Shell ignores theconsumer at its peril

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The Independent Online
The list of companies given a bloody nose by consumers lengthens every month. It ranges from Barclays, which was forced out of South Africa in the mid-1980s by student boycotts in the UK and US, to Hoover, which sold its European subsidiary this year after the fiasco of its travel competition caused a public outcry.

Now Shell is risking a similar backlash over its insistence on dumping the Brent Spar oil installation in the North Atlantic. The affair has already had a dramatic effect on sales in Germany. The company claims motorists in the UK are ignoring calls for a similar boycott, but Brent Spar could prove a slow-burning fuse and it would be unwise at this stage for Shell to be confident about maintaining its market share. Big corporations ignore public opinion at their own peril.

A full-scale consumer boycott is only the extreme version of something that happens all the time in marketing. An organised boycott can have a devastating effect on a trade. The fur industry was driven almost underground, while the cosmetics industry's behaviour was radically changed by the campaign against animal testing.

Even in the absence of such action, however, corporate stubborness on a level now being displayed by Shell can have a devasting impact. Many motorists might choose a BP station rather than Shell, perhaps out of no more than a vague feeling of unease about the Brent Spar.

According to Simon Knox, reader in consumer marketing at the Cranfield School of Management, purchasing decisions have been increasingly influenced by perceptions of the broader behaviour of companies in recent years, and this has become a very difficult issue for managers. Mr Knox says that "silent defections" are more worrying than open boycotts. Ethics are often not the main issue. The Persil saga at Unilever was to do with damage caused to clothes by the product itself, while Hoover was about simple competence in keeping a promise.

The underlying change of behaviour is that consumers will no longer take a brand on trust and stick with it through simple loyalty. They expect to be informed truthfully by companies and, just as important, they switch products if they are deceived, which is easy in a marketplace where they are usually spoilt for choice.

Transparency and honesty now really matter. Virgin has used its name to sell in many different markets and product areas by building up a frank and open relationship with consumers. Clever public relations have also helped.

But woe betide the company that disappoints the expectations it has raised; consumers are voting ever more rapidly with their feet. Body Shop successfully hit back at a campaign that tried to undermine its ethical stance. But Shell, which has spent a fortune on promoting itself as an environmentally conscious oil company, now risks shooting itself in the foot with a single decision on Brent Spar that - for many people - goes against what the company has said it stands for.

In business terms, the technical and environmental question of whether dumping Brent Spar is right or wrong is becoming irrelevant.

With Chancellor Kohl joining in, the issue has now reached the point at which Shell's senior management must seriously consider whether to back down. The cost of finding some other method of disposal could be dwarfed by the potential damage if Shell stubbornly carries on.