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SUSTAINABILITY MARKETING

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EXECUTIVE SUMMARY

This essay discusses the concept of ‘Sustainability Marketing’ and how marketing cancontribute significantly towards the sustainable development. In order to develop suchframework for sustainability as a marketing strategy, we identify the challenges of theconventional marketing approach . The concepts of marketing strategy and sustainability havebeen defined and how these two concepts interact has been analyzed. This in turn this essaywill help us to understand sustainability as a ‘tool for competitive advantage' and how it can bean ‘effective guide for sustainable marketing’.

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TABLE OF CONTENTS

1. What is Marketing Strategy?....................................................................................................42. The Ambivalent Role of Marketing………………………………………………………………………………………43. Evolution of Sustainable marketing…………………………………………………………………………………....44. The Concept of Sustainable Marketing………………………………………………………………………………..45. Understanding Sustainable Business……………………………………………………………………………........56. Challenging the basic marketing assumptions: Impact on society?.........................................67. Triple bottom line (TBL)…………………………………………………………………………………......................88. Sustainability Marketing Mix: 4C’S for 3 P’S (TBL)……………………………………………………………….89. How can Sustainability Marketing be achieved?....................................................................1110. The most common used excuses to ignore Sustainability by Marketers ……………………………1311. What does Sustainability Marketing offers to a Business?.....................................................1312. Conclusion………………………………………………………………………………………………………………………….1513. Bibliography……………………………………………………………………………………………………………………….16

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WHAT IS MARKETING STRATEGY?According to (Obermiller, Burke, & Atwood, 2008), the marketing strategy aims to attain aposition that is to attain the best position which is:Desirable: In order to satisfy the customers’ needs and wants.Distinguishable: In order to attain a competitive advantageDefensible: In order to maintain that competitive advantage

THE AMBIVALENT ROLE OF MARKETING

In the 21st century, Sustainability can be termed as one of the major marketing challenges.Marketing can make significant contributions towards the sustainable development byintegration of the social and economic factors. Marketing exhibits an ambivalent character ason one hand, it imposes pressure on the social and ecological factors by promoting thematerialistic lifestyles and on the other hand it creates and formulates the sustainabilityinnovations like promoting less materialistic lifestyles, in order to contribute to the sustainable.

EVOLUTION OF SUSTAINABLE MARKETING

Peattie (2001) explains that Green Marketing can be classified in three main ‘ages’- Thefirst age of ecological marketing in 1970s’ that stressed on some specific environmentalproblems, for example air pollution, the impact of pesticides on the environment .

1980’s was the second age, marked by Environmental marketing which stressed topromote clean technology , to understand and target the “green consumer,” and toconsider good socio-environmental performance as a foundation to gain that competitiveadvantage.

The third age i.e. the current age is sustainable marketing which stresses on the creatingsustainable development and thus creating an economy that is sustainable.

THE CONCEPT OF SUSTAINABLE MARKETING

As defined by (Kotler & Armstrong, 2012) – “sustainable marketing calls for socially andenvironmentally responsible actions that meet the present needs of consumers and businesseswhile preserving or enhancing the ability of future generations to meet their needs.”

Source: (Kotler & Armstrong, 2012)

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Sustainability is the interweaving of environmental factors, social factors and economicfactors which encompasses the key sustainability issues such as: pressure of the increasingpopulation, the growth in the consumption of the energy, water and food, increasingglobalization, global warming and changing climate due to increasing carbon emissions,depleting ozone layer.(Charter, Peattie, Ottman, & Polonsky, 2002)

Fuller’s definition as cited by (Stead & Stead, 2004); sustainable marketing is:“The process of planning, implementing and controlling the development, pricing, promotionand distribution of products in a manner that satisfies the following three criteria (1)customers needs are met (2) organization goals are attained; and (3) the process iscompatible with ecosystems.”

UNDERSTANDING SUSTAINABLE BUSINESS

Sustainability within a business recognizes an entity’s relationship with the system in which theentity exists. These could include the social, economic, environmental, and institutional effects.Thus, a business is sustainable if it operates in a way which does not degrade the larger systemby fulfilling the criteria of economic viability and environmental maintenance. (Obermiller,Burke, & Atwood, 2008)

Source: (www.sustainablebiz.ne)

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Some of the principles of sustainability as identified by Hargroves and Smith (Hargroves, 2005)are: Value and appreciation for nature; Integration of social, economic and environmental goals in planning (“triple bottom line”); Protection of biodiversity; Concern for the global effects and fairness to the future generations Ensuring best practices; no loss of natural or human resources; constant improvement; Excellent governance.

CHALLENGING THE BASIC MARKETING ASSUMPTIONS: IMPACT ON SOCIETY?

(Belz & Peattie, 2012) have challenged the basic beliefs and assumptions of the marketingprinciples in the light of sustainability by proposing a values driven approach towardssustainability marketing as against the amoral view of the conventional marketingtechniques.

(Kotler & Armstrong, 2012) explains that some marketing practices of not only harm thesociety but also the customers and other businesses.

Source: (Peirce & Madden)

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1. Who pays the Social and environmental costs?

The price which consumers pay excludes the costs such as: social and environmental costs ofproduction, disposal of the products etc. Moreover, these costs are considered as“externalities” and are assumed to be met by the society. The marketers today are unable toconsider the monetary value of the beautiful landscape and the vast environmental resources.They fail to acknowledge the irreversible processes. Thus, the internalization of these costscould be a significant step towards sustainable development.

2. Customer is the King?

The customer choice and the Consumer sovereignty have always been sacred to the Marketerswith respect to who are the customers, what they want, what they buy, how much they wantto pay. Conventional guide to the marketing strategies assumes that’s the customer is facedwith the complete information. However this assumption is flawed as the information providedabout the goods is often misleading and incomplete. The Companies are incapable of providingthe right balance of the social and environmental outcomes of the products. Moreover, thefreedom to consume the goods requires to be balanced with the non-consumers’ rights. Forexample: Smokers regard smoking as their right, but they fail to acknowledge the equal right ofa non smoker to breathe pollution free air.

3. Are the needs satisfied?

According to (Kotler & Armstrong, 2012) marketing aims to create false desires that arebeneficial for the industry much more than the customer itself. Moreover, marketing creates anunsustainable world by promoting overconsumption and materialistic way of living. Even if theconsumer earns and consumes more doesn’t imply that they are happy which leads us toconclude that only some part of our consumption satisfies our needs positively. The companiestoday fail to meet the needs of the present which includes both rich and poor. Sustainabilitymarketing seeks to generate opportunities for the poor by including them within the marketsthrough new pricing models and innovative products and help these poor to consume moreand to lead a life which satiates their basic needs.

4. The Nature’s Peripheral Nature:

The conventional marketing model explains the constituents of the macro – environment associal, economic, technological factors which influences the marketers’ marketing strategieswhile ignoring the Physical environment. It is this physical environment which underpins theseconstituents of the macro environment. The sustainability marketing paradigm bases itself onthe natural environment which aims at reducing the negative impacts of the goods on the

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environment .The sustainability marketing assumes that the nature is vulnerable and fragileand it needs to be preserved with a view to attain sustainable development.

TRIPLE BOTTOM LINE (TBL)

According to (Henriques & Richardson, 2004), Triple Bottom line agenda focusescorporations not just on the economic value that they add, but also on the social value thatthey add or destroy.”

The three factors, along which TBL functions towards the goal of sustainability, as describedby John Ellington 1995, are “People, Planet, and Profit”.Thus, it’s imperative that the Marketers must develop a marketing strategy on the line ofthe TBL factors.

Source: (www.triplepundit.com)

SUSTAINABILITY MARKETING MIX : 4C’S FOR 3 PS(TBL)

Source: (http://www.customfitonline.com) The four P model as suggested by McCarthy’s (1960) of Product, Place, Price and Promotion

has been criticized by many marketers on the fact that this model is too producer centricand neglects the significant factor of marketing discipline i.e. ‘Customer orientation’ .Shaw,Jones(2005).

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Also, Silverman,(1995) considers that McCarthy’s model ignored the broad range ofstakeholder’s view and only acknowledged the end user’s expectations. Thus, a morecustomer oriented marketing mix needs to be developed which integrates not only thecustomer’s expectations but also the stakeholders view at large. Further, harmonizing thismodel with the 3 Ps of TBL as suggested above would help the firm to contributesignificantly towards the sustainability.The 4C’s model as suggested by (Belz F. M., 2005) as been described below:

1. Customer Solution: The 4C’s model overlooks the conventional marketing approach ofcreating a product and then selling it to the mass, and focuses on the customer wants anddevelop a product as a solution to their wants and needs. From the perspective ofsustainability, the product must address both, the ecological/social problems and offcourse, customer problems. The six significant characteristics to develop such product are:customer satisfaction, dual focus in terms of social and ecological factors, product life cycleorientation, significant improvements, continuous improvements, competing offers.

2. Customer Cost: Price usually takes in to account the producer’s effort only and ignores thecustomer’s perspective. The ‘total customer concept’ suggested by the 4C’s model takesinto account the all financial and the non financial costs (time, effort etc) through all thestages of the consumption process. From the sustainability perspective, it also considers,lifetime costs like deteriorating costs of assets like car, mobile phone etc.

3. Convenience: Convenience is the key value in a distribution process and the firms must puttheir efforts in making the products/services widely available and making them easilyavailable, for e.g. Via: 24/7 superstores.

4. Communication: The communication factor plays a significant role in the marketing mix.From the perspective of sustainability, it is imperative to communicate the sustainabilitysolutions in order to make the customer aware of sustainability objectives and developing along term relationship with their customers. One such tool for an effective communicationcould be CSR report which highlights the sustainability approaches of an organization inproviding the customer products and services and their significant milestones incontributing towards the sustainable development.

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Source: (http://www.csreurope.org)

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HOW CAN SUSTAINABILITY MARKETING BE ACHIEVED?As described by (Belz, 2005), sustainability can be described as a six step process, (as shown inthe figure below) listed as:

1. Analyzing the social and the ecological problems: The conventional marketing approach,does not take the ecological and social issues into serious consideration. Moreover, thenatural environment is examined as an element of macro environment of the organization.The impact of the increasing population on the environment can be analyzed by the formulagiven by Ehrlich,Holdren(1971) as follows:

“IMPACT: POPULATION x AFFLUENCE x TECHNOLOGY”

In order to study the social and ecological issues, it is imperative that the whole product lifecycle from its development stage until its decline be examined (Kotler/Armstrong 2004, p.330-337) while including processes such as production , extracting raw materials ,distribution , producing final products , reusing – and recycling of the products.

Source: (Belz, 2005)

2. Analyzing the customer behavior with respect to the socio- ecological factors:Sustainability marketing attempts to resolve the socio-ecological issues while meeting thedemand of the consumers at the same time. Finding solution to the key questions as statedbelow will enable the marketers to market while fulfilling the sustainability needs of theenvironment. What type of socio-ecological issues would influence the consumer demand, which

would not and why? How does the consumer perceive the socio- ecological issues?

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3. Developing sustainability visions and social and ecological marketing goals:An organization’s CSR reports, principles and guidelines are significant normativefoundations in order to achieve the sustainability marketing approach.CSR reports talk about the firm’s attempt to improve and protect the environment byadopting a greener way of disposing the production waste or by recycling the paper used asstationery and so on. For example: As per the CSR report of the Swedish Company IKEA ,explains how it has contributed towards the sustainable development and it believes that “what is good for society is good for us”, (IKEA, 2011).The report also explains the company’s future sustainability goals for the next three yearshighlighting the firm’s key objectives and to offer a range of environmental friendlyproducts.

4. Developing the sustainability marketing strategy:This step involves strategizing the sustainability STP of the firm (segmenting, targeting andpositioning) for its market. This process involves discovering the USP ( unique sustainableproposition of the firm’s product ,deciding among various sustainability innovations andfinding the target segment of these innovation and develop and understanding howcustomers play a significant role in development of the sustainable products. Apart fromthe positioning, this step involves deciding on the optimal time to place these innovations into the market and evaluating the advantages of an early market entry.

5. Inter-wining the social and ecological factors with the Marketing mix :The classic marketing mix comprises of the four P’s i.e. product, place, price and promotion;these only take the seller’s point of view while ignoring the customer’s view point. In theage of sustainable development and by incorporating the customer’s view, developing asustainability marketing mix with four C’s i.e. Customer cost, Customer solution,Convenience and Communication. (Please refer to the sustainability marketing mix asexplained further in the essay.)

6. Contributing in the sustainability marketing transformations:The present institutional set up allows only a limited scope for marketing the sustainableproducts; rather it encourages the unsustainable behavior. Thus, it is important to bringabout changes in this framework and to create viable conditions to market the sustainablegoods beyond the market niches. This requires an active participation by the companies inpolitical processes and public, for example CSR (corporate social responsibility) has provedto be an effective way to link your company with sustainability marketing.

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THE MOST COMMON USED EXCUSES TO IGNORE SUSTAINABILITY BY MARKETERS

As explained by (http://www.csreurope.org), Marketers generally sideline the concept ofsustainability:

“Who has the time for sustainability?” “Who am I, if customers want the product?” “My job is not to save the planet but sell the product!” “It’s the government’s headache to clean up environment, not mine!” “Less Packaging will only increase my costs!”

WHAT DOES SUSTAINABILITY MARKETING OFFERS TO A BUSINESS?

1. DIFFERENTIATION:

Sustainability marketing aids in differentiating a firm’s products not just by leveraging off thehealthy characteristics of the product but also its environmental benefits. To share an example:In order to undertake health oriented farming for its products, the company ‘Danone’ hascollaborated with a European association – Bleu Blanc Coeur. They add Flax to the cows’ feedwhich not only helps to increase the cows’ yields and fertility but also the milk then producedby these cows provide enhanced health benefits to the customers.

2. DRIVE CREATIVITY AND INNOVATION/ LEVER OF COMPETIVE ADVANTAGE:

The concept of sustainable development can be used by the marketers as a lever of innovation.Marketers have claimed that there have been evidences that prove that environmental orsocial aspects aid to differentiate the products offered by a firm and to create a lucrative niche.For example: Toyota used celeb endorsements for promoting the environmental benefits ofPrius, its hybrid fuel. The niche companies –such as suppliers of the organic products and fairtrade coffee have tried to address the social and ecological concerns of the consumers bymaking use of the eco-labels to build the consumer understanding of the products.However, it might not be the best approach to directly endorse your brand with sustainabilityattributes if they do not integrate well with the values of the company

3. NEW OPPORTUNITIES/ MITIGATE THE RISKS:

The American Businessman and philanthropist, Warren Buffet has to say “It takes 20 years tobuild reputation and five minutes to ruin it.”Many customers are shocked to learn that the world’s largest retailer, Wal-Mart has beencriticized for unfair social practices, ranging from destruction of small communities to unjustlabor practices. But only few know that Wal-Mart has been working for the cause of sustainable

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development and has been the world’s largest crusader for this cause. CSR (corporate socialresponsibility) helps to recognize the major environmental and social risk for the organization.It also helps to mitigate these risks by providing new opportunities and effectivelycommunicating them to the stakeholder’s in a sustainable way. (Kotler & Armstrong, 2012)

4. HELPS TO SAVE COSTS:Organizations can save bundles of costs by adhering to sustainable ways of conducting thebusiness. Such as : making use of the technology and less of paper can help them not only cutdown on costs but also help maintaining the ecological balance by saving trees. To share anexample: Nokia’s collaboration with O2 has helped them save 23% of paper weight, 98%increase in deliver time , reduced carbon emissions and avoidance of production of thecharging units.

5. ENHANCING CUSTOMER’S BRAND LOYALTY:An ‘eco-friendly’ brand has significant influence on the customer’s buying decision and alsohelps an organization in augmenting its sales. Providing the customers with a brand whichcomes with added benefits such as energy saving factors helps a firm not only to step towardssustainable development but also create a brand most desired by the customers. For example:The new Ariel offered by P&G was a new icon for sustainable innovation as it allowed thecustomers to wash their laundry at lower temperatures leading to lower energy consumption.According to the various researches worldwide , the customers (in terms of businesses, directcustomers or public sector firms) tend to favor those firms that are more environmentally andsocially responsible.

6. BUILD ATTRACTION FOR INVESTMENTS:The sustainability marketing approach helps the firm to build a stronger brand by attractingvarious investment options and collaborations to create innovative and creative products. Forexample: Coca- Cola Austria in 2006 came up with a fifteen million Euros partnership incollaboration with its other industrial partners to build Austria’s first bottle recycle plant.

7. EMPLOYEE MOTIVATION AND EMPLOYEE RETENTIONTo be associated with a company which offers environmental friendly products makes theemployee feel proud of their employer. It also motivates them to also become part the firm’ssustainability initiative. BT Company claims that 66% of its employees say that the corporatesocial responsibility initiatives of the company make them feel proud to be associated with BT.

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CONCLUSION:

Director of Corporate Responsibility (BT), Adrian Hosford says, “Companies whose brandsrightly become synonymous with sustainability will be the ultimate winners. By committing tothe sustainability agenda, customers will soon learn to trust your brand and realize that you’lldo the right thing by society and the environment on their behalf. That’s when you can offercustomers something truly valuable and you’ll be rewarded through their loyalty”;

Thus, Sustainable Marketing reframes the conventional marketing principles and acknowledgesthe modern day customer centric marketing objectives and ultimately harmonizing thisapproach with the social and the ecological factors while stepping towards the Sustainabledevelopment.

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