Eco Friendly Marketing: Challenges and Opportunities

Eco Friendly Marketing: Challenges and Opportunities It is no exaggeration to say a society is ruled by the logic of the environment in the 21st century. Since the 18th century industrial revolution, human beings have benefited of the richness due to the mass production and mass consumption, having a continuous growth with a progress of industrialization, industrial technology, and advanced material. However, these types of economic activities based on material growth causes serious global environmental issues such as destroy of the ozone layer, global warming, acid rain, waste disposal and so on because of the destruction of public goods that is the environment; furthermore, the level of the contamination threats the survival of mankind. Since 1970s, the worlds environmental problems have started to spread out towards the awareness of environment conservation, and in recent years the need of environmental management emerges as a new measure including international agreements and the Green Round, which is to urge connection between env ironmental problems and international trade. Because of the seriousness of these environmental issues, the paradigm which is environmentally sustainable and sound for the 21st century led to a new international economic order occurred. Therefore, each business organization should recognize a bunch of issues about environment as a member of the community, the national society, and the international community in that the issue is no longer the problem of individual countries but rather the common problem of humanity. That is, it means that there is no exception across the world. Additionally, enterprises became unable to walk away from the strategic perspective in the event that the more our societies have increasing influence to the attention called environmentalism and consumerism, the more business sectors should concentrate on social responsibilities as well as ethical aspects. From this situation above, Eco-friendly marketing is emerging as a key role in business implementation plans. In other words, what is called Eco-frien dly marketing does not fully separate environmental issues from the economic goals; on the basic principles above, it is meant that a firm may have to focus even on not only its business vision under the objectives such as the profit of outcome, market share, and product-development projects but also its social vision for example: the community interest, the preservation of the natural environment, and the formation of corporate culture. Thus, Eco-friendly marketing can be defined as a marketing strategy which is to develop an increase of attention to the interdependence among human and human, human and social, and human and natural environment. It has often, however, been argued that Eco-friendly marketing can be shown a direct effect when a company under the companys long-term goals performs Eco-friendly management in the process of all marketing decisions, turning around into the overall environmental management structure. In this regard, this essay, for this reason, begins with the idea that what the cause of the mistake in terms of the majority of companies are taking a wrong place in the Eco-friendly marketing; plus, it is necessary to point out what the true meaning of Eco-friendly marketing is. Although awareness of both companies and consumers about the environment is very different from the past and both of them recognize with depth of understanding about there is a need for a new marketing strategy, the reason it is hard to find a case of company in the true meaning of success in performing the Eco-friendly marketing is that the history of academic theory and strategies in response to environmental issues is not so long; thus, there have been lack of relevant academic frameworks. Also, because of wrong recognition widespread ¸ Eco-friendly marketing is passively considered as one of the way to make profit rather than social responsibility. In this paper, therefore, there will be an argument about theoretical aspects of Eco-friendly marketing as the emerging factor of threats as well as opportunities in the modern world Eco-friendly marketing based on the previous research; then, it aims to provide the cases of companies comparing the status in the performance of Eco- friendly marketing between South Korea and the UK in order to suggest accurate directions which can lead to sustainable development and to be performed effectively. In the middle of developing worldwide standard such as ISO Series for environmental management and Global Reporting Initiative guideline, companies should not only adopt these global standards but also precede a correct understanding of environmental conservation activities of corporations in some countries while in international trade or direct investment. In addition, there is more attention now in the world than ever before in terms of a successful case of the companys environmental conservation activities beyond national boundaries; furthermore, it is necessary to know the trends related to the reform of countries` institutional background and surroundings of the company in order to grasp why a company in a certain country is attracting attention as a success story and how the successful cases are able to apply for a particular organization. This research is primarily concerned with the theoretical background and important factors to learn about Eco-friendly marketing on the basis of existing literature, and it will be also considered theoretical background relating to environmental management as the foundation to achieve effective performance for Eco-friendly marketing. Finally, through a comparative case study including the internal and external activities of the environment management, this essay aims to examine both practical efforts and institutional structure for the background of the corporations in the UK called an advanced country related to Eco-friendly marketing activities; at the same time, there will be a suggestion to improve understanding of the situation and problems in relation to current eco-friendly marketing of South Korean companies with the right direction. Since the early 1990s, it has raised several debates for Eco-friendly marketing in the name of ‘Green Marketing by way of mass communication; still, the concept can be seen as an academic field which has not been set clearly yet. In general, Eco-friendly marketing may often be considered the marketing activity as companies not only provide products or services to meet the needs of society but also perform social and ecological balance under the mutual recognition that a consumer is not any longer a simple buyer for the sale of products but is an individual for mutual benefit.[1] Table 2-1 below reveals several concepts that were released by associated marketing groups, academic circles or scholars, and media relate to Eco-friendly marketing. [2] [3][4][5][6] [7] To begin with, it is essential to understand clearly the different features between traditional marketing which is consumer-focused marketing and Eco-friendly marketing that is social perspective in terms of ideologies, values, and systems. The table 2-2 shows the differences below. That is, [8] the philosophy of Eco-friendly marketing is not to mainly focus on the limited customer reaction which is visible, but with a wide degree of dimensions to keep emphasis on the gist of improving the quality of human life rather than material convenience or wealth, regarding the customers as its own value without being recognized as a revenue source.[9] Also, remarkably characteristic feature is often described that the majority of companies when they are in the pursuit of traditional marketing in the past days were inclined to deal with the environmental problem as an entity they want to avoid as if it is possible. However, the feature of organizations to seek Eco-friendly marketing can be defined that they do not recognize the problem related to environmental preservation as the factor of threat, but do treat the activities in the role of another opportunity that can afford competitive advantages combining with long-term profitability, focusing on interdependence with hu man, human and social, human and natural environment.[10] Finally, it can be, therefore, clarified that Eco-friendly marketing is a business practice in the pursuit of social quality including environmental basic structure, environmental living condition, and social and cultural areas that contain all of human life. (Source: Moon, S.G., 1993) [11] As in shown in the table above, Eco-friendly marketing mix consists of Product, Price, Place, Promotion of the general configuration of marketing mix but the difference with the general 4Ps is that Eco-friendly marketing mix can be called the primary methods to perform the pricing of production-elements for development of environmentally friendly products, development of reverse distribution system through recirculation of waste, development of environment-friendly corporate- image, induction of consumption-behavior based on environmental consciousness, and program development, reflecting the environmental aspects. While companies are taking over marketing activities based on the new concept of 4Ps, on the position of the companies, a new strategy that can lead to revolutionary changes is needed in order to pursue competitiveness via environmental excellence. In particular, because the fundamental approach of environmental management begins from the perspective of Life Cycle Assessment, it should be implemented by reviewing the whole process or all action plans in terms of marketing-functions among the stage from purchase of raw materials, production, packaging, distribution, and to use and final disposal of waste, at the same time, establishing new marketing strategies. (Source: Cheong, H. B., 1995) [12] The table chart shows not only the process of being integrated expansion from the ‘Ps as a key function of traditional marketing for profit-maximization to green ‘Ps as needed by Eco-friendly marketing but also relationship with green ‘S, which is possible to assess whether Eco-friendly marketing in the pursuit of economic profitability and environmental sustainability at the same time is successfully achieved. From the chart, it is quite difficult to regard the external green ‘Ps as a target for companies direct control in the event that they include customers needs, providers attitude, positions of political power and pressure groups, and a wide range of factors associated with the global environment, or other stakeholders. However, the internal green ‘Ps, which include the elements of both the traditional ‘Ps such as 4Ps and the new green ‘Ps for information, individuals of marketing mix, process, workforce, management policies and so on, can make the majority of companies direct-controls; the internal elements may be, thus, independent marketing elements of corporations and can be called the core target for successful Eco-friendly marketing. The most priority issues in the product strategy of green marketing mix need to be addressed about identification of the characteristics of environment-friendly; still, the definition of green marketing has not been clear. Hence, green product has not been clearly defined yet by the academic circle. To recapitulate, it will be suggested simple existing definitions of some scholars below. [13][14][15][16] As in Table 2-3, it is shown that previous research tried to identify green products in the two types of perspective between relative and absolute in comparison with common products. In other words, with this type of strategy of green product, the key point is to develop new green products or to transform the existing products depending on the result of evaluation-factors related to the impact on environment. Most of the existing products seem to be lack of consideration for the environment, but also because investment in new product-development need for efforts in long-term technology development, in some cases, it could be essential to consider first enhancement of the environmental preservation through the improvement of existing products. Green price means the value of the currency based on how far consumers are willing to pay according to the level of Eco-friendly products. However, these issues of green price have been one of the most controversial parts in the academic from first beginning to form the concept of Eco-friendly marketing.[17] Key issues of this controversy are you will need a higher price in order to protect environment or how consumers will respond to the factors of rise in the price in terms of high Eco-friendly degree. The reason these two issues are debatable continuously is that the establishment of a logical set is not simple. The potential consumer-awareness of business goal, cost structure, the level of profits, and products will be affected in case a company adds Eco-friendly elements to the normal price of a certain product. Especially, there must be a rise of burden related to social costs. In other words, when it comes to see from the social view, if the environmental cost is reflected in the price, then the condition of environment will be improved, but the consumption would continues to reduce. On the contrary, in case it does not constantly reflect environmental costs towards products, the consumption would be promoted. However, environment probably continues to be worse. According to Henion (1976)[18], a case in green consumption, the price appears to be preferred if only the price is on the same level, but when green products are more expensive than the price of the purchase of substitute goods, both green consumers and consumers show signs of negative reaction to green products. As a result of Gallup Institute survey (1992)[19], well over 50% of consumers in 16 countries out of 2 nations responded to the positive notion that they are willing to pay higher prices to protect environment; remarkably, in the case of South Korea, it shows extremely higher figure that other nationalities often called developed countries. However, the problem is that these results do not lead to actual purchase-behavior. It is found in the various studies to explain the fact that consumers purchase-behavior may often change depending on the extent of the price premium.[20] Therefore, despite the superiority of Eco-friendly concepts, it is, undoubtedly, true that there is no motivation to companies Eco-friendly marketing strategy even if differences of price in market competition make an effect on the strategy as an inferior factor. Through the problem stated above, it will be required a variety of ways in order to overcome these problems; firstly, the most desirable way in the long term is to increase the consumer demand for green products in order to make competitiveness in prices by means of developing technology that is able to produce green products in the low cost. Next, governments role is needed to activate the adoption of green price; that is, government should give benefit on the price competition such as subsidies for increased prime cost, tax reduction, priority while contracting with public projects, support for sales promotion and so on to the companies which try to invest in facility-development to prevent pollution and technology, reducing negative factors related to production-cost for Eco-friendly. In addition, green products should be able to compensate relative weaknesses in comparison with non Eco-friendly goods through introducing non-price elements as consumers have psychological satisfact ion that they contribute to their community by purchasing green products. In conclusion, by promoting these discriminatory properties, we can increase the sales.[21] If an element for green is added on the concept of normal distribution, the rear path can be regarded more important than the front path. In other words, consumer products that are consumed are put emphasis on the recycling problem with the perspective protecting ecological environment and recycling resources in the reverse circulation-process from customers to producers. Therefore, the green distribution strategy could define as an activity to minimize negative environmental effect that can occur in the process of production and use, delivery to consumers, disposal, recycling and reuse; furthermore, it means also the overall set of business activities in order to enhance Eco-friendly characteristics of a company with the main content including material distribution systems such as storage and transportation, distribution process in terms of wholesale and retail, reverse distribution systems for recycling, and packing activities for safe transportation and preservation of the product -value.[22] For the resolution of environmental problems, companies distribution channel management is primarily associated with distribution channels. The reason re-circulation is significant is solid waste is one of the main causes related to environmental pollution, and through the re-circulation, it can be a way that can be expected to solve efficiently problems about resource depletion.[23] The ultimate aim of recirculation not only to construct an alternative plan in economic activities of companies associated with reuse of waste and energy conservation but also to activate public education about recycling waste, boosting public interests to environment.[24] To re-iterate the point, based on Ecological-Cycle, green distribution or place can be explained that a firm try to preserve environmental conditions at a certain level by means of both using resources once again and feedback to nature; moreover, when this perspective reflect on companies distribution strategy, the primary marketing st rategy for place can be developed by re-circulation of waste.[25] As in traditional marketing, promotion strategy is the most pivotal strategic-element which a company can apply along with product strategy in the course of Eco-friendly marketing. [26] The fundamental purpose of green promotion can be explained as 2 steps. Firstly it aims to strengthen behavior and attitude of Eco-friendly consumers through distinctive perspectives between consumers who are environmentally friendly and customer who are not. Secondly, green promotion is to help consumers who are unfamiliar with Eco-friendly concept to change their attitude and behavior to Eco-friendly customers; in detail, the specific aim is to convince consumers to buy green products that are developed by companies. [27] Therefore, at the same time, it is necessary to perform integrated green communication, and green communication can be called an informative activity to announce or communicate positive implementations for environmental issues towards both internal and external depending on strategic objectives such as a response to environmental risks, improved corporate image, contributing to society, product promotions, and so on.[28] Typical way of green communication is advertising strategy and PR strategy. In green marketing, it can be explained that green advertising is a type of advertising activity in the pursuit of environmental improvement and protection; also, with a view of the content, it is to express the environmental effects of a particular product or the representation of companies identities that are environmentally friendly as a main content and can do it.[29] With green PR, it is important for Green PR strategy to improve public relation together with advertising in the event that Eco-friendly marketing is to sell a corporate image rather than to promote simply a product. Thus, it can be effective that green PR has to deliver a message that could not have been accessed by advertising. [30] In addition, these green PR activities consist of three activities such as green campaign, green event, and personnel sales.[31] Typically, the green PR is created by a certain purpose to influence from custome rs, relevant stakeholders, authorities, administrative department of government, and to corporate stakeholders (employees, managers, shareholders)via a PR means such as distribution of press-related materials, speeches, seminars, publication of annual reports, sponsorship for charitable organizations, publication of related books, lobbying activities, community relations and so on.[32] The background that a company not only has an interest in Eco-friendly marketing but also has a practice of that kind of marketing activity may be originated mostly from outside of business conditions in the direction of respect for the environment. The type of factors and intensity that affect impact directly or indirectly on introduction of Eco-friendly marketing usually vary in each of the companies depending on local circumstances. [33] Those factors can be summarized like below. Because human being is a member of eco-systems, plants, animal, natural environment in Earth have inevitably been sacrificed in order to make up the human life. Before the Industrial Revolution, the level of environmental destruction had remained at not serious situation, but as the era of mass-production/mass-consumption dawned, now the destruction of environment is exacerbating continuously with significant threats such a Global Warming, Ozone Depletion, Acid Rain, Deforestation, Decertification, Species Decimation and so on. In this atmosphere, Eco-friendly concept has been emerged as an important factor to obtain sustainable competitive advantaged among organizations. [34] Recently, in South Korea as well as the world the latest trend is Well-being. That is, most people have become preferred to purchase a product which is beneficial to our body and our planet. In other words, this phenomenon is the purpose of companies and this fact means that awareness of consumers who have a survival decision of companies is no longer passive in that consumers both select and evaluate product themselves; especially, the evaluation of impact on environment among those assessments has been more objective and rigorous than before.[35] Thus, we can describe those people who actively navigate products that are less negative impact on environment as a green consumer. The concept of green consumer was beginning to form from the end of 1960s and has raised the extended debate as a social marketing concept.[36] According to Moisander (2001)[37], in particular, green consumers can define consumer groups that not only emphasize on socially responsible consumption to overcome the crisis of todays natural environment but also prefer a product which is relatively less contaminative. The characteristic in the green consumers behavior is possible to vary depending on personal inclination, but typically green consumers require environmental information, feel the need for environmental control, seek to differentiation with general consumers, and want to maintain existing lifestyle.[38] Additionally, green consumer category can be divided into by and large three groups depending on the level of involvement about environment such as innovative consumer actively to participate in protection movement, opinion-leading consumers to purchase Eco-friendly products, and common consumer to practice saving water and energy in daily life.[39] The table represents problems green consumers consider when they purchase a product; specifically, they start from raw material and manufacturing process and consider even corporate social responsibility as a factor in their decision-making.[40] (Source: Ottman, 1995)[41] In the past, companies has been consistent with a somewhat selfish or irresponsible attitude, regarding economic development as a priority, and agencies or officials of government have also driven forward with also short-sighted development policies; in consequence, it has caused a lot of environmental damage. However, in recent years, the issues related to environmental protection and ecological devastation is going to be generalized as the premise that is the most significant in business activities as well as across the whole area of society. To put it another way, our society do not want meaningless development with ignorance of environment; furthermore, that type of development is not allowed any longer. As a result, social criticism and responsibility for causing environmental pollution as well as attack of consumer groups and environmental groups on those companies, which are not responsible for environmental problems and legal or administrative regulations from the government has been gradually increased. From those situations above, managers arrived at the idea that they should not only identify human value and quality of life, but also focus on public interest of communities and consumers satisfaction.[42] In conclusion, by means of proposed strategies in the Table , a company has been able to apply Eco-friendly marketing strategy to an alternative means, which can help to achieve Eco-friendly innovation and efficiency for a long-term survival. (Source: Ottman, J. A., 1995)[43] As environmental problems have been serious, companies are required changes in business environment. Based on these transformed business conditions, it is utilized for a company to make good use of the shift of business conditions as a source of both new revenue and growth. Unless it may be in the right place, the market would be lost due to the decline in corporate-images for environmental responsibility. The main stakeholders in companies have been changed by conditions from the times as shown in the following Table ; besides, a new paradigm of corporate management has also been reformed. (Source: Lee, B. W., 1997)[44] Through the issue of distribution-equity in the mid of 1960s and quality-oriented management in the 1970s, since 1990s, as emerging the concept called green, companies have reflected the pressure to be Eco-friendly from social communities or relevant stakeholders to their business activity from manufacturing process to service process. Consequently, the idea that the concept of total quality environmental management, which can maximize the quality of all stakeholders and move to think about future should be introduced instead of total quality management focusing on the quality of products and services has been steadily considered by companies.[45] This varied consideration can be seen as the changes of consumers consciousness gave the greatest influence because consumers now recognize responsibility of environmental protection, the degree of contribution to communities, and ethical responsibility by means of evaluation criteria. The primary goal of Eco-friendly marketing is to promote practical use as the basis to secure competitiveness after building environmental management system.[46] Also, through the goal, it aims to obtain profitability for short-term and to pursue sustainable prosperity for long-term. In other words, the key role is not only to win profit and ethical corporate-image but also to promote social welfare in the long term at the same time actively intervening in environmental issues. From the view in the position of individual companies, necessity of Eco-friendly marketing can be summarized as five representative needs such as to satisfy consumer needs, to secure business opportunities, to guarantee sustainability, to occupy better position for competitive advantages, and to strengthen national competitiveness.[47] However, among various kinds of needs, the reason Eco-friendly marketing in contemporary society is the most necessary is to ensure the survival and competitiveness of companies, gratifying requests of customer and social needs through being green of all activities related to marketing mix.[48] In addition, only Green marketing activity cannot achieve the ultimate goal; it is, therefore, essential that a company should make an integrated effort in the entire business/national level of all business activities including production/technology and all circumstances that surround companies.[49] Environmental management system on a sound basis can provide companies with an opportunity that enables environmental goals to be connected with individual objectives when they convert their idea from traditional management to environmental management, which is able to gain sustainable competitiveness and organization-growth as well as to continue environmental improvements for sound condition of Earth with the help of prearranged, proactive, preventive, and systemized activities. Above all, it is beneficial in that introducing Eco-friendly management can be linked with financial outcome; on top of that, opportunities to make sure whether resources are allocated in the right place so as to achieve the best performance as in financial/environmental aspects. Therefore, these effects can be summarized as the table below. (Source: ISO-Korea Business Research Institute, Environmental management guide, 2003)[50] Eco-friendly management had formed a lot of consensus as a new paradigm of the 21st century as well as it has been discussed not only in economic sectors but also in various fields called such as green management, green management, environmental management. (Source: Lee, B. W., 1997)[51] From the table , the concept of Eco-friendly management can be defined that a company considers the impact on environment in the whole process of all business activities, draws a plan to reduce negative effects on environment, and finally executes it on practical ways at the same time. In addition, recently it has been subdivided into individual parts including Green organization (role of organization-members, determination determination of managers, internal training, green communication and Green, Eco-friendly marketing (defined earlier), Green accounting, Green operation management (Life Cycle Assessment, acquisition of Eco-friendly labels, cleaner production).[52] Business activities including marketing activities are affected by economic/social policies and regulations of each government; moreover, a companys marketing activity should be in need for constant change because a companys strategy has to meet the requests of national or local community. Therefore, in this chapter, it can provide an analytical concept in terms of both the problems of companies Eco-friendly marketing practice and the right path of direction through investigation of environmental policies in South Korea. In South Korea, governments environmental policy aims to establish a site where Man and nature can live along together. Environmental policies in South Korea are constantly evolving with prevention-oriented environmental policy such as Eco-friendly production process, efficient use of resources, minimizing waste beyond policies following an event, which are individual media-oriented including monitoring or supervision of polluting material emissions, activating recycle, and so on. It can be recapitulated for the environmental policy of South Korea as in Table below. (Source: Ministry of Environment, Annual report, 2004)[53] Command or control is the regulated way South Korean government not only presents a certain degree of standards for a facility or activity that causes contamination but also imposes obligation to comply with the standards. In case a company or individual violates both obligations and regulations, the government will give a legal or administrative sanctions based on the environmental policy; in addition, those kinds of policies are very effective and relatively simple measures in that the impact appears quickly. As the result, it is widely used in South Korea and over the world. Economic instrument is the measures in order to achieve environmental goals by means of market as economic and financial media, and, a case in point of South Korea, there are two representative policy measures. EITS was revised in 1991 and is still the policy during execution in South Korea. It aims to promote reduction of pollution and to raise a reasonable investment funds acco