Critically evaluate and discuss the advantages and disadvantages of Customer Boycotts. Compare and contrast either Coca Cola or Bacardi with another consumer boycott of your choice and discuss appropriate microeconomic theoretical models.
Firstly to understand this question we need to understand what a customer or consumer boycott actually is. Well it is normally called by an organisation or a group of individuals, asking consumers not to buy a specific product, or the products of a specific company, in order to exert commercial pressure. This is usually done to get the company to change behaviour, to cease an activity or to adopt a more ethical practice.
For this essay I am going to discuss many advantages and disadvantages of consumer boycotts and also I have decided to compare and contrast coca cola with the Nestle boycott.
There are various ways to make a boycott efficient. To be efficient a reduction of 1-2% of turnaround of a company (or product) is seen as the critical mass needed. (27 Mar 2003, Demanding consumer [online]. Available at:).
Boycotts can be successful, for example, in 1986 Rainforest Action Network launched a boycott of Burger King. This was because of Burger King importing beef from tropical rainforest countries because it was cheap. But the rainforests were getting destroyed in order to provide pasture for cattle. As a result of the boycott, Burger Kings sales dropped by 12%. In response, Burger King cancelled thirty-five million dollars worth of beef contracts in Central America and announced that the company would stop importing rainforest beef.
Boycott calls are at times controversial because they may be called by groups from the political side or for activities that people don't specifically disagree. Boycott efforts can include protests against everything from investing in a politically undesirable country to discouragement of the eating or drinking of products from certain companies or countries.
Boycotts are not always effective and only a limited percentage of countries consumers will participate in one. While many people are sympathetic to the reason behind a boycott, not enough people join in. One of the main reasons is that people do not see their actions as having any results. This may be partly due to only concentrating on what happens to the primary target of a boycott. But there are also secondary effects which I will talk about later.
There are many advantages to consumer boycotts that I will discuss now. Obviously the main advantage is when the boycotts work, as said above with the boycott of burger king, and the company consequently changes its ways. But more often than not boycotts rarely change the companies ways or at least so that the consumer knows about it.
One advantage is that boycotts are a way that consumers can use their power for positive social change. Boycotts can be effective because when successful they will result in increased public scrutiny of the company. This in turn will cause concerns inside the company about lost profits from the loss in consumer interest and companies are always concerned about their financial position.
Another advantage is that a boycott can hold a company accountable for any policies that negatively affect the environment or people. This is an advantage because a company could be ignoring the problem but with a consumer boycott more and more people will find out about the problem and may also decide to join in.
The negative coverage that will arise from media coverage of the boycott may become a big problem for the company in the long run, since competitors may gain a relative advantage. An example of this is that after the boycott of French wines in Denmark had calmed down, the French wines had lost 20 percent market share. Also there was a bigger problem, because the general impression was that consumers could be persuaded to switch back to French wines. But many...