Companies used to operate on the assumption of an endless supply of resources. They also were not required to cover the cost of externalities such as air pollution, water degradation, and other harm to the environment resulting from their activities. Now the picture has changed. Companies are required to recognize resource limits and externality costs and alter their objectives, policies and marketing strategies to incorporate sustainability thinking into their decision making. The past harm that unbridled business activity has caused to the natural environment is now visible in climate change, increased air and water pollution, soil degradation, increased desertification, water shortages, and increasing depletion of physical and natural resources.
How can companies set high business growth goals and yet manage to meet the environmental imperative? Something between a zero growth goal and a modest growth goal would make more sense. This may ultimately mean that a standard has to be established for what constitutes “responsible consumption.”
Companies need to make drastic changes in their research and development, production, financial, and marketing practices if they are to serve the goal of protecting the planet. A number of companies are now taking sustainability seriously. DuPont has done a great job of finding ways to reduce pollution and produce materials that are sustainability-appropriate. Wal-Mart has built its truck fleet to be more fuel efficient and is goading their suppliers to change their truck fleets to be more fuel efficient and less polluting. By 2012, Wal-Mart will require more than 60,000 of its suppliers to source 95%of their production from highly ranked “environmentally oriented” companies. And General Electric even sees sustainability as an opportunity to do good and make a profit in launching eco-friendly solutions. The marrying of good business practice with sustainability is going forward in a number of companies.
What marketing practices must companies reexamine? Consider the four Ps:
- Product. Companies will need to develop new products and services more carefully in terms of the materials and energy they require. They will have to develop packaging that is disposable and biodegradable.
- Price. Companies need to create offerings that differ in their level of environment-friendliness and price them accordingly. Companies will have to price more fully to cover their externality costs.
- Place. Companies will have to bring production closer to the markets they are serving to reduce transportation costs. Companies will need to increase their use of online selling to reduce traffic congestion.
- Promotion. Companies will have to shift more of their promotion from physical to digital means. Their product labeling might have to be more specific about ingredients and carbon footprints.
Many consumers will change their lifestyle and consumption preferences as a result of changes in their economic means and their social consciousness. Growing numbers of consumers will prefer to buy from companies that care about the environment. Consumers will be emailing, blogging, and tweeting to their friends and acquaintance good things or bad things about a company. Companies will not want to appear indifferent to larger economic, social and political concerns.
Nonprofit organizations and the public sector will be using the tools of social marketing and demarketing to bring about a better balance between economic growth and the environmental imperative.
Philip Kotler (M.A., University of Chicago, Ph.D., M.I.T.) is the S. C. Johnson Distinguished Professor of International Marketing at the Kellogg School of Management, Northwestern University. He has published Marketing Management, 13th edition, and 45 other books on different applications of marketing thinking. His research covers strategic marketing, innovation, consumer marketing, business marketing, services marketing, e-marketing, and social marketing. He has consulted a number of major companies and is the recipient of 12 honorary degrees from abroad.
Journal of Marketing, Volume 75, Number 4, July 2011
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