L4. Sustainability in the Marketplace Flashcards
Consumer society
is built on the assumption that consumption can increase indefinitely
Sustainable consumption is using products to
- satisfy human needs
- enhance quality of life
- minimizing use of natural resources, waste and pollutants over the whole life cycle of products.
Reducing impact
- Technological innovation (e.g. electric vehicles or renewable energy)
- Using green ingredients, materials, methods (usually as specified by labels and standards, such as “organic”, “eco”, LEED-certified, and others)
- Product service systems (product recapture, servicizing, product sharing)
- Reducing demand (voluntary simplicity)
Millennials and Gen Z
- Account for about 25-30% of sales in many product categories
- Will hit 45% by 2025
- 75% of millennials were willing to pay more for sustainable offerings
Alibaba
66m, or 16%, of its customers had bought 5+ green products in 2015, (4m in2011)
Counterexample 1: Fashion Industry
- Linear economy: About 84% of old clothing end in landfill or incineration. 1% is recycled.
- Textile production is one of the most polluting industries. Polyester is the most commonly used fabric in clothing, which has 2.5 times the CO2 emission of cotton.
- Traditional Fashion: 2 cycles a year; Fast Fashion: 50 cycles a year; almost 60% of all clothing is disposed within a year of production.
Counterexample 2: Car Industry
2014: Ford is No. 1 on annual list of Interbrand’s 50 Best Global Green Brands. (public perception of the brands’ green practices, compared to environmental performance data).
2009: Ford had received a $5.9 billion loan from the US Department of Energy to build more fuel-efficient vehicles. Ford developed several internal combustion engines for its passenger cars.
2018: Ford announced that it would largely abandon the US passenger car markets in favour of more trucks, crossovers, and SUVs. Modern SUVs are more fuel-efficient than they were in the past, have additional weight and wind-resistance.
Rights of Customers
Any consumer issue is likely to impact on a firm’s reputation, but “marketing and sales” are perceived as among the least ethical of business functions.
Caveat emptor (“Buyer beware”)
The consumer’s sole right is whether to purchase a given product or not. It is still a basic principle in virtually all countries, even if firms can provide misleading information even while remaining within the limits of the law.
Consumer protection
Respecting the dignity of consumers and providing fair treatment beyond laws.
Main areas of consumer protection (UN Guidelines on Consumer Protection):
- health and safety hazards for consumers
- economic interests of consumers
- access by consumers to adequate information
- consumer education
- effective consumer redress
- freedom for consumers to act collectively
- promotion of sustainable consumption patterns
Marketing management:
product, promotion, price, place
Marketing management issues
Individual-level issues
Social-level issues
Individual-level issues
misleading practices that create false beliefs (e.g. “greenwashing”)
- Self-regulation very common in the advertising industry.
- Large room remains for firms to be more transparent or correct.
Social-level issues
marketing communication may have negative impact on society:
- too intrusive (e.g. billboards)
- creates artificial wants (e.g. “impossible” ideals of beauty or personal success)
- reinforces consumerism (convinces people that buying things leads to happiness)
- creates insecurity and perpetual dissatisfaction
perpetuates social stereotypes (e.g. Fair & Lovely)
Marketing strategy
segmentation and targeting
Marketing strategy issues
- Targeting vulnerable consumers who are not able to make an informed decision about a product purchase; Duty of care: firms should not exploit the vulnerability of people
- Excluding certain marginal consumers from access to important goods and services
Marketing research
customer information
C.K. Prahalad: “fortune at the bottom of the pyramid”: offer innovative products that target the poorest people, especially in Africa, Asia and South America (e.g. Vodafone M-Pesa).
Win-win logic, Re-branded as “inclusive markets” by the United Nations.
Ethical Consumption
Definition
The deliberate choice to base consumption choices on moral values and beliefs.
Ethical Consumption
Negative case:
avoiding or boycotting certain companies and products. It may be combined with consumer activism, when activists try to harm a firm’s reputation with customers.
Ethical Consumption
Positive case:
choosing products or companies with certain characteristics, (fair trade or organic products), or adopting sustainable practices, (recycling or re-using products).
Ethical consumption benefits
- save money (e.g. recycling)
- protect one’s health (e.g. organic products) One could think of it as sustainability at a personal level, where the economic dimension (saving money) and social dimension (people -> better life) are aligned with the planet dimension (reduce personal footprint)
- may force consumers to accept lower product quality (e.g. fake fur instead of real fur).
- may also force consumer to abstain from certain practices (e.g. from illegal file sharing).
Targeting customers
- Niche strategy: specialist ethical products to a committed minority
- Mainstream strategy: integrating ethical considerations in a conventional product offering for the broad market. Sometimes niche products grow and go mainstream.
Usual Marketing mix
- Product: only the sustainable option or both sustainable and non-sustainable options?
- Price: usually premium
- Communication: should you emphasize the sustainable characteristics?
- Distribution: specialty stores or traditional channels?
