1. Project report on Impact of Corporate Social Responsibility on
Consumer Preference for a Brand with special reference to Classmate
brand of ITC
By
Muzamil Quadir
IV SEMESTER MBA
(11MB5105)
Guide
PROF. JULIE SUNIL
Project Report submitted to the University of Mysore in partial fulfilment of the requirements
of IV Semester MBA degree examinations – 2013
RIMS
Ramaiah Institute of Management Studies
#15, New BEL Road, MSRIT Post, M S Ramaiah Nagar
Bangalore – 560054
1

2. Certificate from the Guide
Ramaiah Institute of Management Studies
Bangalore - 560054
CERTIFICATE
This is to certify that this Project Report on “Impact of Corporate Social
Responsibility on Consumer Preference for a Brand with special reference
to Classmate brand of ITC” is a bona fide study of Muzamil Quadir and carried out
under my guidance and supervision.
Place: Bangalore
Date: Prof. Julie Sunil
2

3. Certificate from the Dean
Ramaiah Institute of Management Studies
Bangalore - 560054
CERTIFICATE
This is to certify that this Project Report on “Impact of Corporate Social
Responsibility on Consumer Preference for a Brand with special reference
to Classmate brand of ITC” is a bonafide study of MUZAMIL QUADIR and carried
while the study in the college under my guidance and supervision of Prof. Julie Sunil.
Place: Bangalore
Place: Dr.Rejimon
Thomas
DEAN
3

4. DECLARATION
I hereby declare that this Project Report on “Impact of Corporate Social
Responsibility on Consumer Preference for a Brand with special reference
to Classmate brand of ITC” submitted in partial fulfilment of the requirement for IV
Semester MBA Degree examinations 2013 of University of Mysore through Ramaiah
Institute of Management Studies is my original work and not submitted to any other
university. This work has been done under the supervision of Prof. Julie Sunil in Ramaiah
Institute of Management Studies, Bangalore.
Place: Bangalore
Date: Signature of the Student
Muzamil Quadir
(11MB5105)
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5. ACKNOWLEDGEMENT
Acknowledgements are due to many persons without whose cooperation, support.
Encouragement and guidance, this dissertation would not have been carried out.
I owe a great debt of gratitude to my guide Prof. Julie Sunil for her scholarly guidance,
constant help and encouragement throughout the study.
I also express my gratitude to the University of Mysore for providing me an opportunity to
do this dissertation work.
I am extremely thankful to the chairman, Department of Management, university of Mysore,
Mysore for providing an opportunity to do this work for my MBA Degree.
I also express my sincere thanks to Dr. M. R Pattabhiram, Director, Ramaiah Institute of
Management studies, for providing an opportunity to do my MBA in the Institute.
I also express my sincere thanks to Dr.Rejimon Thomas, Dean, Ramaiah Institute of
Management Studies, for providing an opportunity to do my MBA in the Institute.
I also express my sincere thanks to all faculty members and non- teaching staff of Ramaiah
Institute of Management Studies who have supported me to do this dissertation work.
I also owe my gratitude to the librarian and the staff, Ramaiah Institute of Management
Studies for helping me to get relevant literature from time to time.
I would like to express my grateful acknowledgement to those writes whose contributions are
quoted in the study as well as in the bibliography.
Place: Bangalore
Date:
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6. TABLE OF CONTENTS
Chapter Particulars Page No.
number
Executive Summary 1
Introduction 2-12
Limitations of the research 13
Ch-1 Review of literature 14-32
1.1 CSR definition 14
1.2 Ethics and CSR 14
1.3 Research on CSR relationships 25
1.4 Stakeholders and Shareholders Relationships with CSR 26
1.5 CSR and brand trust 27
1.6 initiatives of Indian companies 31
1.7 Government initiatives to promote corporate social responsibility 29
among companies
Ch-2 Analysis and Findings 34-56
2.1 Chapter 2.1: Analysis and findings of data collected from consumers 41
Ch-3 Chapter 3: Responses of retailers 46-56
3.1 These below are the responses by retailers on rating the ITC 52
(CLASSMATE) as supplier.
3.2: Regression Analysis 57
Ch-4 Summary of findings 60
Ch-5 Recommendations and suggestions 62
Ch-6 Bibliography and Appendix 64
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7. LIST OF FIGURES
SL FIGURE PARTICULARS PAGE
NO NO. NO
1 FIG NO. 1 Ranking of brands 34
2 FIG NO. 2 Recall percentage 35
3 FIG NO. 3 Preference of classmate 35
4 FIG NO. 4 Attention towards CSR 36
5 FIG NO. 5 Premium price 36
6 FIG NO. 6 Deliberately buy Classmate 37
7 FIG NO. 7 Recommend others 37
8 FIG NO. 8 Sense of fulfilment 38
9 FIG NO. 9 Helping our country 39
10 FIG NO. 10 Giving back to society 40
11 FIG NO. 11 Advertising and publicity purposes 40
12 FIG NO. 12 Education for less privileged 41
13 FIG NO. 13 Save environment 41
14 FIG NO. 14 Public health and hygiene 42
15 FIG NO. 15 Women empowerment 42
16 FIG NO. 16 42
Rural development
17 43
Most desired CSR
18 FIG NO. 17 44
Gender
19 FIG NO. 18 44
Age
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8. SL. Figure no Page no
No. Particulars
20 FIG NO. 19 44
Occupation
21 FIG NO. 20 45
Monthly income
22 FIG NO. 21 45
Educational level
23 Retailers 46
FIG NO. 22 Time of association
24 FIG NO. 23 47
Familiarity with ITC products
25 FIG NO. 24 47
Quality
26 FIG NO. 25 48
Sales performance
27 FIG NO. 26 48
Promotional schemes
28 FIG NO. 27 49
Rating on the basis of monthly sales
29 FIG NO. 28 50
Margins
30 FIG NO. 29 50
Shelf arrangement
31 FIG NO. 30 51
Services
32 FIG NO. 31 51
Promotion
33 FIG NO. 32 52
Feeling of change in society
34 FIG NO. 33 52
Interested in offering help
35 FIG NO. 34 53
Sense of responsibility
SL Table no. Page
NO. Particulars number
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9. 36 FIG NO. 35 53
Profit margins
37 FIG NO. 36 54
Overall performance of scheme
38 FIG NO. 37 55
Stake in the scheme
39 FIG NO. 38 56
Awareness among consumers
40 FIG NO. 39 59
Readiness to pay
TABLES
SL TABLE PARTICULARS PAGE
NO NO NO
1 Table-1 Model summary 57
2 Table-2 Coefficients 58
3 Table-3 ANOVA 58
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10. EXECUTIVE SUMMARY
This project is mainly focused on studying the consumer preference of Classmate stationery
by analyzing and studying the behavior of consumers towards the CSR initiatives undertaken
by companies. The other main purpose is to study the factors which are most important in
determination of a consumers‟ preference of Classmate stationery. In this project various
factors were determined to study the preference of consumers and various quantitative tools
were used to study the same thoroughly.
Since CSR has really become one of the most discussed and debated topic, the present
research is aimed to explain whether the CSR initiatives taken up by companies help them in
securing consumer preference keeping in view the interests of all stakeholders. Earlier
researches identified that corporate social responsibility (CSR) has had a positive impact on
consumer behavior, but even so little was known about these effects. The present research
investigates the relationship between CSR and consumer preference, as well as the variables
that best represent CSR. The research also looks into the matter of charging premium price
for products and the consumers‟ response towards the same.
The study was conducted by administering two questionnaires for consumers and retailers
separately. The questionnaire for consumers was circulated online and a paper questionnaire
was administered for retailers. The sampling method considered in this research is non-
probabilistic sampling viz. convenience sampling and the sample size is 100 and 30 of
consumers and retailers respectively. The respondents are from all walks of life including
students and employees. The data collected was first tabulated and presented in excel and
then SPSS data viewer was used to analyze it. The data was analyzed using regression
analysis. As per the findings collected and analyzed the CSR initiatives are taken quite
seriously and positively by consumers and it does influence in shaping their preference
towards a particular brand. Overall this study explores the linkages between CSR and
consumer preference. This study provides a foundation for further research and identifies
several important implications for the leaders of organizations to consider in terms of CSR
investment and the effects on brands within their portfolio. This positive reaction should
create a positive effect towards brand feelings and trust, for consumers of products and
services of companies that engage in CSR activities.
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11. INTRODUCTION
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12. COMPANY PROFILE
ITC is one of India's foremost private sector companies with a market capitalisation of nearly
US $ 14 billion and a turnover of over US $ 5 billion. ITC is rated among the World's Best
Big Companies, Asia's 'Fab 50' and the World's Most Reputable Companies by Forbes
magazine, among India's Most Respected Companies by Business World and among India's
Most Valuable Companies by Business Today. ITC ranks among India's `10 Most Valuable
(Company) Brands', in a study conducted by Brand Finance and published by the Economic
Times. ITC also ranks among Asia's 50 best performing companies compiled by Business
Week.
ITC has a diversified presence in Cigarettes, Hotels, Paperboards & Specialty Papers,
Packaging, Agri-Business, Packaged Foods & Confectionery, Information Technology,
Branded Apparel, Personal Care, Stationery, Safety Matches and other FMCG products.
While ITC is an outstanding market leader in its traditional businesses of Cigarettes, Hotels,
Paperboards, Packaging and Agri-Exports, it is rapidly gaining market share even in its
nascent businesses of Packaged Foods & Confectionery, Branded Apparel, Personal Care and
Stationery.
As one of India's most valuable and respected corporations, ITC is widely perceived to be
dedicatedly nation-oriented. Chairman Y C Deveshwar calls this source of inspiration "a
commitment beyond the market". In his own words: "ITC believes that its aspiration to create
enduring value for the nation provides the motive force to sustain growing shareholder value.
ITC practices this philosophy by not only driving each of its businesses towards international
competitiveness but by also consciously contributing to enhancing the competitiveness of the
larger value chain of which it is a part."
ITC's diversified status originates from its corporate strategy aimed at creating multiple
drivers of growth anchored on its time-tested core competencies: unmatched distribution
reach, superior brand-building capabilities, effective supply chain management and
acknowledged service skills in hoteliering. Over time, the strategic forays into new
businesses are expected to garner a significant share of these emerging high-growth markets
in India.
ITC's Agri-Business is one of India's largest exporters of agricultural products. ITC is one of
the country's biggest foreign exchange earners (US $ 3.2 billion in the last decade). The
Company's 'e-Choupal' initiative is enabling Indian agriculture significantly enhance its
competitiveness by empowering Indian farmers through the power of the Internet. This
transformational strategy, which has already become the subject matter of a case study at
Harvard Business School, is expected to progressively create for ITC a huge rural
distribution infrastructure, significantly enhancing the Company's marketing reach.
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13. ITC's wholly owned Information Technology subsidiary, ITC InfoTech India Limited, is
aggressively pursuing emerging opportunities in providing end-to-end IT solutions, including
e-enabled services and business process outsourcing.
ITC's production facilities and hotels have won numerous national and international awards
for quality, productivity, safety and environment management systems. ITC was the first
company in India to voluntarily seek a corporate governance rating.
ITC employs over 25,000 people at more than 60 locations across India. The Company
continuously endeavours to enhance its wealth generating capabilities in a globalising
environment to consistently reward more than 3, 60,000 shareholders, fulfil the aspirations of
its stakeholders and meet societal expectations. This over-arching vision of the company is
expressively captured in its corporate positioning statement: "Enduring Value. For the nation
For the Shareholder."
History
ITC was incorporated on August 24, 1910 under the name of 'Imperial Tobacco Company of
India Limited'. Its beginnings were humble. A leased office on Radha Bazar Lane, Kolkata,
was the centre of the Company's existence. The Company celebrated its 16th birthday on
August 24, 1926, by purchasing the plot of land situated at 37, Chowringhee, (now renamed
J.L. Nehru Road) Kolkata, for the sum of Rs 310,000. This decision of the Company was
historic in more ways than one. It was to mark the beginning of a long and eventful journey
into India's future. The Company's headquarter building, 'Virginia House', which came up on
that plot of land two years later, would go on to become one of Kolkata's most venerated
landmarks. The Company's ownership progressively Indianised, and the name of the
Company was changed to I.T.C. Limited in 1974. In recognition of the Company's multi-
business portfolio encompassing a wide range of businesses - Cigarettes & Tobacco, Hotels,
Information Technology, Packaging, Paperboards & Specialty Papers, Agri-Exports, Foods,
Lifestyle Retailing and Greeting Gifting & Stationery - the full stops in the Company's name
were removed effective September 18, 2001. The Company now stands rechristened 'ITC
Limited'.
Though the first six decades of the Company's existence were primarily devoted to the
growth and consolidation of the Cigarettes and Leaf Tobacco businesses, the Seventies
witnessed the beginnings of a corporate transformation that would usher in momentous
changes in the life of the Company.
ITC's Packaging & Printing Business was set up in 1925 as a strategic backward integration
for ITC's Cigarettes business. It is today India's most sophisticated packaging house.
In 1975 the Company launched its Hotels business with the acquisition of a hotel in Chennai
which was rechristened 'ITC-Welcomgroup Hotel Chola'. The objective of ITC's entry into
the hotels business was rooted in the concept of creating value for the nation. ITC chose the
hotels business for its potential to earn high levels of foreign exchange, create tourism
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14. infrastructure and generate large scale direct and indirect employment. Since then ITC's
Hotels business has grown to occupy a position of leadership, with over 100 owned and
managed properties spread across India.
In 1979, ITC entered the Paperboards business by promoting ITC Bhadrachalam Paperboards
Limited, which today has become the market leader in India. Bhadrachalam Paperboards
amalgamated with the Company effective March 13, 2002 and became a Division of the
Company, Bhadrachalam Paperboards Division. In November 2002, this division merged
with the Company's Tribeni Tissues Division to form the Paperboards & Specialty Papers
Division. ITC's paperboards' technology, productivity, quality and manufacturing processes
are comparable to the best in the world. It has also made an immense contribution to the
development of Sarapaka, an economically backward area in the state of Andhra Pradesh. It
is directly involved in education, environmental protection and community development. In
2004, ITC acquired the paperboard manufacturing facility of BILT Industrial Packaging Co.
Ltd (BIPCO), near Coimbatore, Tamil Nadu. The Kovai Unit allows ITC to improve
Customer service with reduced lead time and a wider product range.
In 1985, ITC set up Surya Tobacco Co. in Nepal as an Indo-Nepal and British joint venture.
Since inception, its shares have been held by ITC, British American Tobacco and various
independent shareholders in Nepal. In August 2002, Surya Tobacco became a subsidiary of
ITC Limited and its name was changed to Surya Nepal Private Limited (Surya Nepal).
In 1990, ITC acquired Tribeni Tissues Limited, a Specialty paper manufacturing company
and a major supplier of tissue paper to the cigarette industry. The merged entity was named
the Tribeni Tissues Division (TTD). To harness strategic and operational synergies, TTD was
merged with the Bhadrachalam Paperboards Division to form the Paperboards & Specialty
Papers Division in November 2002.
Also in 1990, leveraging its agri-sourcing competency, ITC set up the Agri Business
Division for export of agri-commodities. The Division is today one of India's largest
exporters. ITC's unique and now widely acknowledged e-Choupal initiative began in 2000
with soya farmers in Madhya Pradesh. Now it extends to 10 states covering over 4 million
farmers. ITC's first rural mall, christened 'Choupal Saagar' was inaugurated in August 2004
at Sehore. On the rural retail front, 24 'Choupal Saagars' are now operatonal in the 3 states of
Madhya Pradesh, Maharashtra and Uttar Pradesh.
In 2000, ITC launched a line of high quality greeting cards under the brand name
'Expressions'. In 2002, the product range was enlarged with the introduction of Gift
wrappers, Autograph books and Slam books. In the same year, ITC also launched
'Expressions Matrubhasha', a vernacular range of greeting cards in eight languages and
'Expressions Paperkraft', a range of premium stationery products. In 2003, the company
rolled out 'Classmate', a range of notebooks in the school stationery segment.
ITC also entered the Lifestyle Retailing business with the Wills Sport range of international
quality relaxed wear for men and women in 2000. The Wills Lifestyle chain of exclusive
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15. stores later expanded its range to include Wills Classic formal wear (2002) and Wills
Clublife evening wear (2003). ITC also initiated a foray into the popular segment with its
men's wear brand, John Players, in 2002. In 2006, Wills Lifestyle became title partner of the
country's most premier fashion event - Wills Lifestyle India Fashion Week - that has gained
recognition from buyers and retailers as the single largest B-2-B platform for the Fashion
Design industry. To mark the occasion, ITC launched a special 'Celebration Series', taking
the event forward to consumers. In 2007, the Company introduced 'Miss Players'- a fashion
brand in the popular segment for the young woman.
In 2000, ITC spun off its information technology business into a wholly owned subsidiary,
ITC Infotech India Limited, to more aggressively pursue emerging opportunities in this area.
Today ITC Infotech is one of India‟s fastest growing global IT and IT-enabled services
companies and has established itself as a key player in offshore outsourcing, providing
outsourced IT solutions and services to leading global customers across key focus verticals -
Manufacturing, BFSI (Banking, Financial Services & Insurance), CPG&R (Consumer
Packaged Goods & Retail), THT (Travel, Hospitality and Transportation) and Media &
Entertainment.
ITC's foray into the Foods business is an outstanding example of successfully blending
multiple internal competencies to create a new driver of business growth. It began in August
2001 with the introduction of 'Kitchens of India' ready-to-eat Indian gourmet dishes. In 2002,
ITC entered the confectionery and staples segments with the launch of the brands mint-o and
Candyman confectionery and Aashirvaad atta (wheat flour). 2003 witnessed the introduction
of Sunfeast as the Company entered the biscuits segment. ITC's entered the fast growing
branded snacks category with Bingo! in 2007. In just seven years, the Foods business has
grown to a significant size with over 200 differentiated products under six distinctive brands,
with an enviable distribution reach, a rapidly growing market share and a solid market
standing.
In 2002, ITC's philosophy of contributing to enhancing the competitiveness of the entire
value chain found yet another expression in the Safety Matches initiative. ITC now markets
popular safety matches brands like iKno, Mangaldeep, Aim, Aim Mega and Aim Metro.
ITC's foray into the marketing of Agarbattis (incense sticks) in 2003 marked the
manifestation of its partnership with the cottage sector. ITC's popular agarbattis brands
include Spriha and Mangaldeep across a range of fragrances like Rose, Jasmine, Bouquet,
Sandalwood, Madhur, Sambrani and Nagchampa. ITC introduced Essenza Di Wills, an
exclusive range of fine fragrances and bath & body care products for men and women in July
2005. Inizio, the signature range under Essenza Di Wills provides a comprehensive grooming
regimen with distinct lines for men (Inizio Homme) and women (Inizio Femme). Continuing
with its tradition of bringing world class products to Indian consumers the Company
launched 'Fiama Di Wills', a premium range of Shampoos, Shower Gels and Soaps in
September, October and December 2007 respectively. The Company also launched the
'Superia' range of Soaps and Shampoos in the mass-market segment at select markets in
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16. October 2007 and Vivel De Wills & Vivel range of soaps in February and Vivel range of
shampoos in June 2008.
Meaning of Name
ITC stands for “Imperial Tobacco Company” initially when it was incorporated for the 1st
time in 1924. Later on the name has been changed to “Indian Tobacco Limited” in 1974.
After that, in recognition of the Company's multi-business portfolio encompassing a wide
range of businesses - Cigarettes & Tobacco, Hotels, Information Technology, Packaging,
Paperboards & Specialty Papers, Agri-Exports, Foods, Lifestyle Retailing and Greeting
Gifting & Stationery - the full stops in the Company's name were removed effective
September 18, 2001. The Company now stands rechristened 'ITC Limited'. There is no
specific meaning of ITC name is given on their website. But what I think is that it is the name
given to the company to signify the operation of the company. Since ITC started its business
in tobacco industry, they have chosen the name to demonstrate their nature of business and
what exactly what they want to perform.
Evolution of Name
ITC was incorporated on August 24, 1910 under the name of 'Imperial Tobacco Company of
India Limited'. ITC had a humble beginning and in the initial days it used to operate from a
leased office on Radha Bazar Lane, Kolkata. On its 16th birthday on August 24, 1926, ITC
purchased the plot of land situated at 37, Chowringhee, (now renamed J.L. Nehru Road)
Kolkata. Two years later company's headquarter building, 'Virginia House' came on that plot.
Progressively the ownership of the company Indianised, and the name of the Company was
changed to I.T.C. Limited in 1974. In recognition of the Company's multi-business portfolio
encompassing a wide range of businesses, the full stops in the Company's name were
removed effective September 18, 2001 and the Company was rechristened as 'ITC Limited'.
Since the present research is based on the educational and stationery offering the profile of
the same is given as below:
Education & Stationary products
• ITC made its entry into the stationery business in the year 2002 with its premium
range of notebooks, followed in the year 2003 with the more popular range to augment its
offering.
• Today, ITC continues to blend its core capabilities to market a growing range of
education and stationery products. These capabilities include,
a. Manufacturer of India‟s first Ozone treated environment friendly Elemental Chlorine
Free (ECF) pulp, paper an
d paperboard.
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17. b. Knowledge of image processing, printing & conversion garnered from its Packaging
& Printing Business.
c. Brand Building & Trade Marketing & Distribution strengths resident in its FMCG
Business.
• ITC‟s stationery Brands are marketed as “Classmate” and “Paperkraft”, with
Classmate addressing the needs of students and Paperkraft targeted towards college students
and executives.
• Classmate - India‟s truly largest National brand, reaching 65,000 outlets across the
country, has over 300 variants in its range which comprises notebooks, long books, practical
books, drawing books, scrap books, reminder pads etc.
• The Classmate Fun N Learn range of children books targeting pre school learners,
comprising categories like Pre School Learner, Active Minds and Read Aloud Tales with
features like Wipe n Use again, Trace & Color and Puzzles ensure that a child's first lessons
are truly enjoyable.
• Classmate Invento Geometry Boxes, launched for school students comprise a world-
class precision compass and high quality plastic instruments coupled with interesting trivia
and useful information, to make geometry more fascinating for students.
• Aesthetically designed, Classmate pens offer the consumer a smoother and more
comfortable writing experience through use of ergonomic design, reducing the effort required
for writing. The initial launch comprises ball pens - Classmate Safari and Classmate Ilet - and
gel pens - Classmate Glider and Classmate Octane.
• A new entry to the Classmate portfolio is its range of HB Jet Black pencils. Designed
attractively for school kids, the pencils offer a unique advantage of lesser lead wear out and
thus, “Stay Sharper for Longer”.
• The Classmate Notebook range builds in regional preferences and caters to the
requirements of All India & State Education Boards. Every Classmate notebook carries ITC's
Corporate Social Responsibility message on its back. For every four Classmate Notebooks,
ITC contributes Re. 1 to its rural development initiative that supports, among other projects,
primary education in villages.
• Classmate has successfully run the “Classmate Young Author & Artist Contest” for 5
years. The contest is a national level event going across 34 cities and getting participation
from 5000 schools.
• The Paperkraft brand recently launched premium business paper – an environment
friendly multipurpose paper for office and home use. The paper has been crafted by ITC‟s
Bhadrachalam unit using a pioneering technology, called “Ozone Treated Elemental Chlorine
17

18. PURPOSE OF THE RESEARCH
Corporate Social Responsibility is understood as the obligation of decision-makers to take
actions that protect and improve the welfare of society as a whole along with their own
interests. Every decision the business person makes and every action he or she contemplates
has social and business implications. It is debatable whether the CSR initiatives really help to
achieve the company goals. It has become a very common practice for the companies. In
most cases, CSR activities aim at reducing negative externalities, such as pollutant emissions
or the variability of farmers' income. In some cases, positive externalities are produced, as in
the financing of technological transfers to local farming communities, or school building.
CSR has increasingly become an important concept in public policies, corporate
communication and management sciences, which have used various conceptual framework to
examine consumer demand for CSR (see, inter alia, Carrigan and Attalla, 2001; Mohr et al.,
2001; Sen and Bhattacharya, 2001; Chatzidakis et al., 2007; Valor, 2008). Consumers'
responses to CSR have been less carefully analysed in economics, perhaps because there is
wide gap between positive attitudes toward social responsibility and actual purchase
behaviours. Opinion surveys reveal that there is a growing interest of consumers in the use of
socially responsible technologies by companies (Doane, 2001). According to MORI (2000),
70 per cent of European consumers declare that they are willing to pay more for a product.
AIM
Is CSR a fruitful activity keeping in view the interests of all stakeholders especially in and
how it benefits the ultimate owner?
OBJECTIVES
To study the methods by which companies communicate their CSR to the public and how
well does that help in the consumers‟ recall of the brand at the time of purchase.
RESEARCH QUESTIONS
Do the CSR initiatives and efforts taken by companies translate into the preference of the
brand over the other brands not doing CSR?
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19. RESEARCH METHODOLOGY
 Research Design:
The descriptive research design is followed in the current research because the study
aims to study the relationship of CSR and consumer behaviour in preference of a
particular brand.
Descriptive research, also known as statistical research, describes data and characteristics
about the population or phenomenon being studied. However, it does not answer
questions about e.g.: how/when/why the characteristics occurred, which is done under
analytic research. Although the data description is factual, accurate and systematic, the
research cannot describe what caused a situation. Thus, Descriptive research cannot be
used to create a causal relationship, where one variable affects another. In other words,
descriptive research can be said to have a low requirement for internal validity.
The description is used for frequencies, averages and other statistical calculations. Often
the best approach, prior to writing descriptive research, is to conduct a survey
investigation. Qualitative research often has the aim of description and researchers may
follow-up with examinations of why the observations exist and what the implications of
the findings are.
 Hypotheses
• H0: There is no relationship between the CSR and consumer preference
• H1: There exists a positive relationship between the CSR and consumer preference.
• H0: There is no relationship between the CSR and the willingness to pay a premium
price.
• H1: There exists a positive relationship between CSR and the willingness to pay a
premium price
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20.  Sampling Plan:
 Sampling unit: Consumers, Retailers
 Sample size: 100 consumers, 30 retailers
 Non-probabilistic sampling i.e.; convenience sampling
Sampling is the use of a subset of the population to represent the whole population.
Probability sampling, or random sampling, is a sampling technique in which the probability
of getting any particular sample may be calculated. Nonprobability sampling does not meet
this criterion and should be used with caution. Nonprobability sampling techniques cannot be
used to infer from the sample to the general population. Any generalizations obtained from a
nonprobability sample must be filtered through one's knowledge of the topic being studied.
Performing nonprobability sampling can be considerably less expensive than doing
probability sampling. However, the results of studies conducted using nonprobability
sampling are of extremely limited value.
Convenience, Haphazard or Accidental sampling - members of the population are chosen
based on their relative ease of access. To sample friends, co-workers, or shoppers at a single
mall, are all examples of convenience sampling. Such samples are biased because researchers
may unconsciously approach some kinds of respondents and avoid others (Lucas 2012), and
respondents who volunteer for a study may differ in unknown but important ways from
others
 Data collection:
Primary Data: This research has been conducted by administering two structured
questionnaires online as well as offline for retailers and consumers separately. A total
of more than 130 questionnaires were distributed. There were separate questionnaires
for consumers and retailers; the consumers‟ questionnaire was circulated online
through websites like Facebook, Gmail and Linked In and the questionnaire for
retailers was directly filled in person, total of 30 questionnaires were circulated
among retailers.
Data Analysis: SPSS and MS Excel
Regression analysis: A body of statistical techniques in which the form of the relationship
between a dependent variable and one or more independent variables is established so that
knowledge of the values of the independent variables enables prediction of the value of the
dependent variable or likelihood of the occurrence of an event if the dependent variable is
categorical. Regression analysis is a method by which quantitative social science seeks to
20

21. establish how things are caused. The objectives are both scientific description and prediction.
If we know the form of the relationship between things we have measured and know to be
causal to something else, then we can predict the value of the caused thing.
The dependent variable in this research is Consumer preference and independent variables
are many which affect the consumer preference of consumers.
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22. LIMITATIONS OF THE PROJECT STUDY
Since the topic corporate social responsibility is one of the most discussed topics in the
modern day business, it has drawn attention from all the stakeholders including
consumers. Consumers are also building consciousness towards the same. Since the
present research has been conducted to study the topic impact of CSR on the consumer
preference though the research has been conducted quite rigorously but still like the rule
says every research has some limitations to which a researcher can‟t attend to due to the
inherent limitations in the research process. The present research suffers from following
limitations:
 Small sample size: The sample size of the present research is 100 which is quite
small keeping in view the scope of Corporate Social Responsibility and its impact
on the society, it would have been prudential to involve the beneficiaries of the
scheme but due to constraints of time and finance it was subject to confinement.
 Composition of sample: The sample is composed of good number of educated
people who are quite conscious of the positive or negative measures of the
companies. In addition to that almost none of the minor students has found a place
in sample which also would have been quite useful in understanding the behavior
of children towards the scheme, because they are also the direct customers of the
Classmate products.
 Method of sampling: Convenience sampling though quite useful but suffers from
many limitations that limit the equal chance of every individual being selected in
the sample. Since the sampling frame is not known, and the sample is not chosen
at random, the inherent bias in convenience sampling arises that the sample is
unlikely to be representative of the population being studied. This undermines our
ability to make generalizations from the sample to the population we are studying.
 CSR being a social initiative, it is supported by every individual on paper: The
bias arises from the human nature which is people tend to support causes on paper
but when action is to be taken only a few prove to be pragmatic.
 Online data collection: Though the online data collection is convenient and cost
effective method, it limits the interaction of respondents with the enumerator.
22

23. CHAPTER 1: LITERATURE REVIEW
1.1CSR Definition
CSR is the concept of organizations promoting, participating and initiating social programs
in order to address an issue or concern in the wider community. A broad definition, including
multiple dimensions such as philanthropy and stakeholders, is favoured by academics (De
Los Salmones et al., 2005; Godfrey & Hatch, 2006; Piercy & Lane, 2009). The definition of
CSR has developed over time from the 1950s to the present. Literature from the 1980s
onwards presents fewer set definitions and further research into CSR (Carroll, 1999).
1.2Ethics and CSR
Ethical decision making in leadership and in regards to the environment is an important part
of CSR. Agatiello (2009) states ethics is made up of role, responsibilities and interactions
between people. However, the foundations of each of these principles are different depending
on the practice and the person (Frederiksen, 2010). Sharp and Zaidman (2009) suggest that
CSR decisions can be divided into two groups, from an ethical and moral basis or from a
business orientation. Although, Quairel-Lanoizele´e (2011) propose demand for „virtue‟ is
weak in the business world but the expectation for ethical and responsible company behavior
is still strong.
Agatiello (2009) advise there needs to be a rigid structure for making ethical decisions for
environmental strategy. Similarly, Sharp and Zaidman (2009) conclude that CSR decisions
need to be governed by strict rules. Ethical decisions are now valued as major responsibilities
for corporations and these corporations have a duty to environmental conservation.
Frederiksen (2010) discussed the moral frameworks for ethical decisions and concluded that
utilitarianism would dictate the best CSR action; this creates the most happiness for majority
of stakeholders. Bansel and Roth (2000) support the idea of involving stakeholders in
important decisions. Duarte (2010) concludes the creation of an organizational identity that
supports ethical decision making can help mould a culture that supports CSR activities by
highlighting sustainability, environment, ethics and transparency.
Creyer and Ross (1997) advocate that the behaviours a company engages in can affect the
way the consumer views a product, consumers may even be more willing to reward good
23

24. ethical behaviour by actions such as paying a higher price for a product. However, Carrigan
and Attalla (2001) suggest stating ethical firm behaviour will be rewarded with purchase
intention is neither straightforward nor simple.
Creyer and Ross (1997) discovered if consumers perceive no difference between companies
offering a similar product, it may be the marketing manager promoting the ethics of the firm
that sways the purchase decision. CSR by definition is an ethical behaviour, but the actual
definitions of „ethical and unethical‟ need to be determined. Carrigan and Attalla (2001)
suggest consumers are more informed in this modern age and may have less sympathy with
causes they feel they can not relate to. However, Ardvisson (2010) discovered businesses
fundamentally engage in CSR activities and communication to avoid negative impacts rather
than proactively wanting to help society. The reactive response directly influences corporate
reputation and brand building.
CSR has increasingly become an important concept in public policies, corporate
communication and management sciences, which have used various conceptual framework to
examine consumer demand for CSR (see, inter alia, The spectrum of activities covered by
CSR is likely to be large, as social responsibility requires that attention be paid to many
stakeholders, including the company‟s stock holders, its suppliers, its employees, its
customers, and all individuals and communities that may be affected by its decisions. This is
reminiscent of considerations of externalities associated to private actions in public
economics. In most cases, CSR activities aim at reducing negative externalities, such as
pollutant emissions or the variability of farmers' income. In some cases, positive externalities
are produced, as in the financing of technological transfers to local farming communities, or
school building. Hence, from a neo-classical point of view, favouring the development of
CSR has three key advantages. It may help to solve some market imperfections, such as the
externalities generated by market activities. It may increase the local provision of public
goods in an efficient, decentralized, manner. A priori, state intervention is kept at a
minimum, and so are market distortions.
Carrigan and Attalla, 2001; Mohr et al., 2001; Sen and Bhattacharya, 2001; Chatzidakis et
al., 2007; Valor, 2008). Consumers' responses to CSR have been less carefully analyzed in
economics, perhaps because there is wide gap between positive attitudes toward social
responsibility and actual purchase behaviors. Opinion surveys reveal that there is a growing
24

25. interest of consumers in the use of socially responsible technologies by companies (Doane,
2001). According to MORI (2000), 70 per cent of European consumers declare that they are
willing to pay more for a product which they perceive as ethically superior and 66 per cent
declare that a CSR claim has triggered a purchase at least once in the past year. From the
economist‟s point of view, „CSR products‟ are both private goods and public goods. Their
consumption produces some private hedonic benefits, but consumers can also derive utility
from knowing that the firm is committed to care for the well-being of their suppliers and their
employees or for the environment, i.e., that it produces some public good alongside the
product supply chain ( Hines and Ames, 2000). Yet, market shares remain quite low: French
consumers and U.S. consumers spent only 1.71 Euro and 1.14 Euros respectively per year on
purchases of fair-trade products in 2005, as against 19.02 Euros for the Swiss or 4.62 Euros
for the British (Poret, 2007). It complements marketing- and psychology-based insights into
this question, by focusing on the two main economic barriers to CSR consumption: (i) the
consumers‟ subjective valuation of CSR, and (ii) the information asymmetry between
companies and consumers. Understanding and breaking down these barriers is a key issue,
because companies‟ involvement into social responsibility is partly determined by the
prospect of not losing profits or expanding market opportunities.
In this perspective, we show that the development of CSR may be favored by appropriate
consumer policies. From the economist‟s point of view, „CSR products‟ are both private
goods and public goods. Their consumption produces some private hedonic benefits, but
consumers can also derive utility from knowing that the firm is committed to care for the
well-being of their suppliers and their employees or for the environment, i.e., that it produces
some public good alongside the product supply chain ( Besley and Ghatak, 2007). Whether
the consumption of CSR products leads to additional welfare gains for consumers, as
compared to standard products, depends on two conditions. First, consumers must grant some
value to the public good aspect of their purchase. Second, they must be well informed about
the quantity of public good that has been incorporated into the product during the production
process.
The decision to purchase a CSR product is primarily determined by the consumer's
willingness-to-pay (WTP) for CSR. The WTP is a monetary measure of his/her preference
for this product attribute. It depends on two parameters of her utility function: the marginal
utility of income and the marginal utility of CSR. The latter is determined by her „social
25

26. preferences‟, which refers to her propensity to internalize the effect of her own actions on
others‟ welfare. We first show how social preferences are revealed by economic experiments
using actual monetary incentives. This literature suggests a first explanation for the attitude-
behaviour gap: most (if not all) measures of attitudes toward ethical consumption are not
incentive compatible. We then trace social preferences back to three important motives:
altruism, self-image and social image. Self-image concerns are important for those
individuals Self-image concerns are important for those individuals who want to reassure
themselves that they are good people by contributing to the provision of public good. Social
image concerns may also drive the choice of CSR products, when their consumption is a
means of buying social prestige or of avoiding social stigma (Bénabou and Tirole, 2010). We
present empirical evidence that, in addition to pure altruism and self-image, social-image
concerns strongly affect individuals‟ generosity, which should be more intensively used in
the private and social marketing of ethical products. Last, following the recent advances in
the economics of personality psychology, we relate social preferences to some personality
traits. For psychologists, personality traits are "relatively enduring patterns of thoughts,
feelings, and behaviours that reflect the tendency to respond in certain ways under certain
circumstances" (Roberts cited in Almlund et al., 2011). Interestingly, some traits have been
linked to the individual propensity to donate to charities or to engage in social activities. As
personality traits have been shown to be sensitive to interventions, especially during early
childhood, education is a means of favouring the consumption of ethical products (Borghans
et al., 2008). However, well-developed social preferences will not translate into actual
purchase decisions for consumers with a high marginal utility of income, i.e. for the less
well-off, as the latter reduces their WTP.
In addition, a high WTP for CSR products will lead to a purchase only if consumers have
accurate information about who has made the product, and how it has been made. That the
production process followed socially responsible procedures is largely a credence attribute:
its presence cannot be verified by a careful and low-cost pre-purchase inspection, as it would
be the case for a „search attribute‟, or by the repetition of consumption experiences. This
raises problems of information asymmetry between consumers and firms, and the latter are
likely to develop strategic behaviors on the supply side of the market. Since consumers with
well-developed social preferences are often willing to pay more for a CSR product,
unsubstantiated claims may proliferate and cause adverse selection, whereby consumers are
26

27. not able to distinguish the true from the false CSR products. As a consequence, since
producing the former is generally more expensive, the true CSR products will be selected out
of the market (as in the market for „lemons‟ described by Akerlof, 1970). Labeling is a
natural solution to adverse selection. A key distinction between simple communication (the
so-called „green washing‟) and labeling is that the latter requires a reputable certification
agent whom consumers can trust (Caswell and Mojduszka, 1996). Labels transform credence
attributes into search attributes. They favor the emergence of a separating market
equilibrium, whereby consumers with social preferences are matched with CSR-firms, and
consumers without social preferences are matched with non-CSR firms. Although the
literature on labels is mainly theoretical, we present some recent empirical results from
laboratory experiments that evaluate the effect of labels on consumers under different label
regulation rules. Last, we point several limits to the use of labels, which essentially relate to
biases in the consumers‟ perception and treatment of information. This suggests that the
proliferation of labels should be avoided, and that labels should be unified and carefully
regulated by public authorities The reminder of the paper is organized as follows. Section 2
focuses on consumers‟ social preferences. Section 3 analyzes the information issue, and the
role of labels. Section 4 concludes on the role of consumer policies in the development of
CSR.
The objective of reviewing germinal works on CSR, CA, and CnSR is to obtain a deep and
broad understanding of the concepts and their relationships. The following sections include a
literature review related to the independent variables and then the dependent variable.
Independent Variable: Corporate Social Responsibility
In its evolution, the concept of CSR passed through several stages. Starting with the
chronological classification developed by Schwalb and García (2003) and integrating new
concepts from the literature, it is possible to identify the following stages: germinal,
emergent, development, and generalization and audit.
Germinal stage.The germinal stage started during the last decades of the 19th century, and an
entrepreneurial spirit and the laissez-faire philosophy characterized this stage. During this
stage, the terms corporate philanthropy and welfare capitalism emerged. This last concept
became the name of the system in which companies provided extensive community facilities
27

28. and company programs for their workers (Jacoby, 1997). Little direct regulation of business
occurred during this period.
Emergent stage. The second stage began with the Great Depression and a focus on
managerial values and principles. This was a normative and ethical philosophical period. The
emergence of the formal concept of corporate social responsibility (CSR1) characterized this
stage. Bowen (1953) defined CSR as comprising “the obligations of businessmen to pursue
those policies, to make those decisions, or to follow those lines of action which are desirable
in terms of the objectives and values of our society” (as cited in Wolff & Barth, 2005, p. 6).
Bowen clearly emphasized the ethical considerations over the economic ones.
Development stage. This stage started in the 1960s. The attention shifted away from
theorizing about what was good for society to analysing which demands on business society
put forward. The focus was the processes that ensure the capacity of a firm to respond to its
environment. This stage had an action-oriented managerial inclination. Social activism and
the rise of consumerism; increasing public awareness of environmental and ethical issues;
and increasing pressure from environmentalists, consumer advocates, feminists, young
people, and civil rights movements characterized this period. During this stage and in the late
1970s, Carroll (1979), working on the founding concept of Bowen (1953), developed a more
structured analysis and formulated a four-part definition of CSR, suggesting that companies
have four responsibilities: economic, legal, ethical, and philanthropic (or altruistic or
humanitarian). Between 1970 and 1990 and parallel to the development of CSR, other
concepts began to appear, often tied to environmental subjects such as sustainable
development and sustainability. The emergence and evolution of the principles of sustainable
development have had an important impact on the concept of CSR, resulting in two
significant contributions to the construct: incorporating the environmental variable as one of
the main social expectations to be covered and considering sustainability. Essentially,
organizations must satisfy not only the expectations of current society but also those of future
generations. Moreover, the environmental concern caused CSR to shift away from the
theoretical and philosophical level, to a more concrete and practical dimension, the urgent
necessity for the firm to respond to its environment.
Generalization and audit stage. Between the 1980s and 1990s, the stakeholder theory
contributed significantly to the development of CSR. This theory proposes that a firm is a
nexus of contracts between stakeholders and that the responsibility of a business is not to
28

29. society at large but to legitimate stakeholders: shareholders, employees, customers, suppliers,
and local communities (Van der Putten, 2005). The impact of the environmental and
sustainability discourse initiated in the previous stage and the proposal of concepts, such as
the triple bottom line (Elkington, 1999), developed the CSR concept to include the three
dimensions of sustainability: social, ecological, and economic bottom line. Despite its long
history, the evolution of the concept, and the increasing importance of CSR worldwide, a
universally accepted definition of CSR does not exist. Different terms in the literature
describe the phenomena related to corporate responsibility in society: corporate social
responsibility, corporate citizenship, corporate philanthropy, corporate giving, corporate
community involvement, community relations, community affairs, community development,
global citizenship, corporate societal marketing, society and business, social issues
management, public policy and business, stakeholder management, corporate accountability,
and corporate sustainability (Garriga & Melé, 2004; Kotler & Lee, 2005). The criteria of
CSR may change between generations and cultures and will be different in Europe (welfare
society) and the United States than in developing countries. Previous research indicates that
these differences exist because of differences in culture, economic development, legal and
political environment, organizational ethical climate, and gender (Juholin, 2004; Lines, 2003;
Papasolomou-Doukakis et al., 2005; Singhapakdi & Karande, 2001). The following
comprehensive definition for use in the proposed research borrows and integrates elements
from these different areas and approaches: CSR involves running a business with an action-
oriented managerial strategy under a comprehensive set of policies, practices, and programs
integrated throughout the business operations. Decision making includes a voluntary
commitment to contribute to sustainable development by making decisions that fairly balance
the claims of all key stakeholders, shareholders, employees, customers, suppliers, and local
communities. These decisions should maximize the positive impact and minimize the
negative effects of the business, while maintaining concern for society‟s long-term needs in
ways that address or exceed the ethical, legal, environmental, commercial, and other wants or
expectations of society, with consumers trying to be accountable to society for performance
by explaining, justifying, or reporting on their actions.
Independent Variable: Corporate Ability A number of researchers have investigated the
degree to which consumers‟ associations regarding a company influence them (Berens, 2004;
29

30. Berens et al., 2005; Brown & Dacin, 1997; Dacin & Brown, 2002; Sen & Bhattacharya,
2001). In their germinal work, Brown and Dacin (1997) defined corporate associations as “a
generic label for all the information about a company that a person holds” (p. 69). Corporate
associations include the following: Perceptions, inferences, and beliefs about a company: a
person‟s knowledge of his or her behaviors with respect to the company; information about
the company‟s prior actions; moods and emotions experienced by the person with respect to
the company; and overall and specific evaluations of the company and its perceived
attributes. (p. 69) Furthermore, Berens (2004) defined corporate associations as “a
heterogeneous set of perceptions, which may relate to a wide variety of aspects of a
company” (p. 17). Berens et al. (2005) remarked that perceptions of individual people, rather
than groups of people, define corporate associations. In addition, corporate associations are
regarded as a set of perceptions, which may or may not be related to one another, rather than
as a holistic picture, and as Brown (1998) pointed out, corporate associations are a
heterogeneous set of perceptions, which may be related to a wide variety of aspects of a
company. Berens and Van Riel (2004), after developing an overview of the studies on
corporate associations of the last five decades, established three main typologies of corporate
associations. They include “(1) the different social expectations that people have regarding a
company, (2) the different personality traits that people attribute to a company, and (3) the
different reasons they have to trust or not to trust a company” (p. 174). Berens (2004) stated
that in terms of the social role typology, two specific types of corporate associations exist:
corporate ability (CA) and CSR associations. In their germinal work, Brown and Dacin
(1997) introduced and studied these two types of corporate associations as a way to explain
the inconsistent results observed in previous studies under the rubric of corporate image.
They demonstrated that “what consumers know about a company can influence their
evaluations of products introduced by the company” (p. 68) and that “different types of
corporate associations (i.e. CA and CSR) can have important” (p. 68) but different influences
on company and product evaluations. The authors provided participants either with extensive
attribute information about new products or information about corporate associations and
measured the associations. They found that CA “may have a greater impact on both specific
product attribute perceptions and the overall corporate evaluation than a reputation for social
responsibility” (p. 80). However, they also observed that CSR has a positive influence on
consumer response to new products. Researchers have begun investigating the conditions
30

31. under which CA association and CSR association may influence consumers‟ preferences, and
in some cases, their results are contradictory. Sen and Bhattacharya (2001) found that the
CSR issues addressed by the company, “the quality of its products,” “the consumers‟
personal support for the CSR issues,” “their general beliefs about CSR,” and “the consumers‟
perceptions of congruence between their own characters and that of the company in their
reactions to its CSR initiatives” (p. 225) moderated the effect of CSR on product preferences.
Moreover, they found that consumers are more sensitive to negative CSR than positive CSR
and that the consumers‟ perceptions of the tradeoffs between CSR and CA efforts play a
significant role in their final response. Berens (2004) found that the effect of CA association
and CSR association on product evaluations and purchase intentions is different depending
on the accessibility of the associations, their diagnostic value, and the corporate brand
strategy that a company uses. The experimental results of Mohr and Webb (2005) indicated
that CSR had an important and positive influence on company evaluation and purchase
intent. Their results showed that American consumers “reacted more strongly to negative
than to positive CSR” (p. 139) and that a “low price did not appear to compensate for a low
level of social responsibility” (p. 142). According to Berens et al. (2005), academic
researchers, on the influence of corporate associations in consumer response, “have found
that associations with a company‟s corporate ability (CA) and its corporate social
responsibility (CSR) both influence product evaluations but that CA associations have a
stronger effect than CSR associations” (p. 35). In contrast, Marin and Ruiz (2007)
demonstrated that the contribution of CSR is stronger than CA. The authors suggested that
the increasing competition and the decreasing CA-based variation in the marketplace may be
responsible for this result. Moreover, they claimed that “CA may have become a base line
below which companies face great difficulties to stay in the market, and above which
companies benefit from competitive advantage in the form of associations obtained from the
undertaken CSR activities” (p. 255).
Dependent Variable: Consumer Social ResponsibilityA growing body of academic research
supports this new corporate global approach. Researchers claim that the business case of
CSR includes improved financial performance, reduced operating costs, long-term
sustainability of the company, increased staff commitment and involvement, long-term return
on investments, enhanced capacity to innovate, enhanced brand value and
31

32. reputations,development of closer links with customers, and greater awareness of their needs
(Jones, Comfort, Hillier, & Eastwood, 2005). Researchers have investigated the interface
between CSR and the customer broadly, and as the literature shows, this is a truly complex
matter. Many surveys developed at an international level suggest that a positive relationship
exists between a company‟s CSR actions and consumers‟ reaction to that company and its
product (Bhattacharya & Sen, 2004; Sen & Bhattacharya, 2001). A growing body of
academic research corroborates and attests to the generally positive influence of CSR on
consumers‟ company evaluations and product purchase
intentions (Brown & Dacin, 1997; Carrigan et al., 2004; Creyer & Ross, 1997; Maignan,
2001; Schroeder & McEachern, 2005; Uusitalo & Oksanen, 2004). This kind of consumerism
mainly incorporates environmental issues but also extends to animal welfare, human rights,
and labor working conditions in the third world (Tallontire et al., 2001). The links to
consumers‟ positive product and brand valuations, brand choice, and brand recommendations
documented the relationship between CSR and consumer attitudes. As a result of the broad
literature, Devinney, Auger, et al. (2006) proposed a new concept highlighting the important
role that CSR plays in consumer behaviour, consumer social responsibility (CnSR: “The
conscious and deliberate choice to make certain consumption choices based on personal and
moral beliefs” (p. 32). This concept has ethical and consumerism components, which can
appear as an “expressed activity in terms of purchasing or no purchasing behaviour; and as
an expressed opinion in surveys or other forms of market research” (p. 32). Conversely,
recent investigations demonstrate that the relationship between CSR and ethical consumerism
is not always direct and evident. The results are in many cases contradictory and establish
numerous factors that affect whether a firm‟s CSR activities translate into consumer
purchase. They include trade-offs with traditional criteria like price, quality, and convenience
and lack of information (Mohr et al., 2001); corporate brand dominance (Berens et al., 2005);
and the type of CSR, quality of products, consumers‟ personal support for the CSR issues,
and their general beliefs about CSR (Sen & Bhattacharya, 2001). There seems to be a
contradiction between what the international polls and surveys established in terms of
intentions to buy products with CSR features and the real purchasing of them (Devinney,
Auger et al., 2006). Auger et al. (2003) explained that the differences occurred because in the
former studies, researchers used surveys to rank the importance of some CSR issues, without
any trade-off between traditional features and CSR product features. These types of
32

33. instrument overstate the relevance of CSR issues because Likert-type scales do not give
“incentives to answer questions truthfully” (Auger & Devinney, 2005, p. 2) and because
“respondents may want to edit their private judgment before they report it to the researcher,
due to reasons of social desirability and self-presentations” (p. 6). Hence, “these surveys may
overstate the importance of social features, since there are clearly more socially acceptable
answers” (Auger et al., 2006, p. 6).
Majority of the private companies say they embrace corporate social responsibility not only
because it‟s the right thing to do, but also because it strengthens their brands. The percentage
of brand value represented by corporate social responsibility is trending upward but all other
identifiable contributors to corporate brand value-advertising, market cap, and the industry in
which a company competes – appear to be declining. The relationship between brand image
and Corporate Social Responsibility is strongest for familiarity, not for favourability. That is,
if the company is well known in its community, its Corporate Social Responsibility activities
will strengthen its brand image more than they would if the company were less well known.
According to a study by financial paper, The Economic Times, donations by listed
companies grew 8% during the fiscal ended March 2009. As many as 108 companies donated
up to 20% more than the previous year.
Consumers increasingly expect companies to make a broader contribution to society. The
business benefits of doing are not evident. Prior studies conclude that consumer‟s purchase
decisions are positively influenced by socially responsible initiatives. According to the
research carried by Cone Inc., in 2009, 79% of consumers would switch to a brand associated
with a good cause. Bharat Petroleum and Maruti Udyog came on top with 134 points each,
followed by Tata Motors (133) and Hero Honda (131). The study was based on a public
goodwill index and India received 119 points in the index against a global average of 100.
Thailand was at the top slot with 124 points. Malini Mehra, founder and CEO of Social
Markets, an organization that works towards transition to sustainable development and
realisation of human rights and social justice, explains, “There is minimalist version,
Corporate Social Responsibility is little more than a philanthropic activity-tree planting,
schools and health clinics. In the maximalist version, Corporate Social Responsibility is
about character and conduct, where integrity and responsibility run right through every seam
of the firm‟s activities and ethos. External Relations Director Lee Bansil of Procter and
Gamble explains: co-donation and cause-related marketing help promote competition, which
33

34. in turn leads to corporate innovation. He believes this is essential for developing sustainable
products and promoting sustainable consumption.
1.3 Research on CSR Relationships
Pivato et al. (2008) investigated the consumer trust and CSR realm, but although hypotheses
were developed, the findings are based on other literature and not an empirical study. There
is empirical evidence relating to brand and consumer behaviour in reference to CSR such as
Becker-Olsen et al. (2006) and Pivato et al. (2008). Specifically relating to brand loyalty and
consumer valuation of services, De Los Solmones et al. (2005) conducted a survey to
investigate the effect that selected company„s socially responsible activities had on the
consumer„s service evaluation.
Other research investigates leadership, culture and strategy (Angus-Leppan et al., 2010;
Sharp & Zaidman, 2009; Duarte, 2010; Lee, 2009). Strategy relies on leadership for
execution and the development of a culture that fosters CSR initiatives. Cruz and Pedrozo
(2009) used case studies to investigate green management. Yu, Ting and Wu (2009)
investigated ‗greenness„ of firms directly influencing financial performance in relation to
SMEs and large corporations. Sen et al. (2006) had the only field study identified, which
explored stakeholder relationships in relation to CSR.
There are a number of studies that examine the use of CSR to attract employees and
influence levels of organisational commitment. Job seekers found companies with higher
CSR involvement more attractive, as it was perceived these companies had greater diversity
and employees were more valued (Albinger & Freeman, 2000). Organisational commitment
was investigated by Brammer et al. (2007) and Turker (2009), who studied organisational
commitment in relation to CSR and commitment levels of employees in CSR orientated
organisations respectively. Peloza and Shang (2011) identify several studies investigating
CSR in single and diffuse activities involving a range of other subjects such as business
practices, philanthropy, products, fit and consumers. Vlachos, Tsmakos, Vrechopaulos and
Avramidis (2009) and Castaldo, Perrini, Misani and Tencati (2009) investigated trust, with
organisational reputation as a regulating factor, when assigning consumer attributions to
brand or company.
34

35. In order to test conceptual ideas, empirical investigation is conducted. For this particular
study, variables from Turker„s (2009) conceptual measurement scale for CSR was used. The
Turker (2009) scale was developed from multiple areas including legal, environment,
employee and ethics and has been adapted and applied in the data analysis. Turker (2009)
conducted empirical research in order to develop a 21 factor variable list, but the scale has
not been tested in a wider CSR context. An adaptation of Turker„s (2009) scale is used as it
provide a multidimensional representation of CSR, which can help determine which
dimensions will have an effect on brand trust.
1.4 Stakeholders and Shareholders Relationships with CSR
1.4.1 Stakeholders
Piercy and Lane (2009), De Los Salmones et al. (2005) and Godfrey and Hatch (2006)
identify stakeholders as important in relation to CSR. Conceptual theorists have suggested
that research into CSR can be made operational, especially to examine marketing benefits of
CSR on stakeholder relations (Maignan & Ferrell, 2004). Russo and Perrini (2009) state that
social capital explains SMEs approach to CSR more appropriately, where stakeholder theory
explains the CSR approach by large organisations. Larger organisations CSR approach can
include different individuals as well as consumers. The differences in strategy and ethical
considerations between CSR and SMEs are other areas for development. Russo and Perrini
(2009) concluded that stakeholder views have a large impact on the decisions of large firms
in relation to CSR activities. Similarly, Piercy and Lane (2009) propose the support a
company receives from investors and the strength of business relationship are prominent
factors in the implementation and success of CSR efforts. According to Pivato et al. (2008),
people in authority in business are now recognising CSR as important.
Sen, Bhattacharya and Korschun (2006) concluded that CSR influences stakeholders into
purchasing brands as well as strengthening the overall relationships. Implementing CSR to
foster stakeholder relationships is important, as individual stakeholders such as shareholders
and employees may have multiple relationships with the company (Sen et al., 2006).
Stakeholders need to be informed of organisational policy or goals, the communication
increases stakeholder„s confidence in the company„s actions (Bansel & Roth, 2000).
Stakeholders are important to consider in CSR implementation. Walton and Rawlins (2010)
35

36. 25 even suggest using the topics important to stakeholders as a tool to measure CSR such as
employee well-being and economic performance.
1.4.2 Shareholders
Sjostrom (2010) suggests that shareholders can provide a benchmark for organisational social
activities. In contrast, Arvidsson (2010) suggests that focus has moved from shareholder
value to CSR efforts after corporate scandals (i.e. companies employing child labour).
Shareholder value can be built by CSR activities giving ‗insurance„ protection for companies
in bad times, meaning the positive reputation, which would foster brand trust and loyalty, can
help reduce the bad effect of a negative event (Godfrey et al., 2008).
Hsieh (2009) determined that managers should make decisions on the overall happiness of
society (through CSR activities), sometimes at the expense of shareholder interests. This idea
does not consider shareholders as a main benchmark for CSR as suggested, but simply an
addition to the main societal responsibilities of an organisation. Godfrey and Hatch (2006)
identified shareholder capitalism for an organisation as negative when considered in relation
to the CSR-CFP (corporate financial performance). Shareholder capitalism for an
organisational strategy focuses on the manufacture of economic goods to contribute to social
welfare and this has a negative effect on the CSR-CFP relationship (Godfrey & Hatch, 2006).
The buying of shares and the impact on organisational financial performance can be affected
by the activities organisations are involved in. Adam and Shavit (2008) state investments
have increased over time in organisations that consider the social needs of the market and
operate best practice policies. There is also indication that organisations that are socially
responsible can positively change investor attitudes by having a greater social responsibility
ranking (Adam & Shavit, 2008). Ranking companies in relation to a social responsibility
could motivate organisations to participate in CSR to improve image in the market.
1.5 CSR and Brand Trust
Branding is used to differentiate one product or service from another using a symbol, name
or design (Pride et al., 2006, p.208). Branding can be used for customers to identify a product
or service, making the introduction of new products into the market easier, whilst building
brand equity, or the value a company can leverage off the brand. More importantly whilst
36

37. branding makes it easier for consumers to identify products, it also makes it easier to develop
brand loyalty (Pride et al., 2006, p.209). Although brand loyalty will vary depending on the
item and consumer, brand trust is a major component to loyalty; consumers have faith in the
product or service they are purchasing. Dunn and Davis (2004) state one of the greatest
challenges CEOs can address is managing consumer loyalty effectively. Whether trust can be
affected by external actions of the company rather than the performance of the product or
service is what this study aims to research.
CSR and branding have a number of linkages, specifically through trust, corporate reputation
and consumer attribution. Gurhan-Canli and Fries (2009) developed a corporate social
responsibility and brand-related outcomes model. Gurhan-Canli and Fries (2009) suggest that
both consumer characteristics, such as awareness of CSR programmes and personal
judgement and company characteristics such as reputation are factors influencing branding
outcomes. The branding outcome would include evaluation of the company, brand and
product, in which brand trust would be considered. Fit between the CSR activities and the
company and brand itself also impacts on the way consumers perceive the CSR activities
(Ellen et al., 2000; Yoon et al., 2006).
Delgado-Ballester and Munuera-Aleman (2005) suggest that brand equity can be developed
through brand trust. Brand trust must be maintained not only to foster consumer loyalty and
brand equity, but to create a sustainable competitive advantage (Delgado-Ballester and
Munuera-Aleman, 2005).
Consumer Attributions and Corporate Reputations
The awareness of CSR in general provides influence on attitude, attribution and purchase
decisions (Pomering & Dolcinar, 2009; Ellen at al., 2006; Yoon et al., 2006). Similarly,
Maignan (2001) suggests further study to identify at which point consumers are aware of the
CSR efforts a company has undertaken. This is associated with leadership ability in the
corporation and the need to communicate CSR activities (cause marketing included) while
developing an appropriate direction or strategy (Morlin-Azorin et al., 2009; Murillo &
Loranzo, 2006). Marin and Ruiz (2007) suggest CSR has direct influence on a company„s
identity attractiveness; this identity can both attract new consumers and influence marketing
37

38. power for that company. Attractiveness is strongly affiliated with the awareness of a specific
brand.
Peloza and Shang (2011) suggest that product-related CSR means higher levels of consumer
awareness. Du, Bhattacharya and Sen (2007) found evidence to suggest that a brand that
positions itself as a CSR brand can improve consumer awareness levels, in contrast to a
brand that just engages in CSR activities. This may due to the consumer being directly
exposed to the CSR information. Bhattacharya and Sen (2004) expressed that CSR activities
had greater influence on outcomes internal to a consumer, such as awareness and attributions,
which are easier to target than external outcomes such as purchase behaviour. Bhattacharya
and Sen (2004) suggest CSR awareness is a stumbling block for most companies, who can
only get the benefits from CSR once consumer awareness is increased. De Los Salmones et
al. (2005) state the possibility that the perception of CSR influences the valuation of
individual services as well as goods, as the concept of perceived quality can apply to both
service and goods.
Affiliated with consumer awareness, corporate reputation is another area that could be
influenced by CSR activities (Yoon et al., 2006; Ellen et al., 2006). Yoon et al. (2006)
identified suspicion in consumers as a factor influencing positive or negative attribution to
the company. Bhattacharya and Sen (2004) also identified corporate reputation as moderating
consumer suspicion. If a company has a good reputation the consumer will act favourably to
event sponsorship even if there is not perceived fit between the event and the company. If the
consumer suspects the reason for the CSR activity is for an ulterior motive, other than
legitimately helping a cause then there will be a negative response. Bhattacharya and Sen„s
(2004) findings imply that consumers are aware of CSR activities and the legitimacy of these
activities in relation the company. Likewise, Ellen et al. (2006) states decisions made for
CSR activities that display self-centred motives or are for stakeholder benefit can receive
negative feelings from consumers, impacting on consumer trust.
Kitchin (2003) expresses that the responsibility in CSR is brand responsibility and that it is in
fact the brand that has the social responsibility. The brand relies on brand promises and
relationship to the stakeholders to convey the CSR efforts. Kitchin (2003) concludes CSR
activities are not considered a separate entity from a brand or company, but part of
everything the brand does. Brand learning gaps can only be decreased by further cultural
38

39. understanding into the needs of society on behalf of the companies participating in CSR
(Kitchin, 2003).
Cultural perspectives in regards to branding and CSR have been explored to a small extent.
Little is known about public relations practices and culturally specific CSR to date (Kim &
Kim, 2010). Other studies have not considered a cultural approach, this could impact on the
brand trust perspectives as different cultures may consider different practices as more
trustworthy.
Other empirical studies support the relationship between CSR and brand performance. Lai,
Chin, Yang and Pai (2010) concluded that both CSR and corporate reputation had a positive
effect on brand equity in the industrial sector. The brand equity also included brand loyalty
and brand awareness. Brand equity can help adjudicate a relationship between brand
performance and CSR.
Biloslavo and Trnavcevic (2009) suggest using websites to communicate ‗green„ corporate
identity. In each case of 20 Slovene companies, green reputation was used in an attempt to
create a lasting competitive advantage. All the companies presented information about social
responsibility through green messages and supporting the environment, but it did not
translate to a distinct advantage for each company such as consumers purchasing more
products (Biloslavo & Trnavcevic, 2009). Websites that communicate green messages and
convey corporate social responsibility need to be combined with activities that consumers
can see, thus reducing the amount of scepticism from the consumer. 34
Curras-Perez et al. (2009) state that CSR helps construct a brand with personality that can be
differentiated by consumers, while fulfilling their needs. However, effectiveness of CSR can
often be hard to measure (Pivato et al., 2008). CSR activities are mainly associated and
compared to financial gains. Godfrey and Hatch (2006) identified extensions beyond profit
for CSR activities, but there are has not been any empirical evidence to date. This study plans
to add exploratory empirical evidence to the CSR and branding relationship.
De Los Salmones et al. (2005) concluded although social responsibility has become popular
in recent years, there have been few studies conducted towards CSR in reference to consumer
behaviour and attitudes. Maignan, Ferrell and Hult (1999) suggest CSR has general positive
consequences for business, but there is limited research on the impact from a marketing
39

40. perspective. In terms of how, when and for which specific consumers CSR initiatives work
best, there are scarce studies (Sen & Bhattacharya, 2001). There is however a few studies
exploring the connections between CSR and corporate reputation and reputation can provide
an influence on brand trust. The relationship between reputation and brand trust is explored
in the next section.
1.6 Initiatives of Indian companies to promote brand image with
the help of corporate social responsibility
The 2010 list of Forbes Asia‟s 48 heroes of Philanthropy contains four Indians. Nearly all
leading corporate in India are involved in Corporate Social Responsibility programmes in
areas like education, health, livelihood creation, skill development and empowerment of
weaker sections of society. Notable efforts have come from the Tata Group, Infosys, Bharti
Enterprises, ITC Welcome group, IOC among others. For brands, it is an excellent way to
show they care, taking the lead with innovative “giving back” schemes. Few ways by which
Procter and Gamble did in the past was, that they teamed up with UNICEF to introduce
Nutristar-a powdered drinking product that addressed micronutrient malnutrition in some
populations and by acquiring the PuR brand to bring low-cost water purification technologies
to consumers in developing markets. The company also promoted better hygiene in at-risk
communities and in return had the benefit of forming new markets for its products like soap
and toothpastes.
A recent initiative of Corporate Social Responsibility by Procter and Gamble is that it joined
hands with the International Olympic Committee (IOC) jointly announced a sponsorship
scheme wherein Procter and Gamble‟s portfolio of brands will sponsor “Proud Sponsor of
Moms” campaign globally. To celebrate the dedication and sacrifices of moms, families and
Olympians, Procter and Gamble will produce a documentary video series called “Raising an
Olympian” that will provide the insight into the experiences of mom of an Olympian which
will guide and improve the lives of forthcoming athletes.
Mr.Sunil Mittal, chairman and managing director of Bharti Enterprises, runs the country's
largest affirmative action project imparting quality education to 30,000 underprivileged
children in rural India across five states. The initiative is housed under the Bharti Foundation.
Idea is a telecom service provider, which historically lacked the market leaders in terms of
40

41. performance. With its new campaign, which sets the tagline, “What an idea” in the landscape
of rural India, it has managed to become a stronger and more credible player. The advertising
focuses on stories that demonstrate how the mobile phone helps education and democracy to
rural India, not to mention solving the caste problem. Another instance is that of a leading
tea brand from India‟s most respected business house, Tatas. Tata Tea uses the tag line
“Jaago re” (wake up) and its advertising shows its protagonists handing out cups of tea to
young people in college insisting that they are asleep and need to “wake up”. The waking up
in question involves their going out and voting. In this case, the advertising leads us to a
website which actually allows people to register on-line as voters.
Corporate companies like ITC have made farmer development a vital part of its business
strategy, and made major efforts to improve the livelihood standards of the rural
communities. Unilever is using micro enterprises to strategically augment the penetration of
consumer products in rural markets. IT companies like TCS and WIPRO have developed
software to help teachers and children in schools across India to further the cause of
education. The adult literacy software has been a significant factor in reducing illiteracy in
remote communities. Banks and insurance companies are targeting migrant labourers and
street vendors to help them through micro credits and related schemes. As in the West,
Indian companies are also waking up to the realization that Corporate Social Responsibility
is not just an external philanthropic activity, but an internal responsibility as well. In fact, as
Paul Abhram, COO, Induslnd Bank, puts it, “If you don‟t start from within, the entire
Corporate Social Responsibility program would turn out to be meaningless.” The concept of
solar ATMs and encouraging customers to choose e-statements over traditional paper
statements has been a part of Induslnd Bank‟s broader Corporate Social Responsibility
initiatives.
1.7 Government initiatives to promote corporate social
responsibility among companies
Although corporate India is involved in Corporate Social Responsibility activities, the central
government is working on a framework for quantifying the Corporate Social Responsibility
initiatives of companies to promote them further. According to Minister of Corporate Affairs,
Mr.Salman Khurshid, one of the ways to attract companies towards Corporate Social
41

42. Responsibility work is to develop a system of Corporate Social Responsibility credits, similar
to the system of carbon credits which are given to companies for green initiatives.
Pharmaceuticals Company Jubilant Organosys Ltd., already runs an anti-tuberculosis
programme with the government of Uttar Pardesh. Apart from schools and hospitals that are
run by trusts and societies, the government too is exploring to widen the scope of public-
private partnerships to build and maintain schools and hospitals in return for a fixed annuity
payment.Besides the private sector, the government is also ensuring that the public sector
companies participate actively in Corporate Social Responsibility initiatives. The Department
of Public Enterprises (DPE) has prepared guidelines for central public sector enterprises to
take up important Corporate Social Responsibility projects to be funded by 2-5 per cent of
the company‟s net profits.
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43. FINDINGS
Chapter 2: Analysis and findings of data collected from consumers
The findings are based on the questionnaire which was circulated online to consumers
through various websites viz. Facebook, Gmail, Linked In etc. the below are given the
findings. The Fig. 1 is the preference of consumers they exhibit in buying stationery
products, the total brands mentioned in the questionnaire were 5 viz. Apsara, Kores, Camlin,
Navneet, Classmate and Faber castell. The ranking of the brands is in terms of percentage.
Ranking of Brands
40
35
30
25
20 Series1
15
10
5
0
Apsara Kores Camlin Navneet Classma Faber
te Castell
Series1 18.987 8.86 15.189 4.43 35.443 17.088
Figure 1
The figure 1 depicts that consumers rank Classmate as number 1 stationery brand followed
by Apsara and Faber Castell. The ranking depicts the overall buyer behaviour towards the
Classmate. The question asked for this question was ranking the brands on a scale of five,
where 1 stood for the most preferred and 5 stood for least preferred and out of the brands
shown in the figure Classmate got most of the 1s and 2s and the overall percentage of getting
most preferred rank is 35.443% which is quite high comparing it to the other competitor
brands. Classmate is followed by Apsara and Faber Castell with 18.987% and 17.088%
respectively.
43

44. Recall Percentage:
As recall at the time plays a very important role from company‟s point of view the recall
percentage of Classmate‟s “let‟s put India first” initiative is given in the Fig2
Recall Percentage
80
60
Series1
40
20
0
Yes No
Series1 75 25
Figure 2
The figure 2 depicts the responses in the form of Yes and No, 75% of the respondents were
aware of the scheme and 25% did not know about the scheme. The awareness is the basis for
preference, and as established by responses, the awareness of Classmate CSR is modest.
Since awareness is one of the most important factors in the buyer‟s purchase process. Only
25% of the respondents were not aware of the CSR efforts of Classmate.
Preference for Classmate due to its CSR initiatives
Preferece for Classmate
80
60
Series1
40
20
0
Yes No
Series1 75 25
Figure 3
The figure 3 depicts the responses collected in the form of Yes and No, the question asked is
whether the CSR efforts of Classmate leads them to prefer it over the companies not doing
CSR. The figure depicts 75% of the total respondents showed a positive response which is
exactly equal to the percentage of respondents who are aware of the CSR efforts of
Classmate.
44

45. Attention towards CSR:
The attention towards the CSR activities as per the responses is given in the figure4, the
responses are below:
Attention towards CSR
45
40
35
30
25
20 Series1
15
10
5
0
Strongly Strongly
Agree Neutral Disagree
agree disagree
Series1 18 25 40 10 7
Figure 4
The figure 4 depicts the percentage of people who pay close attention to the CSR initiatives
and as per the responses collected 40% are neutral to this and 18% and 25% strongly agree
and agree respectively. Relatively only a small percentage of consumers do not pay attention
to the CSR efforts. A good percentage of people are neutral to it which may be taken as an
opportunity as the interest among consumers can be generated by efforts by any company.
Readiness for Premium Price:
Readiness to pay premium price
30
25
20
15 Series1
10
5
0
Strongly Agree Neutral Disagree Strongly
agree disagree
Series1 16 27 29 19 9
Figure 5
The question was intended to know the readiness of people towards paying premium price
and the results in the sample depict that 29% are neutral towards it, 27% are ready to pay a
premium price and 16% are strongly ready to pay premium price. The premium price is the
extra price that consumers pay to help less privileged or any other cause.
45

46. Deliberate buying of Classmate due to CSR:
Deliberate purchase of Classmate
30
25
20
15 Series1
10
5
0
Strongly Agree Neutral Disagree Strongly
agree disagree
Series1 16 27 29 19 9
Figure 6
Deliberate purchase of Classmate refers to the tendency of consumers to buy Classmate
stationery because of its social initiatives. The deliberate purchase means a consumer prefers
to buy Classmate even if the options are available and it may be assumed at a lower price.
Since Classmate stationery is comparatively following high pricing consumers still don‟t
mind paying high price.
Recommendation to others:
Recommendation to others
30
20
Series1
10
0
Strongly Agree Neutral Disagree Strongly
agree disagree
Series1 21 30 24 15 10
Figure 7
The recommendation refers to adverting others to buy a particular product or service here it
refers to Classmate, as recommendation is a form of communication that is quite powerful
that works for the benefit of a company. A high percentage of respondents agreed that they
refer people to buy classmate which is a good sign, recommendation may be assumed to be
46

47. equivalent to referral thus it needs to be understood to help consumers to refer others in the
benefit of the company.
Sense of fulfilment:
Sense of fulfilment
45
40
35
30
25 Series1
20
15
10
5
0
Strongly Agree Neutral Disagree Strongly
agree disagree
Series1 20 41 17 16 6
Figure 8
The sense of fulfilment has a very modest role to play in shaping the consumer behaviour
precisely speaking consumer preference. As the sense of fulfilment is a psychological
process that satiates a consumer need which ultimately leads to extra satisfaction that a
consumer gets on buying a product as a by-product. The contribution of Classmate for the
purpose of education for less privileged on sale of every product leads to a sense of
fulfilment in the consumers which is depicted in the (figure 8) 61% believe that it is a source
of fulfilment for them, on the other hand lesser percentage is against the statement.
47