information on how the reputation of a firm can have a long-term or short-term impact on customer satisfaction. Besides, the recommendations of the study can be essential in enabling fashion wear brands to formulate CSR strategies that could be vital in improving their relationship with their customers as well as satisfying them. In the end, this results in a boost in their profits. Lastly, the information gained from the study can be essential in enabling upcoming researchers can have a prospect on some of the aspects of the impacts of CSR that can have on customers or any other aspects that have not been covered in the study.

Research Objective

To investigate the impact of corporate social responsibility on customer satisfaction for fashion wear brands.

Literature Review

Corporate Social Responsibility (CSR) and Brand Reputation

Generally, there is no specific definition for CSR. However, the European Commission describes CSR as ‘the accountability of companies based on their impact on society’ (Torres et al., 2012,p.51). On the other hand, the world bank describes CSR as “the commitment of a business to contribute to sustainable economic development by working with employees, their families, the local community, and society to improve their quality of life, in ways that are both good for business and good for development” (Carroll and Shabana, 2010). As a result, over recent years, the plight of CSR has been at the forefront for many companies, especially the leading fashion brands such as Adidas and Nike. CSR has been on the rise to the extent that currently, it has been adopted by many companies to complement their organizational structure (Torres et al., 2012). In most cases, CSR has been adopted by these companies to boost their reputations. While there are cases where some of these companies have adopted CSR to get themselves out of a crisis, in many cases, it is used by companies to attract new customers to consume their products as well as gaining their loyalty.

Research has shown that at least 76% of corporate management do believe that CSR is essential in boosting the value of shareholders and a further 55% do believe that CSR is vital in building a company’s reputation (McKinsey, 2010). Based on this, it explains why many companies have managed to invest a lot of resources in CSR. The best examples of companies that have managed to make use of CSR are the technological giants’ Facebook and Microsoft. The respective owners of these companies have been on the forefront making CSR be on the rise. For example, in the case of Microsoft, its cofounder Bill Gates has managed to invest a lot of resources in supporting research for various diseases, especially in the African continent, while in the case of Facebook, Mark Zuckerberg and his company has also managed to make large donations to scientific researches that are aimed at finding the cure to some of the chronic diseases in the world through the Chan Zuckerberg entity (Schleifer, 2020). Through this, both companies have managed to boost their reputation across the world. On the other hand, Microsoft stock prices have also been on the rise and so is its profit (Kramer, 2020). The question remains, could have a boost in reputation promoted the sales of its products. Many studies have shown that apart from most of their products being of high quality the company’s image has also played a role in its success.

Nowadays, customers do assess companies not only base on their product but also on CSR. In this case, companies that are likely to be associated with negative CSR are likely to have a low purchase force in the case of consumers while these that have got positive CSR do witness a rise in the purchase of their products and services. Therefore, it is quite clear that a positive CSR activity does boost the evaluation of a company or a brand from a customer’s point of view. Moreover, in the case of satisfaction, positive CSR is quite complex given that there are several issues that the companies have to address in the view of the customer. In the fashion world, the rise of technology has been vital in boosting this industry. However, its rise has also had its drawbacks. Technology has majorly contributed to the pollution of the environment, especially in terms of climate change and as a result, it has led to a rise in the public discourse (Lo, Egri, and Ralston, 2008, p.86). Based on the above, apparel fashion brands have been forced to give a direction in how they are going to put efforts in place to address this issue. Therefore, many apparel fashion brands have been at the forefront in portraying positive CSR to boost customer purchases as well as gaining customer loyalty. These companies are driving the message of sustainability as the image for their brand to boost customer satisfaction (Kapferer and Michaut-Denizeau, 2014). Many fashion wear brands are currently concentrating on sustainability given the fact that this feature has also majorly affected the automobile sector However, particular brands such as Tesla which has managed to adopt sustainability as its brand image by developing environmentally-friendly vehicles have managed to play a huge role in its success (Perkins and Murmann, 2018). All this is a result of customer satisfaction that has led to a rise in purchasing power form the customers and this explains why currently it is considered to be one of the leading automotive brands in terms of profits.

Based on the above, empirical and theoretical evidence has managed to prove that positive CSR is essential in boosting customer’s loyalty and satisfaction (Chung et al., 2015, p.542). In regions such as China, where many companies are established as well as the region having an available and ready market given its large population has made various companies be involved in various CSR activities such as legal, philanthropic, consumer protection, environmental responsibility, among other to boost their reputation. For example, Nike has been at the forefront in partnering with various community projects in supporting health projects for community members who have been suffering from cardiovascular diseases. Besides, the apparel fashion line and athletics wear (Nike) managed to boost its sustainability drive in China in 2019 by establishing a state of the art logistics center in Beijing (Xiaojin, 2019, par.3). All this effort was made to capture young shoppers who are keen on buying products from the company that is creating measures in place that are aimed at curbing climate change. Nike is aiming at reducing its carbon footprint as a result of its production.

Customer satisfaction

According to Boshoff and Gray (2004), customer satisfaction is not entirely based on the quality and quantity of a product or service that customers consume but also their perceptions and attributes on the product or service that reflects on themselves usually count. For example, customers are more likely to consume a product from a brand that is at the forefront of championing various social issues such as equality and environmental conservation. Therefore, customer satisfaction can be defined as ‘feelings or the expressions of a customer based on the expectations provided by a given product or a service’ (Shin and Thai, 2015, p. 381). Putting this into account, the satisfaction of customers will always differ despite them consuming a similar product or service (Ueltschy et al., 2007). Currently, in the corporate world customer satisfaction is considered to be a vital aspect of marketing strategy and this explains why many companies are keen on observing it. Besides, it is a long-term key driver for any company’s growth as well as profitability. In other words, when there is a higher level of customer satisfaction, there will be a higher purchase power from the customers for a given product or service (Iqbal et al., 2008). Therefore, it is clear to say that CSR directly relates to customer satisfaction. On the other hand, just to mention, there is also the aspect of customer loyalty. This aspect ensures that many companies can maintain growth as well as boosting their survival (Oberseder, Schlegelmilch, and Murphy, 2013,p.1845). In the case of fashion brands, this is a vital aspect of their marketing strategy given the existence of fierce competition in the sector. Although Nike, Adidas, Louis Vuitton, Puma, and Dolce & Gabbana are among the leading fashion brands, other small brands are on the rise, therefore, making the industry very competitive. As a result, CSR has been employed by many brands, especially those that are new in the market as well as other luxury brands such as Gucci. Given that CSR is essential in boosting customer satisfaction which eventually leads to customer loyalty and many brands have been keen on creating and developing a positive CSR, therefore, comprehending the ability of customer retention is essential in boosting the brand’s profitability (Anserson and Mittal, 2000). Previous studies have shown that CSR does play an important role in influencing customer’s purchasing ability, attitudes, satisfaction as well as their loyalty (Oberseder, Schlegelmilch, and Murphy, 2013; Anderson and Sullivan, 1993; Anserson and Mittal, 2000). Besides, several types of researches have also shown that customers usually evaluate a company’s or brand’s commitment or investment into CSR (Anserson and Mittal, 2000). Just as discussed above, it is widely agreed that customer satisfaction does play a huge role in ensuring customer retention, word of mouth, and purchase intentions. Therefore, it can be said that positive CSR and customer satisfaction are directly related.

Conceptual-Theoretical Framework and Hypothesis

Figure 1.0. Conceptual Framework – Impact of CSR dimensions on customer satisfaction and loyalty

Economic CSR and Customer Satisfaction

An initial study conducted by Tan and Komaran (2006), it was discovered that positive economic CSR does have a positive effect in influencing the purchasing intentions of customers. Besides, economic CSR also does enable the customer to build trust with the given brand and this eventually enables the customer to be satisfied with the given product or service (Lee et al., 2012). Some of the determinants for economic CSR include fair prices and other features such as discounts. Therefore, fashion wear brands that are likely to observe the above do have an upper hand in satisfying their customers as well as boosting their customers’ loyalty towards their brand. Apart from fair prices, the quality of a product is also essential in customer satisfaction. The quality of the product can be in terms of meeting the standards that are provided in the specifications or the advertisement.

H1: Improved perceived practices of Economic CSR activities will boost customer satisfaction.

Legal CSR and customer satisfaction

While there are researches that have shown that the compliance of companies towards legal responsibilities has got no effect on customer satisfaction, there are others that have proven vice versa, especially in cases where is it quite essential (Lee et al., 2012). For example, due to the rise of pollution, several countries have managed to come up with policies and legal requirements that companies should observe, for instance, fashion companies. Therefore, if there is a report that there are companies that do not observe such legal obligations they are at risk of many customers boycotting their products. Another tricky area is in compliance with customer safety or protection (Onlaori and Rotchanakitumnuai, 2010, p. 1575). Some of the companies around the world who at one time faced bad publicity which affected their reputation due to failure in observing workers’ safety are Amazon and the beauty corporation L’Oréal (Meyersohn and Trafecante, 2019, par.3; Lerbinger, 2018, p. 130). Generally, brands observing several laws are essential in boosting customer purchases.

H2: Legal CSR practices have a positive effect on customer satisfaction.

Ethical CSR and Customer Satisfaction

According to Galbreath (2010), ethical practices within an organization always play a major role in boosting customers’ satisfaction and loyalty. The determinants behind ethical CSR include integrity, honesty, and fairness, among others. However, in the case of brands and companies, the ethical behavior of staff and employees does also count in customer satisfaction, and these explain why large corporations are always keen on employing staff who are well trained and effective in their capacities (Nareeman and Hassan, 2013, p. 32). Also, companies that have adopted the green aspect that helps in protecting the environment has enabled them to boost their customer’s satisfaction. Generally, ethical CSR does boot the customer’s satisfaction.

H3: Ethical CSR perception will boost customer satisfaction.

Philanthropy CSR and Customer Satisfaction

According to Tan and Komaran (2006), philanthropic activities conducted by brands is essential in boosting customers’ satisfaction and loyalty. These activities can be a cause-related marketing event, building several essential projects for the community, for instance, a hospital, as well as making donations, among others. Also, voluntary services such as the brands’ employees and managers participating in various events are essential in boosting customer satisfaction (Lev, Petrovits and Radhakrishnan, 2010, p.183). Two great examples of companies that have managed to make use of this aspect are Facebook and Microsoft, whose cofounders have been at the forefront of supporting various community initiatives, such as research in examining the cure to several infections and diseases. Philanthropy is the most common form of CSR that has been adopted by many companies since through it several companies or brands can connect with the community. Another example of a company that has benefited from this is Coca-Cola, which is known to sponsor and make donations to various community projects.

H4: Higher participation in philanthropy CSR activities boosts customer satisfaction.

Methodology

Research Design

The research design that will be applied in the study is the survey.

Sampling

Convenience sampling will be applied in the study given that a majority of individuals are into fashion. However, the research will highly concentrate on the youth, that is age 20-25, given that they are a vast majority of fashion consumers. The youths are keen on following fashion trends as well as buying the latest fashion products in the market. Therefore, the area of study would include students within the University. Besides, all genders will be involved in the study. The study will target educated individuals to participate in the study given that they should be aware of CSR. Also, all races will be included in the research.

Data Collection

In this study, questionnaires will be sued to collect the data. The main reason for using this method is that it is faster considering that at least 200 participants will be included in the survey and other methods such as the use of interviews will be time-consuming. However, more than 400 questionnaires will be issued out given that one disadvantage for questionnaires is that the respondents may not turn in their questionnaires. Participants would be informed that the data will only be used for educative purposes and their responses will be kept confidential. Also, the participants will be assured that there is no wrong or right answer so that they can openly provide reliable data.

Data Analysis

In the statistical analysis, the SPSS software will be employed in analyzing the data. Various analysis methods will be used in the study and this includes simple and multiple linear regression, and two-way ANOVA to test the above-mentioned four hypotheses.

GANTT CHART

References

Afifah, N. and Asnan, A. (2015) ‘The impact of corporate social responsibility, service experience and Intercultural competence on customer company identification, customer satisfaction and customer loyalty (case study: PDAM TirtaKhatulistiwa Pontianak west Kalimantan)’, Procedia – Social and Behavioral Sciences, 211, pp. 277–284.

Anderson, E. W. and Mittal, V. (2000) ‘Strengthening the satisfaction-profit chain’, Journal of Service Research, 3(2), pp. 107-120.

Anderson, E. W. and Sullivan, M.W. (1993) ‘The antecedents and consequences of customer satisfaction for firms’, Marketing Science, 12(2), pp. 125-143.

Boshoff, C. and Gray, B. (2004) ‘The relationships between service quality, Customer satisfaction and buying intentions in the private hospital industry’, South African Journal of Business Management, 35(4), pp. 27-37.

Kramer, M. (2020) ‘Microsoft’s massive stock gains may be far from over’, Forbes, Feb 9. Availble at: https://www.forbes.com/sites/kramermichael/2020/02/09/microsofts-massive-stock-gains-may-be-far-from-over/#160742828b63 (Accessed: 5 July 2020).

Schleifer,T. (2020) Mark Zuckerberg is teaming up with Bill Gates to try to find a drug to treat coronavirus. Available at: https://www.vox.com/recode/2020/3/27/21196421/coronavirus-mark-zuckerberg-priscilla-chan-drug-treatment-bill-gates-zuckerberg-initiative (Accessed: 5 July 2020).

Brown, T. J.  and Dacin, P. A. (1997) ‘The company and the product: Corporate associations and consumer product responses’, Journal of Marketing, 61(1), pp. 68-84, 1997.

Carroll, A. B.  and Shabana, K. M. ‘The business case for corporate social responsibility: a review of concepts, research and practice’, International Journal of Management Reviews, 2010

Chung, K.H., Yu, J.E., Choi, M.G. and Shin, J.I. (2015) ‘The effects of CSR on customer satisfaction and loyalty in China: the moderating role of corporate image’, Journal of Economics, Business and Management, 3(5), pp.542-547.

Crane, D. (2000) Fashion and its social agendas: class, gender, and identity in clothing. Chicago: The University of Chicago Press.

Galbreath, J. (2010) ‘How does corporate social responsibility benefit firms? Evidence from Australia’, European Business Review, 22(4), pp.411-431.

Grappi, S., Romani, S. and Barbarossa, C., (2017) ‘Fashion without pollution: how consumers evaluate brands after an NGO campaign aimed at reducing toxic chemicals in the fashion industry’, Journal of Cleaner Production, 149, pp.1164-1173.

Idowu, S. O., Vertigans, S. and Burlea Schiopoiu, A. (2017) Corporate Social Responsibility in times of crisis. Cham, Switzerland: Springer.

Iqbal, A., Zia, M. H., Bashir, S., Shahzad, K. and Aslam, M. W. (2008) Antecedents and outcomes of customer satisfaction in using prepaid cellular service in Pakistan. Islamabad, Pakistan: Iqra University.

Kapferer, J.N. and Michaut-Denizeau, A. (2014) ‘Is luxury compatible with sustainability? Luxury consumers’ viewpoint’, Journal of Brand Management, 21(1), pp.1-22.

Lee, Y.K., Kim,Y.S., Lee, K.H. and Li, D.X. (2012) ‘The impact of CSR on relationship quality and relationship outcomes: a perspective of service employees’, International Journal of Hospitality Management, 31, pp.745-756.

Lerbinger, O. (2018) Corporate communication: an international and management perspective. New Jersey: John Wiley & Sons.

Lev, B., Petrovits, C. and Radhakrishnan, S. (2010) ‘Is doing good good for you? How corporate charitable contributions enhance revenue growth’, Strategic Management Journal, 31(2), pp.182-200.

Lo, C.W., Egri, C.P. and Ralston, D.A. (2008) ‘Commitment to corporate, social, and environmental responsibilities: an insight into contrasting perspectives in China and the US’, Organization Management Journal, 5(2), pp.83-98.

Martínez, P. and Del Bosque, I.R. (2013) ‘CSR and customer loyalty: The roles of trust, customer identification with the company and satisfaction’, International Journal of Hospitality Management, 35, pp. 89–99.

McDonald, L.M. (2006) Use of different corporate social responsibility (CSR) initiatives as a crisis mitigation strategy. Queensland, Australia: Griffith University Press.

McKinsey (2010) How companies manage sustainability: Mckinsey global survey results. Available at: https://www.mckinseyquarterly.com (Accessed: 5 July 2020).

Meyersohn, N and Trafecante, K. (2019) ‘Why some Amazon workers are going on strike on Prime Day’, CNN, 15 July. Available at: https://edition.cnn.com/2019/07/15/business/amazon-workers-strike-minnesota/index.html (Accessed: 5 July 2020).

Mohr, I. (2013) ‘The impact of social media on the fashion industry’, Journal of applied business and economics, 15(2), pp.17-22.

Nareeman, A. and Hassan, Z. (2013) ‘Customer perceived practice of CSR on improving customer satisfaction and loyalty’, International Journal of Accounting and Business Management, 1(1), pp.30-49.

Oberseder, M., Schlegelmilch, B. B. and Murphy, P. E (2013) ‘CSR practices and consumer perceptions’, Journal of Business Research, 66(10), pp. 1839-1851.

O’Cass, A. (2004) ‘Fashion clothing consumption: antecedents and consequences of fashion clothing involvement’, European Journal of Marketing, 38(7), pp. 869-882.

Onlaori, W. and Rotchanakitumnuai, S. (2010) ‘Enhancing customer loyalty towards corporate social responsibility of Thai mobile service providers’, World Academy of Science, Engineering and Technology, 66, pp.1575-1578. Available at: http://waset.org/journals/waset/v66/v66-242.pdf (Accessed: 5 July 2020).

Perkins, G. and Murmann, J.P. (2018) ‘What does the success of Tesla mean for the future dynamics in the global automobile sector?’, Management and Organization Review, 14(3), pp.471-480.

Shin, Y. and Thai, V.V. (2015) ‘The impact of corporate social responsibility on customer satisfaction, relationship maintenance and loyalty in the shipping industry’, Corporate Social Responsibility and Environmental Management, 22(6), pp.381-392.

Tan, G. and Komaran, R. (2006) Perception of corporate social responsibility: an empirical study in Singapore. Available at: https://mercury.smu.edu.sg/rsrchpubupload/7130/ICAM-CSR-Perceptions-26Jun.pdf (Accessed: 5 July 2020).

Torres, C. A. C., Garcia-French, M., Hordijk, R. and Nguyen, K. (2012) ‘Four case studies on Corporate Social Responsibility: do conflict affect a company’s Corporate Social Responsibility Policy’, Utrecht L. Rev, 8, pp. 51.

Ueltschy, L. C., Laroche, M., Eggert, A. and Bindl,U. (2007) ‘Service quality and satisfaction: An international comparison of professional services perceptions’, Journal of Services Marketing, 21(6), pp. 410-423.

Xiaojin, R. (2019) ‘Nike steps up sustainability drive’, China Daily, 17 Jan. Available at: https://www.chinadaily.com.cn/a/201901/17/WS5c3fe580a3106c65c34e4fe0.html (Accessed: 5 July 2020).