m16mkt resit cw - nick stamelos.docx

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0Contemporary issues in Marketing


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M16MKT

Critical Analysis Resit CW 2

Nick Stamelos

ID: 2330349

15/8/13

Word Count: 2480


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Report Summary:

In this report we aim to analyze how ethical marketing and green marketing is shaping the

marketing mix that organizations are currently using. We are also attempting to provide insight

on how the consumer perceives the concept of green marketing; how beneficial is it towards a

company and what possibly issues it might have when being implemented. We also provide ourown personal recommendation on what actions a company should take when considering going

green.


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Table of contents

Introduction ______________________________________________________________page 4

What is Ethical and Green Marketing__________________________________________page 5

The Green Marketing Mix___________________________________________________ page 6

Gold Price vs. Green Reward________________________________________________ page 7

Recommendations and Limitations____________________________________________ page 8

Conclusion______________________________________________________________ page 10

References______________________________________________________________ page 11

Appendices_____________________________________________________________ page 12


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Introduction:

With the last few years giving a rise to environmental awareness, more companies are beginning

to understand that their consumers want a company or brand that has integrity. They want to be

able to purchase a product from a company that is practicing ethical marketing, such as Cadburyand their fair trade program (see appendix 1.1), and feel comfortable with that action. The

consumer wants to be able to use a product knowing that their own conscience will remain intact

but also be capable of parading their ethical awareness to the outside world.

Green Marketing is a fairly non-complicated approach towards promoting products that abide bya certain ethical framework; however many companies and organizations seem to take ethical

and green marketing for granted. This is mainly due to the inherent nature of the average

consumer who only wants to consume products and not think about how they might be damaging

the environment or in some cases, other cultures.

In this report we will aim to explain why ethical consumption, green marketing and

organizational conscience are important towards bettering the image of a company, as well as

satisfying their consumers ethical needs. Any organization that follows a definitive creed forenvironmental responsibility will be guaranteed to improve its relationship with both their target

market and their current consumers, but also with governmental bodies responsible for fair trade

and environmental awareness.

However we will also aim to identify any problems that might arise when taking the ethical

approach to marketing; problems such as false advertising of non-green products to appear as

though they are ethically manufactured with the environment in mind.


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What is Ethical and Green Marketing?

As mentioned above, Ethical Marketing and Green Marketing is the act of promoting a product

or service whilst adopting an environmentally friendly view on how the product is created; as

well as how the company conducts itself within the boundaries of ecological business. Greenmarketing is not just a method used to reevaluate or adjust existing marketing practices, but

rather is an approach that seeks to address a major gap between current marketing practices and

the socio-ecological realities of a broader marketing environment (Belz F. et al., 2009).

This major gap, also known as the green gap (Aubrey R. and Angeline G. 2012), is thedifference between how our current ecological practices as a civilization have become stricter in

order to better our environment; and yet corporate business practices along with their

promotional campaigns remain in an unethical consumption state.

In the recent years there has been an increase in ethical consumption, the act of purchasing and

consuming with moderation. Ethical consuming aims to better the way individuals purchase their

desired products; as well as to how they approach different organizations. Ethical consumption

incorporates a wide array of actions that dictate an individuals consumer behaviors; actions suchas advocating need purchases over want and boycotting of unethical organizations (Loureiro

et al2002).

Ethical Consumption and the Green Consumers:

However, what organizations forget to note, is that ethical consumption fits into a consumergroup; this means that individuals are part of a community that can be easily penetrated by

newcomers. We say easily penetrated by newcomersbecause in our current technological state,

communities no longer have any geographical boundaries; anyone can be part of any community

they desire simply through the use of modern communication (Muniz and OGuinn 2001) andbecome members of communities through sheer mutuality (Bender 1978).

As detailed in Augers (2003) article, an individual will be more willing to purchase products

that are marketed with ethical/environmental features. Therefore organizations need to takeadvantage of this growing community and tap into their consumer desires; by catering to their

ethical and ecological consumer behaviors. In order to do so, one must first understand how

ethical consumption and green marketing has altered the way organizations should function.

Ethical consumption as stated by Sebastiani R, et al (2013) plays such a great role in the way that

consumers interact with organizations that it can affect everything from the way the purchase

products (Huybrechts and Reed 2010) their selection processes towards different brands(Kniazeva and Venkatesh 2007) and even the channels that are used to direct promotions towards

said consumers (Thompson and Coskuner-Balli 2007).


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The Green Marketing Mix:

It has become so significant within the marketing world that Green Marketing has become

legitimate approach towards targeting individuals who are environmentally aware and ethicallyconscious. The Green Marketing Mix (see appendix 1.2) was created in order to re-evaluate the

usage of the 4Ps within the context of environmental awareness. According to Ginsberg and

Bloom (2004) a company can classify itself under four different categories (see appendix 1.3)which determine the level of commitment a company will want to have with green marketing

and the environment.

As provided by Kumar D.,et al.(2011), the following are the four possible marketing strategiesa company can follow when going green:

Lean Green is an approach for companies that adopt green practices but do not focus on

publicizing their initiatives. They implement environmental friendly practices for the reduction

of cost and in order to improve efficiency. Such companies choose to function this way in orderto reduce their overall expenses during production as well as to create an internal environment

that improves working efficiency among both employees and machinery.

Defensive Green is more of a marketing orientated approach that is used as a precaution towardspossible crisis situations and in order to counter the competition. Companies that use defensive

green methods tend to utilize green marketing so that they can create a positive brand image, in

such a way that they will stick out from their competition. Most of the environmental initiativesthat companies under this category undertake are less permanent and rather again function as a

way to differentiate from their competitors.

Shaded Green involves companies that adopt a more stable and long-term green strategy. These

companies aim to participate in many different environmentally friendly processes that require asignificant financial dedication; however they also require a change in their organizational

structure to accommodate for a non-financial sort of dedication. Shaded green companies usethese approaches to mainly differentiate their products on the basis of being moreenvironmentally friendly and green.

Lastly, the Extreme Green approach is for companies that adopt the green marketing mix in a

very holistic manner. They attempt to integrate environmental awareness in their overallmarketing strategies. Running as an environmentally friendly organization is what drives these

companies to improve their methods of business; by bringing in concepts such as life cycle

assessments, total environmental quality management, the reduction of wastes and ecologicallyfriendly promotions that endorse the companys philosophy. Many consider these organizations

as the niche of the market, since they offer a complete package that is rarely looked for by the

average environmentally conscious consumer.

These approaches are used in order for a company to be able to classify which way they arewilling to go with their marketing strategy. They are affected by the current market the company

wants to target, as well as how they want their product and brand image to be perceived by the

general public.


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Gold Price vs. Green Reward:

The general public has become so vocal that research (see Weng Marc et al 2013) has beenconducted in order to understand how green marketing is affecting the consumers perception

and decision making. Participants of this study viewed green marketing as a fairly new approachthat was highly innovative and gave way to a so called go-green marketing trend that aimed toraise awareness for environmentally friendly products. However there was a high focus on the

fact that many individuals simply did not interact with environmentally friendly concepts in their

daily life, and as such did not go out of their way to change their purchasing habits simply on thenotion of being green.

Another very interesting part of the study focused on the reward vs. price that green products

offered. Many individuals felt that green goods simply did not offer enough reward over their

cost; they would purchase goods that might help the environment or provide more nutrients, butthe costs made them seem as though they were luxury goods rather than daily expenses. This

brings us back to the 4Ps (see appendix 1.4) of the green marketing mix, and most importantlyon Price.

Price plays a big role on how motivated an individual is towards purchasing any product or

service. Second thoughts into the purchasing of products that fall into the green category, over

the non-green goods the consumer purchases on their usual buying habit, are going to arise if theprice of the eco-friendly products reaches a point were cost outweighs benefit (Weng Marc et al

2013).

The right message can be delivered, the right location can be chosen and right product can be

sold but it all comes down to the pricing. A product is bound by very similar rules as those usedin the project management triangle (see appendix 1.5), where one cannot have everything they

want from a product they are producing and must pick only two; we believe a green productmust abide from a selection of terms such a quality; environmental awareness, in this case beingmanufactured and sold under strict ecological regulations such as reduced CO2 emissions; and

the cost for its production, which in turn will gauge its pricing.

However, the average consumer sees a green product as one that has both quality andenvironmental awareness; therefore it is stuck to having a high manufacturing cost and

subsequent price. A company cannot market a green product as both inexpensive and of quality,

because in turn it will lose its ecological credibility; yet it cannot be ecologically credible andinexpensive or it will be perceived as a cheap, poor quality item. As a result green products are

stuck in a predetermined state of being quality, eco-friendly goods at an unreasonable price.


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Recommendations and Limitations:

Ultimately a company must find a way to market its products as being eco-friendly, of highquality and worth the price tag. They need to create a campaign that will raise awareness of the

benefits that one can receive from using and purchasing such ecological products. This campaignmust not only be related towards the product but also the way that the internal parts of theorganization function.

Firstly the company should pick an orientation such as the ones mentioned above; we

recommended following the shaded green approach, which will allow the company to adopt along-term environmentally friendly strategy for both the organizational structure and its

marketing campaigns.

Even though there might be an issue with the finical support that is required from such acommitted plan, we believe that the overall results from this change will bring a big payoff. Not

only will the advertising campaigns allow for the raising of awareness concerning green productsgreen products that the company is selling, but it will also allow the target consumers to gain a

glimpse of how dedicated the company is by altering their very own organizational structure toaccommodate for the environment.

Going back to the marketing side of things, we recommend that the company provide its very

own community alongside its eco-friendly brands, so that their customers are able to feel asthough they belong to a cost most noble. As cited before, an ethical and ecological consumer

belongs to a community of like-minded individuals; therefore creating a community that brings

all those consumers together under the companys branding will create a high level of interaction

and involvement. The brands will become synonymous with ethical marketing andenvironmental awareness, just like Cadbury and their fair-trade products (see appendix 1.1); and

as such will gain a positive reputation within their target markets, become widely moredifferentiated than the possible competition.

However, we must also keep in mind that green marketing is not all that beneficial. It has its pros

but it also has a select few of cons that might deter a company from going green. While it

might seem that adopting a green marketing approach is advantageous for a company due to its

inherent benefits, there are some problems that must be overcome before an organization can

truly feel the benefits of using green marketing.

The biggest problem that companies will encounter when using a green strategy is false

marketing; whichmeans that the company must ensure that their actions are not misleading inany way towards its consumers or the industry. It must always abide by any and all laws or

regulations that precede the usage of environmental marketing. They must ensure that their

consumers do not perceive their actions as environmentally responsible when they are not.

Another major challenge that green marketing will bring is a rise in production costs; due to their

nature, green products require materials that are recyclable and renewable. However such


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materials come at a high cost and as such might not be very appealing to companies that are

trying to reduce their costs.

On the subject of costs, green marketing obviously requires green products, but green products

also require green technology. In order to produce products that abide by certain ecological

regulations, the production infrastructure must be upgraded to the appropriate technology whichwill help reduce CO2 emissions, create organic goods and overall better the functionality of the

company. This might seem as a beneficial point but on the contrary it requires a high level of

investment in both the monetary and organizational aspects of a company.

Lastly and possibly most important, is the way that the target consumers will react towards green

brands and/or products. The majority of the public is not very aware of green products and their

benefits to both the environment and the person using them; which leads to a need for a

marketing campaign that will raise their awareness levels and hopefully make them more

involved. Yet when they do become involved, those consumers might not be willing to pay a

premium price for these green products, and as such puts another hamper on the company.


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Conclusion:

Before turning environmentally friendly and ethically aware, a company must weigh theirpossible benefits over the probable costs they will have to endure before their change becomes

valuable. It should be noted that the overall costs that a company will endure in order to makethe change over to being ethical and green will look very meaningless when they begin to count

up all the savings that they will gain over the next following years.

Going green is a slow investment, it requires a certain amount of time before the overall profitsand savings are seen; however what is seen from the beginning is a rise in efficiency and public

image. A company which uses green marketing the right way will be capable of increasing its

image towards its current and potential customers as well as an growth in organizationalefficiency.


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References:

Belz, F. and Peattie, K. 2009, Sustainability marketing: a global perspective. 2nd ed. John Wiley& Sons Ltd.

Fowler III, A, & Close, A. 2012, 'IT AIN'T EASY BEING GREEN',Journal of Advertising, 41,

4, pp. 119-132, Business Source Complete, EBSCOhost, viewed 15 August 2013.

Loureiro, M. L., McCluskey, J. J., & Mittelhammer, R. C. 2002, Will consumers pay a premium

for eco labeled apples?Journal of Consumer Affairs, 36(2), 203219.

Muniz, A. M., & OGuinn, T. C. 2001, Brand community, Journal of Consumer Research,

27(March), 412432.

Bender, T. 1978, Community and social change in America. New Brunswick, NJ: Rutgers.

Auger, P., Burke, P., Devinney, T. M., & Louviere, J. J. 2003, What will consumers pay for

social products features?Journal of Business Ethics, 42, 281304.

Sebastiani, R, Montagnini, F, & Dalli, D. 2013, 'Ethical Consumption and New Business Models

in the Food Industry. Evidence from the Eataly Case',Journal Of Business Ethics, 114, 3, pp.

473-488, Business Source Complete, EBSCOhost, viewed 15 August 2013.

Thompson, C. J., & Coskuner-Balli, G. 2007, Countervailing market responses to corporate co-

optation and the ideological recruitment of consumption communities,Journal of ConsumerResearch, 34(2), 135152.

Ginsberg, J. M. and Bloom, P.N. 2004, Choosing the Right Green Marketing Strategy,MIT

Sloan Management Review, Vol. 46, No. 1, pp. 79-84.

Kumar, D., Kumar, I., Rahman, Z., Yadav, S., Goyal, P. 2011, 'Green Marketing Mix:

Rethinking Advantage during Climate Change, The first International Conference of

Interdisciplinary Research and Development. [online] available at:

http://www.inrit2013.com/inrit2011/Proceedings2011/02_62_15C_Divesh%20Kumar_[5].pdf

viewed 15 August 2013.

Weng Marc, L, Ding Hooi, T, Chun Keat Sim, J, Kah Mun, H, & Kin Wai Cheong, K. 2013,

'UNDERSTANDING THE INFLUENCE OF GREEN MARKETING STRATEGIES ON

CONSUMER PERCEPTION AND DECISION-MAKING',Review Of Business Research, 13, 2,

pp. 21-28, Business Source Complete, EBSCOhost, viewed 15 August 2013.
http://www.inrit2013.com/inrit2011/Proceedings2011/02_62_15C_Divesh%20Kumar_%5b5%5d.pdfhttp://www.inrit2013.com/inrit2011/Proceedings2011/02_62_15C_Divesh%20Kumar_%5b5%5d.pdfhttp://www.inrit2013.com/inrit2011/Proceedings2011/02_62_15C_Divesh%20Kumar_%5b5%5d.pdf


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Appendices:

1.1: Cadbury and Fair-trade

Cadbury and the Fairtrade Foundation today announced plans to achieve Fairtrade certification

for Cadbury Dairy Milk, the nations top selling chocolate bar, by end of Summer 2009. This

groundbreaking move will result in the tripling of sales of cocoa under Fairtrade terms for cocoa

farmers in Ghana, both increasing Fairtrade cocoa sales for existing certified farming groups, aswell as opening up new opportunities for thousands more farmers to benefit from the Fairtrade

system.

Cadbury Chief Executive, Todd Stitzer, says, This is an historic moment for our company. I

am proud that the nations favourite chocolate bar will display the FAIRTRADE Mark. I was in

Ghana last month and saw how vital it is that businesses support their partners and the

communities they live in. We believe that by joining forces with the Fairtrade Foundation, we

can further improve living standards and conditions for farmers and farming communities, and

create a sustainable supply of high quality cocoa for Cadbury.

Cadburys commitment is breakthrough news for the farmers in Ghana who are very excitedthat they will be able to sell more of their cocoa as Fairtrade, bringing greater benefits to their

communities, says Harriet Lamb, Chief Executive of the Fairtrade Foundation. Were

delighted to have the opportunity to certify Cadbury Dairy Milk, enabling all those who buy it to

make a real difference for cocoa farmers with every purchase. This certainly sets a new standard

for the mainstream chocolate industry.

Source:

http://www.fairtrade.org.uk/press_office/press_releases_and_statements/archive_2009/march_2009/cadbury_dairy_

milk_commits_to_going_fairtrade.aspx
http://www.fairtrade.org.uk/press_office/press_releases_and_statements/archive_2009/march_2009/cadbury_dairy_milk_commits_to_going_fairtrade.aspxhttp://www.fairtrade.org.uk/press_office/press_releases_and_statements/archive_2009/march_2009/cadbury_dairy_milk_commits_to_going_fairtrade.aspxhttp://www.fairtrade.org.uk/press_office/press_releases_and_statements/archive_2009/march_2009/cadbury_dairy_milk_commits_to_going_fairtrade.aspxhttp://www.fairtrade.org.uk/press_office/press_releases_and_statements/archive_2009/march_2009/cadbury_dairy_milk_commits_to_going_fairtrade.aspxhttp://www.fairtrade.org.uk/press_office/press_releases_and_statements/archive_2009/march_2009/cadbury_dairy_milk_commits_to_going_fairtrade.aspx


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1.2: Green Marketing Mix


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Source: Grundey, D. and Zaharia, R.M. 2008, Sustainable incentives in marketing and strategic greening: the cases

of Lithuania and Romania, Baltic Journal on Sustainability, 14(2), 130143.

(Image,http://upload.wikimedia.org/wikipedia/commons/c/ce/Green_Marketing_Activities.png)

1.3: Green Marketing Strategy Mix
http://upload.wikimedia.org/wikipedia/commons/c/ce/Green_Marketing_Activities.pnghttp://upload.wikimedia.org/wikipedia/commons/c/ce/Green_Marketing_Activities.pnghttp://upload.wikimedia.org/wikipedia/commons/c/ce/Green_Marketing_Activities.pnghttp://upload.wikimedia.org/wikipedia/commons/c/ce/Green_Marketing_Activities.png


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Source: Ginsberg, J. M. and Bloom, P.N. 2004, Choosing the Right Green Marketing Strategy, MIT

Sloan Management Review, Vol. 46, No. 1, pp. 79-84.

(Image,https://reader012.{domain}/reader012/html5/0817/5b76ae0bde2f1/5b76ae1295495.png)

1.4: The 4Ps of Green Marketing
http://sloanreview.mit.edu/files/2008/12/46112-si1-lo8.pnghttp://sloanreview.mit.edu/files/2008/12/46112-si1-lo8.pnghttp://sloanreview.mit.edu/files/2008/12/46112-si1-lo8.pnghttp://sloanreview.mit.edu/files/2008/12/46112-si1-lo8.png


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PRODUCT: The products have to be developed depending on the needs of

the customers who prefer environment friendly products. For example,

Nike is the first among the shoe companies to market itself as green. It is

marketing its Air Jordan shoes as environment- friendly, as it has

significantly reduced the usage of harmful glue adhesives

PRICE: Green pricing takes into consideration the people, planet and profit

in a way that takes care of the health of employees and communities and

ensures efficient productivity. Wal-Mart unveiled its first recyclable cloth

shopping bag.

PLACE: Green place is about managing logistics to cut down on

transportation emissions, thereby in effect aiming at reducing the carbon

footprint. For example, instead of marketing an imported mango juice in

India it can be licensed for local production avoiding shipping of the product

from far away, thus reducing shipping cost & carbon emissions.

PROMOTION: Green promotion involves configuring the tools of

promotion, such as advertising, marketing materials, by keeping people,

planet and profits in mind. Toyota is trying to push gas/electric hybrid

technology into much of its product line. It is also making the single largest

R&D investment in the ever-elusive hydrogen car and promoting itself as

the first eco-friendly car company.

Source:http://www.slideshare.net/MisbahChoudhary/green-marketing-12772556

1.5: Project Management Triangle
http://www.slideshare.net/MisbahChoudhary/green-marketing-12772556http://www.slideshare.net/MisbahChoudhary/green-marketing-12772556http://www.slideshare.net/MisbahChoudhary/green-marketing-12772556http://www.slideshare.net/MisbahChoudhary/green-marketing-12772556


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Source: Atkinson, R. 1999, Project management: cost, time and quality, two best guesses and a

phenomenon, itstime to accept other success criteria, International journal of project

management, 17(6), 337-342.

(Image,http://www.sciencedirect.com/science/article/pii/S0263786398000696)
http://www.sciencedirect.com/science/article/pii/S0263786398000696http://www.sciencedirect.com/science/article/pii/S0263786398000696http://www.sciencedirect.com/science/article/pii/S0263786398000696http://www.sciencedirect.com/science/article/pii/S0263786398000696

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