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brayden king on the ivanka trump boycott

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Our good friend Brayden King has a column in Fortune discussing the Ivanka Trump boycott in light of research on boycotts. Key passages:

As research has shown, boycotts typically do little to hurt companies’ revenues, in part because the activists are not typical consumers of their target companies’ goods. For example, animal rights activists who belong to People for the Ethical Treatment of Animals would not frequent the fast-food restaurants they often urge consumers to avoid. In addition, consumers tend to be fickle and unwilling to part from their favorite products and services to support a boycott, even when they are ideologically aligned with its goals.

Investors, too, tend to shrug off these actions, unless the boycott receives sustained media attention. New boycotts start every week, so media attention has become a limited resource. And, as a result, few boycotts manifest any long-lasting investor reaction. For example, last November, food manufacturer Kellogg (K, +0.07%) suffered only a three-day drop in its stock price after it faced a boycott from Trump supporters for pulling its advertising from the right-wing website Breitbart News; then the share price quickly recovered.

The biggest impact from boycotts is a company’s reputation. Companies want to avoid sustained negative attention that comes from a boycott. For that reason, when a boycott captures national media coverage, about 25% of the time this unwanted glare of attention results in some kind of concession from the company.

And:

If there is any bright spot for boycotted companies, it’s the fact that media and consumer attention is diluted by the sheer number of boycotts and actions being taken by both sides. For example, #GrabYourWallet lists more than 80 companies that it recommends people boycott to avoid doing business with companies that have business ties to the Trump family. With so many companies on the pro- and anti-Trump watch lists, consumers may have difficulty paying attention to them all.

But given Trump’s lightning-rod-like ability to attract both supporters and repel critics and his notoriety for lashing out against his critics, more companies may end up on the politically neutral sidelines rather than create unwanted attention from activists and the consumers they target.

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Written by fabiorojas

February 16, 2017 at 12:31 am

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