Student’s last name 1

Research topic: An evaluation of the manner in which CSR policy in a

cosmetic brand influences the buying behavior of millennial consumers in

emerging markets

STUDENT NAME: xxxxxxx

STUDENT ID: xxxxxxx

SUPERVISOR: xxxxxxxx

Date of submission: xx-xx-xx

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Table of Contents
Introduction..........................................................................................................................2

Research question............................................................................................................3

Research problem............................................................................................................3

Research aim....................................................................................................................4

Research objectives.........................................................................................................4

Significance of study.......................................................................................................4

Methodology........................................................................................................................5

Data collection.................................................................................................................6

Results..................................................................................................................................7

Findings from semi-structured interviews.......................................................................7

Findings from case study.................................................................................................9

Data analysis......................................................................................................................11

Conclusion and recommendations.....................................................................................13

Limitations and further research....................................................................................14

References..........................................................................................................................15
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Introduction

Corporate social responsibility has a number of definitions put forward by scholars and

business professionals. Aguinis and Glavas (2012, p. 933) define the concept to be efforts as well

as activities that are purposed on improvement of the welfare of stakeholders such as the

environment, community members and the economy in the society. The scholars explain that a

company that engages in CSR extends its priorities beyond shareholder interests. An alternative

definition is provided by Schwartz (2017) who defines CSR as the efforts and activities done by

an organization with the objective of positively impacting on the society. A third definition is

that CSR is an approach that an organization adopts involving prioritization of sustainable

development by delivering benefits that encompass three areas – the economy, the society and

the environment. A common factor in the definitions is that the organization extends its focus

beyond shareholder interests and addresses the interests of other stakeholders (Dahlsrud 2006, p.

1). The definition provided by Dahlsrud is more comprehensive as it stipulates the individual

areas covered under CSR. Simply focusing on environmental preservation results in one facet of

CSR being addressed – the environment. While some industries and firms in the private sector

have started exercising their responsibility to the environment and society in recent years, the

public sector has made effort to reduce negative environmental impact for decades. Motivations

behind increasing interest in CSR include climate change, industrialization (leading to pollution)

and growing consumer awareness. In the present study, focus is narrowed down to the cosmetics

industry and millennial customers. The cosmetics industry has been a subject of criticism in

history with regards to business practices that are unethical and environmentally damaging. In

recent years (and based on growing consumer awareness), cosmetics firms have had to adopt

CSR to clean up their image. In the current study, the influence that CSR compliance by
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cosmetics firms has on purchasing behavior of millennial customers is evaluated. Millennial

customers constitute a large segment for cosmetics firms (45%) hence the choice of the segment.

Research question

How does the CSR policy of a cosmetic brand influence the buying behaviors of

millennial consumers in emerging markets?

P – Millennial consumers

I – CSR policy

C – Non-compliance

O – Improved efforts on sustainability and CSR

C – Cosmetics industry

Research problem

In the past, cosmetics firms have been accused of engaging in business practices that are

unethical and environmentally unfriendly. Cosmetics firms in recent times have exhibited greater

awareness regarding CSR. The influence of consumer awareness is linked with improved

compliance with CSR in the cosmetics industry (Bird et al 2006, p. 13). An evaluation of the

impact of CSR policy on purchasing behavior of millennial consumers is anticipated to

encourage cosmetics firm to prioritize CSR initiatives. Realization that consumers are less likely

to purchase products from a brand that does not comply with CSR would be adequate motivation

for a firm to integrate CSR into its business practices.

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Research aim

This study aims to illustrate the manner in which CSR policy in cosmetics firm impacts

on the purchasing behavior of millennial consumers.

Research objectives

The primary objective is to determine how millennial consumers base their purchasing

decisions on a cosmetic brand’s CSR compliance.

Secondary objectives are:

- To determine the effectiveness of existing regulatory and control policies in resolving

the proliferation of harmful cosmetic brands that are non-compliant with socially

responsible business practices.

- To identify whether cosmetics brands are committed to corporate social responsible

conduct.

- To identify the degree to which millennial consumers are aware of CSR compliance

by the brands they consume.

- To establish whether millennial consumers develop loyalty towards brands that

exercise CSR.

Significance of study

The findings made from this study will have implications on future efforts on CSR by

cosmetics firms. A realization that customers (their largest segment – millennial customers) base

their purchase decision, repeat purchases and recommending a brand on the brand’s compliance

with CSR would motivate cosmetics firms to ramp up their CSR efforts. Additionally, the
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findings would illustrates trends in CSR adoption in the cosmetics industry and ways in which

awareness regarding perils of non-socially responsible business practices can be enhanced. The

study is hence important in promoting the CSR compliance agenda that is associated with a wide

range of benefits – including improvement in brand image, customer loyalty, increase in sales,

societal development and environmental preservation.

Methodology

In conducting this research study, mixed methods is the selected methodology. There are

three key methodologies applied when conducting a research study, namely; qualitative,

quantitative and mixed methods methodologies. Qualitative methodology applies when the

researcher explores the phenomena under study through use of non-numerical data (Creswell

2008, p. 118). The researcher seeks to create an understanding of motivations, opinions as well

as reasons that are linked with specific phenomena. The methodology differs from quantitative

research which involves use of statistical data. In quantitative research, the researcher

empirically investigates the phenomena under study through a structured system (Creswell 2008,

p. 118). Computational techniques coupled with mathematical and statistical tools are used to

collect and analyze data. It is important to note that the scope covered under quantitative

approach is limited as the questions answered are the ‘what’, ‘when’ and ‘which’ regarding the

phenomena being investigated (Creswell 2008, p. 121). In contrast, qualitative approach extends

the scope to include additional considerations such as ‘how’ and ‘why’ questions regarding the

phenomena being studied. Answering the additional questions allows for qualitative approach to

identify cause-and-effect relationships in additional to explaining behavior of various variables.

The appropriateness of qualitative research is hence observed in its ability to identify

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relationships between variables. The third approach when conducting research is mixed methods.

Mixed methods involve combining elements from both qualitative and quantitative approaches

when conducting a study (Creswell 2008, p. 122). The approach is considered advantageous as it

would allow the researcher to exploit advantages of the individual research approaches while

avoiding limitations that are linked with either of the approaches. For instance, the researcher can

use a large sample population (as is the case in quantitative research) which is advantageous

because it allows for more accurate and generalizable findings to be made. Additionally, the

researcher may include questions that answer the ‘how’ and ‘why’ question linked with the

phenomena under study therefore manifesting qualitative approach and resulting in identification

of relationships between variables.

Data collection

Primary data was collected using semi-structured interviews with 56 consumers of

cosmetics brands. The participants were approached at Pall Mall that is located along St. James

Street in London. Consent forms were provided to consumers who agreed to participate in the

interviews. Semi-structured interviews refer to a data collection approach in which the researcher

develops a set of open-ended questions prior to conduction of the interview with participants

(Bryman 2017 p. 62). They are beneficial based on their support of exploratory research since

the responses provided do not limit the interviewee to ‘yes’ and ‘no’ answers and the researcher

can explore additional themes as well as responses at a later stage. The only consumers included

in the study are those who had purchased a cosmetics product once or more in the last month

(prior to conduction of the interviews). A total of 56 interviewees (38 women and 18 men) aged

between 22 and 37 years were selected and engaged in the interview. Flexibility was exercised to
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a small degree because the some questions were added to the interview during the interviewing

process to allow for interviewees to elaborate on unclear or incomplete responses.

The case study design employed used Rimmel London as the cosmetic brand from which

data would be collected. Rimmel is a cosmetics firm that has branches worldwide and engages in

design and production of beauty products including make-up (mascara, lip-stick, eyeliner and

foundation), hair spray, perfume, shampoo and body lotions. Secondary research was conducted

on the company to identify compliance with CSR and the financial performance by the firm. The

data collected came from the company website (and annual reports) and trade press.

Results

Findings from semi-structured interviews

The questions posed were linked with CSR compliance, consumer perceptions as well as

company sales. The table below illustrates the number of responses that affirmed and negated the

questions posed. Given that the questions are open-ended affirmative responses are those that

reflect the hypothesis on the influence of CSR. Negation is manifested in the interviewee

illustrating that CSR has little to zero influence on their purchase decision. For instance

regarding which brands the interviewee is loyal to affirmative responses are the ones that list

cosmetics brands that highly comply with CSR.

Table 1: Responses on interview questions

Question # of people who affirmed # of people who negated

How does CSR compliance 31 25
influence you decision to
purchase a cosmetic product?
What factors do you take into 37 19
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consideration before you

purchase a cosmetic product?
Which cosmetic brands are 29 27
you loyal to?
Have you ever recommended 22 34
a brand to a friend family
member or colleague because
of its environmentally friendly
nature?
Do you purchase most of your 29 27
beauty products from one
brand? If so why?
What is your perspective on 45 11
efforts by cosmetics firms to
exercise environmental
preservation sustainability and
societal development?
Have you ever read a brand’s 33 23
environmental or
sustainability report? Was it
on the company website,
annual report or marketing
campaign?

A significant finding is that a majority of millennial consumers (45 out of 56

interviewees) agree that they desire a cosmetics brand that makes effort to preserve the

environment develop the society and exercise sustainability. However a fewer number links their

purchase decision to CSR compliance (31 of 56 interviewees) hence illustrating that not all of the

45 interviewees check CSR compliance or do research on the brand before making a purchase. If

they did, it is likely that they would be influenced to purchase from a CSR compliant brand –

based on their emphasis that CSR compliance should be promoted.

Findings from case study

In a 2017 annual report on cosmetics brands, Rimmel (whose parent company is Coty)

was reported to have declined 5% in value. Other brands under Coty similarly exhibited a decline
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in value including Cover Girl – a 21% decline (Brand Finance 2017, 11). Rimmel exhibits the

assertions that have been made against cosmetics brands regarding their low investment in CSR.

According to Rank a Brand (2016) Rimmel London received the E-label primarily due to its poor

disclosure on the company’s sustainability policy. Regarding disclosure on the firm’s annual

absolute carbon footprint, the company has only disclosed its operations climate footprint

beginning 2013 although no report has been published on its absolute carbon footprint.

Additionally, Rimmel London has yet to communicate its policy on renewable energy or up to

date reduction targets on the firm’s operations climate footprint (Rank a Brand, 2016). The firm

has not submitted a report on any policy to eliminate all potentially harmful substances and in

fact continues to use high hazard chemicals that the Skin Deep Database lists as ‘red coded’. One

Green Planet (2016) shares the same perspective by including Rimmel on a list of top brands that

consumers need to avoid. According to the article, Rimmel’s products do not use sustainable

palm oil.

Quantifying the outcomes, it is evident that Rimmel falls in the low category (investment

in CSR that falls below 5 percent of total revenue generated) of CSR compliance. The firm

additionally has indicated lack of reporting on environmental policy, climate change/carbon

emissions and fair trade. The company only reports on less than 20% of its sustainability efforts

and is very defensive of its commitment to CSR. The table below provides statistics on CSR

compliance at Rimmel.

Table 2: Rimmel’s CSR efforts (Rank a Brand, 2016)

CSR initiative Approximate percentage of involvement

Climate change reduction 10%
Carbon emission reductions 5%
Eliminating animal testing 70%
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Use of renewable energy 20%

Phasing out possible harmful substances 30%
Reducing use of microplastics 50%
Use of a water recovery program 90%
Waste minimization and recycling 40%
Ensuring purchase of tropical ingredients that 20%
are certified

Data analysis

In analysis the data collected, correlation of the link between CSR, consumer purchasing

behavior of millennial consumers and company performance was conducted. The mean

identified on the

Question # of people who # of people who Fraction of

affirmed negated consumers whose
purchase decisions
is influenced by
CSR (in decimals)
How does CSR 31 25 0.55
compliance influence
you decision to purchase
a cosmetic product?
What factors do you take 37 19 0.66
into consideration before
you purchase a cosmetic
product?
Which cosmetic brands 29 27 0.52
are you loyal to?
Have you ever 22 34 0.39
recommended a brand to
a friend family member
or colleague because of
its environmentally
friendly nature?
Do you purchase most of 29 27 0.52
your beauty products
from one brand? If so
why?
What is your perspective 45 11 0.80
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on efforts by cosmetics
firms to exercise
environmental
preservation
sustainability and
societal development?
Have you ever read a 33 23 0.59
brand’s environmental or
sustainability report?
Was it on the company
website, annual report or
marketing campaign?
The degree of reliance on CSR compliance to influence purchase decision is high (a mean

of 0.62) which is above average. A high number of consumers are shown to be aware of the

negative environmental and potential societal impact that cosmetic firms’ operations have.

However, not all consumers who are aware of the value and necessity of CSR compliance

conduct research to identify whether their brand complies with CSR initiatives. CSR compliance

also influences brand loyalty (29 of 56 interviewees) although no direct link is established

between brand loyalty and CSR compliance. The inference is made based on the fact that all of

the interviewees who responded affirmative on brand loyalty also included that they conduct

research on CSR compliance of cosmetics brands and indicated that CSR compliance influences

their purchase decision.

On the case study, the recent acquisition of brands from P&G by Coty is linked with the

decline in performance (loss of value) by the firm. Following the acquisition, Coty began to

exhibit a decline in value ($2.3 billion) 3 months after the deal was completed (Brand Finance

2017 p. 11). In this regard, the decline in value that Rimmel has shown can be linked with the

challenge that Coty has experienced because of an influx in brands (43 brands). The findings

made on the lack of commitment to CSR by Rimmel can also be a contributing factor. Primary

research has shown that 45 of 56 millenial consumers respect and would prefer it is a cosmetics
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brand complied with CSR. Such growing awareness among consumers regarding ethical business

practices impacts on purchasing decisions. 29 of 56 consumers have indicated that they are loyal

to one or few consumer brands. 33 of 56 consumers indicated that they have read a sustainability

report on a brand. A significant factor that correlates loss of brand value by Rimmel to CSR

compliance is the response provided by the interviewees regarding recommendation of a brand to

another individual. 22 of 56 interviewees indicated that they had recommended a cosmetics

brand to a friend, family member or colleague based on its environmentally friendly nature. The

inference is that word-of-mouth marketing is promoted by CSR compliance hence contributing

to growth in market share increase in sales and possible growth in profit margin.

Conclusion and recommendations

The research study conducted is exploratory and seeks to provide insights into the

growing trend among millennial consumers to rely on CSR compliance for purchase decisions of

cosmetics products. The findings made show that a high number of millennial consumers are

aware of CSR compliance among cosmetic brands. Additionally, some cosmetics brands

(Rimmel included) do not put significant effort to exercise CSR. Lack of compliance with CSR

by a brand causes 55 percent of consumers not to purchase products under that brand (31 of 56

interviewees base their purchase decision on CSR compliance). The primary objective of this

study has been met as millennial consumers have been shown to check on environmental policy,

carbon emission reductions, climate change initiatives and societal development efforts to

influence their purchase decision. Rimmel continues to exhibit low compliance with CSR and is

lacking in environmental policy. The inference is that the current regulatory and control policies

are ineffective in resolving the proliferation of harmful cosmetics brands that are non-compliant
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with socially responsible business practices. Another objective met is that the study findings

showed that unlike other industries such as motor industry tourism industry and the

pharmaceuticals industry the cosmetics industry has low compliance on CSR. Rimmel is an

example of a firm that has low CSR yet it is a leading brand whose parent company (Coty) has

more than 43 brands in its portfolio.

The recommendation made is for cosmetics firms to increase marketing efforts on

millennial consumers (having established that they constitute the largest segment). Additionally,

cosmetics firms are encouraged to engage in CSR initiatives or increase investment in CSR.

Compliance with CSR would result in brand loyalty more repeat purchases higher sales and

potential growth in profit. As has been shown, approximately 55% of consumers check for CSR

compliance before purchasing a cosmetics product.

Limitations and further research

A major limitation of this study is that the case study focuses on one company from one

geographical location hence reducing generalizability of the findings made. The validity

reliability and generalizability of the findings would be enhanced if the case study included a

second cosmetics company from another geographical region and that is not among leading

brands globally. Another limitation is the correlation made between CSR compliance and brand

value is speculative since there are no control variables. The loss of value by Rimmel could be

linked with other variables (such as the recent acquisition of brands from P&G). A

recommendation for future research would be a conclusive study (the current study was

exploratory) that established control variables for determination of a causal relationship.

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References

Aguinis H. and Glavas A. (2012). What We Know and Don’t Know About Corporate Social
Responsibility: A Review and Research Agenda. Journal of Management, 38(4): 932-968
Bird, R., Casavecchia, L., Reggiani, F. (2006). Corporate social responsibility and corporate
performance: where to begin? Working Paper, University of Technology, Sydney &
Bocconi University, Milan.
Bryman, A. (2017). Quantitative and qualitative research: further reflections on their integration.
In Mixing methods: Qualitative and quantitative research (pp. 57-78). Routledge.
Creswell, J.W. (2008). Research design: Qualitative, quantitative, and mixed methods approach.
London: Sage
Dahlsrud A. (2006). How corporate social responsibility is defined: an analysis of 37 definitions.
Corporate Social Responsibility and Environmental Management, 15(1): 1-13
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One Green Planet. (2016). Are you funding deforestation? Top brands to avoid (Online)
Available at: https://www.onegreenplanet.org/animalsandnature/are-you-funding-
deforestation-top-brands-to-avoid/ (Accessed August 8 2018)
Rank a Brand. (2016). How sustainable is Rimmel London? (Online) Available at:
https://rankabrand.org/cosmetics/Rimmel+London/page/2 (Accessed August 8 2018)
Schwartz M.S. (2017). Corporate Social Responsibility. London: Routledge.