Where two strong brands stand in the social impact landscape
Why do you choose one brand over its competitors when you seek a product or service? And why do you choose this brand over the others even when the price tag is higher than your other options?
The critical concept of brand equity refers to the value a brand adds to a product or service, which stems from consumers’ perceptions and loyalty to the brand. The sources of strong brand equity are consumers’ high awareness and perceived positive image – and this can command a higher price premium for that brand with inelastic demands. In the social impact sector, strong brand equity can lead to increased community support, greater loyalty and engagement, and significant positive influence on the issue or cause. In understanding the prominence of branding in the social impact landscape, statistics such as G2’s finding that “62% of consumers say that their purchase decisions are heavily influenced by a brand’s values” sheds a light on just how much consumers may feel connected to a brand’s ethos.
Two prominent brands in the social impact sector are Patagonia and TOMS, and we will dive into each one’s sources of brand equity as well as determine which is likely to command a higher price premium and, therefore, greater overall equity.
Brand overviews of Patagonia and TOMS
Founded in 1973 and based in Ventura, California, Patagonia is an outdoor recreation clothing company widely recognized for its environmental activism. It began selling climbing gear and then shifted focus to outdoor apparel and accessories, now operating stores in more than 10 countries and factories in 16 countries across the globe. Patagonia has a bold commitment to environmental sustainability and overall corporate social responsibility. According to the company’s website, it has pledged 1% of its sales to environmental causes, awarded over $140 million in cash and in-kind donations to domestic and international grassroots environmental groups, and even created its own non-profit encouraging other like-minded businesses. As the company’s initiatives focus on supply chain transparency and equitable working conditions, its materials and products have strong brand recognition and loyalty among its consumer bases. Regarding its climate goals, Patagonia’s CEO Ryan Gellert says, “If we don’t clean up our mess, we’ll be history. We must use all the tools at our disposal to secure a safer, more just future.”
Founded in 2006 and based in Los Angeles, California, TOMS is a footwear and apparel brand that pioneered the “One for One” model, where one pair of shoes is donated for every pair sold. The company’s business model positioned it as a pioneer in social entrepreneurship by blending profit with purpose. According to the TOMS website, in addition to its business model providing shoe donations, it also “supports mental health, education and community development programs throughout strategic partnerships.” TOMS also gives one-third of its profits for grassroots good, “supporting the people who are working to build equity at the local level and driving progress from the ground up” – including cash grants and partnerships with community organizations focusing on mental health resources for those in need.
Exploring the brands’ sources of brand equity
When considering consumers’ awareness of these two brands, it is notable that both Patagonia and TOMS enjoy high levels of brand awareness. Patagonia has steadily built strong awareness through decades of advocacy for environmental efforts and investment of time and resources to produce high-quality products. Patagonia has also significantly had consistent messaging around sustainability throughout this time, making it a household name among outdoor enthusiasts and conscious consumers. On the other hand, as TOMS became quickly and widely known for its innovative business model, it resonated well with consumers who wanted to make a difference with a simple purchase like a pair of shoes. The simplicity of the company’s “One for One” slogan also made it easy for consumers to understand the concept and support its mission.
In relation to its brand image, Patagonia is deeply associated with environmental sustainability, activism, and ethical business practices, as it has cultivated an image of being a force for positive environmental change. Patagonia has a strong association with long-term sustainability through its commitment to high-quality and durable products, which include using recycled materials and ensuring fair labor practices. The brand image of TOMS is strongly associated with social good, philanthropy, and giving back, which it showcases throughout its continuous storytelling of impactful donations. Thus, as its consumers purchase TOMS products, they know that they are contributing to a greater cause – and as they are in the casual footwear space, the focus is not necessarily on it being a premium or durable, high-performance product.
Overall, Patagonia’s customers are not only loyal to its products but are often also advocates for the brand’s values – and this strong emotional connection leads to high levels of repeat purchases and continued support. The company’s brand heritage is a significant source of its equity, while its unwavering commitment to its values and consistent performance leads to its high level of trust and credibility among consumers. Meanwhile, TOMS has a loyal customer base among socially conscious consumers who prioritize the social impact of their routine purchases. However, the downside of this type of loyalty with TOMS is that it can be fickle as the market for routine socially responsible products, such as for affordable shoes, has grown and diversified. And it is also important to note that TOMS is still a relatively young brand which although being a pioneer in its business model, now finds itself in a crowded space of social entrepreneurship.
The brand with higher price premium and overall brand equity
Upon analyzing the two brands, Patagonia emerges as the brand to command a higher price premium and therefore possess greater brand equity. The consumer perception that Patagonia’s products are high quality, durable and credible justifies its higher price point – as consumers are willing to pay more for what they believe will last longer and in return have less of an environmental impact. Its customers also have a deep emotional connection with the brand and strong sense of loyalty to it, which is grounded in shared values of environmental sustainability and can translate into a greater willingness to pay a premium price tag.
Patagonia has been successful in differentiating itself through a multifaceted approach to sustainability and activism – which has been harder to replicate and contributes to its ability to command higher prices, in comparison to TOMS initially innovative but simple “One for One” model that has since been easily replicated by many imitators. As author and business leadership speaker Simon Sinek says in his Tedx Talk Start with Why, “People don’t buy what you do; they buy why you do it” – and Patagonia has effectively stood by their “why” and connected on it with its customers over its over 50-year history. While both brands in this comparative analysis have built significant equity and are pioneers in their own rights, Patagonia is better positioned as a leader in this competitive landscape of social impact by leveraging its brand equity to drive financial, environmental, and social returns.
Check out my blog to explore more insights on how to build brand equity through social impact marketing: Impact With Natalie