CASE STUDY BODY SHOP L'Oréal

7/22/2019 CASE STUDY BODY SHOP L'Oral

1/93

Katie Attenborough

The Importance of Corporate Ownership in Making

Ethically Minded Purchasing Decisions.

Katie Attenborough


2/93

Katie Attenborough

Literature Review


3/93

Katie Attenborough

Introduction and outline to the Literature Review

The growth of ethical consumerism has been documented in many academic articles,

books and throughout the media. As the behaviour of businesses and their impact on the

environment become more apparent (Prothero et al, 1992), through greater awareness

with the ease of communications in the global marketplace, consumers are able to be

more discerning with their choice of purchases. With the rise of the internet giving

consumers even more choice in an ever increasingly competitive environment (Dunphy et

al, 2003), consumers are able to be more demanding and pay attention to the softer

aspects of the products or services that they are interested in, such as social responsibility

or sustainable development issues (Begg, 2003). Through this project the relationship

between ethical consumers and corporations will be examined, with a view to try and

identify the importance of corporate ownership. In particular, a business case study

concerning the takeover of The Body Shop by the global cosmetics firm LOreal will be

examined to give a more in depth perspective on the importance of corporate ownership

t thi l


4/93

Katie Attenborough

main area of research within this literature review. This section will cover the various

ways in which corporations use and create socially responsible marketing, and look at the

documented responses by consumers. The use of a corporate brand to differentiate an

organizational from an ethical standpoint will be looked at, looking at relevant business

examples, particularly The Body Shop. The importance of corporate identity, of which

corporate ownership is integral aspect of, will be introduced The importance of marketing

and branding as outward manifestations of a corporations identity will be examined, and

then further research on the importance of socially responsible marketing and branding

will be given as a whole when looking at the significance of ethical consumerism.

What is an ethical consumer?

To examine the relationship between ethical consumers and corporations first the idea of

ethical consumers needs to be defined so that different characteristics and behaviours of

this consumer type can be explored, to examine the relationship and implications on

b i f thi i M d t l (1998) hi hli ht th f t th t


5/93

Katie Attenborough

behaviours and opinions at any given time. Blackwell et al (2001) also point out that very

rarely are consumers consistent with their attitudes and actual purchasing behaviour.

Bowerman (2000), Strong (1996) and Shrum et al (1995) among others point out that this

is particularly relevant when looking at ethically minded consumers, as many consumers

claims that they purchase ethically, but actually purchasing behaviour shows otherwise.

Research highlighted in Bowermanss 2000 article suggests that 80% of consumers claim

that they shop or invest money ethically, but only 30% of consumes actually do. Though

this research is now over 6 years old, other scholars such as Shaw et al (2005), Mohr et al

(2001) and Hurst (2006) all echo this sentiment. Social desirability bias (where

consumers want to be seen as acting ethically) may be accountable for much or at least

some of this discrepancy. Bu increasing actual sales through ethical product lines or

socially responsible marketing is only one of the reasons corporations are responding to

the apparent growth in ethical consumers, which will be discussed in more depth later in

this chapter. So, from this alone, a definitive definition of an ethical consumer may not be

ibl b t b l ki t t h fil f b h i d/ ttit d f


6/93

Katie Attenborough

unethical, consumers often judge that the low price they pay (or reluctance to pay a

premium) from these unethical corporations is punishment for that corporations actions

(Carrigan et al, 2001).

Mintel (1994) used the term ethical consumer (or green consumer) to describe consumers

who considered environmental issues, animal issues and ethical issues such as labour

exploitation, oppressive regimes and armaments when purchasing. Elkington et al (1989,

p7) describes a green consumer as one who evades products that are likely to endanger

the health of the consumer or other; cause significant damage to the environment during

manufacture, use or disposal; consume a disproportionate amount of energy; cause

unnecessary waste; use materials derived from threatened species or environments;

involve unnecessary use or cruelty to animals; adversely affect other countries.

Strong (1996, p5) suggests that one of the main concerns of ethical consumers is the

people aspect of manufacture, use and disposal. Strong states that ethical consumerism

f t b b h i th t fl t ith th bl f th Thi d W ld


7/93

Katie Attenborough

were identified as those consumers who had a noticeably higher awareness of and

sensitivity to environmental issues, and were willing to make adjustments to their

lifestyles regarding purchase decisions based on their concerns.

Though this information on ethical consumers by Brown et al (1998) is from a very small

American sample from over 8 years ago, it does highlight the fact that there are different

types and degrees of ethical consumerism. Again, this supports this researchers idea that

there is no static profile of an ethical consumer, but a set of characteristics and behaviours

which ethically minded consumers may exhibit at various times throughout their

purchasing.

Rallapalli et al (1994) researched further into consumer personality traits and the

relationship between them and ethically minded consumer behaviour. The research was

completed using only a small sample of American students from one university, so can

not be used to make any generalisations, but can be used as a starting point to examine if

t i lit t it lik l t illi it thi l i h i


8/93

Katie Attenborough

examined. Information on how specific personality traits may affect these attitudes and

relationships are not to be included.

Bhattacharya et al (2004) examine consumer characteristic that effect consumers

response to corporate social initiatives. As part of this they identify that some ethical

consumers have a certain affinity with specific causes, and these often shape their

purchasing opinions and behaviour. For example, if a specific individual is especially

interested in animal welfare, that individual will be more likely to incorporate that into

their purchasing decisions. This is linked with what Bhattacharya terms attachment,

where consumers feel some sort of attachment or identification with a corporation. This

may be because the corporations is linked with a cause they feel strongly about, may be

less tangible, such as the consumer feeling the specific corporation values the same

morals they do. This may be a clear link to the importance of corporate ownership by

ethically minded consumers. If customer-company identification is an important factor

mitigating consumer response, this can be seen to indicate that corporate ownership is an

i f id f hi ll i d d S hi ll i d d


9/93

Katie Attenborough

A Mori survey commissioned by the Co-operative Bank, whose results are used in

mainstream publications such as Keynote reports on ethical consumers (2005) and by the

BBC, identified five groups of consumers with different ethical attitudes. These were:

49% do what I can consumers price more important than ethics

22% look after myself consumers no interest in ethical shopping

18% conscientious consumers shop ethically if they can

6% brand consumers motivated by fashion

5% global watchdogs ethics are crucial

Peattie (1992, p120) outlined a framework produced by Marketing Diagnostics which

also defined the different types of ethical consumers:

Green activists members or supporters of environmental organisations(5-15% of

population)

Green thinkers will look for new ways to help the environment and seek out

d d i ( 30% f l i i l di i i )


10/93

Katie Attenborough

Again, this shows that it is not possible to create a definitive definition of an ethical

consumer, but does help to describe a spectrum of ethically minded consumer behaviour.

Generally, factors affecting consumer behaviour can be put into at least five different

categories. These factors are termed by Peattie (1992) and Blackwell (2001) as:

Demographic including age, sex and nationality

Personal and Psychological level of education, lifestyle, motivation, values and

belief system, personal circumstances

Sociocultural family influence, peer group influence, national/local cultural

norms, status and role within society

General environmental economic climate, security of employment, political

stability, climate, weather and season

Informational - this covers the amount and nature of information that the

consumer may have gathered about a specific corporation and its products, and

includes (Peattie, 1992 p117):

1. advertising and promotion of the company and its competitors

2 d f h


11/93

Katie Attenborough

Bhattacharya et al (2001), Carrigan et al (2001) and Creyer (1997) among others suggest

that those ethical consumers who actually follow through with their ethical attitudes to

their purchase behaviour often have more disposable income then those who are ethically

minded but do not purchase with that in mind, or those consumers who are not concerned

with ethical issues. As will be discussed in more detail later, corporations are starting to

use ethical product lines, socially responsible marketing and behaviour to differentiate

themselves in the competitive marketplace. In general, consumers are more apt to pay a

premium for differentiated products, and so may be more willing to pay that bit extra for

ethical goods. This has been shown in the growth of ethical products in certain industries

which will be covered in the next section.

The Growth of Ethical Consumerism

Doane (2001) states that the ethical consumer market had a market share growth between


12/93

Katie Attenborough

and Morri reports, and also by media giants such as BBC News and Sky News as part of

their reports on ethical consumerism.

In 2002 the EPI found that ethical consumption in the UK alone was worth 19.86

billion. On October 21st 2003 the Index stood at 125 points, which indicated a rise by 25

points from the baseline in 1999. This jump in the index represents a 2 billion growth in

ethical sales in the previous two years (Keynote, 2005). But, when looking at the market

as a whole, it is estimated that the ethical goods and services market share is fewer than

2%. But even though this may still be viewed by some as a niche market, with its

continued growth, the growing strength of consumers and the increasing importance of

ethical issues in the marketplace all mean that corporations are having to take integratethe surrounding issues of sustainable development and ethically minded consumers into

their business, and many have begun to make this an integral part of their organisation, as

scholars and prominent business people recognise that responding to these issues will be

a key skill required for their very survival.


13/93

Katie Attenborough

Total 19 863

Table 1 shows in more detail where the estimated 19.96 billion was spent.

Approximately 6.9 billion was spent on ethical good and services, while 7.4 billion

was to ethical financial services. It also shows that 2.58 billion was lost by corporations

due to consumer boycotts, with research from The Co-operative Bank showing that 52%

of people claim to have avoided at least one product because of ethical obligations. Many

scholars, including Creyer (1997), Doane (2001) and Carrigan (2001) all highlight the

fact that consumers are much more willing to punish bad ethical behaviour bycorporations than to reward good ethical behaviour. This will be discussed further in the

next section outlining the different responses that corporations have to the growth in

ethical consumerism.

Table 1: Ethical Consumerism in the UK (m) 2002 from The Co-operative Bank


14/93

Katie Attenborough

Included in the ethical food sector are vegetarian and meat alternatives, free range eggs

and organic foods. It can be argued that these items are not on the only increase because

of purely ethical reasons, but also due to the increase in healthy foods and lifestyles, but

have still been included in the Co-operatives study. 5% of the population in the UK are

vegetarian, and of these approximately 51% claim that moral or ethical reasons are their

main motivation. Figures show that sales of vegetarian products and meat alternatives

rose by 6% in 2002, but this was offset by a rise of 13% in meat sales. Free range egg

sales have continued to increase over the past 5 years, even in 2002 when egg sales in

general fell, the sales of free range eggs rose to 209 million. 86% of people questioned

in the Co-operative study claimed they opposed the use of caged egg production, and in2003 free range eggs account for 40% of total egg sales in the UK. Organic foods have

also seen impressive rises in sales in the past few years, from 390 million in 1999 to

reach 920 million in 2002. The Co-operative study found that when asking what types

of purchasing activity people claim to do for ethical reasons, buying organic foods can

out as the number one activity. The market share occupied by organic foods rose from


15/93

Katie Attenborough

to some of the governments new initiatives to try and reduce the amount of energy the

public uses, using increased media attention through campaigns in national newspapers,

magazines and television. Eco-cleaning products have also seen a large increase, from the

increase in the number of kitchen towelling products made from recycled paper to

cleaning products that do not effect wildlife once they have been disposed of, which

amounted to 8 million in 2002.

The number of green personal items purchased has also increased over the last 10 years.

The Co-operative study has attributed this to the growth in consumers (known to be more

than 80% questioned on the issue) that are against animal testing for cosmetics. The UK

ended cosmetics animal testing for finished products and ingredients in 1998, but many

companies still test their products abroad where it is still legal. The British Union for theAbolition of Vivisection (BUAV) has recently won q thirteen year long campaign to ban

cosmetics animal testing in the European Union, but this will not come into force until

2009. The number of products approved under the Humane Cosmetics Standard (HCS)

which are genuinely not tested on animals has increased in the last five years, and sales of

this products totalled 187 million in 2002, showing a 4% growth from the previous year.


16/93

Katie Attenborough

As international travel becomes cheaper and people have access to greater amounts of

disposable income the tourism industry has become one of the fastest growing industries

in the 21st century (Begg, 2003, the number of international tourists is expected to double

by 2020 to 1.6 billion. As different operators look for ways to differentiate themselves

from the competition the promotion of responsible tourism has increased dramatically. In

2002 the tourism market took fell back by 7% in the UK, but money spent with

responsible tour operators grew by 3% that year to 81 million (The Co-operative Ethical

Consumerism Report 2003). Spending on UK environmental tourist attractions was also

up by 31%, with spending at 25 million.

Green house spending as defined by the Co-operative report is made up of greenmortgage repayments and green energy sales. The report terms green mortgage

repayments as the rising star of ethical consumption, different green mortgages have

different features such as a certain amount of interest being donated to charity, and many

include carbon offset, where the mortgage provider will offset a certain amount of the

carbon dioxide produced by the property during the life of the mortgage (The Co-


17/93

Katie Attenborough

as part of their report, 24% of people shopping at charity shops claimed their main factor

in shopping there was to support the given cause. 17% of people questioning buying

second hand goods claimed this was because it is better for the environment to re-use.

Using only these percentages of revenue, total spending on second hand goods for ethical

reasons amounts to 1255 million. Local shopping is also included in ethical consumer

behaviour by the Co-operative study and by Peattie (1996). Over 80% of all consumers

shop regularly at local independent stores and according to the Co-operative report this

accounts for 11% of their total weekly spend. Research has shown that 19% of consumers

state that supporting their community is the for front reason for them shopping locally,

and from this, it is estimated that sopping at local independent stores for ethical reasons

generated 1568 million in 2002.

The idea of public transport being used as a form of ethical consumerism has been

discussed by organisations such as Greenpeace, been encouraged by the government and

is outlined as another factor contributing to the growth of ethical consumerism in the Co-

operative ethical consumerism report. From the Co-operative report, one out of five


18/93

Katie Attenborough

Margolis et al (2003) suggested that socially responsible as ethical consumer behaviour

can have a real impact on the way in which corporations conduct their business. As

certain ethically minded investors modify their behaviour as they are motivated to

conduct ethical investments new tool and practices to perform socially responsible

investing come about, and as these are implemented by a growing number of investors

this can then promote changes in corporate behaviours. Socially screened mutual funds

have quadrupled in number from 1995 to 2005 in the US, with the total assets this

corresponds to growing from $12 billion in 1995 to $179 billion in 2005. The UK market

has also developed greatly in the last 10 years, particularly when compared to their

European counterparts. The UK has twice as many socially responsible investment funds

then Italy, and over 20 times as many as Spain in 2002 from figures in Dillenberg et al(2003). It can be viewed that this increase in socially responsible investments is an

indicator of the growing importance of corporate ownership for ethically minded

consumers. Domini et al (1984) suggest that ethical investing takes this feeling that our

finances are a reflection of ourselves and carries it to a logical conclusion. Socially

responsible investors are able to utilise their rights as shareholders to initiate positive


19/93

Katie Attenborough

Organic food sector. 454 million is linked to transport boycotts, the majority of which is

attributed to petrol retailers. This will be expanded upon in the next section, looking at

the effect these boycotts have on corporations and what their responses are to them.

Peattie (1992) outlines six major driving forces behind the growth of green consumerism.

Heightened awareness of ethical and sustainable development issues among people as a

whole is one of the leading factors, also supported by Begg (2003), Brown (1998) and

Dunphy (2003). Greater awareness has been linked with the increased media coverage of

these issues, which leads to the next driver, improved amounts of information that

consumers are able to access to help them make more informed purchasing decisions.

Increased media coverage, the growth and increased power of consumer organisationsand the use of the internet have all enabled consumers to gain access to a greater depth of

information on a wide range of products and companies. Many green organisations

have been able to galvanise support through these avenues over the last decade, such as

the Stop Esso campaign, and the Nestle boycott, so not only does the increased

information give consumers the ability to purchase ethical goods and services, but also


20/93

Katie Attenborough

government intervention may be needed for some of these products and services to be

able to be adopted by the mass market. As corporations make green alternatives more

widely available, the widespread use of ethical and sustainable advertising proliferates,

which Peattie (1992) highlights as another major driver of green consumerism.

As the number of green product substitutes rises, so does the use of green advertising

themes increases. Over the past decade, the rise in the use of ethical marketing has seen a

substantial increase, recognised by Peattie (1992 & 1995), Bhattacharya (2001) and

Bussey (2006) as a driver of ethical consumerism. There are many different ways that

firms can introduce ethical issues into their marketing mix, and these will be discussed in

more detail later in this literature review. It has also been recognised that many moreenvironmental and social charities are creating larger marketing budgets to raise funds for

their various causes. This rise in their use of green marketing has also lead to greater

awareness of social and environmental issues among consumers, which in turn has lead to

the increase in ethically minded consumers. As stated above, Strong (1996) has shown a

sharp increase in the number of members of these types of organisations, giving these


21/93

Katie Attenborough

Corporate Response to the Growth in Ethical Consumerism

As the previous section has outlined, the growth in ethical consumerism over the past few

years has become extremely apparent, such to the extent that businesses no longer have

the luxury of ignoring it. Though many businesses over the past decade have found niche

markets within ethical consumerism, some of which have reached mainstream success

(see information on The Body Shop), most businesses have been slow on the uptake of

responding to this change in consumer needs. Daft (2001) outlines how important it is for

a business to monitor and respond to its operating environment, but how many businesss

have previously ignore the rise in ethical consumerism, as they were unable to see how

this would make a real impact on their business, and often only gave this area lip servicewithout any real thought going in to how responding to ethical consumerism could add to

their business. Daft (2001) also outlines that many businesses only took reactive

behaviour when the negative consequences of ethical consumerism affected their

business, when a more proactive approach is required. This section will outline the

importance of a businesss operating environment, how the rise in ethical consumerism


22/93

Katie Attenborough

context of how they interact with the organization within the environment. Dawson

(1996:81) states that to speak of an organization is thus to speak of the environment as

well.

Generally an organizations environment can be split into two different areas as discussed

by Daft (2001), Dill (1958), Morgan (1989) and Bedeian (1984). These are the task

environment and the general environment. Dill (1958) defined the task environment as

the components of an organizations environment that are significant or potentially

significant to the organizations objectives. These include everyday elements such as

interactions between an organization and its clients, competitors and the government. The

general environment involves forces that have a wider effect, and do not directly effect

the organization but shape the wider environmental landscape.

The rise in ethical consumerism has impacts on the business through its task and general

environment. Initially, as consumers become more aware of ethical and sustainable


23/93

Katie Attenborough

Many companies are using the growth in ethical consumerism to differentiate themselves

in the market place. As shown from the research already quoted, consumers are often

willing to pay more for goods which fulfil their ethical obligations. Therefore, many

firms are using this to create premium products that are ethically sound and appeal to

these types of consumers. Two such examples are The Body Shop in the health and

beauty sector, and Green and Blacks in the food industry. Both these organisations willbe analysed in further detail later in this report.

Companies that use differentiation as a strategy to get ahead in the marketplace often uses

their own company identity/image as a source of differentiate that is easily assessable by

consumers (Peattie, 1995). This can be done by using ethical products, or ethicalmarketing or branding. The use of ethical or green marketing and branding has seen a

sudden surge in the past few years as the increase in ethical consumerism receives more

media attention, and it becomes more apparent to corporations that these new demands by

consumers are not going away. A later section in this literature review will look at in

more detail how organisations are using these tools to appeal to this new consumer


24/93

Katie Attenborough

a given boycott has meant corporations faced with this kind of conflict have to try and

take proactive measures before it reaches a level that can have a critical impact on their

business.

One example which is extremely useful in looking at how the power of boycotts has

grown is the Shell Brent Spa incident. In 1995 Shell UK was planning to sink the BrentSpar, a decommissioned floating oil storage facility in the North Sea, into the Atlantic

Ocean. On April 30th 1995 the environmental group Greenpeace lead protests against

Shells plans by boarding the Brent Spar, under the banner The sea is not a garbage can

(Winsemius et al 2002).

The British government strongly supported Shells disposal plans, and Shell also had the

support of the Dutch, German and Norwegian governments among others. But

Greenpeace claimed that the sinking of the Brent Spar was potentially very dangerous to

the environment, and heightened media coverage of this incident continued for two

months in the UK and in other countries. Protests took place in the UK and Germany,


25/93

Katie Attenborough

and undermined trust throughout our stakeholder community. He also states company

actions today are subject to more public scrutiny, and that Shell is now trying to engage

beforehand with their stakeholders, not get into a defensive posture after the event. This

illustrates that stakeholder management is a significant motivation in engaging in more

stakeholder dialogue with regards to sustainable development.

Hemmati (2002) shows how stakeholder dialogue is an extremely important tool to use in

creating a proactive approach to ethical and sustainable development issues within a

corporation. Many corporations have learned from the Brent Spa incident and often

encourage company executives to set up networks with local and national organisations

that have vested interests in their company and/or industry sector. Oil companies inparticular have seen how boycotting and public demonstrations can have an impact not

only on the companys image but also on the bottom line.

But opening a dialogue with stakeholders over important issues is useless unless the

stakeholders involved feel like their opinions and interests are really causing changes.


26/93

Katie Attenborough

Smart (1992) suggests that companies such as Shell must learn that closer co-operation

with governments and NGOs is to become inevitable. Schaltegger highlights how the

more independent stakeholders are from the management of the corporation, the more

extreme their political claims can be. As seen with the case at Brent Spar, as Greenpeace

had low dependency on Shell they were able to be uncompromising on their opposition.

If Shell is able to maintain relationships with organisations such as Greenpeace, theirinter-dependency will protect them from extreme opposition, and they will be able to

build up a reserve of goodwill, which may help them in future conflicts. This again

outlines the fact that Strong (1996) brings up, that consumers are much more likely to

react to negative information about a company them they are to react to positive

information. Many corporations may not see the advantage of marketing themselves that

appeals to ethical consumers, but many more will see the benefits of taking a proactive

approach to dealing with negative attributes.

So, use of good ethics can be used by corporations as a way of differentiating themselves

in the marketplace, and to protect themselves against action from independent


27/93

Katie Attenborough

website) and were the first indexes to track the financial performance of the leading

sustainability-driven companies worldwide.

Companies are also using their corporate social responsibility reports as tools to help

them manoeuvre in their given market, and to help them broach new markets. These new

markets do not even have to be within ethical consumption. Many organisations are nowusing their ethical and sustainable development ideals to help mitigate their liability of

foreignness when first entering foreign markets. Luo (2002) and Zaheer (1995) both

acknowledge that by advertising their stringent ethical values and showing their

environmental awareness, companies are able to reduce the amount the effects of liability

o foreignness they may experience when beginning trading in a new environment. By

showing that the company is taking a greater responsibility within the society in which it

operates, promoting their ethical standards is an excellent way of encouraging reticent

clients and business partners in a new environment.

Also in a competitive aspect, many businesses are using ethical incentives as a way to


28/93

Katie Attenborough

with its competitors more or as much as to help the environment. This will be discussed

in more details in the case study section.

As first discussed in this section, a corporations operating environment is inextricably

linked to the way that it conducts its business, noticeably so when operating in an

environment that may produce hostile public reactions to the work of the corporation.Dawson (1996), p81 states that to speak of an organization is thus to speak of the

environment as well. This again highlights how integral the operating environment is to

an organisation, and can also be interpreted that the operating environment is a part of the

organisations corporate identity. Corporate identity has been interpreted by many

scholars and leading business figures in variety of ways, and it is not within the scope of

this assignment to fully explore these, but the next section in this literature review will

look at the importance of corporate identity from the view of the consumer, and will

further look at the different factors that comprise corporate identity and how important

these are in influencing the purchasing habits of consumers.


29/93

Katie Attenborough

Corporate Identity

Factors in

Corporate Identity

CorporateOwnership

Marketing

CorporateBrands

NationalIdentity

CorporateCulture

Products/Services


30/93

Katie Attenborough

This authors particular interest is the importance of corporate ownership, which is a

factor in corporate identity. Corporate ownership itself is hard to define, as it can relate to

a number of different factors. Consumers often see the more tangible aspects of corporate

ownership through an organisations marketing mix. Ethically minded consumers are

often more informed then the average consumer, so greater knowledge on the product

and/or industry could affect the impact of the marketing on that particular consumers, andtherefore change their opinion of the corporation.

Look at the importance of corporate ownership, as seen from the view of the consumer

through marketing and branding by the corporation. Look at how ethical consumers often

have more information on a corporation, therefore corporate identity also a factor by

itself.


31/93

Katie Attenborough

Case Study The Body Shop and LOreal


32/93

Katie Attenborough

Introduction to the Case Study

As outlined in the literature review, the growth of ethical consumerism is of particular

interest to this author, and how corporate ownership effects the purchasing decisions of

ethically minded consumers. To look at this in more detail, the takeover of The Body

Shop by the cosmetics giant LOreal will be used to look at this in more detail. By doingthis, this author hopes to analyse the various different responses to the takeover, and see

to what extent this change in corporate ownership effects purchasing decisions at The

Body Shop. To analyse this fully, this next section of the report will give a brief history

of each organisation, and outline their main corporate activities. The details surrounding

the takeover will then be examined, and the predicted responses to this will be given with

respect to the differing aspects of the two companies.

The Body Shop - a historic view

The Boy Shop first opened in 1976 in Brighton by Anita Roddick, the founder. Anita


33/93

Katie Attenborough

initiatives to help enforce human rights around the world, aid other charities in protecting

endangered wildlife and also ran a number of projects helping the vulnerable in the UK.

In 1991 The Big Issue project was set up, which was a huge success, and in 1998 The

Body Shop Foundation part-funded the launch of The Big Issue in the US.

In 1995 The Body Shop created The New Academy of Business, initiated by AnitaRoddick. A new management degree was founded at The University of Bath in the UK,

which focused on dealing with social and environmental issues related to business. As

well as creating opportunities to teach others about making social and environmental

issues a core part of a business, Anita Roddick created more opportunities to use The

Body Shop as an example of how a business could be used within high ethical and

environmental standards. In 2001, The Body Shop UK region and the service centre head

offices switched over to Ecotricity, meaning that their electric and power sources were

provided by renewable sources, which is set to be rolled out across all stores when

possible. The Body Shop continued to promote the use of renewable energy, and in 2002

joined with Greenpeace International to run a global campaign promoting the use of


34/93

Katie Attenborough

have been integrated as part of its core business. In 2003, founder Anita Roddick was

appointed as a Dame of the British Empire as part of the Queen's Birthday Honours.

Other more recent accolades have included recommendations from British Union for the

Abolition of Vivisection (BUAV) and an award for achieving higher standards of animal

welfare in the cosmetic category at the first annual awards of the Royal Society of

Prevention of Cruelty to Animals in the UK. In 2006 The Body Shop won PETA'sProggy (progress) awards for our commitment to avoid animal testing. It was in March of

the same year (2006) that The Body Shop announced its takeover by LOreal.

The Body Shops Core Values

When looking at The Body Shops website, leaflets given out in their stores, or any

reports on the company, great emphasis is placed on the importance of passion and the

firms five core values. On the firms website passion is defined as thus: All our

products are made with a love of life, respect for the world we live in, a spirit of

individuality, and commitment to trading fairly. In a word, passion.


35/93

Katie Attenborough

ingredients that it buys to make sure these have not been tested on animals, as many

companies state that their products are not tested on animals, but this can often mean that

the ingredients used to make the final product may have been tested on animals. The

Body Shop has never tested or commissioned testing of its ingredients or products on

animals. It has also placed restrictions on their suppliers' use of animal tests by refusing

to buy any ingredient that has been tested on animals for cosmetic purposes after the 31stDecember 1990. Some extreme action groups have questioned The Body Shops claims

that their products are not tested on animals, but The Body Shop has issued various

statements detailing that some of the ingredients they use may have been tested on

animals in the past, and that it is not always possible to find ingredients that have not at

one point or another been tested on animals somewhere. By trying to create as much

transparency as possible The Body Shop is able to gain greater trust from its consumers

and from many of its critics.

Support Community Trade The Body Shops commitment to fair trade


36/93

Katie Attenborough

cosmetics firms. Roddick (1992) has made several scathing remarks about firms such as

Este Lauder and LOreal who she feels have helped to pressure women into trying to

obtain unattainable beauty, by making them feel as if they should not be satisfied with

their own appearance. This issue has received heightened media coverage over the past

few years, and the company Dove has taken advantage of this by creating the Campaign

for Real Beauty. This was inspired in part by The Body Shops own campaign Rubywhich was based on a real looking doll with the caption "There are three billion women

in the world who don't look like supermodels and only eight who do". More recently The

Body Shop has used this campaign to highlight the importance of self-respect, and has

drawn attention to the high number of women in abusive relationships, and helped fund

counselling centres and half way houses for those women who need it.

Defend Human Rights The Body Shops commitment to ethical trade and defending

basic human rights

As a base of their commitment to human rights, The Body Shop ensures that wherever


37/93

Katie Attenborough

packaging to maximise re-use and recycle and minimise waste. The Body Shop alsopromotes the use of sustainable wood sources, in partnership with the Forest Stewardship

Council. Also, The Body Shop has implemented a planting programme, and the business

aims to be carbon neutral by 2010. Palm oil-based ingredients are an important part of

many toiletry products. Since 2004, The Body Shop has taken a primary position in

addressing the serious social and environmental impacts of palm oil production whichinclude deforestation, biodiversity and the rights of indigenous populations. To address

these issues, The Body Shop is active in the Roundtable on Sustainable Palm Oil, a non

profit organisation whose members represent major players along the palm oil supply

chain, including the oil palm growers, palm oil processors and traders, consumer goods

manufacturers, retailers, banks and investors.

LOreal a historic view

LOreal also began as a very small company run by its founder Eugene Schueller, a

young French chemist in 1907. Schuellers business began after he created an innovative


38/93

Katie Attenborough

(25.1%, equalling 3.441 billion) which includes brands such as Cacharel, Lancme, andtoday, The Body Shop.

Professional products produced by LOreal are fast becoming a major source of income

for the firm, which in 2003 accounted for 13.9% (1.9 billion in profit). The Matrix and

Redkin brands within this sector are gaining more recognition from the professionalcosmetics marketplace, and are set to achieve significant growth in the coming years.

(New York Times, 2005). Active cosmetic brands account for the remaining 5.5% of

LOreals products (totalling 0.749 billion).

Though LOreals prescribed main business activity is researching and creating

innovative cosmetics, marketing is a huge part of what LOreal do. LOreals famous

advertising slogan because Im worth it has recently changed to because youre worth

it, but is still one of the most well know advertising slogans across Europe and America.

Vast amounts of LOreals revenue is feed back into its marketing departments across its

operating sectors (the company trades across 130 countries), and its famous advertising


39/93

Katie Attenborough

LOreal takeover of The Body Shop

On 17th March 2006 The Body Shop and LOreal reached an agreement on the terms of a

recommended cash offer to be made by JPMorgan Cazenove on behalf of LOreal for the

entire issued and to be issued share capital of The Body Shop (LOreal: Recommended

Cash Offer 2006). Information regarding a possible takeover had been picked up by themedia before this date, where the many different opinions were already forming as to the

nature of this takeover. Media sources from Ethical Consumers magazine, the BBC and

The Times all immediately outlined what they believed to be controversial aspects to the

takeover, due to the contrasting value systems in place in each firm. Ethical; Consumer

magazine and other sources also picked out concerns regarding LOreals relationship

with the multinational firm Nestle (covered in detail in the next section).

In a letter by Adrian Bellamy, the Executive Chairman of The Body Shop International

PLC, he outlined his full backing of the LOreal offer by highlighting The Body Shops

significant growth in the last few years, and stated that LOreal could be used as a vehicle


40/93

Katie Attenborough

Conflicting Values and The Nestle Connection

After the takeover was announced, the media and consumer backlash began, with

negative comments made in publications such as Ethical Consumer, and green consumer

forums online. Organisations which supported The Body Shop through its causes, such as

the British Society of the Abolition of Vivisection voiced their concerns over the

seemingly conflicting values of the two firms.

As set out earlier, The Body Shop has long been an advocate of prohibiting the use of

animal testing for cosmetic purposes. But LOreal has a know history of using animal

testing in its own research. Though LOreal claims that none of its products have been

tested on animals in over 10 years, it still uses animal testing to test specific ingredients

that it uses within its products. Prothero et al (1992) sights the debate against animal

testing as one of the main factors impacting on ethical cosmetics and health and beauty

products. This is the first of many contradictions which has many ethically minded

consumers scrutinising the takeover.


41/93

Katie Attenborough

maintained that it is a health and beauty company, not a cosmetics company. AnitaRoddick has indeed made several remarks about large cosmetic companies, and has even

made extremely negative remarks about LOreal and the image it portrays of how women

should look. As described before, LOreal uses extravagant marketing, using famous

Hollywood actresses to promote its goods, promoting a certain image of beauty for

woman which Anita Roddick has previous described as dangerous (Roddick, 1992).

Anita Roddick has always maintained that The Body Shop does not have marketing

department. There have never been any Body Shop commercials, and the company does

not use marketing in the most common sense. Instead, The Body Shop promotes the

causes that it is supporting, and as such raises its own profile among its consumers. This

way The Body Shop uses this money spent on promoting the cause, not its products, and

so this money goes directly to helping to support the cause, which is again in complete

opposition to the millions of dollars spent each year on LOreals advertising budget.

Also linked with packaging is the way in which The Body Shop uses recyclable

materials, and encourages consumers to recycle the packaging used for their products. In


42/93

Katie Attenborough

Nestle is the worlds largest food and beverage company. It produced a huge range ofproducts, ranging from confectionary, mineral water, baby milk and cereals. Nestle

purchased a shareholding in LOreal in 1974, and was its first investment in a cosmetics

firm and non-consumables, to diversify its portfolio. Though Nestle claims to have a

strong corporate social responsibility policy, it has often been surrounded by controversy

regarding some of its business activities, particularly relating to the promotion of its baby

milk, and is the most boycotted company in the UK, and one of the most boycotted in the

world.

The most controversial aspect of Nestle business policies is to do with its marketing of

baby milk formulas, starting in the 1970s. This has cantered on its apparent

recommendations for nursing mothers to switch to its baby formula milk products,

leading to the alleged deaths of about 1.5 million babies each year as a result of the

formula being mixed with contaminated water. Allegedly, Nestle has violated the

International Code of Marketing of Breast-milk Substitutes by using babies in its

advertising, and encouraging young mothers to switch from nursing their children


43/93

Katie Attenborough

Methodology


44/93

Katie Attenborough

Research Goals

As already explained in the introduction to the literature review, the aim of this study is

to examine the importance of corporate ownership when purchasing across a range of

ethically minded consumers, by use of a business case study. The initial ideas for this

investigation came from the case study itself the LOreal takeover of The Body Shop.

This author wanted to find out if the change in ownership had had any significant effect

on the opinions of consumers, particularly surrounding the issues of a firm famous for its

good ethics being taken over by a firm with a grey history in this area. This author was

also particularly interested in the relationship between LOreal and Nestle, a significant

shareholder in LOreal, as Nestle is well know for its ethically questionable policies.

By looking at consumer responses to this particular business example, this author hopes

to extract relevant information on the importance of corporate ownership to ethically

minded consumers that may be used to indicate more general opinions on the importance

of corporate ownership. With the available times resources and other resources available,


45/93

Katie Attenborough

Though the diagram above is a very simplified diagrammatic representation of the factors

contributing to the type of relationship that occurs between a consumer and the

Consumer

Mediators of corporate image

CSR activities

Socially responsiblemarketing

Corporate brand

Reputation

Business

environment company reaction toindustry specific

problems

Cor orate Ownershi

CorporationCustomer-

Corporate

Relationship

Multipliers effecting

impt of corporate identity

Profile Awareness

Interest in specificcause

Moderators

Negativeassociations

Identity cross over

Product range

Price

Positive associations

Customerloyalty

Stakeholdermanagement

Goodwill

Behaviour

modification

Negative

associations

Increasedscrutiny

Consumer

boycotts

Reputationand branddamage


46/93

Katie Attenborough

Once the information that was to be captured had been decided upon, a method ofextracting this had to be devised. At this point it should be clearly highlighted that even

though the information to be gathered had been decided upon, a reflexive approach was

taken in gaining this data. It was decided that first a questionnaire would be created to

measure a given consumers ethical activities, and then gather information on that

consumers opinions on the companies involved in the case study, and the actual takeover

itself. The questionnaire was distributed to family and friends, and also by emailing other

students at The University of Nottingham. As discussed in the evaluation, this would not

ensure that a representative sample was reached, but was manageable with the resources

available. A sample survey was produced and given to a small test group. A few

modifications changing the layout of the questionnaire to make it easier to answer.

To make the questionnaire as simple as possible, thereby getting as higher return rate as

possible, the first section of the questionnaire was designed to be a simple exercise in

ticking for the respondent. A copy of the final questionnaire can be found in the

appendices. This section was used to measure the ethicalness of the given consumer.


47/93

Katie Attenborough

questions that provided the respondent with an answer that required them to choosebetween an ethically attractive option and a price option. These could then later be

compared to those questions where an ultimatum was not given, to see if there were any

real contradictions which may indicate social desirability bias.

It was decided that to try and gauge the importance of corporate ownership without

giving the respondents any prompts, a blank open ended question would have to be used.

This was given in the form of asking the consumer to define corporate ownership, and

then stating how important a factor this was in their purchasing.

Information regarding the consumers purchases at The Body Shop and LOreal were

then recorded. This would be used to gauge the reasons consumers gave for shopping at

each of these companies, and to see if these were related to the consumers ethical score

gained in the first part of the questionnaire. One question was included regarding the

Nestle boycott, no information on the boycott was given, so as to not bias later answers

by consumers who were not aware of the boycott. The question was created so that those

consumers that were aware of the boycott where asked to show if and to what extent they


48/93

Katie Attenborough

Results and Discussion


49/93

Katie Attenborough

Results and Discussion

The complete raw data collected from the questionnaires can be found in the appendix at

the end of this investigation. This includes complete answers given by every respondent

to the questionnaire. Also, all the longer written answers supplied by the respondents are

supplied in another part of the appendix in full. Overall, 60 responses were generated

from the questionnaire. These have been used to quantify the information, and create

graphical data to display the results generated.

Overview of responses for Ethical Scoring Questions

40

50

60

70

fanwersreceived


50/93

Katie Attenborough

Social desirability bias can be a problem using these types of questionnaires, which iswhy questions posing a dilemma/ultimatum type answer were chosen so that the

respondents had to make a conscious decision to choose between price and ethics.

Usually with these types of questions were participants are asked to choose from a

number of variables, the extreme choices (i.e. the lowest and highest) are rarely chosen.

By looking at the graph it is obvious that the options Often and Sometimes were the

most used, and the Never option only occurred in six out of the 18 questions. The

Always answer was used more often then its opposing extreme the Never answer,

partly due to the fact that even though this answer is an extreme, it is a positive extreme.

Again, social desirability bias may be partly causing this as well, as it may skew the

registered responses towards the more positive side.

Each question was scored individually, and this was then added up to get the individuals

ethiscore. These ranged from a low of 38 points to a high of 83 out of a possible 90

points. The literature review was used to point out how difficult it is to define an ethical

consumers, and this author used the phrase ethically minder consumer behaviour to


51/93

Katie Attenborough

Types of consumers by 'ethiscore'

0-49 50-65

66-90

Figure 2 shows the number of different consumer types. 15 out of the 60 respondents

were counted as type 1 consumers, as they scored less than 50 points in the ethiscore. 24

out of the 60 were classed as type 2 consumers, who scored between 50 and 65 points. 21

Figure 2


52/93

Katie Attenborough

0

5

10

15

20

25

30

35

40

No animal

testing

Natural

ingredients

Not exploiting

workers

Recycled

packaging

Good quality

products

Wide range of

products

Ethical

reputation

Price Other

Top 3 Factors in Purchasing at The Body Shop

Out of the 60 people questioned, 55 of them had made at least one purchase from The

Body Shop. The higher the figure the better, as one of the main aims of this study is to

Figure 3


53/93

Katie Attenborough

0

5

10

15

20

25

30

35

40

No animal

testing

Natural

ingredients

Not exploiting

workers

Celebrity

endorsements

Good quality

products

Wide range of

products

Ethical

reputation

Price Other

Top 3 Factors in Purchasing from L'Oreal

Figure 4

Figure 4 shows the spread of factors chosen for shopping from LOreal. These are


54/93

Katie Attenborough

The level of awareness of the particular respondent to both The Body Shop and LOreal

are important in answering these questions. Animal testing often brought out the most

extreme answers from people, as in if respondents were going to put down animal testing

as an important factor in their purchase, it was more often then chosen to be the most

important factor overall.

4

6

8

10

12

14

16

18

Most Important Factor in Body Shop Purchases by Consumer Type


55/93

Katie Attenborough

0

2

4

6

8

10

12

14

16

18

20

No animal

testing

Natural

Ingredients

Not exploiting Celebrity

endorsements

Good quality Wide range Ethical

reputation

Price other

Most Important Factor in L'Oreal Purchases by Consumer Type

ConsumerType 1 Consumer Type 2 Consumer Type 3

Figure 6

Figure 6, which shows the distribution of factors considered most important when


56/93

Katie Attenborough

0

5

10

15

20

25

Disagrees Agrees Agrees and takes part to

some extent

Agrees and takes part

fully

Not Aware

Reactions to Nestle Boycott by Consumer Type

Consumer Type 1 Consumer Type 2 Consumer Type 3

Figure 7

Figure 7 shows the results pertaining to the response to the Nestle boycott question.


57/93

Katie Attenborough

0

5

10

15

20

25

a b c d e Other

Reaction to takeover by Consumer Type

Consumer Type 1 Consumer Type 2 Consumer Type 3

Figure 8

Figure 8 is very significant as it shows the response to the actual takeover itself. From


58/93

Katie Attenborough

factors in their purchases, as they felt the goods sold at the Body Shop were good quality,

and so its takeover by LOreal was irrelevant to them. Several people were concerned

that Nestle was now profiting from the Body Shop, one suggesting that the profits that

Nestle will be making from the Body Shop may cancel out the good that the Body Shop

does.

Two people made general comments that they were worried that large multinationals

were taking over firms like the Body Shop in an attempt to add to their own socially

responsible image in the easiest way possible, and were not truly concerned with

upholding the brought-out companies values.

Several comments were made as to the trustworthiness of LOreals claims that the

purchase of the Body Shop was to learn from its CSR activities, and was an attempt by

LOreal to pacify some of its critics.

Two comments were made that implied the commenters were open to the possibility that


59/93

Katie Attenborough

only commented that they did not know what corporate ownership was. Several

commented on the importance of prior knowledge about the firm. This agrees with

information found in the literature review, as knowledge is key in the construct of

corporate identity by an individual, with corporate ownership an important factor.

Responsibility was an important issue that came up connected with corporate ownership

and its importance when making an ethically minded purchasing decision. When making

ethical purchases, as shown in the literature review, the consumer no longer just thinks

about the direct consequence of buying that product or service, but is now more

interested in the more intangible surrounding issues. Factors such as human rights,

supporting employees in third world countries and further implications of the purchase

are all considered. This is why responsibility taken by the company is such an important

aspect.

Corporate ownership is more likely to become a more importance issue in relation to the

amount of information that the specific consumer has about the firm in question. When

little is know about the firm, corporate ownership may not be a big issue as the consumer


60/93

Katie Attenborough

The importance of corporate ownership also seem to be related to the type of product to

be purchased, and how important the consumer views the possible purchase to be. One

respondent wrote how corporate ownership was possibly more important when making

cosmetic purchases, as she was worried about the type of products she could use on her

skin, therefore the producing company is an important aspect, as often consumers will

sometimes have pre-approved list of companies in their sub-conscious when planning a

specific purchase.

As described in the literature review, supporting local shops is another form of ethically

minded consumption. One respondent remarked that corporate ownership was important

to him in the way that he often made a conscious decision to avoid certain larger stores

and supermarkets to make sure he purchased from his local stores to support his local

community. Therefore, because this particular issue is of importance to this consumer,

corporate ownership takes the form of the difference between large multinationals and

smaller firms.


61/93

Katie Attenborough

Evaluation and Future Research


62/93

Katie Attenborough

Evaluation of Investigation and Future Research Objectives.

Overall this author feels that the main aims of this assignment have been achieved in as

much detail as was feasible taking into account the available resources. To recap, this

author started out by looking at how important the factor of corporate ownership was to

ethically minded consumers in purchasing decisions. From research carried out in the

literature review, the definition of ethically minded consumers was found to be extremely

broad, and, as with other consumer categories, found it is not possible to accurately

label any consumer at any given time, as consumers exhibit different behaviours and

opinions at different times. Also, as discussed previously, it has been shown that

consumers opinions often differ to actual consumer behaviour. Therefore, one possible

avenue of future research following on from this investigation is to investigate the

relationship between consumer opinions and actual behaviour regarding ethically minded

purchases, and to expand this to investigate if consumer opinions on the importance of

corporate ownership are integrated into their actual purchasing behaviour.


63/93

Katie Attenborough

they often do not make a conscious effort to choose, or not choose, a certain company. If

future research could ascertain a profile of consumers that used corporate ownership as

part of their rational decision making purchase, then companies may be able to target

their marketing more accurately and with more success.

If greater resources were available and with further time allowances, this author believes

that this study could have been extended greatly by creating a profile of respondents in

much more details, to try and identify patterns in consumer profile and their opinion on

the importance of corporate ownership. As already discussed, the majority of the

respondents questioned in this study were students studying at The University of

Nottingham, and due to the limited number questioned, it was not feasible to try and

create a meaningful profile some this small sample, so only very limited information on

the respondents was taken (sex and age). With greater resources, a larger more varied

population could have been sampled, and greater information on the respondents

themselves could have been gained. This would be an excellent way to continue the

research started in this investigation, to see if and how consumer profiles were linked to


64/93

Katie Attenborough

have their own definitions of it, it is very hard to find media evidence that corresponds

with a given respondents view. Though these can be generalised, as this information is

taken relating to a given case study, it is not pertinent to generalise these in any way, as

they are only relevant o this particular case. Therefore, future research could be used to

try and draw more generalised conclusions from this research without loosing any of the

details, by completing further more in depth research with a greater number of

consumers.

In relation to that, difference in cultural ideas have been left out of this assignment, again

due to limitations, and the difficulties in trying to find the appropriate consumers to

question. Another avenue for future research would be to look at how cultural difference

affects a consumers opinion of the importance of corporate ownership.

This particular case study has looked at the takeover of a firm, and as brought up by one

individual, it may be pertinent to research further into how corporate takeovers, mergers

and strategic alliances change consumers opinions on corporate ownership, and how this


65/93

Katie Attenborough

ownership. Further research could be carried out to find out the importance of ethically

based branding/marketing to ethically minded consumers, and how consumer opinions on

this may affect their purchasing opinions and behaviour. From the research on ethically

minded consumers, Peattie (1992 & 1996) pointed out that ethical consumers are often

more informed about the products they buy, and also more critical of corporate

marketing/branding. Further research could then be carried out to ascertain how much

and what type of information that an ethically minded consumer has on a particular

product affects the level of scrutiny they exhibit regarding company marketing/branding

related to that product or other products in the same range/sector. This could be used to

help corporations ascertain the best type any quantity of information to include with their

products packaging and marketing campaigns.

This final chapter has looked at the various ways in which this investigation could be

improved upon or extended given available resources. If ethically minded consumerism

continues to grow at the current rate, this type of research will become more important as

corporations try to learn what relevant factors that are relevant to ethical consumerism do


66/93

Katie Attenborough

References


67/93

Katie Attenborough

Anderson, W Thomas & William H Cunningham. (1972). The Socially Conscious

Consumer.Journal of Marketing Vol 36, July.

Anonymous. (2003). Is there such thing as an ethical consumer? CSR from a purchasing

perspective. Strategic Direction Vol 19 Issue 6.

BBC News (2006). Bag incentives for Tesco shoppers.

http://news.bbc.co.uk/1/hi/business/5244708.stm Published on 04/08/06. (accessed on

11/08/06).

Bedeian, Arthur. G. (1984). Organizations Theory and Analysis, Test & Cases. CBS

College Publishing.

Begg, David and Damian Ward. (2003). Economics for Business. McGraw-Hill

Education.


68/93

Katie Attenborough

Brown, Joseph D & Russell G Wahlers. (1998). The Environmentally Concerned

Consumer: An Exploratory Study. Journal of Marketing Theory and Practice, Spring

1998.

Brown, Tom J & Peter A Dacin. (1997). The Company and the Product: Corporate

Associations and Consumer Product Responses.Journal of Marketing Vol 61 Jan.

Bussey, Noel. (2006). Is it important to be an ethical brand? Campaign: Teddington.

Published 17/03/06.

Buttle, F. (1994). Editorial: Special Issue on New Paradigm Research in Marketing.

European Journal of Marketing 28 8/9. In Marsden, David & Dale Littler. (1998).

Positioning Alternative Perspectives of Consumer Behaviour. Journal of Marketing

Management Vol 14.

Carrigan, Marylyn & Ahmad Attalla. (2001). The myth of the ethical consumer do


69/93

Katie Attenborough

Publishing.

Dawson, Sandra. (1996). Analysing Organisations. MacMillan Press Ltd.

Dill, W.R. (1958). Environment as an influence on Managerial Autonomy.

Administrative Science Quarterly 2, 409-43.

Dillenberg, S; T Greene and H Erekson. (2003) Approaching Socially Responsible

Investment with a Comprehensive Ratings Scheme: Total Social Impact. Journal of

Business Ethics 43 (3).

Doane, J. (2001). Taking Flight: The Growth of Ethical Consumerism. John Wiley &

Sons Ltd.

Dow Jones Sustainability Index. http://www.sustainability-index.com/ (accessed on

11/08/06)

K i A b h


70/93

Katie Attenborough

Hemmati, Minu. (2002). Multi-stakeholder processes for governance & sustainability.

Earthscan Publications Ltd.

Hurst, Rosey. (2006). Ethics and the purchaser. Supply Management Vol 11 Issue 5.

Keynote Market Research Reports. (2005). The Green and Ethical Consumer.

Kraus, Mangery; Ellen Mignoni & Chrystine Zacherau. (2004). Communicating CSR:

Talking to People Who Listen. http://www.apcoworldwide.com (accessed 27/06/06).

LOreal: Recommended Cash Offer by JPMorgan Cazenove Limited on behalf of

LOreal for The Body Shop International PLC 2006. Available via http://www.loreal.com

LOreal: Sustainable Development Report 2006.

http://www.loreal.com/_en/_ww/group/Img/LOREAL_RDD_GB.pdf

(accessed on 11/08/06)

K ti Att b h


71/93

Katie Attenborough

Martin, Bridget & Antonis C Simintiras. (1995). The impact of green product lines on the

environment: does what they know effect how they feel? Marketing Intelligence and

Planning Vol 13 No 4.

Melewar, TC. (2003). Determinants of the corporate identity construct: a review of the

literature. Journal of Marketing Communications

Mintel. (1994). The Green Consumer Report. In Shaw, D; E Grehan, E Shiu, L Hassan &

J Thomson. (2005). An exploration of values in ethical consumer decision making.

Journal of Consumer Behaviour Vol 4, 3.

Mohr, Lois A; DJ Webb & KE Harris. (2001). Do Consumers Expect Companies to be

Socially Responsible? The impact of Corporate Social Responsibility on Buying

Behaviour. The Journal of Consumer Affairs Vol 35 No 1.

Morgan, Gareth. (1989). Creative Organisation Theory: A Resource book. Sage

Katie Attenboro gh


72/93

Katie Attenborough

Peattie, Ken & Andrew Crane. (2005). Green Marketing: legend, myth, farce or

prophesy? Qualitative Research: An International Journal Vol 8 No 4.

Prothero, Andrea & Pierre McDonagh. (1992). Producing Environmentally Acceptable

Cosmetics? The Impact of Environmentalism on the United Kingdom Cosmetics and

Toiletries Industry.Journal of Marketing Management Vol 8.

Rallapalli, Kumar C; SJ Vitell, FA Wiebe & JH Barnes. (1994). Consumer Ethical

Beliefs and Personality Traits: An Exploratory Analysis.Journal of Business Ethics Vol

13 Issue 7.

Rigby, Elizabeth. (2006). Retailers see all their activities through green filter ethical

consumers. Financial Times. Published 12/06/06.

Roddick, Anita (1992). Body and Soul. London: Vermillion publishings.

Katie Attenborough


73/93

Katie Attenborough

Smart, Bruce. (1992). Beyond Compliance: A new industry view of the environment.

World Resource Institute.

Smith, James. (2004). Sustainable development as a basis for business success. Speech by

Shell UK Chairman at the Birbeck lecture (9th November 2004), London, UK.

Stoll, Mary Lyn. (2002). The Ethics of Marketing Good Corporate Conduct. Journal of

Business Ethics. Vol 41 Issue 1/2.

Strong, Carolyn. (1996). Features contributing to the growth of ethical consumerism a

preliminary investigation.Marketing Intelligence & Planning Vol 14 Issue 5.

The Body Shop website. http://www.thebodyshopinternational.com (accessed on

11/08/06).

Times Online (2006). Customers demand fair trade from big business. Published

Katie Attenborough


74/93

Katie Attenborough

Zaheer, Srilata. (1995). Overcoming the liability of foreignness.Academy of Management

JournalVol. 38 Issue 2 (p341-364).

Katie Attenborough


75/93

Katie Attenborough

Appendices

Katie Attenborough


76/93

Katie Attenborough

Ethical Consumerism Research MSc International Business

Please check one box to answer each question (mark an X in the relevant box)

Always

(a)

Often

(b)

Sometimes

(c)

Rarely

(d)

Never

(e)

1. I consider a companysenvironmental record when purchasingproducts/services

2. I avoid purchasing products fromcompanies that have a reputation forbeing socially irresponsible

3. I purchase products from companiesthat do not use animals for producttests

4. I purchase fair trade coffee rather

than other brands of coffee5. I purchase other fair trade foodsrather than other brands

6. I purchase free range eggs ratherthan eggs from caged hens

7. I am willing to pay more forproducts/services from companies

hi h hi ll d

Katie Attenborough


77/93

Katie Attenborough

Always(a)

Often(b)

Sometimes(c)

Rarely(d)

Never(e)

14. Firms with ties to charities orissues I am interested in are moreappealing to me and this influences mypurchases

15. Ethical and environmental issuesare important factors I consider whenbuying health and beauty products

16. I buy health and beauty productsthat have not been tested on animals

17. Specific firms/brands are importantto me when making health and beautypurchases

18. I would change brands if I found

out the firms making the health andbeauty products I use were involved inunethical activities

19. How would you define corporate ownership? Is it an important factor to

consider when making a purchase?

Katie Attenborough


78/93

g

21. (i) Have you ever purchased a LOreal product (or one of its associated brands)?

Yes No

(ii). If yes, what were the main factors influencing your purchase? (Check up to 3)

a) Not tested on animals f) Good quality products

b) Natural Ingredients g) Wide range of products

c) Not exploiting workers h) Ethical Reputation

d) Celebrity endorsements i) Price

e) Other (please specify)

(iii). What was the most important factor? (Please check only 1)

a) Not tested on animals f) Good quality products

b) Natural Ingredients g) Wide range of products

c) Not exploiting workers h) Ethical Reputation

d) Celebrity endorsements i) Price

e) Other (please specify)

22. (i) Are you aware of the Nestle boycott?

Yes No

(ii) If yes, do you agree with the boycott and have you taken part in the boycott?

(Please check only one)

a) No I do not agree with the boycott

Katie Attenborough


79/93

g

Please write in any other views you would like to express or word your own answer

to the last question if none of the above answers fit your views

Are you?Male Female

Age?

a) Under 18

b) 18-24

c) 25-39

d) 40-65

Katie Attenborough


80/93

Written Survey Responses

Respondent Number Q & A

19: The company that makes the product, usually it does notmake a difference to me unless they have a very bad or verygood reputation

2

23: I think The Body Shop does a great deal of good work forvarious causes, so being taken over by another company willnot change that if it is left to operate as it was already.

19: Im not sure what corporate ownership means, but if youmean the people who own the company, i.e. the shareholders,its not something I give much thought to when makingpurchases.

3

23: I dont like the idea that Nestle know owns part of TheBody Shop as I know Nestle has a poor social record but I thinkI will still shop at Body Shop as often as before.

6 23: I have not purchased from the Body Shop but I am aware ofthe charities it is involved in, overall Body Shop is a businessand wants to make money, so I dont see why it being takenover will have any effect on the work it does, especially ifLOreal says that it wants to learn from this aspect of how theBody Shop does business.

8 23: I dont shop at the Body Shop, I think that they use theirffili i i h i k h i d d h

Katie Attenborough


81/93

company values. I know that LOreal has a bad track record in

animal testing, and though they no longer test their products onanimals I believe they still buy ingredients which have beentested, and are worried about the difference in their values.

14 19: No idea what is corporate ownership.

16 23: I dont think that the Body Shops image would be damageby this takeover. Maybe a little bit, but not severely. Due toLOreal has good reputation that they respect the brands theypurchase, like it took them a long time to understand the culture

of Shu Uemura then officially market the brand. Therefore, Iwould consider this takeover is a positive transaction for bothLOreal and the Body Shop. LOreal Group could learn fromthe Body Shop how to build up an ethical reputation, and theBody shop could learn from the strong marketing skill fromLOreal Group.

19 19: To me, corporate ownership is when a company is held

responsible for its impact on society and the environment. Thisis a very important factor to be taken into account whenpurchasing something as without it there would be significantnegative effects on the environment and the quality of life.Without it, there would be an increase in illegal/unethicalactivities by the larger corporations.

20 23: I love buying from the Body Shop as the products are greatlit d it l k f l th t I h l i i th

Katie Attenborough


82/93

23 When I first heard about the LOreal takeover I was very

surprised that a firm like the Body Shop would be taken over byan ethically questionable firm, but as Body Shop have statedthey will not be changing the way that they do business Im notsure if it will affect my future purchases.

19: I prefer to buy health and beauty products from companiesthat I know or have been recommended to me, as I am carefulwhat sort of products I use on my skin, so corporate ownershipis important in those purchases, but other products like

household goods I am not so bothered about the companybrand.

25

23: I like buying products from the Body Shop as they are reallygood quality, the fact that the Body Shop is involved in so maygood causes is like a great extra with my purchase, but not amajor factor, so I think the takeover wont effect my purchasingthere.

21 (ii & iii): I have made a purchase from LOreal in the pastbut do not buy from them any more.26

23: I am quite skeptical about LOreals claims of wanting tolearn from the Body Shop as I think it may be LOreals way oftrying to overcome its criticisms without actually taking anyreal actions.

19: To me corporate ownership refers to whether the companyi bli i t l d P bli l d i h

27

Katie Attenborough


83/93

35 23: I shop at Body Shop because of the good quality items that

are not available elsewhere. I like to think that my purchase willhelp the environment but it is not one of my main concerns withhealth and beauty purchases, so I dont think the takeover willchange my opinion of their products.

36 19: The term corporate ownership implies corporateresponsibility to me. A corporation needs to be responsible forthe products that it puts out into the marketplace, from the wayin which it sources and manufactures them to how they are sold.

I think it is very hard to make corporate ownership an importantfactor in purchasing as there is so many different productsavailable, and information on the specific corporations can bescare on this subject, especially if the corporations knows thatconsumers may not be happy with the way it is producing.

39 19: Corporate ownership refers to the power of theshareholders. I dont really think it has an impact on mypurchases as its not something that I would think has a directimpact.

43 19: Corporate ownership refers to the specific company thatmade the product, and to any parent or other companyassociated with it. If I have heard good comments about aparticular company then it may be a more important factor as Iwould be more inclined to purchase from them, and vice versa.

44 19 I thi k it f t ti l ll k b d

Katie Attenborough


84/93

better as I know they make a real effort with their customers,

and my purchase means much more to them then if I broughtfrom a larger firm.

21 (ii)e: Good value for money, not just price itself

19: Management and employees working in harmony to achievethe same corporate objectives. Profit is an important aspect but

not at the expense of wasting world resources for futuregenerations.

21 (ii)e: Ease of availability

52

23: As a nation humans need to conserve the world environmentand avoid further extravagant loss of natural resources. Theprofit making (share dividend) conglomerates will alwaysendeavour to make profits at the cost of using raw materials.

There will be a need to mind replacement, manufacturedmaterials, and research will need to be funded. Balance needs tobe struck but managed by whom World Governments havefailed to give confidence that they can influence this matterdespite so called agreements at Kyoto and other Worldmeetings.

19: I dont know much about business but Id say corporatehi k thi k f bi b i d hi h fit t

58

Katie Attenborough


85/93

The Body Shops ethical standards, as if that were the main

reasons, why wouldnt they start a strategic alliance instead? Itis easier for these large companies to takeover other companiesthat have a piece of the market share that they want, but usuallyend up turning those companies into other versions ofthemselves then really learning anything from them.

Katie Attenborough


86/93

Raw Data from Survey Responses

RespondentNumber

QuestionNumber R1 R2 R3 R4 R5 R6 R7 R8 R9 R10

1 c b c c c d c c c b

2 c b b d c c b c c b

3 b c c d c c c c b b

4 d c c d d d c d d c

5 d d d d d e d d d c

6 b a b c c d b c b b

7 c b b d d d c c c b

8 c b b d d d d d c c

9 c b a c d c b c c b

10 b c b c d d c c b b

11 d a a c c c c c d a

12 b b b d d d c d b b13 c b b c c c c c c b

14 d b b c c d c d d b

15 c c b d d d c c c a

16 d b b c c c b c d b

17 b b b b b b b c b b

18 c b a c c c c c c a

19 N Y Y N N N N N N Y

Katie Attenborough


87/93

QuestionNumber

CASE STUDY BODY SHOP L'Oréal

Documents

Transcript of CASE STUDY BODY SHOP L'Oréal