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Sustainability Marketing Transformation
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Sustainability Marketing Transformation is counted to the field of Macromarketing and is the active participation of companies in public and political processes to change institutions in favor of sustainability. Within the present institutional framework, the successful marketing of sustainable products is possible, but limited. That is why a change in institutions is necessary to expand in the intersection between socio-ecological problems and consumption. Sustainability pioneers and leaders can harness enlightened self-interest to change public and political institutions and thus enhance sustainable development. Sustainability Marketing Transformation is explained by three different perspectives: * The first one is the Outside-In Perspective, in which ecological and social problems such as Climate change, Overexploitation or Peak oil are gaining a place in the current market and the way in which they influence it. * The second one, the Inside Perspective, describes how companies modify and react to outside pressures by denying, ignoring, accommodating or accepting the process and trying to follow or not the Sustainability Marketing trend. * The third one is the Inside-Out Perspective where companies can present themselves as driving forces for changing the market, regarding to social and environmental problems and enhancing public and political compromise. Transformation in context of Sustainability Marketing The term Sustainability Marketing admits the limitation of a market orientation by following corporate and collective commitment. At the same time it is reinforcing the necessary alteration from institutional settings and the price-issue in favor of integrated social, ecological and economical development. In addition to the macro marketing perspective, Sustainability Marketing emphasizes the Triple bottom line of ecological, social and economics issues, building and maintaining a long-term sustainable relationship with customers, the social environment and the natural environment. The Sustainability Marketing follows six key elements: socio-ecological problems, Consumer behavior, sustainability marketing values and objectives, sustainability marketing strategies, sustainability marketing mix and sustainability marketing transformation. The first two elements belong to the corporation external environment, while the third and the fourth refer to the decisions at a corporate level, and the fifth focus on the product level. As a last key element we find the sustainability marketing transformation referring to the active participation of companies in public and political processes to change institutions in favor of sustainability. Reframing the six key elements all together, Sustainability Marketing provides a more realistic view of markets, in which the key players have some power to influence their environment; where companies and consumers take some responsibility for the social and environmental impact of production and consumption; and in which the impact of today’s decisions on future generation of consumers, citizens, investors and manager is considered. The three perspectives of Sustainability Marketing Transformation One can take three perspectives of Sustainability Marketing Transformation. The two basic ones are the view from the outside to the inside and the perspective from the inside to the outside. In between we find the Inside-perspective. The Outside-In Perspective The Outside-In perspective explains how ecological or social issues are pushed forward by politics and/or the public and therefore influence the strategies of companies as well as the positioning in the market. In easier words: How issues and concerns coming from outside influence the inside of a company. It has to be taken into account that public attention rarely remains sharply focused upon one domestic issue for very long- even if it involves a continuing problem of crucial importance to society. A study carried out in the United States provides insights into how long public attention is likely to remain sufficiently focused upon any given issue to generate enough political pressure to cause effective change. Therefore the comparatively short period of time, in which public interest is focused on an issue, has to be used effectively and fast to enforce changes in favor of social or ecological improvements. The Outside-In Perspective of Sustainability Marketing Transformation can be distinguished in a direct and an indirect process. Indirect Sustainability Marketing Transformation For several social and ecological problems, politics have to implement laws for producers (and sometimes also for consumers) to force them to change their behavior. In this case the term Indirect Sustainability Marketing Transformation process is used. Not the public is directly putting pressure on the market; the change is developed because political institutions regulate the issue. Politicians act as an intermediary between the interests of the public which are based on social-ecological problems and the market. One very good example for an indirect proceeding is the phase out of Chlorofluorocarbon to avoid further growing of the ozone layer. Ozone in the Stratosphere protects life on earth by absorbing most of the incoming damaging ultraviolet-B radiation from the sun. In 1973 some experts proposed for the first time that CFC could break down in the stratosphere and release catalyst that destroys ozone. Connected Figure 3, this can be seen as the recognition of an ecological problem. After the first reports concerning this issue, public attention rose rapidly. As it was a global problem, the main emitters of CFC had to find an agreement, which took around 13 years of political negotiations. Finally, politics agreed on a total phase out of CFC till the year 2000. This decision forced producers of CFC to change their production behavior and develop alternatives. Direct Sustainability Marketing Transformation While Indirect Marketing Transformation is supported or enforced by legal acts, Direct Sustainability Marketing Transformation is often started by pressure of the public to a market to change the behavior or decrease the impact of a certain proceeding to social or ecological issues. To illustrate the process of a Direct Sustainability Marketing Transformation the second largest chemical manufacturer in the United States DuPont can be used. DuPont began to mobilize its sustainability efforts in 1988 after Greenpeace activists scaled the wall of one of its plants and hung a giant banner “DuPont Number 1 Polluter” facing a highway used by thousands of commuters. The fear of being singled out as one of the world’s top corporate villains continued to motivate the company’s top management during the 1990s to become a more sustainable company. Greenpeace as a public stakeholder raised attention on DuPont and drove them to change their behavior. New media like the internet, mobile phones and social networks developed themselves as platforms for adversaries to organize their protest and boycott action. New information and communication technologies help them to spread information and exchange ideas on a very fast and cheap way. This is a powerful tool for pushing companies to confront socio-ecological issues and problems to gain public attention by the mass media. Key actors The process of Indirect as well as Direct Sustainability Marketing Transformation, are both based on the commitment of different people, either the public in general or politicians, which are willing to improve a given situation. These people are so called key actors, which are separated commonly in three different groups: Well-known and credible public stakeholders, political key actors and market key actors. They are able to influence the whole value chain and competition within the market. Institutions or NGO’s like Greenpeace, citizens’ initiatives or interest groups are counted to the group of public stakeholders. They try to gain public attention to receive support (as well as financial help) for their project. Activists have proven in the past that they are able to influence markets and politics in a remarkable way. National governments or supranational organizations like the EU are counted to the second category of political key actors. Those have the power to include political instruments into the market to fight social- ecological problems. The past has unfortunately proven that it can take years or even decades before an instrument is finally set in by law. Market key actors influence the whole value chain and competition within the market. One reason will be explained in chapter 3.2 as there are companies which want to change their impact on socio-ecological issues. Another one is the competitive advantage companies’ gain by entering successfully a niche market. With their success they force their competitors to follow the strategy. The Inside Perspective The Inside Perspective describes the way companies deal with the pressure and the obstacles concerning sustainability opposed on them from outside. They can for example ignore these questions, fulfill public claims for more sustainability or push Sustainability Marketing Transformation by doing more than is required by the outside. This option demands changes within the company itself. It is essential that sustainability issues are not only considered and negotiated in the public relations or in the CSR department of the company, but at all areas and in all processes that are taking place within the company. For a company which actively wants to undergo this process, several internal obstacles have to be mastered. These can be categorized into individual barriers among the employees (for example lack of awareness, fear, unwillingness to change something, extra work), organizational internal barriers (for example a short term perspective or a lack of a clear business case) and organizational external barriers (for example lack of consumer interest or investor interest). For successfully conquering these barriers several factors are important. A committed CEO is certainly one of the most important factors, as he has the power to initiate and suggest changes. However, there also have to be sustainability change agents, who implement these changes in all departments of the company. They are highly important, as they have either the power or the knowledge or both to deal with changes towards more sustainability. In the end, if the sustainability strategy of the company is to be successful, empowered employees are also important factors, as they are a part of the change process and represent the company to the outside. Some more technical factors also play a crucial role, like a Sustainability Marketing Information System, which informs and educates decision-makers about impacts of the company's product and also about the needs and requirements of the customers. Furthermore, a motivating Corporate Sustainability Missions Statement and powerful sustainability incentive structures are needed for dragging on the whole company towards Sustainability Marketing. These are especially useful for engaging the employees. Case Study: Inside-Perspective and HIPP The German company HIPP, which produces nutrition for babies, is an example for the big role a committed CEO plays in leading a company towards Sustainability Marketing Transformation. The company's founder, Georg Hipp began in 1956 with farming organic food, as he was personally convinced by this type of agriculture. Today the company is using only organic food for their products and considers itself as the biggest processor of organic basic materials worldwide. The example of HIPP also shows how the company has reacted to sustainability issues by doing far more than required by government or the public, as they started to implement organic farming at a time when there was no great public pressure upon them. The company also hooked its environmental concerns into its “Ethic-Charta” and is continuously trying to improve their performance. The Inside- Out Perspective The Inside-Out Perspective explains the behavior of companies towards the sustainability challenges described above. It is characterized by a proactive approach, where companies play an active role towards sustainability challenges. In this approach companies can act as sustainability change agents themselves and influence the market for sustainable development. Two types of motivation for an Inside-Out Perspective can be found: First, the ethical motivation, where inside-out behavior is based on the ethical values of the shareholders or managers. Second, the strategic rationale one, where the sustainable issues are viewed as marketing tools for a more profitable and competitive company. Despite this potential advantage, the strategic rationale is limited by its application within the present institutional framework, which can be far away from sustainability. Either based on ethical values or on the strategic rationale it is necessary that companies apply a proactive behavior towards sustainability. This way they can change the institutional framework. This scenario presents companies as driving forces for changing the market, regarding to social and environmental problems and enhancing public and political compromise, which means they encourage the transfer from a free-market system to a socio-ecological market system. With more social and political institutions encouraging sustainable consumption, it will be easier for the companies to introduce sustainable products and services into mass markets. Another main factor is the internalization of external effects of business activities, which will make it more viable for the marketing decision-makers to equilibrate the triple bottom line in a responsible way. The Inside-Out Perspective has the ultimate objective to influence institutions in a way that they set positive incentives for the purchase, use and post-use of sustainable products and services and set negative incentives for purchase, use and post-use of conventional/unsustainable products and services. For those objectives it is vital to influence the society and the politics sectors. Belz explains that “there are three possibilities for sustainability pioneers and leaders to enhance these processes: problem exploration, public development and political development”. Problem Exploration The point of departure for sustainability marketing are ecological and social problems, both in general and in relation to products and services. This kind of exploration is usually developed by university scientists, concerned citizens or NGO’s who investigate the ecological and social impacts of markets at local, national and international levels. The Sustainable Marketing Transformation encourages companies to play an active role by investigating those impacts and its possible solutions. In this way the companies can gain credibility and serve as early warning function for possible social or environmental problems caused by markets. Another positive factor for those companies is that they become “pioneers”, being the first to get the results and in developing appropriate solutions. Public Development A main factor for a consistent development towards sustainability is the constant and durable perception of the public about the identified socio-ecological problems. Without this kind of perception it is more difficult to influence public or other stakeholders towards sustainability and to educate them for a sustainable behavior. The credibility needed for this can only be achieved by open and transparent communications between companies and stakeholders. Examples for those means are the sustainability reports, such as the Sustainability Guidelines, which are developed by the Global Reporting Initiative(GRI). Generally those reports provide information on the economic, ecological and social performance of companies with a special focus on their operations and products. Such reports can set a path for sustainable consumption and influence the media coverage about the company. For an efficient public development, beside those measures, a cooperative approach with social and environmental organizations is also productive. Political Development For a consistent sustainable development it is determining that policy redefines the institutional framework in a sustainable direction, which covers all the consumption process such as the purchase, use and post-use of more sustainable products and services. In this case, companies can encourage the political agents and the government for a more sustainable framework of markets. Bendell and Kearins argue that this tendency has three main drivers: “the growing criticism of voluntary corporate responsibility initiatives;the increasing awareness and targeting of corporate political activitiesand a realization among certain corporate executives and financiers that, without changes to public policies, an individual company's own voluntary responsibility may not deliver sufficient commercial returns”. For the success of this “political bottom line” management applied by companies, a clear and transparent behaviour of the companies is necessary, where the whole sustainability measures should not be contradictory or ambivalent. This gets even more important when regarding the bad influence of some “sustainable” companies, who are doing hidden lobby against sustainability. Case Study: Marshalls - Carbon Labelling & Reduction Marshalls , the UK’s leading producer and supplier of hard landscaping products, created and applied rigorous carbon footprinting to its products, using this mechanism to encourage and educate customers to make sustainable choices through multimedia information on YouTube and Twitter, as well as in the company website. This mechanism helped Marshalls to identify carbon management and sustainable product development as essential for its business and consumers to move to low carbon, and reformulated the worst-performing, leading to carbon reductions of up to 39%. Over 2,000 products were carbon labelled and simple guides produced to explain labelling and greenwash in simple terms. The Marshalls long term goal is to reduce carbon emissions by 80% by 2050. As one of 13 pilot partners on the Carbon Trust’s carbon labelling project, Marshalls also helped formulate the British Standards Institute’s PAS 2050 methodology for carbon footprinting. retrieved 2011-05-30 See Also
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