18. Sustainable Marketing in the Global Marketplace

Chapter Overview 1.Global Corporate Citizenship 2.Major Areas of CSR 3.The Case for Sustainability 4.Challenges for Sustainability Strategies 5.Sustainable Marketing and Global Consumers 6.Developing and Implementing a Sustainable Strategy 7.Global Stakeholder Engagement Programs 8.Sustainable Marketing Mix Policy for the Global Marketplace 9.Crisis Management and Consumer Boycotts 2

Introduction Companies recognize that sustainability is here to stay. Global companies have to pay attention to the effect of business decisions on the environment as well as on a host country’s social and economic conditions. A proactive approach is necessary to address sustainability. 3

1. Global Corporate Citizenship Corporate social responsibility (CSR) is “the company’s status and activities with respect to its perceived societal obligations.” The European Commission defines CSR as “a concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis.” The United Nations Global Compact (UNGC) is a framework that the UN established in 2000 to help companies in adopting sustainable and socially responsible strategies. It stipulates 10 principles in the areas of human rights, labor, the environment, and anti-corruption. 4

Exhibit 19-1: The Un Global Compact’s 10 Principles

1. Global Corporate Citizenship The ISO provides a template for social responsibility in areas such as: – Human rights – Labor practices – Environmental issues – Fair operating practices – Consumer issues – Community involvement and support 6

Exhibit 19-2: The Nestle Creating Shared Value Pyramid

2. Major Areas of CSR Corporate social responsibility includes: – Corruption and Bribery – Environmental Concerns – Supply Chain Accountability – Commitment towards customers – Community Support 8

Exhibit 19-4: Examples of Water Save Initiatives

3. The Case for Sustainability Building customer trust is the prime reason to pursue CSR. – In a 2002 survey covering 12 countries on why consumers pick global brands, “social responsibility” came out as the third-most-important element. – Firms with a good CSR image could also get rewarded with higher brand loyalty and the ability to charge a price premium. – One concern that multinationals face with reputation management is the so-called negativity effect: consumers place much more weight on negative publicity than on positive publicity 10

4. Challenges for Sustainability Strategies Cross-border differences in cultural values and ethical conduct create moral confusion – Cultural relativism vs. Cultural imperialism – Poor infrastructure can force companies to scale back their aspirations – Decisions in one country can affect a company’s global image 11

Exhibit 19-7: Conflicting CSR Images

5. Sustainable Marketing and Global Consumers With the rise of social media, consumers are rapidly alerted when a global brand has a harmful impact at the other end of the planet. Consumer behaviors are also affected by: – Lack of Awareness – Negative Perceptions – Product price 13

6. Developing and Implementing Sustainable Strategy To create a suitable CSR strategy, a company must: – Set objectives and targets – Understand the operating environment – Specify strategic sustainability initiatives – Implement – Develop metrics for monitoring 14

7. Global Stakeholder Engagement Programs Stakeholder perceptions and priorities can rapidly shift in a global environment. – Stakeholders are a valuable source of information They can help determine standards and targets for sustainability Firms team up with stakeholder groups to generate creative decision making Monitoring stakeholders can help a company audit their sustainability. 15

8. Sustainable Marketing Mix Policy for the Marketplace Meeting consumer needs and desires creates corporate challenges for global companies in areas of: – Sustainable packaging – Sustainable pricing 16

Exhibit

8. Sustainable Marketing Mix Policy for the Marketplace Long Term Strategy requires internal and external communication strategies. – Internally – a code of conduct sets out core values and basic ethical rules for employees. – Externally – marketing communication reaches out to stakeholders through advertising and public relations. 18

Crisis Management and Consumer Boycotts Crisis can damage a company’s reputation – Have a crisis management team Monitor all situations Handle crisis vigorously Build a reputation to protect it Communicate with stakeholders during a crisis Be prepared to rebuild brand reputation after the crisis is resolved 19