Socially Responsible Marketing

Executive summary:

The following report starts with the history of socially responsible marketing with its definition, then gives some statistics about CSR “corporate social responsibility” phenomenon and clarifies its importance; it discusses challenges of social responsible marketing, characteristics of CSR and discusses ethics as CSR is a part from ethical approach of the company. Next step, the report provide us with new CSR model suggested by some researchers, a theory about relationship between social responsible marketing and innovation, the final paragraph of the first part discusses CSR in the crisis and if it is still worth to apply social responsible marketing during economic crisis. The second part gives an overview about Tesco the third largest retailed worldwide, then it analyses with examples the social marketing approach of Tesco and finally it gives some recommendations that Tesco can execute to improve its socially responsible marketing strategy. For additional information there are fourteen appendixes that give closer look on researches (conducted by big firms like BCG), Statistics, models and analysis of Tesco like SWOT analysis and Marketing mix.

Socially responsible Marketing concept history:

Marketing has always faced criticism that certain practices might have negative impact on consumers (like high prices, deceptive practices, unsafe product, planned obsolesce and poor service to disadvantaged customers), society ( like creating false wants and much materialism, over selling private goods instead of public goods and cultural pollution) and other businesses ( like acquisition of competitors, marketing practices that create barrier to entry and unfair competitive practice), this has lead to the creation of two important movements, the first is consumerism which is defined as “an organized movement of citizens and government agencies to improve the rights and power of buyers in relations to sellers” (Kotler, et al 1999:56) and the second is environmentalist which is defined as “An organized movement of concerned citizens and government agencies to protect and improve people's living environment” (Kotler, et at 1999:57).

At the beginning a lot of companies opposed these movements but through time many of them responded positively and followed the concept of enlightened marketing that focuses on long term benefit of the marketing system and which contains five important principles that are consumer orientation, innovation, value, sense of mission and societal marketing. Kotler and Zaltman were the first to introduce the concept of social marketing in 1971 through an article in the journal of marketing where they said “Social Marketing is the design, implementation and control of programs calculated to influence the acceptability of social ideas and involving consideration of product planning, pricing, communication, distribution and marketing research” (Kotler and Zaltman 1971:10).

The main three lines of CSR are defined in academic literature as stakeholder driven, performance driven and motivation driven ( Bazu and Palazzo 2008:2-3). There are some obstacles to implement CSR which are lack of awareness of CSR, view that costs outweigh benefits and people and time pressure (Fontodonna and MacGregor 2008:13) .

Statistics about Social responsible marketing phenomenon:

An advertisement for developmentcrossing.com, a website that is specialized in CSR and sustainability development declared that this time over 3000 companies are highly investing in CSR (Appendix 2) which clearly prove that the world is changing and companies are highly interested in being socially responsible in order to attract customers and please their employees. Consumers now have a deeper education and really seek for a healthier life and a greener environment which create a new demand that societal marketing should target. Fortune magazine have now a top ranking for social responsible companies (Appendix4). Social responsible marketing might not contribute directly to the company but it is for sure a reason for the company to be differentiated, have a better brand image highly trusted and positively considered (Jahdi and Acikdilli 2009).

Challenges of socially responsible marketing:

  • Products are more complex than those in commercial marketing because they have to include ideas and behavior change (Appendix 5).
  • More challenging, because it has to deal with negative demand like smokers.
  • More challenging target segment for example campaign against aids might targets uneducated people who are hard to reach.
  • Greater consumer involvement because it deals with product that are more complex and needs high involvement from customers like changing lifestyle.
  • More varied competition represented by Inertia, alternative behavior like practicing hobbies instead of donating blood, other companies who has social trends and commercial marketing like tobacco and alcohol. (MacFayden 1999)

Characteristics of CSR:

The core CSR characteristic - as mentioned in an article published from ESADE business school includes:

  • “Voluntary activities that goes beyond those prescribed by law.
  • Internalizing or managing externalities that are positive and negative side effect of economic behavior.
  • A multiple stakeholder focuses considering a range of interests and impacts among variety of different stakeholders.
  • Alignment of social and economic responsibilities like the campaign of Dove for real beauty which encourage women to trust their natural beauty.
  • A particular set of business practices that deal with social environmental issues like the new LCD from Sony that has special technology in it that modify the lighting of the screen according to the available light in the room in order to save energy (Bradbury 2009).
  • Beyond philanthropy and community projects, CSR is about how all company operations have an impact upon society.”

(Albareda 2008:4) For more detailed information (Appendix 7)

Socially responsible marketing and ethics:

Organization's ethics is the value, standards that the company adopt to influence the actions and beliefs of its employees and members. Some companies really provide ethic training for their employees to improve their actions from the ethical side and motivate human behavior. Corporate social responsibility is an extension to ethics and the social marketing is a part of the ethical value of the organizations. Based on what we said Valentine and Fleischman give the following hypothesis, First Ethic programs are associated with greater perceived CSR in company, Second, ethics programs are associated with greater individual job satisfaction, third, perceived CSR activity will mediate the positive relationship between ethics programs and individual job satisfaction (Valentine and Fleschman 2008:).

New CSR Model:

Bazu and Balazzu suggest a new model for corporate social responsibility because of the homogeneity and standardization caused by companies listing their social activities in report without understanding their results. The new model suggests that CSR is derived from organizational sense making which has three views, first is cognitive which include relationship with stakeholders and the world which represents identity orientation and legitimacy, second is linguistic which include explanations of the reasons behind the activities the company to doing which represents mode of justification and transparency, third is conative which include the behavior postures that the company adopts with commitment and consistency to activities that helps to strengthen the relationship perceived (Bazu and Palazzo 2008:4-9)

Socially responsible marketing and innovation:

After 60 interviews with SMEs executives during one year and three month of research (Appendix6), the RESPONSE project that study the relationship between innovation and CSR, considering CSR as an added value through innovation instead of additional cost reached the following hypothesis:

  • “The diffusion of CSR should be modeled on the diffusion of innovation that ensures that new products are more socially responsible throughout their life cycle from beginning until the end. Social innovative firm should be proactive.
  • Innovation and CSR can be configured to form a virtuous circle: SMEs might be driven by value or search for value which means either CSR centric motivation to CSR implementation (CSR-driven innovation, doing the right thing) or an innovation-centric approach (Innovation driven CSR, doing the thing right) (Appendix8)
  • There is a maturity path towards true CSR innovation integration: the founding vision for both areas may start apart then the vision develops with the implementation of a narrow, formalized view then spreading throughout the company, the two areas are bound together by key strategic actions.” (Appendix9)

Theory taken from (Fontodonna and MacGregor 2008)

CSR and the crisis:

The global economic crisis changed the world, consumer spending has decreased and became more cautious, it affected a lot businesses negatively like clothing, luxury products and even organic food but it also affected others positively like repair companies and locally produced food which increased for social reason to help local companies to survive during these hard times.

Key barrier of consumers are high price, confusion, lack of trust and availability of alternatives (PriceWaterHouseCooper 2008), which impose new missions for socially responsible marketing to encounter these barriers by focusing on quality, customer service and ethical behavior and finally treat sustainability as opportunity rather than add on cost will lead to long term benefits. The real Ethical consumers are less price sensitive, they buy as a commitment to ethics not because of low or high price but In order to attract more customers who are willing to pay premium for ethical product but not as high as the current price, marketers should invent a way to reduce price for instance, decreasing packaging expenses. (Carigan and Pelsmacker 2009) (Appendix 10).

Tesco :

Tesco is the third largest retailer worldwide regarding revenue, it is based in the UK but operates in 14 countries and it is one of the social responsible companies that maintained their position during the crisis and raised their profit from 2,130 million pounds to 2,166 million pounds which mean an increase of 1.89% ( Tesco's annual report 2009).

Tesco's approach to operate their business is called the steering wheel (Appendix 11) that focuses on five areas: People, Operations, Community, Finance and Customers, the mentioned steering wheel include their famous slogan which is “Every little helps”.

We can notice that Tesco gives high importance to social responsibility by making it a part of their main five long term strategy. Social responsibility in their viewpoint includes four areas: environment, Supply ethical and trading, people, customer choice and Health and community (Appendix 12).

Analysis of Tesco:

When we compare to the theoretical part we can see that Tesco knew the importance of CSR from the beginning and they were trying to include it in each aspect of their strategy, they knew that marketing for green product is more challenging and more complex but they put a strategy to change shopping style of customers for instance by launching the greenclubcard that gives point in normal shopping, double point when buying organic and eco- friendly products and points even when clients reuse their bag, which encourages consumers in an indirect way to change their habits and keep consuming these products (Adam 2009). Tesco is always trying to apply all the characteristic of corporate social responsibility starting from volunteering activities like charity and donations of 2.6 million pounds to Marie curie cancer center, taking care of stakeholder by involving them and taking feedback constantly from them, social issues like their new strategy of “Buy one get one for free later” (Gray 2009) which helps consumers to get the free product when they need it instead of being obliged to take it at the same time even if they will not benefit from it, this will help the society to reduce waste in general especially food. Environmental issues like the Tomra recycling system which won the UK's National Recycling Award for category best retail recycling initiative which helped the society to recycle quickly and efficiently and to complete the system they throw an incentive program to customers In order to encourage them to recycle and help to save the environment (Packaging Gateway 2007), another important strategy for Tesco to handle environmental issues is focusing on the emissions of Carbon from properties, distribution, transportation made by their employees, and even on consumption but trying to carbon label the largest number of product (100 product so far).

Tesco uses many marketing approach to communicate CSR including its website, CSR report published each year, the special section in its store promoting for green product, 200 promotions each week on healthy products in addition to differed creative and innovative activities and programs like The nurture scheme which is made to ensure customers that all fruits and vegetable are grown in an environmental and responsible way, funding education system, providing job opportunities, planting 9 million trees project by 2015 so far 3.8 million tree were planted, creating 91 culture center, donating over 3 million item of equipment worth about 150 million pounds to over 35000 UK school, total amount raised for charity 7,752,447 pounds, “Make a wish” a charity program for children who have serious illness, the Tesco dairy center of excellence, the sustainable beef project, nutritional labeling of their product, “change4life” movement to eat well, move more, live longer, “get healthy with Tesco lotus” to promote healthy and active life, community alcohol partnership, tescodiet.com to give nutritional tips, providing food in school to 342,000 poor kids in different country, training and development programs for employees like apprenticeship, attracting people with disabilities for work experience (Tesco's CSR report 2009).

Tesco has a strict ethics policy because ethics is associated with high perceived CSR and ethics lead to high job satisfaction. Tesco try to include ethics in its relationship with all stakeholders, it even prepare training ethic program for employees to ensure that the company's body is healthy. Tesco has the ETI “Ethical Trading Initiative ”base code that require all its suppliers to follow these standards in order to work with them, it monitors its relationship with suppliers through SEDEX “The Supplier Ethical Data Exchange” database which contains ethical data about Tesco's suppliers (Tesco's CSR report 2009).

Tesco's apply the new CSR model which depends on organizational sense making as we mentioned before. It follow the cognitive view because it maintains its relationship with all stakeholders using different methods and feedbacks, it follows linguistics view because Tesco understands its CSR activities and have reasons and goals behind them, it follows conative view because through its CSR report it clarify for the world the challenges that it's facing and state actions and activities made to confront these challenges and reach its goal which is a sign of commitment and consistency behavior.

Tesco is considered a CSR driven innovation because it moves from CSR centric motivation to CSR implementation through innovative ideas, activities and promotions and it focus on doing the right thing in order to attract more customers.

Tesco is in downturn like other CSR companies but one of the reasons that made its profit go up its marketing orientation which is being at the side of the customer by trying to reduce prices and it didn't give up its social responsible behavior instead Tesco invented new ways to promote and market its green product like the promotion in October 2008 in the UK of selling 5 low energy light bulbs for only 40p which made them sell 3.5 million more than the whole previous six months even if they are in a crisis (Carrigan 2009).

Recommendations:

After reading the SWOT analysis and marketing mix of Tesco (Appendix 13, 14) to have a general idea about Tesco's situation, we can give some recommendation:

  • Regarding their main environmental mission which is Carbon Labeling, they have to conduct an awareness campaign of the meaning of this mission not only for children like they do in Turkey but for adults too because the majority of people were confused when they saw the carbon footprint because they don't understand the meaning of the numbers. (Kanter 2009).
  • Tesco should innovate a way to encourage its employees to participate in community work this will help them to contribute to their society and be more attached to their company, for instance Timberland company pays up to 40 hours to full time employees and up to 16 hours to part time employees to spend them doing community work (Wojcik 2008).
  • Tesco should take advantage from the international expansion and try to execute more overseas' CSR activities in to boost its reputation in new markets and attract more customers to be eco friendly in addition to focusing on UK market.
  • Tesco should benefit from the new trend of social marketing and WOM like the use of facebook and twitter and other large social network, for instance we've checked Facebook group of Tesco and it's not a professional group like other companies.

Conclusion:

We can conclude from the report that nowadays social responsibility marketing is a must due to more educated clients and mo matter what are new thoughts about CSR and social responsible marketing, the value and the concept is the same since 1971 when Kotler and Zotlman first introduced it to the world, the only difference is the new challenge each year to market green product and transform more customers to eco friendly clients. Tesco was successful in its socially responsible marketing so far which helped the company to expand its customers' database, strengthen its reputation and increase it profit.

Bibliography:

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Appendixes:

Appendix 1:

In 2005 Kotler and Lee provided a table in their book that summarizes examples about different social responsible practices done by known companies like Cisco, Coca Cola, Nike, Motorola, Intel, Starbucks etc

Appendix 2:

  1. 1996 = 267 companies published corporate social responsibility report, now over 3000 companies are publishing CSR report.
  2. 2003 = 1 in 10 fortune 500 firms had board committee dedicated for environmental issues, in 2008 1 in 4 have.
  3. Number of business school offering green courses increased from 34% in 2001 to 63% in 2007.
  4. CSR focused job increased 37% from 2005 to 2008.
  5. 97.3% of students are willing to make financial sacrifice on average of $ 14,902 a year to work for socially responsible company.
  6. Over than 90% of US consumers sat that the environment influences their day to day purchasing decision but only 26% seek environmentally friendly product.
  7. In 2008 press coverage of Greewash doubled more to more than 2300 stories in the US.

Appendix 3:

We can see in the graph that Keven Pate clarified the most important criteria of the most admirable companies and we can notice that social responsibility became one of these criteria (Pate 2007)

Appendix 10:

In July 2008 The Boston Consulting Group conducted a research in nine different countries with 9000 consumers aged between 18 - 65 to assess green attitude and shopping behavior during downturn and the result was that consumers didn't abandon their green attitude, they always appreciate green businesses, categorize CSR companies in high standards, believe in the important role of companies in environmental and social issues and consumers are ready to pay a little bit more (5-10%) for a safer healthier product according to product's category and perceived benefits. (Manget, Roche, Munnich 2009)

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