Winning hearts and markets through purpose-driven branding

If someone were to tell you that the purpose of a business can be other than profits, you would think they are out of their minds. Conventional knowledge tells us that a business exists for the sole purpose of making profits; the rest is all just image management. But if one were to go by that explanation, there would be no Tata group of companies. The Tata Group, India’s largest salt-to-software conglomerate, started with the purpose of nation-building. The group wasn't driven by the singular purpose of making profit but rather by a combination of entrepreneurial vision, commitment to national development, social responsibility, strategic diversification, and taking a long-term perspective. The company is integral to India’s growth story, and its purpose-led run has held it in good stead more than a century later.

As a concept, purpose-driven branding is not something new. It has always been around. Some of the greatest companies in the world have been built that way. Today, however, companies are waking up to the fact that it pays to have a purpose that is outside of profits. Today, purpose-driven brands can charge a premium for their products, differentiate themselves from the competition, and attract and retain talent owing to their shared values. There are many pluses to being a brand that is guided by a purpose. Deloitte’s 2023 Gen Z and Millennial Survey reveals that six in ten Gen Zs and millennials are willing to pay more for sustainable products and services. 

Looking beyond CSR

So, what is purpose-driven branding? Is it a group of hippies sitting in a drum circle and chanting about saving the rainforests? Is it a company tom-tomming its CSR accomplishments? Purpose-driven branding goes beyond that. The concept is about embedding a deeper meaning into the very code of the brand’s DNA. A brand led by a defined purpose has it ensconced in everything, from its mission statement to product development, marketing campaigns, and employee engagement. It is about building trust and emotional connections with consumers who share similar values and aspirations.

Consider Patagonia, for example, the American retailer of outdoor recreation clothing. Patagonia, with its message of environmental protection and sustainability, goes to great lengths, even at the cost of profits, to stay true to its larger purpose of saving the environment. The company has done everything a company should not do if it seeks to make profits alone. It has carried out full-page advertisements against its own products. It sued the then-reigning president Donald Trump for policy decisions that the company found were detrimental to the environment. It also became the first business to commit 1% of annual sales to the environment. Today, it is worth more than $1.5 billion, employs more than 1,000 people, and, according to recent reports, has given away $71 million of its earnings since September 2022 to fund wildlife restoration, dam removal, and Democratic groups. It is a great brand that takes care of the planet and its employees too, as evident by the 4% retention rate, in stark contrast to the average North American rate of 57%.

Does it work in India?

In a country like India, where the first question one gets asked on buying a new vehicle is about its mileage, can purpose-driven branding really work for a company? While we Indians do seek value for money over several things, profits are not the only motto of most businesses. Consider, Amul. Started in 1946 with the purpose of stopping small dairy farmers from being exploited by traders and agents, it became the world’s largest producer of milk and milk products. Amul’s example shows us that purpose-driven branding and sustainable communication are not a shortcut to building trust but a smart way to go about doing a good deed.

Even for existing brands that did not think of ascribing a purpose to their raison d'être, indulging in purpose-led initiatives can work to their advantage, albeit if their messaging is authentic. A brand report by Kantar Millward Brown revealed that the top 100 most valuable Indian brands have seen a collective brand value increase of 21% in 2023, with many attributing this growth to stronger connections with consumers through purpose-driven initiatives.

When purpose-driven branding fails

Purpose-driven branding is a long-term journey that requires commitment and sustained evaluation to have any positive impact and brand success. It fails spectacularly when it is disingenuous and inauthentic. Several large companies, too, have realized that force-fitting a purpose to a brand doesn’t work out too well. Hein Schumacher, the current CEO of the global FMCG behemoth Unilever, stated this year that they wouldn't be "force-fitting" a purpose to their brands as some didn't have a natural fit. Interestingly, the decision was taken after a majority shareholder criticized the company when it tried to define the purpose of a bottle of Hellmann’s mayonnaise.

Force-fitting a purpose to products often leads to undesirable results, such as greenwashing, the deceptive practice of misleading consumers about a product or service's environmental benefits. Given that some companies have been repeat offenders in this regard, at times authorities have had to step in and impose hefty fines, like in the case of Adani Power, when the National Green Tribunal (NGT) in 2013 ordered the company to pay a fine of INR100 crores for causing damage to the environment and public health. The NGT had to step in because the company insisted that its Mundra power plant was compliant with environmental regulations and that it was committed to sustainable development.

Anyone who has established a business knows that building trust is not an easy task. Earning the loyalty of both internal and external stakeholders takes time and consistent effort. It requires continuously delivering on promises, meeting expectations, and exceeding the set standards every single time. Companies need to be transparent, responsive, and, most importantly, accountable. Yes, purpose-driven branding can help a company attract loyal customers, differentiate itself from its competitors, and build trust by aligning with values they care about. However, for this to be a reality, companies need to be authentic and commit to the long term. Ultimately, if done in the right manner, purpose-driven branding helps a company connect with consumers on a deeper level, drives long-term success, and positions the brand as a force for good.

This article is penned by Jaideep Shergill, Co-Founder, Pitchfork Partners.