What you'll learn to do: explain how demonstrating corporate social responsibility can impact marketing
We have reviewed many ethical challenges and potential traps for marketers. How can a marketer win? Actually, in lots of ways. Increasingly, marketers are doing more than just trying to avoid doing harm; as you'll see, they're taking on important issues and are making a difference, actively doing good.
Earlier in this module we discussed what corporate social responsibility is and how social responsibility programs impact many different stakeholders in a business. In this section we focus on the role of corporate social responsibility in marketing. We will look at the marketing mix—product, price, promotion, and distribution—and see how companies are changing their marketing strategies to visibly contribute to their communities.
Finally, we'll talk about the results that companies achieve when social responsibility is part of the marketing strategy.
The specific things you'll learn in this section include:
- Define social responsibility
- Identify examples of social responsibility that create value for customers
- Explain the impact of social responsibility on marketing results
You'll recall that we defined corporate social responsibility as the ethical behavior of a company toward society. It means acting responsibly toward the stakeholders—not just the shareholders—who have a legitimate interest in the business. Let's focus on how marketers use corporate social responsibility to achieve marketing objectives.
First, let's return for a moment to the marketing planning process. Where does social responsibility fit in? It generally comes into the planning process in one of two ways:
- Social responsibility may be a corporate-level strategy with specific objectives.
- Social responsibility may be part of the marketing mix based on the situation analysis
Let's look at both of these approaches.
Corporate Strategy at Coca-Cola
Coca-Cola's mission is:
- To refresh the world . . .
- To inspire moments of optimism and happiness . . .
- To create value and make a difference.
In support of the vision, the company has created what it calls a "roadmap" that defines the focus areas for company strategies and tactics. These include:
- People: Be a great place to work where people are inspired to be the best they can be.
- Portfolio: Bring to the world a portfolio of quality beverage brands that anticipate and satisfy people's desires and needs.
- Partners: Nurture a winning network of customers and suppliers, together we create mutual, enduring value.
- Planet: Be a responsible citizen that makes a difference by helping build and support sustainable communities.
- Profit: Maximize long-term return to shareowners while being mindful of our overall responsibilities.
- Productivity: Be a highly effective, lean, and fast-moving organization.
Which of the roadmap areas focus on social responsibility? "Planet" is clearly a social responsibility focus, as it acknowledges a responsibility to improve the world beyond the sale of Coca-Cola's products. "People" also suggests a note of social responsibility; Coca-Cola strives to be a place where employees are not only doing a good job for the company but are inspired to be their best as people.
Marketing Strategies to Address Childhood Obesity
Coca-Cola doesn't specifically call out customer health in its roadmap, but that concern has become a significant component of its marketing strategy, and the company has developed a specific set of marketing programs to address childhood obesity. Childhood obesity is a challenging issue for the company. If you were to conduct a SWOT analysis of Coca-Cola, you could imagine that this issue would appear under "external threats" and have a negative impact on its market. In most K–12 schools in the United States, the sale of soft drinks has been steadily eliminated. Rather than wait to find out how this trend might play out, marketing decided to take a proactive role. In 2013, Coca-Cola announced its four global well-being commitments to help fight obesity, each of which has a direct impact on the marketing mix:
- Offer low- or no-calorie beverage options in every market. (Product)
- Provide transparent nutrition information, featuring calories on the front of all of our packages. (Product)
- Help get people moving by supporting physical activity programs in every country where we do business. (Promotion)
- Market responsibly, including no advertising to children under 12 anywhere in the world. (Promotion)
Coca-Cola has added a number of water and juice brands to its product portfolio in order to achieve these social responsibility objectives, and has devoted a substantial budget to develop physical activity programs in its markets. The tone of the company's advertising has shifted to focus on an older audience.
Increasingly companies around the world are including some social responsibility objectives in their corporate-level plans. The majority of U.S. companies in the S&P 500 and Fortune 500 provide reporting to investors on their sustainability goals and performance. In South Africa, companies are required to provide such reporting in order to be listed on the Johannesburg stock exchange.
With this emphasis and accountability, social responsibility is no longer regarded as a "special project," but is becoming an integral part of the corporate and marketing planning process that is central to business performance and success.
The Business Case for Social Responsibility
Regardless of broader benefits, there is a strong business case for social responsibility. Public companies' stock prices benefit from strong social responsibility initiatives. In 2013, more than $6.57 trillion were invested based on socially responsible investment strategies.
For marketers, the desire for socially responsible products and companies is driven by consumers. Nearly 30 percent of consumers plan to increase the amount of goods and/or services they buy from socially responsible companies in the coming year. Twenty-five percent avoided buying products from an enterprise because they thought it wasn’t socially responsible.
Social Responsibility Programs
In defining social responsibility programs and goals, companies are acknowledging a commitment to creating a better world. How do they determine where to focus these efforts and what are they trying to achieve? Generally, companies are expanding on unique market strengths that benefit society and trying to reduce the negative impact of their products on society. As with any other business strategy, an approach that is customized to the company and its market is likelier to have greater impact. For example, Coca-Cola's emphasis on preventing childhood obesity acknowledges and addresses a risk that the company brings to its market. If Exxon Mobile launched a childhood obesity initiative, it wouldn't have the same impact. The company's oil and gas offerings don't have a direct impact on childhood obesity, and thus it would raise questions about the energy company's commitment to addressing issues much closer to home—i.e., the serious impact that Exxon Mobile products have on the environment.
Many companies are implementing a host of social responsibility strategies through sustainable product initiatives.
Creating Sustainable Products
A sustainable product is constantly environmental-friendly during its entire life. That is, from the moment the raw materials are extracted to the moment the final product is disposed of, there must be no permanent damage to the environment.
A sustainable product focus may include:
- Use of organic raw materials
- Sustainably harvesting of raw materials
- Emphasizing human rights and labor conditions in sourcing decisions
- Use of renewable energy in the production process
- Ensuring that use of the product creates a positive impact on the community
- Creating product recycling and reuse options
- Improving the impact of the product's use on human and environmental health
The intent of a sustainable product strategy is that the company is identifying the impact of its products on society at every phase of the product lifecycle, and minimizing the negative impacts. Sustainable product initiatives are so broad in scope that they often encompass all of the social responsibility initiatives. This broad scope also requires companies to be focused and realistic about what they can achieve, setting appropriate objectives that demonstrate progress and identify where more work is needed.
As the world's largest retailer, Wal-Mart faces unique challenges in product sustainability. It must not only focus on its stores, but on the products provided and transported by a board network of suppliers. To address this, Wal-Mart has partnered with The Sustainability Consortium to create a sustainability index that can be used to set standards and measure progress across its value chain. The goals of the index are to:
- Improve the sustainability of the products customers love
- Integrate sustainability into the business of buying and selling merchandise
- Reduce cost, improve product quality and create a more resilient supply chain
- Strengthen customers’ trust in retailers and the brands we carry
The company cites progress in its work to date.
One great example of how we are delivering impact is through the progress we’ve made on our goal to eliminate 20 million metric tons (MMT) of greenhouse gas (GHG) emissions from the supply chain. Through our partnership with the Environmental Defense Fund and by leveraging the Index as a tool to gain buy-in and create accountability, we’ve:
- Eliminated 7.575 MMT of GHG by the end of 2013
- Implemented projects that are estimated to eliminate 18MMT of GHG emissions by the end of 2015
Clearly, Walmart has significant work ahead, but independent evaluations have been positive. Joel Makower of Green Biz reports that Walmart’s sustainability initiatives are having a real impact, both on its operations and those of the companies in its supply chain. He also notes that some of that progress is offset by the company’s rapid growth.
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