User:Kaichun/Sustainability Marketing

Sustainability marketing is a type of marketing that is “building and maintaining sustainable relationships with customers, the social environment and the natural environment”. It is a marketing concept that takes into account the planet’s ecological limits and seeks to protect the planet’s ecosystem, while at the same time promoting equity and social justice. Sustainability marketing also seeks to build long-lasting relationships with customers and other stakeholders. It is a concept linked to the sustainable development agenda

History

The advent of sustainability marketing can be traced back to the late 1970s, where several marketing concepts have emerged to deal with ecological and social issues. Those concepts include societal marketing, social marketing, ecological marketing, green marketing, environmental marketing, and sustainable marketing.

The evolution of these marketing approaches was mainly due to dramatic changes such as globalization of markets, the rise of electronic commerce and renewed concerns about the environment, and thus created new pressure on marketing to respond and evolve. The field of macro-marketing emerged to integrate many of the debates about the impacts of marketing activity and the relationships between markets, regulation and social welfare that had surfaced periodically since the beginning of twentieth century. In the early 1980s, the discussions about the evolution of ‘postmodern’ marketing have been brought up by Stephen Brown, who mainly critiqued the mainstream marketing thinking and the term ‘marketing panaceas’ which were proposed as solutions to marketing’s supposed ills. ‘New marketing’ ideas were raised in different approaches, concepts such as niche marketing, micromarketing, community marketing, ethics marketing, entrepreneurial marketing etc. were brought to solve different market problems.

The debates about postmodern marketing, marketing panaceas and the various concepts of ‘new’ marketing formed the future of marketing that blends the mainstream economics and technical perspectives with the emerging concepts of relationship marketing and the social, ethical, environmental and intergenerational perspectives of sustainable development. Societal marketing, social marketing, ecological marketing, green marketing and environmental marketing failed to cover the entire perspective. As for sustainable marketing, it is a macro-marketing concept which embraces the idea of sustainable development, and emphasizes the triple bottom line of ecological, social and economic issues, unlike green marketing, which tends to focus on environmental problems and the reduction of the environmental burden. Sustainable marketing can be interpreted as marketing that builds long-lasting customer relationships effectively – without any particular reference to sustainable development or consideration of sustainability issues . Sustainability marketing deals more explicitly to the sustainable development agenda and thus it represents this evolution of future marketing.

Sustainability and Marketing

Challenges for the Twenty-First Century

Over the past 50 years, the world population grew from 3 billion to 7 billion (+130%), the majority of the world population lives in Asia, especially in China and India. In more developed regions, the growth rate of the population is estimated to remain fairly constant between 2005 and 2050, whereas in less developed regions, the growth rate is expected to more than double. The rapid growth of population not only generates problems of hygiene and disease in less developed regions, but also multiple environmental problems due to high resources demand.

The rise of the world population and the affluent consumer class leads to increasing resource scarcity, and thus accelerates the speed to reach peak oil, peak food and peak fish. A sustainable development that “meets the needs of the present without compromising the ability of future generation to meet their own needs "is thus required.

Sustainability marketing contribution to sustainable development

Combining the IPAT formula (Human Impact (I) on the environment equals the product of P= Population, A= Affluence, T= Technology) with marketing has become a new trend to make marketing a part of the solution of sustainable development. Sustainability marketing emphasizes not only the product level (Life Cycle Assessment) but also customers as the ‘forgotten stakeholder’ (CSR), it also helps to facilitate new lifestyles that are less materialistic and more sustainable.

Sustainability marketing aims to build and maintain sustainable relationships with customers, the social environment and the natural environment; it is ecologically oriented (seeks to satisfy our needs without compromising the health of ecosystems and their ability to continue delivering ecosystem services), viable (from technical feasibility and economic competitiveness perspectives), ethical (in promoting greater social justice and equity) and relationship-based (views marketing as the management of relationships between businesses and their customers and other key stakeholders).

Sustainability and Consumer

Sustainable consumer behavior

Consumer behavior is key to the impact that society has on the environment. Consumption is not only used to fulfill needs but also to express self-identity within the society. Due to the large amount of consumption, social and ecological environments are being negatively affected. Sustainability marketers are making efforts to guide consumers to consume in a more sustainable manner. It is crucial to understand, explain and predict consumer behavior. Three theoretical consumer behavior approaches are the rational approach (focus on the consumer perceived net benefits), psychological approach (consumers attitudes and beliefs are taken into consideration) and sociological approach (how we think others will perceive our consumption activities, and how that might reflect and influence our place in society).

Consumption process

Conventional marketing emphasizes only the purchase stage and it often leads people to overlook the negative impact of consumption activities. On the contrary, negative social and environmental consequences are evaluated at each stage of consumption process in sustainability marketing. Understanding the entire consumption process is essential in that sense.

Total Consumption Process

During the use and post-use phases, consumers have more opportunities to pursue a sustainable way of living. For example, durable products and energy efficient appliances are good solutions for consumers and the environment. Because of the role of consumers in determining sustainability impacts during the use and disposal phases of the consumption process, their overall behavior will also strongly influence the sustainability performance of goods and services. For sustainability marketers, success is based on understanding consumer behavior throughout the consumption process so that they can develop a marketing strategy and marketing mix that will meet consumers’ needs more effectively and more sustainably.

Values and Objectives

Values

Sustainability values set the foundation of credible and responsible sustainability marketing management. In opposition to the amoralization of conventional marketing theory, sustainability marketing embraces sustainability as well as ethics in its implications. Externalities like environmental and social impacts during the product life cycle are considered in the market price.

In sustainability marketing, the natural environment is a central paradigm. There are two ways of reflecting the natural environment – through the ‘inside out’ perspective and the ‘outside-in’ perspective. The former regards nature as vulnerable and fragile whereas the latter regards nature as wild and strong. With the life cycle analysis (LCA), of which the aim is to decrease negative impacts of products and services on the natural environment, the ‘inside out’ perspective can be applied to marketing activities. Although unpredictable natural disaster might have a negative impact on the stability of socio-economic systems, the ‘outside-in’ perspective sees the opportunity to create new markets, products and services. Complementing the two views is suggested as a useful application of sustainability marketing.

Objectives

“Sustainability marketing objectives state where the company intends to be at some specific time in the future”. Unlike conventional marketing, which focuses only on economic objectives such as sales, profits and market shares, sustainability marketing pursues the “win-win-win situation” where economic, ecological and social objectives interact with each other. What is good for the natural and social environments is also good for customers and long-term profits.

• Economic objectives: For sustainability marketing, economic objectives refer not only to financial growth but also to increasing the company’s sustainable products’ and services’ shares. To do so, a company will try to generate public awareness of the sustainable products and services and to achieve a long-term relationship with the customers at the same time. Through a good understanding of customer satisfaction and customer value, the life-long relationship between the company and customers can be achieved.

• Ecological objectives: “Ecological objectives will reflect the need to manage the ecological impacts of the consumption and production of a product or service through all phases of the physical product life cycle”. Ecological objectives in sustainability marketing include aspects of material use, water use, emissions, effluents and waste.

• Social objectives: While safety and health are vital issues for consumers, the “world behind the product’ (where and under what conditions it was produced) is getting more attention from consumers nowadays. Physical protection and the well-being of people at work within the entire supply chain are important indicators of sustainability marketing. Companies aim to increase positive social impacts with a contribution to the well-being of communities by means of donations and involvements in social, cultural and educational projects that enhance the quality of life.

Sustainability Marketing Strategies

The marketing strategy of a company reflects its overall corporate values and objectives, its mission, vision and values. Sustainability marketers take into account four specific areas to develop an overall marketing strategy: Market choice, competitive strategy, sustainability sustainability innovations and market entry. The market choice includes decision about which markets to compete in and whether or not to enter a particular sustainability oriented market or market segment. The competitive strategy takes into account different sources that companies can use to generate competitive advantage. Sustainability marketers usually focus on a low cost, differentiation or niche strategy to generate competitive advantage. Sustainability innovation are innovations that could provide companies with a source of competitive advantage and that could lead towards a more sustainable society through its transformation. Market entry takes into account the timing of introducing new products or product improvements in the market, by considering a number of factors like competitors actions, market research etc.

Framing Sustainability Marketing

Sustainability Marketing Mix

Customer Solutions

Unlike traditional marketing, which focuses on products and services, sustainability marketing focuses on providing customer solutions. For example, while the automobile is a product, mobility is the solution that the customer ultimately requires. Sustainable products and services are defined as “offerings that satisfy customer needs and significantly improve the social and environmental performance along the whole life cycle in comparison to conventional or competing offers” . This can be achieved through the use of motive alliances, whereby social and ecologically oriented aspects of the product are combined with inherent consumer benefits such as cost effectiveness and convenience and other product attributes such as design, functionality, and performance .

Sustainable products must strive to be sustainable along the entire lifecycle. This may start with extraction or sourcing of raw materials. An example is sustainable forest management that seeks to protect the forest’s productivity and biodiversity. During production processes, a large amount of pollution and waste could be produced in certain industries. Both the pollution and the waste could be minimized by adopting a cleaner production approach. This could be achieved, for example by switching production from non-renewable to renewable energies. Another strategy could be to reuse elements such as water, waste and heat . An example of this is the Kalundborg Industrial Complex, in Kalundborg, Denmark, where different industries are clustered together and use the waste material or heat from one source as input in another complex. For example, the excess heat from the Asnæs power plant is pumped into the municipality, which has eliminated the need for 3,500 oil furnaces .

For many products, such as automobiles and washing machines, the use stage is the most ecologically disruptive due to consumption of energy and water. Many sustainable products are energy efficient and therefore offer both a benefit to consumers in the form of lower costs, and a benefit to the environment since resource consumption is lower. Examples include well-insulated homes and hybrid vehicles. Another important criterion for a sustainable product is durability. Since the middle of the twentieth century, many producers have used the strategy of planned obsolescence to shorten a product’s life in order to increase revenues. This strategy significantly increases material throughput increasing waste and resource use. Sustainable products strive to be more durable and sustainable producers extend the life of the product by offering the ability to repair a product, and training consumers to use it in an efficient way, among other strategies. Another strategy that companies can use is to offer use-related services such as car sharing instead of offering the vehicle itself as a product. Such an approach allows companies to focus on customer solutions rather than products . Sustainable products should also strive for a cradle-to-cradle approach so that when the life of the product is over, it can be recycled. Companies can do this by using biodegradable materials for example. Another strategy would be to create products that are 100% and easily recyclable .

Communications

Communication plays a very vital role in helping marketers to convey the right message and to increase consumer awareness about sustainable product solutions. Communication also serves as an important source through which marketers can overcome the barriers that are associated with the adoption of sustainable products. Consumers are sometimes reluctant to change their established buying and consumption habits. Marketers can deal with this by employing effective means of communication to influence consumer choices and to covey the associated environmental and social benefits of sustainable products. Sustainability communication could be used to serve a dual purpose; it could not only be used to communicate about the sustainable product offerings of the company but also to communicate with the consumer and other stakeholders about the company as a whole. Sustainability marketers could choose from a number of available media sources to communicate their message such as advertising, personal selling, labeling, promotions etc.

In order to influence consumer behavior, different kinds of labels, either by a third party or those created by individual producers are used. Labeling is one of the most widely used communication techniques being employed by sustainability marketers. They have the advantage of being able to communicate on the packaging and in store, where consumer make their final decision about purchasing a product. Examples of such kind of labeling include: fair trade labels, organic food labels, Energy Star (efficiency) labels etc.

Customer Cost

In the sustainability marketing field, customer cost is a wide concept and unlike conventional marketing, price is not the only factor. Sustainability marketing takes into account the different costs associated with a product from its purchase to the disposal stage. Price is an important element of the total consumer cost because customers’ decision regarding purchasing a product greatly depends upon its initial cost i.e. the price. On the other hand, from the producer’s perspective, price represents the source of revenue for the producers and the goal of the producer is to make sure that it covers all the costs in terms of producing, distributing, and selling the product.

Sustainable products are usually priced higher than the conventional products, this creates a challenge for marketers to influence and persuade the customers to use the product and about the benefits that they will get after the purchase of that sustainable product. “Sustainable products must provide a higher net benefit (total benefits minus total cost) than conventional products in order to be bought”.

As opposed to the higher purchase price, the maintenance cost of sustainable products could be lower due to the efficiency of such products compared to conventional products. But as the functioning patterns of sustainable products could be different from the conventional products, consumers have to learn and adopt new behaviors, which may lead to a high switching cost for such products. Even at the end of a product’s life cycle, sustainable products tend to be more efficient in terms of their resale and recycling opportunities than the conventional products due to their efficient design and packaging. This allows for a much more environmentally friendly disposal procedure. Sustainability companies also offer opportunities for the extension of a product’s life cycle through repair, reuse and upgrading.

The concept of consumer cost is as important for marketers as it is for consumers “Marketers of sustainable products must move beyond pricing decisions to consider the total cost to the customer for purchasing, using and disposing of the product, and integrate this perspective into their marketing strategy”.

Convenience

While conventional marketing uses the concept of place, sustainability marketing focuses on convenience instead. Sustainability marketing principles consider place as being a producer-oriented concept and a concept that focuses on the acquisition stage even though consumers expect convenience throughout the entire consumption process. Furthermore, the concept of convenience takes into account changes in technology that have allowed consumers to shop online. Convenience is defined as something that is “appropriate in time and place”, “removes discomfort or trouble and promotoes ease”, and “is well suited to one’s needs”. A number of issues need to be considered by sustainability marketers regarding convenience since the ecological and social impacts of offering convenience to consumers could be quite high. For example, while certain business models such as the 24/7 store increase customer convenience, it increases energy consumption and has a negative impact on the health of employees. Packaging is also a major source of waste. 20-36% of municipal waste (by weight) in EU countries is due to packaging. Packaging however, plays an important role in customer convenience as it eases the transportation of products, protects the products, provides consumers with information, and helps to attract attention to the product. Reducing packaging is more ecologically friendly and could lead to decreased costs for producers. Companies also have the potential to lower negative impacts during the retailing stage by using more energy efficient refrigerators and lighting, among other measures. Convenience aspects of products themselves also have the potential of having a negative impact. A prominent example is the automobile, which may be more convenient than public transportation but has a higher environmental impact. Furthermore, it is important to consider convenience in the post-use stage of the product. Recycling, for example, may be inconvenient for consumers however it is an important tool in decreasing negative environmental impacts.

Examples

Car-sharing

Consistent with the concept of Customer Solutions, car sharing is designed to be a sustainable alternative to car purchasing that satisfies customer needs for mobility. Car sharing leads to a lower car production, leading to fewer materials consumed and other negative environmental consequences of the automobiles’ life cycles.

Compact Fluorescent Lamp (CFL)

Compact Fluorescent Lamps (CFL’s), illustrate the concept of customer cost and the importance of sustainable products meeting customer needs. The main environmental benefits of CFL’s are due to their high-energy efficiency compared to incandescent light bulbs. The energy use of a CFL light bulb is approximately 75% less than that of an incandescent lamp. Another main advantage of CFL’s is that they last up to 13 times longer than incandescent bulbs (5). While the initial purchase price of CFL’s is higher than that of incandescent bulbs, the low energy use and the longer lifetime meant that the total cost of CFL’s is lower than the total costs of incandescent bulbs.

External links

• "Sustainability Marketing: A Global Perspective."
• "Guides for the use of Environmental Marketing Claims"
• "Green Marketing"
• "Green Marketing blog"
• "Sustainability & CSR Conversations"
• "Sustainable Ink"
• "Population Action International"

See also

• Sustainability
• Green marketing
• Life Cycle Assessment
• CSR
• Sustainability Communications