Sustainability, Customer Trust & Brand Building Prof. Joffi Thomas ISA Seminar on Sustainability Perspectives December 15, 2011

How does sustainability initiatives affect consumer choice / consumer loyalty? How can this understanding be used in managing customer relationships? Managing brands?

Branding Brand as relationship partner Communication model of relationship marketing Trust: Key Feature of any Relationship Trust as a relationship evaluation tool

Communication - based Model for Managing Relationships Corporate Level Message Sources Admin. Operations Marketing Finance H R Legal Marketing Level Message Sources Product Mix Price Mix Mktg Commn. Distrbn Mix Mix Marketing Communication Level Message Sources Personal Advert Sales Direct Public Packa- Events Sales ising Promotion Marketing Relations ging Customers Other Stake Holders Employees Investors, Govt Consumers Local Community Media,Interest Groups Distributors Suppliers Competition Brand Relationships Brand Value I N T E R A C V Y

Customer Trust What is trust? How does trust develop in a relationship? Trust , Brand Equity and Sustainability

Understanding TRUST; Earning Trust

Trust and Trustworthiness Evaluation Dimensions of Trustworthiness Evaluation Relationship Entities and Trustworthiness Evaluation Effects of Trust on Business Outcomes

Trustworthiness Evaluation and Trust Expectancy of positive outcomes (or non negative outcomes) that one can receive based on the expected actions of another party in an interaction characterized by uncertainty Trustworthiness Evaluation: “ the extent to which the trustee can trust the trustor” (Mayor, 1995) - on the attributes of the trustor - based on cues continuously received over interactions

Relationship Outcomes Trustworthiness Evaluation e.g. Purchase Intentions Word-of-mouth Repeat Purchase Price Premiums Cues used by Consumers Cue 1 Cue 3 Cue 2 Dimension II Dimension I Consumer Trust Trustworthiness Evaluation

Trustworthiness Dimensions Generic Dimensions: ability, benevolence and integrity (Mayor,1995; McKnight et al 2002) Ability is that group of skills competencies and characteristics that enable a party to have influence in some domain (Mayor, 1995) Benevolence is the extent to which a party believes that the benevolent party has intentions and motives beneficial to the party” (Ganesan, 1994) Integrity refers to the trustor’s perception that the trustee adheres to a certain set of principles the trustee finds acceptable. (Mayor,1995)

Trustworthiness Evaluation and Trust Cognitive, Affective and Visual cues Cue 1 Cue 2 . . . . Cue 1 Cue 2 . . . . Cue 1 Cue 2 . . . . Benevolence Ability Integrity Trustworthiness Evaluation TRUST

Understanding & Earning Trust

Customer Relationship & TRUST Three entities in a customer relationship Corporate Brand Product Brand Customer Interface CBT,PBT and CIFT Reciprocal Effects ---(Product Brand Integrity: “consistency between the physical appearance, mental imagery and the intended use of the product”)

CUSTOMER FIRM Corporate Brand Product Brand Customer Interface Customer Evaluation

Customer Interface Trust Three Facets of Trust and Inter-relationships Corporate Brand Trust Product Brand Trust Customer Interface Trust

Trustworthiness Evaluation, Trust Facets and Customer Trust Cognitive, Affective and Visual Cues Cue1 Cue2 . . . Cue1 Cue2 . . . Cue1 Cue2 . . . Benevolence Ability Integrity Trustworthiness Evaluation Product Brand Trust Corporate Brand Trust Customer Interface Trust Trust Facets Customer Trust

Understanding TRUST and its Effects

Effects of TRUST on Business Outcomes Customer Management Customer Acquisition Customer Retention Customer Trust affects Business Outcomes WOM Customer Perceived Value

Effects of TRUST on Business Outcomes Outcomes: word of mouth communication wom: “informal communications directed at other consumers about the ownership, usage or characteristics of particular goods and services and/or their sellers” Mediated by Customer Perceived Value Value: “The perceived utility relative to its costs, assessed by the consumer and based on a simultaneous considerations of what is received and what is given up to receive it.”

Effects of Trust on Business Outcomes Word-of-mouth Communications EXISTING CUSTOMER POTENTIAL CUSTOMER Brand I Brand II TRUST TRUST Purchase Intentions (Model II) VALUE VALUE Brand III Word-of-mouth Communications (Model I) Model I : Existing Customers: Customer Trust & Perceived Value Word-of-Mouth Model II: Potential Customers: Customer Trust & Perceived Value Purchase Intentions

Customer Interface Trust Trustworthiness Evaluation Ability Corporate Brand Trust Benevolence Integrity Ability Product Brand Trust Benevolence Value Word-of-mouth Integrity Ability Customer Interface Trust Benevolence Integrity

Overview of Scale Development, Testing and Questionnaire Development Literature Review In-home in-depth Interviews Qualitative Testing Quantitative Testing Questionnaire Format Questionnaire Pre-testing Item Generation Questionnaire Development Literature Review In-depth in Home Interviews Discussion with Practitioners Item Testing Final Questionnaire Operationalisation of Study Constructs

Measurement: Corporate Brand Trustworthiness Corporate Brand Ability well respected for competencies strong prospects for future growth products leader in the field products of high quality Corporate Brand Benevolence Takes care of customers very pleasant to deal with thoughts evoke positive feelings understand and satisfies the customer needs Corporate Brand Integrity fulfills promises and commitments sincere and genuine fair with customers

Testing the Model BRANDS: MODEL I: Existing Customers’ Evaluations Indica, Santro, Wagon R, Zen MODEL I: Existing Customers’ Evaluations Dataset 1: ALL BRANDS - 461 Brand Evaluations Dataset 2: OWNED BRANDS -126 Brand Evaluations MODEL 2: Potential Customers’ Evaluations Dataset 1: ALL BRANDS -177 Brand Evaluations Dataset 2: OWNED BRANDS

Brand Evaluations of Existing Customers USER BRAND EVALUATIONS (ALL BRANDS) Brand A (INDICA) 97 Brand B (SANTRO) 131 Brand C (WAGON R) 122 BRAND D (ZEN) 111 Total Brand Evaluations 461 OWNERS BRAND EVALUATIONS 31 32 126

Potential Customers: Brand Evaluations Total: 177 Brand A (INDICA) : 43 Brand B (SANTRO) : 44 Brand C (WAGON R) : 45 BRAND D (ZEN) : 45

Total Effects of Trust Facets on Relationship Outcomes Model Dataset CBT on WOM (PI) PBT on WOM (PI) CIFT on WOM (PI) Std. Unstd. Existing Customers ALLBRANDS (461) 0.0792 0.106 0.7470 0.866 0.1608 0.1879 OWNED BRANDS (126) 0.1925 0.2558 0.5945 0.677 0.1645 0.194 Potential Customers 177 Evaluations 0.0932 0.114 0.7675 0.82 NS

Key Features Captures trustworthiness evaluation process Differential effects of three trust facets on wom / future intentions Relationships between trust facets CPV partially mediating TRUST wom / future intentions

Sustainability & Customer Trust Impact of Corporate Brand Trust Corporate Brand integrity, benevolence, ability trustworthiness evaluations Corporate brand trust influencing consumer behaviour Sustainability practices building corporate brand trust

Sustainability & Customer Trust Product Brand Trust Product brand benevolence; ability trustworthiness evaluation Sustainability as a dimension of the value proposition Customer Interface Customer interface integrity, benevolence, ability trustworthiness evaluations (Employees of service providers)

Sustainability and Brand Equity Firm need to demonstrate its ability to understand and address changing consumers / social concerns Product Brand need to evolve itself by offering superior quality products Consistency between rational benefits/values and emotional benefits/ values Need for product innovations Customer interface should augment the value proposition of the brand through addressing pre- sale and post sale service requirements

Sustainability and Brand Equity: Environment Audit to identify Sustainability Initiatives Changing customer demands Society, Technology and Resources (STaR) Problems: Water, energy, waste disposal, Global Warming Customer evaluation of relationship Product Brand (market offerings), Corporate Brand and customer interface (company employees/channel partners) Effect of trust facets on relationship outcomes Brands needs to stay relevant to provide superior value By aligning corporate brand, product brand and customer interface

Monitor Brand Relationships Manage Brand Relationships Brand Audit: Action Program for Brand Building Use trust model to understand the effects of trust facets and their trustworthiness dimensions on relationship outcomes for each brand. Understand brand characteristics, strengths and weaknesses relative to each other . Evaluate alternative brand strategies based of the effects of trust facets on relationship outcomes and business objectives. Identify significant trustworthiness dimensions. Evaluate alternative marketing programs based of the effects of trustworthiness dimensions on trust facets Profile brands after a predetermined time interval to monitor the effects. Monitor Brand Relationships Manage Brand Relationships PROFILE COMPETING BRANDS COMPARE BRAND PROFILES ALLOCATE RESOURCES AMONG TRUST FACETS DESIGN PROGRAMS TO DEVELOP TRUST IN FACETS

Thank You