The Impact of Corporate Social Responsibility on Consumer Behaviour in the Malaysian Cosmetic Industry

This introductory chapter provides a comprehensive background to the study of the research topic follow up by applying scientific methods. In depth, this chapter includes research background, problem statement, research objectives, research questions, hypotheses of the study, significance of the study, and chapter layout. This research is aim to examine the impact of corporate social responsibility (CSR) on consumer behaviour in Malaysian cosmetic industry. Specifically, we examine the relationship between 4 independent variables, economic responsibility, legal responsibility, ethical responsibility, philanthropic responsibility and the dependent variable, consumer behaviour.

1. Research background

The use of corporate social responsibility (CSR) initiatives to influence consumers and differentiate product offerings has become quite common. Corporate Social Responsibility (CSR) has become a main topic in recent years, especially within the cosmetics industry. The consumers are becoming more concerned with CSR and the demand for socially responsible brands is increasing. On the other hand, cosmetics brands are implementing more and more CSR activities. The consumers are getting more conscious of the company involved in corporate social responsibility (CSR) through better education and the increased influence of the media. Howard Bowen (as cited in Matthias S. Fifka, 2009) mentioned that entrepreneurs have a responsibility to consider social objectives, aims, expectation and values when they make decisions. But, the definitions of CSR have a larger term of responsibility today. The CSR today is define as a concept, and which is the basis for companies to integrate social and economical needs in their corporate activities and the interrelation with the stakeholders is very popular. Most of the companies had already understand that their socially responsible behaviour have a direct impact on the consumer buying behaviour. Consumers find CSR an important issue in the cosmetics industry and would hope to see more socially responsible cosmetics brands. They would like to be informed more about what the cosmetics brands are actually doing in terms of social responsibility. Consumer would also like to know on how the CSR activities of the cosmetics brands are truly meant to improve the society and the environment, not just to use as a marketing tool. When it comes to buying cosmetics brands; quality, price and ingredients are considered to be the main purchase factors by consumers. However, it can be stated that even though CSR is not considered to be a purchase factor, it does have a significant impact on the purchase decisions. In cosmetic industry, when it comes to purchasing cosmetics products, the product quality is the main reason that affects the consumer behaviour. Functional attributes like breathable, water-resistance, easy to wash are other factors are use to decide the quality of the product. For instance, some consumers use cosmetics for work and some for leisure and sports, as they need a lot of movement, while durability is an important consideration in purchasing cosmetics. The performance of the merchandise also effect customer psyche since a merchandise having huge sales would make the customer think that the quality of the product must be good to generate such sales (Hamza S.K., 2011). Under product quality were included aspects like good quality of products presented by the brand, match between product-consumer skin type, availability of a wide range of products under the same brand name and contents of harmful chemicals in the products (Chitralekhah H.D., 2009). The majority of the consumers are searching for products that are fragrance free and allergy tested, and that do not contain unhealthy chemical additives. The cosmetic industry has received a lot of criticisms on immoral and irresponsible business activities such as using of animals for product test, chemical pollution, unethical sourcing and unsustainable ingredients. Companies of the cosmetic industry have understood the importance of CSR and have started working on the prevention and minimization of the negative impacts by their business practices. Previous studies on consumers†attitudes on CSR and CSRâ€s impact on consumer behavior and buying decisions are quite general. We found that many researchers explore that CSR have impact on consumer behaviour in the cosmetic industry. So, we see this as an opportunity and have the idea to overcome the problem (Zhao.G, 2012).

2. Problem statement

Consumers view cosmetic companies as profit maximizing companies rather than socially responsible companies that emphasizes on putting corporate social responsibility into practice to make the world a better place to live (McNeal, n.d.). There is a controversy issue that cosmetic companies use animal testing in the process of producing cosmetic products (Mohamed, 2010). In this day and age, consumers start to concern about the animal rights (Mohamed, 2010). Consumers have raised issues such as the humanness of Cosmetics Company for intentionally poisoning animals in order to test the cosmetic products that they produce where the ethicalness of cosmetics companies has been questioned (McNeal, n.d.). Consumers are not willing to buy cosmetic products marketed by cosmetics companies that have a bad reputation in terms of animal testing (McNeal, n.d.; Mohamed, 2010). Besides animal rights, there is also an issue regarding the cosmetic industryâ€s packaging which causes negative impact on the environment (Danley, March 2012). The cosmetic industry has been known in using large amounts of materials in its packaging, resulting in an increase usage of landfill space required for its waste disposal (Danley, March 2012). Moreover, a substantial amount of energy input is needed in manufacturing, production and transportation of those packaging materials leading to a large amount of natural resources and energy consumption, as well as resulting in the emission of greenhouse gases and harmful pollutants into the atmosphere which may causes global warming (Danley, March 2012). According to Mohamed (2010), consumers are not willing to spend money on cosmetic products produced by Cosmetics Company which have undergone unfriendly production process. In the present day, consumers have become more environmentally concerned as well as being more selective and accountable in their choices (Mohamed, 2010). They care about how, where and why the cosmetic products are produced (Mohamed, 2010). In addition, consumers have shown a high interest in cosmetic products which are made from natural ingredients such as botanical extracts, oils and minerals (Mohamed, 2010). When consumers are more aware of the CSR of the cosmetics companies, their purchase decision will look different. The decision statement here is in what ways cosmetic companies can improve consumer buying behavior towards cosmetic products. This research was done on Malaysian cosmetic industry as there was no or little research done previously by other researchers regarding this particular field. In order to fill the research gap, we have used a series of research methodology such as data processing, data analysis and other methods to conduct the test to determine whether there is any impact of the four levels (pyramid) of CSR on consumer buying behavior in Malaysian Cosmetics Industry.

3. Research Objective

1. General Objectives

The objective of this research is to investigate the impact of the Four Levels of Corporate Social Responsibility (CSR) on Consumer Behaviour in Malaysian Cosmetic Industry.

2. Specific Objectives

1. To investigate the impact of Economic Responsibility on Consumer Behaviour in Malaysian Cosmetic Industry.
2. To investigate the impact of Legal Responsibility on Consumer Behaviour in Malaysian Cosmetic Industry.
3. To investigate the impact of Ethical Responsibility on Consumer Behaviour in Malaysian Cosmetic Industry.
4. To investigate the impact of Philanthropic Responsibility on Consumer Behaviour in Malaysian Cosmetic Industry.
5. To investigate the impact of the Four Levels of Corporate Social Responsibility on Consumer Behaviour in Malaysian Cosmetic Industry.