How Political Polarization Influences Consumer Behavior

Remember when Donald Trump’s Twitter account was permanently suspended? It was all anyone could talk about! But why did that happen? It was the pressure from many Twitter users that made the #bantrumpfordemocracy hashtag go viral. In other words, their tweets were meant as a boycott.

Boycotts occur when customers stop consuming to inflict financial or reputational harm to a company as punishment for undesirable behavior. In contrast, buycotts entail customers increasing their consumption to support a firm due to positively viewed firm behavior. Both phenomena are widespread forms of consumer behavior, specifically consumer activism. In 2018 one third of U.S. millennials and Gen Xers contributed to at least one boycott!

But what influences the extent of consumer activism, and what determines its effect on a firm? M. Neureiter and C.B. Bhattacharya at the University of Pittsburgh used statistical analysis of public-opinion survey data and qualitative analysis of companies' past political controversies to investigate the effect of the political environment of a country on consumer behavior.

A Theoretical Background on Political Controversies and Polarization

Unlike negative publicity (e.g., a bad product review), a political controversy has more of an ethical implication. So, what could cause a political controversy? Usually, the trigger is a critical event, which often takes the form of CEO activism: when a company takes a stand on a societal issue that is not directly related to the company’s business.

Not all political controversies lead to consumer activism. Why?

This study suggests that the level of political polarization of the firm’s country is one of the main determinants.

Four factors characterize political polarization:

The dispersion of beliefs and attitudes congregated around two extreme positions with very few moderate views in-between
Politicization: societal issues becoming increasingly political
The increased correlation between political views and individuals’ demographic identity
Group-centric impulses: individuals becoming more unsympathetic towards people with different views whilst being more attracted to and protective of groups that have similar views

The Methodology on the Study of the Impact of Political Polarization on Consumer Activism

The extent of political polarization varies in different countries. Furthermore, citizens’ political ideologies change, and a country’s level of polarization can increase or decrease over time. For instance, analyzing survey data, the researchers found that the level of polarization in the U.S. was relatively low during the 90s and early 2000s but increased significantly after the 2004 presidential elections.

Moreover, using data from over 1000 companies, the researchers found that political controversies per year in the U.S. almost doubled from 2002 to 2011. Amongst other reasons, as the U.S. became more polarized, politicization increased, and companies found themselves more often in a position where statements about social issues were deemed political, causing more consumer activism. The researchers supported this argument via an empirical analysis of survey data from 19 European countries. Controlling for a series of confounding variables, they found that as polarization rose from its minimum to maximum values, a person’s probability of engaging in a boycott leaped from 10 to 25%!

Due to group-centric impulses, when an environment is highly polarized, it is more likely for a critical event to trigger a boycott and a buycott at opposite sides of the political spectrum. For example, the researchers analyzed Nike’s 2018 campaign featuring ex-NFL player and racial justice activist Colin Kaepernick. The campaign caused political turmoil and led to boycotts from conservatives, which deemed kneeling during the national anthem unpatriotic.

Conversely, the campaign was greatly supported by liberals who encouraged the fight against racial injustice and increased buycotts. But then how come Nike’s income increased by 10% after this campaign? The answer lies within political congruence: the extent to which the views of most of the firm’s customers overlap with the firm’s political views. Since the political makeup of Nike’s customers contains mainly progressive liberals, the boycott surpassed the boycott.

The Results and Implications of Consumer Activism

This study demonstrates that political belief is an increasingly important element of one’s consumer psychology. Overall, the results of the analysis indicate three important effects of a firm's political environment on consumer behavior:

As polarization increases, so do the number of political controversies, which results in a surge of consumer activism
In highly polarized environments, consumer activism is likely to cause both boycotts and buycotts at different ends of the political spectrum
The impact boycotts and buycotts will have on a company’s sales depends on the political congruence

Due to these results, it is crucial for companies to consider the country’s level of polarization and the political makeup of their customers before taking a political stance. Supporting a political opinion just to increase short-term profits may not be the marketing opportunity that it seems, there are more effective and ethical marketing strategies out there!

Your Pop Neuro Consumer Behavior Insights

It’s ethically questionable for a firm to support a group on one side of the political spectrum as it is likely to increase the country’s polarization levels
The political oscillation of a firm could be deemed as hypocritical by its customers and so could lead to financial harm in the long-run
Companies should aim to slowly build towards addressing a specific cause by developing politically aware long-term social strategies, rather than hazardly reacting to whatever political issue is trending

This is an exclusive, members-only post. To get access to more posts like this, sign-up for the Consumer Behavior Insights Magazine here

References

Forbes: The Power of Purpose: Nike and Colin Kaepernick”, Afdhel Aziz

Political Polarization in the American Public. (2019, December 31). Pew Research Center - U.S. Politics & Policy. https://www.pewresearch.org/politics/2014/06/12/political-polarization-in-the-american-public/