This essay attempts to analyse how the pressure on organisations to integrate sustainability into their strategic thinking is fundamentally changing the nature of marketing.
Historically, business, and by extension marketing, have worked to the main benefit of shareholders and company profits. Environmental considerations, responsibilities towards consumers and employees have been relegated to second place. The one pivotal premise has been 'big is good' (Friedman, 2002, p 6-14). Market distortions created by price controls and subsidies have further aggravated the achievement of environmental objectives. Laying bare the fact that the social responsibility of business was focused only on increasing its profits, Nobel Laureate, Milton Friedman, in his book Capitalism and Freedom described the social responsibility of business as a "fundamentally subversive doctrine". One in which "there is one and only one social responsibility of business-to use it resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud" (Friedman, 2002, p 8).
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This is perhaps best evidenced in the business actions of giants like MacDonald's. Although hugely popular, McDonald's is one of the major causes of obesity in the USA. In McDonald's Restaurants v/s Morris & Steel, Lord Justices Pill, may and Keane ruled that it way fair to say that 'if one eats enough McDonald's food, one's diet may well become high in fat etc., with the very real risk ofÂ heart disease" (McSpotlight, 1999, p1)
British American Tobacco (BAT) has consistently insisted that the company works in the best interest of the people. In an attempt to improve its image and weaken tobacco control measures, BAT has invested in community development initiatives such as youth smoking deterrent campaigns, disaster management operations and banning of child labour in their supplier's tobacco farms(Mallenbaker.net, 2002, p1).
Recurrent oil spills and the resultant environmental damage by stellar companies like British Petroleum has debunked their claim of 'Beyond Petroleum' In fact in recent years the company has been fined for a number of major pollution incidents (Mallenbaker.net, 2007, p1).
Liquor companies like Bacardi in their campaigns 'Say sorry with Nikkie' and 'You don't want to spoil a great party' claim to teach youngsters to drink responsibly, focusing their educational campaigns at minors (European Centre..., 2009, p6).
Similarly, British mining company Vedanta has become a prime target of Amnesty International, London Mining Network and others for its unethical CSR practices. Almost all of Vedanta's operations site reports of environmental destruction and protests by local communities. Fearing a serious threat to their eco-system, Tribes in the Niyamgiri Hill area of Orissa, India have strongly opposed Vedanta bid for mining rights in that area (Rahul, 2009, p 1).
Biotechnology and genetically modified foods campaigning under the pretext of promoting the technology to alleviate world hunger are following a lucrative profit motive (Butler, 2010, p 1).
Despite such tendencies in the past, companies are now flagging a new trend. Improvement in corporate social responsibility, governance, environmental sustainability, shifting consumer awareness and trends, preventative activities by Greenpeace, Fairtrade Labelling Organisation (FLO) and other non-governmental organisations have all influenced this trend (Jones, et al, 2008, p 123-130). This is particularly so in the western world where companies are now increasingly motivated and aware of their social responsibility; towards people, environment consumers, investor, employees, media and areas in which companies carry out their operations. Such changed sensibilities are also impacting on marketing strategies, with more ethical business processes and actions (Jones, et al, 2008, p 123-130).
This essay will first attempt analyse the present marketing objectives of companies, change in their marketing sensibilities and strategies, the factors and agencies that are influencing it, and the manner in which companies are changing track in their marketing operations and the resultant impact on the environment.
Marketing Objectives in the Past
The marketing objectives of a company are influenced by their product and pricing objectives, advertising and sales, profits, market promotion and share, competitive advantage, and objectives for survival and growth (Weinreich, 2006, p 1). The visualisation and practise of a "Corporate Vision" is considered the most important factor in successful marketing. Effective marketing strategies would include monitoring marketing objectives and goals, planning and research, analysing and anticipating competitor schemes with the ultimate aim of identifying the needs and wants of the consumer and delivering benefits that will enhance not only the consumer's lifestyle, but result in improved earnings for the company (Weinreich, 2006, p 1).
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Historically, however, the main objective of business was focused on profit maximisation with scant attention to environmental issues, responsibilities to employees, consumers and shareholders and the community at large (Friedman, 2002, p 6-14). Several major corporations have recently been hauled up for their unethical business practises that have resulted in widespread environmental damage and related risks.
Soft drink giants Coca Cola faced a massive protest rally in Plachimda, Kerala India. Protestors demanded criminal action against the company for serious environmental violations- excessive extraction of ground water, dumping of toxic waste and consequent depletion and poisoning of water, damage to health and property (Mallenbaker.net, 2007, p1).
Tobacco companies continue to push their products, despite their awareness of its health risks. British American Tobacco has garnered sizeable law suits, whilst a US federal judge ordered cigarette maker R.J. Reynolds Tobacco Holdings Inc. to pay $15 million in punitive damages to a smoker whose legs were amputated. The court sighted RJRs concealment of the addictive nature of tobacco particularly nefarious (Mallenbaker.net, 2002, p1).
A series of environmental crises like the recent gulf oil spill, the earlier spill in Alaska and the Texas refinery explosion have tarnished British Petroleum's corporate halo. The Federal Court of Nigeria's ruling in 2007 put an end to gas flaring in the Iwherekan community (Mallenbaker.net, 2007, p1).
Green Business and Marketing
However, in recent years there has been a change in this trend, with 'Green Business' taking precedence over the old practices. These changes have been evidenced particularly in the western world where companies are increasingly motivated and aware of the social responsibility aspect of business. Many companies are actively adopting sustainable and responsible business practices. Marketing strategies are changing and being repositioned to accommodate these demands (Rivero-Camino, 2007, p 1328-32).
The greener approach to business and marketing has been influenced by several factors including (a) increasing awareness of alarming environmental degradation,(b) effects of climate change, (c) increased competition, (d)greater selectiveness and demands of customers and the rise of green or ecological consumers, (e) greater influence of shareholders,' (f)governmental regulations,(g) development of Corporate Social Responsibility (CSR),(h) FLO (i) Greenpeace campaigns and actions, and (j) the media (Rivero-Camino, 2007, p 1328-32).
To leverage their companies' position in the domestic and international markets, most major companies, particularly in the western world are being exhorted to integrate 'sustainability' into their companies' philosophy as well as that of their chain-partners (Jones, et al, 2008, p 123-130). Increasing awareness and concern about the environment has prompted a surge in company initiatives that aim to encourage pro-environmental behaviour, with current marketing efforts concentrating on sustainable consumption (Jones, et al, 2008, p 123-130).
The evolution of CSR can be connected to the rise in ethical consumerism. In the present scenario, the CSR perspective has allowed companies to examine not only their own practices, but that of their entire supply chain. The adoption of successful CSR methodologies has given every company, be it hamburgers, petroleum, fashion or IT, a better market advantage and better public support (Jones, et al, 2008, p 123-130).
TESCO's environmental practices have been lauded. They have consciously adopted a green marketing Strategy (GMS) in their corporate vision and are engaging in environmentally sustainable actions (Tesco.com, 2010, p 1). Their stores lights are now powered by wind turbines. In addition, they have incorporated a ten point programme into the new business strategy which includes reduction of energy consumption in Tesco's buildings, doubling recycled matter, using degradable bags, labelling products with nutritional value, educating parents about healthier food choices for their children, reducing noise by decreasing deliveries to Express convenience stores, seeking more feedback before constructing new stores, easy accessibility for small suppliers, selling more local produce and introduction of regional counters and to sponsor walking, cycling and running events (Tesco.com, 2010, p 1).
To address health issues, McDonald's have developed healthier menus and new diet-conscious options as well as improved choices for children at their outlets (NewsMax..., 2004, p 1).
In a recent ruling, the Obama administration had slapped limits on greenhouse gas emission from cars and light trucks. Hailed by environmentalists, the ruling encourages production of hybrid and electric cars and vehicles that burn alternative fuels (Baker, 2010, p 1).
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Many European countries and American have taken cognizance of the inhumane practice of raising wild animals in captivity for their fur and have restricted or banned the practice of fur farmingÂ (Humane Society..., 2010, p 1).
British Petroleum has renewed its commitment to the environment aspects of its operations by development of several safety and sustainable environmental technology in its campaign 'Beyond Petroleum' (Mallenbaker.net, 2007, p1).
Non-governmental organizations like Greenpeace and FLO are also taking an increasing role in changing and modifying corporate behaviour, leveraging the power of the media and internet. Through a series of campaigns, actions, education and dialogue, these organizations are holding business responsible for their actions (Jones, et al, 2008, p 123-130).
Nestlé's claim that breast milk substitutes 'protect' babies drew severe public criticism and protests. In an email campaign, Nestlé has been asked to withdraw its 'protect' logo which advocates the use of breast milk substitutes (Bowen, 2010, p 1).
While some companies have actually employed sustainable and good business practices others are suspected of using marketing jargon to manipulate the consumer into believing their products are actually greener than they are supposed to be (Hamdan, 2006, p 1). This 'green washing' has led government bodies such as Advertising Standards Authority in the UK to closely monitor marketing claims. Today, green marketing efforts are matched by an equal rise in claims of green washing by activists, and others (Hamdan, 2006, p 1).
Major corporations like BAT, BP and McDonalds have been accused of engaging in high profile CSR programmes to divert attention from their existing problems due to core business activities (Mallenbaker.net, 2007, p1). BAT takes part in health initiatives and BP has installed enormous wind-turbines on some petrol station roofs in the UK. Although the tobacco regulation act of 2003 prohibits elaborate paid-media marketing, the companies have found a way to skirt this ban by advertising on province based television and radio (Fonbuena, 2009, p 1). Coca Cola and McDonald's have revamped their marketing strategy. However, there is no evidence to suggest that they have used their collective resources and money to improve the nutritional value of their meals, garnering the criticism of a mere 'green wash' in their marketing strategy (Hamdan, 2006, p 1).
Historically, the marketing objectives of business were maximisation of profits to the exclusion of other vital factors like environmental considerations, responsibilities towards consumers and employees have been relegated to second place. This is perhaps best evidenced in several major giants like British Petroleum, British American Tobacco, Vedanta, Bacardi and McDonalds amongst others, where the pivotal premise is 'big is good'.
However, despite such tendencies, companies, particularly those in the western world, are flagging a new green business and marketing trend. Improvement in corporate social responsibility, governance, environmental sustainability, shifting consumer awareness and trends, preventative activities by Greenpeace, Fairtrade Labelling Organisation (FLO) and other non-governmental groups and the impact on marketing strategy are major factors influencing this change.
Companies are now increasingly motivated to incorporate Corporate Social Responsibility in business practice. This has brought into focus their responsibility towards the environment, consumers, stakeholders, employees and media. Such changed sensibilities are also impacting on marketing strategies, with more ethical business processes and actions.
Whilst most companies like TESCO, BP , McDonalds and BAT and those from the fashion, IT and other industries have consciously incorporated CSR practices into their company much needs to be done to sustain these changes.
However, there are an equal number of 'green wash' allegations against companies who use marketing jargon to manipulate the consumer into believing their products were greener than they actually are. In recent years, several oil spills and safety irregularities have tarnished British Petroleum's commitment to the environment. Similarly, Coca Cola, BAT, McDonald have also been accused of engaging in high profile CSR programmes to divert attention from their existing problems due to core business activities.
While large strides have been made by corporations world to integrate sustainable thinking into their business practices and by extension marketing, much remains to be done to not only make CSR a global practice, but one in which the prevailing loopholes can be effectively plugged.