Target CEO Gregg Steinhafel and the controversy over the retailer’s corporate donations to a business group trying to elect GOP gubernatorial candidate Tom Emmer may help move us back to an earlier era, one in which people considered beliefs and affinities when deciding where to buy something.
It is not clear, however, whether that will be good for Steinhafel’s employers, people who own Target stock.
I experienced that earlier era growing up in the Dutch Calvinist colony in southwest Minnesota in the 1950s. Huisken’s V-store was where Chandler, Minn.’s Dutchmen usually went for groceries and dry goods. Scandinavians and others favored Dysthes. In nearby Edgerton, members of one Dutch Calvinist denomination usually bought John Deere farm machinery from Brink Implement. Those from a rival denomination, so similar to the first that advanced study in theology and 16th century history is needed to understand the differences, favored International Harvester equipment from Roelofs across the street.
Catholics to the north favored Koob implement in Lake Wilson, Minn. while the mass of German Catholics to the southeast bought in Adrian. Scandinavian Lutheran farmers had a plethora of choices, but older Danes, in particular, maintained an affinity for Pilgaard’s Allis Chalmers in Ruthton. Most Dutchmen drove Chevies because that is what the DeBoer cousins sold at their dealerships in Leota and Edgerton.
Those purchasing preferences never were absolute and eroded rapidly as the original immigrants and the first generation born here died off. Nor was there much animosity involved, although the Protestant-Catholic divide remained toxic for a long time. (Very sick Catholics went to McKennan Hospital in Sioux Falls, Protestants went to Sioux Valley Hospital.)
It was rather an example of loving “the little platoon we belong to in society.” British political philosopher Edmund Burke called this “the first principle” of society. The impulse lies more latent now than when groups of immigrants came to a strange and frightening new country. But just as sheep scattered across a Siouxland hillside instinctively form a tight knot at first sight of a strange dog, so do we all band together when our key values seem threatened.
That makes me wonder if Steinhafel really thought through what he was doing when Target as a corporation made a political contribution to an organization that so far has put all its resources behind one outspoken Republican candidate for governor. In today’s brutally competitive retail environment, that seems like reaching around to hang a “kick me” sign on your own tush. Why ask for trouble when you could accomplish the same thing more discretely? Did he study public relations at the same school as soon-to-be-former BP CEO Tony Hayward?
Not offending the public is more critical for retailers than for any other business. No homeowner cares about the ethnic connections of the company that made the Portland cement for the concrete in her new sidewalk. Nor do consumers care whether the inventor of a new iPhone app is Confucian or Hindu. But if their first reaction to the word “Target” is “anti-gay” (my wife) or “voodoo economics” (me), it is easy to buy one’s toilet paper somewhere else.
Avoiding unnecessary public controversy and not taking actions that might compromise one’s brand identity are basic principles in marketing. Public relations experts know and teach that consumer reactions to political stances are asymmetric. They tend to repel those who disagree with the stance much more than they attract those who agree.
Steinhafel argues that he has a fiduciary duty to his stockholders to have the corporation he manages support politicians that will promote economic growth. Such growth will boost the company’s long-term sales and profits and hence Target share owners wealth.
But one still has to question the method chosen. Yes, the recent U.S. Supreme Court decision on “Citizens United” established that juridic persons like Target have the same constitutional rights as physical persons like me. Target is merely exercising that right. But there were many discrete ways of getting corporate cash to favored candidates long before this decision.
Only political junkies pay attention to the political donations of individual corporate managers or board members. Steinhafel himself has given money to Michelle Bachman and no one paid any attention until the current kerfluffle. And there are all sorts of PACs trade associations and other mechanisms that businesses have used for years to funnel money to political parties and candidates. Any of these could have been used to get Target money to Emmer and other favored candidates without tarnishing Target’s brand, which is its single most valuable corporate asset. So why take the risk of a major hit to brand identity for the very minor gains of overt rather than covert political donations?
Burke’s insights into the mentality of “little platoons” may explain things. An individual’s perceptions are skewed by the views of others in their little platoon. If all of your friends favor gay marriage it is easy to believe that a large majority of the general public feel the same way. If everyone with whom you worship thinks abortions are murder, it is natural to feel this is true for the entire populace. If many of my economist friends and colleagues think that supply-side economics has harmed our nation, there is an impulse for me to believe that our concerns are the tip of a groundswell of public sentiment. And if his colleagues and friends believe that Emmer’s economic stances are more correct than any other candidate, Gregg Steinhafel may not understand that others will not only disagree, but will form a negative image of his corporation as a result.
© 2010 Edward Lotterman
Chanarambie Consulting, Inc.