The power of consumer brands to create social impact and why impact investors should take it seriously
The startup ecosystem in India is experiencing a brand renaissance. New-age brands create strong brand identities in a very short period of time. Thanks to recent technological advances, they are achieving enviable matrices of customer loyalty and repeat purchases.
The cheap and widespread use of the internet has fundamentally changed the way brands target and interact with their consumers. By using digital storytelling across multiple online platforms, brands are now able to connect with their consumers who are now looking for more than just products.
Today, brands are in a unique position to influence mindsets and drive behavior change. Incidentally, the âpower to influenceâ is at the heart of creating any social impact – and brands can do it on a large scale. They get the attention of Gen Z and Millennials, who are much more conscious consumers.
Many brands are leveraging their strong brand position to drive impact. For example, “Soulfull” brings millets back to the Indian diet. Millets are not only great for consumers from a nutritional standpoint, but also have a huge impact on the poorest of poor farmers.
This is because millet production requires very little water, it does not need fertilizers or pesticides and it can grow even in drought conditions. This makes millet an excellent crop for farmers as it protects them from many risks associated with farming and requires minimal initial investment.
We have been growing and consuming millets for thousands of years. However, in recent decades, following the Green Revolution, the diet of the urban Indian population has rapidly shifted to wheat and rice.
As a result, the production of millets fell sharply, causing serious agricultural and environmental consequences.
Soulfull has created innovative food products to bring millets back to our plate. Their brand created nostalgia for millets and prompted consumers to bring millets back into their food consumption.
By raising awareness of the benefits of millet for health and the environment, the company was able to trigger a ripple effect on a larger scale, where this trend was picked up not only by other companies in the same category, but also in other food categories. And through its mission to increase the demand for millet, the company is creating a huge impact on many small farmers across the country.
Likewise, Bombay Hemp Company’s B Label brings the same awareness to hemp, which is also a low water intensity product and good for Indian agriculture.
It is generally believed that impact investing is limited to direct impact by providing access to finance, education or health. However, the scope of impact investing goes far beyond. The potential for impact of companies that can alter demand patterns using the power of branding is enormous.
These businesses that can change mindsets, create new markets and align with the goals of bringing social good are also a powerful tool in creating a positive impact in vulnerable communities.
Another such company is Neeman’s, which uses plastic waste to make fashionable and comfortable shoes. Besides the direct environmental benefit of recycling plastic waste, Neeman’s more important indirect impact is that it educates consumers about the use of plastic and influences them to make more conscious lifestyle choices.
Carmesi and Nua bring the same awareness to the sanitary care market by encouraging consumers to use more environmentally friendly towels by highlighting the environmental and health impact of this category of products.
Another group of companies that harness the power of a brand are those that connect fragmented, low-income, market-less suppliers with ever-changing consumer demand.
Companies such as Jaypore.com, FabIndia and Reshamandi, through its Amraii brand, source their supplies from craft communities belonging to backward sections and thus inform them of market needs.
On the consumer side, these companies are using their branding power to educate and influence urban customers on Indian handmade clothing, thus increasing the demand for this community.
Marketing dollars spent on a well-crafted brand story can go a long way in creating a long-term mindset shift for the good of the company. These promotions subtly influence viewers psychologically and make them rethink the way they consume.
This phenomenon has many aspects.
First, the turnover of these companies is not the right indicator of the impact created. The eyeballs that these promotions get are way more than what gets converted into sales.
Second, unlike mass television and channel advertising, online ads are precisely targeted and personalized. Digital storytelling is proving to be a much more effective way to communicate with consumers. It’s more intimate and personal. The floodgates for this purpose opened with the entry of Jio. People are spending significantly more time on the phone – 4.6 hours per day in 2020, up 39% from 2019, according to App Annie’s âState of Mobile 2021 Reportâ.
Third, Gen Z and Millennials are aware of what they are consuming. They are aware of their choices and of their social and environmental impact. They are much more likely to be influenced by marketing that carries messages that educate them about social and environmental impact.
For young consumers, 83% want companies to align with their values ââand 76% want CEOs to speak out on issues that matter to them. This is according to the 5WPR Consumer Culture Report 2020.
A recent survey released by Samsung found that 60% of young people are ready to make a complete wardrobe change for the sake of sustainability. Another 39 percent said they would rather be “durable” than “trendy.”
Fourth, new age brands are also becoming more socially aware. Brands are no longer content to find a gap in the market and fill it through marketing and distribution. The founders come with deeper personal stories in the creation of such brands and products.
Brands have a strong purpose and identity, which further attracts the new generation of consumers.
Good brands generate strong loyalty figures because they identify with their audience on an emotional level. And that, in turn, gives them more power to influence.
These emerging trends are prompting impact investors to look to brands to raise sustainability awareness or create a market for suppliers in vulnerable sections. However, using brands to create impact also presents challenges that investors should beware of.
With great âbrandâ power comes great responsibility. These brands must adopt the highest ethical standards and not use âsustainabilityâ superficially to simply attract consumers. Adding ‘sustainability’ to your branding can sound like a very attractive and easy way to attract consumers, but if that isn’t really reflected in the makeup of the product or even in the cultural DNA sooner or later , he will be in trouble.
Then there is the question of measuring the impact. In direct impact, measuring the impact is relatively simple. However, measuring a brand’s impact can be a complicated exercise for impact investors.
Despite the challenges, creating strong brands with social messages embedded in their brand identity has enormous potential. About 100 years ago, John Maynard Keynes explained how investments can have a multiplier effect in an economy and are an effective tool to create a significant impact on financially vulnerable sections.
However, now the âbrand multiplierâ is a new kind of multiplier effect that can directly change mindsets to empower people with knowledge, to drive social change. The âbrand multiplierâ works on a psychological level and could have a lot more potential than its financial counterpart.
When Victoria Secret changed her brand message to empower women, it created a stir. When Allbirds launched their brand rooted in sustainability, it rocked the market and created a force of loyal consumers in a very short time.
The Tesla brand has become a titan to be reckoned with, taking the auto industry by storm. All of these companies, by inspiring users to embrace new ways, are creating global impact on a scale never seen before. And that’s 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.)