But as a consumer researcher I am interested in one further, fundamental question: will tax avoidance exposés really have an impact on consumer behaviour, or will people just carry on buying these brands as usual?
Much research has been done on the extent to which people are willing to align their purchasing behaviour to their political and moral beliefs. It is true that there is an elusive segment of ultra-committed ethical consumers out there. By this I mean people who really go out of their way to eat organic, buy only sustainable products, go on domestic holidays, take public transport even if they can afford a car, have a small wind turbine in their garden or solar panels in their roof, and recycle and compost all their waste. Yes, this segment of consumers is very likely to try and refrain from using brands that are finding a way around their taxes. But the last time a market research report tried to measure such committed ethical consumers as a segment, back in 2000, they only represented about 5% of the UK population.
Most people are more flexible when it comes to political or ethical consumption. So much so that market researchers have shifted their attention to measuring increases in sales of ethical products rather than the amount of ethical consumers in the marketplace. While the sales of ethical products have grown steadily over the past ten or so years, experts still warn us that the sales of ethical products remain smallcompared to total UK market sales.
Of course, most consumers today hold positive attitudes toward brands that are perceived to act in politically or morally desirable ways, but they will not always act in line with their attitudes. They will only translate their moral or political beliefs into “purchase votes” if such purchases are convenient and do not affect their everyday lives. So, by extension, while consumers may openly say they disapprove of the tax avoiding strategies of giant brands such as Starbucks, Google, Amazon and Apple, research on ethical consumption and the attitude-behaviour gap shows it is unlikely they will completely stop buying these brands.
Another way to explore this issue is to ask whether consumers will actively boycott tax-avoiding brands. Boycotts need not involve loud protesting on the streets. Instead, often all that is needed is one organisation (say, an NGO or the media) to urge individuals to stop buying products from such brands.
The recent media attention on multinational firms’ tax arrangements has led to numerous boycott calls. Ethical Consumer Magazine, for example, has a special issuedevoted to Amazon, and the Guardian has advised its readers on
boycotts can be seen by consumers as social dilemmas, as there is usually a trade-off between being part of a group and doing what one believes to be the right thing. So consumers may really feel a desire to make a difference and think that they should boycott Apple, for example. But if their peer groups consider Apple to be the coolest brand around and all their friends use it, consumers will find it difficult to give up.
People are more likely to stop buying an unethical, tax-avoiding brand for three reasons: if they agree with all the really bad arguments being presented against the brand; if the brand is hypocritical (for example, if it trumpets its ethical credentials while avoiding tax); and if consumers think the boycott has a chance of success.
If consumers believe their decision to stop buying or using Apple will actually have an impact on Apple’s bottom line, they are more likely to boycott the brand. Unfortunately, however, consumers often think that their individual efforts cannot have an aggregate impact on the marketplace – and brand managers may well want to emphasise reasons not to boycott their brands.
More importantly, when consumers really like a brand they are less likely to boycott as it can be very difficult for them to withhold consumption unless there is a similar substitute that is considered just as good, both functionally and symbolically.
Strong, lovable brands are difficult to substitute and this is why big companies invest so much money in building brand equity. Also, if all well-loved brands are avoiding tax, then “good” substitutes become hard to find. If the financial, time, quality or convenience costs of withholding brand consumption are perceived to be too high, consumers are just not going to boycott them.
Consumers may say they do not approve of these brands’ tax arrangements, but let’s face it: can we really readily substitute Google, Amazon and Apple without much effort? I know I would struggle without at least one of them.
Caroline Moraes has received external funding from the 2012 Academy of Marketing Research Initiative Funding and the 2012 ESRC Festival of Social Science.
Caroline Moraes is a Reader in Marketing in the Centre for Trust and Ethical Behaviourat Coventry University.