SALİM KADIBEŞEGİL

Should a Brand be “Ethical” in terms of its Promises? This article was published at Brandmap’s March 2016 issue..
Salim Kadibesegil

maxim.com

You must have heard the story of Martin Shkreli, who was born in 1983. Shkreli, who is based in the USA and owns hedge funds, likes to be close to the drug industry. He is the founder and former CEO of Turing Pharmaceuticals. We started hearing his name more when Turing received a patent for the drug called Daraprim in September 2015. Daraprim, which is defined as an antiparasitic drug, is classified as one of the “main drugs” used very often especially by AIDS patients. Shkreli raised the price of the drug from USD 13.50 to USD 750 per tablet as soon as he received the patent. This 5556% price increase shocked everybody. He could quite shamelessly say “In fact, it’s a life-saving drug. It should be more expensive.”
Martin Shkreli, whose career is full of very complicated relationships and matters for the courts although he is very young, was arrested by the FBI on charges of corruption and fraud in December 2015. However, he was released on bail. Shikreli, who was subpoenaed to appear before the U.S. House Committee on Oversight and Government Reform, exercised his rights rising from the Fifth Amendment of the U.S. Constitution and didn‘t answer any questions. Shkreli became so insolent that he tweeted “Hard to accept that these imbeciles represent the people in our government.” after he had been released by the U.S. House Committee on Oversight and Government Reform.
In fact, the logic behind Shkreli’s various statements known by the public is very simple and clear: “It’s my money and my company. This is my drug, I have its patent, I manufacture it and it fills a highly crucial gap. I can sell it at whatever price I want. Mind your own business!” Shkreli couldn’t make the money that he was hoping to earn through his venture which led him to be referred as “the most hated man in America”. He handed the company over as a result of intense pressure. He spends his days in a time tunnel where his future is unknown.
Let’s turn the page to Uber.
This is how Uber tells the beginning of its story on its website: “On a snowy Paris evening in 2008, Travis Kalanick and Garrett Camp had trouble hailing a cab. So they came up with a simple idea—tap a button, get a ride.”

newsweek.com

Uber, which was founded in 2009, not a long time ago, is actually no more than “software” like many other similar successful examples. Its adventure, which begun in the USA, started to expand into global markets in 2012. It became the “alternative taxi” application used in more than 300 cities in 58 countries in 2015. More interestingly, it was worth more than USD 60 billion according to the calculations in 2015, and it drew away from the traditional automotive manufacturers of the USA through that figure.
Some people applaud the success that a “taxi” company which does not have even a single vehicle of its own has had in such a short time whilst widespread protests and legal cases against Uber are continuing especially in the European countries. Moreover, two Uber managers were arrested in France in June 2015.
Taxi drivers claim that Uber does not pay any tax, that it does not have taxi licenses, that its drivers do not receive the necessary training, and that the technical and safety audits of its vehicles are not conducted by official authorities, and therefore, customers’ lives are put in danger. The number of complaints about Uber’s management style are increasing from day to day. It is claimed that Uber counterattacks the people and corporations that criticise or speak against it using guerrilla-like methods.
Official authorities do not conceal the fact that the company’s business model causes unfair competition when thousands of taxi drivers remain unemployed since consumers prefer Uber. We don’t know how much the taxi drivers who were shown on TV beating Uber’s drivers in the streets of Paris disturbed Uber managers, but it’s widely believed that there is an “ethical” problem.
Apple is in trouble with the FBI. The Federal Bureau of Investigation (FBI) asked Apple to mine data from the phone used by one of the shooters of the terrorist attacks in California, where 14 people were killed last year. The company turned down the request by emphasising the protection of freedoms. Then, the FBI got an order issued in accordance with its request and repeated that request. This time, Apple’s CEO, Tim Cook, appeared and published a letter of “ethics” which would inspire lots of brands.
Apple’s CEO, Tim Cook, stated that they would object to the order which asked them to develop new software to break their own security measures in a letter addressed to millions of customers of the company and published on Apple’s website. Cook said that there had never been such an order, and that it would have chilling effects in terms of government access to personal data.
A brand is having an “ethical” fight against a government agency as powerful as the FBI and against the American justice for the first time in the history of brands!
When we look at the world of brands, we see that the factor which will affect basic consumer preferences is “brand promises”. “I can wash it better. I am cheaper. You couldn’t ask for more. This is the most economical one. You dreamed of it, we made it.”

Being ethical may not be perceived as a promise since it is believed that “we should be ethical in any case”. Maybe, being ethical does not suit the needs of brands! Why should a brand be ethical? However, the damp walls of the brands market is full of brands which did not take the issue of ethics very seriously and whoso logos became “mouldy”.

Linda Fisher Thornton, who is one of the management consultants who has made these issues her business, has some remarkable findings. Thornton points out a shift in companies’ brand value from tangible value to intangible value. She emphasises that this situation has dramatically changed the way in which companies conduct and manage business in recent years. I agree with that if a company’s concern is to create value at the end of the day. 80% of company value consisted entirely of tangible value in 1980s. Nowadays, it is replaced with intangible value such as reputation, innovation, patents, R&D competences, social responsibilities, management quality and ethics.

themarketingscope.com

Thornton refers to Millard Brown’s report, BrandZ, in her article. The report says that consumers shop globally, and that they pay attention to ethical evaluation when they decide to buy something. They even question how each purchase that they make during the recession will impact their communities and the planet.

Thornton shows in 7 statements that ethical approaches of brands impact brand value:

1. Customers are thinking more before buying.
2. They are evaluating the ethics of companies and products.
3. They are making responsible consumption a priority.
4. They place their “vote” for ethical business by purchasing from ethical companies.
5. They value trust.
6. They expect ethical behaviour.
7. They spread the word when companies are responsible and offer quality and value.

In addition to Thornton’s findings, according to a survey released by the Fleishman-Hillard public relations firm during the World Economic Forum in Davos, seven out of ten CEOs said that more than 40% of their company’s market capitalization came from their corporate brand reputation.

Brands compete with their “promises”. These promises are generally defined as the basic statements which show the superiority of a product compared to its competitors. These statements provide consumer benefit which makes consumers buy products. Where will “ethics” be positioned as a promise in this entire process? If being ethical really triggers reputation and if reputation triggers in no small measure the market values of companies, where and how the relationship between a toothpaste’s preventing cavities and being ethical will be represented as a promise?

Today, brands’ statements especially about social responsibility and environmental consciousness have become an element of competition to such an extent that they are used in TV advertisements. Well, do you think it is ethical for these brands and their manufacturers “which should be responsible and environmentally-conscious anyway” to tell that they are socially-responsible and environmentally-conscious on TV as it’s “such a big deal”?

Furthermore, there is a list of “companies whose ethics grades go through the floor”. Huffpost Business published the results of the research which have been conducted for seven years by a Swiss research firm, Covalence. Regulators, individual and corporate investors and non-governmental organisations preparing banners for protests look askance but seriously at the rankings of these companies, where Monsanto, the American food giant, comes first.
In fact, “ethics” may not be included in brand promises, but brands have to live in an ethical world!