Kotler 2020, Chapter 5 - Sustainable Marketing PDF

CHAPTER 5 – Sustainable marketing, social responsibility and ethics Mini contents ​ Company case Sustainable business in non-sustainable environments: Telia Company's challenging efforts to contribute to a sustainable society ​ What is sustainable marketing? ​ Sustainability at Unil...

CHAPTER 5 – Sustainable marketing, social responsibility and ethics Mini contents ​ Company case Sustainable business in non-sustainable environments: Telia Company's challenging efforts to contribute to a sustainable society ​ What is sustainable marketing? ​ Sustainability at Unilever: creating a better future every day ​ The sharing economy -a sustainability and business opportunity ​ Greenwashing ​ Social criticisms of marketing ​ Consumer actions to promote sustainable marketing ​ Business actions towards sustainable marketing ​ Company case -Ben & Jerry's where there are two scoops of social values ​ Ethics and moral dilemmas in practicing sustainable marketing ​ Company case - adidas: athletic apparel with purpose Chapter preview In this chapter we'll examine the concept of sustainable marketing, meeting the needs of consumers, businesses, and society - now and in the future through socially and environmentally responsible marketing actions. How companies work with such things are crucial and pave the ground for how they deal with marketing realities when it comes to i.e, consumer behaviour, market segmentation, branding and developing an appealing product and consumer offer. We'll start by defining sustainable marketing and exemplify with the sharing economy and other sustainable practices and how they are organized through platform-based business models. We'll then look at some common criticisms of marketing as it affects individual consumers as well as public actions that promote sustainable marketing. Finally, we'll see how companies themselves can benefit from proactively pursuing sustainable marketing practices that bring value to not only individual customers but also society as a whole. Sustainable marketing actions are more than just the right thing to do; they might also be good for business. In fact, sustainability is a key issue in developing competitive advantages in today's marketplace, and the global nature of marketing makes it a true challenge to ensure that the company's operations live up to claims on sustainability. That's something Swedish-Finnish telecom giant Telia Company has to deal with - we'll start with a case about how the company deals with ethics and sustainability considerations. Learning objectives After reading this chapter, you should be able to: 1. Define sustainable marketing and discuss its applications and importance. 2. ldentify the major social criticisms of marketing. 3. Define consumerism and environmentalism and explain how they affect marketing Strategies. 4. Understand the role of ethics in marketing. Responsible marketers discover what consumers want and respond with market offerings that create value for buyers in order to capture value in return. Not all marketers, however, follow the sustainable marketing concept. In fact, some companies use questionable marketing practices that serve their own rather than 'consumers' interests. Moreover, even well-intended marketing actions that meet the current needs of some consumers may cause immediate or future harm to other consumers or the larger society. Responsible marketers must consider whether their actions are sustainable in the longer run. This chapter examines sustainable marketing and the social and environmental effects of consumption. What is sustainable marketing? Sustainable marketing – Socially and environmentally responsible marketing that meets the present needs of consumers and businesses while also preserving or enhancing the ability of future generations to meet their needs. Sustainable marketing calls for socially and environmentally responsible actions that meet the present needs of consumers and businesses while also preserving or enhancing the ability of future generations to meet their needs. Figure 5.1 compares the sustainable marketing concept with marketing concepts We studied in Chapter 1. Sustainability iS a global trend of awareness as to how consumption has an impact on the environment. For marketing, this trend means that environmental and social concerns must be integrated all along the value chain from product development, to production, consump- tion, marketing channels, marketing communications and disposal. Meanwhile, sustainability offers many new business opportunities. Climate change is linked to production and consumption of products such as cars, vacation travel, fashion, food, and many other products. The focus on sustainability has become one of the major global marketing trends and it has an influence On basically all marketing decisions in various- sized companies. This shift in attitudes among companies and their marketers have led to a creative revolution in terms of new sustainable business models and new innovative ways to produce and consume in a sustainable way. The marketing concept recognizes that organizations thrive by determining the current needs and wants of target customers and fulfilling them more effectively and efficiently than competitors do It focuses on meeting the company's short-term sales, growth, and profit needs by engaging customers and giving them what they want now. However, satisfying consumers' immediate needs and desires doesn't always serve the future best interests of either customers or the business. For example, McDonald's early decisions to market tasty but fat- and salt-laden fast foods created immediate satisfaction for customers as well as sales and profits for the company. However, critics assert that McDonald's and other fast-food chains contributed to obesity, damaging consumer health and burdening the national health system. In turn, many consumers began looking for healthier eating options, causing a slump in the sales and profits of the fast-food industry. Beyond issues of ethical behaviour and social welfare, McDonald's was also criticized for the sizable environmental footprint of its vast global operations, everything from wasteful packaging and solid waste creation to inefficient energy use in its stores. Thus, McDonald's strategy was not sustainable in the long run in terms of either consumer or company benefit Applying the three dimensions of sustainability, such changes in consumer attitudes are economically unsustainable for the company too, since it may suffer from lower income and profit. Looking upon the development of pricing for McDonald's in Sweden, it has obviously lost pricing power over time. In the 1990s, the price of a Big Mac & Co. menu was SEK 49, in 2020 it's around SEK 69 (each restaurant is free to set its own prices) while eating out at lunch or dinner has been 60 to 80 per cent more expensive in general. But to maintain sales figures. McDonald's now has to provide extensive promotions. For instance, an infrequent McDonald's customer (less than SEK 1,000 a year) has several promotions in the app: Buy two Donken meals, pay for one; 9 McNuggets & Co SEK 39; Buy two Frappé, pay for one; 4 McNuggets s SEK 10, etc. Obviously, McDonald's has lost some of its attractiveness in the marketplace. Whereas the societal marketing concept identi fied in Figure 5.1 considers the future welfare of consumers and the strategic planning concept considers future company needs, the sustain- able marketing concept considers both. Sustainable marketing calls for socially and environ- mentally responsible actions that meet both the immediate and future needs of customers and the company. For more than a decade, McDonald's has responded to these challenges with a more sustainable strategy of diversifying into salads, fruits, grilled chicken, low-fat milk, and other healthier options. The company has also sponsored major educational campaigns to help consumers better understand the keys to living balanced, active lifestyles. McDonald's sustainability initiatives also address environmental issues. For example, it calls for food-supply sustainability, reduced and environmentally sustainable packaging, reuse and recycling, and more responsible store designs. McDonald's has even developed an environmental scorecard that rates its suppliers' per formance in areas such as water use, energy use, and solid waste management. Thus, McDonald's is now well positioned for a sustainable future - but it has to convince young consumers in particular of the advance- ments being made. Truly sustainable marketing requires a smooth-functioning marketing system in which consumers, companies, public policy makers, and others work together to ensure socially, environmentally, and economically responsible marketing actions. Unfortunately, however, the marketing system doesn't always work smoothly but we`ll use the rest of this chapter to explore various ways to make marketing and consumption more sustainable The sharing economy – a sustainability and business opportunity Sharing products is discussed intensively, and in some contexts it has really taken off, Many companies of various Sizes operating in different industries are considering adapting their business models to meet the new realities. What can be shared? Almost anything: vacuum cleaners, drills, trailers, summer houses, skiing equipment, lawn mowers, clothing, cars, and handbags, to name a few examples. Sharing schemes may look different for cars, garden tools, clothes, books or toys. By sharing products that consumers aren't using on a regular basis, fewer new products are needed Consequently, the environment will gain while companies unless they change their busi- ness models - will lose. Is it that simple? Not really. As we will see, there is a range of obsta- cles in realizing sharing. Sharing and platform business model The sharing economy includes a range of practices and business models based on sharing, yet there are significant differences. There is a whole range of activities, practices, and trends, such as: ​ services facilitated by online platforms (e.g., ride-sharing, ride-hailing, accommodation rental) co-ordinated and regulated through mobile apps; ​ Sharing skills and knowledge, e.g. through universities providing online courses, P2P file sharing, and collaborative encyclopaedias such as Wikpedia; ​ financing platforms, e.g. crowdfunding and P2P loans; ​ placement platforms, e.g. Shareville, where investment proposals are shared. Sharing is collaborative (carpooling) or commercial (rental cars) but in many cases a mixture, e.g. Danish GoMore (car sharing with consumers sharing their cars against a fee to the plat- form) or Airbnb. The sharing economy promises economic, social, and environmental benefits by using existing resources more efficiently and reducing waste. An important aspect of the sharing economy is the social dimension. If one is socially aware, GoMore may give more value than renting a car from a Europcar station -and the other way round. GoMore will include interaction with the person you rent the car from. The concept collaborative consumption is a type of sharing economy that emphasizes the social aspect. It's defined as “traditional sharing, bartering, lending, trading, renting, gifting, and swapping, redefined through technology and peer communities. [...] enabling people to realize the enormous benefits of access to products and services over ownership, and at the same time save money, space, and time; make new friends; and become active citizens once again”, by Rachel Botsman and Roo Rogers who in 2010 published a book that already in the cover text emphasizes that there is a need for change - nine years before Greta Thunberg was entitled Person of the Year by Time Magazine: 'In the 20th century humanity consumed products faster than ever, but this way of living is no longer sustainable. This new and important book shows how technological advances are driving forms of "collaborative consumption" which will change forever the ways in which we interact both with businesses and with each other. The average lawn mower is used for four hours a year. The average power drill is used for only twenty minutes in its entire lifespan. The average car is unused for 22 hours a day, and even when it is being used there are normally three empty seats. Surely there must be a way to get the benefit out of things like mowers, drills and even cars, without having to carry the huge up-front costs of ownership? There is indeed. Collaborative consumption…’ The sharing economy can increase resource utilization significantly, but one has to be atten: tive. According to a report, according to uc Berkeley's Transportation Sustainability Research Centre, one car-sharing vehicle replaces 9-13 personal vehicles. This comes in the form of car. sharing members selling their current vehicle, not buying a second vehicle, or postponing the purchase of a vehicle.3 However, real data from cities around the world that apply car-sharing show rather low utilization rates for car-sharing. With Madrid as an exception (21.6 per cent) the utilization ranges from 4 to 11.2 per cent. The average length of the trip, typically three to four kilometres, indicates that many of the trips are not really replacing car ownership but rather replacing walking, using public transport, or taxi.* Most of the sharing economy business models are platform-based, and it's important to distinguish between different types of platforms: ​ Tightly controlled franchiser` platforms with competition bet ween providers in combination with tight control from the franchisee. Uber, Foodora etc. place very strict demands on those who do the job, resulting in a lack of job security, but in high and consistent quality since providers are afraid of losing their jobs. ​ Platforms with a high competition between providers, but a looser control of the product, e.g. Airbnb. ​ Bidding platforms such as Upwork. For platforms, it's crucial to have a critical mass of customers or contacts As opposed to many non-digital business models, more data and consumers do not require more resources to deal with, but lead to a boost in value In fact, consumers are likely to visit the platforms with the highest number of qualified providers. It's to an extent a the-winner takes-it-all game When choosing hotels or P2P car sharing, consumers are likely to use hotels.com, booking.com or gomore.se/gomore.dk/gomore.no. A platform with fewer providers will have fewer buyers and hence be less interesting to create business oppor- tunities. Platforms with fewer qualified providers and buyers may compensate the lack of transaction opportunities with lower fees but market forces will make it difficult for them, since larger operator with higher fees and more buyers and sellers will have many more opportunities to invest, innovate grow and still be profitable.5 Platforms that are popular and become hubs also have the advantage of gaining a strong position as hubs highly ranked in consumers' minds when a need to buy something is translated into initiating a purchase process. Sustainability: the dead angle of economic growth? The more we share, the less the economy will grow. That's true in a narrow sense. But whether a decrease in economic growth will follow, because fewer new products are produced i and sold, or whether consumers will use the purchasing power gained through sharing to consume other products. But one thing is clear: the welfare gained through efficient sharing is not reflected in classical GDP growth figures. Greenwashing The term “greenwashing” is used to describe how companies use marketing communica- tions and advertising in particular to claim that products and offers are considerably more environmentally-friendly than they really are. Exaggerated claims about a product's environmental performance and the like do not impress today's consumers,6 and neither does 'much ado about nothing', something which applies to matters that are becoming increasingly self-evident: i.e. sorting waste by source, shops donating unsaleable food to relief organizations, environmentally-oriented travel policies, etc. Pretentious claims with little support may be counterproductive as the consumer then adopts a questioning stance as to whether the company has something to hide since it is indulging in misleading green communication. As greenwashing has become such a frequent activity, there is a tendency today for consumers to reject all marketing communication in which sustainability claims are made, and instead to choose other brands and products that do not communicate any such argu- ments at all. Sustainability that is being communicated for the sake of a company's purposes, and not owing to any genuine conviction regarding a more sustainable society, thus runs the risk of undermining the reputation and effects of sustainability communication. Since marketing communication relating to sustainable products is aimed at changing consumer behaviour, greenwashing runs the risk of threatening change from unsustainable to sustain. able offerings in their entirety. The promotion of cars is a typical field that has been full of greenwashing. Mercedes-Benz, for example, argued in an advertisement for their car model B170 NGT 'Finally an environ- mentally friendly car...7 Similar claims from other car manufacturers resulted in the Swedish Consumer Agency drawing the attention of the Swedish Market Court to the Mercedes Benz campaign which resulted in Mercedes Benz having to pay a fine of SEk 1,000,000 for their claims. Mercedes-Benz was prohibited from using the claim 'environmentally friendly in their car adverts. Several automobile adverts are indicating that a car is 'green' or environmentally friendly. Volkswagen showed a picture of its Passat BlueMotion Estate with flowers coming out of the exhaust pipe - which certainly does not reflect reality. The BlueMotion is 5 to 10 per cent more fuel efficient than the regular Passat diesel. In a similar manner, Toyota suggested that their RAV4 Diesel (model year 2010) is The Car Nature Wants to Own' - and the emissions are 154g co2/km compared to 129 g for the Passat BlueMotion.8 Old examples - but they emphasize the memory of companies engaging in green washing! Social criticisms of marketing Like most other human endeavours, marketing has its flaws and it receives much criticism. Some of this criticism is justified, much is not. We present here both sides of some of the most common criticisms of marketing. Marketing's impact on individual consumers Studies suggest that consumers hold mixed or even slightly unfavourable attitudes towards marketing practices. Consumer advocates, government agencies and other critics have accused marketing of harming consumers through high prices, deceptive practices, high- pressure selling, shoddy or unsafe products, planned obsolescence and poor service to disad- vantaged consumers. Such questionable marketing practices are not sustainable in terms of long-term consumer or business welfare. High prices Many critics charge that marketing causes high costs of distribution, high advertising and promotion costs and excessive mark-ups. A long-standing charge is that greedy marketing channel intermediaries mark up prices beyond the value of their services. Critics charge that there are too many intermediaries, that intermediaries are inefficient, or that they provide unnecessary or duplicate services As a result, distribution costs too much and consumers pay for these excessive costs in the form of higher prices. How do resellers answer these charges? They argue that intermediaries carry out work that would otherwise have to be done by manufacturers or consumers. Mark-ups reflect services that consumers themselves want – more convenience, larger stores and assortments, more service, longer store hours, return privileges, and others. In fact, they argue, retail competi- tion is SO intense that margins are actually quite low. In many countries, supermarket chains are typically left with barely 1 per cent profit on their sales; however, in Sweden many ICA supermarkets enjoy 5-6 per cent. And fact is that retailers, particularly those with a good location, can derive many benefits from their position in the marketing channel and charge high prices, provided they sell good products and deliver good shopping experiences. This applies to emotion- -linked products in particular. In many cases, however, other resellers will step in with lower prices if some resellers try to charge too much relative to the value they add. High advertising and promotion costs Marketing is also blamed for pushing up prices to finance heavy advertising and sales promo- tion. For example, a few dozen tablets of a heavily promoted brand of pain reliever sell for the same price as 100 tablets of less-promoted brands. After the deregulation of pharmacies in Sweden in 2009, prices of some common tablets increased by 3o to 50 per cent. Differentiated products - cosmetics, detergents, toiletries - nclude promotion and packaging costs that can amount to 40 per cent or more of the manufacturer's price to the retailer. Critics charge that much of the packaging and promotion adds only psychological value to the product rather than functional value. However, studies suggest that industries with high marketing expenditure see lower price increases over time. Low-price stores such as Lidl, City Gross and ÖoB pressure their competitors to operate efficiently and keep their prices down. Marketers argue that while it is true that advertising adds to product costs, it also adds value by informing potential buyers of the availability and merits of a brand. Brand name products may cost more, but branding gives buyers the assurance of consistent quality. Moreover, consumers can usually buy functional versions of products at lower prices. However, they want and are willing to pay more for products that also provide psychological benefits that make them feel wealthy, attractive or special. And companies are cost-conscious about promo- tion and try to spend their money wisely. Excessive mark-ups Critics charge that many companies mark up goods excessively. They point to the phar- maceutical industry, where the retail price of a pill may be 40 times the manufacturing Cost, and to excessive prices for everything from insurances and fund fees to funeral homes. Marketers respond that most businesses try to deal fairly with consumers because they want to build customer relationships and repeat business. Most consumer abuses are unintentional. A service company seldom fully utilizes its co-workers, since it must be overstaffed to be able to offer consumer services whenever the consumer wants them - and in this respect customer demands are continuously increasing. Moreover, marketers argue that consumers may not understand the reasons for high mark-ups: pharmaceutical mark-ups must cover the costs of purchasing, promoting and distributing existing medi- cines plus the high research and development costs of formulating and testing new medi- cines. As pharmaceuticals company GlaxoSmithKline states in its ads, “Today's medicines finance tomorrow's miracles”. Deceptive practices Marketers are sometimes accused of deceptive practices that lead consumers to believe they will get more value than they actually do. Deceptive practices fall into three groups: pricing, promotion and packaging. Deceptive pricing includes practices such as falsely advertising factory` or 'wholesale' prices or a large price reduction from a phoney high retail-list price, e.g. 70 per cent off a hotel night or Persian carpets. Deceptive promo- tion includes practices such as misrepresenting the product's features or performance or luring the customers to the store for a bargain that is out of stock. Deceptive packaging includes exaggerating package contents through subtle design, using misleading label- ling or describing size in misleading terms. The toughest problem is defining what is 'deceptive'. Not all advertising messages are intended to be taken literally. An advertiser's claim that its powerful laundry detergent "makes your washing machine 10 feet tall', is one among many examples. One noted marketing thinker, Theodore Levitt, once claimed that advertising puffery and alluring imagery are bound to occur - and that they may even be desirable: There is hardly a company that would not go down in ruin if it refused to provide fluff, because nobody will buy pure functionality…Worse, it denies… people's honest needs and values. Without distortion, embellishment, and elaboration, life would be drab, dull, anguished, and at its existential worst.' Marketers argue that most companies avoid deceptive practices. Because such practices harm their business in the long run, they simply aren't sustain- able. Profitable customer relationships are built upon a foundation of value and trust. High-pressure selling Salespeople are sometimes accused of high-pressure selling that persuades people to buy goods they had not thought of buying It is often said that insurance, property and used cars are sold, not bought. Salespeople are trained to deliver smooth, canned talks to entice purchasers. They sell hard because sales contests promise big prizes to those who sell the most. But in most cases marketers have little to gain from high- pressure selling. Such tactics may work in one-time selling situations for short-term gain, such as tele- marketing in cases where the selling organization has no intention of building long term relationships with buyers. Shoddy, harmful or unsafe products Another criticism concerns poor product quality or function. One complaint is that, too often, products are not well made and services are not performed adequately. A second complaint is that many products deliver little benefit, or that they might even be harmful. For example, think again about the fast- food industry. Many critics blame the plentiful supply of fat-laden, high-calorie fast food for the rapidly growing obesity epidemic. Worldwide obesity has tripled since 1975, 39 per cent of adults are overweight and 13 per cent obese.1o In Sweden, around 50 per cent of adults are overweight or obese according to the Public Health Agency of Sweden. Although these figures have got worse in recent decades, with some signs in recent years that the percentage of overweight people might actually go down, Sweden has relatively limited problems with obesity. Studies in the us suggest that some 69 per cent of American adults, and 18 per cent of American children and teenagers are over- weight or obese.12 The critics are quick to condemn what they see as greedy food marketers who are cashing in on vulnerable consumers, turning Americans into nation of overeaters. Some food marketers are looking pretty much guilty as charged. A third complaint concerns product safety. Product safety has been a problem for several reasons, including company indifference, increased product complexity and poor quality control. Various hazards in tested products have been reported: electrical dangers in appli- ances, dangerous design of toys, and risks of injury from lawn mowers, among many others. However, most manufacturers want to produce quality goods - but it may be difficult to get it right as cost pressures might force manufacturers to change suppliers or raw materials. Consumers who are unhappy with a firm's products may avoid future purchases and talk other consumers into doing the same. Thus, quality missteps can have severe consequences and are not consistent with sustainable marketing. Planned obsolescence Critics also have charged that some companies practise planned obsolescence, causing their products to become obsolete before they actually need replacement. They accuse some producers using materials and components that will break, wear, rust or rot sooner than they should. Others are charged with continually changing consumer concepts of acceptable styles to encourage more and earlier buying. An obvious example is constantly changing clothing fashions, and the same holds for child strollers, skiing equipment and other types of sports equipment. Still others are accused of introducing planned streams of new products that make older models obsolete. Critics claim that this occurs in the consumer electronics and computer industries. The average iPhone user is not expected to change a battery – it's a tricky operation compared with what mobile phone users are used to – and taking a Renault Clio for its 120,000 km inspection may cost SEK 20,000 or more, not much less than the value of the car. It's fairly easy to argue against this criticism since, obviously, consumers like new and fresh products and product designs. Marketers respond that consumers like style changes; they get tired of the old goods and want a new look i in fashion. Or they want the latest high- tech innovations, even if older models still work. No one is compelled to buy the new product. And finally, most companies do not design their products to break down earlier; instead, they seek constant improvement to ensure that products will consistently meet or exceed customer expectations. Poor service to disadvantaged consumers Finally, the marketing system has been accused of serving disadvantaged consumers poorly. For instance, home and car insurers have been accused of assigning higher premiums to people with poor credit ratings. The insurers claim that individuals with bad credit tend to make more insurance claims, and that this justifies charging them higher premiums. Schools. kindergarten and primary healthcare providers have been criticized for choosing locations where children and clients are 'well behaved", thus making operations smoother and profit. ability higher. However, many marketers profitably target such consumers with legitimate goods and services that create real value. Marketing's impact on society as a whole Marketing has been accused of having a poor impact on society overall, shifting citizens' focus away from areas that make them unhappy, and increasing social fragmentation and environmental damage. This criticism is a lot stronger in the us than in Europe. False wants and too much materialism Critics have charged that the marketing system urges too much interest in material posses- sions, and that people's love affair with worldly possessions is not sustainable. Again, this criticism is a lot stronger in the us but also applies in the European and Swedish perspective. People are judged by what they own rather than by who they are. This drive for wealth and possessions hit new highs in the 198os and 1990s, when phrases such as greed is good' and 'shop till you drop' seemed to characterize the times. In the current decade, many social scientists have noted a reaction against the opulence and waste of the previous decades and a return to more basic values and social commit- ment. However, our infatuation with material things continues. The critics do not view this interest in material things as a natural state of mind but rather as a matter of false wants created by marketing. Businesses hire advertising agencies to stimulate people's desires for goods, and the agencies use the mass media to create materialistic models of the good life. People work harder to earn the necessary money. Their purchases increase the output of industry, and industry in turn uses the agencies to stimulate yet more desire for the indus trial output. On a deeper level, our wants and values are influenced not only by marketers but also by family, peer groups, religion, cultural background and education. If people are highly materi alistic, these values will have arisen out of basic socialization processes that go much deeper than business and mass media could produce alone. Too few social goods Business has been accused of overselling private goods at the expense of public goods. As private goods increase, they require more public services that are usually not forthcomins For example, an increase in car ownership (private good) requires more highways, traffic control, parking spaces and police services (public goods). The overselling of private goods results in 'social costs`. For cars, some of the social costs include traffic congestion, petro shortages and air pollution. A way must be found to restore a balance bet ween private and public goods. One Option is to make producers bear the full social costs of their operations. The government could require car manufacturers to build cars with more efficient engines and better pollution-control systems. Car makers would then raise their prices to cover the extra costs. If buyers found the price ofs some cars too high however. the producers of these cars would disappear second option is to make consumers pay the social costs. For example, many cities around the world re starting to charge congestion tolls in an effort to reduce traffic congestion. To unclog its streets, the city of London now levies a congestion charge of GBP 11.5 per day per car to drive in an eight-square-mile area in the centre – a lot more expensive than the charge in stockholm and gothenburg of SEK 9435. Cultural pollution Critics charge the marketing system with creating cultural pollution. Our senses are being constantly assaulted by marketing and advertising. Commercials interrupt serious programmes; pages of ads obscure magazines; billboards mar beautiful scenery; spam fills our i inboxes. These interruptions continually pollute people's minds with messages of materi- alism, sex, power or status." Marketers answer the charges of 'commercial noise' with these arguments: first, they hope that their ads reach primarily the target audience. But because of mass communication channels, some ads are bound to reach people who have no interest in the product and are therefore bored or annoyed by them. People who buy magazines such as Vogue or Fortune rarely complain about the ads because the magazines advertise products of interest to them. Secondly, ads make much of television and radio free to users and keep down the cOsts of nagazines and newspapers. Many people think commercials are a small price to pay for these benefits. Consumers find many TV commercials entertaining and sometimes seek them out. Finally, today's consumers have alternatives. They can delete TV commercials On recorded programmes or avoid them altogether on many subscription cable or satellite channels. Thus, to hold consumer attention, advertisers are making their ads more entertaining and informative. Marketing's impact on other businesses Critics also charge that a company's marketing practices can harm other companies and reduce competition. They argue that firms are harmed and competition reduced when companies expand by acquiring competitors rather than by developing their own new products The large number of acquisitions and the rapid pace of industry consolidation over the past several decades have caused concern that vigorous young competitors will be absorbed and that competition will be reduced. Concentration to fewer companies happens regularly in many industries. In virtually every major industry -] retailing, entertainment, financial services, utilities, transportation, cars, telecommunications, healthcare - the number of major competitors is shrinking There are, however, entrepreneurial initiatives in some indus- tries that contribute to a higher level of competition Amazon, Apple and Spotify are signifi cant examples - but they tend to be acquired by large companies or acquire other companies, something that results in reduced competition. Acquisition is a complex subject. Acquisitions can sometimes be good for society. The acquiring company may gain economies of scale that lead to lower costs and lower prices. A vell-managed company may take over a poorly managed company and improve its efficiency. An industry that was not very competitive might become more competitive after the acquisition. But acquisitions can also be harmful and, therefore, are closely regulated by the government. Critics have also charged that marketing practices hinder new companies from entering an industry. Large marketing companies can use patents and heavy promotional spending or tie up suppliers or dealers to keep out or drive out competitors. Those concerned with competition regulation recognize that some barriers are the natural result of the economic advantages of doing business on a large scale. Other barriers could be challenged by existing and new laws. For example, some critics have proposed a progressive tax on advertising spending to reduce the role of selling costs as a major barrier to entry. Finally, some firms have in fact used unfair competitive marketing practices with the inten- tion of hurting or destroying other firms. They may set their prices below cost, threaten to cut off business with suppliers, or discourage the buying of a competitor's products. Various laws work to prevent such predatory competition. It is difficult, however, to prove that the intent or action was really predatory. Retailers, and particularly bigger chains with more financial resources, have been accused of using predatory pricing in selected market areas to drive smaller retailers out of business. Others assert that their actions are just the result of healthy competition between a more efficient company and less efficient ones. Consumer actions to promote sustainable marketing Sustainable marketing isn't solely the province of businesses and governments. Through consumerism and environmentalism, consumers themselves can play an important role. Sustainable marketing calls for more responsible actions by both businesses and consumers. Because some people view business as the cause of many economic and social ills, grass roots movements have arisen from time to time to keep business in line. The two major movements have been consumerism and environmentalism. Consumerism American business firms alone have been the target of organized consumer movements on three occasions. The first consumer movement took place in the early 1900s. It was fuelled by rising prices, author Upton Sinclair's writings on conditions in the meat industry, and scandals in the pharmaceutical industry in that country. The second consumer movement, in the mid-1930s, was sparked by an upturn in consumer prices during the Great Depression and another pharmaceutical scandal. The third movement began in the 1960s. Consumers had become better educated, prod- ucts had become more complex and potentially hazardous, and people were unhappy with American institutions.U.S.consumer advocate Ralph Nader, who later ran for president, appeared on the scene to force many issues, and other well- known writers accused bis business of wasteful and unethical practices. President John F. Kennedy declared that consumers had the right to safety and to be informed, to choose and to be heard. The U.S.government investigated certain industries and proposed consumer-protection legislation, and soon similar actions were taken in other countries. As the consumerism movement coincided with the 1968 student revolution - which represented a lot of criticism against traditional authorities, big corporations and their practices consumerism gained many passionate supporters in Europe. Many consumer groups have been organized and several consumer laws have been passed. The consumer movement has spread internationally and after the third movement it has become very strong in Europe. As the third movement coincided with the 1968 student revolution - which saw a great deal of criticism against traditional authorities, big corporations and their practices consumerism WOn many engaged supporters in Europe. But what is the consumer movement? Consumerism is an organized movement of citizens and government agencies to improve the rights and power of buyers in relation to sellers. Traditional sellers' rights include:  ​ the right to introduce any product in any size and style, provided it is not hazardous to personal health or safety; or, if it is, to include proper warnings and controls: ​ the right to charge any price for the product, provided no discrimination exists among similar kinds of buyers; ​ the right to spend any amount to promote the product, provided it is not defined as unfair ​ the right to use any product message, provided it is not misleading or dishonest in content or execution; ​ the right to use any buying incentive programmes, provided they are not unfair or misleading. Consumerism – An organized movement of citizens and government agencies to improve the rights and power of buyers in relation to sellers. Traditional buyers' rights include: ​ the right not to buy a product that is offered for sale; ​ the right to expect the product to be safe; ​ the right to expect the product to perform as claimed. Comparing these rights. many believe that the balance of power lies on the seller's side. True, the buyer can refuse to buy. But critics feel that the buyer has too little information,education and protection to make wise decisions when facing sophisticated sellers. Consumer advocates call for the following additional consumer rights: ​ the right to be well informed about important aspects of the product; ​ the right to be protected against questionable products and marketing practices: ​ the right to influence products and marketing practices in ways that will improve the *quality of life'; ​ the right to consume now in a way that will preserve the world for future generations of consumers. Each proposed right has led to more specific proposals by consumerists. The right to be informed includes the right to know the true interest on a loan (truth in lending), the true cost per unit of a brand (unit pricing), the ingredients in a product (ingredient labelling), the nutritional value of foods (nutritional labelling), product freshness (open dating) and the true benefits of a product (truth in advertising). Proposals relating to consumer protection include strengthening consumer rights in cases of business fraud, requiring greater product safety, ensuring information privacy, and giving more power to government agencies. Proposals relating to quality of life include controlling the ingredients that go into certain products and packaging and reducing the level of advertising 'noise'. Proposals for preserving the world for future consumption include promoting the use of sustainable ingredients, recycling and reducing solid wastes, and managing energy consumption. Sustainable marketing is up to consumers as well as to businesses and governments. Consumers have not only the right but also the responsibility to protect themselves instead of leaving this function to someone else. Consumers should also make good consumption choices, rewarding companies that act responsibly while punishing those that don't. Environmentalism Whereas consumerists consider whether the marketing system is efficiently serving consumer wants, environmentalists are concerned about marketing's effects on the environment and about the environmental costs of serving consumer needs and wants. Environmentalism is an organized movement of concerned citizens, businesses and government agencies to protect and improve people's current and future living environment. Environmentalists are normally not against marketing and consumption; they simply want people and organizations to operate with more care for the environment. The marketing system's goal, they assert, should not be to maximize consumption, consumer choice or consumer satisfaction, but rather to maximize the quality of life, including the quality of the environment. Environmentalists want current and future environmental cOSts included in both producer and consumer decision-making. Environmentalism – An organized movement of concerned citizens, businesses and government agencies to protect and improve people's current and future living environment. Environmental sustainability – A management approach that involves developing strategies that both sustain the environment and produce profits for the company. In the most recent environmentalism wave, companies are accepting more responsibility for doing no harm to the environment. They are shifting from protest to prevention and from regulation to responsibility. More and more companies are adopting policies of environmental sustainability. Simply put, environmental sustainability is about generating profits while helping to save the planet. Environmental sustainability is a crucial but difficult societal goal. Some companies have responded to consumer environmental concerns by doing only what is required to avert new regulations or to keep environmentalists quiet. Enlightened companies, however, are taking action not because someone is forcing them to, or to reap short-term profits, but because it is the right thing to do for both the company and for the planet's environmental future. Figure 5.2 shows a grid that companies can use to gauge their progress towards environmental sustainability. In includes both internal and external *greening activities that will pay off for the firm and environment in the short term and beyond greening" activities that will pay off in the longer term. At the most basic level, a company can practise pollution prevention: eliminating or minimizing waste before it is created. Companies emphasizing prevention have responded with internal 'green marketing programmes – designing and developing ecologically safer products, recyclable and biodegradable packaging, better pollution controls, and more energy-efficient operations At the next level, companies can practise product stewardship – minimizing not just pollution from production and product design but all environmental impacts throughout the full product life cycle, and all the while reducing costs. Many companies are adopting design for environment (DFE) and cradle-to-cradle practices. Cradle-to-Cradle is a design concept that was developed in the 1990s in Germany. It combines innovation, quality and good design with circular economy thinking. This involves thinking ahead to design products that are easier to recover, reuse, recycle or safely return to nature after usage, becoming part of the ecological cycle. Products created according to the principles of circular economy distinguishes Cradle-to-Cradle from conventional recycling and the concept of eco-efficiency. Hence, it goes beyond conventional sustainability tools and approaches. Cradle-to-Cradle philosophy calls for redesigning and reshaping traditional product design and manufacturing system to a closed loop system in which all materials travel through a continuous cycle of use and reuse, hence creating economic, social and ecological benefits. An example is Designtex, upholstery with remnants that would not be considered hazardous waste. In the production of their Climatex upholstery, thanks to the Cradle-to-Cradle principle, the chemistry changed the mill's water effluent, which became cleaner than the incoming water. By producing new fabrics designed to decompose safely, the mill saved scraps and turned them into felt, avoiding costly disposal fees. Local strawberry farmers used this felt as ground cover for their crops. Today's 'greening' activities focus on improving what companies already do to protect the environment, hence making it possible to retain consumption opportunities while considering sustainability. The beyond greening' activities identified in Figure 5.2 look to the future. Finally, companies can develop a sustainability vision, which serves as a framework for pollution control, product stewardship and new environmental technology for the company and others to follow. Investing only in the left half of the grid puts a company in a good position today but leaves it vulnerable in the future. In contrast, a heavy emphasis on the right half suggests that a company has good environmental vision but lacks the skills needed to imple- ment it. Thus, companies should work at developing all four dimensions of environmental sustainability. Environmentalism creates some special challenges for global marketers. As international trade barriers come down and global markets expand, environmental issues are having an ever-- greater impact on international trade. Countries in Western Europe, North America and other developed regions are generating strict environmental standards. The European Union has passed 'end-of-life' regulations affecting cars and consumer electronics products. And the EU'S Eco-Management and Audit Scheme (EMAS) provides guidelines for environmental self-regulation.1s However, environmental policies still vary widely from country to country. Countries such as Sweden, Denmark, Germany and Japan have well-developed environ- mental policies and high public expectations. But major countries such as China, India, Brazil and Russia are in only the early stages of developing such policies. There is a lack of interna- tional and even domestic coordination. Business actions towards stable marketing At the foundation of marketing is the belief that companies that fulfil the needs and wants of customers will thrive. Companies that fail to meet customer needs or that intentionally or unintentionally harm customers, others in society, or future generations will decline. Says one observer, Sustainability is an emerging business mega trend, like electrification and mass production, that will profoundly affect companies' competitiveness and even their survival.' Says another, *Increasingly, companies and leaders will be assessed not only on immediate results but also on.. the ultimate effects their actions have on societal well-being. This trend has been coming in small ways for years but now is surging. So pick up your recy- cled cup of fair-trade coffee, and get ready.' Sustainable companies are those that create value for customers through socially, environ- mentally, and ethically responsible actions. Sustainable marketing goes beyond caring for the needs and wants of today's customers. It means having concern for tomorrow's customers in ensuring the survival and success of the business, shareholders, employees, and the broader world in which they all live. It means pursuing the mission of shared value and a triple bottom line: people, planet, profits. Sustainable marketing provides the context in which companies can engage customers and build profitable relationships with them by creating value for customers in order to capture value from customers in return - now and in the future. At first, many companies opposed consumerism, environmentalism, and other elements of sustainable marketing. They thought the criticisms were either unfair or unimportant. But by now, most companies have grown to embrace sustainability principles as a way to create both immediate and future customer value and strengthen customer relationships. Under the sustainable marketing concept, a company's marketing should support the best long-run performance of the marketing system. Companies operating without having sustainability in their sight are being noticed more and more by a number of different stakeholders Critical consumers, at times organized via consumer movements, the environmental movement, social media, and the mass media, are important actors when it comes to pushing companies towards sustainability. Glaring media headlines about how workers making Apple iPhones are committing suicide, how horse meat is being sold as beef, or how those making clothes for H& M in factories in Cambodia are earning the equivalent of sek 3 to 5 per hour promptly reach today's critical consumers. When really profitable companies such as Apple and H&M turn out to be acting in a manner that does not promote sustainability, human rights, ethics, etc., this becomes a rewarding subject to write about. Even though this may be argued in different ways, and various standpoints may be taken, this type of occurrence adds to a general sense of disdain towards profitable companies that to a high or exaggerated degree exploit cheap labour opportunities in the Third World. The trend towards grass-roots-driven information, whereby critical consumers create and manage the information flow, not least via social media and alternative not-for-profit media channels, is pushing companies into working towards sustainability. Other factors affecting today's companies include the ever-increasing costs that the government and the Eu are imposing upon companies and consumers in order to make it more expensive to act unsus- tainably. Examples of such levies include carbon dioxide tax and tax on electricity consump- tion. The need for resource housekeeping, ethics, reasonable working conditions, etc. is thus becoming more and more important. Hence, a key point of departure in this chapter is discussing the relationship between production and marketing. During the 1990s, not least as a result of the work by the Brundtland Commission, more and more researchers, commentators, and business executives came to question the taken-for- granted picture that companies, by definition, are unsustainable organizations and that companies working proactively with sustainability issues will become unprofitable and knocked out. Thus, the 1990s came to constitute a turning point in terms of how the relation- ship between sustainability and economic growth was viewed. From having exclusively been addressed by consumer and social protest movements in the 1970s and 1980s, from the 1990s and onwards, movements advocating zero growth and a low-energy society means that the sustainability issue has become a key issue for many manufacturing companies. Planning for the future Today’s greening activities focus on improving what companies already do to protect the environment. The beyond greening activities identified in Figure 5.3 look to the future. Fist, internally, companies can plan for new clean technology. Many organizations that have made good sustainability headway are still limited by existing technologies. To create fully sustain able strategies, they will need to develop innovative new technologies. A sustainability vision serves as a guide to the future. It shows how the company's products and services, processes, and policies must evolve and what new technologies must be devel oped to get there. The vision provides a framework for pollution control, product stewardship, and new environmental technology for the company and others to follow. It addresses not just challenges in the natural environment but also strategic opportunities for using environ mental strategies to create sustainable value for the firm and its markets. Most companies today focus on the upper-left quadrant of the grid in Figure 5.3, investing most heavily in pollution prevention. Some forward-looking companies practise product stew- ardship and are developing new environmental technologies. However, emphasizing only one or two quadrants in the environmental sustainability grid can be short-sighted. Investing only in the left half of the grid puts a company in a good position today but leaves it vulner able in the future. In contrast, a heavy emphasis on the right half suggests that a company has good environmental vision but lacks the skills needed to implement it. Thus, companies should work at developing all four dimensions of environmental sustainability. Public actions to regulate marketing Citizen concerns about marketing practices will usually lead to public attention and legisla understand as they make decisions about competitive relations, products price, promotion, tive proposals. The task is to translate these laws into a language that marketing executives and distribution channels. Figure 5.4 illustrates the major legal issues facing marketing management. Ethical and moral dilemmas in practicing sustainable marketing ethics This chapter has dealt with sustainability, a field closely related to marketing ethics: Good ethics is a cornerstone of sustainable marketing. In the long run, unethical marketing harms customers and society as a whole and jeopardizes the company's very survival. The sustain- able marketing goals of long-term consumer and business welfare can be achieved only through ethical marketing conduct In this section, we'll take a closer look at some dilemmas that marketers have to deal with. Conscientious marketers face many moral dilemmas. The best thing to do is in many cases unclear. Because not all managers have fine moral sensitivity, companies need to develop corporate marketing ethics policies broad guidelines that everyone in the organization must follow. These policies should cover relations to marketing channels, advertising standards, customer service, pricing, product development, and general ethical standards. The finest guidelines cannot resolve all the difficult ethical situations the marketer faces. Table 5.1 lists some difficult ethical issues marketers could face during their careers. If marketers choose immediate sales-producing actions in all these cases, their marketing behaviour might well be described as immoral or even amoral. If they refuse to go along with any of the actions, they might be ineffective as marketing managers and unhappy because of the constant moral tension. Managers may need a set of principles that will help them figure out the moral importance of each situation and decide how far they can go in good conscience. But what principle should guide companies and marketing managers on issues of ethics and social responsibility? One philosophy is that such issues are decided by the free market and the legal system. Under this principle, companies and their managers are not responsible for making moral judgments. A second philosophy puts responsibility in the hands of i individual companies and managers This more enlightened philosophy suggests that a company should have a 'social conscience". Companies and managers should apply high standards of ethics and morality when making corporate decisions, regardless of what the system allows. History provides an endless list of examples of company actions that were legal but highly irresponsible. AS with environmentalism, the issue of ethics presents special challenges for international marketers, something that is clear in the Telia Company case at the beginning of this chapter. Business standards and practices vary a great deal from one country to the next. While various treaties against bribery and corruption have been signed and ratified by more than 60 countries, these are still standard business practices in many countries. The World Bank estimates that bribes totalling more than USD 1 trillion per year are paid out worldwide. One study showed that the most flagrant bribe-paying firms were from Indonesia, Mexico, China, and Russia. Other countries where corruption is common include Sierra Leone, Kenya, and Yemen. The least corrupt were companies from Australia, Denmark, Finland, and Japan. 18 The question arises as to whether a company must lower its ethical standards to compete effectively in countries with lower standards. The answer is no. Companies should make a commitment to a common set of shared standards worldwide. Many industrial and professional associations have suggested codes of ethics, and many companies are now adopting their own codes. For example, the American Marketing Association, an international association of marketing managers and scholars, developed a code of ethics that calls on marketers to adopt the following ethical norms:  ​ Do no harm. This means consciously avoiding harmful actions or omissions by embodying high ethical standards and adhering in all applicable laws and regulations in the choices we make. ​ Foster trust in the marketing system. This means striving for good faith and fair dealing so as to contribute toward the efficacy of the exchange process as well as avoiding deception in product design, pricing, communication, delivery or distribution. ​ Embrace ethical values. This means building relationships and enhancing consumer confidence in the integrity of marketing by affirming these core values: honesty, responsibility, fairness, respect, transparency, and citizenship. Companies are also developing programmes to teach managers about important ethical issues and help them find the proper responses. They hold ethics workshops and seminars and create ethics committees. Furthermore, most major U.S.companies have appointed high: level ethics officers to champion ethical issues and help resolve ethics problems and concerns facing employees. And most companies have established their own codes of ethical conduct. Still, written codes and ethics programs do not ensure ethical behaviour. Ethics and social responsibility require a total corporate commitment. They must be a component of the overall corporate culture. As the Google Code of Conduct concludes: “It's impossible to spell out every possible ethical scenario we might face. Instead, we rely on one another's good judgment to uphold a high standard of integrity for ourselves and our company. Remember.. don't be evil If you see something that isn't right, speak up!” SUMMARY In this chapter, we've closed with many important sustainable marketing concepts related to marketing's sweeping impact on individual consumers, other busi- nesses and society as a whole. You learned that sustain- able marketing requires socially, environmentally and ethically responsible actions that bring value not just to present-day consumers and businesses, but also to future generations and to society as a whole. Sustain- able companies are those that act responsibly to create value for customers in order to capture value from customers in return, now and in the future. Sustain- able marketing calls for meeting the present needs of consumers and businesses while still preserving or enhancing the ability of future generations to meet their needs. Whereas the marketing concept recognizes that companies thrive by fulfilling the day-to-day needs of customers, sustainable marketing calls for socially and environmentally responsible actions that meet both the immediate and future needs of customers and the company. Truly sustainable marketing requires a smoothly functioning marketing system in which consumers, companies, public policy makers and others work together to ensure responsible marketing actions. The sharing economy is a typical example of sustainable marketing. It could be a business opportunity in addi- tion to promoting sustainability. The sharing economy includes a range of practices and business models based on sharing. Marketing has its flaws and has received lots of criticism. Social criticism of marketing includes marketing's impact on individual consumers, high prices, high advertising and promotion costs, exces- Sive mark-ups, deceptive practices, high-pressure selling, shoddy, harmful or unsafe products, planned obsolescence, and poor service to disadvantaged consumers. In addition, marketing has been accused of having a poor impact on society overall through false wants and too much materialism, too few social goods, and cultural pollution. Through the consumerism and environmentalist movements, consumers have played an important role in making marketing more sustainable. Conscientious marketers face many moral dilemmas, hence principles must be in place to guide companies and marketing managers on issues of ethics and social responsibility.