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Corporate Social Responsibility and Its Impact on Customer Loyalty

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Corporate SocialResponsibility and its impacton customer loyalty. A casestudy of Body Shop and BritishPetroleum
Table of ContentsTopic: Corporate social responsibility and its impact on customer loyalty. A case study of BodyShop and British Petroleum.............................................................................................................1CHAPTER 1: INTRODUCTION....................................................................................................11.1 Introduction......................................................................................................................11.2 Background of study.........................................................................................................11.3 Rationale of study.............................................................................................................21.4 Research Objectives.........................................................................................................3CHAPTER 2: LITERATURE REVIEW.........................................................................................42.1 Introduction......................................................................................................................42.2 Corporate social responsibility.........................................................................................42.3 Reason for Body Shop and British Petroleum to engage in CSR.....................................72.4 Aspects of CSR...............................................................................................................102.5 Correlation between customer loyalty and CSR............................................................122.6 Conclusion......................................................................................................................13CHAPTER 3: RESEARCH METHODOLOGY...........................................................................143.1 Introduction....................................................................................................................143.2 Research Philosophy......................................................................................................143.3 Research Approach.........................................................................................................153.4 Data Collection...............................................................................................................153.5 Data Analysis..................................................................................................................193.6 Conclusion......................................................................................................................19CHAPTER 4: DATA ANALYSIS................................................................................................204.1 Findings from quantitative analysis................................................................................204.2 Objectives Discussion....................................................................................................314.3 Conclusion......................................................................................................................34CHAPTER 5: CONCLUSION AND RECOMMENDATION.....................................................35
5.1 Study summary...............................................................................................................355.2 Conclusion......................................................................................................................355.3 Recommendation............................................................................................................35REFERENCES..............................................................................................................................37APPENDIX....................................................................................................................................41
Topic: Corporate social responsibility and its impact on customer loyalty. Acase study of Body Shop and British PetroleumCHAPTER 1: INTRODUCTION1.1 IntroductionIn 21stcentury, organisations dealing at international level face various challenges relatedto gain sustainability, in intense competitive environment. It includes changing demand ofcustomers, presence of diversified alternatives, socio-economical criteria and more. To overcomefrom such challenges, CSR (Corporate Social Responsibility) is taken as a new marketing toolthan increase customer loyalty as well as purchase intention. This would aid organisations inearning high profitability(Reverte, Gómez-Melero and Cegarra-Navarro, 2016). Loyalcustomers mostly boost a company financially by increasing willingness of consumers. Itincludes word-of-mouth publicity, frequent purchases, spend more per transaction and more.Therefore, earning customer loyalty is considered as especial potent, that can be gained whencompanies give more contribution for welfare of society.The present study is going to investigate concept and different aspects of CSR activities ,that impacts on customer loyalty. For this assistance, two major companies of UK that deals indifferent-different sectors are taken, via Body Shop and British Petroleum. Here, Body ShopInternational Limited is a trading company that offer a range of 1,000 products categorised ascosmetics, perfume and skin care products, in international market. While, British Petroleum isconsidered as the seventh largest multinational oil and gas company of UK, in terms of revenue(Price and Sun, 2017). As in both sectors there is a hyper competitive environment anddiversified alternatives. To deal with such challenges, Body Shop and British Petroleum runsvarious CSR activities, that proves more effective than advertising campaign for promoting thebusiness.1.2 Background of studyCorporate social responsibility considers as a management concept where, organisationsused to social and environmental concerns into business operations(Shin and et. al., 2017). Itrefers to a way by which company creates a balance of economic, social and environmentalimperatives. Along with this, they can also address the shareholders and stakeholders’1
expectation also. Therefore, CSR has become a crucial and valuable approach in building a longterm relationship of a company with its customers (Albus and Ro, 2017).In context with present study, it explores the various aspects of CSR. For this purpose, twomajor companies of UK are taken, that deals in different-different field. It includes Body ShopInternational Ltd., that operates its business in cosmetic and skin care products. While BritishPetroleum is another company which headquartered in London and one of the largest oilcompany of world. In order to run business ethically and gain high attention of customers, bothcompanies run various programs for creating a balance of CSR imperatives(Aramburu andPescador, 2019). It includes reducing carbon footprint from manufacturing industries, runprogram for welfare of vulnerable societies etc. This research is limited within area of corporategovernance with different organizational level unit of analysis, including impact of CSRinitiatives on customer behaviour and their loyalty. It highlights relevant CSR dimensions as wellas its potential impact on positive and enduring relationship of customers with business of bothcompanies.1.3 Rationale of studyAs Corporate Social Responsibility has become the most important aspect of today’sbusiness. With increasing changed in internationalization trend within business community invarious countries, it has observed that good ethical practices refer to paramount for everybusiness transaction (Hopkins, 2016). This would majorly deal with successfully operating inglobal market. With this assistance, trust, transparency, honesty, accountability, responsibilityand integrity between transacting business and values of organizations, serve as the main keyfoundation of earning credibility as well as good position in international arena. In context withBody Shop Ltd. and British Petroleum, both companies concern to integrate business with CSRinitiatives(Russell, Russell and Honea, 2016). This would help them in running business ininternational platform more easily and gain attention of loyal customers as well. This dissertationis therefore, concerns on identifying the correlation between CSR and customer loyalty ofcompanies. The reason behind chosen this topic is to explore knowledge within this largeconcept and to analyse how such companies integrate their business with CSR initiatives. Thiswould give opportunity to researchers to enhance their skills in research field and take morechallenging assignment in future(Kuo and et. al., 2016). Along with this, they can also provide2
effective suggestions to companies for running businesses in ethical manner and improvingcustomer loyalty.1.4 Research ObjectivesIt refers to most important part of research on which entire study is based. Researchobjectives provide a base to project makers and direction on which they can conduct their studies(Benlemlih and Bitar, 2018). In context with present research, where study mainly investigate theconcept of CSR and its role in earning customer loyal, the main objectives are given as beneath:To understand the concept of Corporate Social ResponsibilitiesTo identify different aspects of CSRTo determine the correlation between CSR and customer loyalty3
CHAPTER 2: LITERATURE REVIEW2.1 IntroductionA literature review can be defined as a source where researchers survey books, scholarlyarticles and other, to extract information and data on a certain topic(Chang, 2017). This wouldhelp in analysing the research issues and addressing the same in more better manner, toaccomplish the objectives. In context with present research, here, researchers are going toanalyse the concept of corporate social responsibility and how it helps organisations in earningcustomer loyalty. For this purpose, various articles have been evaluated to address specific issues(Kim and et. al., 2018). Here, literature review is generally conducted in two different mannersas – Preliminary review and a comprehensive survey. Preliminary review is done beforeconducting a large study for critically analysing a topic(Diddi and Niehm, 2016). Whilecomprehensive survey refers to a systematic review that identified, appraises as well assynthesizes evidences for addressing the research issues. Under this condition, a systematicreview is done to address main question of present dissertation, which is based on-“DoesCorporate Social Responsibility impact on customer loyalty?”.2.2 Corporate social responsibilityAccording to perception ofCrowther and Seifi (2018),corporate social responsibility canbe defined as strategic business management concept, for enhancing reputation of anorganisation and strengthen its brand. For this purpose, companies concern more on improvingcondition of local communities, reducing poverty and enhancing living standard of people. Asper the article given by Sammi Caramela, it has been analysed that people while purchasingcommodities of a company concerns more on brand image then quality (What is CorporateSocial Responsibility?,2019). Therefore, for building an effective brand image, most companiesare prioritizing the CSR activities and holding corporations accountability in order to effectsocial change with practice, beliefs and profits of their businesses. In this regard, Corporateresponsibility refers to an easy way for corporations, to take responsibility for reducing negativeimpact of business operations on social and environmental factors(Elbedweihy and et. al., 2016).A robust CSR program gives opportunities to companies for demonstrating good corporatecitizenship of them. It also protects business from risk which may arise due to changes inexternal environment.4
As per the article given by Andrew McDougall, it has been analysed that Body ShopInternational Limited has currently announced to implement a global CSR strategy. It mainlyoutlines 14 targets in order to maintain its position at international marketplace as- “a leader inethical business' (Body Shop goes for a green makeover with new CSR strategy,2019). With thisassistance, it can achieve its main goal i.e. to gain customer loyalty for earning sustainability inretail sector. These 14 targets of respective company reflects its new aim that is to be the world'smost ethical as well as truly sustainable global business, that includes specific and measurabletargets by 2020(Obeidat, 2016). It makes business more accountable for delivery and increasingcustomer engagement with company's products and services. Along with this, its fourteen targetsalso categorised within three P's that focusing on product, people and planet as given below:-Enrich Planet:1. To help local people and communities to live more sustainable life, Body Shop will build bio-bridges that protects as well as regenerated near about 75 million square meters of habitat(Lin,Lobo and Leckie, 2017).2. Concern on product packaging process and ensure that at least 70% of the same do not containany fossil fuels.3. Create sustainable packaging innovations4. Reduce energy consumption from all its stores near by 10%5. Switch to 100% renewable or carbon balanced energy.6. Reduce carbon and other environmental footprint of stores by refurbishing or redesigningthem.Enrich People:7. Increase the Community Trade Programme by 40 ingredients at least to enrich communities.8. Aim to enrich more than 8 million people with Enrich Not Exploit Commitment mission,which will the biggest project yet(Hanks, Line and Mattila, 2016).9. Provide support to access work to more than 40k economically vulnerable people10. In order to identify the way to enrich biodiversity of local communities, Body Shop willinvest its more than 250k hours of its skills.Enrich Products:11. Work to ensure that 100% of natural or organic ingredients should be sustainably sourced.12. Reduce year by year its carbon footprints from all its categorised products.5
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