Circular Economy PDF

Circular Economy Guarda anche i case studies 00_Why would clients buy your products or services rather than those of a competitor? Why would clients buy One answer is that when buying goods, consumers increasingly want to buy from companies that are motivated by more than “business as usual”. Anoth...

Circular Economy Guarda anche i case studies 00_Why would clients buy your products or services rather than those of a competitor? Why would clients buy One answer is that when buying goods, consumers increasingly want to buy from companies that are motivated by more than “business as usual”. Another answer is that consumption is a social phenomenon, consumers take on attitudes, beliefs, opinions and values of others (Word Of Mouth) These attitudes are increasingly shaped by information shared digitally, often generated by people “outside” of the companies. Hence, the companies unaware of changes in society run the risk of alienating customers. This is the case of sustainability, which despite being missing from many marketing texts is increasingly important to key stakeholders. What is marketing? “The management process of anticipating, identifying and satisfying customer requirements profitably.” (CIM, 2019) “Marketing is the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners and society at large.” (AMA, 2019) “Marketing is a social and managerial process by which individuals and groups obtain what they need and want through creating and exchanging products and services.” (Kotler et al., 2005, p.6) Pagina 1 di 99 The main elements of marketing - Management process—> First, marketing is seen as a management process. Since marketing covers strategic elements, it can be fully embedded into the culture of an organisation only if it has “buy-in” from top management. - Employee involvement —> All employees can influence the customers (or prospective customers) who have contacted an organisation and been cut off or have been spoken to in an unprofessional manner or not given solutions to problems. Not all staff members are involved in sales and marketing; for example, many are in accounts, logistics or tech support, but customers do not distinguish between the different roles if they are dissatisfied. - Holistical perspective —> Customers see the company holistically. Thus, marketing is everybody’s responsibility, because everyone plays a part in creating the customer experience. The main elements of marketing The traditional view is that customers buy products and services from organisations in exchange for money. This simple view is outdated. The reality is that organisations cannot “give” customers value. - Some argue the exchange brings the organisation and the customer together, and here they co-create value. - Others argue that customers provide money so that they can seek value from companies. Marketers must focus on creating circumstances where customers can seek and co-create or simply take value. - These two options (co-creation and value seeking) reduce the risk for organisations because they promote a customer- centric approach. Since value seeking and value taking involve bringing (at least) two parties together, relationships are formed, and many marketers today try to capitalise on that initial relationship by finding out as much as they can about the customer and their needs. Pagina 2 di 99 Since the advent of digital technologies, the use of user-generated content (UGC) on websites, blogs and social media sites has increased immeasurably. Considering this scenario, to be more successful, organisations must be externally focused, not just internally focused upon production techniques, products and processes. Many organisations suffer from such navel gazing and develop tunnel vision for their business activities. This is often referred to as marketing myopia: a short-sightedness that can often result in the loss of customers and business failure. The current business environment is so turbulent that many marketers are to a degree blind to the future. Companies which have survived similar scenarios were able to make changes, which permeated their management culture and went through a process of recovery, where the focus of their philosophy incorporated identifying, anticipating and delighting the customer. These companies addressed social issues related to supply chains and later led the way in adopting sustainable policies under their programme. However, most organisations have limited resources: financial, staff, equipment and so on. Therefore, they must seek to satisfy their customers efficiently and profitably. Now more than ever, business activities should also be undertaken and managed in an environmentally friendly and socially responsible manner. Pagina 3 di 99 Historical view of consumption Whilst the terminology and the context of sustainable consumption are relatively recent, the debates about consumer behaviour and consumerism are much older and much deeper. Many commentators have reflected on how consumers have demonstrated differing values. Fig 1.1 Different approaches to consumption and consumer value approaches Aristotle Pleonexia (the “insatiable desire for more”) Thorsten Veblen Conspicuous consumption Pierre Bordieu Analysis of social distinction Jean Baudrillard Semiotic analysis Fred Hirsch Positional goods Mary Douglas Symbolic interactionism Abraham Maslow & Erich Fromm Humanistic psychology Edward Wilson & Richard Dawkins Biological analogies John Kenneth Galbraith Socio-political critique of the affluent society Juliet Schor Downshifting Duane Elgin Voluntary simplicity Adam Smith recognised the idea of voluntary exchanges: transactions between producers and consumers where both parties benefited (Smith, 1776). Smith suggested abandoning the assumption of the zero-sum game (i.e. a fixed amount of wealth) and talked about wealth creation, especially through labour and voluntary exchange. From Smith to present days From the time of Adam Smith through to the present day, organisations have been allowed (or even encouraged) to develop in line with neo-liberal traditions. These developments mean that “some corporations have gradually come to replace the most powerful institution in the traditional concept of citizenship” (Garriga and Mele, 2004). With Facebook, Amazon, Microsoft, etc., this is arguably more relevant today than ever before. It is, however, too simplistic to say that globalisation has generated only negative impacts. It can be Pagina 4 di 99 argued that material well-being has increased dramatically for many people as a result of globalisation. The stakeholder relationships There has been a shift from shareholder interests reigning supreme to a scenario where different stakeholders compete to influence the business agenda. In this scenario, shareholder interests are simply one of many. Businesses have to meet increasing public expectations and to address legal obligations around environmental and sustainability issues. The need to make profit can coincide or conflict with a company’s stated ethical aims and objectives. Sustainability should be viewed in terms of commitment within the wider context of stakeholder relationships. Improving relationship management requires understanding stakeholders who may have interpersonal (consumers) or person- to-firm (company) perspectives (Wong and Sohal, 2002; Sparks and Wagner, 2003). The stakeholder theory Freeman (1984) provided a language and framework for examining how companies relate to stakeholders. He defined “stakeholders” as groups or individuals who can influence (or be influenced by) the achievement of the organisation’s objective (Freeman, 1984). The effect can be beneficial or harmful. Some of the reasons for involving internal stakeholders, connected stakeholders and external stakeholders: Needing to understand the complexity of the cultural system; Ensuring management systems identify potential conflicts inherent to objectives; Resolving areas of conflict and counterbalancing existing patterns of interaction. Primary stakeholders are those without whom the company cannot survive, whereas secondary stakeholders represent those who influence or affect (or are influenced or affected by) the company but are not essential for survival. Pagina 5 di 99 The relationship between firm and society Scholars have been criticised for paying too little attention to the relationship between the firm and society, focusing too much on internal organisational processes, to the neglect of any analysis of the societal effects of the firm. Businesses that ignore this relationship are remiss in that ethics, social responsibility and sustainability in business have moved from the margins to the mainstream, and it can no longer be argued that the business of business is purely business (Emery, 2012). Corporate social responsibility (CSR) «Business is on one side and ethics is on the other , then we’ll have a gap that may come to be known as corporate social responsibility (CSR)». (Freeman, 2008) CSR is a complex concept: it draws on economics, politics, social integration and ethics. CSR is an eclectic field with loose boundaries, multiple memberships and different training/perspectives, and it is broad rather than focused and interdisciplinary (Carroll, 1994). Many companies address ethical and societal concerns by adopting CSR policies, which may benefit both the company and their stakeholders. Many studies have found positive correlations between improved profitability after adopting progressive CSR measures, such as employee relations, product innovation/safety, environmental stewardship and community relations. Carroll’s pyramid portraying levels of organisational CSR Fig 1.6 Carroll’s Pyramid portraying levels of organisational CSR Discretionary level—> Organisation goes beyond stakeholder views of everyday expected duty, what is just and fair, often involving philanthropy, and is an exemplary corporate citizen. Pagina 6 di 99 Ethical level —> Organisation views its responsibility to satisfy society’s expectations to go beyond basic legal requirements and do what is just and fair, and their practice reflects this. Focused on business ethics in a wide stakeholder context Legal level —> Organisation obeys all the laws and rules applied by the state. (E.g. tax, regulation, etc.) Concerned as with the law and legal rights, duties, rules and obligations are built Economic level—> Organisation produces products and services that society wants and sells them at a profit. Base starting point the economy and economic performance. This is seen as pivotal Corporate social irresponsibility (CSI) “Corporate social irresponsibility” (CSI) is a term better suited to describing the workings of the “old” shareholder business models, whereas CSR is more applicable to the workings of the nascent stakeholder business model. CSI extends Carroll’s work on definitional constructs by rexamining some of the theoretical frameworks that underpin, inform and guide CSR. Some organisations may be positioned towards CSR on some issues whilst closer to CSI on others Corporate social irresponsibility (CSI) 00_Slide 20. Profit is the sole purpose of business & should be achieved at any cost (bad view of business) Defining sustainability In companies, terms such “CSR” and “sustainability” are vague enough to gloss over differences among definitions, stakeholder interests and involvement while being powerful enough to draw the commitment of many different actors, including customers, other companies and (inter)national organisations. Pagina 7 di 99 Even well-established terms, such as the “environment”, are used in myriad ways in different texts and in some cases by the same author. Consumers often connect with broader environmental issues. Their environmental interaction is important, often emotional and often influences their purchasing decisions. Sustainability in the Brundtland Report The concept of sustainable development was introduced for the first time by the Brundtland Report (also known as Our Common Future), that is a document published in 1987 by the World Commission on Environment and Development. They define sustainability as: “development that meets the needs of the present without compromising the ability of future generations to meet their own needs”. (Brundtland Commission, 1987) The Triple Bottom Line (TBL) - Valtex Case Study In the late 1990s, the issue was brought to wider audiences when Elkington coined the phrase “Triple Bottom Line” (TBL) in the Harvard Business Review. Since TBL was coined, the sustainable business development concept has grown, often being referred to as people-planet- profit. In TBL, the traditional economic focus (i.e. the company’s bottom line) is complemented by adding new elements, namely societal and ecological responsibilities. Companies need to be able to position (or reposition) themselves within their markets in order to make effective decisions. All marketers must ask the following two questions: How do you rate your company in terms of sustainability? How do your customers rate your company in terms of sustainability? Pagina 8 di 99 Sustainability and business Many companies have extolled their green credentials via blogs, websites and social media. However, simply insisting they are green is no longer sufficient. Such claims will be challenged, and those who have engaged in greenwashing will suffer reputational damage and collateral damage to their brand. The risk of Greenwashing Greenwashing refers to the act of falsely presenting products, services, or policies as contributing to sustainable development, deceiving consumers into believing that they are making environmentally friendly choices. A case of charity washing The term “charity washing” refers to a practice adopted by some companies, organizations or celebrities which consists in using charitable activities or donations for beneficial purposes to divert attention from ethically questionable practices or to improve their public image, without an effective commitment to social or environmental causes. This phenomenon is similar to the more well-known “greenwashing”, where companies try to appear greener than they really are. In the context of charity washing, a company could, for example, donate a small portion of its profits to charities, widely promoting these actions through marketing campaigns, while simultaneously maintaining harmful labor or production practices, such as labor exploitation, pollution or unethical behavior. In 2022, the influencer Chiara Ferragni and Balocco launched a campaign for the sale of a branded Christmas pandoro. The initiative suggested that part of the proceeds would be donated to a pediatric cancer research hospital, the Regina Margherita in Pagina 9 di 99 Turin. But it later turned out that no direct contribution came from sales. The main elements of this case: 1. Lack of transparency: if it is not clearly communicated how much of the amount raised will actually be donated to the charity, the public can be led to believe that most or all of the proceeds go to support the cause. 2. Personal promotion vs actual cause support: if the initiative is used primarily as a marketing tool or to improve the individual’s public image, rather than to make a significant difference to the supported cause, this can be seen as an example of charity washing. 3. Mismatch between statements and actions: if a certain percentage of donation is promised and then not met, this raises questions of trust and integrity. 7 revolutions for more-sustainable future - Valtex case study Elkington argued that the standard business- as-usual approach was changing as a result of seven “revolutions” that were changing businesses’ behaviours and leading to a more- sustainable future. Clearly, the “revolutions” do not stand apart; rather, they can energise or constrain each other. Nor are they chronologically linear or constant across different cultures. The complex nature of the revolutions is exacerbated by the (mis)use of the word “sustainability” itself. 1. Markets —> Increased competition in more demanding, volatile markets making businesses more susceptible to the effects of economic crises 2. Values —> Worldwide shift in human / societal values making businesses susceptible to values-based crises when society finds them wanting 3. Transparency—> Increased transparency resulting from more open access to information, more authority of stakeholders to demand information, adoption of scrutiny and reporting systems Pagina 10 di 99 4. Life-cycle technology—> Acceptability and appraisal of products at point of sale loses significance and the focus rests on the whole of the supply chain from acquisition of raw materials, manufacture, transport and storage through to disposal or recycling after consumption 5. Partnerships—> Business partnerships will become more varied with campaigning groups entering relationships with business organisations once regarded as enemies 6. Time —> Sustainability issues lengthen time considerations making planning for sustainable business a matter of years, decades even generations 7. Corporate governance—> Evolving corporate governance to include the representation of all relevant stakeholders not just shareholders, keeping the corporate board focused on all aspects of the sustainable agenda. Sustainability Marketing (SM) definition The phrase “Sustainable Marketing” was coined in 1996, because of the inadequacy of green and/or ecological marketing. SM is the process of creating, communicating and delivering value to customers in such a way that both natural and human capital are preserved or enhanced throughout (Martin and Schouten, 2012). “Sustainable Marketing (SM) is principled and predicated on the foci of the triple bottom line. SM decisions should be ethically and ecologically sound, and companies should divert profits into people and planet foci to enable implementation. Sustainable business practices must be informed by continuous dialogues with all stakeholders. Ultimately, this is the only way to resolve the tensions between customer (and stakeholder) demands, long-term interests, companies’ requirements, society’s long-run interests and the need for environmental balance”. (Richardson, 2015) Some use the term “sustainability-driven marketing” to reflect the values of marketers who more strongly associate the Pagina 11 di 99 meaning of it with the process of sustainability as opposed to the process of sustaining anything. This raises the same problems as the increasingly outdated notion of a value proposition. Value (whether sustainable or other) cannot be “given” to consumers. They can co-create or take it, but companies cannot simply give it. Hence, the all-encompassing concept of SM is preferred, and now, more than ever before, SM encourages marketers to align their values with the increasingly ethical and/or green behaviour of consumers. Marketers must find out not only what consumers think but also what they value, which in turn will provide insights into the networks and communities of users, prospects, friends, colleagues and even families. Corporate values vs customers’ values One of the critical factors that determines failure or success is whether those leading large organisations can react to changes in the business environments (i.e. the internal environment, microenvironment and macroenvironment). Some companies seem to be vulnerable after a long period of continued success. This may result from internal inertia or risk aversion. This suggests that a meaningful two-way conversation with customers and stakeholders remains essential if a company is to survive and prosper, which central to being market oriented. Effective and continuing marketing research supported by relevant information systems is critical to success. For companies to prosper, they must make sense of the abundance of raw data. They must identify customers’ values. Companies should put most of their resources into value-building investments and activities, because marketers “ may raise sales in the short run but add less value than would actual improvements in the product’s quality, features or convenience. Enlightened marketing calls for building long-run consumer loyalty and relationships, by continually improving the value that consumers receive. By creating value for customers, the Pagina 12 di 99 company can capture value from consumers in return”. (Kotler et al., 2009) By creating value for customers, the company can capture value from consumers in return, or “co-create” value. The concept of value proposition (VP) Value is not a permanent state; rather, it can be created or destroyed. Companies should pose two linked but separate questions about value: Does the business have a value proposition that is genuinely distinctive from that of its competitors? Can it communicate that value proposition in (a) clear , concise and compelling fashion? The term “Value Proposition” is becoming increasingly contentious (Richardson et al., 2015). It justifies why a consumer should purchase a particular product or service – through “giving” more value to the customer and/or better solving a problem than other competing offerings. The Value Proposition approach is problematic because the instruments and processes may be unable to adequately capture the customers’ values and priorities. Co-creating value Co-creating value counters the idea of giving or proposing value, by suggesting that value is mutually created. This is a challenge for marketers because decisions may be linked and supported by common values. Alternatively, they may be unconnected and affected by the external (situational) environment. Consumers have values that they attach to sustainability criteria in their decision-making. These values can be functional, emotional, cognitive, social and/or conditional. Hence, we have to conclude that decision-making is far from simple. Pagina 13 di 99 Marketers should tailor their strategies towards a new approach which focuses on their relationship/interaction/co-operation with consumers. Vargo and Lusch (2004) reached a similar conclusion, recognizing consumers as co-creators of value rather than ‘targets’. The emergence of consumers as co-creators or seekers of value has stimulated much interest in marketing circles. Transactional —> the company give value Co-creation—> company collaborate with customers Value seeking—> company seek value from customers Pagina 14 di 99 The sustainable consumer Because marketing is about aligning brands with customer perceptions, it makes sense for the definition of a sustainable consumer to align with that of Sustainable Marketing (SM): “sustainable consumers’ values enable decision-making that complies with the tenets of the triple bottom line. Their decisions are guided by sustainable practices, socially and ecologically. In seeking value that chimes with the TBL approach, they recognise that the short-term sacrifice of paying more may be the only way to balance their wants and long- term interests with companies’ requirements, society’s long-term interests and the need for environmental balance”. Every time a consumer makes a decision, it has the potential to contribute to a more or less sustainable pattern of consumption. RECAP of the first lesson Definitions - Definitions of Marketing: - Management process: satisfying customer needs profitably (CIM, 2019). - Social and managerial process: creating/exchanging value (Kotler et al., 2005). - Main Elements: - Management Process: Strategic approach embedding marketing across the organization. - Employee Involvement: All employees influence customer perception. - Customer-Centric Approach: Opportunities for value-seeking and co-creation. - Challenges in Marketing: - Transition to dynamic co-creation models. - Risk of marketing myopia: tunnel vision limiting adaptability. Sustainable Marketing - Sustainability in Marketing: - Triple Bottom Line: Integrates People, Planet, and Profit. Pagina 15 di 99 - Sustainable Marketing SM: Aligning strategies with long-term ecological and societal value. - CSR: - Definition: Bridging ethics, economics, and societal integration. - Carroll's Pyramid: Ranges from economic to philanthropic responsibilities. - Challenges: - Greenwashing: Deceptive sustainability claims. - Emerging Trends: - Value Co-Creation: Customers as collaborators. - Ethical Consumption: Aligning choices with sustainable values. 01_marketing trends 1. Relationship marketing RM 2. Sustainable Entrepreneurship 3. Small Medium Enterprises SMEs 4. Digital Marketing in the sustainable age Relationship marketing (RM) Historically, marketers have focused on transactions. Ultimately, however, the SURVIVAL and SUCCESS of organisations depend on repeat purchases. Repeat purchases suggest the development of confidence and trust leading to a relationship between buyers and sellers Companies must balance (finite) resources when either acquiring new customers and/or retaining existing customers. The Scandinavians, have developed the notion of Relationship Marketing (RM) in a deliberate move away from transactional practices. Berry (1983) argued for the need to move beyond the one-off- sale transactional sales-oriented model of marketing (see Chapter 1) to the development of longer-term relationships between supplier and customer. Pagina 16 di 99 The Customer Relationship Pyramid Financial services companies, typically, use the value of a customer’s business or size of bank/savings account, size of shareholding to determine the level of service that they will provide. The highest value customers – typically representing the smallest proportion of clients - receive a highly personalised service. At the top of the pyramid there is a ”fewest clients with highest value”, and then there is a decreasing levels of relationships, at the bottom of the pyramid there is “largest number of clients with lowest value per capita” Customer Relationship Management & Relationship Marketing (example: Salesforce) There is a debate whether CRM is the same as RM or whether it refers to the adoption of technology to implement RM. Rababah et al. (2011) concluded that some saw CRM as a philosophy (akin to RM), while others simply saw it as a technology. With the advent of Big Data (data trawling, user-generated data, etc.) the picture has become less clear. Having a substantial database of prospects and clients is pointless if they do not value what is offered. Value resides with the customer only, which is why many companies fail despite having substantial client databases. Loyalty Loyalty is not just an attitude towards a product or service it also implies changing behaviour patterns – that is, the repeat(ed) purchase of products or services (Dick and Basu, 1994). The fundamental idea, beyond segmenting the actual or potential customer base, is to remind marketers that they should try to move customers up the ladder. Pagina 17 di 99 There are problems, however: It is not clear how to move customers up one or more classification. Suppliers cannot have the same depth of relationship with each customer. It is not possible to push every customer up the ladder. It doesn’t specify how to identify suspects, prospects or lurkers before they have engaged. Different marketing approaches will be needed for the different categories. 01_slide8: Loyalty ladders Loyalty versus Satisfaction Satisfaction is “the emotional state that occurs as a result of customers’ interactions with the firm over time” (Verhoef, 2003). Genuine satisfaction can come only after repeated experiences (purchases); however, there is still no clear link to creating loyalty. Loyalty starts with customer acquisition – that is, converting suspects to prospects to customers. Marketers must sell the benefits and not simply list the features. Customers want to know how their problems can be solved Loyalty will result from implementing this customer-centric approach if meaningfully supported by senior management. Listening Sustainability is built on ongoing, continuous dialogue with stakeholders. This dialogue is an essential part of progressive, customer- centric sustainable marketing SM. Marketers should be holding Pagina 18 di 99 conversations, providing relevant content, posing questions on social media and creating discussions facilitated by hashtags. Social media and communities provide ideal opportunities to “listen” to communities. Reading and giving consideration to online communities should improve the co-creation of value that consumers seek through their decision-making. Who are your customers? Make sure you have knowledge of who your customers are, where they go online and where they post. Who are the creators and critics? Who are the more vocal customers? Who has influence and impact? Start monitoring key areas – brands, products and service encounters. Start small, focus on key areas and begin to grow your listening and monitoring as you become more confident Benefits of RM (Relationship Marketing) The implementation of RM should see increased trust and more equitable treatment of stakeholders Trust is central to the idea of loyalty and is built on reliability, consistency, transparency, commitment being treated fairly (with equity) Loyal customers may be less sensitive to price levels than those who are first-time customers. Harris and Goode (2004) recognised that while perceived value, satisfaction and service quality are important requirements in relationships, trust is the central factor without which loyalty cannot be assumed. Pagina 19 di 99 Sustainable Entrepreneurship, Values, norms and sustainable entrepreneurs Entrepreneurs must quickly align their values with changing consumer perceptions and engagement. They must also engage with a diverse range of stakeholders e.g. suppliers, consumers, facilitators and other stakeholders in the micro-environment. Entrepreneurial perceptions of value are not limited to financial profit or economic wealth creation, but reflect personal and wider generalised value systems. The entrepreneurial process is therefore embedded in the social context. As social contexts, values and rules change, so do the entrepreneurial opportunities (Tilley & Young, 2009). Sustainable entrepreneurs in the community Communities are traditionally viewed as a public (interested but no engagement), however they can evolve into ‘engaged’ stakeholders. The notion of ‘community’ can be used to foster good relations or a supportive atmosphere. A benefit of this approach is that it improves involvement. Involved stakeholders are often committed to supporting the community beyond the entrepreneurial activity itself. These entrepreneurs often highlight the importance of welfare and quality of life in their locality (Tilley & Young, 2009). Community engagement varies as they are heterogeneous and their needs vary. Some communities overlap and evolve which can provide opportunities for entrepreneurs who may seek to develop interdependence with differing sectors of the community (Vestrum & Rasmussen, 2013) Pagina 20 di 99 Environmental resilience (Candiani e Florim) Sustainable Entrepreneurs seek to attract mainstream consumers, which may explain why so many are just focused on niche, green consumers. The notion of resilience is key for many sustainable entrepreneurs. Often sustainability is seen to represent the regenerative use of resources. Indeed many studies have found that individuals have a connectedness with the broader environment. Their environmental interaction is features emotional commitments, which can affect their patronage decisions. When discussing sustainability, stakeholders are often confused by the vastness of topics e.g. recycling, energy saving, water saving or being environmentally friendly. Digital marketing in the sustainable age The advance of digital technologies presents challenges but also opportunities to operate in a more sustainable fashion. The following are some important current and future digital trends: Mobile marketing; —> sms and notifications The Internet of Things (IoT); —> intelligent refrigerators Digital Out of Home (OoH);—> digital advertising panels powered by solar energy Virtual and augmented reality; Personalisation and customisation; —> AI that suggest the cosmetics for your specific skin texture Digital marketing research. —> using data found on internet to make researches Mobile Over half of the world’s Internet access uses the mobile platform. Pagina 21 di 99  Marketers can now send messages, rather than wait for searches, in store via Beacons, Bluetooth LE and NFC tags. The IoT is powered by sensors integrated into devices, whether in the home, the organisation or elsewhere. These connected, communicating devices will increasingly generate data for marketers to analyse Such connected devices will collect data about their users, their habits, their behaviour and actions, making homes, workplaces, leisure time and travel more connected. Internet of Things The IoT is powered by sensors integrated into devices, whether in the home, the organisation or elsewhere. These connected, communicating devices will increasingly generate data for marketers to analyse Such connected devices will collect data about their users, their habits, their behaviour and actions, making homes, workplaces, leisure time and travel more connected. Virtual and Augmented reality Virtual Reality (VR) is increasingly used to deliver interactive brand experiences. Augmented Reality (AR) has the potential to deliver targeted messages to mobile consumers, via specific devices. Information such as special offers, directions, product reviews and more could be presented as layers, augmented onto the reality seen by the wearer. Personalisation and customisation Suppliers will increasingly seek to personalise their full and mobile websites to improve the user experience. (See intesa san paolo with its mobile app) Pagina 22 di 99  Google enables the creation of a personalised homepage that contains a Google search box at the top and the user’s choice of gadgets Amazon User Experience modified through AB testing SMEs & Micro-Enterprises They are major providers of employment and often provide the platform for new ideas (think technology spinoffs from universities). They are vital for the economy and will play an increasingly important role in future. They regard marketing as something more relevant to large organisations. Furthermore, the financial restrictions faced by many SMEs, coupled with the time demands of the owner/managers, undoubtedly contribute to the lack of coordinated marketing. It is, however, impossible to apply a single rule to all SMEs, because they are simply too diverse. (Heterogeneous) Many exhibit entrepreneurial behavioural patterns while having little structure, whereas others are long-standing and well established, with structures comparable to larger companies Large and small firms play differing roles and it is largely agreed that SMEs (hereafter including micro- enterprises) are more flexible and can react quicker to changes in the marketplace than larger competitors. SMEs have characteristics which dictate their approach to marketing namely: the inherent characteristics and behaviours of the owner/manager size limitations and the stage of development limited resources (such as finance, time, marketing knowledge); lack of specialist expertise (owners tend to be generalists) limited impact in the market place SMEs and sustainability SMEs (including micro-enterprises) have significant environmental impacts Pagina 23 di 99  They tend to focus on, rather than engaging with stakeholders in the supply chain (Moore and Manring,2009) their societal and environmental behaviours internally There are some barriers to SMEs adopting sustainability: Lacking awareness of sources of assistance Perceiving the necessary skill problems as barriers; Believing their company size is too small to have a meaningful affect; Thinking “costly” sustainable actions are unaffordable (Danone case) Believing it incompatible with existing in-house systems. Sustainable business models, Overview of Sustainable Business Models Definition: Sustainable business models integrate economic, environmental, and social dimensions to create value while reducing negative impacts. These models aim to balance profitability with responsibility, ensuring long-term benefits for all stakeholders. Key trend: The shift from traditional linear models (extract- produce-consume-dispose) to circular systems (reduce-reuse- Pagina 24 di 99 recycle) represents a fundamental change. Technologies like digital platforms and green innovations play a pivotal role in this transition. The Digital Economy: Redefining Business Models The digital economy encompasses the conversion of information into digital form and the development of technologies to manage and economically exploit digital resources. It includes interconnected systems like the internet, cloud technologies, and IoT. Key components: Internet and communication networks, cloud computing, IoT, advanced automation, big data analytics, and mobile applications form the backbone of the digital economy. Impact on business models: Companies are transforming their organizational structures, operational processes, and competitive dynamics. Digital platforms enable innovative ways to deliver products and services, enhancing flexibility and efficiency. Examples: E-commerce platforms: Amazon and Alibaba leverage big data analytics and cloud computing to optimize supply chain and consumer interactions. IoT applications: Smart home devices like Nest redefine consumer experience. The Sharing Economy: A Paradigm Shift Definition: The Sharing economy leverages digital platforms to aggregate users with similar needs, creating communities that share resources and services. This model emphasizes access over ownership, reducing waste and optimizing resource use. Key advantages: Shared use of resources leads to environmental benefits (reduced waste), cost savings for individuals, and enhanced social interactions within communities. Pagina 25 di 99  Behavioral shift: Jeremy Rifkin’s concept highlights the shift from owning goods to accessing them when needed. This behavioral change underpins platforms like Airbnb, where users rent accommodations rather than owning them. Examples: BlaBlaCar: Enables carpooling, optimizing vehicle use and reducing travel costs. Airbnb: Provides cost-effective and flexible accommodation options, creating opportunities for peer-to-peer interactions. The Green Economy: Aligning Business with Ecology Definition: The Green economy promotes the production of goods and services that enhance environmental conditions while generating economic value. It responds to growing environmental challenges and consumer demand for sustainable solutions. (Doesn’t mention stakeholders like the Sustainable business model definition) Driving forces: Environmental urgency and heightened awareness drive businesses and governments toward green solutions. Innovations like energy-efficient technologies and waste reduction strategies are central to this shift. Innovations: Models like Energy Saving Companies (ESCOs) align profits with energy conservation. Green supply chain management optimizes production and logistics to minimize environmental impact. Example: Extended producer responsibility: Encourages recycling and reuse by making manufacturers accountable for a product’s end- of-life impact. Circular Business Models: Closing the Loop —> Carlsberg Italia Definition: Circular business models focus on reducing waste and maximizing resource efficiency. Pagina 26 di 99  Key principles include cradle-to-cradle design, where products are engineered for durability and recyclability, and industrial symbiosis, enabling resource sharing among businesses. Key pillars: Technology: Enhances energy efficiency, recycling processes, and sustainable material use. Social: Encourages shared resource use and educates consumers on sustainability practices. Organization: Promotes large-scale adoption of circular practices through open innovation and collaboration. Types: Circular Supplies: Use renewable and biodegradable materials to reduce waste. Resource Recovery: Recycle and repurpose products at end- of-life. Product Life Extension: Extend product usability through repairs and upgrades. Sharing Platforms: Optimize resource use via access-based services. Product-as-a-Service: Shift from selling goods to providing services. Reuse and Recycling in Circular Business Models Reuse: Extending the life of products by repurposing or refurbishing them for further use. Examples include refurbished electronics and second-hand clothing platforms. Recycling: Transforming waste into raw materials for new production. Innovations like advanced recycling techniques (chemical recycling) play a critical role in reducing environmental impact. Examples: Patagonia: Incorporates recycled materials into their product lines, combining environmental sustainability with consumer appeal. Pagina 27 di 99  Electronic waste programs: Dell’s initiatives in recycling old devices demonstrate circularity. Industrial Symbiosis: Collaborative Sustainability Definition: Industrial symbiosis involves the sharing of resources, materials, and by-products among different businesses to maximize resource efficiency and minimize waste. Key benefits: Reduced waste and costs for participating industries. Enhanced resource efficiency through interconnected supply chains. Examples: Favini: Local industries exchange resources. Examples of Circularity in Action Circular Supplies: Use of renewable and biodegradable materials to reduce waste and dependence on non-renewable resources. Critical in industries with volatile raw material prices. Example: Dell uses recycled plastics in manufacturing laptops, reducing reliance on virgin materials. Resource Recovery: Focus on recycling and repurposing products at the end of their lifecycle. Cradle-to-cradle design enables effective resource reuse. Example: IKEA’s furniture take-back programs facilitate recycling and reuse of materials, integrating circularity into the supply chain. Sharing Platforms: Platforms that prioritize access over ownership, encouraging optimal resource use. Suitable for products that are durable but used infrequently. Example: BlaBlaCar’s carpooling platform optimizes vehicle use, reducing environmental impact. Pagina 28 di 99  Product Life Extension: Extends the usability of products through maintenance, repair, and upgrades, reducing the need for new production. Example: Caterpillar’s refurbishment programs for heavy equipment extend product lifecycle and reduce waste. Modular designs facilitate easy upgrading and repurposing of durable goods. Product-as-a-Service: Shifts the traditional ownership model to a service-oriented approach, where consumers pay for the use or performance of a product rather than owning it. This model encourages manufacturers to maintain and extend product lifespans. Example: Philips provides lighting as a service, offering businesses efficient lighting systems without ownership, while maintaining and upgrading equipment over time. Comparative Analysis! Digital Economy vs. Sharing Economy: The digital economy focuses on—> technology-driven efficiency, while the sharing economy emphasizes—> community resource use. Green Economy vs. Circular Economy: The Green economy—> mitigates environmental impacts, while the Circular economy—> creates closed-loop systems to eliminate waste. Circular economy and sustainability Sustainable Marketing Planning Sustainability into organisations Marketers must reflect on the changes needed to fully incorporate sustainability and customer centricity into their organisations by considering: Attitudes to relationships with customers; Pagina 29 di 99  The balance between “our” needs and “their” wants; new customer satisfaction; focus on the long-term objective rather than shorter-term objectives; rethinking the value chain; new internal corporate cultures; the only costant is change (Richardson, 2020). Objectives, strategies and tactics There are three common terms that marketers must understand when talking about sustainability: Objectives / Strategies / Tactics Objectives and strategies can be organisational or functional (e.g. marketing, HR, production etc.), whereas tactics are always a matter for the functions (how to apply the strategies). A range of corporate objectives and strategies can be directly affected by marketing: Supporting major change Communicating executive and management messages Communication the business mission/vision/values Raising awareness of business issues and priorities Raising and maintaining the credibility of the management Employee motivation Improving the communications skills of management. The POST model The company’s purpose statement (aka mission) is based on corporate objectives. The functions within companies (e.g. marketing, sales, HR, accounting, production, logistics, etc.) will have their own functional objectives. In the vast majority of cases, functional objectives should support the corporate objectives. Pagina 30 di 99 3 key corporate strategies (in which to apply sustainability) Stability, expansion or concentration. 1. A stability strategy seeks to maintain the status quo and make incremental improvements. This approach is good for low-growth, stable markets where opportunities are deemed to be minimal. 2. Expansion strategies involve a degree of business redefinition. Managers seek to add services and products in order to satisfy their economic goals. 3. Concentration strategies are based on low risk and seek to exploit existing resources. This often happens when the company has a relatively small market share and does not need to take risks to grow. Planning frameworks All 3 corporate strategies need planning. Good planning will improve the understanding of why the change is necessary and how implementation will occur. Planning encourages marketers to: Define the priorities – ensure that time is not wasted on unnecessary activities; Avoid unplanned activities – justify the need to avoid unnecessary activities; Be cohesive – in short-, medium- and long-term activities; Reflect – on activities that will influence achieving objectives; Be cost-effective; Pagina 31 di 99  Engage stakeholder groups – identifying their needs and potential to contribute; Control the agenda – work proactively to identify issues and corrective actions. Planning Sustainable marketing plan adopt a long-term view. Planning horizons often feature durations of years, not months: Short term plan 1–3 years Medium term plan 3–5 years Long term plan 5+ years A successful marketing plan will consider the problems that might occur and make appropriate preparations The 4 steps of a sustainable marketing plan 1. Goal setting: Mission (or vision) statement, corporate objectives & gap analysis 2. Situation review: The Internal (Micro) and External (Macro) environments 3. Strategy formulation: Strategy (and objectives) definition and tactical implementation 4. Resource allocation: Monitoring, evaluation and control Goal setting/Purpose statements A mission statement generally expresses a company’s overall purpose. Few lines or comprehensive statements concerning wide-ranging factors such as why the company exists, how it operates. Often (most importantly) purpose statements define the customers and the benefits offered. Accelerating the World’s Transition to Sustainable Pagina 32 di 99 Energy https://www.youtube.com/watch?v=ggbnzRY9z8w "To be one of the world’s leading producers and providers of entertainment and information, using its portfolio of brands to differentiate its content, services and consumer products.” Mission statements should fit the values and expectations of key stakeholders. A worry for managers is that companies that lack clarity in what they seek to achieve often have employees who lack direction. The core elements of a mission statement are: Raison d’être, essence or purpose; Long-term views on strategy; Area of company involvement in products or services; Core competences and key strengths; Benefits to customers; Policies, standards and attitudes, such as CSR; Value systems, such as sustainability. A common way to start the planning process is to carry out a gap analysis to illustrate the brand’s current position and extrapolate (or forecast) the target point after a set period of time. Gaps can be either operational or strategic: Operational gaps can be filled by methods such as improving organisational productivity, reducing costs or increasing prices. Strategic gaps can be addressed by finding new user groups, entering new segments, geographical expansion, new product development and/or diversification. When addressing strategic gaps, the company’s attitude to risk must be considered. Situation review Marketers have to continually monitor the factors that are operating externally and internally, to ensure organisations Pagina 33 di 99 change with the times. These internal and external factors constitute the “Marketing Environments” The marketing environment Factors of marketing environments External factors are beyond the control of the organisation; they are in the macro-environment or situational environment. With macro-analysis, marketers always look to identify future trends. (Threats and opportunities) Internal factors are specific to particular industries or organisations where an organisation has control. These factors are in the internal environments and micro-environments and feature recent and current strengths and weaknesses among the company, target segments, marketplace. (Streghts and weeknesses) Pagina 34 di 99 Marketing audits Environmental scanning can be done with a Marketing Audit, which should be: Comprehensive Apolitical Structured Timely CAST is a useful mnemonic as it provides a degree of structure however it leaves a number of matters to be judged e.g. how comprehensive? what degree of structure? is an apolitical audit achievable without external input and the timing of audits? Each needs careful consideration. Internal environment analysis tools A wide range of internal and micro tools or frameworks is available. No one tool is sophisticated enough to capture all the factors. Marketers should select the best 3-4 tools and create a blend that really suits the circumstances. So it’s useful to marketers to tailor specific 3-4 tools given the circumstances Internal analysis tools/McKinsey 7S Framework McKinsey 7S framework helps marketers to take a holistic view of the organisation and reflect on how each factor may be affected. It can also be used as a framework in mergers and acquisitions, where companies have a structure to make comparisons. It was one of the earlier frameworks seeking to use academic research to inform managerial practice. Its aim was to act as a change catalyst by promoting organisational change and shaping new strategies Waterman et al. (1980) concluded that businesses that have these seven elements aligned and mutually reinforced are more Pagina 35 di 99 likely to achieve competitive advantage. Internal analysis tools/McKinsey 7S Framework Internal analysis tools/Core Competence framework - “Core Competence” In 1990 Prahalad and Hamel introduced the notion of the “Core Competence” of organisations. They suggested a company’s competitiveness derives from its core competencies and core products (the tangible results of core competencies). Core competence refers to an organisation’s (collective) knowledge, skills and attitude. Pagina 36 di 99 Core competencies involve promoting behavioural changes in order to create value for customers. Value creating behaviours should become the foundation for the company. Core competencies should be chosen with care. They should meet the following criteria: provide potential access to a wide variety of markets create value for customers and prospects differentiate the organisation from competitors reflect the values of the organisation be resilient i.e. they should not diminish with time. BCG Matrix (market share →/ market growth↑) Pagina 37 di 99 Internal analysis tools/Directional Policy Matrix (DPM) Directional Policy Matrix has two use: 1. assessing a product’s position in a company’s portfolio 2. it can be used as a positioning tool to map key competitors. Market attractiveness and business strengths are Critical Success Factors (CSFs). Directional Policy Matrix Criteria Pagina 38 di 99 Internal analysis tools/Porter’s value chain analysis In 1985, Michael Porter introduced a generic value chain model that comprised a sequence of primary value-creating activities This analysis describes how the primary activities are linked to support activities. Market fragmentation, globalisation, hyper-competition, oversupply, regulation and disruption are among the watchwords of marketers in the 21st century. Porter’s models rely on being able to know an organisation or being able to predict behavioural outcomes of third parties. Pagina 39 di 99 Internal analysis tools/5 forces model In 1979 Professor Michael Porter introduced the 5 ‘Forces’ model to be evaluated when assessing competitive (i.e. micro) environments (Porter, 1979). It is widely used by marketers when evaluating an organisation’s industry structure. 5F assumes a corporate strategy should meet the opportunities and threats in the organization’s micro- environment. Competitive strategy should be based on an understanding of industry structures and the way they change. CASE STUDY CARLSBERG ITALIA: ONE STEP CLOSER TO CLOSING THE LOOP WITH THE DRAUGHTMASTER SYSTEM —> Circular Economy models de nitions, key principles Pagina 40 di 99 fi 03_Circular economy and sustainability, Sustainable Marketing Planning The macro-environment Macro-environment is composed of external forces (e.g., politics, economics, socio-cultural factors). Macro-environment is changeable and can strongly affect companies. Macro forces do not operate in isolation. They can constrain or energise each other. The identification of these macro forces (and trends in general) is the starting point of the analysis of the macro-environment Too many managers/firms do not spend enough time looking to the future. Companies: stay within their comfort-zones by focusing on internal rather than external issues; often fail to consult with colleagues in order to build consensus; Pagina 41 di 99  tend to look 2-3 years into the future rather than 10-20 years; adopt the simple approach of predicting the future by reflecting on current situational trends that (they hope) will continue into the future. Marketers do not have this luxury. They must consider short, medium and long-terms changes of the macro-environment. Marketers should seek to understand, better than their competitors, the macro-environmental trends (and disruptions) that may transform their sectors and create new business opportunities. A trend is a phenomenon that (over time) maintains the status quo, increases or decreases. Once identified, it is necessary to recognise whether the trend is gathering momentum. Furthermore, marketers must establish whether the trend is neutral or have a positive or negative affect on achieving objectives. A range of frameworks can support the assessment of future external trends, such as the PEST analysis. External analysis/PEST Economics Economics covers factors such as national growth/decline, interest rates, exchange rates, inflation rate, balance of trade, wage rates, minimum wage, working hours, unemployment Combinations of these factors can have a substantial impact on consumer confidence Pagina 42 di 99 Politics There are three levels of politics: local, national international. European Union, for example, may introduce a new environmental law to cover all member states Companies seeking to physically expand will need planning permission, which is provided through local government facilities. Governments have a direct impact on marketers’ activities and intentions. Change, or potential change in governments (after or in the run- up to a general election), brings uncertainty, a change in emphasis or, on occasion, a dramatic reversal in policy. Many governments are accused of “greenwashing”, because they claim to be green and yet reduce support for renewable micro-generators such as solar panels (Ethical Consumer, 2018). Pagina 43 di 99 Legal & GDPR (information) Information provides the basis of effective decision-making, and therefore, its availability and content accuracy are issues for managers and leaders alike. Technological change has enabled changes in communication and information generation; for example, Web 2.0 has created an explosion of accessibility to information and for an increasingly wider audience. A case where technology and legal meet is the GDPR legislation introduced in 2018. GDPR The GDPR set out seven key principles: 1 Lawfulness, fairness and transparency; 2 Purpose limitation; 3 Data minimisation; 4 Accuracy; 5 Storage limitation; 6 Integrity and confidentiality (security) 7 Accountability. Sociocultural A common mistake made by those undertaking marketing audits is to confuse “socio-cultural” with “social” Pagina 44 di 99 Sociocultural includes: cultural norms and expectations, health consciousness, demographics (e.g. population growth rate, age distribution, family size, life cycle, divorce rates, etc.), career attitudes, safety, attitudes to global warming, lifestyle choices Marketers must remember that such trends transcend national borders. Because of film, broadcast media and, of course, the Internet, attitudes, fashions are continually evolving Examples: Another positive example would be the change of attitude to drink driving How the credit card industry can survive (in its current form) as users will increasingly use their mobiles as their preferred choice of payment device. Technology Marketing has at times struggled to keep up with the pace of technological change. Examples The next generation of 5G phones will have more functionality. Video-sharing sites will increase dramatically, similar to the picture-sharing sites such as Pinterest, which are still popular. 3D printing will become more significant in the future as the technology becomes more accessible and affordable Environment For the purposes of macro-analysis, the term “environment” refers to the broader, ecological environment. Pagina 45 di 99  As consumers take a greater interest in the environment, driven by the media and better education, the need for marketers to consider the environment in a friendly and sustainable manner is important. From a pool of equal goods, consumers have to choose one them, they choose the green one A common framework? There may be some debate regarding where Macro factors reside in a framework. Not all Macro factors are of equal weight. Marketers must assess the organisation’s strengths and weaknesses before implementing any marketing-related changes The tools are not sacrosanct and can (or even should) be adapted. A sum up of the Situation Review: The SWOT analysis A SWOT summary juxtaposes the internal analysis (micro- analysis) in the form of Strengths and Weaknesses with macro Opportunities and Threats (macro-analysis). Strengths and Weaknesses reflect the organisation over recent years and up to the current time. They provide meaningful information that alludes to the organisational core competences. Opportunities and Threats represent the marketer’s perception of the issues that may affect the company over a given planning horizon. It should be detailed and include trends rather than snapshots. Pagina 46 di 99 The SWOT analysis The SWOT can inform: strategic planning (e.g. acquisition opportunities, entering new markets, investment opportunities, etc.) or marketing planning (e.g. product development and launches, research, etc.) To be effective, it needs to be regularly undertaken so that organisations may spot trends before others, thus providing competitive advantage. Always remember that SWOT summaries are snapshots taken at one specific time. SWOT summary is that it does not offer solutions or (specifically) marketing objectives. Pagina 47 di 99 Factors influencing the SWOT The generation of (sustainable) marketing objectives The final part of the “review” section is the production of the SWOT summary. The analysis starts by judging where the Micro (Strenghts & Weaknesses) fit in with the Macro (Opportunities & Threats) in such a way that marketers can create marketing objectives and strategies. A SWOT analysis does not provide answers but rather informs the creation of objectives and strategies. Identifying “key” objectives provides a platform for achievable marketing goals; they are most effective if they are few in number. For example, generic areas for marketing objectives may include raising a brand’s profile, shaping the opinions of key stakeholders or increasing the market share. Pagina 48 di 99 SMART sustainable objectives Objectives of a sustainable marketing plan should be SMART: Specific – Avoid being either too vague or too tightly focused. Measurable – Ensure objectives can be measured and comparable with previous results. This raises the credibility of marketing objectives in other functions. Achievable – Do not set unachievable targets (aka a wishlist). Realistic – Will the objective deliver the required changes? Timely (or targeted) – Are the resources available to achieve the objectives in the timescale? Is the objective targeting the appropriate segment? The strategic decisions: STP processes After conducting the Situation Review and defining the objectives of the sustainable marketing plan, it is necessary to focus on the strategy. Companies must conduct Segmentation, Targeting and Positioning (STP) processes to achieve their marketing objectives. Segmenting —> Targeting —> Positioning Segmentation and Targeting Which customers to serve? To answer this question it is necessary to carry out a segmentation of the market, which is useful and necessary to divide the market into segments (or clusters). Segments are portions to be evaluated and analyzed to decide which is the interesting target segment (Targeting) for the company. Market segmentation divides buyers into smaller, more manageable groups based on shared characteristics, enabling tailored product offerings and marketing strategies. Pagina 49 di 99 Targeting involves evaluating and selecting the most attractive segments to focus on, ensuring efficient resource allocation and higher profitability. Segmentation Market cannot be assumed to be all the same: each of us is looking for something different, and for this reason it is necessary to distinguish different segments of consumers in the market. We will have in the market different segments with more or less similar consumers; and segments that are very different from each other based on the chosen criteria. Segmentation is therefore the division of the market into very distinct groups of consumers based on their needs, purchasing behaviour, geographical location, etc. The segmentation steps In the segmentation process the company must: 1. define the basis of segmentation; 2. identify the market segments; 3. describe the profiles of the segments; 4. evaluate the attractiveness of each segment: based on the company offering and on the attributes most appreciated by the different segments, companies measure how attractive each segment is (this measurement does not necessarily mean the same as that of the competitors, as it must be carried out based on company characteristics); 5. select the most interesting segment (or Targeting) on which to calibrate the marketing, sales, pricing, strategies, etc. Segmentation Segmentation is important; however, some marketers insist on reducing everything to data sets typically, 90% of new FMCG (Fast-Moving Consumer Goods) products fail within two years. Pagina 50 di 99  Surely a scientific approach (to segmentation) would be able to address this. consumers are often emotional and irrational when buying goods Many marketers use behavioural segmentation to consider attitudes, lifestyle choices and motivations Ultimately, to meet the needs, desires and expectations of customers, marketers need to map how and where value is created: does it reside in the customers, or in the co-creation of a service? Two types of segmentation: - Descriptive segmentation: Based on observable factors like demographics, geography, and behavior. - Motivational segmentation: Based on deeper factors like attitudes, values, and expected benefits The segmentation criteria Geographical Divides markets into geographic units (nations, states, cities, neighborhoods). Companies may focus on specific areas or adapt their offerings to different locations. Examples of success: - Nike’s grassroots marketing initiatives (sponsoring school sports teams, hosting courses, providing tailored products). Pagina 51 di 99 - Citibank adapts banking services to neighborhood demographics. - Retailers like Starbucks use local marketing to cater to regional demands. Demographic Divides markets based on variables like age, gender, income, profession, education, ethnicity, and nationality. Demographics are commonly used due to their close link to consumer needs and ease of measurement. Age and life cycle: o Needs and demands vary by age. o Example: Pampers targets different life stages (prenatal, newborn, toddler, preschool). o Companies must avoid stereotypes (e.g., not all elderly are frail; some are active and adventurous). Gender: o Gender influences shopping behavior and decision-making. o Example: Men focus on goals and information, while women often shop holistically and consider emotional connections to products. o Increasing attention to female consumers in traditionally male- dominated markets like automotive. Income: o Often used for targeting affluent consumers with luxury products and services. o Examples: High-end financial services, travel experiences, and premium cosmetics Segmentation: a customer-centric approach Customer-centric approach is fundamental in the segmentation process. A good company is not interested in all the market segments and considers a specific group of customers. Pagina 52 di 99 Segmentation helps to highlight differences between market segments and to decide which varieties to turn to and which varieties to not include in the marketing strategy. Exception: some companies (such as food companies) engage in intermediate segmentation. Segmentation: examples Practical Examples: Nike: Used local marketing strategies to engage communities through sports sponsorships and expert courses. Pampers: Detailed segmentation by children’s age to meet specific parental needs. Automotive Industry: Adapted design and marketing strategies to meet gender-specific preferences: o Women prioritize safety and environmental impact over exterior design. o Men often emphasize performance and utility. Starbucks: Customized marketing efforts to fit regional and neighborhood preferences. This strategy ensures that companies deliver value to the right customers while differentiating themselves from competitors, leading to a stronger market presence and consumer loyalty Segmentation benefits Benefits of segmentation: understanding the distribution of customers in the market; selection of the target markets which the company intends to address; reduction of the complexity of the market demand. Segmentation failures: Harley Davidson perfume The product was not perceived in its added value by the customer (motorcyclist). Harley Davidson’s promise of Pagina 53 di 99 value has not been understood by customers. Targeting The task of segmentation is to identify the people or companies to approach. Targeting simply refers to the intended means of communicating the benefits on offer so that the customer can take value. Market segmentation identifies opportunities in different consumer groups. Companies evaluate segments based on: o Size, value, and growth potential. o Structural and competitive attractiveness. o Alignment with company objectives and resources Size and Growth: o Larger, high-growth segments aren’t always ideal for all companies.!!!!!! o Smaller companies might prefer smaller, less competitive segments that are more profitable for their scale. Structural Attractiveness: o Segments with many competitors or substitutes are less attractive. o Buyer and supplier bargaining power can reduce profitability. Company Objectives and Resources: o Companies should only enter segments that align with their strategic goals and capabilities. o Example: BMW avoids the economy car segment despite its growth potential, as it doesn’t align with its luxury brand strategy Targeting simply refers to the intended means of communicating the benefits on offer so that the customer can take value. There are four traditional modes of targeting: 1. Undifferentiated 2. Differentiated Pagina 54 di 99 1. Concentrated 2. Focused or Micromarketing 1. Undifferentiated Marketing: One Size Fits All Targets the entire market with a single offer. Focuses on common needs across all consumers. Advantages: Simple and cost-effective. Suitable for uniform products (e.g., steel, raw materials). Disadvantages: Difficult to compete with segmented strategies. Limited appeal in diverse markets. 2. Differentiated Marketing: Tailored Strategies Targets multiple segments with specific products and marketing plans. Advantages: Increases sales and strengthens market position. Builds brand loyalty in different segments. Disadvantages: Higher costs for production, marketing, and distribution. Requires detailed market research and resource allocation. 3. Concentrated Marketing: Focus on the Few Focuses on one or a few small segments (niches). Advantages: Strong market position in chosen niches. Highly tailored products and marketing strategies. Ideal for smaller companies or luxury brands. Pagina 55 di 99 Disadvantages: High risk due to dependence on specific segments. Vulnerable to competition or market crises. 4. Micromarketing: Customization at its Best Customizes products and marketing for: Local groups (local marketing). Individual customers (individual marketing). Local Marketing: Tailored offers for cities, neighborhoods, or speci c stores. Supported by location-based apps and mobile promotions. Individual Marketing: Mass customization using technology. Example: Personalized shoes, furniture, or digital services. What Influences the Choice of Targeting Strategy? Company Resources: Limited resources favor niche marketing. —> Concentrated marketing if the company has limited resources (few money, few segments) Product Homogeneity: Uniform products suit undifferentiated marketing.—> if a company sells salt, can do an undifferentiated marketing to target all the audience Product Life Cycle: Early stages: Undifferentiated/concentrated marketing. Maturity: Differentiated marketing. Market Variability: Diverse preferences require differentiation. Competitor Strategies: Competitor focus impacts strategy effectiveness. Pagina 56 di 99 fi MARKETING RESEARCH Sustainable marketing research Three common areas of marketing research involve: 1. Product- focuses on the features or desirability of the product. Often used in the process of New Product, Development or resolving problems 2. Distribution- to better understand where products ought to be sold and (more importantly), how convenient is it for customers to purchase the goods. Sustainable marketers should be undertaking 540-degree feedback routinely. 3. Markets (arguably the most important)- Marketers often struggle when seeking credible information about the competition Pagina 57 di 99 Data Collection There are different ‘methods’ or tools used to collect primary data. When choosing the data collection ‘method’ the first consideration is whether ‘quant’ or ‘qual’ data is needed. The choice (or perhaps the use of both) is governed by the RQ and ROs. The collection of primary data may need some skills depending on the method used. ‘Quant’ research often uses questionnaires to collect data from a large number of people. Key issues to consider are the time, money or resources needed to question the larger population. Ideally, researchers should question a representative sample of the target audience. If not representative the number of responses must be big enough to carry our useful statistical analysis. Circular economy and sustainability Sustainable Marketing Planning Mini-test to see if I learned something on the previous lesson up to slide number 11 Pagina 58 di 99 Segmentation Market segmentation is the process of dividing a broader market into smaller, more manageable groups of consumers who share common characteristics, needs, or behaviors. It’s essential for companies to recognize that not all customers have the same needs or purchasing behaviors, so segmentation helps businesses tailor their marketing efforts for specific groups. Why Segmentation is Important Customer-Centric Approach: Segmentation enables a customer-focused marketing strategy, where companies can better meet the specific needs of each group Better Resource Allocation: By identifying distinct segments, businesses can allocate resources more efficiently to the segments that align with their capabilities. Competitive Advantage: Understanding and catering to specific segments allows companies to differentiate themselves from competitors and avoid mass marketing, which can be ineffective in heterogeneous markets. Types of Segmentation Geographic factors (e.g., location like cities or regions) Demographic factors (e.g., age, gender, income, profession) Behavioral factors (e.g., lifestyle choices, purchasing behaviors) Motivational factors (e.g., values, attitudes, beliefs) Steps in the Segmentation Process 1. Define the Segmentation Criteria: Determine the key factors that will define market segments. These criteria could include demographic, geographic, psychographic, and behavioral factors. 2. Identify and Profile Segments: Identify potential segments within the market and create detailed profiles for each segment. This could involve gathering demographic and psychographic data, as well as analyzing behavioral patterns. Pagina 59 di 99 3. Evaluate the Attractiveness of Each Segment: After identifying the segments, businesses must evaluate how attractive each segment is, considering factors such as segment size, growth potential, profitability, and compatibility with the company’s resources and capabilities. 4. Select the Target Segment: This is the final step where the company chooses which segment(s) to target based on the evaluation. Targeting Targeting is the process of selecting specific market segments to focus on, based on their attractiveness and how well they align with the company's objectives and capabilities. Effective targeting helps companies allocate their resources efficiently and develop tailored marketing strategies for the chosen segments. Why Targeting is Important Improved Customer Engagement: By focusing on the most relevant segments, businesses can design better messaging, products, and offers that resonate with those consumers Resource Efficiency: Targeting allows companies to concentrate their marketing efforts on the most promising segments, ensuring better return on investment (ROI) Enhanced Brand Positioning: By targeting specific segments, companies can position themselves as experts or leaders within those niches, fostering strong brand loyalty. Evaluating Segments for Targeting When evaluating which segments to target, companies assess them based on several key criteria: Segment Size: How large is the segment? Larger segments may offer higher sales potential, but they may also come with more competition. Smaller segments may provide higher profit margins for niche products. Segment Growth Potential: What is the growth trajectory of the segment? Companies often prefer segments with strong future growth to ensure long-term profitability. Pagina 60 di 99  Segment Profitability: This includes not only the size but also the purchasing power of the segment. The ability of a segment to generate sustainable profits is key. Structural Attractiveness: This includes factors such as: 1. Competition: How many competitors are present? High competition may reduce profitability. 2. Substitute Products: Are there many alternatives to the company’s offering? 3. Buyer Power: Do buyers have a lot of power in the segment, which could drive prices down or demand higher quality? Compatibility with Company Objectives and Resources: The segment should align with the company’s overall strategic goals, expertise, and available resources. Entering a segment that requires capabilities beyond the company’s scope can be risky. There are four targeting strategies: Undifferentiated Marketing: Targeting the entire market with one offer (ideal for uniform products, cost effective but has limited appeal). Differentiated Marketing: Targeting multiple segments with specific products for each. (Strengthen brand loyalty and market position, but has higher costs) Concentrated Marketing: Focusing on one or a few segments, common in niche markets or companies with limited resources. Micromarketing: Customizing offers for local groups or individual customers. Factors Influencing the Choice of Targeting Strategy Company Resources: Smaller companies with limited resources often prefer niche marketing, while larger companies may opt for differentiated strategies. Product Characteristics: Products that are standardized (e.g., raw materials) are better suited for undifferentiated marketing, while more complex or specialized products need a differentiated approach. Market Variability: Markets with diverse preferences and needs benefit from differentiated or concentrated marketing. Product Life Cycle: In the early stages of the product life cycle, undifferentiated or concentrated marketing may be used. As Pagina 61 di 99 the product matures, differentiated marketing becomes more common. Competitor Strategies: Companies must assess competitor activities and responses when choosing a targeting strategy. Positioning Positioning alludes to how consumers, customers and prospects perceive the position companies adopt in comparison to competitors. Define the value proposition → use all the marketing mix to develop it in the targeted segment. Occupy a distinctive and advantageous position in the consumers' minds. Products and services can be positioned by focusing on specific factors which themselves can be subject to differing positioning approaches. Perception The Importance of Consumer Perception Products are manufactured, but brands are created in the minds of consumers. Practical examples:Nissan Versa: Positioned as an affordable car. Mercedes: Positioned as a luxury vehicle. Porsche and BMW: Focused on high performance. Consumers mentally organize products and services into categories to simplify purchasing decisions. Positioning A common approach is to use perceptual mapping featuring “plots” with two axes. The most common format is plotting price versus quality. →This is useful; however, it can be misleading, as price is clearly not the same as value-for-money. Pagina 62 di 99 Positioning Map Purpose and Function Positioning maps help managers visualize consumer perceptions in relation to competitors. They identify market opportunities and areas for improvement. Common dimensions: price, quality, luxury, performance. Positioning attributes Four attributes underpin positioning: 1. Credence– any claims must be credible; 2. Competitiveness– where possible the value taken from the product or service should be unique; 3. Consistency– organisation positioning should be consistently promoted with its mission, values, etc.; 4. Clarity– companies must be transparent in their dealings with the target and other stakeholders Pagina 63 di 99 Positioning: price and quality (Kotler, 2009) Differential Benefits and Positioning: "More for More": High-quality products at a high price, symbolizing prestige and status. Examples: Rolex, Four Seasons, iPhone. "More for the Same": High-quality products at a medium price. Example: Lexus offers premium quality at a lower price than Mercedes. "The Same for Less": Products with similar benefits at a lower price, emphasizing affordability. Examples: Amazon Kindle Fire versus iPad. "Less for Much Less": Products with reduced features at significantly lower prices. Examples: Eurospin, Lidl. "More for Less": High benefits at competitive prices; challenging to sustain in the long term. Sustainable positioning Individuals consider and/or adopt the attitudes, beliefs, opinions and values of others. This influences their decision-making. Companies need to appreciate how they are perceived in terms of sustainability. To build sustainable brands that consumers associate with social and environmental values, challenging decisions have to be Pagina 64 di 99 made involving sustainability brand positioning (Belz & Peattie, 2009). This assumes CSR is central to organisational culture and beliefs, but some maintain that it may simply be an “add-on” feature to their business operation, an after-thought Sustainable positioning: Hart’s sustainable grid Sustainable Marketing positioning Matrix Prioritization must take place: whether to invest in people and/or planet and to what extent? The Sustainable Marketing positioning matrix assumes that profits must be reinvested. Companies must not only reinvest Profit but must also be seen to do so. The degree of reinvestment would depend upon the company and its circumstances. Pagina 65 di 99 Sustainable positioning: The SM positioning matrix First, a company is profitable but invests only a small amount of profit into people (position C). It could simply invest more to improve its social/ethical position. Second, a company invests a high amount of its profit into green projects, but nothing in people (position D), in which case it could maintain the status quo, by investing some profit into people or investing more into its existing green projects. Third, a company invests profits into people and planet, with a bias towards green projects (position B/A), in which case it may want a more balanced sustainable positioning and thus may sacrifice some green projects to invest in ethical alternatives Schumpeter’s Creative Destruction “Creative destruction” describes the process where incumbents’ competences and perceptions are challenged by new paradigms (Schumpeter, 1950). Sustainability represents a step change in how businesses are expected to operate and the advent of Triple Bottom Line is Schumpeterian (Sandberg, 2010) Examples: Market boundaries would be redefined as companies sought to differentiate product offers or to create and target new segments. New entrants to the enlarged market would have a greater incentive to innovate. Sustainable entrepreneurs may discover new opportunities and stimulate change in society, Pagina 66 di 99 Porter’s Generic Strategies Porter proposed three strategic choices: 1. Cost leadership, —> low price among the market 2. Focus, —> particular segments with low price or unique product 3. Differentiation. —> entire market but specific products for specific customers (uniqueness) Consumers rarely buy the cheapest product available. They do, however, constantly strive to find the best value for their money. RISK? Ansoff matrix Ansoff (1957) recognised that company growth is linked to the relationship between products and their markets. He proposed that companies should reflect on whether new or existing products are to be delivered in new or existing markets. His strategy matrix for products and markets (Figure 3.37) is widely recognised as a useful tool in choosing a marketing strategy. Pagina 67 di 99  It also introduces the recognition of risk into the strategic decision. Choosing a strategy to achieve SM objectives and consequently allocating resources Low risk—> market penetration, old products in old markets, aggressive promotion Medium risk—> product development or market, new products in old markets or old products in new markets, can lead to diversification High risk—> diversification, new products in new markets, diversification Sustainable Positioning Strategies Those in the middle ground (i.e. willing to take some risks but, analysis suggests, in the long run need to diversify) have two options. They can take the following two-step approaches: Market Penetration (low risk) → Market Development (medium risk)→ Diversification (high risk) or Market Penetration → Product Development → Diversification Pagina 68 di 99 Competitive Differentiation Key Elements Product: Differentiation through features, performance, or design. Example: Bose, known for its unique design and sound quality. Services: Differentiation through speed, quality of customer service. Example: Singapore Airlines, renowned for its attention to detail. Channels: Excellence in distribution or innovation. Example: Amazon, a leader in direct channels. Personnel: Hiring and training strategies. Example: Disney World, famous for its friendly and competent staff. Image: Distinctive symbols, colors, and logos. Example: Apple’s bitten apple, Ferrari’s prancing horse. Successful Examples Ritz-Carlton: Builds a reputation for quality through consistent performance and communication. Nike: Recognizable for its "swoosh" logo and partnerships with famous athletes. Sustainable Competitive Advantage Long-Term Strategies Positioning must be supported by consistent differentiation within the marketing mix. Businesses must invest in maintaining the promised quality standards. Distinctive Elements Examine the entire customer experience to identify areas of improvement. Differentiate the offer based on: 1. product, 2. service, 3. channels, 4. personnel, 5. image, and 6. price. Examples Singapore Airlines: Differentiates through exceptional customer service. (2. Services) Disney: Provides rigorous training to staff to ensure memorable experiences. (4. Personnel) Pagina 69 di 99 The marketing mix in sustainable marketing The key framework for tactical marketing is the marketing mix traditionally featuring product, price, place and promotion. In the Forties, the mix was developed by Neil Borden PLACE or is better Convenience? “Place” has grown in importance over the years for a number of different reasons. The first factor to consider when sustainable marketing initiatives focus on place is the issue of shipping goods. If companies ship goods, they must define the cost of transporting the products from A to B. The goods must arrive at the right time, in the right place, in the right conditions and with the right post- delivery support. Companies should also seek to reduce their ecological impact when delivering goods. Companies incapable of performing to high standards and expectations are likely to lose customers to others who are more convenient. “Convenience” has replaced “Place” in the mix, as it is the benefit the customer gains. Focusing on “convenience” can help companies to achieve a competitive advantage. Marketing channels In the context of distribution, a marketing channel is the route used to deliver goods (and services) to customers. Channel design is key in sustainable marketing plans. Factors affecting a marketer’s choice include: cost, convenience, customer requirements and control. Different types of marketing channels A One-level channel features one intermediary (another business) between the manufacturer and customer. The Pagina 70 di 99  intermediaries (e.g. retailers, agents or franchisors) move the product from the manufacturer to the customer. They have established networks of outlets to reach their target markets. Marketers should identify mutual opportunities with intermediaries and integrate each other’s branding information into messages. Two-level channels feature two intermediaries between the manufacturer and consumer. Some manufacturers (1) will sell their products to a wholesaler (2), who in turn sells the products to smaller retailers (3) and ultimately the end user (4). Gaining immediate feedback from the consumer market becomes more complicated. If the customer generates a complaint, this will cascade through the channel until it eventually travels back to the manufacturer. (long process rather than one-level channel where there is only one intermediary) The role of intermediaries (retailers and wholesalers) Many reasons for using intermediaries: retailers and wholesalers already have established networks of outlets to reach specific customer segments; using existing retailers’ resources provides customers with further convenience, such as dealing with post-sales services or returns; intermediaries offer great skills, resources, knowledge and expertise and can share risks. Convenience is more than simply “Place”. The market coverage (Exclusive, Intensive, Selective) Marketers must consider the amount of market coverage needed for the product. Traditionally the three choices of coverage are exclusive, intensive or selective distribution. Pagina 71 di 99 1. Exclusive Distribution involves the deliberate restriction of product availability. This fosters a sense of exclusivity (e.g. Rolex, Hermés). 2. Intensive Distribution is diametrically opposed to exclusive distribution. It is often used by Fast Moving Consumer Goods (FMCG) companies. (Coca Cola, you can find it everywhere) 3. Selective Distribution is used where good coverage is required for a product but not to the extent of intensive approach (where horizontal competition may drive prices down) (Apple, you cannot find it everywhere but is not exclusive to few people) Sustainable distribution There are also social implications to distribution in the accessibility of products, particularly in markets such as financial services, where there are concerns about the exclusion of disadvantaged customers through the closure of bank branches and post offices. Sustainability needs to be viewed in terms of involvement within the wider context of stakeholder relationships. With organisational success often depending on suppliers, it is important to ascertain whether the supply network operates in a sustainable manner. Transparency in sustainable distribution Transparency is key to sustainable trade. Many companies are developing sustainability policies and practices and looking closely at their supply chains. Companies should be proactive rather than reactive, to anticipate inevitable change, to fill the space available to them for much more environmentally and socially responsible actions, and to lobby government for faster change. (Porritt, 2005) Pagina 72 di 99 23/01/25 Candiani SPA (possible exam question—> marketing channels / intermediaries) There are highly saturated markets Reduce Reuse Recycle Regenerative cotton 25 billion of garments never worn are destroyed every year Financial and environmental sustainability You can have a fantastic product but if you do not communicate it, it doesn’t make sense How do you communicate it to non-technical persons? You must compare it Brands are only marketing currently No brand has his own production, everyone use third party firms to produce their clothes A jean is produced with 5 euros and it will cost 120 euros in the store Coreva Patent—> elastomer organic plant the recycled part of jeans to grow tomato sauce Pagina 73 di 99 05_Circular economy and sustainability Sustainable Marketing Planning The marketing mix in sustainable marketing The key framework for tactical marketing is the marketing mix traditionally featuring product, price, place and promotion. In the Forties, the mix was developed by Neil Borden. PRODUCT Professor Michael Baker (2009) suggests the mnemonic of AFB is useful where: Attributes define the distinguishing characteristics of an object. Features enable potential customers to differentiate between competing products. Benefits are customer centric, i.e. the solution provided for the customer’s problem. Part of the challenge for marketers is that the competitors will always seek to replicate successful distinctive features. Key components of product A product consists of two key components: 1. Tangible factors – physical features; 2. Intangible factors – such as strength of the brand, quality of the materials and customer care. Customers cannot touch these factors, but they still enrich the “product offering”. Identifying these components can be difficult, because the emphasis placed on them differs from product to product. Pagina 74 di 99 Anatomy of a product A model used to develop a better understanding of products is the anatomy of products. Future product - what the product says about the future customer who doesn’t ‘date’ and can ‘move with the times’ Augmented product - the non-physical added value e.g. warranty, credit terms, after sales advice. Often where the benefits reside. Tangible (aka embodied) product - the physical attributes or features the actual product Core product - the raison d’etre – e.g. a car moves from A to B, why the product exist? Which problem is solving? Core product The core product refers to the actual function the customer derives from the product – for example, the core function of a car is transportation. This chimes with the “attributes”. Tangible (embodied) product The embodied (or tangible) product focuses on the physical features or delivered service. Marketers may refer to the Unique Selling Point (USP) of the actual product; for example, for a Dyson vacuum cleaner, the technology and the absence of needing a vacuum bag are all features of the product. Because products are highly visible, competitors may copy or imitate the physical features of a product. Companies may have to defend themselves with copyright protection. Dyson famously protect individual components – this is a prodigious effort. Pagina 75 di 99 Augmented product The augmented product refers to the added value that customers take from products, such as the warranty, credit terms, after-sales advice and service. This is a highly competitive level and requires much thought. Research has shown that 80% of failure to achieve repeat business from customers is attributed to factors at the augmented level. The augmented level is often where manufacturers seek to differentiate themselves. Think about Apple’s image and perceived usability. These are sophisticated concepts and are therefore not easy to replicate. Future product The future product alludes to the wisdom of considering the future development of the product portfolio. Part of a marketer’s responsibility is to consider the future, and as the customer needs and wants change, there is often a need to transform the existing product in a bid to “move with the times”. Marketers must undertake research to gather feedback regarding the future level. Classification of B2Consumer products In the B2C market, products can be classified as follows: Convenience Goods –require little time, e.g. staple foods such as vegetables, bread, eggs, etc. The customer will usually purchase these products through ‘routine’ or sheer habit. Shopping Goods –require more effort as they incur an element of risk financially, personally and socially, e.g. a new kitchen suite, a new washing machine. Speciality Goods –often more luxurious goods where consumers accept no substitutes. Branding is particularly important, e.g. design