This paper demonstrates practically how a major South African retailer promotes new venture creation within its supply chain as it implements its sustainable marketing strategies. A qualitative case study approach, using content analysis of this chain's 2008, 2009 and 2010 public communications was used in this study. The themes under the new venture creation category were coded using product life cycle variables identified by Fuller (1999:52-56). The results obtained demonstrate that retailers can promote new venture creation within their supply chains as they implement sustainable marketing strategies.
Key Words: sustainable marketing, new venture creation, retailing, retail supply chains
The implementation of sustainable marketing strategies by a major South African retail chain facilitates and encourages new venture creation when these new ventures supply this retailer with products that enable it to achieve its sustainability objectives. Dixon and Clifford (2007:327) suggest that entrepreneurs can remain economically viable and pursue environmentally sustainable business practices by developing interdependent relationships with corporate organisations wishing to enhance their corporate social responsibility profile. This paper demonstrates that in addition to the usual practices mentioned by Schaper (2002:29) to encourage environmentally sustainable entrepreneurship, retail chains can also promote these types of ventures within their supply chain particularly when they facilitate the retailer's implementation of sustainable marketing practices.
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The benefits that accrue to retailers as a result of new venture creation within its supply chains include an enhanced image amongst local communities since employment opportunities exist for individuals within local communities; an enhanced brand image in the marketplace due to its improved social responsibility profile; a local source of supply that reduces its carbon footprint as products are transported shorter distances, and enhanced image within government circles since it assists disadvantaged communities and it co-operates with government in developing holistic solutions to its sustainable business practices for example waste management (Sustainability Report, 2008:8). This retail chain has also found that a sustainable approach to its business encourages it to innovate and in so doing, differentiate itself from its competitors (Annual Report, 2009:13).Other benefits that have accrued to this retailer as a result of its sustainable marketing strategies include opportunities to save costs, improve its operational efficiencies and enhance its brand image (Annual report, 2009:17) while simultaneously reducing its impact on the natural environment. The new venture that is created benefits from this relationship in that it has a formal and reliable market for its products which reduces its risk of doing business; it is given preferential treatment in terms of shorter payment terms, access to loans and limited financial grants as well as assistance in the development of appropriate business skills (Sustainability report, 2008:21). An additional benefit that accrues to the created new venture is an enhanced brand image and trust since this supplier is partnering with a retailer that has a strong ethical reputation in the marketplace. Parrish and Foxon (2009:55) suggest that selling to and partnering with established companies with strong ethical reputations can assist entrepreneurs to create brand awareness and trust.
Sustainable marketing for the purposes of this paper is defined as "the process of planning, implementing, and controlling the development, pricing, promotion, and distribution of products in a manner that satisfies the following three criteria: (1) customer needs are met, (2) organisational goals are attained, and (3) the process is compatible with ecosystems" (Fuller, 1999: 4). In order to develop appropriate sustainable marketing strategies, this retail chain works with its supply chain members in identifying what is taken from the environment, what is manufactured and what is wasted throughout the whole supply process. It does this, since it does not manufacture in the conventional sense of the term, it only produces meals for its in-store cafés. This retail chain does however contribute directly to the whole supply chain's negative impact on the environment by simply existing, selling products produced by its suppliers and utilising materials in its operations that ultimately are derived from the natural environment and which may end in landfills or pollute the environment. This retailer works with its suppliers because it has found that it cannot solve environmental problems on its own (Annual Report, 2010:36) and it also works with business partners, non-governmental organisations (NGOs) and their own customers in order to achieve their sustainability objectives (Sustainability Report, 2008:14). New venture creation within the retailer's supply chain occurs as part of its drive to be a sustainable business that benefits this planet and its people.
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Sustainable marketing is becoming increasingly significant as global warming and its negative impact on society and the natural environment is discussed by governments, businesses, consumers and the mass media. Lorenzoni & Hulme (2009:383) state that the scientific community is now certain that climate change is happening and that human activity is altering the global climate while Heath and Gifford (2006:49) suggest that there are still pockets of uncertainty amongst scientists as to whether global warming is actually happening. The South African government states (The Presidency: Internet):
"The science is very clear - there is no "silver bullet" - climate change is a huge global challenge which will take a combination of the full range of available interventions, technologies, policies and behaviour changes to resolve the climate problem"
"South Africa, being a responsible global citizen and in line with its obligations under article 4.1 of the United Nations Framework Convention on Climate Change acknowledges its responsibility to undertake national action that will contribute to the global effort to reduce greenhouse gas emissions" (Office of the Presidency, 6th December 2009)
A poll conducted in the United States and quoted by Cordero et al. (2006: 865) indicated that 83% of Americans agree that humans are at least partially responsible for the recent warming of the planet while Whitmash (2009:402) states that in the United Kingdom, there is general acceptance by people that climate change is a human caused problem. In South Africa, consumer research conducted by retailer discussed in this article has shown that consumers increasingly want to understand where products come from and they want to be certain that these products are sourced ethically and without harm to the environment (Annual report, 2010:34). As consumer awareness about the negative impact of human activity on the planet increases, more pressure will be placed on businesses to develop more sustainable marketing practices. This statement is supported by Moroke (2009:3) who states that people have realised that irresponsible private and public consumption is not good for anyone and there is an emerging trend in the marketplace where people believe that what is good for the pocket needs to be good for the planet. Schaefer (2005:46) suggests that sustainable marketing systems need to be flexible, decentralised and open to learning from environmental cues such as diminishing natural resources, observable environmental changes such as reduced forest cover, soil fertility, air and water quality and global environmental changes such as global warming, climate change and limited natural carbon dioxide sinks that absorb emissions from the burning of fossil fuels (Lewis and Harvey, 2001:201).
Sustainable marketing strategies that encourage new venture creation are important in the South African context since the South African government sees entrepreneurship as a way of reducing unemployment, achieving more equitable income distribution amongst all population groups and as a means of stimulating the economy (Pretorius & Wlodarczyk, 2007: 504). From an international perspective, entrepreneurship is also seen as contributing to higher economic growth, facilitating regeneration, enhancing productivity and assisting in job creation (Harding, 2003 & Davies, 2002: quoted by Tilley and Young, 2009:81).
South Africa is a country that is not seen as being very entrepreneurial amongst its peers even though it has made huge investments in entrepreneurial support and training in the SMME sector (Pretorius & Wlodarczyk, 2007: 504). Statistics provided by Pretoriaus & Wlodarczyk (2007:504) indicate that in 2004, South Africa was estimated to have an average entrepreneurial activity of 5.4% compared to other developing countries which were found to have an average entrepreneurial activity of 21%. Entrepreneurship for the purpose of this article's is defined as developing and investing resources in something new, risk taking, and reaping the rewards for doing so (Hisrich et al. 2008: 8)
Opportunities for new venture creation occur during the implementation of sustainable marketing strategies when there is a need for sustainably produced products and existing suppliers are unable to satisfy that need. Gaps within the supply chain can be identified by examining what members of the supply chain take from the natural environment, what they make to satisfy customer needs and what they waste and pollute as a result of the making and taking. Each stage within the supply chain needs to be evaluated in relation to its eco-friendliness and long term environmental sustainability. Fuller (1999:52) suggests that in order to get a comprehensive view of the wasting, taking, and making, the whole supply chain needs to be examined since limiting the analysis to a single stage or business can provide a distorted view. For example, it may be said that retailers are not responsible for the waste and pollution associated with the products that they sell since they are not the manufacturers. However, if there was no market for the product, it simply would not exist.
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Fuller (1999: 50) suggests that a diagnostic tool that can be used to identify all the relevant variables involved in the taking, wasting and making is the product system life cycle model. Ryan (2003: 258-259) states that life cycle assessments of suppliers facilitates the identification of weak links that "import" environmental problems for retailers. According to Ryan, Business to Business partnerships or value chain strategies that utilise green alliances support enviropreneurship which is defined as:
"The formulation and implementation of ecologically beneficial corporate policies that protect market position while creating revenue for the participants" (Ryan, 2003:259)
Pesonen (2001: 45) states that enhancing the environmental performance of products requires life cycle thinking which stimulates and encourages co-operation within the supply chain. According to Pesonen (2001: 46), the main contractor (in this instance the retailer), in an industrial value chain very often puts pressure on other members to improve their products' environmental performance. Pesonen (2001: 46) states that environmental performance requirements are also forcing businesses to increasingly focus on what is happening upstream in terms of the impact of raw materials and components on the natural environment. This retailer states in its annual report (2010:36) that it works with its suppliers because it has found that it cannot solve environmental problems on its own.
The primary objective of this study is to demonstrate how the implementation of sustainable marketing strategies by a major South African retailer promotes new venture creation within its supply chain.
The secondary objectives for this study include:
Proposing that the global warming phenomenon is making stakeholders more aware of the negative impact of human activity on the natural environment.
Commenting on the importance of entrepreneurship in a South African context in order to lay the foundation for this study.
Discussing sustainable marketing and the product system life cycle in order to demonstrate how it can be used to identify areas within this retailer's supply chain that have a negative impact on the natural environment
Demonstrating the link between sustainable marketing and new venture creation within a retailing context.
Describing and linking the retailer's sustainable marketing strategies to the promotion of new venture creation within its supply chain
An exploratory, qualitative case study approach that utilised content analysis (Krippendorff, 2004; Tengblad & Ohlsson, 2010: 657) was used to analyse this retailer's 2008, 2009 and 2010 press releases and their annual financial and sustainability reports. Content analysis was selected because these documents contain a wealth of information that could benefit academics and practitioners who were interested in the types of new ventures that could be created through the implementation of sustainable marketing strategies. The appropriate content of these documents was initially categorised as reflecting new venture creation and it was then coded based on the Fuller's (1999:94) product life cycle sectors that include upstream, midstream, downstream and concurrent sector categories. These codes identify the different types of new ventures created within this retailer's supply chain as it implements its sustainable marketing strategies.
The four product life cycle sectors utilised in this study are described as follows:
The Upstream Sector - which consists of raw material and material-component channel networks including all associated manufacturers and industrial distributors that operate in this sector.
The Mid-Stream Sector - includes the retailer being discussed and all the relevant manufacturers and wholesalers who supply it.
The Downstream sector - is the consumer target market and is concerned with identifying the customer's needs and wants in order to design, develop and market products that satisfy customers.
Concurrent Operations in all Sectors (Waste, Pollution and Reverse Waste Channel Networks) - Each sector in the product system life cycle produces waste and pollutes the environment. Most of the waste that is produced by each sector tends to either end up in landfills or is disposed in rivers, streams or the sea. This sector is considered in the product system life cycle in order to develop methods to either reduce or reuse these wastes in a way that does not harm the natural environment (Fuller: 1999:55). An example that demonstrates this principle is the retailer's use of a biodiesel mix that is manufactured from the waste cooking oils generated in its in-store cafés and used to fuel their truck fleet (Annual Sustainability Report, 2008: 41).
Fuller (1999:50) states that the product system life cycle is a useful tool for identifying all relevant businesses, processes and resultant wastes that are involved in the supply chain; from the sourcing of raw materials needed to develop the product for the target market right through to the actual consumption and disposal of that product by the customer. (It should however be noted, that the examples selected for this paper only reflect the diversity of new ventures that have been created in the different sectors of the product life cycle and they do not reflect all the new ventures promoted by this retailer).
This retail chain was selected due to the fact that it operates internationally (Annual Report, 2009), and it is well known in the marketplace for its multipronged, innovative approach to profitable sustainable marketing practice (Please refer to Table 1 below).
Table 1 Retailer's financial statistics, market share and number of stores
Profit before tax Rbn
Market share clothing
Market share food
Total number of stores
Content Analysis for the purposes of this study is defined as "a research method that detects, records and analyses the presence of specified words or concepts in a sample of forms of communication" (Sproule, 2008:115). In addition, personal e-mail communications with the Manager: The Good Business Journey at this retailer's head office was carried out when clarity regarding certain issues in the study was required. The Good Business Journey mentioned in this retailer's communications refers to a comprehensive 5 year plan launched in 2007 that is designed to help society and the planet. This plan incorporates a series of targets and commitments that are designed to achieve the following: accelerate transformation within the retailer; drive social development by helping to alleviate poverty; enhance this retailer's environmental focus and address global warming and climate change issues (Press release, 1st June 2008). Each year this retailer's performance is measured relative to its 2012 targets and so far it has achieved 71% of its stated objectives for 2012 (Annual Report, 2010: 15)
As this study is based on a retailer's sustainable marketing practices and there is no manufacturing activity in the conventional sense of the term, this retailer is perceived as being both directly and indirectly involved in the taking, making and wasting within its supply chain. This is due to the fact that it uses resources that are ultimately derived from the natural environment in order to satisfy its customer's needs by existing, producing food in its in-store cafés, and by purchasing products from its supply chain which it makes available to its target market.
RESULTS AND DISCUSSION
The retail chain being discussed has participated in the creation of a number of new ventures within its supply chain. For this retailer, participating new venture creation enables it to demonstrate to its stakeholders, its commitment towards the planet and its people. Consumer research by this retailer has shown that consumers are now more aware of its sustainable marketing practices and they show high levels of support for its initiatives. In addition, this report states that consumers increasingly want to understand where the products they purchase come from and they want to be certain that these products are sourced ethically and without harm to the environment (Annual Report, 2010:34).
The new ventures that have been created as a result of this retailer's sustainable marketing strategies are discussed below taking into account the different sectors of the product life cycle proposed by Fuller (1999: 94). As stated earlier in this paper, Schaefer (2005:46) suggests that sustainable marketing systems should be flexible, decentralised and open to learning from environmental cues, such as the emerging evidence of impending raw material shortages, observable environmental changes such as reduced forest cover, soil fertility, and air and water quality as well as climate change. The retailer being discussed demonstrates this by being aware of changes in the natural environment, by collaborating with its supply chain to find ways to reduce their impact on the natural environment and by assisting in the creation of new ventures that help it to achieve it sustainability objectives.
New Venture creation in the Upstream Sector (Raw Materials Channel Networks)
The businesses that operate in the upstream sector act as suppliers to the midstream sector discussed in below. This retailer has a strong influence on this sector since it directly and indirectly provides a market for this sector's products and it acts as the channel captain. The new ventures that have been created in this sector include:
Spearheading organic cotton production in South Africa (Sustainability Report, 2008:31)
This retailer is the third largest consumer of organic cotton in the world and all the organic cotton that was previously used to manufacture products for this retailer had to be imported. In order to ensure that it had an adequate supply of locally grown organic cotton, this retailer worked with a number of interested stakeholders including their supply chain to pilot organic cotton growing trials on a number of farms in the Eastern Cape and Limpopo (Press release, 2008, 3rd January 2008). In 2009, this retailer was able to offer its customers the first 100% South African organic cotton range of t-shirts in both their women's and menswear departments. Not only was the organic cotton for these t-shirts grown locally but these t-shirts were made in South Africa as well (Sustainability Report, 2009: 34).
By encouraging the production of 100% organically grown cotton in South Africa, this retailer is planning to achieve the following with the assistance of all relevant stakeholders (Press release, 3rd January 2008):
Develop organic cotton farming on a commercial scale in South Africa
Introduce organic cotton as a rotational crop for its organic food farmers
Create an empowerment model for small scale organic farming for previously disadvantaged farmers
Develop local infrastructure for technical support, training and development
Create a benchmark model for other African countries
Organic cotton farming benefits the natural environment in that no artificial insecticides, pesticides and fertilisers are used. This farming method does not pollute the environment with toxic residues from pesticides and insecticides, and nitrous oxides (greenhouse gases) are not released into the atmosphere from the artificial fertilisers. According to this retailer's press release dated 3rd of January 2008, conventionally grown cotton consumes approximately 25% of the insecticides and 10% of the pesticides used in the world. A benefit that accrues to this retailer and its relevant stakeholders by producing and manufacturing local 100% organic cotton products, is a reduction in costs, increased employment in the country, and a reduced carbon footprint since local organic cotton does not travel the same distances as imported organic cotton.
Provides a formal market for Rooibos Tea grown in the Overberg region and indirectly assists in the protection of biodiversity in the area (Press Release, 1st May 2010).
This venture was initiated when an alternative source for rooibos tea was needed after a serious drought in the Cederberg area affected its production. At the time, the Cederberg was virtually the only region in the world where rooibos teas was grown. After an initial trial in the Standveld area of the Overberg demonstrated that rooibos tea could successfully be grown in this area, this retailer in partnership with an international foundation commissioned a study to determine the impact of rooibos tea production on the indigenous flora in the area. The results of this study suggested a number of ways that rooibos tea production could restore biodiversity in areas where alien vegetation was having a negative impact on the fynbos.
Rooibos tea farmers assist in the protection of the local flora by removing alien vegetation that inhibits the growth of indigenous fynbos; the rooibos that they plant inhibits the growth of aliens and allows the fynbos to flourish. In order to preserve the fynbos; planting, weeding and harvesting of the crop is done by hand. In addition to cultivating rooibos, local disadvantaged farmers have found additional employment by assisting a nearby farmer to harvest fynbos for export. This retailer continues to support this initiative by providing a formal market for this product. The rooibos tea that is produced in this area is sold in this retailer's outlets around the country in unbleached filter tea bags that are kinder to the environment.
New Venture Creation in the Mid-Stream Sector (Finished Products Channel Networks)
Introduced reusable shopping bags which reduce the amount of plastic manufactured and entering landfills (Sustainability Report, 2008: 16).
The introduction of reusable shopping bags in 2004 enabled this retailer to protect the environment by reducing the amount of plastic being manufactured and disposed of in landfills. This is particularly significant since according to an anonymous source in the Camaro Chronicle (2010: 3), landfills are quickly running out of space and the development of new landfill sites is difficult, particularly around the Johannesburg area. With the introduction of reusable fabric shopping bags, this retailer assisted in the formation of the Greater Uitenhage Sewing Co-operative (Gusco) by providing a formal market for the fabric bags produced by this co-operative. Gusco has been supplying this retailer with reusable shopping bags since September 2005.
Gusco was formed through an amalgamation of three informal community sewing groups in order to sell reusable fabric shopping bags to this retailer (Press release, 31st July 2008). In 2008, this co-operative sold 260 000 reusable shopping bags to this retailer, it employed 27 full-time machinist and a number of seasonal employees (Sustainability report, 2008: 16).
New Venture Creation in the Downstream Sector (Consumer Target Markets)
Assists South African schools to develop food gardens using permaculture
In order to assist South African schools in providing sustainable food through their school gardens to their communities, this retailer sponsors and facilitates the development of permaculture food gardens. The vegetables, herbs, fruit and medicinal plants that are grown are used to feed hungry school children, improve their nutrition and encourage self reliance. Any surplus produce that is grown by the school is sold and used to boost the school's income (Press release, 19th May 2009). This project also provides schools with a living, learning laboratory that delivers outcomes based education in all learning areas. Schools with permaculture food gardens play an important role in assisting South Africa to eradicate poverty through sustainable food production (Press release, 19th May 2009). In additional, communities benefit from these projects in that permaculture educators often show fellow teachers how to establish their own food gardens. This in turn enables them to become food security champions in their own communities. A province whose schools have particularly embraced this project is Limpopo (Press release, 19th May 2009).
Permaculture benefits the natural environment in that it is a system of gardening and farming that combines plants, animals, buildings, water, landscapes and people in a way that produces more energy than it uses, recycles all waste and nutrients, and closely imitates nature where possible. The children participating in this programme learn a number of skills that include how to (Press release, 19th May 2009):
brew natural pesticides
interplant crops and attract useful birds and insects
make their own compost
create gardening tools and ornaments from waste products
New Venture Creation in Concurrent Operations Sectors (Waste, Pollution and Reverse Waste Channel Networks)
Supports tree-entrepreneurs (Press Release, 2nd September 2010)
This retailer supports over 2500 'tree-preneurs' who plant, grow and sell indigenous trees in areas with little or no access to formal employment. They achieve this by supporting the Wildlands Conservation Trust's: Indigenous Trees for Life programme. This trust provides the seeds and training needed by the mini-entrepreneurs to grow their trees. Once these trees have reached a specific height, the mini-entrepreneurs then trade or sell these trees to the Trust who then plants them in reforestation projects around the country. In 2010, in recognition of South Africa's 11th Annual Arbour Week, this retailer supported the planting of 3000 indigenous trees in the Vosloorus (Gauteng) area. In a press release dated the 2nd of September 2010, the retailer's Good Business Journey manager stated that they support this programme "because of its unique ability to create employment, develop entrepreneurs and conserve indigenous plants and trees." This project is particularly significant in a world facing global warming since trees and plants remove carbon dioxide (a greenhouse) from the atmosphere and use it in the process of photosynthesis to produce glucose that the trees and plants need for their growth.
Provides a formal market for plastic bags containing 35% recycled content derived from post-industrial waste (Sustainability Report, 2008:44, Press Release, 31st July 2008).
Isikhwama was initially established to provide this retailer with reusable plastic bags that contain 35% recycled content from post-industrial waste. It was also established to provide employment for semi-skilled and unskilled individuals who previously were out of work in Maitland, Cape Town. In 2008, this supplier had sold over a million of these bags to this retailer and it employed over 70 people. According to the owner of Isikhwama, this close partnership with the retailer has enabled it to continually grow and exceed its most optimistic projections. Using harvested post-industrial waste in recycled plastic bags benefits the environment by reducing the amount non-renewable resources in the manufacture of the bags and it also reduces the amount of plastic entering landfills and polluting the environment.
The cases given above for each stage of the product life cycle demonstrate practically how a major South African retailer's implementation of sustainable marketing has assisted in new venture creation within its supply chain. The new ventures that were created have assisted the retailer in ensuring a local supply of more sustainably produced product; have assisted it to offset its carbon footprint and enabled it to reduce its negative impact on the environment either directly or indirectly. For example, the planting of trees in areas being reforested helps to reduce the carbon footprint associated with the retailer since trees absorb carbon dioxide from the atmosphere while the social ventures that encourage permaculture throughout the country help to offset the negative impact that this retailer has on the environment through the purchase of conventionally produced and manufactured products. By assisting disadvantaged school communities to produce their own food in an environmentally sustainable manner, this retailer is enhancing its brand image amongst these communities, its target market and in government circles since it promotes and informs its stakeholders about its sustainable marketing practices.
Sustainable marketing is becoming increasingly significant as businesses, governments and consumers become increasingly aware of the negative impact of human activity on the natural environment. Fraj-Andrés et al. (2009:263) state that the progressive degradation in the quantity and quality of the environmental resources has encouraged societies to consider their responsibility and contribution to current environmental problems. One of the problems currently facing businesses is that environmental issues are often seen as a threat to a firm's profitability due to large investments that need to be made in prevention technologies. This is now changing as businesses are now starting to consider the natural environment as a potential source of competitive advantage (Fraj-Andrés et al. 2009:263). Similarly from a new venture creation perspective, environmental issues are now seen providing numerous niches for enterprising individuals and firms to successfully identify and service (Schaper, 2002:26). This study has demonstrated that successful new venture creation can occur when new businesses partners enable a major retailer to implement its sustainable marketing strategies.
LIMITATIONS OF THE STUDY
This case study focuses on only one of the major South African retailers and it is based primarily on what is stated in its 2008, 2009 and 2010 annual financial and sustainability reports and media portfolio releases. These two data sources were found to be comprehensive and detailed enough to give a good indication of what this retail chain has and is doing in terms of its sustainable marketing strategies. There was personal e-mail communications with this retailer's Manager: The Good Business Journey but only when there was an issue that needed to be clarified. The public documents provided by this retailer are detailed, explicit and easily understood.
This study has demonstrated that businesses can profitably become more sustainable in terms of their marketing strategies and they can benefit from these in a number of ways that include:
An enhanced brand image amongst all its stakeholders since it is seen to be socially responsible while maintaining its profitability.
Cost savings within its operations enable it to invested in more sustainable options and innovations that facilitate the achievement of its sustainability objectives
A collaborative relationship is developed with members of its supply chain which facilitates the implementation of its sustainable marketing strategies.
Competitive advantage and differentiation in the marketplace is facilitated and achieved.
These benefits that accrue to the retailer being discussed are particularly significant in a world that is facing an environmental crises that includes global warming and climate change, that can have a devastating negative impact on human societies and the natural environment; diminishing natural resources that an impact on the quality of life on the planet and increased pollution that negatively impacts on the health of human society and the planet. As society becomes increasingly concerned about these issues, increased pressure will be placed on governments and businesses to mitigate these negative influences. This retailer will be in a strong position in the marketplace as these pressures begin to be felt by businesses having a negative impact on the environment.