Companies In The Crossfire
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When Martha E. Ture took a road trip from Indiana to California on I-80, she ate at Subway restaurants rather than Wendy's (WEN ) or McDonald's (MCD ). When she last flew to Las Vegas, she took United Airlines, not American or Continental. When she drinks beer, Ture, who describes herself as a "writer, singer, guitar picker, nature lover, [and] politico," eschews Coors (TAP ) for Sierra Nevada. She stays at Hyatt hotels (never Marriott), and, when she visits a big-box discount store, she always patronizes Costco (COST ), not Wal-Mart (WMT ).
Then there's Jennifer Giroux of Madeira, Ohio. The mother of nine, a registered nurse and Christian-bookstore owner, always gets her pizza at Domino's. She never takes the kids to Ben & Jerry's, opting instead for Cincinnati hometown favorite Graeter's Ice Cream. At the mall, she won't allow the family to walk anywhere near Abercrombie & Fitch, famous for its suggestive advertising. And when she does laundry, and she does a lot, she never buys Procter & Gamble's Tide detergent or Bounce fabric softener.
Ture and Giroux don't have much in common. But they do share a trait: Their product choices are driven not by low price or customer service, but by politics.
Like millions of Americans, these two consumers choose -- or avoid -- certain companies because of the political donations of their management or the controversial causes they support. Squeezing companies for political reasons is nothing new, from the Red Scare boycotts of 1950s TV advertisers to the anti-apartheid divestment drives of the '80s. But the movement has exploded in recent years, driven largely by the popularity of talk radio and the revolution in modern communications technology. Across cyberspace, dozens of Web sites, blogs, and listservs tell true believers which brands to buy or boycott.
The rise of the ideological consumer has forced companies to reassess their marketing strategies and created a business boomlet for public-relations specialists whose expertise includes defusing politically based customer revolts. A boycott "distracts [companies] from their corporate strategy, it causes them unwanted publicity, and it takes them off-message," says Bob Witeck, CEO of a Washington (D.C.) strategic communications and marketing firm who has counseled Ford, American, and other companies.
Targeted businesses "have to tread this incredibly fine line," says corporate communications strategist Arthur C. "Bud" Liebler, former senior vice-president for communications and marketing at Chrysler Corp. "There used to be a tendency by companies to ignore all [the attacks] and hope they'll go away. Now you can't ignore them because of all the Web sites, talk radio, and alternative newspapers." In addition, Liebler warns, "when you get into these political or religious things, you're never going to please 100% of your customers. Your goal is to do the least damage."
BAD TO WORSE
Crisis communications strategists say some companies get it right. They cite P&G and Miller Brewing Co. for responding to incipient crises by reaching out to angry consumers and communicating a concise, consistent, nonpolitical response. But others only compound their woes. Ford (F ) and Microsoft Corp. (MSFT ) changed positions in their attempts to appease critics, only to face an even stronger backlash from the other side.
What makes businesses so uncomfortable is the passion that activists, on both the Left and the Right, bring to their causes. Giroux says she'll spend more to patronize a socially conservative company and will abandon favorite brands if she dislikes the manufacturer's marketing or political choices. She gave up Tide because she received an e-mail from the American Family Assn. (AFA) in Tupelo, Miss., saying P&G had run ads showing men together in bed. "If they're not pro-family, we don't feel they deserve our dollars," says Giroux. "It's a sacrifice we're making to let them know that we don't agree morally with what they're doing."
Ture, like many liberal economic warriors, was jolted into action by President George W. Bush's 2004 reelection. "If everybody who voted Democratic in 2004 shifted just $100 from red to blue corporations, that would represent a shift of $5 billion in the economy," says Ture, 60. Wal-Mart, a big GOP contributor, is a major target of the Left because it provides its workers only limited health-care benefits. Wal-Mart declined comment.
Conservatives play the political game, too. They've targeted a range of companies -- including Ford, Microsoft, Target (TGT ), Walt Disney (DIS ), H.J. Heinz (HNZ ), Ben & Jerry's, and P&G -- for everything from backing gay-rights groups to banning the Salvation Army in front of their stores at Christmastime.
A network of 35 religious groups called Positive Christian Agenda is urging shareholders to dump the stocks of Microsoft, Nike (NKE ), and Boeing (BA ), all of which backed a Washington State law to ban discrimination based on sexual orientation in housing, employment, and insurance. The group says it could cost Microsoft founder William H. Gates III around $200 million for each dollar the stock drops. Microsoft declined comment.
Boycott efforts sometimes veer into slapstick. In 2004, Teresa Heinz Kerry, widow of Senator H. John Heinz III, made headlines campaigning for her second husband, Democratic Presidential candidate John F. Kerry. Conservative talk-show hosts told red voters to buy new W Ketchup instead of H.J. Heinz' signature product. The upstart's slogan: "You don't support Democrats. Why should your ketchup?" Heinz limited the damage by quickly issuing a statement noting that Mrs. Kerry had nothing to do with the company. One corporate counselor says Heinz let the world know that "Teresa is not on the assembly line stomping tomatoes, and the money is not going to her."
Three conservatives angry at Bennett Cohen and Jerry Greenfield, the liberal founders of Ben & Jerry's Homemade Inc. (UL ), launched Star Spangled Ice Cream in 2005. Its flavors include Iraqi Road, I Hate the French Vanilla, and Smaller GovernMINT. "We're trying to appeal to conservatives, red states, and NASCAR dads who like Ben & Jerry's ice cream but can't [swallow] their politics," says Vice-President Richard Lessner. The boutique brand is available online, at retail outlets in the Mid-Atlantic region, and at 10 military bases in Texas. Lessner says its sales continue to build as conservatives talk it up and spoon it down.
Some companies are caught in the political crossfire. Social conservatives are boycotting Ford because, they say, the auto maker reneged on a promise to stop funding groups that advocate gay marriage. But Ford is also under attack from liberal groups for funneling 84% of its political action committee donations to Republicans in the last election. Target Corp. (TGT ), boycotted by the Right for barring Salvation Army bell-ringers outside its stores last Christmas, is being bashed by the Left for sending 76% of its PAC money to the GOP in the 2004 election. And Heinz, fighting off a ketchup rebellion, is being criticized by liberals for sending 70% of its PAC's campaign cash to Republicans over the past decade. With angry customers on both sides, many companies decide it's best to lie low. "Whatever we say, we just don't win, so we don't say anything," says one embattled executive.
But that's the wrong approach, communications consultants say. Instead, a company should try to defuse a situation before it gets out of hand. Miller Brewing offers a case study. In 2004, Miller's PAC donated $2,000 to House Judiciary Committee Chairman Jim Sensenbrenner (R-Wis.), author of the tough immigration bill that passed the House in December. That prompted an immigrant-rights group, the Chicago Committee Against H.R. 4437, to announce a boycott of Miller's beers on Mar. 10, the day of a massive pro-immigration rally in Chicago. One of Miller's Chicago marketing managers, Matt Romero, got wind of the boycott when distributors said they got pushback from bar owners and retailers.
The company immediately sought a meeting to discuss the situation. On Mar. 15, Romero joined a five-person team led by Nehl Horton, Miller's senior vice-president for communications and government relations, to meet with group leaders at a community center in Pilsen, a predominantly Latino Chicago neighborhood. Miller agreed to run newspaper ads opposing the legislation and helped to facilitate meetings between immigrant rights backers and lawmakers. On Mar. 18 the group officially ended its boycott.
The latino groups chalked it up as a win. "We think it was an important victory," says Carlos Arango of Casa Aztlán, one of the 100 organizations in the protest committee. But the outcome was also a triumph for Miller, which resolved the situation before it wreaked havoc on business. Instead of responding defensively, Miller used the situation to reinforce its image as a corporation that's committed to diversity.
In contrast to Miller's sure-handed action, Ford's response to political threats complicated a sensitive situation. The AFA and 20 other groups first threatened a boycott of Ford in May, 2005. Top company executives met in Dallas with religious leaders and Ford dealers. On Nov. 28, Ford agreed to end its sponsorships of Gay Pride parades and stop sales promotions that give donations to homosexual rights organizations based on the purchase of vehicles.
But the auto maker reversed itself after an angry response from gay rights groups, and the conservative boycott began on Mar. 13. "Ford had to make a choice: support the homosexual groups or the mainstream values of its customers and dealers," says Randy Sharp, the AFA's director of special projects. Twice burned, Ford now chooses to remain silent. Says spokeswoman Kathleen Vokes: "All we can do is remain focused on building high-quality vehicles."
Many companies sympathize with Ford and believe it is unfair for activists to seek economic revenge. Take Wendy's, for example. Although the hamburger chain's PAC has given 93% of its campaign contributions to Republicans over the past five years, it views itself as a "nonpolitical company" that does not take positions on controversial issues, says spokesman Denny Lynch: "We serve customers on both sides of the aisle." Wendy's backs winners, he says, and today those incumbents are mostly Republican. "We're not a red company," Lynch says. "If Democrats start winning, we'll move our money to Democrats. It's just business."
Other companies say it's better business to steer clear of politics. Costco has won praise from liberals as the un-Wal-Mart, with higher wages and better benefits. But Costco CEO James D. Sinegal has not created a corporate PAC because "we don't believe a public company should take shareholders' money and support political candidates or causes." He and Chairman Jeffrey H. Brotman donate heavily to Democrats, Sinegal says, "but we do it with our own money. I'm a merchant, not a politician." Most American merchants would agree -- if only the activists would leave them to their business.
By Richard S. Dunham, with Adrienne Carter in Chicago, Stanley Holmes in Seattle, and bureau reports