The power of consumer brands to create social impact and why impact investors should take it seriously
India’s startup ecosystem is seeing a renaissance in brands. New-age brands are creating strong brand identities in a very short span. Enabled by recent technological advancements, they are achieving enviable customer loyalty and repeat purchases matrices.
Cheap and widespread internet usage has fundamentally changed the way brands target and engage with their consumers. Using digital storytelling on multiple online platforms, brands are now able to create a bond with their consumers who now seek more than just products.
In the current day and age, brands are in a unique position to influence mindsets and drive a change in behaviour. Incidentally, the ‘power to influence’ lies at the core of creating any social impact — and brands can do it at scale. They have the attention of GenZ’s and millennials, who are much more conscious consumers.
Many brands are leveraging their strong brand position to drive impact. For example, ‘Soulfull’ is bringing millets back to the Indian diet. Millets are not only great for consumers from a nutritional point of view, but also have a huge impact on the poorest of poor farmers.
This is because producing millet requires very limited water, it does not need any fertiliser or pesticides and it can grow even in drought-like conditions. This makes millet a great crop for farmers as it protects them from many agriculture-related risks and needs minimal initial investment.
We have been growing and consuming millets for thousands of years. However, in the last few decades, as a result of the green revolution, the diet of the urban Indian population rapidly moved towards wheat and rice.
Consequently, the production of millets has steeply dropped leading to serious agricultural and environmental consequences.
Soulfull created innovative food products to bring millets back on our plate. Their brand created nostalgia towards millets and influenced consumers to bring millets back into their food consumption.
By creating awareness about health and environmental benefits of millets, the company was able to trigger a larger scale spillover effect, where this trend was picked up not just by other companies in the same category but also in other food categories. And through its mission to increase millet demand, the company is creating a huge impact on numerous small farmers in the country.
Similarly, B Label from Bombay Hemp Company is bringing the same awareness for hemp, which is also a low water intensity product and good for Indian agriculture.
Impact investing is usually thought to be confined to direct impact by providing access to finance, education, or health. However, the scope of impact investing goes far beyond it. The impact potential of companies that can change demand patterns by using the power of the brand is massive.
Such companies that can change mindsets, create new markets and are aligned to goals of bringing social good are also a potent tool to create a positive impact in vulnerable communities.
Another such company is Neeman’s, which is using plastic waste to make fashionable and comfortable footwear. Apart from the direct environmental benefit of recycling plastic waste, Neeman’s larger indirect impact is that it builds awareness towards consumers’ plastic usage and influences them to make more conscious choices in life.
Carmesi and Nua are bringing the same awareness in the sanitary care market by encouraging consumers to use more eco-friendly pads by highlighting the environmental and health impact of this product category.
Another set of companies that are using the power of a brand are the ones that link fragmented low-income suppliers, who don’t have market access, with ever-evolving consumer demand.
Companies such as Jaypore.com, FabIndia, and Reshamandi through its brand Amraii procure from artisanal communities that belong to backward sections and in the process educate them on market needs.
On the consumer side, these companies use their brand power to educate and influence urban customers on Indian artisanal wear, thereby increasing demand for this community.
The marketing dollars spent on a well-crafted brand story can go a long way in creating long term mindset change for social good. These promotions subtly influence viewers at a psychological level and make them rethink the way they consume.
This phenomenon has many aspects.
First, the revenue of these companies is not the right indicator of the impact created. The eyeballs these promotions get is far more than what is converted into sales.
Second, unlike mass advertisement on TV and channels, online advertisements are precisely targeted and customised. Digital storytelling is proving to be a far more effective way to communicate with consumers. It is more intimate and personal. The floodgates to this effect opened with the entry of Jio. People are spending much more time on phones — 4.6 hours a day in 2020, up by 39 percent from 2019 as per the App Annie's 'State of Mobile 2021 Report'.
Third, GenZ and millennials are conscious of what they consume. They are conscious of their choices and how it impacts socially and environmentally. They are far more likely to be influenced by marketing carrying messages that educate them on social and environmental impact.
For the young consumers, 83 percent want companies to align with their values and 76 percent want CEOs to speak out on issues they care about. That’s according to 5WPR’s 2020 Consumer Culture Report.
A recent survey published by Samsung discovered that 60 percent of young people are willing to change their wardrobes entirely for the sake of sustainability. Another 39 percent revealed they would rather be “sustainable’’ than “fashionable”.
Fourth, new age brands are also getting more socially conscious. Brands are no longer about just finding a gap in the market and plugging it through marketing and distribution. The founders come with deeper personal stories of purpose in creating such brands and products.
Brands have purpose and strong identities — which appeals more to the new generation of consumers.
Good brands generate strong loyalty numbers because they relate with their audience at an emotional level. And this, in turn, gives them more power to influence.
These emerging trends are making impact investors look at brands to drive awareness on sustainability or create a market for the suppliers from vulnerable sections. However, there are also challenges in using brands for impact creation of which investors should remain wary.
With great ‘brand’ power, comes great responsibility. These brands must adopt the highest ethical standards and not use ‘sustainability’ superficially to just get consumers. Adding ‘sustainability’ to your branding might look very inviting and an easy way to gain consumers but if it does not truly reflect in the product's composition or even cultural DNA — sooner or later it is going to be in trouble.
Then there is the issue of impact measurement. In direct impact, impact measurement is relatively straightforward. However, measuring the impact of a brand could be a complicated exercise for impact investors.
Despite the challenges, creating strong brands with social messages embedded in their brand identity has a huge potential. Around 100 years back, John Maynard Keynes talked about how investments can lead to a multiplier effect in an economy and is an effective tool to create a meaningful impact on the financially vulnerable sections.
However, now “brand multiplier” is a new kind of multiplier effect that can directly change mindsets to empower people with knowledge, to drive social change. The ‘brand multiplier’ works on a psychological level and could have far more potential than its financial counterpart.
When Victoria Secret changed its brand message to empower women, it created ripples. When Allbirds launched its brand embedded in sustainability it shook the market and created a loyal force of consumers in a very small period.
Tesla’s brand has become a titan to reckon with, taking the auto industry by a storm. All these companies — by influencing users to adopt new ways — are creating global impact at a scale that has been never seen before. And this is just the beginning.
Disclaimer: Aavishkaar Capital had invested in Soulfull and Jaypore.com
(Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views of YourStory.)