Consumer Boycotts: Do they Contribute to “Change?”

Consumer Boycotts: Do they Contribute to “Change?”

Friedman (1985) defines consumer boycott as an attempt by one or more parties to achieve certain objectives by urging individual consumers to refrain from selected purchases in the market place.

Consumer boycotts are used to further political and social goals. Loyal individual consumers are urged to refrain from consuming certain types of commodities or all commodities of a given brand or a given firm. The term originated at the time of the Irish Land War in the late 19th century when Captain Charles Boycott, a land agent, was shunned after refusing to negotiate with his tenants. The entire town stopped doing business with him, eventually driving him out of town. After that, several boycotts have been witnessed related to human rights and environmental issues.

For example, the Alabama (Montgomery) bus boycott that was organized by Martin Luther King in 1955 was a defining moment of civil rights movement in America at a time when racial discrimination was very high in the world. The boycott was a result of discrimination of black persons on interstate bus transport where front seats were reserved for the whites; black persons were expected to give up their seats when a white person boarded a bus. At that time, a black woman championing for the rights of the colored people refused to give up seat to a white passenger and she was arrested. Her trial sparked a boycott of the bus transport that lasted for 381 days. The bus service suffered about two thirds reduction of their income since 75% of its passengers were blacks. In June 1956, a federal court declared the bus segregation unlawful and an appeal to the supreme court upheld the local court’s decision and declared segregation on public transport illegal – a great win for the economic boycott.

Further, in 1986, the International Marine Mammal Project (IMMP) organized a campaign, including a consumer boycott of tuna, to urge the United States of America tuna companies to end the practice of intentionally chasing and netting dolphins with purse seine nets, and to adopt Dolphin Safe fishing practices to prevent the drowning of dolphins in tuna nets. Four years later, the three biggest tuna companies agreed to stop selling tuna caught using the dolphin scooping method. Presently, 90% of the tuna sold in the US is caught using methods that do not harm dolphins. Since the adoption of IMMP’s Dolphin Safe standards, reported dolphin deaths in the Eastern Tropical Pacific Ocean have dropped from 80-100,000 annually in the late 1980s to under 3,000 dolphins annually.

Danish Brands boycott in 2005 is a recent episode which was sparked by the Danish newspaper Jyllands-Posten reprinting twelve cartoons of the Prophet Mohammed. Failure to apologize over the same led the Muslim community to boycott all Danish brands using Masjids (Mosques) in many Arab states. Their market share decreased from 17% in January 2006 to less than 1% in February 2006. As a result, it took the company years to recover 70% of its market share. This was confirmed by Arla’s spokesman Louis Honore, who stated: “We have built up our business in the Middle East countries for forty years, and have had production in Saudi Arabia for twenty years, and then within five days or so this is all in ruins”.

Participation in consumers’ boycotts is generally prompted by the belief that a firm has carried out some egregious act(s) of aggression against a certain community or the entire community or interest group(s). The targets could be directly on an industry through one company or indirectly through an attractive target in the supply chain. At the grassroot, boycotts are aimed to convince consumers to spend their money elsewhere while smart campaigns direct their attention on brand reputation instead of directly at the bottom line. A boycott need not have an impact on sale to be effective, but the boycotters can make negative claims that generate negative public perceptions of the firm. When public image of a firm/company is destroyed, firms/companies tend to take boycott demands seriously, but those that sustain their reputation are likely to stick to their guns. The success of consumer boycotts is therefore realized when organizers achieve their objectives.

Several factors contribute to effectiveness and success of a boycott. Key among them is the choice of the target. A targeted firm(s) or brand should have greater visibility in the market with a dominance in its niche market such that consumer boycott would significantly affect its sales volumes. The choice of product should also have high connection with the grievance to convince the loyal consumers to boycott. The product should be highly substitutable by competitive offerings to reduce the cost of consumer participation. This will enable consumers to switch to other products that offer them almost the same level of satisfaction.

Communication is essential in reaching the targeted group members. Various channels such as posting and distributing fliers, newspapers, magazines, TV and radio messaging are used as the primary means to reach their target audience. However, the Internet now makes communication with many people over a wide geographically dispersed region quick, easy, and cheap. It therefore seems to be the solution to easily mobilize groups especially using social media tools. In some cases, mass media attention includes celebrities.
Like any other collective action, boycotts are subject to small-agent and free-rider problems. Individual participants may view their contribution as very small in the market, which then requires strategic coordination to gain support.

Further, an individual may be comforted that they will reap benefits from a successful boycott even if they do not participate. That said, those who participate do so with the desire to make a societal change. In addition, they tend to balance between guilt of consuming and self-esteem through association with a boycott product. As such, consumers must clearly identify with the “ask” and care passionately about the issue whether it is a violation of human rights, discrimination, or betrayal.

Recently, the Kenya’s opposition leaders called on their supporters to refrain from purchase of commodities of targeted companies including Safaricom, Bidco Oil Refineries, Brookside Dairies and companies affiliated to them. The “ask” was that these companies supported the government in winning the recently contested presidential elections. The leaders even demonstrated in public preference for Airtel in place of Safaricom by publicly purchasing Airtel sim cards.

The targeted companies command significant market shares with their key products and have a diverse range of products. For example, Safaricom has over 28 million subscriptions compared to Airtel with about 6 million, commanding over 70% of the mobile market. It also dominates in terms of the mobile money transfer service with over 400 billion transfers as compared to about 870 million for Airtel. Bidco has 60% market share for cooking fat and 54% for cooking oil. Both Bidco and Brookside have spread outside the country with subsidiaries in other parts of Africa. In addition, they are involved in various corporate social responsibility activities. For Bidco, its activities go beyond the products to the value chain, working with 40,000 farmers for supply of soy beans and sunflower.

The effectiveness of such boycotts can then be gauged with impact on sales and subsequent loss of employment at individual firm level. For example, Safaricom has direct employment of about 3,000 and much more employment indirectly through dealers and agencies. If the substitute providers make similar sales and employ similar number of employees then this would not have an effect at aggregate economy level. That said, the economy could lose a lot in terms of the gains made in ICT development, as targeting Safaricom is like targeting the ICT industry and related sectors such as trade and banking. Sunflower and soya beans farmers would lose market for their product if the substitute products use different raw materials and if such raw materials are not sourced locally then the effect will be felt at aggregate level. And so would the many farmers that depend on the dairy industry as a market for their products, and especially if alternative companies do not have available capacity to immediately expand processing. Politically, the success would also depend on any possible retaliation from the other political divide; if the government and its

supporters decide not to do business with those leading and supporting the boycott, then this may have significant repercussions on the economy.
Mitigating such political risks then becomes critical in securing gains made in the development agenda.

 

Authors: Douglas L. Kivoi, Policy Analyst, KIPPRA and Stephen Nduvi, Young Professional, KIPPRA

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