Corporate Social Responsibility and Customer Loyalty: A Case Study

This report investigates the impact of Corporate Social Responsibility (CSR) on customer loyalty, focusing on case studies of Body Shop and British Petroleum. The introduction highlights the challenges faced by international organizations in maintaining sustainability and the role of CSR as a marketing tool to enhance customer loyalty and purchase intention. The literature review explores CSR concepts, the reasons for Body Shop and British Petroleum's engagement in CSR, and the correlation between CSR and customer loyalty. The research methodology outlines the research philosophy, approach, data collection, and analysis methods. The data analysis section presents findings from quantitative analysis and objectives discussion. The conclusion summarizes the study's findings and provides recommendations for businesses to integrate CSR initiatives effectively to improve customer loyalty and brand reputation. The report aims to provide insights into how companies can leverage CSR to achieve long-term customer relationships and sustainable business practices.

Corporate Social Responsibility
and its impact on customer
loyalty. A case study of Body
Shop and British Petroleum

Table of Contents
Topic: Corporate social responsibility and its impact on customer loyalty. A case study of Body
Shop and British Petroleum.............................................................................................................1
CHAPTER 1: INTRODUCTION....................................................................................................1
1.1 Introduction......................................................................................................................1
1.2 Background of study.........................................................................................................1
1.3 Rationale of study.............................................................................................................2
1.4 Research Objectives.........................................................................................................3
CHAPTER 2: LITERATURE REVIEW.........................................................................................4
2.1 Introduction......................................................................................................................4
2.2 Corporate social responsibility.........................................................................................4
2.3 Reason for Body Shop and British Petroleum to engage in CSR.....................................7
2.4 Aspects of CSR...............................................................................................................10
2.5 Correlation between customer loyalty and CSR............................................................12
2.6 Conclusion......................................................................................................................13
CHAPTER 3: RESEARCH METHODOLOGY...........................................................................14
3.1 Introduction....................................................................................................................14
3.2 Research Philosophy......................................................................................................14
3.3 Research Approach.........................................................................................................15
3.4 Data Collection...............................................................................................................15
3.5 Data Analysis..................................................................................................................19
3.6 Conclusion......................................................................................................................19
CHAPTER 4: DATA ANALYSIS................................................................................................20
4.1 Findings from quantitative analysis................................................................................20
4.2 Objectives Discussion....................................................................................................31
4.3 Conclusion......................................................................................................................34
CHAPTER 5: CONCLUSION AND RECOMMENDATION.....................................................35

5.1 Study summary...............................................................................................................35
5.2 Conclusion......................................................................................................................35
5.3 Recommendation............................................................................................................35
REFERENCES..............................................................................................................................37
APPENDIX....................................................................................................................................41

Topic: Corporate social responsibility and its impact on customer loyalty. A
case study of Body Shop and British Petroleum
CHAPTER 1: INTRODUCTION
1.1 Introduction
In 21st century, organisations dealing at international level face various challenges related
to gain sustainability, in intense competitive environment. It includes changing demand of
customers, presence of diversified alternatives, socio-economical criteria and more. To overcome
from such challenges, CSR (Corporate Social Responsibility) is taken as a new marketing tool
than increase customer loyalty as well as purchase intention. This would aid organisations in
earning high profitability (Reverte, Gómez-Melero and Cegarra-Navarro, 2016). Loyal
customers mostly boost a company financially by increasing willingness of consumers. It
includes 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 when
companies 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 in
different-different sectors are taken, via Body Shop and British Petroleum. Here, Body Shop
International Limited is a trading company that offer a range of 1,000 products categorised as
cosmetics, perfume and skin care products, in international market. While, British Petroleum is
considered 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 and
diversified alternatives. To deal with such challenges, Body Shop and British Petroleum runs
various CSR activities, that proves more effective than advertising campaign for promoting the
business.
1.2 Background of study
Corporate social responsibility considers as a management concept where, organisations
used to social and environmental concerns into business operations (Shin and et. al., 2017). It
refers to a way by which company creates a balance of economic, social and environmental
imperatives. Along with this, they can also address the shareholders and stakeholders’
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expectation also. Therefore, CSR has become a crucial and valuable approach in building a long
term 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, two
major companies of UK are taken, that deals in different-different field. It includes Body Shop
International Ltd., that operates its business in cosmetic and skin care products. While British
Petroleum is another company which headquartered in London and one of the largest oil
company of world. In order to run business ethically and gain high attention of customers, both
companies run various programs for creating a balance of CSR imperatives (Aramburu and
Pescador, 2019). It includes reducing carbon footprint from manufacturing industries, run
program for welfare of vulnerable societies etc. This research is limited within area of corporate
governance with different organizational level unit of analysis, including impact of CSR
initiatives on customer behaviour and their loyalty. It highlights relevant CSR dimensions as well
as its potential impact on positive and enduring relationship of customers with business of both
companies.
1.3 Rationale of study
As Corporate Social Responsibility has become the most important aspect of today’s
business. With increasing changed in internationalization trend within business community in
various countries, it has observed that good ethical practices refer to paramount for every
business transaction (Hopkins, 2016). This would majorly deal with successfully operating in
global market. With this assistance, trust, transparency, honesty, accountability, responsibility
and integrity between transacting business and values of organizations, serve as the main key
foundation of earning credibility as well as good position in international arena. In context with
Body Shop Ltd. and British Petroleum, both companies concern to integrate business with CSR
initiatives (Russell, Russell and Honea, 2016). This would help them in running business in
international platform more easily and gain attention of loyal customers as well. This dissertation
is therefore, concerns on identifying the correlation between CSR and customer loyalty of
companies. The reason behind chosen this topic is to explore knowledge within this large
concept and to analyse how such companies integrate their business with CSR initiatives. This
would give opportunity to researchers to enhance their skills in research field and take more
challenging assignment in future (Kuo and et. al., 2016). Along with this, they can also provide
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effective suggestions to companies for running businesses in ethical manner and improving
customer loyalty.
1.4 Research Objectives
It refers to most important part of research on which entire study is based. Research
objectives 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 the
concept of CSR and its role in earning customer loyal, the main objectives are given as beneath:
 To understand the concept of Corporate Social Responsibilities
 To identify different aspects of CSR
 To determine the correlation between CSR and customer loyalty
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CHAPTER 2: LITERATURE REVIEW
2.1 Introduction
A literature review can be defined as a source where researchers survey books, scholarly
articles and other, to extract information and data on a certain topic (Chang, 2017). This would
help in analysing the research issues and addressing the same in more better manner, to
accomplish the objectives. In context with present research, here, researchers are going to
analyse the concept of corporate social responsibility and how it helps organisations in earning
customer 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 manners
as – Preliminary review and a comprehensive survey. Preliminary review is done before
conducting a large study for critically analysing a topic (Diddi and Niehm, 2016). While
comprehensive survey refers to a systematic review that identified, appraises as well as
synthesizes evidences for addressing the research issues. Under this condition, a systematic
review is done to address main question of present dissertation, which is based on- “Does
Corporate Social Responsibility impact on customer loyalty?”.
2.2 Corporate social responsibility
According to perception of Crowther and Seifi (2018), corporate social responsibility can
be defined as strategic business management concept, for enhancing reputation of an
organisation and strengthen its brand. For this purpose, companies concern more on improving
condition of local communities, reducing poverty and enhancing living standard of people. As
per the article given by Sammi Caramela, it has been analysed that people while purchasing
commodities of a company concerns more on brand image then quality (What is Corporate
Social Responsibility?, 2019). Therefore, for building an effective brand image, most companies
are prioritizing the CSR activities and holding corporations accountability in order to effect
social change with practice, beliefs and profits of their businesses. In this regard, Corporate
responsibility refers to an easy way for corporations, to take responsibility for reducing negative
impact of business operations on social and environmental factors (Elbedweihy and et. al., 2016).
A robust CSR program gives opportunities to companies for demonstrating good corporate
citizenship of them. It also protects business from risk which may arise due to changes in
external environment.
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As per the article given by Andrew McDougall, it has been analysed that Body Shop
International Limited has currently announced to implement a global CSR strategy. It mainly
outlines 14 targets in order to maintain its position at international marketplace as- “a leader in
ethical business' (Body Shop goes for a green makeover with new CSR strategy, 2019). With this
assistance, it can achieve its main goal i.e. to gain customer loyalty for earning sustainability in
retail sector. These 14 targets of respective company reflects its new aim that is to be the world's
most ethical as well as truly sustainable global business, that includes specific and measurable
targets by 2020 (Obeidat, 2016). It makes business more accountable for delivery and increasing
customer engagement with company's products and services. Along with this, its fourteen targets
also 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 contain
any fossil fuels.
3. Create sustainable packaging innovations
4. 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 redesigning
them.
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 people
10. In order to identify the way to enrich biodiversity of local communities, Body Shop will
invest 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.
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13. Use of ingredients which are originated from natural and green chemistry as well as
biodegradable also.
14. Develop innovations in business like create a pipeline which delivers cosmetic ingredients
from biodiversity and helps in enriching such areas also (Kull and Heath, 2016).
Here, to meet all these fourteen targets, Body Shop has also given its commitment as:
“The company has set itself ambitious, inspiring as well as measurable targets to enrich the
people, planet and product that help business to grow and prosper” (Chomvilailuk and Butcher,
2016). Along with this, to turn this ambitious into reality, Body Shop also going to work in
partnership with NGOs, suppliers, governments, suppliers and other companies for delivering the
innovation in cosmetics and production.
In context with British Petroleum Corporation, for leading sustainability in fuel industry
and advancing energy for improving people’s lives, this company delivers efficient products and
services to people (Malik and Kanwal, 2018). The energy it produces gives support in economic
growth as well as improve quality of life for various people. It also strives to be a world-class
operator and a responsible corporate citizen to gain customer loyalty. Since the world demands
more energy to fuel increasing prosperity therefore, BP Oil mainly concern on low carbon
ambitions. It includes the expansion of solar presence, human rights, safety and manage
environmental impacts like water usage (Sustainability. 2019). In this regard, British Petroleum
Corporation mainly deals in following main segments:-
 Low carbon ambitious: In order to reduce emission of carbon gases. Improve products
like fuel efficiencies, BP Oil making more investment to set out low carbon emission. For
this purpose, to reduce carbon in operations, it concerns on- Zero net growth in
operational emission out to 2025, 3.5 Mte of sustainable GHG emission reduction by
2025 and targeting a methane intensity of 0.2% (Arli and et. al., 2017). This kind of CSR
activity helps in creating less impact of business on ecosystem and prevents the same by
low carbon emission.
 Expansion of solar business: Business of BP Oil has been more concerning on
renewable energy from last 20 years. To become one of the largest operator in respective
field and achieve ambitious related to low carbon emission, renewable energy seeks to
give more opportunity for this company (Diallo and Lambey-Checchin, 2017). In this
regard, expanding presence of business in solar energy like wind energy, help BP Oil to
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create innovation in production. This would give various opportunities for creating
innovative related to lower carbon emission by partnering gas with renewable (Grayson
and Hodges, 2017). As renewable sources are considered as the fastest-growing energy
source in the world. Therefore, BP Oil give its commitment to provide near about 15% of
global energy mix till 2040. Along with this, Solar expansion generates more than 12
percent of total global power, so respective company also seek to give its contribution to
at least 21% in energy efficiency (Gruber, Kaliauer and Schlegelmilch, 2017).
 Delivering value to business: BP Oil has made a more significant contribution to
societies by providing heat and light across the world. It also provides fuel to get people
to reach at their destinations as well as power for industry (Swoboda, Puchert and
Morschett, 2016). For this purpose, some CSR activities which show contribution of
respective company in delivering its value are- Supporting conversation in Chicago,
Helping India in developing its road facilities, Economic development in Oman and
more. To improve quality of life of billions or millions of people in entire world, BP Oil
concerns on providing access to electricity.
 Managing water to use: As water is one of the most precious resource of the nature,
therefore, BP Oil also runs CSR programs for managing its use (Fatma and Rahman,
2016). In its oil and gas production, respective company also use non-fresh water like sea
water, use waste water in refinery process etc.
2.3 Reason for Body Shop and British Petroleum to engage in CSR
As per views of Albus and Ro (2017), it has been analysed that today companies invest
both money and precious time to conduct CSR activities. This would help in minimising risk,
recruiting talented employees as well as boost their brand image in the eyes of loyal customers.
In this regard, both companies viz. British Petroleum Ltd. and Body Shop Ltd. are concerning
more towards CSR initiatives (Kim, Song and Lee, 2016). It gives them opportunity to make
ease their supply chains, increase access to capital, differentiate business from competitors and
run business effectively in international marketplace. Along with this, making investment in
social responsibilities also aid both domestic and international organisations to promote their
businesses in vast manner, as well as reach potential customers more easily (Albus and Ro,
2017). The CSR activities are very beneficial for the companies like Body Shop and British
Petroleum, as this will help them to build the good and best reputation which a responsible
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company should have, and which can also lead to competitive advantage. These types of
companies are also focusing on the suppliers which can easily gain the attention of more
customers and insist them to buy their products, as this can help them to enhance their sale and
customer loyalty (Alhouti, Johnson and Holloway, 2016). The Corporate Social responsibilities
activities is very beneficial in business of Body Shop, as this can have the better brand
recognition and create the positive business reputation. This is also beneficial in saving cost, as
by reducing the resources use, waste and emissions, this can help the environment and saves lots
of money (Su and et. al., 2017). Also, by having this, the companies can avoid harmful impacts
of their business enterprise on the community. In other cases, the firm will find ways to make
changes in their products and services, which will later on beneficial for the community
(Crowther and Seifi, 2018). In addition with this, the public value is the value that a firm
contributes to its community or society.
From the article given by Terese Collins, it has been analysed that the main reason behind
making a large investment in CSR activities by BP Oil is to improve brand image, which has
destroyed completely after a huge spillage of fuel (near about 206 million Gallons) in Gulf of
Mexico (The eight failures that causes the Gulf oil spill, 2010). During April 2010, it has been
evaluated that due to failure of safety management, an explosion of oil in the Gulf has considered
as one of the biggest oil leakage. Impact of this spillage can measured by given graph –
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It is evident from various research that there is a series of some complex events that led to
this biggest spillage (Hopkins, 2016). It includes Dodgy cement, Valve Failure, Pressure test
misinterpreted, Leakage not spotted on time, Overwhelmed separator, No gas alarm and more.
Therefore, this case has put a huge impact on brand image of BP Oil that affects its public
relations. It also create difficulties for employers to retain stakeholders' interest with company's
project for longer period and gain customer loyalty as well (Park, Kim and Kwon, 2017).
Henceforth, to overcome from this worst situation, BP Oil has made a large investment in
corporate social responsibilities, to reduce affect of spillage from water bodies and environment.
The better Corporate social responsibility structure and the firm mindset will assist the
company to deliver higher outcomes of business value to public. For this purpose, they must
concentrate on how their goods and services make difference in the community (Habel and et.
al., 2016). CSR supports the public value outcomes. Also, the employees or staff of the both the
firm are having the opportunity to get fully involved in the activities of CSR which can help
them in teaching and learning the new skills to the entire staff and which can assist them to
implement those skills in the organisation so that they can enhance the growth of the company.
Also after their working hours, they can contribute their work and cause that they might feel
passionate about or the activities for which they are very fond of, they can contribute their skills
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