Companies Which Stopped Working With NRA: Virtuous, Discriminatory, Or Just Bullied?

Posted: Mar 08, 2018 11:48 AM
Companies Which Stopped Working With NRA: Virtuous, Discriminatory, Or Just Bullied?

Several publicly traded companies decided to end programs in which they offered group discounts to members of the National Rifle Association. From a business point of view, there are two possibilities:

Possibility one: these discount programs were not working in boosting the bottom line of the companies in question. Discount programs like this are a form of bulk-pricing and also of partnership in marketing. Bulk pricing makes sense when the added profit from getting more customers exceeds the lost profit from dropping unit prices. It's a very, very common business strategy. Part of the appeal is that the membership organizations which are participating in the program inform their members. The NRA or AARP or any other group let their members know that United Airlines or Hertz offer a discount to members which means that these companies get some free advertising.  The numbers reveal whether that strategy is working or not. If the numbers showed that these programs were losing more money for shareholders than they were gaining, then they likely would have and probably should have already been cancelled, long before activists took to their Twitter accounts.

On the other hand, it may well be that these alliances made business sense. In this case, then, cancelling these programs after a very brief period of political pressure cost shareholders money. This is important. The assets of the companies are really the assets of the shareholders. We own them, so when they make decisions which cost money, they are costing our money. Now, if a CEO wants to give his or her own money to a gun control organization, that's their money and not a shareholder matter. But when they make a decision to lose revenue to promote the cause, or to avoid negative publicity. It seems that at the very least, if they feel strongly about this, I suggest that they put the question on a proxy ballot so that shareholders can decided for themselves if their conscience requires the loss of those revenues. It's their (our) money.

Perhaps the argument could be offered that the program worked in the past, but that a current controversy is of such intensity that there would be a loss of brand power which would hurt the company over the long run. Okay, but where is the analysis that shows this? How can one determine this in such a short period of time? How does that argument fare given the fact that at least one survey organization finds that these companies were by and large hit with a significant LOSS of favorability when they gave in to political pressure? If this is the reasoning, perhaps the wiser course of action is to slow things down and engage in a non-rushed, non-reactive investigation of the program. Perhaps shareholders could be a voice for that sort of deliberative process.

If this actually is brand management, are companies really fully counting the cost of a resurgence in conservative assertiveness? My own personal observation is that conservatives in the age of Trump are newly emboldened: that there is a large hard core of Americans who simply do not respond any longer to public relations campaigns which attempt to shame or accuse them into acquiescence.

Personally, I'd rather that we listened to one another a lot more. And personally, I'm not a big gun guy. It's not a key issue for me. But shareholder rights are a big issue for me. I'd like for companies to remember who is in charge. Perhaps some of them do. It is possible that CEOs and other C-suite managers are actually tired of getting pushed around by social and broadcast media 'flash mobs' In this case, maybe they just need our help in offering another point of view in the board room.

Either way, it's time for the non-activist chunk of America to understand that we have as much, or perhaps even more authority as shareholders than we do as citizens and to start to use it constructively.