Business ethics and the drivers of customer equity in the South African FMCG industry.

Abstract

Customer equity can be seen as the life blood of an organisation in its ability to generate sustainable revenue, cash flows and ultimately profits. Business ethics is of high importance to senior business management, as any unethical practice has the potential to negatively cause reputational damage and thus an adverse knock on to company profits and associated shareholder value. This research report investigated the drivers of customer equity, specifically within the context of the South African fast moving consumer goods industry. The research focused on the retail environment, notably with discussion on Pick n Pay; the Shoprite Group; Woolworths; and Spar. A ranking of customer equity drivers was then discussed, as well as particular demographic and categorical nuances that affected each of the drivers of customer equity differently. Business ethics were then investigated to understand its importance relative to the drivers of customer equity, within the fast moving consumer goods industry. The drivers of customer equity have been discussed at length in various research papers. From the literature review, the drivers of customer equity are brand, relationship and value equity. Literature on the importance of business ethics relative to the drivers of customer equity is sparse in totality. A total of 165 respondents provided feedback on the quantitative research methodology, which followed a simple regression analysis. The findings concluded that there was adequate reliability with regards to the drivers of customer equity, with brand equity ranked the most important of the three drivers. In addition, value equity has the potential to increase shopping spend by 13 percent in revenue. Business ethics has a marginal effect on the three drivers of customer equity, notably with ethics effecting relationship equity the most of the tested constructs. Recommendations and suggestions for further research to build onto the body of knowledge encapsulated in this research report conclude.