Saturday, February 12, 2011

Sustainability Ideas | THE CHALLENGES OF MARKETING INNOVATION FOR A BETTER SUSTAINABLE DEVELOPMENT

INTRODUCTION

Marketing is about selling people more. So can sustainable marketing really work?

- Marketing comprises a set of skills that generally enable companies to sell more stuff to more people to get a greater share of the market. These skills are usually portable: it doesn't matter what's being sold to whom in what marketplace. The social and environmental impact of the stuff that's being marketed remains, for the vast majority of people in marketing, until recently, largely irrelevant. The idea of sustainable marketing is inevitably sort of ridiculous.

- Sustainable development comprises a set of ideas, principles, values, mindsets and practices that enable individuals and organizations to improve their quality of life in ways that simultaneously protect and enhance the Earth's life-support systems, in other words, without destroying the planet. At the very least, it can mean consuming in more environmentally and socially responsible ways; for some, it means consuming less.

The idea of sustainable marketing is, therefore, sort of suspect. The marketplace is greener now than ever before and will become even more responsive to products and services promising environmental responsibility well into the 21st century. The reasons are many. People are worried. In the 1980's, environmental calamities dominated the news. Almost daily, headlines trumpeted oil spills, toxic-waste dumps, and nuclear meltdowns. A hole punctured the ozone layer, a garbage barge searched in vain for a dumpsite; apples were not considered safe to eat. The issues were no longer in someone else's backyard far-away, but in our own. The environment rose to the top of the public's worry list.

MARKETING INNOVATION AND SUSTAINABLE MARKETING

Nowadays, businesses that fall short of developing effective value propositions have difficulties in taking advantage of market opportunities that are characterized by uncompromising market forces such increased competition, shortened product lifecycles and more sophisticated and variable customer demands. It is a disconcerting fact that many, if not most, businesses struggle to develop sustainable, innovative value propositions that help them sustain their market positions.

Marketing innovation and sustainable development are today's hottest topics of our planet among intellectuals. Why not harness the creativity and innovation of one of the oldest professions there is to move forward our societies onto a much more sustainable footing? Humanity has been known to tackle far more challenging tasks, anywhere from placing a man on the moon, to persuading people to buy aloe vera toilet paper, as Steve Hilton from Good Business often illustrates. Surely, therefore, bringing together these innovators and persuaders needed to make the world more sustainable should also be possible.

Will we assist to less growth with marketing sustainability? Not really. I think if it is well done, it could mean better, smarter and much more efficient ways of buying and making stuff. What if marketing sustainability is just a pipe dream when consumers are largely ambivalent about the green credentials of the products and services they buy, and certainly find it difficult to pay 'green premiums'? We don't think it will be. If done properly, it will appeal to personal values and allow that twinge of "I would really like to do something".

However, I have to notice that efforts by the odd responsible company are not nearly enough to make producer and consumer change stick. A much wider collective effort is needed if we are going to be successful at reversing unsustainable patterns of consumption and production, considering most of us are not willing to sacrifice Aloe Vera toilet paper for banana leaves. If marketing can turn "lead into gold", then it has the potential to make sustainable development a household word, a universally recognised way of adding both social and economic value. Marketing can create, influence and change target audience attitudes, beliefs and perceptions. In a nutshell, marketing works; that's why companies do it. A more interesting question is how can it be used to reinforce sustainable development?

I have to mention that although sustainable development and marketing innovation are the 21st century most discussed topics, they are conflicting concepts. Today's evolution about these topics is to set a challenging sustainable development benchmarks for every element of the marketing mix and build intrinsic brand value in and through sustainable development. Through engaging companies from a range of sectors that are both already active in sustainable development and have high brand awareness, as well as leading media and communications agencies open to new opportunities, we hope to build wider competencies in sustainable marketing within the profession and more broadly in businesses.

MARKETING INNOVATION

Much of the discussion about marketing and sustainable development focuses on developed markets; on the levels of consumption amongst the world's richest people and the changing nature of their preferences. Companies face fierce competition for growth in developed countries whilst, in contrast, the most disadvantaged people in the world represent a market with enormous potential. And if the world's population expands in line with current predictions, over 90% of people will be living in (what are now) developing countries within 30 years. It is no surprise, then, that marketers are increasingly interested in the opportunities amongst the world's poor, which may involve addressing their basic needs. But is this wishful thinking, or are there compelling commercial reasons for business to pay attention to developing markets? As the term sustainable development enters the business mainstream, the responsibility for managing social and environmental issues is slowly shifting from the corporate fringe to an important business function.

The implementation of communication strategies is a marketing innovation. Not only does the company inform the general public of its efforts to reduce its environmental impact, but in addition, it listens to its clients and tries to gain acceptance of its employees. A sophisticated form of the communication strategy consists of taking part directly in the development of restrictive measures (emission standards, branch agreements, etc.). This effort seems to show a proactive approach to companies on the environmental question, but on the other hand, it could be a way to impede environmental progress by means of a lobbying policy.

It is a truth universally acknowledged that a company in possession of a good (or poor) fortune must be in want of innovation. Yet, by all accounts, some 40-90% of innovations fail in the market. In this elective we examine the drivers of market adoption, taking the perspectives of both 'objective reality' and the 'perceived reality' of the players in the decision. We then offer some suggestions for bringing innovations more successfully to market.

Invention and innovation have proven to be crucial components for the development of modern societies. However, 1.3 billion people who currently live on less than a dollar a day do not enjoy the benefits that many modern inventions have brought. At the same time some key new technologies are known to have caused enormous damage to the global environment.

SUSTAINABLE MARKETING

Increasingly, business is investing in sustainable development strategies, often not fully embraced by their marketing departments.

The result of this means that mixed messages are being transmitted to shareholders and stakeholders alike. There is a real need to join sustainable development business strategy with the marketing departments that drive that strategy forward.
Because marketing influences the development of products and services, as well as the communication methods used to influence consumer behaviour, it is at the axis of one of the most challenging issues facing business today: addressing the current unsustainable levels of production and consumption in an uncertain world.

There are two key approaches to marketing and sustainability. One seeks to embed sustainable development within a company's core marketing strategy from innovation to the market. The other aligns opportunities for marketing and advertising with the values of sustainable development, either overtly or covertly.

Why is it now that people think about sustainable marketing?

As mainstream marketing is changing and as we enter a 'third age' of branding, the context for brands is changing irrevocably. The first age of branding was the age of functionality, where product purpose was legitimised through trademarks. The second age was the age of aspiration, meaning brands served a self actualising purpose. The third age of branding is the age of reconnection, that is, solutions-oriented branding. Empowering consumers to make the world a better place through the products they buy. For example, if we take the case of the refrigerators, we can say that in 1950's, somebody could easily be convinced to buy a refrigerator just because it looked cool in his/her eyes, but in today's uncertain world, we might ask ourselves about the impact of the chlorofluorocarbons (CFCs) that our refrigerator is emitting and demand a more environmentally friendly refrigerator.

So, if today's successful marketing is about appealing to personal values and delivering consumer empowerment, then surely the time is right to inject sustainable development into the marketing mix to help address some of the gritty issues currently facing our planet.

SUSTAINABLE DEVELOPMENT

Today's fast technologies innovation and invention have made people worry about their living environment. Although they need improvements for the household equipments they are daily using, they started asking themselves about the future of the world. Based on this, we have to mention that marketing innovation is developing with consequences for humankind. In this 21st century, sustainable development remains a term which many marketers have become accustomed to hearing alongside jargon such as stakeholder engagement and Corporate Social Responsibility (CSR).

Sustainable development is a compelling idea for many people. It is concerned with how business can contribute to some of the most significant challenges that the world faces today; from climate change and biodiversity, to working conditions and health amongst the poorest in the world. But marketing managers have struggled to translate these ideas into viable commercial propositions into marketing strategies that create competitive advantage, build trust or develop new business opportunities.

Moreover, marketers have often faced criticism for being part of the problem for pushing the consumption of unsustainable products and lifestyles.

Sustainable development is becoming a key strategic issue for companies. With growing pressure from global warming, natural resource depletion, widening social gaps, legislation, societal pressures, and the evolution of consumer expectation, the role of marketing within an organization is changing dramatically. Consumer demand for "ethical" products and services is increasing and the marketing is a lever for innovation to answer to this new demand. Social and environmental values are now elements of a brand, marketers need to tackle these issues. Sustainable development is the practice of protecting the environment while improving living standards for all, and invention and innovation is key to its success. Invention and innovation for sustainable development isn't just about developing new technology, but includes new processes and new ways of solving old problems. Creative thinking is the rubric. Creative thinking has always been integral for improving well-being.

Despite the fact that people everywhere have an innate ability to be creative, rich countries are not doing enough to stimulate and harness invention and creative thinking, and poor countries tend to stifle innovation and creativity outright. This is typically due to a combination of factors: insufficient financial resources, lack of role models, education systems that don't inspire or value creativity, and social/political environments that discourage creativity, invention and entrepreneurship. Sustainable development has different meanings and implications in different parts of the world. Julia Marton-Lefvre, executive director of LEAD International, an organization dedicated to leadership for environment and development in a workshop on "invention and innovation for sustainable development" held in November 2003 said to understand the challenges and ramifications "not only in London and Paris and New York, but also in tiny villages in Nigeria and Indonesia and China." Sustainable development is for all countries, not just developing ones. Based on what she said, I can mention that while rich countries need to develop alternative sources of energy and other technologies that reduce their own impact on the environment, poor countries need to develop their own innovation capacity, in order to address their own particular needs.

CHALLENGES FOR MARKETERS TO ACHIEVE SUSTAINABLE DEVELOPMENT

Companies create competitive advantage by understanding the shifts in society; from technological innovations such as the 3G communication system to the unwinding consequences of events such as May 12th China earthquake. These trends are the foundations of marketing strategy, and the emergence of sustainable development as a matter of public and corporate concern is one such change in the marketing environment. In recent years, hundreds of companies have developed ethical policies or mission statements. These initiatives appear to be grounded in market realities. For example, a Weber Shandwick survey of 8,000 consumers in 2001 indicates that 80% of high-education/high-income people in the USA have considered switching brands when a company was negatively portrayed in the media in respect of social responsibility issues. But today, the question for marketers is: is there really an opportunity for them to use sustainable development as a lever of brand innovation, rather than the greenwash?

Marketers rightly insist that appealing to sustainability values will not overcome a fundamental weakness in product quality, yet with excellent products there is evidence that social and environmental aspects can be used to differentiate or create a profitable niche. For them, Sustainability values can be a successful differentiator; a key part of the functional and emotional attributes of a product or service. Many of marketers argue that integrating sustainability values into a brand can contribute to market growth. As one professional has commented, "As long as performance, price and place are right, then corporate responsibility can become a differentiator, although a significant price premium is not possible."

Nowadays, a lot of businesses have tried to differentiate specific products on the basis of their social and environmental impacts. For example, Toyota has used celebrity endorsements to promote the environmental credentials of the Prius, their hybrid fuel car; it has also approved plans to use more distinctive badging on its hybrid Highlander and Lexus models. And niche businesses (increasingly joined by mainstream retailers) supplying fair trade coffee and organic products have targeted consumer concerns regarding working conditions and chemical pollution in the food supply chain, often using eco-labels and social labels to enhance the consumer understanding of their products.

The opportunity for differentiation is perhaps more significant in the business-to-business sector. Business-to-business companies are increasingly identifying opportunities to position their products and services in the wider context of their social and environmental impact as well as their cost and functionality. As one marketer has suggested: "Corporate customers are more interested in these issues than individual customers" Another marketer has confirmed the basis of this business-to-business market: "The challenge is what do customers care about: sometimes it is just price and delivery, but functionality can include aspects of sustainability, like reducing your customers' waste so their operations run better, helping them deal with and/or eliminate regulatory issues."

Today's challenge for marketers to achieve their goals by integrating marketing innovation with sustainable development is to build trust with customers, consumers and society.

Reputation " the goodwill that an organization has acquired from its past performance " is the foundation of future success, the basis on which a business will be trusted in years to come. Companies remain among the least trusted institutions in society, with some businesses particularly vulnerable to pressure group campaigns and consumer boycotts. As a result, many marketers are asking themselves how to minimize the risk of criticism from stakeholders, and whether sustainable development has a role to play in these efforts. Perhaps more positively, they are also wondering what part their companies' ambitions and achievements on social and environmental issues can play in building and maintaining trust with consumers, customers and society as a whole.

Some marketers are also concerned that reputation and trust may not be sufficient to preserve their brands in the longer-term: current patterns of consumption are not sustainable, and so customers and consumers must be educated in order to protect or secure the resources on which business is based.

Products with sustainability attributes will only appeal if they are clearly consistent with the values and activities of the company.

Many people care about the social and environmental impacts of business. Yet people trust companies when they believe they are acting according to their values, and not just because it happens to make sense in that particular instance. Credibility comes from the confidence that a business will continue to behave ethically in the future: a business will gain little reputational benefit " and more likely harm " from helping a community if local people see the contribution as a short-term 'bribe' that will be withdrawn as soon as its immediate objective is achieved. Marketers have a critical role in building trust. In particular, they can help to create inspiring communications, which are honestly based on the abilities of the organisation and the resources that it can realistically devote to enhancing its social and environmental performance.

However, reputation and trust may not be sufficient to safeguard a brand. To succeed, marketers must lead the path towards more sustainable consumption.

International policy makers are paying more and more attention to some of the greatest challenges to society and the environment. For example, UK previous Prime Minister Tony Blair placed poverty in Africa and climate change at the top of the G8 agenda for 2005. These issues are critical to the long-run success of business. In short, companies cannot operate effectively in societies and economies which fail to protect and support the production and consumption of their products and services. Business needs reliable access to sources of raw material, safe working conditions for production, storage and distribution, thriving consumer markets, and safe mechanisms for the disposal of product waste. There is much that governments must do. But if consumers aren't switching to more sustainable products, then it will also fall to business to break the current patterns of consumption. And it is often the marketer who will be best positioned to create this connection between business and consumers.

CONCLUSION

Purchasing organic or fair trade produce is now very easy, but making purchasing decisions about other products such as mobile phones on environmental, social or ethical grounds remains difficult. Innovation for sustainable development would inevitably lead to new product-service systems. Current consumer culture with its emphasis on ownership as a status symbol creates significant barriers to the acceptance of these new product service systems.

Although new products and services may be essential for future growth and profit,

companies must survive today to be around tomorrow. Short term financial objectives tend to focus companies on making incremental improvements that keep sales up, keep customers happy and satisfy city analysts rather than the more radical approaches that would promote innovation for sustainable development.

Transforming today's companies into sustainable innovation stars is not a simple case of creating a new sustainable innovation tool. Product and service innovation is part of a much wider innovation system and is affected by conditions as wide ranging as government leadership on sustainable development and organisational structures within companies. Addressing the barriers to integrating sustainable development into product and service innovation, therefore, requires change to take place across the entire system; from the introduction of new tools into the immediate product development process to the integration of sustainable development objectives into innovation policy.

Sustainable development specialists (and those with equivalent positions or responsibilities) are no longer just responsible for the management of philanthropic initiatives, community engagement programs or environmental impact assessments.

Instead, in leading companies, these managers are expected to act as agents of change: to develop the structures, systems, ways of working and personal values that will support the organisation's sustainable development objectives; and to encourage others in the company to act as enthusiastic agents of change.

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CISSE DAOUDA CISSE DAOUDA - About the Author:

CISSE DAOUDAInternational Trade Ph.D.CandidateZhongnan University of Economics and Law-Wuhan-CHINATel:0086-13429878747E-mail:cissedaouda2008@hotmail.com

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