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- 1. Copyright © 2015 Pearson Education, Inc. 12e Sustainable Marketing
- 2. Copyright © 2015 Pearson Education, Inc. Learning Objectives • Define sustainable marketing and discuss its importance. • Identify the major social criticisms of marketing. • Define consumerism and environmentalism and explain how they affect marketing strategies. 16 - 2
- 3. Copyright © 2015 Pearson Education, Inc. Learning Objectives • Describe the principles of sustainable marketing. • Explain the role of ethics in marketing. 16 - 3
- 4. Copyright © 2015 Pearson Education, Inc. Sustainability at Unilever • Goal - Accomplishing a broader social and environmental mission to improve motionless sales and profits • Sustainable Living Plan • Spans the entire value chain • Fuels innovation, resulting in new products and new consumer benefits • Five Levers for Change - Inspires people to adopt specific sustainable behaviors 16 - 4
- 5. Copyright © 2015 Pearson Education, Inc. Sustainability at Unilever
- 6. Copyright © 2015 Pearson Education, Inc. Figure 1- Sustainable Marketing 16 - 6
- 7. Copyright © 2015 Pearson Education, Inc. Social Criticisms of Marketing Impact on Individual Consumers Impact on Society as a Whole Impact on Other Businesses 16 - 7
- 8. Copyright © 2015 Pearson Education, Inc. Marketing’s Impact on Individual Consumers • High prices • Misleading practices • High-pressure selling • Shoddy, harmful, or unsafe products • Planned and perceived uselessness • Poor service to disadvantaged consumers 16 - 8
- 9. Copyright © 2015 Pearson Education, Inc. Marketing’s Impact on Society as a Whole False Wants and Too Much Materialism Too Few Social Goods Cultural Pollution 16 - 9
- 10. Copyright © 2015 Pearson Education, Inc. Marketing’s Impact on Other Businesses • Acquisitions of competitors • Marketing practices that create barriers to entry • Unfair competitive marketing practices 16 - 10
- 11. Copyright © 2015 Pearson Education, Inc. Traditional Rights Seller’s rights Buyer’s rights • To introduce any product in any size and style with proper warnings and controls, if necessary • To buy a product that is offered for sale • To charge any price for the product without any discrimination • To expect the product to be safe • To spend any amount to promote the product if competing fairly • To expect the product to perform as claimed • To use any product message that is not misleading or dishonest • To use buying incentive programs that are not unfair or misleading 16 - 11
- 12. Copyright © 2015 Pearson Education, Inc. Proposed Consumer Rights • To be well informed • To be protected against questionable products and marketing practices • To influence products and marketing practices to improve quality of life • To consume in a way to preserve the world for future generations of consumers 16 - 12
- 13. Copyright © 2015 Pearson Education, Inc. Environmentalism • Protects and improves people’s current and future living environment • Concerned with: • Damage to the ecosystem • Loss of recreational areas • Increase in health problems • Environmental sustainability: Generating profits while helping protect the environment 16 - 13
- 14. Copyright © 2015 Pearson Education, Inc. Figure 2 - The Environmental Sustainability Portfolio Source: Stuart L. Hart, “Innovation, Creative Destruction, and Sustainability,” Research Technology Management, September–October 2005, pp. 21–27. 16 - 14
- 15. Copyright © 2015 Pearson Education, Inc. Major Marketing Decision Areas That May Be Called into Question under the Law Decision areas Legal issues Selling decisions • Bribing • Stealing trade secrets • Disparaging customers • Misrepresenting • Disclosure of customer rights • Unfair discrimination Advertising decisions • False advertising • Deceptive advertising • Bait-and-switch advertising • Promotional allowances and services 16 - 15
- 16. Copyright © 2015 Pearson Education, Inc. Major Marketing Decision Areas That May Be Called into Question under the Law Decision areas Legal issues Channel decisions • Exclusive dealing • Exclusive territorial distributorship • Tying agreements • Dealer’s rights Competitive relations decisions • Anticompetitive acquisition • Barriers to entry • Predatory competition Product decisions • Product additions and deletions • Patent protection • Product quality and safety • Product warranty 16 - 16
- 17. Copyright © 2015 Pearson Education, Inc. Major Marketing Decision Areas That May Be Called into Question under the Law Decision areas Legal issues Packaging decisions • Fair packaging and labeling • Excessive cost • Scarce resources • Pollution Price decisions • Price fixing • Predatory pricing • Price discrimination • Minimum pricing • Price increases • Deceptive pricing 16 - 17
- 18. Copyright © 2015 Pearson Education, Inc. Sustainable Marketing Principles • Viewing and organizing a company’s marketing activities from the consumer’s point of view Consumer-oriented marketing • Putting most of a company’s resources into customer value- building marketing investments Customer value marketing • Seeking real product and marketing improvements Innovative marketing 16 - 18
- 19. Copyright © 2015 Pearson Education, Inc. Sustainable Marketing Principles • Defining a company’s mission in broad social terms Sense-of-mission marketing • Making marketing decisions by considering: • Consumers’ wants • Company’s requirements • Consumers’ long-run interests • Society’s long-run interests Societal marketing 16 - 19
- 20. Copyright © 2015 Pearson Education, Inc. Figure 3 - Societal Classification of Products 16 - 20
- 21. Copyright © 2015 Pearson Education, Inc. Salutary products • Salutary products are the products that have low appeal but may benefit consumers in the long run. • These products do not provide immediate satisfaction hence the degree of overall market acceptance of these products is limited. • Example: - Seat belts, Air bags. • Both these products have low appeal but protect the driver during the accidents thus proving beneficial in the long run.
- 22. Copyright © 2015 Pearson Education, Inc. Deficient products • It is well accepted now, that the companies produce products which are not of the utmost quality intentionally. Such products are called deficient products. • Example: If Fair and lovely is manufactured to make the customer fairer by 4 shades in 4 weeks, then the customer will not purchase the product again.
- 23. Copyright © 2015 Pearson Education, Inc. Pleasing products • These products have short run consumer benefits but high degree of immediate gratification. These products may hurt consumers in the long run. • Example: - Cigarettes
- 24. Copyright © 2015 Pearson Education, Inc. Desirable Product • This is a concept of societal marketing which says that the products should not just be made for profit, but for the benefit of consumers and the society as a whole. It propagates that a good product should have a two-fold aim: 1 To satisfy the consumers immediate requirements and provide satisfaction 2. To take care of the benefit of society in the long run The products that take care of both the objectives are called desirable products. For Example: Body shop products are called desirable products because they provide short term satisfaction and also help the society as they are associated with breast cancer foundations.
- 25. Copyright © 2015 Pearson Education, Inc. Marketing Ethics • Corporate marketing ethics policies should be developed by firms as guidelines for handling various issues and dilemmas. • Distributor relations • Advertising standards • Customer service • Pricing • Product development • General ethical standards 16 - 25
- 26. Copyright © 2015 Pearson Education, Inc. Marketing Ethics • Principles are needed to guide companies and marketing managers on issues of ethics and social responsibility. • The free market and the legal system should decide such issues. • Responsibility is in the hands of individual companies and managers. • Addressing ethics helps build strong customer relationships based on honesty and trust. 16 - 26
- 27. Copyright © 2015 Pearson Education, Inc. Ethical Codes Suggested by American Marketing Association • Do no harm • Foster trust in the marketing system • Embrace ethical values 16 - 27
- 28. Copyright © 2015 Pearson Education, Inc. The Sustainable Company • Sustainable companies create value for customers through socially, environmentally, and ethically responsible actions. • Sustainable marketing provides the context in which companies can build profitable customer relationships.
- 29. Copyright © 2015 Pearson Education, Inc. Environmentally Sustainable Consumption • Environmentally sustainable consumption encompasses several consumer behaviors, including, but not limited to, buying green products, shopping at green, retailers, supporting companies and charities that adopt or promote sustainable practices, adequately recycling products at the end of their life cycle, purchasing organic food, and wisely using energy resources that are based on renewable resources
- 30. Copyright © 2015 Pearson Education, Inc. “Green” consumption. • The most important factor in green consumption is probably environmental awareness. • People who have the appropriate knowledge and information about sustainable consumption tend to understand the importance of green consumption • Therefore change their practices in line with green consumption
- 31. Copyright © 2015 Pearson Education, Inc. “Green” consumption. • it is important to increase “environmental awareness” • among regular/average customers through public policy and social marketing efforts.
- 32. Copyright © 2015 Pearson Education, Inc. “knowledge-to-action gap” • Burden placed on consumers from excessive amounts of information. • Information about sustainable consumption can challenge consumers’ capacity to process this information
- 33. Copyright © 2015 Pearson Education, Inc. Learning Objectives • Define sustainable marketing and discuss its importance. • Identify the major social criticisms of marketing. • Define consumerism and environmentalism and explain how they affect marketing strategies. 16 - 33
- 34. Copyright © 2015 Pearson Education, Inc. Learning Objectives • Describe the principles of sustainable marketing. • Explain the role of ethics in marketing. 16 - 34
- 35. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America. Copyright © 2015 Pearson Education, Inc.
Editor's Notes
- This chapter defines sustainable marketing and discusses its importance. It identifies the major social criticisms of marketing, and also defines consumerism and environmentalism and explains how they affect marketing strategies.
- This chapter also describes the principles of sustainable marketing and explains the role of ethics in marketing.
- Unilever had experienced a decade of stagnant sales and profits. The company needed renewed energy and purpose. Paul Polman, the CEO of Unilever, asserted that growth results from accomplishing a broader social and environmental mission instead of the usual corporate goals of growing sales, profits, and shareholder value. Unilever launched its Sustainable Living Plan, which is an aggressive long-term plan that takes capitalism to the next level. Under the plan, the company has set out to create a better future every day for people around the world. Unilever’s long-run commercial success depends on how well it manages the social and environmental impact of its actions. The Sustainable Living Plan pulls together all of the work Unilever had already been doing and sets ambitious new sustainability goals. These goals span the entire value chain, from how the company sources raw materials to how consumers use and dispose of its products. To succeed in inspiring people around the world to take small, everyday actions that can add up to a big difference for the world, Unilever has identified Five Levers for Change, which are things that its marketers can do to inspire people to adopt specific sustainable behaviors. The levers for change include: make it understood, make it easy, make it desirable, make it rewarding, and make it a habit.
- This figure compares the sustainable marketing concept with other marketing concepts. The marketing concept recognizes that organizations thrive from day to day by determining the current needs and wants of target customers and fulfilling those needs and wants more effectively and efficiently than competitors do. It focuses on meeting the company’s short-term sales, growth, and profit needs by engaging customers and giving customers what they want now. The societal marketing concept considers the future welfare of consumers. The strategic planning concept considers future company needs. The sustainable marketing concept calls for socially and environmentally responsible actions that meet both the immediate and future needs of customers and the company.
- Marketing receives much criticism. Social critics claim that certain marketing practices hurt individual consumers, society as a whole, and other firms.
- Many critics charge that the American marketing system causes prices to be higher than they would be under more sensible systems. Critics point to three factors: high costs of distribution, high advertising and promotion costs, and excessive markups. Deceptive pricing includes practices such as falsely advertising prices from a phony high retail list price. Deceptive promotion includes practices such as misrepresenting the product’s features. Deceptive packaging involves exaggerating package contents in misleading terms. Deceptive practices led to the Wheeler-Lea Act, which gave the Federal Trade Commission (FTC) power to regulate unfair or deceptive acts or practices. Salespeople are sometimes accused of high-pressure selling that persuades people to buy goods they had no thought of buying. Too often, products and services are not made well or do not perform well. Another complaint concerns product safety. Also, many products deliver little benefit, or may even be harmful. Critics also have charged that some companies practice planned obsolescence, causing their products to become obsolete before they need replacement. Other companies are charged with perceived obsolescence, that is, continually changing consumer concepts to encourage more and earlier buying. Critics also accuse major chain retailers of redlining, drawing a red line around disadvantaged neighborhoods and avoiding placing stores there.
- Critics do not view the interest in material things as a natural state of mind but rather as a matter of false wants created by marketing. Marketers, they claim, stimulate people’s desires for goods and create materialistic models of the good life. In this view, marketing’s purpose is to promote consumption, and the inevitable outcome of successful marketing is unsustainable overconsumption. Many observers predict a new age of more sensible consumption. As a result, instead of encouraging today’s more sensible consumers to overspend their means, most marketers are working to help them find greater value with less. Business has been accused of overselling private goods at the expense of public goods. As private goods increase, they require more public services that are usually not forthcoming. A way must be found to restore a balance between private and public goods. One option is to make producers bear the full social costs of their operations. A second option is to make consumers pay the social costs. For example, many cities around the world are now charging congestion tolls in an effort to reduce traffic congestion. Critics charge the marketing system with creating cultural pollution. Marketers answer the charges of commercial noise with these arguments. First, they hope that their ads primarily reach the target audience. Second, because of ads, many television, radio, online, and social media sites are free to users. Thus, to hold consumer attention, advertisers are making their ads more entertaining and informative.
- Critics charge that a firm’s marketing practices can harm other companies and reduce competition through acquisitions of competitors, marketing practices that create barriers to entry, and unfair competitive marketing practices. Firms are harmed and competition is reduced when companies expand by acquiring competitors rather than by developing their own new products. Acquisitions have caused concern that vigorous young competitors will be absorbed, thereby reducing competition. In some cases, acquisitions can be good for society. The acquiring company may gain economies of scale that lead to lower costs and lower prices. In addition, a well-managed company may take over a poorly managed company and improve its efficiency. Some marketing practices bar new companies from entering an industry. Large marketing companies can use patents and heavy promotion spending or tie up suppliers or dealers to keep out or drive out competitors. Those concerned with antitrust regulation recognize that some barriers are the natural result of the economic advantages of doing business on a large scale. Existing and new laws can challenge other barriers. Some firms have used unfair competitive marketing practices with the intention of hurting or destroying other firms. For example, when Walmart began a program to sell generic drugs at $4 a prescription, local pharmacists complained of predatory pricing. They charged that at those low prices, Walmart must be selling under cost to drive them out of business.
- Consumerism is an organized movement of citizens and government agencies designed to improve the rights and power of buyers in relation to sellers. Traditional sellers’ rights include the right to introduce any product in any size and style, provided it is not hazardous to personal health or safety, or, if it is, to include proper warnings and controls; the right to charge any price for the product, provided no discrimination exists among similar kinds of buyers; the right to spend any amount to promote the product, provided it is not defined as unfair competition; the right to use any product message, provided it is not misleading or dishonest in content or execution; and the right to use buying incentive programs, provided they are not unfair or misleading. Traditional buyers’ rights include the right not to buy a product that is offered for sale, the right to expect the product to be safe, and the right to expect the product to perform as claimed.
- Comparing these rights, many believe that the balance of power lies on the seller’s side. Critics feel that the buyer has too little information, education, and protection to make wise decisions when facing sophisticated sellers. Consumer advocates call for the following additional consumer rights. The right to be well informed about important aspects of the product, the right to be protected against questionable products and marketing practices, the right to influence products and marketing practices in ways that will improve quality of life, and the right to consume now in a way that will preserve the world for future generations of consumers. Consumers who believe they got a bad deal have several remedies available, including contacting the company or the media; contacting federal, state, or local agencies; and going to small-claims courts.
- Environmentalism is an organized movement of concerned citizens, businesses, and government agencies designed to protect and improve people’s current and future living environment. Environmentalists are concerned with marketing’s effects on the environment and the environmental costs of serving consumer needs and wants. They want people and organizations to operate with more care for the environment. Environmentalism is concerned with damage to the ecosystem caused by global warming, resource depletion, toxic and solid wastes, litter, the availability of fresh water, and other problems. Other issues include the loss of recreational areas and the increase in health problems caused by bad air, polluted water, and chemically treated food. Concerns related to the environment have resulted in federal and state laws and regulations governing industrial commercial practices impacting the environment. In recent years, most companies have accepted responsibility for doing no harm to the environment. More and more companies are now adopting policies of environmental sustainability. Environmental sustainability is a management approach that involves developing strategies that both sustain the environment and produce profits for the company.
- This figure shows a grid that companies can use to gauge their progress toward environmental sustainability. It includes both internal and external greening activities that will pay off for the firm and environment in the short run, and beyond greening activities that will pay off in the longer term. At the most basic level, a company can practice pollution prevention. Pollution prevention means eliminating or minimizing waste before it is created. Companies emphasizing prevention have responded with internal green marketing programs such as, designing and developing ecologically safer products, recyclable and biodegradable packaging, better pollution controls, and more energy-efficient operations. At the next level, companies can practice product stewardship, which involves minimizing not only pollution from production and product design but also all environmental impacts throughout the full product life cycle, while at the same time reducing costs. Many companies are adopting design for environment (DFE) and cradle-to- cradle practices. This involves thinking ahead to design products that are easier to recover, reuse, recycle, or safely return to nature after usage, thus becoming part of the ecological cycle. The beyond greening activities identified look to the future. First, internally, companies can plan for new clean technology. Finally, companies can develop a sustainability vision, which serves as a guide to the future. It shows how the company’s products and services, processes, and policies must evolve and what new technologies must be developed to get there.
- This table illustrates the major legal issues facing selling decisions and advertising decisions.
- This table illustrates the major legal issues facing channel decisions, competitive relations decisions, and product decisions.
- This table illustrates the major legal issues facing packaging decisions and price decisions.
- Under the sustainable marketing concept, a company’s marketing should support the best long-run performance of the marketing system. It should be guided by five sustainable marketing principles, which are consumer-oriented marketing, customer value marketing, innovative marketing, sense-of-mission marketing, and societal marketing. Consumer-oriented marketing means that the company should view and organize its marketing activities from the consumer’s point of view. It should work hard to sense, serve, and satisfy the needs of a defined group of customers, both now and in the future. According to the principle of customer value marketing, the company should put most of its resources into customer value–building marketing investments. By creating value for consumers, the company can capture value from consumers in return. The principle of innovative marketing requires that the company continuously seek real product and marketing improvements.
- Sense-of-mission marketing means that the company should define its mission in broad social terms rather than narrow product terms. Brands linked with broader missions can serve the best long-run interests of both the brand and consumers. By following the principles of societal marketing, a company makes marketing decisions by considering consumers’ wants, the company’s requirements, consumers’ long-run interests, and society’s long-run interests.
- This figure shows how products can be classified according to their degree of immediate consumer satisfaction and long-run consumer benefit. Deficient products, such as bad-tasting and ineffective medicine, have neither immediate appeal nor long-run benefits. Pleasing products give high immediate satisfaction but may hurt consumers in the long run. Examples include cigarettes and junk food. Salutary products have low immediate appeal but may benefit consumers in the long run. For instance, bicycle helmets or some insurance products. Desirable products give both high immediate satisfaction and high long-run benefits, such as a tasty and nutritious breakfast food. Companies should try to turn all of their products into desirable products. The challenge posed by pleasing products is that they sell very well but may end up hurting the consumer. The product opportunity, therefore, is to add long-run benefits without reducing the product’s pleasing qualities. The challenge posed by salutary products is to add some pleasing qualities so that they will become more desirable in consumers’ minds.
- The sustainable marketing goals of long-term consumer and business welfare can be achieved only through ethical marketing conduct. Not all managers have fine moral sensitivity and hence companies need to develop corporate marketing ethics policies—broad guidelines that everyone in the organization must follow. These policies should cover distributor relations, advertising standards, customer service, pricing, product development, and general ethical standards.
- Managers need a set of principles that will help them figure out the moral importance of each situation and decide how far they can go in good conscience. One philosophy is that the free market and the legal system should decide such issues. Under this principle, companies and their managers are not responsible for making moral judgments. Companies can in good conscience do whatever the market and legal systems allow. A second philosophy puts responsibility not on the system but in the hands of individual companies and managers. This more enlightened philosophy suggests that a company should have a social conscience. Companies and managers should apply high standards of ethics and morality when making corporate decisions, regardless of what the system allows. Dealing with issues of ethics and social responsibility in an open and forthright way helps to build and maintain strong customer relationships based on honesty and trust. As with environmentalism, the issue of ethics presents special challenges for international marketers. Business standards and practices vary a great deal from one country to the next.
- The American Marketing Association, an international association of marketing managers and scholars, developed a code of ethics that calls on marketers to adopt the following ethical norms. The first norm, which is to do no harm, means consciously avoiding harmful actions or omissions by embodying high ethical standards and adhering to all applicable laws and regulations in the choices we make. The second norm, which is to foster trust in the marketing system, means striving for good faith and fair dealing so as to contribute toward the efficacy of the exchange process as well as avoiding deception in product design, pricing, communication, and delivery or distribution. And the third norm is to embrace ethical values. This means building relationships and enhancing consumer confidence in the integrity of marketing by affirming core values such as, honesty, responsibility, fairness, respect, transparency, and citizenship. Companies are also developing programs to teach managers about important ethical issues and help them find the proper responses. They hold ethics workshops and seminars and create ethics committees. Its official Google Code of Conduct is the mechanism by which the company puts its well-known “Don’t be evil” motto into practice. The detailed code’s core message is simple: Google employees (known inside as “Googlers”) must earn users’ faith and trust by holding themselves to the highest possible standards of ethical business conduct.
- Sustainable companies are those that create value for customers through socially, environmentally, and ethically responsible actions. Sustainable marketing goes beyond caring for the needs and wants of today’s customers. It means pursuing the mission of a triple bottom line which is people, planet, profits. Sustainable marketing provides the context in which companies can build profitable customer relationships by creating value for customers in order to capture value from customers in return, now and in the future.