Sustainable Management

Session 4Product and Services – a forward view, designing in greenNew requirements and opportunities from Social Media

Colin LoveDirector MSc Strategic Marketingc.love@imperial.ac.uk

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Where are we going now?

• Marketing - supporting sustainable business?• Using products and services

• Socialnomics?

• Social Media

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Putting CSR and Sustainability into context:

• How do these concepts relate to marketing?

• How do the concepts relate to Product and Services?

Corporate Responsibility and Sustainability:

Influencing factors:

• Globalisation• Business• Stakeholders• Environment• Ethics• Responsibilities• Sustainability of the planet and business!!

Conflicts: profit versus the planet

Development of Corporate Social Responsibility

Definitions of CSR (Carroll) have reflected concerns such as:• Seriously considering the impact of company actions on

others• The obligation of managers to protect and improve

welfare and society• Meeting the economic and legal responsibilities and

extending beyond these obligations

• It is evident that by CSR practices and trends that social responsibility has both a social component and a business component

Friedman (Chicago School) view of Corporate Social Responsibility

• Managers/corporations should maximize profits while conforming to the basic rules of society.

• Shareholders are the principals, managers are their agents in the pursuit of profit max. and max. shareholder wealth.

• Profits represent the net contribution that the firm makes to the social good.

• Managers representing shareholders and profit maximizing also act in best interest of society.

• Managers using corporate resources to promote social objectives in fact would be undemocratic.

Discretionary

Ethical responsibility

Legal responsibility

Economic Responsibility

Carroll’s Pyramid - 1991

Philanthropic – desirable and discretionary

Ethics and morality – societal expectations

Conformance – operations within the confines of the law

Friedman – responsibility to produce goods/services for society at a profit

From CSR to Sustainability:

• Need to differentiate between sustainability for business or the environment

• Or are they actually one and the same thing!!

Strategies for a Sustainable World

• Root of the global problem lies in:• Explosive population• Rapid economic development in emerging economies

• But this is outside of the mandate and capability of any corporation

• However, corporations effectively control resources, technology and have global reach, and ultimately, the motivation to achieve sustainability

Realistic Strategies for a Sustainable World:

• Stage 1: Pollution Prevention• control and clean up

• Stage 2: Product Stewardship• Minimising all environmental impacts from a product life cycle• Design for the environment – recover / reuse / recycle

• Stage 3: Clean Technology• Investing in tomorrows technologies• Pollution Product Technology – can be designed in!!

Sustainability Vision – is there a road map to deliver the above?

Sustainable Development:

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

own needs.“

• the concept of 'needs', in particular the essential needs of the world's poor, to which overriding priority should be given; and

• the idea of limitations imposed by the state of technology and social organization on the environment's ability to meet present and future needs.

Our Common Future, United Nations World Commission on Environment and Development (WCED),1987.

The Sustainability Portfolio – central role of P&S

Clean Technology

Is the environmental performance of our products limited by our existing

competency base?

Is there potential to realise major improvements through new

technology

Sustainability Vision

Does our corporate vision direct us toward the solution of social and

environmental problems?

Does our vision guide the development of new technologies, markets, products and processes?

Pollution Prevention

Where are the most significant waste and emission streams from our

current operations?

Can we lower costs and risks by eliminating waste at source or by

using it as an input?

Product Stewardship

What are the implications for product design and development if we

assume responsibility for a products entire life cycle?

Can we value or lower costs while simultaneously reducing the impact of

our products?

INTERNAL EXTERNAL

TOMORROW

TODAY

Rate the company in each box to establish commitment, preparedness, vulnerability

New Strategic management requirements:

The big question: how do we make money?

• There is a growing body of evidence to suggest that ethical practices build sustainable businesses which are corporately responsible

• Benefactors being:• Shareholders• Staff• Suppliers• The economy• The planet• Society

How can money be generated?

Operational responsibilities:

Positive commercial reputation• consumer behaviour – brand

value, hence sales increases• Share price – driven by sales

/profits• HR reputation – attracting and

retaining staff• Supply chain relationships• Input cost control and carbon

replacement

Can be defined and measured

Citizenship responsibilities:

Positive social reputation• Environmental stewardship• Education• Community projects• Philanthropic ventures• Not easy to define or measure, but

is likely to feed commercial reputation

Has become a ‘requirement’ of global companies

The triple bottom line:

• PEOPLE

• PLANET

• PROFIT

• No longer a set of conflicts but a corporate requirement

• Good examples:• Unilever• Ikea• Timberland• BP!!!!

• Bad example:• BAT

• Where does Veolia fit in?

And finally what can you do?

• The Three Secrets of Green Business – unlocking competitive advantage in a low carbon economy – Gareth Kane

• 3 Secrets – understand the business case / what to do / how to do it

• Preparation – culture of change / environmental management systems / measures / communication

• Small steps – mostly internal to company• Huge Leaps – cleaner production / design it in / renewables /

service synergies / industry symbiosis

© Imperial College Business School

CSR – Sustainability models

Unilever• Unilever Living Plan• November 2010• http://www.unilever.co.uk/sustainable-living/uslp/

Marks and Spencer• M&S Plan A• January 2007• http://plana.marksandspencer.com/about• High consumer focus

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Mini caselet:

Ikea: founder Ingvar Kamprad

Ikea - history

The Ikea Business Model• 1943 – 1972 domestic business constrained by the size of

the Swedish market space – very much Red Ocean

• 1972 + international / global expansion• Development of 5 components of distinction• Move into the Blue Ocean

• Articulation of The Environmental Agenda 2000 – 2009• Move into Green Space

• And still a family business!! – long term view

Ikea: driven by product and service

Five Components of Distinction

1. Design, function, and quality at low prices

2. Unique (Scandinavian ) design

3. Inspiration, ideas and complete solutions

4. Everything in one place

5. “A day out” the shopping experience

The distinctions above move the company into the Blue Ocean – Uncontested Market Space and making the Competition

Irrelevant

The environmental agenda:

• Based on the company culture – family owned• Creating belonging and fellowship• Bringing employees together• Inspiring allegiance to the company

• The Environmental Agenda built on:• Ikea code of conduct (IWAY) - 2000

• Forestry• Raw materials• Climate change• Towards responsible sourcing• Charity focus

A sustainable business

Ikea: you will always find me in the kitchen at parties

• http://www.youtube.com/watch?v=2Gm9rxNxyDU

DIGITAL MARKETING

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Living in a world of global consumer brands:

• UK, Europe, USA and the World are dominated by global brands / products

• We have become global consumers• National cultures and identities have lost

ground to global marketing imagery - brands

• Is this driven by the consumer or is it driven by corporate cost / profit advantage?

Global customers have increasing voice

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Corporate Social Responsibility brand initiativesEmergence of Brands (products and services) which are known for:• Ethical marketing – a balance of consumer information versus advertising

messages• Products produced from sustainable resources• Environmentally friendly• Fair trade practices• Supporting the 3 R’s – recycling / replacement / reuse

• Putting investment back into society and the environment

The Digital Economy

Big Digital Economy Brands:

• Top 4 brand digital led – Google / IBM / Apple / Microsoft

• Apple $182BN• Google $114Bn • China Mobile $65 Bn• eBay $10 Bn• Facebook $20 Bn• youTube $20 Bn

None in the top 50 brands 3 years ago!!!

Digital and Interactive Marketing

Broad definitions:• Digital – binary code used to process/transfer information using computers

/ communication networks• Digital Business – any business where core processes are dependent on

ICT

• Digital Marketing is the promotion of brands using all forms of digital advertising channels to reach consumers. This includes Internet, Mobile and encompasses social media marketing – together with TV / Radio formats

• The internet and mobile platforms are particularly suitable for interaction with the customer

Shift of influence and power from the marketer to the customer

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Implications for products and services:

Big trends:

Social networking• Facebook• youTube• Twitter• Blogs

Socialnomics – Erik Qualman• http://www.youtube.com/watch?v=lFZ0z5Fm-Ng

It’s a fact: the world is rapidly shifting from analogue to digital. People are consuming more and more digital content on a daily basis – on mobile phones, laptops, desktop computers at work, on tablets and iPads….

Digital marketing is so important because it is not only a rapidly growing force, but it is set to be the future of marketing, while younger generations are replacing more traditional media with digital media.

Why digital marketing is so important?

Source: Internet World Stats

Internet World Population: 2.4 billion in June 2012

Everyday more than 2 billions search queries are carried out on Google

On September 30th Facebook has registered its 1 billion user, everyday more than 50% of Facebook users connects to the social network

Smartphones being used worldwide surpassed one billion units in the third quarter of 2012

Twitter has reached over 500 million active users, generating over 340 million tweets daily and handling over 1.6 billion search queries per day.

At the launch of iPad mini, just few weeks ago, Tim Cook has announced that Apple sold over 100 million iPads.

Some worldwide figures

• Marketers face many marketing communication challenges:• Decline in traditional media usage and decline in prime time

viewership (especially younger generations) • Increase in time spent on online and audience fragmentation• Multi-consumption (many media consumed at the same time)• The proliferation of mobile and portable Internet-connected

devices has made TV multitasking the norm. Forrester’s researches show that about four out of five US online adults who own a laptop, smartphone, or tablet go online regularly while watching TV

Media consumption has changed

• It seems that the more devices and media formats, the more content we consume.

• In the US recent research (Performics) show that people consume an average of 61.4 hours a week (8.8 hours a day) of content. That’s over one third of available time each week, more than half of available time, assuming eight hours of sleep.

• In Britain (source: Ofcom) the average media consumer's day is seven hours and five minutes. From breakfast radio to peaktime evening TV, via surfing and texting at home or at office desks, media takes up 45% of available time.

• The actual amount being consumed is even higher, Ofcom believes, with the boom in mobile computing helping people to multitask

• Ofcom believes that in Britain approximately one fifth of media time is "simultaneous" consumption.

Media consumption has changed

The Mobile “revolution”

• The Mobile revolution is breaking through, driven by ever-higher-performing smartphones, tablets, and other devices enabled by either WIFI or 3G and 4G networks, as well as innovative applications.

• Half of all U.S. adults have a mobile connection to the web through either a smartphone or tablet

• The number of smartphones in use worldwide surpassed the 1 billion-unit mark in the third quarter of 2012

• Smartphone penetration in Europe: UK: 53%, France: 43%, Germany: 40%, Italy: 47.4%

• In China's biggest cities, smartphone penetration is approaching 50%

Mobile got Smart

1. Personal

2. Portable

3. Always on

4. Paying

5. Always available

6. Monitoring

Mobile marketing

The most personal device - Nobody shares a mobile phone

For marketers this means:

• Relevance is key – don’t be intrusive• Personal sphere is important for your customer • Individual platform for products and services• Individual targeting of product and service offerings • Messages are usually read in real-time • In the UK, research shows that smartphones users look at

their phone almost 200 hundred times a day!

Personal marketing – Mobile revolution

Mobile payments Mobile banking M-Commerce e-wallet

• Implications for a service driven company – closeness with the consumer

Paying

For instance, people often take pictures just out of impulse – Excellent if you need your customers to help for a creative

campaign – viral marketing

They are there when people feels an impulse to buy something and can facilitate the purchase immediately

Always available

Each mobile phone transaction can be traced – it corresponds to a single user with a distinct number

Data are crucial to profile and segment a target Campaign results can also be accurately measured Data tracked speak about users’ behaviours and lifestyles:

this also provides information on their social context This rich data can also be used to design new services

and products

Monitoring

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Implications for Veolia:

• Delivery of service product• Physical product information• Account handling• Customer services• Alerts• Corporate communications• Rebuilding the communications

platform with the consumer

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Veolia in the 21st Century!!