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Marketing reflects a changing society : The keywords of the new paradigm - Green & Digital

WHERE ARE WE:

- Marketing reflects a changing society. The keywords of the new paradigm :

Green

‣ More articles about green marketing and sustainable consumer have been published lately

•

Digital

‣ SUSTAINABILITY

- Sustainable development& sustainable behaviour : much broader than only the environmental dimension

Economical, social and environmental sphere

‣ A complex and multi-faceted concept

•

- Sustainability matters to management and marketing

Not only for a niche of scholar

‣

- The global risk landscape (WEF)

World Economic Forum (WEF) a multi stakeholders communities it respond at different type of jobs and aspects

‣

“A global risk is an uncertain event or condition that, if it occurs, can cause significant negative impact for several countries or industries within the next 10

- years.”

- 750 experts and decision- makers in the World Economic Forum’s multi stakeholder

communities responded to this year’s Global Risks Perception Survey.

Respondents are drawn from business, academia, civil society and the public

‣ sector and span different areas of expertise, geographies and age groups

- Visual representation

X : Likelihood & Y : Impact

‣

- Critical area : top right Failure of climate change, migration and adaptation

→

That's why sustainability matters

‣

SUSTAINABLE DEVELOPMENT

- Need to shift to a new paradigm, and pursue so the called : Sustainable Development

- How would you define sustainable development?

"Sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own

- needs"

Minimise the difference between the generation of today and of tomorrow

~ Our Common Future Brundtland Report 1987 ~

- In 1987 sustainability was not as known as it is today

Problems :

- “Needs” : How do we define them?

1. - Needs are complex : Maslow’s hierarchy of needs

Only once we have satisfied the basic (physiological and strategy) we can satisfy the higher ones

‣

- Shall we consider the “needs” to be all the same regardless of time and space?

Needs are not always the same (change over the time);

‣ The needs of a teenager in California are different from the needs of someone in Africa

‣

“Without compromising” : how do we know today for tomorrow? No compromising : no trade off

2. →

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Biofuel paradox :

‣ Bio fuel was tough top be good for the environment but using food (cereals : corn, mais...) caused scarcity of food : if the quantity

shrinks, then prices rise and that could cause an humanitarian disaster

Biofuel were good from environmental point of view, but a disaster from a social point of view

• - When making sustainable choices take into account these three pillars :

Economic : take into account profit

• Environmental : do not pollute

• Social: satisfy employee, wellbeing of society (social-welfare)

•

“Ability to meet” : on which basis

3.

Why did Sustainable development become mainstream?

-

- The issue of sustainability is not as recent as you might think

Sustainability (now fashionable) is actually old

‣ Venice Repubblica Serenissima : big need of wood, there are many type of wood (not all suitable for every occasion)

• Easter island : in the middle of the ocean, when the European came the population started to disappear

• Many woods were needed in order to transport the big statues : they cutted too many trees (= no more food, no more

✦ bungalows) causing deforestation and so scarcity of raw materials

- Recently, there is high awareness because of the intertwining effects of (but this problem always existed) :

a. Demographic explosion

Sooner or later we won't have enough resources we are too many

• Projection: we are still growing and we could reach 10 billions people (in Italy it is actually the opposite trend)

✦

In modern times, awareness emerged (also) in relation with demographic dynamics

• Impact = Population x “Affluence” x Technology

- Technology : allows to produce more (good) but makes us pollute more (bad)

✦

b. Post-industrialisation pollution

We are consuming mole energy and producing more (clean way to produce energy)

• Around 80% of the energy that we use derived from fossils

✦

Affluent lifestyles and increased consumption bring skyrocketing energy demand/consumption

• Most of which is still from non- renewable sources

✦

c. Green consumerism

d. Environmental/social disasters

Changes in natural environment

• Human activities are probably responsible for critic changes in natural environment

• Around the mid 80s : the environmental disaster of Chernobyl brought sustainability at the forefront of international attention

• A nuclear accident on 26 April 1986 at the No. 4 nuclear reactor Chernobyl Nuclear Power Plant, near the city of Pripyat

✦ (Ukraine)

It is considered the worst nuclear disaster in history and is one of only two nuclear energy disasters rated at seven, the

✦ maximum severity, on the International Nuclear Event Scale, the other being the 2011 Fukushima disaster (Japan) and then

Seveso, Bhopal ...

- The earlier Sustainable development concept puts focus on equilibrium between use of resources, carrying capacity of the environment and

social expectations / needs

Carrying capacity: Ecological Footprint

- Maximum population that can survive in a definite space given - How much land and water area a human population uses to

the available resources provide all it takes from nature

How fast we consume resources compared to biocapacity

‣

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- Earth is like a space ship, so it has a carrying capacity : Ecological footprint

- France : 67,5 mln inhabitants footprint : 337,5 mln ha = 3.375.000 Km | France area: 640.679 Km

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Area needed to satisfy the French people needs is 3milions, but the actual France area is one

‣ sixth : Debtors

Germany, Italy, Spain, Portugal, UK and Poland are needed to support France Footprint ...

• and the same is for Italy, Spain, UK ...

- Debtor use more resources than the country could provide : Europe, USA, China

Creditor countries sell to debtor countries

‣

- Counterintuitive = Russia is green because of the quantity available of natural resources

ACTORS IN ACHIEVING SUSTAINABILITY

-

- Many actors involved in achieving sustainability:

Investors

-

- Why should investors care about sustainability? Just for ethical reasons?

The Dow Jones Sustainability Indices (DJSI) launched in 1999, are a family of indices evaluating the sustainability performance of the

‣ largest 2,500 companies listed on the Dow Jones Global Total Stock Market Index.

They are the longest-running global sustainability benchmarks worldwide and have become the key reference point in sustainability

• investing for investors and companies alike.

Companies

-

- Companies are one of the key actors : when sustainability started getting important companies understand that this could be use to become

more competitive

- Sustainable companies are more likely to :

Be competitive in the long run

‣ The more sustainability the more competitive (requires initial investments)

•

Comply with regulations/avoid lawsuits

‣ Avoid incidents (safety)

‣

Public authority

-

- Public authorities at local, national and international level set directives and regulations according to a so- called top-down approach

The 2020 EU energy goals were to have a 20% reduction in CO emissions compared to 1990 levels, 20% of the energy, on the basis of

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‣ consumption, coming from renewables and a 20% increase in energy efficiency.

- Dig into the 2019 report

Explore in depth past trends and latest statistics useful to back up the monitoring towards Europe 2020 targets in our

‣ publication 'Smarter, greener, more inclusive?'

- Visualise the EU's progress since 2008

This chart quickly shows you the current situation of the EU, its progress made since 2008 and its distance to the Europe

‣ 2020 key targets.

- How is your country doing?

With our scoreboard, you can easily get an impression of the situation and developments in your country for all

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HOW DOES MANAGEMENT THEORY REACT TO ALL THIS

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Institutional perspective

-

- Institutional perspective : Only regulations and/or social pressure are at the basis of the companies concern for issues other than profit,

growth, share- holder value, long-term profitability ...

- Coherent with the political economy perspective

- Voluntary activities on personal basis / ethic premises not necessarily endorsed by shareholders

Corporate social responsibility (CSR)

-

- Corporate Social Responsibility (CSR) : based on normative / ethical premises, postulate the responsibility of directors and managers as for

the social (and environmental) consequences of their decisions

- Corporate social responsibility (can find the three pillars translated to CR ands to marketing )

Profit create, richness (economic)

‣ Employees, green marketing (environment)

‣ Employees, society’s large, shareholders (paying dividends) (social)

‣

Stakeholder Theory

-

- Stakeholders are those groups without whose support the organization would cease to exist

- Stakeholders pressure on the company is exerted on economic, social and environmental performance similarly to the shareholders

pressures about financial performances

Agency Theory

-

- The "agents" (directors and managers) behave in their own interest

This includes the elimination of legal risks due to environmental and social damages following their decisions and to which the

‣ shareholders are not subject

Legitimacy Theory

-

- Business are bond to social trust and social acceptance, in a word legitimacy.

Legitimacy is related to coherence between acknowledged values and actual behaviours.

‣

- The spread of socio-environmental values put directors and managers in front of new source of legitimacy, in contrast with the traditional

profit-oriented source of legitimacy.

THE COSTS OF UN-SUSTAINABILITY

- - Evolution of business approach to sustainability was seen as a cost, but

now companies realised that it pay-off

EVOLUTION OF BUSINESS APPROACH TO SUSTAINABILITY

- There has been a shift (from reactive to proactive) communication not telling now much you pollute but tell what you are trying to do

Focus on costs Focus on opportunities

‣ →

End-of-pipe approach Proactive approach throughout the production process

‣ →

Environment seen as an issue for technical depths Shared responsibility

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Confidential information Transparency and communication as a competitive tool

‣ →

SUSTAINABILITY IN BUSINESS: a long-term strategy

-

- Everyday’s activities, together with short-term oriented performance evaluation might bring long term opportunities and threats out of sights

Keep a broad, long-term perspective

‣

- Several sources of business benefits emerge from incorporating sustainable development within business processes.

- However to obtain such benefits a different view / a shift in paradigm is required, since benefits could not be directly measurable through

usual financial measures and pay-back times could be longer than usual.

SUSTAINABILITY IN BUSINESS: an opportunity rather than a constraint

-

- Economically sustainable companies (economic efficiency & effectiveness)

guarantee at any time cashflow sufficient to ensure liquidity while producing a persistent above average return to their shareholders

‣

- Socially sustainable companies (social efficiency & effectiveness)

add value to the communities within which they operate by increasing the human capital of individual partners as well as furthering the

‣ societal capital of these communities. They manage social capital in such a way that stakeholders can understand its motivations and can

broadly agree with the company’s value system

- Ecologically sustainable companies (ecological efficiency & effectiveness)

use only or mainly natural resources that are consumed at a rate below the natural reproduction, or at a rate below the development of

‣ substitutes. Or otherwise use recycled / re-used resources. They do not engage in activity that degrades eco- system services.

Innovation Value for stakeholders Profit and Growth Efficiency in the use of resources Innovation

→ → → →

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GREEN MARKETING & GREEN WASHING

-

- Environment friendship

Products

‣ Processes

‣ Waste

‣

- Exaggerating the green attitude of the company

- The importance of communication :

- Green washing : many company started to declare their product as eco-friendly, companies said it although it was not true

There was the need for some third-party certifications

‣ EMAS and EU Ecolabel : communication tool that can be used by companies to share their sustainability

• Have different object :

✦ · EMAS : values the organization

· Ecolabel : values the single product)

- Green certification : there are different certification scheme (different information from which consumers can base their decision)

1. Corporate company information by means of adv. : it is a biased vision (company tying to sell its product, poor credibility)

2. Institutional : Information from 3 parties which have no ties with the company : Green certification which are EMAS and EU Ecolabel

3. Word of mouth and informal relationships : European Commission tells you something (credible more or less), but if some of you

friends tells you is much more credible

4. Empirical : I try, I can see hands on and then value it

- Do not only focus on sustainability but remember also functional traditional features

Atlas case : a detergent popular in the 80s; they thought it was important to focus on advertising products as environmentally friendly

‣ (it is in the 80s that sustainability became fashionable)

Advertising : all about this eco friendly detergent (does not pollute)

• The problem of focusing only on sustainability lack of other functional aspects such as quality (it was not effective)

• →

McDonald’s paper straws that can not be recycled

‣ Biofuel : narrow view, which if seen in a broader poin of view cause also downsides

‣

- The essence of sustainable marketing is that company positions the brand as an active figure in an environmental or societal issue.

It can humanise the brand messages and create another reason why customers should choose the company over competition.

‣

- Corporate Responsibility definition : (not jus product; not just environment)

Focus no only on the product but also on the brand values, practices, relationships, company as a whole ...

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Many people mention “green marketing” which was the first label used to describe non-traditional ways to produce friendly to the

‣ environment now we use sustainable (broader in scope : not only environmental but also society)

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- Essence of marketing : brand, product positioning in an environmental and societal issue

Functionality is the main thing customer searches : sustainability is a plus the product needs to be effective and sustainable

‣ DIGITALISATION

- Marketing is facing a rapidly evolving society. Business environments change, as do the needs of customers

Business environment changes and so do customer (always been dynamic, but be forewarned it changed slower than today)

‣

- We are considered postmodern costumers

Typical mistake : think that costumer of today is the modern consumer (modernity is tough to be today)

‣ In marketing the modern customer id the costumer of yesterday; the customer of today is the postmodern costumer

•

INDUSTRY 4.0

-

- Why is it called 4.0?

It is the fourth industrial revolution which is about cyber-physical technology, automatisation, internet of things

‣ Level of complexity is always increasing

‣

- First industrial revolution : in England in the 18 century

th

- Second industrial revolution : in the United State (Ford T) 20 century

th

- Third industrial revolution : electronics and computer used in companies in a large scale 70s

- Fourth industrial revolution : today

Industry 4.0 refers to a new phase in the Industrial Revolution that focuses heavily on

‣ interconnectivity, automation, machine learning, and real-time data

- Craft (artisan) Production : Pull factor (market, every single client was asking)

Many different products - limited volume

‣

- Mass Production : Push model

Correlation between variety of products and the No variety in the model-colour (Ford T), many products produced

‣

volume of things produced - Mass Customisation : use of flexible computer-aided manufacturing systems to produce

custom output (low costs of mass production combined with flexibility of customization)

More product variety less volume produced

‣

- Personalised production : many different products (personal) at a low cost, allowed by

machine that can create different products (products out of the same machine)

Toyota : Lean production

- Pull versus Push

Pull situation : market (costumer) pull the features of the product

‣ (I want this : company produces)

Customisation is allowed by collection of data

• Pull strategies are more common now than before

• (reaction to what costumer wants : not in all sectors, in some still use mass)

Push situation : company knows it can produce something and market will accept it

‣ (I give you this you take it)

- The more sophisticated the product pull is the solution (almost all sector use pull)

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- In 2006 many things did not exist : world is completely different (grate opportunity & challenges for marketing)

iPhone, iPad, Kindle, 4g, Uber, Airbnb, Android, Instagram

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- Time to reach from 0 to 100,000