Sustainable Marketing

A Holistic Approach

Mark Peterson

• Publisher: SAGE Publications Ltd
• Year: 2021
• ISBN:
  9781529769173
• Edition: 1
• Topic: Negocios y empresa
• Subtopic: Marketing
• Index: Marketing

Building on the idea that holistic marketing strategies allow firms to assess risk and realise opportunities, this book draws on new research and industry examples to help you recognize effective sustainability practices that benefit companies, stakeholders and society.

With an issue-based approach that dissects the interplay between marketing and society, the author encourages readers to critically engage with the changing nature of markets; how companies can adapt to sustainability guidelines and environmental threats while still remaining profitable in today's global market.

Using a range of examples including Costco, Juul, Facebook, Patagonia and Bitcoin, Peterson highlights the importance of social issues facing businesses today such as poverty alleviation, the drive towards more 'green' living, corporate social responsibility within firms and political pressures such as emissions guidelines and reducing the global carbon footprint. The Mavericks Who Made It feature also highlights key entrepreneurs throughout history, their key successes and their impact on sustainable marketing.

PART I Macromarketing for Sustainable Marketing

1 Twenty-First-Century Micro and Macro Issues

Throwing Shade

Source: Photo by Guilherme Stecanella on Unsplash.

The Air in Big Cities

Today, more than half the world’s population (55 percent) live in cities (Ritchie and Roser, 2018). By comparison, in 1960, only about one-third of the world’s population lived in cities. Researchers studying the mass migration of populations from rural to urban areas predict that two-thirds of the world’s populations will live in urban areas by 2050.

People living in cities tend to have higher incomes than those in rural areas, which results in lower levels of poverty (Robison, 2019). However, one of the costs for this benefit is dirtier air breathed by city dwellers.

In an effort to reduce fuel consumption and CO₂ emissions from vehicles in the 1990s after the Kyoto Protocol climate change agreement was signed in 1987, governments in Europe encouraged vehicle manufacturers to produce and sell more vehicles with diesel engines (Sullivan et al., 2004). As a result, Europe embraced the diesel engine. Until the mid 1990s, diesels accounted for less than 10 percent of the car fleet in Europe, but in 2015 they accounted for more than half of the car fleet (Vidal, 2015). Across the EU, there are more than 50 million diesels – compared to 1.6 million in 1998 (Robison, 2019). Only 7 million diesels are registered in the US.

While diesels produce 15 percent less CO₂ than gasoline or petrol engines, they produce 22 times the particulates (which penetrate the lungs, brain and heart). A secondary pollutant – ozone – forms when these pollutants react with sunlight. Diesels also emit four times more nitrogen dioxide (NO₂) which inflames the lungs, heart and brain, and appears to be a contributor to cancer, dementia, as well as respiratory illnesses (McCarthy, 2018).

For years, concerns about climate change overrode the concern about air quality among environmental groups, and government and businesses. Auto manufacturers produced more diesels from the mid-1990s, while governments kept the diesel price below that of petrol. In the UK, France and Germany, owners of autos emitting lower amounts of CO₂ paid lower taxes – thus, these government incentivized citizens to buy more diesels. Diesels comprised 32 percent of new vehicle sales in 2018 in the UK (down from 50 percent in 2014) (Statista, 2020).

In 2015, researchers at West Virginia University in the US conducted independent tests of vehicle emissions and found evidence that diesels made by Volkswagen AG spewed 40 times more NO₂ than in regulatory lab tests. Volkswagen later admitted it had intentionally created software to show its autos met emission standards (McCarthy, 2018). Volkswagen AG has paid $33 billion in fines and settlements. However, in subsequent research, Adac – Europe’s largest motoring organization – showed that diesel cars from Renault, Nissan, Hyundai, Citroen, Fiat, and Volvo released more than 10 times the level of NO₂ than shown in tests conducted by the EU (The Guardian, 2015).

Now, the harmful effects of NO₂ and particulates are more evident. Doctors now are confronting the need to educate patients about the dangers of air pollution similar to how they did for smoking cigarettes (Robison, 2019). A study conducted by the research consultancy CE Delft for the European Public Health Alliance in 2018 asserted that diesels accounted for 83 percent of the €66.7 billion costs of air-pollution from traffic (both health and nonhealth) in the EU in 2016 (CE Delft, 2018).

Since 2015 when Volkswagen’s rigging of emission tests became known, diesels’ share of new car registrations across Europe has dropped markedly from 50 percent to 36 percent (McCarthy, 2018). (By comparison, only 3 percent of cars in the US were diesels in 2015 (Chambers and Schmitt, 2015).)

Twenty-four European cities have adopted diesel bans that will go into effect by 2030 (Behrmann, 2019). For example, diesels will be banned from Paris and Madrid in 2024.

Questions to Consider

• What factors led to having 25 times more diesels in Europe over a 20-year time span from 1998 to 2018?
• Do you think the European leaders who signed the Kyoto Protocol in 1997 to address climate change thought there would be such a surge in the adoption of diesels as there was?
• Are you surprised that there was so much more adoption of diesel cars in Europe than in the US?
• What does this story from Europe say about the effectiveness of government interventions in markets? About consumer preferences in transportation modes? About business’ role in auto markets?

Chapter Overview and Learning Objectives

This chapter will give a historical summary of how we have come to the place where using a macromarketing lens can reduce risk and help identify opportunities for entrepreneurially oriented firms. A macromarketing lens can be useful because it helps us understand the interplay between marketing and society. This chapter will specifically focus on the practice of sustainability and the seven reasons business is more mindful of society today, discuss what marketing and macromarketing are and why they are important, and conclude with a series of examples showing the implications of macromarketing for entrepreneurship.

The chapter concludes with the story of Ray Anderson, founder of Interface, Inc. – a manufacturer of carpet tiles – as a maverick firm that made it. Interface transformed itself in the late twentieth century to become a leader in developing sustainable business practices. After this chapter, you should be able to answer the following questions:

• What are the seven reasons businesses are more mindful of society today?
• What is the definition of markets? Marketing? Society?
• What is macromarketing, and why is it important?
• What is the emerging view of capitalism and its five types of capital (manufactured, financial, natural, human, and social)?
• What role do entrepreneurs play in moving the marketplace toward generating social and environmental gains?
• How can social responsibility be integrated into a sustainable enterprise?

Sustainability and the Triple Bottom Line

What Is Driving the Turn for Businesses to Be Mindful of Society?

Although theories explaining the roots of Conscious Capitalism are only now emerging, several likely contributing factors can currently be identified (Hollender and Breen, 2010). The seven reasons business is more mindful of society are discussed below.

Reason 1: Technological Improvements

Improvements in technology, especially telecommunications technology, increasingly give power to individual consumers and citizens. In a networked world, accountability is more timely and powerful. Savitz and Weber (2006) call this the ‘Age of Accountability’. Accordingly, externalities generated by firms, such as the variety and breath of pollutants produced, no longer go unrecognized. On the other hand, firms that embrace stewardship of the planet and concern for people in their pursuit of profits are more likely to be recognized and rewarded for such an approach to business. Some firms are going beyond separate reports for financial and nonfinancial results (e.g., corporate social responsibility or sustainability reports) and combining these into a single integrated report (Eccles and Krzus, 2010). At the same time, they are using the internet to offer more detailed results to all of their stakeholders and to improve their level of dialogue and engagement with a wider set of stakeholders. Wall Street financial analysts have begun to take note because such integrated reporting adds noticeable value to the company. Contributions to sound business practices and a more sustainable society make enlightened firms more appealing to many stakeholders – including shareholders.

Reason 2: Rising Prosperity and Environmental Values

Second, rising prosperity in countries allows quality-of-life and environmental concerns to move higher in the priorities of consumers and citizens. This is happening all over the world. With higher income, individuals give higher priority to self-expression and to quality of life. There is a strong association between prosperity and environmental values (Inglehart and Welzel, 2005). The increased interest in environmentally friendly products can be seen in the demand for hybrid cars. Toyota anticipated this trend and introduced its Prius hybrid vehicle years before other competing firms (Bonini, Mendonca, and Oppenheim, 2006).

Reason 3: Awareness of Earth’s Limits

Rising awareness of the planet’s limits suggest that new forms of production and consumption need to be developed. New York Times Foreign Affairs columnist and Pulitzer Prize winning author, Thomas L. Friedman (2008) characterizes the Earth as a hot, flat, and crowded planet. Friedman means that the Earth is characterized by (a) a changing global climate, (b) a developing world that is rapidly beginning to use many of the competitive capabilities of the developed world that were once thought to be nonexistent in a developing county, and (c) a developing world with a burgeoning population in urban areas. These all suggest that we are all more vulnerable to volatility and major social, economic, and political change than we previously perceived we were in the twentieth century. The rise of China and India as economic powers suggests that demand for energy will continue to be pressed. As this happens, energy prices will move higher. Many of the sources for fossil fuels, such as Venezuela and Saudi Arabia, seem to be poised for difficult transitions in political leadership in the future. In sum, there is an increasing awareness that a take–make–waste approach within societies ne...