Companies throughout the world are adapting sustainable approaches to business in order to maximize profits and remote a greener, more environmentally friendly way of operating. But the question they are all asking is will this help create a competitive advantage for the organization, and will that advantage be sustainable over time? Environmental marketing is arguably one of the most talked about subjects in the area of business.
Whether businesses are willing to accept it or not, the world in which we live is changing, and hence there is a call to some degree to move towards environmental savvy practices – this includes the area of environmental marketing strategy for businesses. However the success of implementing such a strategy remains in question, and is the subject of much debate amongst businesses and consumers alike. If a given business implements such a strategy, does it mean that the business in question will gain some form of sustainable competitive advantage?
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Does the evidence against this case outweigh this assumption? Or is it the case that this advantage is achievable, but requires concentrated effort and beneficial factors and circumstances? This piece seeks to clarify the possible answers to this discussion by providing a comprehensive analysis of the subject matter surrounding the topic. Key terms, such as ‘green marketing’, ‘competitive advantage’ and ‘sustainability’ will be defined in the opening section.
The piece will then move towards an in-depth study, using key theory concepts and applying them to well known businesses existing in the market space today, there is no easier way to relate to an issue than a real life example, exploring the viability of implementing such a strategy and whether potential does indeed exist. A conclusion will be drawn up as to whether or not, as a result of the research, environmental marketing does create the possibility of a competitive advantage which may be sustained by a given business, and possible suggestions and reasons for the outcomes given will then be explored. Green Marketing” refers to holistic marketing concept wherein the production, marketing consumption an disposal of products and services happen in a manner that is less detrimental to the environment with growing awareness about the implications of global warming, nonprogrammable solid waste, harmful impact of pollutants etc. , both marketers and consumers are becoming increasingly sensitive to the need for switch in to green products and services.
While the shift to “green” may appear to be expensive in the short term, it ill definitely prove to be indispensable and advantageous, cost-wise too, in the long run (Mishear, 2012). Sustainable development can be described as “development that meets the needs of the present without compromising the ability of future generations to meet their own needs”. (World Commission on Environment and Development, 1987) Research & Analysis Firstly, many businesses involved in environmental marketing go through a process, similar to that of the development of environmental marketing itself.
Appetite discusses how green marketing, while originally formulated as a means to help the deduction of waste towards the end of the production process, moved towards creating a sustainable environment – with the prospect of re-evaluation for further development in this area (Appetite, 2001). One could argue that companies can be traced along a similar pathway, showing the movement from a pure, ecological form of environmental marketing, to that of sustainability.
Sony, the world renowned consumer electronics giant, may be a relevant example to continue the discussion on whether or not the concept of sustainability and environmental marketing can potentially produce a competitive advantage for a given firm in industry. It has come readily apparent that, whilst not an overtly environmental marketing orientated company, according to their own corporate social responsibility website (Sony, 2013), Sony has been engaged in some form of environmental marketing since the 1994 fiscal year when they first began issuing their own internal environmental report.
Indeed, their latest Business and Corporate Social Responsibility(CARS) report speaks not only of aspects related to that of the environment, but also governance, responsible sourcing and human resources. Based on the readings of Appetite (2001) one may argue that Sony is moving towards implementing an environmental racketing strategy, and towards, as he would describe, a sustainable marketing strategy.
Contained within their recent CARS reports is an initiative known as “Road to Zero”, a strategy “striving to achieve a zero environmental footprint throughout the life cycle of our products and business activities by 2050” (Sony, 2013). With such an ambitious plan, it appears from the outset that Sony are committed to a environmental marketing strategy. The question remains, however; has Sony achieved a competitive advantage through its apparent implementation of an environmental marketing strategy?
Sony remains one of the most recognized brands ND companies in the world, but it is doubtful whether they have obtained a direct competitive advantage through their application of an environmental marketing strategy. Like many companies however, Sony do have the potential to capture a competitive advantage from an environmental marketing stand point. In her book on the issue of sustainability “The Sustainable MBA,” Sessile Hebrew argues that, while the exact results differ, “a potentially large percentage of consumers are ready and looking to purchase products on sustainability grounds… T is a growing market that is not yet being effectively reached. (Hebrew, 2010). Due to the fact the idea of environmental marketing has progressed in the minds of businesses and the wider market, so too will companies move within the confines of the green marketing strategy matrix, as put forward by Ginsberg and Bloom (2004) – the majority of businesses today will have moved from some form of “lean green” strategy towards something more representative of shaded, defensive or even extreme green.
While one, for example, may conclude that Sony is making efforts towards moving along the environmental marketing line, the lack of extensive public knowledge would lead one o suggest that they are at least not to be considered as an “extreme green” implementer. However, regardless of their current position, it is clear that due to environmental pressures companies are moving, or will have to move towards some form of environmental marketing strategy, such as is being proposed by the likes of Sony.
Another rival of Sonny’s should also be considered, Toshiba is an example off well known company who are trying to incorporate environmental marketing into their business however they still position themselves extremely low on the Greenback ‘Guide to Greener technologies’ where they find themselves at on the OTTOMH of the list behind their competitors Acre, Monika, Dell, HP and the list goes on. (Greenback. Org,2012) In relation to the products and services they offer their quality and dependability is not disputable. However, their green marketing stance is quite the contrary.
It is said that Toshiba talk a great line but do not follow through, in order to be successful in this area it is very important to communicate to your consumers exactly what your company ethos is, it is of no benefit to attempt greenmailing of consumers because the company will get caught out and their chances to tap into this possibly lucrative market will disappear. However, in recent years they have really tried to get involved in promoting green, or environmentally friendly events and initiatives (Matthews, 2013).
There are arguments for and against whether green marketing can provide a sustainable competitive advantage. Companies need to consider the future as well as the present in order to sustain a competitive advantage and be aware that no resource is infinite and ‘green’ problems can affect every business. It is certainly not a quick, overnight process. It will take true belief from the top to the bottom of the organization in order for this to be worthwhile. The company must live in what they are doing as it will require time and possibly capital investment for it to succeed.
There are also risks involved in every strategic change, may it be marketing or otherwise. Employees also get affected by change. If a risk happens to be unsuccessful for a firm it may leave the firm in a worse situation (Saris,2012). Nevertheless, some companies are born green, an example of this would be The Body Shop and Ben ; Jersey’s. It would be accepted that it would be easier for these companies to continue to thrive, it is all about creating that reputation you want for your firm and the customers believing what you tell them. How do you want your company to be perceived by society, the target market?
It is very difficult for a company such as Toshiba who have been criticizes for their environmental contribution in the past to come into this new market. If the market analysis informs us as marketers that the ALOHAS consumer population is 63 million (this information is based from the year 2002 and has been on the rise ever since), this is a significant market and describes those consumers who are concerned with health and their purchasing habits would be affected by the health of their families and the planet and how human behaviors affect them (Average,2002).
Perhaps this is an argument which is in favor of practices aligned with green marketing, and green marketing does in fact give companies the potential to give companies that sustainable advantage. It is undeniable we are becoming increasingly more aware of the importance of sustainability and the world issue of global warming and pollution. Governments have imposed taxes on co emissions and fines on local business who do not dispose of their waste in a sustainable manner.
So this is not a local problem for individuals or specific businesses, this is national and international. Being a member of the European union also has a huge role to play. Every company, new and already established must comply with regulations in relation to pollution and waste disposal and this is only going to continue to grow, there is no going back on this issue. We can no longer fix the damage already caused to the environment by unsustainable practices but we can prevent further damage However, one must ask is this enough?
Are other things much more important for creating that competitive advantage every business seeks to achieve for example Branding, a very successful teeth of creating that ‘something special’ we associate with a thriving brand. For example when we think of Barberry we automatically think of its distinctive check pattern and it would be fair to say they have no need to adopt green marketing to get the sustainable advantage which they already achieved through what could be argued to be a more effective streamline method.
McDonald’s, Channel, Rolls Royce, Mercedes are all examples of high end brands whose triumph is certainly not up for dispute, all of which do not promote their products to be green, this is not to go thou saying they do not try to be aware of the resources they use and the effect their production and disposal procedures have on the planet but they lead with what seems to be the lucrative branding they have achieved. Customer innovation is another great method of creating a sustainable advantage, perhaps easier to gain that competitive edge.
If one looks at the well-known ‘Share a Coke’ idea which was developed in order to boost the sales of Coke in Australia after it emerged that over fifty percent of the countries teen population had never even tasted the popular soft drink (Marketing. Com, 2012). This shows their customer innovation which not only helped their sales in their target country but spiraled all over the world with people eager to get their names on a Coke bottle or can.
It could be argued the belief that green marketing has the potential to create a sustainable competitive advantage is a myth unless you have already established the reputation of being green from inception, otherwise other methods of marketing prove to be more worthwhile. In an opposite market, the fashion/clothing industry, green marketing also has a role to play and is approached in contrasting ways which should be considered. Two impasses which show the potential environmental marketing has to deliver a sustainable competitive advantage for business are Levies and Ezra.
Through research and an in-depth look into how these companies plan to brand their products and to alter their production processes to make them more environmentally friendly. Susan Fairfield looks at how levis is going green with waste less Jeans in the Bloomberg Business Week and how they aim to make their Jeans environmentally friendly using eight recycled plastic bottles in each pair of waste-less Jeans, which means that every pair of Jeans will be made of at least 20% recycled plastic. Levies expect to sell 29 million water-less denim products in 2013 alone.
Michael Kobo, the Vice-President at Levi Strauss ; Co. Said “you can’t add sustainability mid way through the process” and this quote shows how Levies have looked at how they can reduce their environmental impact throughout the entire process, not Just at certain steps in the process. With pressure being placed upon Levis by Greenback to reduce their impact on the environment they began a marketing campaign in 2010 to encourage people to wash their Jeans less often, in cold water only and also to line dry them.
They changed the care-tag to encourage these practices and even held an online contest for consumers to suggest their own air-drying ideas. It also recommended that consumers donate old Jeans to Goodwill rather than throw them away to promote the reuse of their products. Levies found that 49% of the water used during the lifetime of a pair of ‘501 ‘ jeans occurred at the very beginning, with cotton farmers. 45% of the water used was by customers washing their Jeans on average 100 times.
Levies saw that its customers were responsible for 60% of the energy used in the product life cycle and aimed to ewer this fugue by encouraging consumers to adopt more sustainable practices such as cold water washes and line-drying. It turned out that the manufacturing process, where Levies can exert the most control, had the least impact on water and energy use further reinforcing their commitment to CEO-friendliness. Have these environmental marketing campaigns been able to provide Levies with a competitive advantage in the business world?
With more and more customers looking for green products and more environmentally friendly marketing campaigns to follow, it would seem they have succeeded in delivering a sustainable competitive advantage for the business. Through the chart below it is clear to see that the profits from Levis have risen worldwide following their new green marketing campaign. Net revenue ($ millions) February 27, 2011 February 2010 Americas $ 592 $545 Europe $312 $306 East pacific $217 $184 More and more companies are starting to use environmental marketing campaigns as they have been proven to be sustainable.
Companies are reducing waste and their impact on the environment. Another company, which has tried this strategy, is Ezra. As described by Ezra itself, “the main driving force behind the Ezra brand is the customer”. As customers are more inclined in this day and age to buy products that are environmentally friendly, Ezra are changing their processes and altering their impact on the environment. Having come under severe pressure from Greenback, Ezra has agreed to eliminate the discharge of hazardous chemicals from its supply chain and products by 2020.
The Greenback detoxify campaign targeted Ezra, as the largest clothes retailer in the world and Ezra endured 9 days of intense pressure from both online and offline sources, eventually giving in and Joining a long list of companies including Nikkei, H;M, Aids and Puma that have agreed to be toxic ere. The campaign followed the publication of a Greenback report examining a total of 141 items of clothing from 20 global fashion brands. Greenback’s investigation found cancer-causing amines from the use of certain ago dyes in two garments made by Ezra.
With growing concerns over the impact of these toxic discharges into the environment and also the cancer causing amines found, Ezra had no choice but to change their environmental marketing campaign and the process in which they produce their products. They have made this into a sustainable goal by aiming to be toxic free by 2020. Both of these cases, Levies and Ezra, are examples of impasses that have engaged in environmental marketing and have seen the potential to deliver sustainable competitive advantage for business.
On the contrary, Firebombed & Fitch(A&F) are a perfect example of a company in the same industry who don’t follow sustainable business practices and suffer as a result. A;F have come under much media scrutiny over the past six months due to revelations that their excess stock and damaged goods are burned rather than recycled or donated to charity in order to protect their ‘brand image’. A;F CEO Mike Jiffies said in a recent interview that “we go after the cool kids… Lot of people don’t belong in our clothes, and they can’t belong. Are we exclusionary?
Absolutely” (Forbes, 2013). Essentially Jiffies is saying that A;F intentionally does not tailor their clothes to people who do not have what is considered ‘desirable’ physiques and this is backed up by the fact they don’t produce women’s clothing in sizes XSL or above and their Jeans only go up to size 10 US, effectively limiting their target market significantly. Their men’s sizes do stock XSL and XSL sizes but only in ‘muscle fit’ styles to cater to those with an athletic build, who are of course within heir preferred target market; ‘young, athletic and popular’ college students.
A&F have also been known to use toxic materials in the production of their garments which obviously has a hugely negative effect on the environment as it pollutes the world’s water supply during the production process and also post- production when consumers wash the garments. When the these revelations came to light there was widespread uproar over their practices especially on social media. The company became the subject of much lobbying from numerous sources including mainstream media and the general public to change the way in which they al with the public. A viral campaign entitled #Faithlessness’s [http:// www. Tube. Com/watch? V=divisions] started on Youth by Greg Karee has gathered huge support with nearly 8 million views wherein he goes to thrift shops throughout Los Angels to find old A&F items of clothing and then donates them to homeless with the aim of highlighting the unsustainable and negative marketing strategies used by A&F. The various mediums of social media have accelerated the campaign with people actively posting pictures of themselves or others who may not be considered as A&If’s target market wearing the clothing (See appendix 1) o highlight the problems.
The popularity of the campaign has resulted in a 10% drop in sales this year for A;F after steady growth in both 2011 and 2012 with net sales nesting from in 2010 to $451 in 2012, according to their 2013 annual report(Firebombed, 2013). A;If’s stock price has also tumbled a massive 18% (Houses, 2013) as a result of this drop in sales which will of course have the hugely negative effect of reducing the dividends shareholders receive along with devaluing the company as a whole.
However, many marketers will argue that the campaign hasn’t actually had a negative effect on the company at all and has instead revered as a form of free advertising for the company. And while many would argue that this is not the type of advertising A;F would want it is often said that ‘there is no such thing as bad publicity’. A;F CEO Mike Jiffies insists that the 10% sales drop mentioned earlier was “due to weaker traffic and continued softness in the female business, consistent with what others have reported” (Egan, 2013) and nothing to do with the negative publicity he and the company have come under.
However, in May this year Jiffies issued a public apology via the A;F Backbone age insisting that A;F are “are completely opposed to any discrimination, bullying, derogatory characterizations or other anti-social behavior based on race, gender, body type or other individual characteristics” (Firebombed, 2013) which resulted in further criticism from the public but this was followed by a small rise in sales figures perhaps indicating that consumers were ready to forgive A;F and relax the negative publicity and begin shopping there once again.
This shows that consumer’s can be fickle and maybe green marketing is not as effective as it seems ND successful companies may continue to thrive regardless if they do or do not adopt a sustainable approach. A recent Greenback report into the percentage of hazardous chemicals that washed out from clothing items during typical domestic laundering showed that when washed A&F products returned 88 percent of employment tessellates (Napes) compared to pre-wash.
This means that every time an item of A&F clothing is washed by the consumer a significant amount of toxins are released into wastewater treatment plants, which do not effectively treat or prevent the release of these hazardous substances into the environment (Chug, 2011). This is a very blatant disregard for the welfare of the planet and serves as more negative publicity for A&F but other companies criticizes in the article include Aids, Nikkei, Ralph Lauren and H&M, all of whom remain very profitable so it shows that companies can disregard green marketing and still be extremely successful.
One could argue that A&If’s lack of sustainable business practices are having a negative effect on them as a company. The clothing industry has suffered largely worldwide in the current economic downturn and their more up market product range was always going to suffer but with that said they have always en a frontrunner’s in the market. The negative publicity clearly did result in a drop in sales and they should take this into account when deciding on their market strategy in future.
A&F and businesses who currently don’t adopt sustainable environmental marketing practices should look to make changes for the good of the planet for example reusing excess materials or recycling and using more CEO-friendly materials in production. This change will also help them to grow in an ever-growing CEO-friendly marketplace. Conclusion The thought which then occurs is whether any form of sustainable competitive advantage can be derived from such implementation if the vast majority of businesses begin to conduct and orientate themselves in a similar fashion.
Competitive advantage may be achieved, but whether it is or will be sustainable is another question entirely. Issues such as those put forward by Jobber which he claims stems from the macro- environment can be looked at in further detail using a PESTLE analysis, or a PEST as he classifies it himself – such factors include political factors, economic, societal, technological, environmental and legal factors Cobber, 2010).
A point of conclusion may be drawn here, that companies investigating the idea of implementing a ‘green’ marketing strategy should give credence not only to the internal issues, but also the myriad of external factors which may force them towards or away from adopting such a strategy. Such considerations may bring to light whether or not the possible competitive advantage gained is sustainable from a business perspective.
Based on the analysis above, one can conclude that, given a number of key factors and circumstances aligning with the vision and strategy put forward by the company in question, it is possible that environmental marketing could potentially be the origin of some form of competitive advantage. However, such competitive advantage is not a given. Through our examples it is clear that there are numerous companies implementing a green marketing strategy – yet whether or not they have a competitive advantage directly related to this strategy implementation remains to be answered.
For a successful competitive advantage to be derived from such strategies as described above, there are many challenges and obstacles to overcome, some which the company can readily change such as the mindset of employees toward sustainable business practices , and others which may require a more long term focus, for example the large cost required to make such a damning change to the way in which the business operates.
The nature of seeking a sustainable advantage inherently means a need to focus on more than the given financial year, and move towards a vision and strategy which, by placing an emphasis on the future of such matters as the environment, can bring about a sustainable competitive advantage. In spite of this, and despite the many initial downsides to implementing an environmental marketing strategy, there are some benefits to be found in implementing a successful environmental based marketing strategy.
As in Levies situation they gained a growth in profit and sales which they gave credit to their green strategy. To be sure, there a numerous companies in existence not covered in this analysis due to constraints, which purport both sides of the argument – companies like The Body Shop and Interface demonstrate that environmental marketing can lead to a competitive advantage as the value of both businesses continued to grow exponentially year after year which has been supported by The Body Shop’s sale to L’Oreal for IEEE million in 2006 (Daily Mail, 2006).
Others such as A;F clearly show that environmental marketing might not be all that it claims to be as the brand continues to be the driving behind the success of the business despite the increased negative publicity they have come under for failing to incorporate sustainable business practices. Environmental marketing can lead too competitive advantage, but it’s not a given – there are a number of key factors to consider. It may also be the case that, while it may not directly create a sustainable competitive advantage, it can indirectly affect other aspects of the business which can then deliver a competitive advantage.
It would be difficult for businesses who don’t fall into the extreme green category as defined by Ginsberg and Bloom (2004) to implement an environmental marketing strategy that will contribute to a sustainable competitive advantage, but not impossible. Regardless, with the state of environmental impact changing, all businesses, regardless of market, will have to adopt some form of green strategy to abide by legal obligations. As shown above, not engaging in an environmental marketing strategy can create a competitive disadvantage and perhaps damage the reputation of the company.