Brands and politics. Not a bad idea after all?

If you take a stance in a divisive political issue, you will benefit if you’re a small brand but will probably get hurt if you’re a big brand.

Brands are increasingly under pressure to take public stances on divisive social and political issues. People have become more polarized, and the majority expect brands to take a stance.

Yet, only a minority of companies do. In a survey of 178 US chief marketing officers, the overwhelming majority (83%) believed it was inappropriate for their firm to “take a stance on politically charged issues” (The CMO Survey 2018).

So what should you do, does it help or hurt your bottom line? It turns out that taking a political stance probably pays off.

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Take a political stance if you are a market challenger

Impacted metrics: Market share | Customer acquisition
Channels: Brand strategy | PR

Recommendation

If your brand has a small market share, take a stance on a divisive issue to gain more customers. If your brand has a large market share, you will probably lose customers if you take a stance.

You should be among the first-movers though, otherwise you won’t feel authentic and won’t benefit.

Effects

  • When a brand has a small market share, it can gain market share by taking a political stance in a divisive issue (i.e. an issue in which the population is divided roughly equally).

  • If the brand’s market share is sufficiently small, it can gain share even by taking a stance that a majority of the population opposes (in the experiment, 72%).

  • A brand with a large market share is likely to lose market share if its customers are equally divided on the issue.

  • However, if the majority of customers of the large brand are of a certain political stance, it could avoid the negative effect and even gain from it.

  • Customers are even willing to trade-off price and quality to join a brand that takes their preferred political stance.

  • Individually, customers are more likely to abandon you than join you for your political stance.

  • To be perceived as being authentic in taking a political stance, a first-mover advantage is critical. If a brand is seen as taking the stance only because a competitor did, people are less likely to believe it.

(What happens when brands take a stance, large vs small brands - Click to zoom in. Note: CPA stands for Corporate Political Advocacy, i.e. taking a political stance)

Why it works

  • Part of why we choose a brand is because we identify with it. Buying a certain brand reinforces our self-identity, something we constantly strive for.

  • As a consequence, we identify with politically aligned brands and disidentify with politically misaligned brands.

  • However, disidentification is a stronger prompt to choose a brand, because we respond more strongly to negative versus positive information. For example, it’s more likely that we will boycott rather than ‘buycott’ a brand.

  • At an overall market level, however, the net effect of taking a stance for a small brand is positive because of the sheer number of potential customers available.

  • We are already skeptical of brands, so if we see their political stance as a ‘copycat’ move they lose almost all credibility. At that point, we are unlikely to believe their message.

Limitations

  • The perspective of this research is very B2C. We don’t know what the effects would be in a B2B environment.

  • The researchers analyze what happens right after a brand takes a political stance. But we don’t know what the effects are long-term. For example, what would have happened to a brand today if it had taken a stance to oppose gay marriage in the 90s? How would it perform today? (in 1996, only 27% of Americans approved of gay marriage. In 2020 that has risen to 67% - Gallup survey). It may be better to align with stances that will be become more popular over time.

  • We don’t know the effect on other stakeholders. How would employees, suppliers, or investors perceive the political stance? If we consider the psychology behind this, it would likely be net negative.

  • The research was performed in the US and in the UK over an exceptionally divisive issue (Brexit). While polarization around political issues has been growing around the world in recent years, in the US this has been particularly strong. How polarized a society is and cultural differences may have an impact on the effect.

Companies using this

  • Historically, it’s usually larger brands that take a stance. It may be that smaller brands are more reluctant to take the risk, when in fact they would benefit the most.

  • Non-US brands appear to be more reluctant to take political stances.

  • Some examples of large brands taking a stance:

    • Nike hired Colin Kaepernick after he controversially knelt during the US national anthem to protest racial discrimination.

    • Airbnb took a stance against President Trump’s travel ban from several Muslim-majority countries.

    • Ben & Jerry’s took a stance against climate change, a controversial issue in the US.

Steps to implement

  • Understand where your customers stand politically.

  • If you are a large brand and most of your customers are of a certain political alignment, or you are a small brand, prepare your PR department to take a political stance.

  • When a new controversial issue emerges, rapidly take a strong political stance that’s most aligned with your brand.

  • That could mean that you modify your branding, change where and how you sell your products, or even that you introduce specially targeted promotions.

  • Above all, be ethical and sincere.

Study type

Lab and online experiments and market observation (anti-Brexit vs pro-Brexit supporters), United States and United Kingdom

Source

Hydock, C., Paharia, N., & Blair, S. (September 2020). Should Your Brand Pick a Side? How Market Share Determines the Impact of Corporate Political Advocacy. Journal of Marketing Research.

[Link to paper]

Affiliations

California Polytechnic State University and Georgetown University

Remember: Because of the groundbreaking nature of this paper, it could be disproven in the future (although this is rare). It also may not be generalizable to your situation. If it’s a risky change, always test it on a small scale before rolling it out widely.


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