Responsible marketing, which is also known as socially responsible marketing, is a form of marketing in which enterprises, while undertaking certain social responsibilities, use the influence of news and public opinion and advertising to improve their own reputation, enhance public recognition and brand awareness, increase customer loyalty, and ultimately increase sales. Philip Kotler, known as “the father of modern marketing”, asserts that the core of socially responsible marketing is trust. The purpose of socially responsible marketing is to establish trust between enterprises and customers.
Better community relations, sustainable production and distribution, and respecting user data privacy are examples of responsible marketing which balance corporate profitability and social value.
A clothing company’s marketing team may launch a marketing campaign and encourage consumers to buy a bundle of socks instead of just one pair. Using this model, the company will donate a bundle of socks to military personnel overseas or to local homeless shelters for each bundle sold. By doing this, the company brands itself as socially responsible and charitable, which ultimately attracts consumers who are motivated to socially responsible commitments and who want to support the welfare of the community. In 2019, Nielsen surveyed 30,000 consumers in 60 countries and found that 66% of them were willing to pay more for companies that demonstrated social commitment.
In the retail industry, companies can choose to use recyclable and eco-friendly packaging materials; for the mobile phone manufacturing industry, companies can improve the public’s awareness of data privacy and for enterprises selling alcohol, they can choose to not target vulnerable groups such as children, etc.
In terms of ESG (environment, society, governance) ratings, rating agencies such as Refinitiv, and FTSE Russell evaluate whether the enterprise carries out responsible marketing as an indicator to evaluate the Social (S) dimension of an enterprise. According to historic data for this indicator, investors can tell whether the company regards CSR as a single marketing channel or whether the company actually implements the values of responsible marketing as part of its business processes.
Responsible marketing means more for the internet consumer financing
According to data provider Wind, the coverage rate of credit records included in the credit reporting system of the Central Bank of China is only 27%, far lower than that of 75% in the United States, and there are about 600-700 million individuals without credit reference records.
Those not included in credit reference records include the elderly, blue collar workers, young white-collar workers, students and unemployed residents. For these groups, their daily wages may not necessarily meet their daily consumption demands, but banks and other financial institutions cannot provide them with loans. Thus, this group has become an additional target for licensed consumer financing companies and internet consumer financing. Such individuals are categorized as a financially vulnerable group in China since many of them are more willing to accept loan offers, but have an insufficient ability to understand the hidden traps to lending schemes.
Taking advantage of the rise in use of short video Kuaishou and Douyin in second and third tier cities, internet consumer financing companies can more easily target individuals in these cities. Their advertisements, full of poor logic, and brainwashing propaganda, often are even bumped up by negative comments and forwards, triggering platform algorithms to push these short videos, thus, increasing the traffic to it. According to Vista, an internet financial lending platform can spend as much as RMB3m a day on a short video platform for advertising.
Currently, short video platforms have become an important channel to capture clients for online consumer financing companies. The cost of obtaining a single user from internet information and advertising, for example WeChat Moments, has exceeded RMB1,000 while short video platform, such as Kuaishou and Douyin, only amounts to RMB30 to RMB50 per user.
There are no clear regulatory rules to advertising internet loans. In March 2019, the Internet Finance Association of China issued a risk alert for fraud and infringement of consumers’ rights and interests of false advertising for online loans. It asked all those in the online lending business and relevant institutions with online microfinancing services to strictly abide to self-discipline requirements, to adhere to compliance and prudent operation, and to not publish false advertising in violation of regulations.
The industry, overall, still has not seen much restraint from online loan advertising. Internet consumer financing companies still have long ways to go to improve their socially responsibility.
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