Research Paper (postgraduate), 2002
30 Pages, Grade: 1,3 (A)
1. Introduction page
2. Theory of the societal marketing concept page
3. Evolution of social responsibility page
4. Societal marketing today page
4.1. Why do companies adopt the societal marketing concept? page
4.2. Implementation of societal marketing page
4.3. Societal marketing supporting educational and cultural issues page
4.3.1. In big business page
4.3.2. In small business page
4.3.3. Dangers and criticisms page
4.4. Controlling societal marketing and social responsibility page
5. Future development of societal marketing page
6. Conclusion page
In June 1995 the off-shore oil rig Brent Spar, owned by oil and petrol giants Dutch-Shell and British Esso, was supposed to be dumped in a depth of 2400 metres near the Scottish westcoast. British institutions had already permitted the dumping, which due to institutional investigations didn’t violate the international environmental conventions made in Oslo and Paris to protect the sea. But suddenly the environmental organization Greenpeace launched a European-wide protest campaign to prevent the dumping of Brent Spar, which resulted in massive boycotts of Shell’s petrol stations all over the continent. The enormous public support of Greenpeace’s campaign forced Dutch-Shell not to dump Brent Spar but to tow it into a Norwegian fjord where it has been stored until today. By now there hasn’t been a solution for the disposal of the oil rig.
In the case of Brent Spar everyone mentioned responsibility. The responsibility of the Dutch-Shell company to protect the environment, to report about future actions and their consequences and to base decision-making on more than just the opinions of shareholders.
According to the public opinion, Dutch-Shell hadn’t taken this responsibility, the so-called social responsibility, which turned out to harm the image and sales of the company for years. This project work will explain the meaning and the role of social responsibility in marketing concerning past, present and future developments. Looking at the societal markteting concept supporting educational and cultural issues , we’ll see why and in which way firms adopt the societal marketing concept and how this affects their businesses, customers, organizations, governments and the society as a whole. But at first we have to define what we’ll be speaking about. So what do social responsibility and the societal marketing concept mean?
Maria Rumpf, 1996 ,”Brent Spar - Beschreibung eines internationalen Konflikts”, Jena, 1996 The Royal Dutch / Shell Transport and Trading Group , 1997 , Social Impacts Assessment, http://www.Shell.com
”... make marketing decisions by considering consumer’s wants, the company’s requirements,
consumer’s long-run interests and society’s long-run interests.”
”Principles of Marketing” by Kotler/Armstrong, Prentice Hall
According to Kotler/Armstrong’s book ”Principles of Marketing” the societal marketing concept is a marketing management philosophy defined as following:
”The idea that the organization should determine the needs, wants and interests of target markets and deliver the desired satisfactions more effectively and efficiently than do competitors in a way that maintains or improves the consumer’s and society’s well being”(p.20).
Hence, in addition to its focus on customers and profits, the organization takes a special effort for the consumer and the society. What this special effort means in detail, Kotler/Armstrong explain in Chapter 20, ”Marketing and Society”. Companies engaged in the societal marketing concept”... make marketing decisions by considering consumer’s wants, the company’s requirements, consumer’s long-run interests and society’s long-run interests” (p. 769). In other words, these companies doubt that other marketing concepts are always doing what’s best for consumers and society in the long run. This driving force of the societal marketing concept does neither guarantee higher profits in the short run nor in the long run. But companies do it because they feel socially responsible for the consumers and the society as a whole.
As Ricky Griffin and Ronald Ebert define it in their ”Business”-book, social responsibility is ”the attempt of a business to balance its commitments to groups and individuals in its environment, including customers, other businesses, employees and investors.”
Therefore the way in which a given company behaves towards other groups and individuals is also called corporate social responsibility. There are different fields of corporate social responsibility. Social responsibility towards the environment includes problems such as air, water and land pollution. Social responsibility towards customers refers to consumer rights, unfair pricing and ethics in advertising. Furthermore there are social responsibilities towards investors and employees that generally depend on the company’s ethical commitments to the given groups.
To cut a long story short:
The societal marketing concept is driven by the company’s commitment to act socially responsible and therefore go beyond making profits. The extent to which a given company takes social responsibility is called corporate social responsibility.
”Principles of Marketing” by Kotler/Armstrong, 9th edition, Prentice Hall
”Business” by Griffin/Ebert, 5th edition, Prentice Hall
”There is no crime business won’t commit for a profit of 300 per cent.”
Karl Marx, ”Das Kapital”
The fact that the societal marketing concept is the newest of all marketing management philosophies underlines that the belief in social responsibility in business hasn’t always been as strong as it is today. Since the societal marketing approach is a consequence of increased social responsibility, let`s briefly trace the history of social responsibility:
First signs of social responsibility emerged in the late nineteenth century. The governmental ”laissez-faire”- philosophy and the entrepreneurial spirit supported very few men with outstanding economic power. J.P. Morgan’s and John D. Rockefeller’s empires dominated the American economy as well as e.g. Alfred Krupp`s company the European markets. Rising prices and Upton Sinclair’s writings on conditions in the American meat industry and Friedrich Engel’s reports about the poor lives of workers in factories in Europe led to first concerns by government and individual citizens about improper business handling. These concerns resulted in first laws regulating fundamental business practices.
The second major phase of social responsibility took place in the 1930’s, during the Great Depression. Rapid price increases, business and bank failures and widespread loss of jobs were the hard consequences of the world economic crisis in 1929. People blamed the greed of business for this situation and asked for new laws protecting and guaranteeing the general welfare of society.
The third major phase was characterized by the era of worldwide social activism during the 1960’s and 1970’s. Disclosures about common unethical business practices and drug scandals put a lot of pressure on companies. Intellectuals and celebrities combined for the leadership of the social activism movement and related to business as a negative social force. One of the most quoted persons in those times was the German philosopher Karl Marx, who once said: ”There is no crime business won’t commit for a profit of 300 per cent.” With the greatest public awareness and acceptance ever, the social activism movement forced government regulation such as basic consumer rights, health warnings on cigarettes and stricter environmental protection laws. Although actions of the social activism movement seem to have disappeared, its spirit is still alive. Some of its protagonists are now members of governments (”Die Grünen” in Germany) or highly reputated advocates of the established consumer and environmental rights movement (Ralph Nader).
The question that rises out of this development is:
Why wasn’t the idea of social responsibility put into practice earlier? The reason for its long, difficult development can be found in Maslow’s hierarchy of human needs. Sure people used to be aware of the importance of social responsibility in business, but they hadn’t reached this highest step of self-actualization yet. Two World Wars and diverse economic slumps were the reasons why customers didn’t demand that businesses cared about social responsibility. Consumers first had to satisfy their physiological, safety and social needs. When the economy prospered in the 60’s, people’s lower needs were steadily satisfied and they turned to the”luxury”-needs of esteem and self-actualization. In fact, growing wealth of the individual supported the social and environmental movements of the 60’s and 70’s. Though facing needs of hunger and thirst nobody didn’t demonstrate for environmental issues. These movements put enormous pressure on business as a whole. It was no longer possible for companies to ignore the subject of social responsibility. One could also say, there was a inevitable demand in this field which, according to economic basics, had to be supplied by business, although this meant lower profits for the economy in the first place. But the consumer became increasingly conscious of his power and more and more companies therefore respected their customers’ demands as the one and only driving force of their businesses. As the American catalog retailer L.L. Bean states it in its mission statement: ”Nobody ever won an argument with a customer.”
Meanwhile there has been a broad discussion about social responsibility in society. In 1992 the UN passed the ”Agenda 21 for Sustainable Development” which addressed all societal and economic forces to follow a sustainable development, defined as ” development that meets the needs of the present without compromising the ability of future generations to meet their own needs”.
Since both society and economy are dependent on each other and therefore interested in a common future, business is required to be involved in designing this future which includes e.g. support of education, research, health care and local communities.
Companies consequently contributing to the current and future well-being of its customers and the whole society founded the new marketing concept of societal marketing, which will be discussed in detail in the next chapter.
”Business” by Griffin/Ebert, 5th edition, Prentice Hall
”Das Kapital” by Karl Marx, 1st edition, Dietz Verlag Berlin
The Royal Dutch / Shell Transport and Trading Group , 1997 , Sustainable Development, http://www.Shell.com
As you could learn in the last chapter, the societal marketing concept is getting adopted by more and more companies. The next chapter will show how small and big businesses currently deal with social responsibility, why and how they follow the philosophy of the societal marketing concept and what are the objectives and results, dangers and criticsisms of their engagements.
Tracing the history of social responsibility in Chapter 3, we’ve particularly understood the consumer’s point of view. But even the consumer-friendliest company wouldn’t adopt the societal marketing concept if it didn’t experience a range of bottom-line benefits. The most obvious benefits will be summarized in the following key points.
Examples and data underlining theses key points I got from the ”Business for Social Responsibility (BSR)”- homepage. BSR is a US-based global resource for companies seeking to sustain their commercial success in ways that demonstrate respect for ethical values, and for people, communities and the environment. More than 1,400 companies are BSR members representing more than $1.5 trillion in combined annual revenues and employing more than six million workers. The reasons why companies adopt the societal marketing concept are:
+ Improved Financial Performance
Business and investment communities have long debated whether there is a real connection between societally marketing business practices and positive financial performance. According to ”BSR”, several studies have shown such a connection:
- A 1999 study, published in ”Business and Society Review”, showed that 300 large corporations found that companies which made a public commitment to rely on their ethics codes outperformed companies that did not do so by two to three times, as measured by market value added.
- A recent longitudinal Harvard University study found that “stakeholder-
balanced” companies showed four times the growth rate and eight times the employment growth when compared to companies that are shareholder-only focused.
+ Increased Sales and Customer Loyalty through Improved Brand Image and
Customers often are drawn to brands and companies considered to have good reputations in areas of social responsibility. Being engaged in any form of societal marketing costs a lot but can make a significant difference in the consumer’s buying decision process. Through total quality management and advanced technology different products in the same product category nearly equal in price and quality. In those cases other forces like the promotion mix of a company dominate and influence the competition. Companies that practise societal responsibility build up customer relationships at a price no advertising could do. It all comes down to the basic promotion management rule: good public relation beats any advertsing.
”BSR” quotes a 1999 landmark study by Environics International Ltd. in cooperation with other non-profit organizations, named the “Millennium Poll”. This study surveyed 25,000 citizens in 23 countries regarding corporate social responsibility and revealed that:
- 90% of people surveyed want companies to focus on more than profitability
- 60% of respondents said that they form an impression of a company based on its social responsibility (defined as regard for people, communities, and the environment)
- 40% responded negatively to, or said they talked negatively about, companies that they perceived as not being socially responsible.
- 17% of respondents reported that they had actually avoided the products of companies they perceived as not being socially responsible.
Furthermore, according to ”BSR”, a 1997 study by Walker Research found that when price and quality are equal, 76 percent of consumers would switch brands or retailers if a company is associated with a good cause.
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