Adding Value through Marketing

7BSP0419 (Semester B 2010-11)

❶ Cova (1996) argues that the

postmodern individual in the

light of shifting markets and

advances in technology ‘is both

isolated and in virtual contact

with the whole world

electronically. Postmodern

daily life is characterised by

ego concentration encouraged

by the spread of computers’. With reference to examples discuss the

opportunities for organisations to develop new products for this

changing world.

❷ ‘Sustainability is a tendentious catch-all term with

a certain political flavour and its own contradictions’ –

Hutchinson and Young (2005). Evaluate the extent

to which a sustainable and green approach to

marketing can add positively to the bottom

line in an age of consumer confusion and

possible indifference.

❸ References

Deniz Kurugollu

10283502

MSc Marketing

9th May 2011

❶ ‘Postmodern individual in the light of shifting markets and advances in

technology is both isolated and in virtual contact with the whole world electronically’

(Cova, 1996). In this respect, postmodern consumer daily life has been shown to

change dramatically. This brings with new opportunities for new product and service

development so as to meet those postmodern consumers’ demands. This essay will

address to the postmodern consumer life and the respective product or service

developments. It follows the structure shown in Table 1.

Table 1: The post modern consumer

One of the emerging concepts that postmodernism has brought to our glossary is

‘hyper-reality’. Hyper-reality is characterized by image, illusion, and simulation

where we know something to be false but feel it to be true (Cova, 1996). In this

context, Elliott and Percy (2007) point out that rationality is not strong enough to

stop us enjoying ourselves. As a result, postmodern consumers favour simulation to

reality, and prefer to experience their consumption activities in a virtual way (Cova,

1996). In this respect, hyper-reality receives significant support from the internet and

computer technologies as providing consumers with virtual experiences. This

consequently leads to new product developments. For example, ‘Planet Calypso’

owned by the company MindArk is an entertainment and business platform which

enables players and organizations to build, design and trade their own virtual planets

online. To a devoted ‘postmodern’ consumer it seems that hyper-reality is such

serious that he bought a virtual property for $6 million (Trendhunter, 2011a).

Post modern consumer life New product and service developments

Hyper-reality Planet Calypso

Individualism 3D printing, Mini Cooper, Nike

Customization RSS (Really Simple Syndication)

Right here, right now Virtual banking

Prosumer Twitter, Facebook, Foursquare → Google Analytic

Post-modernity has brought about ‘individuals’ who make use of the market offerings

in a way that they create their own consumption patterns. They want to be involved in

the process as a producer of experiences, not as a target of final goods and services

(Cova, 1996). In this regard, many brands now offer customers to personalize their

consumption objects in line with their own tastes and preferences. For example, The

Mini Cooper allows consumers to customize their cars on website before it goes to

personalized production process (Mini, 2011). Likewise, Nike and many others allow

customers to design their own shoes (Nike, 2011). The most significant development

in this area can be seen in recently emerging technology ‘3D printing’. This

technology can be regarded as the latest manifestation of customization (BBC, 2011).

It does not only provide large variety of usage area such as health, fashion, and even

food but also, enables to produce them at lower cost (Trendhunter, 2011b). It seems

that 3D printer will become a casual item in the postmodern consumer’s house in the

near future.

Rapp and Collins (1990) defines marketing in the era of customization as ‘an

extremely personal form of marketing that recognize, acknowledges, appreciates, and

serves the interests and needs of consumers whose personal identities and marketing

profiles become known to the marketers’. In this sense, RSS (Really Simple

Syndication), a free internet service which sends to subscribers electronically what

they want to read, watch, and listen can be taken as a good example of new service

development for postmodern consumers. On the other hand, some businesses also

use this new service to organize their business operations at lower cost. For example,

Union Bank of California’s use targeted RSS feeds based on job description and

location to send memos instead of using broadcast emails, which in turn accelerates

the operations and saves time. Consequently the bank is expected to save $750.000

(Beizer, 2007).

Firat and Shultz (1997) indicate that the postmodern consumer has a ‘right here, right

now’ attitude. In other words, consumers of today are seeking immediate gratification

in return for their consumption. Hence, this requires instant, ubiquitous marketing in

order to meet the expectations of those postmodern consumers. In this respect,

‘virtual corporation’ and ‘virtual marketing’ has been shown to take place in

postmodern daily life (Aijo, 1996). For example, virtual banking has emerged as a

new service development practised by several banks such as ING, HSBC, Citibank,

and so on (CR, 2009). By using web ready devices such as smart phones, customers

of these banks can carry out all financial transactions anytime, anywhere.

Finally, the internet and web-integrated devices such as smart phones provide

consumers with opportunities to be virtually in touch with the whole world (Cova and

Pace, 2006). This significant development in web technologies has morphed

consumers into ‘prosumers’ (Gerhardt, 2008). Prosumer stands for the combination

of ‘producer and consumer’. Prosumers are keen adopters of web technologies to stay

connected to outside world whenever and wherever they want. The term ‘self-

exposure’ can be used to explain this group. They are inclined to share everything

from their current location and time (e.g. Foursquare), likes and dislikes (e.g. Twitter,

Facebook) to even their private lives (e.g. blogs). In this context, there is an enormous

opportunity for marketers to understand their customers’ insights since prosumers

expose considerable amount of information about themselves. As a matter of fact,

new product and service developments such as Google Analytics appear in the market

to capture prosumer insight and allow marketers to customize their offerings to suit

individual needs and wants in real time (Derrick, 2006; Google, 2011).

❷ Sustainability has been shown to become an important topic in the companies’

board room recently. It has also started to take place on the management hierarchy as

a separate discipline, now companies have a ‘Chief Sustainability Officer’. There

seems to be a lack of understanding about the terminology. In general, sustainability

is referred to environmental issues only or it is used to mention about philanthropic

efforts. However, Werbach (2009) propose four equal dimensions for true

sustainability; Social, Economic, Environmental, and Cultural (see Figure 1). It can

therefore be suggested that sustainability is a holistic approach for organizations to

consider in a wider context.

Figure 1: True sustainability

Adapted from: Werbach, 2009

It is evident that playing ‘the sustainable’ creates positive buzz and PR for the sake of

companies by empowering the brand image in the mind of consumers. Sustainable

efforts also help businesses to save their operating costs, to attract new customers,

and even to build new brands. Consequently, it adds to the bottom line. Pinault (in

Bourne, 2011) states that ‘sustainability is as much to do with the bottom line as it

does with the environment’. For example, P&G declared its 2012 goals to generate

$20 billion in sales from green brands (Sherwin, 2008). On the other hand, talking

about sustainability without really making some good practices and tangible efforts

are deemed to blame for ‘greenwashing’ (Davis, 2009). According to the research

(Havas Media, 2010), confusion, lack of clarity and perceived higher prices prevent

responsible purchasing.

In the light of foregoing, this essay will address to the given benefits of sustainable

efforts and the unlikely events of being classified under ‘greenwashing’ by using the

examples from real organizations. It follows the structure illustrated in figure 2.

Figure 2: Benefits & Challenges

Cost saving

It can be suggested that sustainable efforts ought to be considered as investment to

cut operational costs in the longer term rather than expenditure. For example, Macy’s

announced to install energy saving LED light bulbs in its stores in America. Although

this new energy savvy attempt will require initial outlay for the company, it is

planned to cut energy consumption (i.e. cost) by 73 per cent in the longer term

(Bourne, 2011). Similarly, Levi’s has introduced Water-Less jeans, which require an

average of 28% and as much as 96% less water to produce. The company is expected

to cut cost equivalent to 16 million litres of water in only three month period (Bourne,

2011).

Benefits Challenges

disparity

the nature of business

portfolio contradictions

branding opportunities

reputation & credibility

cost saving

Reputation & Credibility

Silverstein (2010) states that corporate sustainability does not directly affect brand

purchase decision, but the ‘meaningfulness’ of the brand in the mind of consumers.

Davis (2009) claims that consumers concern what companies are doing to contribute

global issues and expect them to show their environmental and social commitments

to those problems. Research (Jobber, 2010) reveals that consumers are ready to pay

price premium and also more forgiving of businesses if they believe that the company

is socially and environmentally responsible. In this respect, it can be suggested that

commitment to sustainability can be used as a signal for reputation management and

brand credibility, which in turn is followed by positive word-of-mouth and attracting

new customers; consequently, it positively effects to the bottom-line.

Branding

Sustainability programmes have recently been shown to become sub-brands of the

main company or a brand on its own. For example, Plan A by M&S, Virgin Unite by

Virgin, and Ecomagination by GE can be classified under the sustainability

programme as brands (Sherwin, 2008). This implies that there is an opportunity for

companies to differentiate their brands in terms of sustainability. However, it should

be noted that integrity is the key for those sustainable activities to be meaningful in

the eye of consumers (Havas Media, 2010).

Portfolio contradiction

The key challenge for marketing managers is to integrate sustainability with overall

business strategy and consumer insights (Davis, 2009). In this respect, portfolio

inconsistency may put sustainable efforts under criticism. An example of this can be

taken from Virgin Group. Despite of investing great amounts in sustainable issues

such as biofuels and carbon reducing technologies, the company also has Virgin

Galactic (taking consumers on trips to space) in its portfolio (Sherwin, 2008). The

latter seems paradoxical to the former efforts on the basis of wasting resources.

The nature of business

Sometimes the business itself may become a challenge in acting sustainably, in

particular socially responsible. For example, tobacco companies can be classified

under this circumstance. Considering the social dimension of Werbach (see figure 1),

public health can be regarded as a conflicting issue for those companies. For instance,

although Philip Morris (2011), under its charitable giving program, focuses on areas

such as hunger, poverty, rural living conditions, education, and so on; the dominant

health-related facts of cigarette may prevent consumers from matching the company

with socially responsible activities.

Disparity between ‘said’ and ‘done’

There is a delicate balance between being sustainable and greenwashing. Even a

trivial disparity between what companies claim and what they actually implement

may attach a negative label to the brand name. As previously mentioned, sustainable

efforts have significant power to create buzz and PR. However, this may work

negatively as well. For example, clothing brands like Primark and Nike still carry the

negative image resulted from their operations in supply chain (Harrison and Scorse,

2010). Again, it should be noted that integrity is vital in terms of sustainable efforts to

add true value at the end of the day.

❸ References

Aijo, S. T. (1996) ‘The theoretical and philosophical underpinnings of relationship marketing: environmental factors behind the changing marketing paradigm’. European Journal of Marketing. 30 (2) pp. 8-18.

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Havas Media (2010) ‘Brand Sustainable Futures’. Available at: http://www.havasmedia.com/#/en/MediaAndPressRoom/BrandSustainableFutures [Accessed 9th May 2011] Jobber, D. (2010) Principles and Practice of Marketing. 6th ed. Berkshire: McGraw Hill M&S (2011) ‘Plan A’. Available at: http://plana.marksandspencer.com/ [Accessed 9th May 2011] Mini (2011) ‘Design your Mini’. Available at: http://www.mini.co.uk/html/ecom/ecom.html [Accessed 9th May 2011] Nike (2011) ‘NikeID’. Available at: http://store.nike.com/gb/en_gb/?l=shop,pwp,c-300/hf-4294967255/f-787/t-Men%27s_NIKEiD&sitesrc=GBLP_IDNS#l=shop,pwp,c-300/hf-4294967255/f-787/t-Men's_NIKEiD [Accessed 9th May 2011] Philip Morris (2011) ‘Our charitable giving programme’. Available at: http://www.pmi.com/eng/about_us/charitable_giving/pages/charitable_giving.aspx [Accessed 9th May 2011] Pinault, H., in Bourne, L. (2011) ‘Fashion companies go green, cut costs’. Available at: http://www.nbcnewyork.com/blogs/threadny/THREAD--120714254.html [Accessed 9th May 2011] Rapp, S. and Collins, T. (1990) The Great Marketing Turn Around: The Age of The Individual and How To Profit From It. New Jersey: Prentice-Hall Silverstein, B. (2010) ‘Consumers Rank Ikea, L'Oreal, Home Depot High in Corporate Sustainability’. Available at: http://www.brandchannel.com/home/post/2010/10/22/Brand-Sustainable-Futures-2010.aspx [Accessed 9th May 2011] Sherwin, C. (2008) ‘Brand green: ten features for success’. Forum for the future. Available at: http://www.forumforthefuture.org.uk/ [Accessed 9th May 2011] Trendhunter (2011a) ‘Planet Calypso’. Available at: http://www.trendhunter.com/trends/planet-calypso#!/photos/109836/8 [Accessed 9th May 2011] Trendhunter (2011b) ‘3D printing’. Available at: http://www.trendhunter.com/trends/3d-food-printer [Accessed 9th May 2011] Virgin (2011) ‘Virgin Unite’. Available at: http://www.virgin.com/company/virgin-unite [Accessed 9th May 2011] Werbach, A. (2009) Strategy for Sustainability: A Business Manifesto. Massachusetts: Harvard Business Press