Green Marketing and Corporate Social Responsibility - Assignment Example

Green Marketing and Corporate Social Responsibility Table of Contents Identify green consumer psychology and buying strategies. 2 Discuss the five challenges of green marketing 5 Discuss the five challenges of green marketing 7 Case Study on Social Responsibility of IBM 9 References 19 Bibliography 21 Identify green consumer psychology and buying strategies. In the past few years, the environmental issues have received significant attention from the people and companies are coming forward to create the awareness among the people. Green consumers are those people who prefer to buy green or eco-friendly products from the market. It is important to investigate the demographic and psychological behavior to understand the green consumers better. It is also important to analyze the attributes, personality, motives, lifestyle, behind buying ecological products. So it can be said that the characteristics of the green buyers can be understood by studying the profile of the green consumers (Wagner, 2003, p. 1). It is difficult for the marketer to understand the consumer behavior, especially in case of buying environment friendly products. The psychology of the green consumer can be analyzed by studying the physiographical characteristics of the green consumers, such as the personal qualities, activities, hobbies, lifestyle, etc (Grant, 2009, p. 44). It is also important to analyze the behavior of such consumers. The scientific studies help the marketers to analyze the physiological aspect of green customers. The consumer classification can be done on the basis of their characteristics, to measure their contribution towards conserving the environment. They are: Loyal eco-friendly customers: They believe that one must have environmental awareness in order to protect the earth that is why they feel that it is their duty to contribute effectively for conserving the environment. They always prefer to buy eco-friendly products, even at higher prices compared to the non-eco-friendly product. At the same time they also try to persuade other consumers to buy similar eco-friendly products. Less devoted eco-friendly customers: These people are highly concerned about the environment but they are busy enough to change their habits or lifestyle. These types of consumers follow the loyal eco-friendly consumers but they do not apply same rules in their lives. They are ready to buy eco-friendly products but up to certain limit. Consumers developing interest towards green products and services: They approve the activities done to promote greenery only during certain situations. They are ready to pay only up to 4 percent more for the eco-friendly products. Consumers not willing to change: These types of people think that it is the responsibility of the state or the big business houses to take initiative for improving the condition of the environment. Majority of the customers in this category do not have much information about the current environment issues, neither do they have much interest to buy eco-friendly products even after paying more for them. The consumers can also be classified on the basis of their needs. The green consumers buy eco-friendly products or services to satisfy their needs. The needs and the purchase strategies of the green consumers can be presents as below: Information need: It is a common fact, that the consumers should be well-informed regarding the types and quality of the eco-friendly products available in the market. They would be motivated to buy the eco-friendly products if they come to know about the quality of the products. When the consumers search the eco-friendly products in the market, they should be informed about the location of eco-friendly products in the departmental stores or supermarkets. It is also important for companies to properly label the eco-friendly products, so as to spread awareness and induce demand. Need for controlling: The companies must pay special attention that the eco-friendly nature of the product is described in the different stages such as in manufacturing, maintenance, supply chain, etc. Consumers only buy eco-friendly products from trusted companies only. Need for change: The green customers not only buy eco-friendly products or services, but they also motivate others to buy as well. This involves spreading knowledge and information regarding conserving the environment. The whole process is important as it would slowly help to bring about change in the world. Lifestyle need: The prices of the eco-friendly products are little higher than the normal products as the resources are less, whereas, the quality is high. So the price and quality aspect of the product is important to the customers for making decision regarding buying the product. Moreover, the consumers has to first see their standard of living and buy products accordingly, so they never buy those products which can create conflicts between their lifestyle, however eco-friendly the product is. The green consumers can be also classified by analyzing their motives. To prove that the completely loyal customers group is also not totally homogeneous, the customers can be segregated into three groups according to their motives, they are: The consumers concerned about the environment and the planet: These consumers trust those organizations or marketers, who have taken various initiatives for protecting the environment. These types of consumers are concerned about recycling the waste product in the house, use water and electricity economically, regularly reads the books, magazines on planet or environment issues, and avoids the excessive consumption of natural resources in direct or indirect form. Health conscious consumers: This category believes in those organizations who are concerned about healthy lifestyle of the human being or nutrition. They prefer to buy organic food and products and purified water. They have a regular habit of using sunscreen lotion before stepping out of their houses and read magazines and books on health, nutrition and lifestyle of various people. Animal lovers: This group prefers those organizations, which fight for animal rights. They are vegetarians and do not prefer to eat meat or fish. They do not approve the usage of fur coats and study magazines or journals which deals with issues related to animals and animal rights. The environment friendly products or services cost more due to the smaller economies of scale, compared to the high cost. The organic food production is highly labor-intensive and difficult to produce in large mass without the help of chemical or synthetic fertilizers, so companies producing such products face complex challenge (Earth Share, 2012). As more and more people understand the current environmental situations, they would prefer to buy more eco-friendly products. This would not only promote green products but also generate high revenue for those marketers producing these products (Evans, 2011). Discuss the five challenges of green marketing The marketing of those products and services which are environmentally safe are called eco-friendly or green products. These products are produced to reduce the negative effects of production on the physical environment and improve the quality of the products, and packaging of the product. The people are gradually becoming conscious of the environment and are buying environment friendly products, but the numbers of customers are few compared to the customers for non-eco friendly products. There are many challenges that green marketing is facing, they are as follows: 1) One of the biggest challenge of green marketing is that marketer need to address to the environmental issues and also satisfy the needs and wants of the consumers at the same time. It becomes difficult for the marketers to offer very attractive organic products to the customers because products manufactured from organic raw materials often lack the luster or shine as the synthetic products have. This fact is understood by few consumers, but not by the majority. It is very difficult to convince the consumers and explain them the fact that green products are equally effective and can satisfy the consumers in the similar manner as the non-eco friendly products can (Ottman, 2011, p. 108). 2) The second problem is the cost issue. It has been seen that the environmental friendly products are expensive. Though the consumers agree that they would pay about 7 to 20 percent more for buying green products, but in reality they do not do so. They would go and buy expensive product which are not even eco-friendly, but do not trust the organic products to delivery same or better results (eScholarship, 2012). 3) The organic or eco-friendly products are promoted in similar manner as the non eco-friendly products. The packaging of the organic or green products are similar and not eye catching. So the customers do not get attracted to those products kept in the shelves of the retail stores. Companies’ should allocate funds for its promotional campaign, advertisements on television or print media. This will not only create awareness about the product of the company, but also motivate people to buy green products. 4) The use of organic or eco-friendly raw materials or following environmental friendly procedure for production, supplying or packaging increases the cost of production of the manufacturer. This results in the increase in the price of the products or services. The resources are also limited and have to be used carefully. This is another challenge for the marketer. 5) Many of the companies make false claims of selling eco-friendly products, without even utilizing any eco-friendly raw material or procedure. It is necessary to set an organization or regulatory body to test the products and get certifications from those organizations, so that the customers can trust the products of the company and buy them. Discuss the five challenges of green marketing The marketing of those products and services which are environmentally safe are called eco-friendly or green products. These products are produced to reduce the negative effects of production on the physical environment and improve the quality of the products, and packaging of the product. The people are slowly becoming conscious of the environment and are buying environment friendly products, but the numbers of customers are few compared to the customers for non-eco friendly products. There are many challenges that green marketing is facing, they are as follows: 6) One of the biggest challenge of green marketing is that marketer need to address to the environmental issues and also satisfy the needs and wants of the consumers at the same time. It becomes difficult for the marketers to offer very attractive organic products to the customers because products manufactured from organic raw materials often lack the luster or shine as the synthetic products have. This fact is understood by few consumers, but not by the majority. It is very difficult to convince the consumers and explain them the fact that green products are equally effective and can satisfy the consumers in the similar manner as the non-eco friendly products can (Ottman, 2011, p. 108). 7) The second problem is the cost issue. It has been seen that the environmental friendly products are costly. Though the consumers agree that they would pay about 7 to 20 percent more for buying green products, but in reality they do not do so. They would go and buy expensive product which are not even eco-friendly, but do not trust the organic products to delivery same or better results (eScholarship, 2012). 8) The organic or eco-friendly products are promoted in similar manner as the non eco-friendly products. The packaging of the organic or green products are similar and not eye catching. So the customers do not get attracted to those products in the selves of the retail stores. Companies’ should allocate funds for its promotional campaign, advertisements on television or print media. This will not only create awareness about the product of the company, but also motivate people to buy green products. 9) The use of organic or eco-friendly raw materials or following environmental friendly procedure for production, supplying or packaging increases the cost of production of the manufacturer. This results in the increase in the price of the products or services. The resources are also limited and have to be used carefully. This is another challenge for the marketer. 10) Many of the companies make false claims of selling eco-friendly products, without even utilizing any eco-friendly raw material or procedure. It is necessary to set an organization or regulatory body to test the products and get certifications from those organizations, so that the customers can trust the products of the company and buy them. Case Study on Social Responsibility of IBM Overview IBM is an American multinational, engaged in technology and consulting business. The company is a value-based firm of efficient individuals, who apply the technology to make the world a better place to live in. About 400,000 IBMers all around the world invent and assimilate software, hardware and the services for enabling organization, institutions and individuals, to succeed in a smarter planet. IBM has always been considered as one of the leader in CSR, among the other companies (Global Peace Festival Foundation, 2010). The company has also taken an initiative called On Demand Community for taking global initiatives and encouraging the employees around the world to use the resources and skill for helping the local people or contributing for a social cause. Corporate Service Corps (CSC) is another initiative of IBM to educate and train the employees. The high-performance employees of IBM are involved in this project (SRO, 2010). The objective of the company is to strategically focus its resources such as its technology, innovation, solutions and talented employee base to fight the societal problems in health, education and environment. IBM has taken active participation in literacy campaign, disaster relief initiatives and various other cultural issues. IBM as a company has never tried to follow technology, market trend, products or leaders. IBM has always followed its pre-determined values. Even when the economic downturn is making it difficult for companies to survive in the market, IBM is making investment for skill training, wellness and health programs for its employees (IBM, 2008). Social Responsibility Issues Governing the Corporate Responsibility In IBM the employees always believe that IBM is not just a profit making organization. It is the duty of the senior level management to monitor the performance of the employee, analyze the functions of the company, so that the laws and regulation are strictly followed, the activities of the company and its impact on the environment. It is the duty of the board to review the performance of employees on a regular basis. There is also a steering committee within the organization to advice the board on issues relating to corporate affairs and citizenship of the organization. This committee reports directly to the Vice-President of Marketing and communication. The steering committee comprises of top level executives from all departments of IBM (IBM, 2009). Environmental Sustainability IBM conserved about 5.4 percent of energy, which exceeded their corporate goal of 3.5 percent. The energy conservation projects undertaken by IBM included saving more than 246,000 MHz of electricity and 410,000 million of fuel. This would reduce the Carbon dioxide emission by 142,000 metric tons. IBM spent about $26.8 million for undertaking this project. IBM has also utilized its wide range of solutions and technology to make it operations in the data center, energy efficient. The company is also engaging real time thermal monitoring systems, known as the measurement and management technology 1.5, spread across the data center of IBM to discover the areas where improvements can be done and usage of energy can be reduced. The usage of virtualization has been increased in projects across the data centers around the world so as to reduce energy consumption. IBM has also introduced a fresh business strategy to reduce energy consumption by minimizing the use of backup IT equipment and also compromising with the service and quality commitments to the customers. Moreover performance of the equipment has also been continuously monitored to improve its hardware and software capabilities and make it energy efficient. Process Stewardship The process stewardship includes the policy of IBM to use, develop and manufacture those products and solutions, which are environment friendly. IBM's environment protection initiative is not new. Ever since IBM was formed, initiatives were taken by the top level management of the company to monitor the amount of chemical usage and reduce it from the products and processes. The company has also come up with various substitutes which would have less impact on the environment and health of the living beings. On 2010, IBM declared that it was successful in eliminating Perfluorooctanoic acid and perfluorooctane sulfonate (PFOS) from the manufacturing process of the microprocessor and from the product too. The company is also one of the first in the industry to eliminate these two carbon compounds from its products and processes. IBM has employed ambitious technological experts and developed alternatives to formulate new strategies to deliver its commitment without impacting the environment in a negative way. Product Stewardship The product stewardship program of IBM was introduced in the year 1991. The product stewardship of IBM includes the goals, tools and development of the organization. The data centers are the backbone of the company for generating information, solutions and delivering business to the other organizations. IBM has more than 450 data centers all around the world to assist organizations by providing information, analytics and other research needed by the companies to operate in a sustainable manner (IBM Corporate Environmental Affairs, 2011). IBM carefully designs its products and services so as to inject efficiency in their own data centers and for the clients too. New data centers are being opened by the company, such as in Raleigh, North Carolina. This was developed to assist the clients in using the new computer models. This new data center reduced the cost of technology and improved the quality of services provided to the clients. The new data centers uses half of the energy of the old data centers to deliver all the services assigned to it. IBM’s UNIX based POWER 750 express and the power 755 became first four processors to receive US EPA Energy stars. The innovative POWER 7 and POWER 6 processors of IMB deliver twice or thrice more efficient services by consuming minimum energy. IBM has not only paid attention for production of energy efficient products, but also towards eco-friendly packaging too. It has been the primary focus of the design engineers in IBM to design minimal product package, keeping in mind the issue of product protection. It is specifically ordered to the suppliers to use non-toxic inks and materials to design the packaging. The materials should be recyclable. It helped the company to reduce its annual cost by $ 9.3 million. IBM has started offering 100 percent recyclable materials with thermoformed nestable cushion for packaging various products like the server bands or retail store systems. These products are generally shipped to different places. IBM saved these materials, which was estimated to be about 91 metric tons and helped in saving about $1.9 million in the transportation and material cost. IBM also has special packaging design team that designed about 22 different designs to find the best solution. The company saved about $ 1.4 million in transportation and material cost in this process. The goal of IBM was to recycle and reuse the old products, which has already completed their life cycle. IBM wanted to send minimum waste for landfill. In the year 2009 the end of life operation management involved the usage of 41,400 metric tons of those end of life products, only 0.5 percent of the waste was sent for landfill. It is the goal of the company to reduce and reuse their products. This will help to reduce and finally eliminate the waste products in landfills. Figure 1 Source: (IBM, 2009) Communities IBM work with the local leaders of the countries to identify the social issues in the country. They utilize their technological expertise and human resources to plan strategically and offer well-designed solutions to people. The major challenges that are seen in most of the places are related to healthcare, food, water, economic growth, and education. IBM has made considerable contribution in creating smarter technologically faster cities in Vietnam, helped the victims of typhoons in Philippines, assist the people in Haiti during earthquake, and the list goes on. The company has always methodologically aligned its community services, so that none of the aspect gets missed out. Various initiatives have been taken by the company to fight against diseases such as AIDS, Cancer or dengue fever in different countries around the world. Innovative methods have been planned out to educate children and various knowledge programs have been designed by the community of IBM. The employees in IBM are always ready to respond to the natural disasters happening around the world. The IBMers are among the first to contribute time, money and technological aid in managing disasters. In 2009 IBM responded to H1N1 outbreak in Mexico and other countries, flood in Vietnam and India and earthquake in Haiti. They developed emergency communication infrastructure for the people and also provided servers and software to register the profile of missing persons in these disasters. IBM also provided asset tracking and logistics management facilities to the people and government of these countries. The employees of IBM donate about $1.1 million around the world to their On Demand Community for charity. The World Community Grid has been launched by IBM to assist the researcher around the world in solving various humanitarian problems. The network runs on the idle processing power of the computers of more than 500,000 participants. The researchers are using this technique to unearth some of the most important afflictions from dengue to dystrophy of muscles. In the year 2009, the Chiba Cancer Center institute for research in Japan also planned to use the grid to find the drug that can disable protein like neuroblastoma, as this is the core cause of solid tumors in children. Anyone can join the World community grid by donating the processing capacity of their idle PC (World Community Grid, n. d.). Supply Chain IBM manages more than 28,000 suppliers in more than 90 countries around the world. It also motivates its suppliers to take initiatives in the social and environmental causes. IBM has also introduced check points for the suppliers in the procurement process since many years. IBM has created a supplier Improvement Plan after its social responsibility audits. The company has formed supply chain social responsibility teams for offering guidance to the suppliers. The company merged its environmental and social requirements to form a management system which would deal with the environmental and social issues in the supply chain management. It would also help in increasing the efficiency of the supply chain and help in generating quality performance. This new system also includes training programs for proper communication, operation control and monitoring the performance against the set goals. Governance It is a well known fact that offering products or solutions for making a smarter planet is not an easy task. IBM provides technological support to the businesses, hospitals, organizations and various other agencies. IBM strategically plans all its projects not only for profitable business, but because the company knows that many clients, shareholders, partners and employees and their trust are there with the company. The strategic approach towards the business will always keep the roots strong. IBM also believes that to transform earth into a smarter planet, strong emphasis should be laid on privacy and security of the clients, employees and their information. For example, the X-force is a leading security expert which continuously monitors external threats and provide updated information to the chief information security officer of the company. He/ She is responsible for monitoring the information and respond across 120,000 servers and 500,000 endpoints (Noobsters, 2012). Public Engagements IBM has always taken active participation in looking for innovative technologies in healthcare. The company invests almost $1.1 billion in the health care segment. The company employee physicians and other medical staffs to assist the engineers in making user friendly products that would help in advanced medical treatment. Conclusion Building a smarter planet seems like a vast activity, but together with the help of IBMers, all around the world, the company has skillfully moved towards its target to innovate and introduce new technology, so that the world would become a better place to live in (Philanthropy News Digest, 2011). The nature of the work in IBM demands best expertise around the world, so IBM selects the best individuals to contribute in their campaign to build a smarter planet through technology and solutions. The company offers a culture of innovation and in turn demands commitment from its employees to follow the visions or goals of the company. IBM is one of the companies in the industry to invest in additional resources for compensating employees. The company annually spends considerable amount of money on the health and wellness of the employees. The IBMers are provided 100 percent health insurance from the company. The company has also invested in the Healthy Living Rebate Program that provides incentives to the employees and their families in case of any health related problems. The company launched Global Citizen Portfolio for the employees to support education and skill development programs. IBM is a profit making organization and it has been seen that other companies in the same industry do not take so many social initiatives for the development of the society as a whole (CECP, 2011). IBM not only plans to benefit the employees by providing them opportunities for advanced learning or wellness, but it also utilizes its core competency that is technology and solutions to eliminate the problems of the society. It also focuses on the environmental issues, reduction of carbon footprint and waste management. The motto of the company is not only to make the planet a better place to live but also to efficiently use the resources for conserving energy and making the planet a safe place to live. References CECP, 2011. The Corporate Philanthropist: Pro Bono Service. [Online] Available at: < http://www.corporatephilanthropy.org/research/best-practices/the-corporate-philanthropist/recent-issues/the-corporate-philanthropist-pro-bono-service.html?start=4> [Accessed 28 June 2012]. 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Environmental Marketing: Strategies, Practice, Theory, and Research. London: Routledge. Sahay, B. S., et al., 2006. Green Marketing. New Delhi: Allied Publishers. Read More