Chap 6: Sustainability Marketing Strategies

Question 1

Sustainability Marketing Strategies - Learning Objectives

1. Understand the micro and macro environments of companies from a sustainability perspective
2. Explain how ecological and social problems translate into market and marketing issues
3. Describe the major steps involved in developing a sustainability marketing strategy
4. Appreciate the key role of innovation in sustainability marketing

Answer 1

Correct answer :-P

Question 2

A Company‘s Marketing Strategy:

• reflects:
• is shaped by:

Answer 2

• Its marketing strategy reflects a companies overall corporate strategy and objectives, its vision, mission and values
• Marketing Strategy is shaped by the nature of the company’s market and its wider marketing environment. It reflects relationships that evolve between the company and the key actors within that environment

Question 3

A Company‘s Marketing Strategy can be subdivided in:

• ….
• ….

Pls explain them.

Answer 3

• 1. Normative sustainability marketing
• 2. Strategic sustainability marketing

1. Normative sustainability marketing:
   - NSM determines the broad “What?” and “Why?” questions (in establishing a more sustainable approach to marketing)
2. Strategic sustainability marketing:
   - SSM focusses more on answering the “Where?”, “When?” and “How?” questions
   - Necessary to translate sustainability marketing values into a commercial viable strategy
   - Ensures that a business can survive, thrive and endure –> Respond to changing economy

Question 4

Generally “Strategic Marketing”:

• Benefits
• Delimitation of the term “sustainability”

Answer 4

Benefits:

SM helps companies to look:

• into their environment
• forward in time
• -> to identify potential threats to their survival
• -> opportunities to exploit
• Anticipation of disruptive environmental and social change –> Endurance

Delimitation of the term “sustainability”:

• Strategic perspective of ensuring that a business can survive is highly competitve ( –> “green” and “sustainability” marketing are not oxymorons!)

Question 5

3 ideas for business thinking

Answer 5

1. Business = warfare

confrontation between a company and its competitors (seeking to dominate the market)
- e.g. guerrilla marketing

2. Companies = machines

issues of structure, efficiency, control systems

3. Business = organism

success depends on being well suited to its environment and adaptable to environmental change (Darwins principle Survival of the fittest; best suited for their environment –> Concept of survival: fundamental to business and marketing strategy)

Question 6

Marketing Environment includes:

Answer 6

• marketers
• their customers
• their competitors
  ( + interactions )

Question 7

MICROenvironment (aka “Task Environment”)

• Def

Answer 7

= company‘s market + those actors it interacts with directly and relatively regularly

Question 8

Name 3 different actors in a MICROenvironment of companies

Answer 8

1. Market Actors
2. Political Actors
3. Public Actors

Question 9

Forces of the MACROenvironment of companies?

Answer 9

broader and less direct forces:

1. • natural
2. • demographic
3. • socio-cultural
4. • technological
5. • political
6. • economic

— forces

These forces affect the MICROenvironment

Question 10

Actors in a MICROenvironment:

1. Market Actors

Answer 10

MICROenvironmental Market Actors:

Market Actors:

• *1. Customers:**
• Customers play the leading role in shaping a company‘s strategic response to the sustainability agenda (reaction on market depends on perception) Examples: Customers can include individuals, households, retailers, other businesses, govt bodies, public service porviders etc.

2. Intermediaries:
- Ensure product reaches costumer (facilitate marketing, collect costumer info to improve marketing, pre-selection of goods for market)
Examples: retailers, wholesalers or distributors

• Gate-keepers
• Diffusion agents
  (both in a sustainability context)
• Gate-keepers: Skandinavia: Difficult to find fridge with poor energy ratings in stores
• Diffusion agents: European retailers help to establish labels like FSC
• -> Retailers can act as gatekeepers and diffusion agents in the sustainability context
• *3. Suppliers:**
• A company‘s strategy and the quality of its products depends on its ability to purchase the necessary goods and services from suppliers
• *4. Competitors:**
• e.g. “Me-Too Strategy“ : companies may follow the lead of a particular competitor

Question 11

Actors in a MICROenvironment

2. Public Actors

Answer 11

I. The Media

• opinion shaping of sustainabiity agenda & perception (mostly online media: Social media)

II. Interest groups

• vary from global to local, e.g.

A. Confrontational interest groups
(Greenpeace –> Shell)
B. Collaborative/partnership (Farmer & Bioland)

III. Online Media

• social media for supporters

IV. Local communities

• small businesses: –> majority of customers are local community
• corporate reputation

V. Online communities

e.g city farming, eco village

Online Social Communities are locally based, support based, or issue based

Question 12

Actors in a MICROenvironment

3. Political Actors

Answer 12

The government

• Challenge to achieve social and economical benefits, while reducing environmental impacts
• Creating policy framework
• Command & control
• Taxation, incentives
• Self-regulation

Question 13

MACROenvironment includes:

Answer 13

A. Natural environment:

provides resources, absorbs waste –> integral part of decision making

B. Demographic environment

C. Socio-cultural environment:

“shared values” - sustainability issues reflected in cultural landscape) –> customers response

D. Technical environment:

cares about environmental problems; reduces environmental impacts; affects opportunities

E. Political environment:

laws, taxes etc., rather short term planning (election scope); conflicting interests; global dimension

F. Economic environment:

Higher costs of more sustainable technologies

Question 14

Ecological Product Life Cycle

Answer 14

= the sustainability performance of a product depends on the related social and environmental impacts (throughout the supply chain)

Question 15

Major steps in developing a Sustainability Marketing Strategy

Answer 15

Question 16

Issue Attention Cycle of Socio-Ecological Problems

Answer 16

Question 17

Sustainability Marketing Transformations

Answer 17

Question 18

2. Segmenting Sustainability Markets

Answer 18

1. Geographic:

Divides the market into different geographical units such as continents, countries, regions, states,cities and neighbourhoods –> willingness to pay; amount of LOHAS (Greenex-study)

2.Demographic:

Divides consumers into groups based on variables such as age, gender,religion, race, educatopn, occupation and income –> e.g. sustainable products consumption of middle ages woman with kids and “x“ income

3.Behavioural:

Divides consumers into different groups based on their use of or response to sustainable products
e.g. a heavy user buys a sustainable product frequently (<–> light user; nonuser)

Groups buyers according to the different benefits that they seek from sustainable products

—-> Consumer behaviour

4. Psychographic:

Divides sustainability markets into groups based on personality characteristics and lifestyles

• Market studies in countries all over the world show that there is a growing segment of LOHAS consumers (LOHAS = Lifestyle of Health and Sustainability)
• Demographic variables such as age, gender, education and income do not work to detect and define LOHAS consumers; they come from all walks of life. They are willing to pay more for sustainable products and services, which align traditional quality criteria with environmental and social attributes. They make conscious decisions and believe in the power of consumption to change markets in the world

Question 19

LOHA & LOVOS

• Differences

Answer 19

• LOHAS consume differently, but LOVOS consume LESS
• LOVOS = Lifestyle of voluntary simplicity. They live simply for reasons such as reducing stress, health, more leisure time with family and friends, spirituality, social justice and anti-consumerism
• LOVOS combine efficiency (consuming differently) with sufficiency (consuming less). This group is LESS ATTRACTIVE for sustainability marketers, than LOHAS are

Question 20

3. Sustainability Innovations

A Typology of Sustainability Innovations

Answer 20

Question 21

A Typology of Sustainability Innovations

• Describe the four types of sustainability innovations

Answer 21

1. Focuses on the improvement of existing products and services with regard to environmental and social performance

E.g. The increase in fuel efficiency of conventional cars with internal combistion engines

2. This represents alternative technologies to existing problems

E.g. Growing social and political pressure over vehicle emissions and their regulation has pushed companies to search for alternative technologies such as fuel cells and electric cars. Toyoto is the innovation leader when it comes to hybrid electric cars. An alternative technology to food packaging is bioplastics, which comes from renewable resources and biodegradables after use

III. This applies existing knowledge to new market areas

E.g. Car sharing offers mobility without ownership

4. Co-evolution of new systems is probably the most fundamental contribution to sustainable development. Beyond product and service innovations, it refers to the level of entire systems.

E.g. Sustainable mobility systems, which apply complementary modes of transportation such as electric bikes, electric cars and public transportation

E.g. Sustainable energy systems based on different sources of renewable energies

(Point 4) –> Evolves through top-down policy & bottom-up social change

Question 22

Innovation vs. Exnovation

Answer 22

Innovation <–> Exnovation

Exnovation: Discarding existing products or practices to adopt new sustainable innovations

Question 23

Market entry barriers to sustainability innovations

• Describe two market barriers

Answer 23

Question 24

4. Positioning
   - Meaning
   - 3 options of positioning

Answer 24

4. Positioning

• Position the company has in the consumers mind
• New position-finding in market is hard!
• -> convincing of consumers
• First option: The company puts a focus on the socio-ecological value added, which captures a dominant position over performance and price (focus on value for environment, not for consumer –> micro niche)
• Only few consumers are willing to sacrifice & pay more

-The second option is to put equal emphasis on performance, price and socio-ecological aspects (USSP based on no. of benefits)

• Another option to position sustainable products is to communicate the socio-ecological value added as an integral part of product quality
• -> Lohas: not willing to sacrifice performance

No.1 –> Only attractive for small companies USSP

No.3 –> Attractive for large companies

In case not described in the other chapters!? –> USSP = unique sustainability selling position, letzter Absatz S.159

Question 25

Positioning Sustainable Products

4 graphs

Answer 25

Question 26

5. Partnering - I
   - Conventional approach
   - Alternative approach
   - Stakeholder approach
   - Reuse/Recycle

Answer 26

Conventional mainstream marketing puts a strong emphasis on competitiveness

An alternative approach to understand sustainability marketing strategy is in terms of partnering and relationship management beyond just the relationship with consumers
–> E.g. work in partnership to improve social and environmental performance (e.g. with supply chain)

Stakeholder-Approach

• A central idea in mgmt and marketing strategy is that of Stakeholders
• Stakeholder model seeks to identify those parties in the marketing environment whose behaviour can potentially affect the interests of the company, or towards whom the company owes some kind of social obligation
• Stakeholders as partners who work together
• Inclusion issue: Who and who not?
• Balancing issue (of different type of stakeholers… primary, secondary etc.)

–> Broader range of stakeholders for long-term sustainability

Reuse/Recycle

-Supply loop from which reusable and recycleable products and materials are returned into the production system

–> Costomer also becomes a supplier of the business (and participant in the co-production of sustainable value)

Question 27

5. Partnering - II

“Open Sustainability Innovation“ & “Open Sustainability Marketing“

Answer 27

“Open Sustainability Innovation“

–> Co-creation of sustainable products with stakeholders

–> Cooperate and partner with stakeholders to develop and market new sustainable products and services

“Open Sustainability Marketing“

–> Involve stakeholders in your marketing (e.g. Procter & Gamble‘s washing powder + WWF support)

• -> Generally:
• Opening up the company for new ideas
• Balance needs for future generations

Question 28

About LOHAS behaviour

Answer 28

LOHAS consumers are likely to research a sustainable product online, trial it and inform others if it meets their expectations