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Why Sustainability Marketing Matters and its Future as a Strategic Marketing Approach

Introduction

Today’s consumers, whether in the consumer electronics, food and beverages, transportation or manufacturing industries, are increasingly environmentally-conscious due to the growing realities of global warming and its associated climate change. These realities started during industrial revolution that created mass production, and range from rapid depletion of non-renewable natural resources to loss of biodiversity, and above all, climate change. As a result, consumers have propensities to purchase and use brands they perceive are produced in ways or processes that contribute towards enhancing their quality of life while creating a sustainable economic and social environment for future generations. In response, companies are increasingly joining the sustainability practices bandwagon by focusing on corporate social responsibility practices and labeling their brands as “eco-friendly”, “green” or “energy star”. For instance, Hewlett Packard marks its products, especially printers as “Energy Star”. This essay seeks to examine the prospect of sustainability marketing as an emerging marketing practice by drawing on the principles of the practice as well as on why it matters and the challenges surrounding its adoption.           

Sustainability Marketing Principles

The turn of the 20^th century saw unpresented population explosion as well as mass production and technological growth that was mediated by industrial revolution. Developments in these sectors created many opportunities for the economic growth that had been a longstanding agenda for many societies. However, these developments and their related economic prosperity came at the expense of natural resources, the environment and disadvantaged communities. For instance, the world is experiencing rapid depletion of natural resources as well as loss of biodiversity and climate change is increasingly becoming a reality.

On the other hand, economic growth patterns have left many communities behind, especially those from developing regions. Notably, more than 1.2 billion people have no access to electricity, approximately 900 million are at risk of malnutrition and over 950 million lack access to quality health care and clean drinking water (UN Environment Program 2015). Consumers’ awareness about these social challenges, environmental issues and the impacts of their consumption is growing. As a result, they express their concerns about social and environmental impacts of business and their products by demanding “green” and “eco-friendly” products produced in socially responsible way. In response, managers are trying to address these concerns by adopting sustainability marketing practices because they believe they can be hardly addressed by means of conventional marketing strategies.

            Sustainable marketing is a new marketing practice that involves companies focusing on environmental, social and economic well-being of both existing and future generations in their marketing strategy. Between 1970s and 1990s, sustainable marketing focused on environmental and ecological marketing by using “green” label to market products that were environmentally-friendly. Today’s interpretation of sustainability marketing, according to Murphy (2005), is that it “it should deal positively with the ecological environment and be sensitive to the needs of future generations” (p. 171). Sustainability marketing can, therefore, be thought as an approach used by companies to increase consumer’s awareness in their commitment to sustainable development, which Bruntland Commission Report (1990) defined as “the ability to meet the needs of the present without compromising the ability of future generations to meet their own needs”. Thus, companies that seek to incorporate sustainability marketing into their operations should realize that the approach transcends mere focus on environmental stewardship, and instead incorporates economic and social well-being aspects of sustainability (Murphy, 2005).

In his analysis, Reutlinger (2012) established that sustainability marketing is centered around “sustainable development and offers marketers a holistic approach to make the products and the companies themselves more sustainable in order to meet tomorrow’s challenges” while at the same time appealing to today’s consumers (p. 1). These ideas and or principles are derived from Sir John Elkington’s (1994) Triple Bottom Line framework for sustainability. The framework is built on three fundamental canons; that is, environmental sustainability, social equity and economic sustainability, that closely intertwine to create sustainability marketing. In other words, as Heck and Yidan (2013) point out, sustainability marketing reflects three E’s (environmental, equity and economic) that define an organization’s commitment to sustainability performance. Figure 1 below shows the three key tenets of Triple Bottom Line Model for sustainability marketing and how they intertwine. 

Figure 1: Triple Bottom Line Model for Sustainability Marketing highlighting its   Key Pillars (adapted from Elkington (1994).

As an emerging concept in marketing, sustainability marketing includes principles of green marketing, environment marketing and social marketing that marketing scholars and professionals consider as more ethical and strategies forms marketing a company’s CSR practices. The marketing approach, therefore, helps companies plan, implement and regulate the “development, pricing, promotion and distribution of products” through ways that meet customers’ needs and expectations, while meeting their organizational goals and participating actively in environmental sustainability initiatives (Fuller, 1999). 

According to Belz and Peatttie (2010), sustainability marketing is not an overnight activity, rather, it requires long-term planning on building relationships with consumers. This means the entire marketing process starting from market research to customer needs identification and assessment should picture elements of environmental, social and economic sustainability. Sustainability marketing can, therefore, be considered a convergence of modern marketing and traditional forms of marketing; that is, relationship marketing, eco-marketing and ethical marketing.  

Why Sustainability Marketing Matters

Consumer’s interest in eco-friendly brands has increased dramatically in recent years because they are constantly looking for ways to reduce their footprint on earth and ensure that the environment and the economy are sustainable for both current and future generations. As Lubin and Esty (2010) maintain, this means consumers in today’s economy, are looking for companies they are genuinely devoted to environmental issues and social challenges. For instance, various companies such as Starbucks, Volvo, Colgate Palmolive, Toyota have experienced spectacular growth in terms of market capitalization and revenue earnings as customers felt they were committed to sustainability and CSR in their business practices. In contrast, Enron, Nike, McDonalds and other companies that were hesitant about investing in sustainability initiatives suffered miserable failure and loss of market share because consumers felt their business practices were non-sustainable. For some companies such as Mazda, sustainability efforts have not yet achieved commercial success partly because consumers are ignorant of the initiatives. These cases suggest the essence of sustainability marketing in today’s market economy where millennial consumers are more mindful of the effects of the products they consume to their health, environment, community wellbeing and future generations. Companies can market their sustainability initiatives and persuade consumers that their brands are sustainable sustainability reporting and marking their products with eco-friendly labels.

Conventional marketing approaches view consumers from a very narrow and limited standpoint. In particular, they are informed and driven by traditional perceptions that all customers care about when making purchase decisions is price or cost, product functionality and direct utility to be extracted from the product or service. However, in today’s information age, consumers are mindful of the impact of products they consume to their well-being as well as well as to the environment, just the same way they care about quality. This growing dynamism in consumer habits and behavior sets the basis that differentiates sustainability marketing from traditional forms of marketing. Particularly, traditional marketing approaches focus on 4P’s that market a brand in terms of its low-cost, uniqueness or quality and accessibility and product-specific factors. In contrast, sustainability marketing fosuses on 4C’s that emphasize CSR and sustainability of the brand. Table 1 below shows the effectiveness of sustainable marketing mix over conventional marketing mix by contrasting the two marketing approaches.

Table 1: Traditional marketing Vs. Sustainable Marketing – the later focuses on     marketing a company’s CRS and Sustainability Initiatives (Belz and Peatttie,     2009).

            Another major reason sustainability marketing matters for companies concerns its ability to and enhance brand equity. A 2014 study by United Nations Global Impact Accenture revealed that approximately 90 percent of company executives believed sustainability marketing approaches contributed outstandingly to their competitive advantage and market capitalization. Evidently, these views suggest existence of a strong interplay between sustainability marketing, business value and sustainable competitiveness.  Another study by Heck et al. (2013) concluded that consumers have higher preference for companies that employ sustainable marketing in promoting and driving awareness of their brands. However, the study did not show how the marketing practice influences purchase decisions and consumer behavior.

Furthermore, sustainability marketing matters because it promotes brand differentiation. Arguably, with commitment to improving social and environmental performance position themselves uniquely with respect to competitors. Reutlinger (2015) notes strategic implementation of sustainability initiatives such as eco-friendly production, packaging, distribution and promotion has the potential to improve a company’s efficiency, cost saving, and more importantly, organizational performance and reputation. For instance, Tesla has differentiated itself from other auto manufacturers by focusing on production of autonomous electric powered sedans. Other companies such as Starbucks and IKEA differentiate their brands by sourcing raw materials (coffee beans and hardwood, respectively) from select suppliers – those whose business practices contribute sustainability initiatives.

Lastly, adopting sustainability marketing is increasingly pressing because it increases brand loyalty and customer retention. Engaging in ethical and sustainability marketing has been found to make consumers feel valued as well as change their behavior and attitude, thereby, increasing their loyalty to the brand (Oliveira, 2010). Customers’ purchase decisions are often influenced by available information about a given brand. Sustainability marketing offers cutting-edge means of communicating such information to potential consumers to increase their awareness of ongoing CSR and sustainability practices in the company. Access to this sustainability information will convince consumers to premium prices and remain loyal as they will realize they are buying sustainable brands.

Implications and Challenges of Sustainability Marketing.

Companies confront a myriad of challenges in their efforts to adopt and implement sustainability marketing. First, with access to many information channels, millennial consumers are difficult to persuade, engage and influence. Most of these consumers’ expectations and preferences reflect their material needs such as quality, low cost, and functionality and not rational needs that pertain to well-being of future generations. As such, convincing consumers to make purchases based on a company’s sustainability practices can be an overwhelming task.

Second, the ability of sustainability marketing to appeal to consumers and inform their purchase intentions remains unknown, which means most companies can be hesitant to its adoption as a marketing practice. For instance, some consumers are inclined to buying low-cost products services without considering sustainability practices of their producers or providers due to the ever tightening economy and escalating costs of living.

Moreover, sustainability marketing requires companies to demonstrate high commitment to social equity and environmental stewardship. This calls for increased investment in programs that add value to community members, use of technologies that mitigate their carbon footprint among other practices deemed to contribute to environmental and social well-being (Martin & Schouten, 2012). For most companies, the most strategic way sustaining these practices and remaining profitable is by charging premium prices for their products and services. The challenge key for these companies is to convince today’s price-conscious consumers to pay a premium for their brands since they lack direct reflection of value addition. 

The Future of Sustainability Marketing

Sustainability marketing has a positive prospect for adoption as a next-gen marketing and awareness-creating practice. As aforementioned, realities of climate change – one of long-term impacts of mass production, are increasingly unbearable due to their related losses. According to National Geographic (2012), 46 disasters (of which natural fires accounted more than 95%) were reported between 1980 and 1995 leading to damages of up to $1 billion and total losses of $339 billion. Number of these disasters rose by approximately 200% to 87 between 1996 and 2011, and led to damages worth $1 billion and losses amounting to $541 billion.

As economic activities peak in today’s fast-growing economies, these catastrophes are set to increase further and led massive losses for companies. Most of these disasters as National Geographic established are mediated by use of non-sustainable practices such as overreliance on fossil fuels as energy sources and inappropriate disposal of industrial wastes and effluents. In response, companies are increasingly implementing measures to mitigate the threats and improve their ecological footprint. This means the companies more likely to adopt sustainability marketing to communicate their best practices to consumers, shareholders and other stakeholders.

Additionally, pressures driving environmental sustainability agenda across the world will certainly necessitate company to adopt sustainability marketing. Aberdeen Group found in its 2009 report that the top pressures driving sustainability programs in today’s economy range from desire for social and environmental stewardship to present and anticipated regulatory compliance as depicted in figure 2 below. For instance, regulatory agencies require companies to measure and report their sustainability initiatives through annual sustainability reports, Global Reporting Initiative (GRI), Dow Jones Sustainability Index, Carbon Disclosure Report and GHG Greenhouse Protocol (Martin & Schouten, 2012). Since competitiveness in future market economies will be a function of these pressures combined, more companies are set to join sustainability marketing bandwagon to demonstrate to stakeholders their commitment to economic, environmental and social responsibility. Figure 3 below depicts the key drivers of sustainability agenda, which suggests sustainability marketing has a higher potential for adoption in the future as a strategic marketing tool.

            Figure 2: Forces Driving Sustainability Agenda (Adapted from Aberdeen Group, 2009;    Schaltegger & Wagner, 2017).

Lastly, consumers’ growing interest in sustainability suggests sustainability marketing has a positive outlook in the future. According to Sheldon (2012), more that 55% of consumers consider a brand’s environmental sustainability and social value reputation when making purchase choices. Sheldon further notes that millennials are becoming more environmentally-sensitive, and thus are more likely to base their buying and consumption decisions on a company’s corporate social responsibility records. Corporate responsibility is, therefore, paramount to creating long-term shareholder values it helps companies to embrace new opportunities and manage risks related to social, economic and environmental changes. This means adopting sustainability marketing will be inevitable for companies in near future because it will not only provide opportunities to market their brands, but it will also be essential for shaping conversations about sustainability efforts (Martin & Schouten, 2012).

For example, some of the ongoing practical sustainability initiatives include Nestle’s Nutritional Profiling System, Unilever’s Sustainable Living Plan and Intel’s Smart Cities. Evidently, as Belz and Peattie (2009) asserts, it’s only through sustainability marketing approaches that these companies and many others in the future can effective create awareness of these sustainable programs and practices. 

Recommended Practical and Constructive Changes in Sustainability Marketing

There is need to address current challenges affecting sustainability marketing and modify some of its aspects if companies have to use it successful as a strategy for improving their brands’ CSR and sustainability, generating business value and fulfilling consumer needs for sustainability. Because consumer behavior, attitude and decision making are central to the effectiveness and success of sustainability marketing practice, companies must increase their focus on consumers’ needs and expectations when designing the marketing approach. This shift in sustainable marketing paradigm can be implemented through the four key sustainable business strategies; that is, innovation to create products that add value; proper and transparent communication with consumers and other stakeholders; collaboration with government and NGOs; and commitment to sustainability and consumer engagement.

Lastly, because some consumer groups can be difficult to persuade and convince to accept brands on the basis of sustainability, companies can succeed in marketing their CRS initiatives and sustainability practices through positioning and segmentation. These strategies have proved to be effective in conventional marketing approaches, and will evidently improve the efficiency of sustainability marketing. For instance, they will help companies wishing to market their sustainability agendas to identify market niches and potential target groups that value sustainable brands and appreciate sustainability efforts.