Different Areas of Environmental Marketing - Essay Example

?Strategic Marketing Table of Contents Introduction 3 Brief of Environmental Marketing 4 Increasing Importance of Environmental Marketing5 Driving Factors in Environmental Marketing 7 Challenges in Environmental Marketing 9 Environmental Marketing as a Critical Tool in Strategic Management 10 Strategies for Successful Environmental Marketing 12 Conclusion 14 Reference 16 Introduction Emergence of the post-modern organisations is one of the most vital occurrences in prevailing management theories and concepts. In recent years, the management theories have changed significantly as management styles have been improving constantly. Increasing competition and expanding market exposure are the major reasons behind such notable improvements. The post-modern business organisations have realized the importance of long term success for achieving competitive advantages. In this respect, they have recognised their responsibilities towards its internal and business environment. For example, existing business organisation are more focusing on enhancing stakeholders’ value. Moreover, they are also concentrating on the welfare of society, environment and community as they have understood that these activities are very important for their sustainability and for corporate governance (Aras and Crowther, 2009, p.36). In post-modern organisations, management are using these concepts and theories as an important tool for marketing, brand development and for entire strategic management. This paper will attempt to present discussions on environmental marketing which is emerging as a tool for better strategic management. In this respect, the entire discussion will focus on critical analysis, and at first a brief overview of environmental marketing will be presented followed by critical evaluation of its increasing importance. Then, multiple influencing factors in environmental marketing will be assessed followed by an analysis on multiple issues in environmental marketing. The next section will present that how the prevailing companies are using environmental marketing as a critical marketing tool. The strategies for implementing and executing effective environmental strategies will also be discussed and finally, the entire discussions and analyses will be summed up in conclusion. Brief Description of Environmental Marketing Environmental marketing is an emerging concept in strategic business management and it refers to the marketing activities revolving around the environmental consciousness. The increasing environmental awareness among the management and consumers is the major reason for its development. Environmental marketing is also referred as the green marketing. Polonsky and Wimsatt have explained that “environmental marketing is rooted in the essential tension between environmentalism and modern mass consumption” (Polonsky and Wimsatt, 1997, p.38). Environmentalism involves the entire environmental related issues like global warming, air pollution, water pollution, resource depletion etc. Increasing industrialization and business activities have a greater negative impact on environment and being a social entity, the business organisations have now realized their responsibility towards the safety of environment. There is a conceptual relation relationship between the green marketing, industrial ecology and environment. Oyewole (2001), have developed a model that clarifies this conceptual relationship. The model is given below. Figure 1: Relationship between Industry and Environment (Source: Zaman, Miliutenko and Nagapetan, 2010) As per the above figure, social cost (including monetary and non-monetary) is major factor that relates the industry and environmental aspects. Considering the social cost, business organisations are now practising green marketing management. For example, they are implementing innovative technologies to develop eco-friendly products focusing on recycling and energy conversation. Increasing Importance of Environmental Marketing Since last decade, the importance and necessity of environmental marketing have been increasing significantly. The companies have identified the multiple advantages that can be achieved by implementing effective environmental marketing. There are five major reasons that have led to increase its necessity. These reasons are sustainability issues, changing consumers’ behaviour, competitive advantage, reputation management and government’s environmental policies. Sustainability is the major factor that has caused to enhance the value of environmental marketing. Hence, it is also defined as sustainability marketing. At present, sustainability related issues are major areas of concern for business organisations and hence, they consider the sustainability as an integral part of strategic management. In this respect, Brown (2006) has stated that “environmental sustainability is not an option – it is a necessity” (Holt and Ghobadian, 2009). Global warming has become one of the major issues for the entire world and hence, the mass people are becoming environmentally conscious. They are focusing on energy conversation and preferring eco-friendly and recycled products. Environmental awareness is now playing a crucial role in consumer buying behaviour. George Baourakis have defined such consumers as “green consumers” (Baourakis, 2004, p.77). Green marketing or environmental marketing has become a major tool in corporate reputation management. Management in post-modern organisation focuses on maintaining long term corporate reputation, and in this respect, they have found the environmental marketing as a necessary criterion. Stakeholders are more concerned with reputation of their organisation while deciding the corporate alliances and it motivates management to develop a respectable reputation by implementing environmental marketing (Miles and Covin, 2000). Increasing competiveness is another major factor that has necessitated the activities relating to environmental marketing. The companies have identified that environmental marketing is a platform for creating sustainable competitive advantage. A research by Dr.Soegoto has revealed that environmental marketing is an important source of competitive advantage because, it plays “an important role on the formulating marketing strategy determination and its performance” (Soegoto, 2007). Bedside, pressure from the governments’ end is also a major reason for increasing green marketing activities. Regulatory authorities are now imposing regulations on companies to practise green business in their operational process to reduce the negative impact of operational activities on environment. Many UK manufacturing companies are focusing on their supply chain management for environmental issues. In fact, “average manufacturers perceived the greatest pressure to improve environmental performance through legislation and Ids” (Holt and Ghobadian, 2009). Driving Factors in Environmental Marketing Environmental marketing is one of the latest trends in prevailing business environment. However, there are certain factors that influence the environmental marketing. These factors drive the quality, frequency and degree of environmental marketing. In this respect, there are three major factors influencing environmental marketing. These driving factors are technology, organisational culture, and role of regulatory authorities. Environmental marketing involves entire tasks of marketing which causes minimum negative impact on environment. Marketing strategy includes four primary areas of marketing i.e. product, price, promotion and place. In framing strategies for these areas, technology plays very significant role. For example, product development is an important process in meeting the criterion of green marketing. Currently, leading automobile manufacturers are producing more numbers of hybrid and electric cars. Toyota has already launched its hybrid car called, Prius which is one the most successful eco-friendly cars and it is an good example of technological innovation or eco-innovation for green marketing (J. Ottman Consulting, Inc., 2003). Entrepreneurial innovative skill is another major driving factor that encourages green marketing within an organisation. It is very necessary to develop favourable organisation culture that motivates their employees to practice green business and to encourage for innovations. Management style of an organisation must take green factors into account in their decision making process. Charter and Polonsky have commented that there is no need for government regulation for green business, “if they have been able to develop an organisation an organisational culture and strategy that support their green marketing effort (Charter and Polonsky, 1999, p.339). Government’s support and role is also one of the major driving factors in encouraging environmental marketing. For example, government offer tax and other benefits to the companies practising green marketing. Moreover, companies within an economy require better infrastructure and resources for better and effective environmental marketing and hence, government play an instrumental role in this respect. However, due to environmental regulation also causes hindrances in growth of an organisation. US firms have realized that environmental regulation, affects the competitiveness, productivity and it also influence their international expansion (Jaffe, Peterson and Portney, 1995). Challenges in Environmental Marketing The above sections have described the importance and drivers of environmental marketing. It has become important phenomena for entire business world and inevitable for healthier environmental. Moreover, companies are using it as a vital strategic tool for gaining competitive advantage. However, there are also certain issues and challenges in environmental marketing. W. Edward Stead, Jean Garner Stead and Mark Starik have identified five major challenges in this respect. Firstly, many organisations have found that the term ‘green’ difficult to interpret as it involves complexities and methodological issues. Secondly, organisational also found it difficult to make target consumes understand regarding necessity for changing lifestyle to encourage green practise. Thirdly, environmental marketing also includes the task of educating consumers regarding environmental problems. Fourthly, marketers aiming for green marketing often fail to find non-misleading and legitimate ways to communicate the benefits of green product with target consumers. “The fifth challenges for environmental marketing is to gain credibility for the idea that business interest do not necessarily conflict with environmental responsibly (Stead, Stead and Starik, 2003, p.164). Besides, there are other issues that poses hurdle for environmental marketing. Environmental marketing requires huge investment in R&D for innovating alternative technology and most of the small and medium scale companies do not possess such financial capability. Moreover, due to high cost of recyclable material and require renewable green products are comparatively expensive and hence, many consumers do not want to buy high cost product (Pirakatheeswari, 2010). Environmental Marketing as a Critical Tool in Strategic Management Environmental marketing or green marketing is becoming very popular in these days. Apart from the environmental and social needs, the management have found this marketing concept as one of the key success factor in strategic management. Strategy formulation process includes a number of necessary steps like development of mission & vision, environmental scanning, strategy framing, implementation and evaluation. The organisations that encourage green business in their operational process use environmental marketing as an important tool. In the earlier section, importance of environmental marketing for gaining competitive advantage has already been described. Ethical and social marketing help the companies in meeting their responsibilities towards society, environment and community and environmental marketing is part of ethical marketing that focuses specifically on environmental welfare. Moreover, Russo and Fouts (1997) have identified that when organisations focus on environmental protection thorough their daily operational processes, they are able to develop innovative capabilities and resources (Lopez-Gamero, and Molina-Azorin and Claver-Cortes, 2009). Environmental marketing is one of the marketing approaches that help organisation to achieve long term success that includes cost-effective production by energy conservation, profit sustainability and competitive advantage. Font (2001) has identified benefits of green marketing for profit making, non-profit making organisations and for customers. The following table lists these benefits. Table 1: Benefits of Green Marketing (Source: Font and Buckley, 2001, p.12) As per the above table for green marketing benefits, the organisations use environmental marketing for three major reasons i.e. for resource preservation, for corporate advantage through image building and for financial benefits (Font and Buckley, 2001, p.12). However, practically, environmental marketing is not always helpful in achieving competitive advantages. Moreover, it becomes hindrances for the companies who are preparing for international market. Primary issue in this respect is the force regulation of government for environmental protection. Jaffe has identified that it affects the productivity, international trade, investments, and overall economic growth. If an economy imposes stricter environmental regulation, overall product costs goes up affecting the economies scale (Jaffe, Peterson and Portney, 1995). For example, during 1998, Shell decided to “become more deeply concerned with environmental and social” and it caused a decline in its overall organisational growth (Winsemius and Guntram, 2002, p.229). Strategies for Successful Environmental Marketing In order to achieve long term benefits by meeting the responsibility towards environments, it is very necessary to develop a comprehensive environmental marketing strategy. Environmental marketing is not different from general marketing strategy but it is alternative approach of marketing that helps to meet organisational and its environmental objectives. Therefore, while framing environmental marketing, organisation must focus on the four components of marketing i.e. product, price, promotion and place. However, before drafting green marketing strategies, organisation must identify their aims and needs in this respect. The following matrix model is very useful in choosing proper objective and strategic directions for green marketing. Figure 2: Environmental Strategic Posture (Source: Hollensen and Banerjee, 2009, p.369) By analysing the above matrix, it is easier for organisations to identify their ‘green needs’ and accordingly, they should focus on their product, price, promotion and place. Product is the core necessity for any business and hence, organisation must create ecological objective in product development process. As per Dr Michael Frein, “the goal of eco-effective product design is to integrate environmental management and the environmental aspects of products in the design process” (Frein, 1998, p.17). The following figure represents a model for designing eco-effective product. Figure 3: Eco-Effective Product Design (Source: Frein, 1998, p.17) Price is critical factor in green marketing as includes high cost for producing eco-friendly products and consumers must realize this fact. Promotional mix is necessary to educate the consumers for spreading environmental awareness. While choosing the distribution channels, the companies must consider consumers’ convenience to encourage them for using eco-friendly products (Yim, 2007, p.42). Conclusion This paper has examined and analysed different areas of environmental marketing which is also referred as green marketing or sustainable marketing. As the name suggest, ‘environmental marketing’ involves environmentalism in marketing activities. There have been significant improvements in environmental marketing due to certain reasons like sustainability issues, competitive advantages and increasing governments’ interferences in maintaining safe environment. Besides, the technological innovation and organisational culture are major drivers influencing the green marketing. However, in spite of long term benefits, there are certain major challenges in environmental marketing causing barriers for organisations. High cost product and lack of consumers’ environmental awareness are the two major challenges for environmental marketing. The post-modern organisations have been able to identify the importance of environmental marketing and hence, they are using this marketing approach as a critical strategic tool. With increasing popularity and necessity, many scholars have developed models for developing green marketing strategy. The company must identify and select their prime objectives for practising green marketing and then, they should focus on four Ps of marketing. Reference Aras, G. and Crowther, D. 2009. Global perspectives on corporate governance and CSR. Gower Publishing, Ltd. Baourakis, G. 2004. Marketing trends for organic food in the 21st century, Volume 3. World Scientific. Charter, M. and Polonsky, M. J. 1999. Greener marketing: a global perspective on greening marketing practice. 2nd ed. Greenleaf Publishing. Dr. Frein, M .October 1998. The Journal of Sustainable Product Design. 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Available at: http://kth.academia.edu/SofiiaMiliutenko/Papers/227711/Green_Marketing_or_Green_Wash_A_Comparative_Study_of_Consumers_Behavior_on_Selected_Eco_and_Fair_Trade_Labeling_In_Sweden. [Accessed on February 22, 2011]. Journal of Ecology and the Natural Environment Vol. 2(6), pp. 104-111, June 2010. Read More