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The importance of brand purpose

24Nov Posted by Ina Strander

In a world where consumers have strong expectations of a company’s behaviour in society, and also have more power to put pressure on companies than ever before, it is fundamental for businesses to acknowledge their role with regards to social responsibility and act accordingly. Committing to a clear brand purpose, which can be defined through the integration of what the world needs, and how a company can meet these needs, – the social why of what the company is doing, is therefore fundamental to business success.

Why is brand purpose important?
New technology, value-driven consumers and an increased focus on climate change and other complex social issues have drastically changed the role of the corporate brand over the past few years. Consumers today expect companies to be transparent in their actions and responsible to society in which they operate, and are looking beyond the brand to see whether the company behind it is one they want to align with.

Therefore, to build trust and reduce reputational risk, the brand purpose should be at the core of the business strategy and be integrated with everything the company does and says, internally and externally.

Radley Yeldar recently released its Fit for Purpose Index – a ranking of the top 100 companies for ‘brand purpose’. Purpose was here defined through a brand slogan, a commitment to sustainable living or initiatives that give back to local communities. It’s important to note that the companies that top the ranking do more than just communicate their purpose, they also see results on their bottom line.

Looking at the three main areas companies need to address to fulfil their purpose; ‘corporate communications’, ‘business strategy’ and ‘culture’, the Index found that companies that enact their brand purpose through adding meaning to products and services allows consumers to trust the brand and connect with the company on an emotional level. In a world where so many companies struggle to stay profitable while competing on price, this is a valuable differentiator. Unilever, which ranks number one in the Index, reports a direct effect on sales: in the US, Unilever’s ‘responsible consumption’ products have grown considerably in the past three years, and the brands that communicate on sustainability outpaced the global average with a 10% increase in sales.

Deliver on your promise
Managing a brand today is only getting more challenging now that consumers and other relevant stakeholders, such as NGOs, have the power and the tools, through social media for example, to affect a company’s reputation if it doesn’t deliver on its promise. This makes it fundamental for companies to follow through on their stated purpose – there’s a crucial difference between the companies that simply state their purpose, and the ones that incorporate the purpose in their business strategy and in their company culture. Organisations that are truly interested in making an impact gain trust and reduce their reputational risk, whilst the ones who do not fulfil the promises they talk about will find themselves in a precarious position in a world calling for increased transparency.

To succeed in efficiently sharing their purpose with their stakeholders, companies must have a clear, long-term plan aligned with their overall business strategy.

Instead of pitching individual CSR stories to the media with a ‘splatter gun’ approach, companies should develop an overarching narrative that works inside and outside the organisation. Put simply, it should tell the story about what the company does for employees, customers and society and why, as well as its vision for the future. A company that does this well is IKEA. Acknowledging the business potential of providing solutions that enable customers to live a more sustainable life at home, IKEA’s sustainability strategy, “People & Planet Positive”, covers all aspects of its business and value chain.  IKEA’s narrative around “People and Planet Positive’ is natural and authentic as it aligns with their business plan for growth. Their overarching ambition of becoming carbon neutral by 2020 isn’t an unattainable PR stunt, it’s positioned as a core part of their business plan, and the best way of safeguarding IKEA’s position as a leader in retail for years to come.

Told in the right channels and arenas, authentic narratives ensure that stakeholders understand an organisation’s purpose and ultimately build trust (in a world where people have less trust in business than ever before). If more organisations can build a believable ‘brand purpose’, and not be afraid to show how sustainable commitments benefit themselves and others, they are far more likely to build stronger relationships with customers and other relevant stakeholders, and improve their bottom line.


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