bake it in

March 25, 2016 0 comments

Philip Kotler’s 4Ps have held sway for many decades but in August 2004, American Marketing Association articulated a new definition of ‘marketing’ as follows: ‘marketing is an organizational function and a set of processes for creating, communicating, and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders’.

596-1The new definition broad-based the concept of marketing from just planning and execution of product, pricing, promotion, and distribution—it widened the scope to not just individual [customers] and organizational objectives but also the stakeholders.

The concept of sustainability goes beyond just the organization and its shareholders, to envelop larger societal issues and environmental concerns. Marketing now has to look beyond the customer and the organization. Where does marketing fit in the triple bottom line orientation of companies?

Marketing concept is now to create value for customers and as they become more worldly wise, they are going to demand from companies a higher level of responsibility.

is the old 4P Mantra to be forgotten?

Not really, but companies need to layer the sustainability mantra on to the 4Ps. And this can be done in many different ways.

Taking the first P, product, companies are trying to see if the manufacturing process can be modified to ensure that energy and scarce resources such as water are used less. Global corporations such as Unilever and Coca-Cola have mandated an audit of not just their own factories but also their vendors to ensure there is a continuing audit of how energy and water are used with greater care.

With consumers becoming more and more aware of energy consumption of durables like air conditioners and refrigerators, companies are now displaying the energy rating of their products. The Government of India created the Bureau of Energy Efficiency that rates appliances and has encouraged brands to display them on their packaging. As yet, this may not have had a big impact but this will change soon, especially when the use of LED bulbs become common. The push by the government to get consumers to convert from old bulbs to energy-efficient LEDs is probably one of the biggest sustainability initiatives undertaken at a national level.

Product packaging too has been facing increasing criticism on blogs and social media. Several electronic product manufacturers have been lampooned for their ultra-difficult packaging systems. Brands are trying to display that the packaging is eco-friendly, but as yet there has been no real consumer momentum towards checking the packaging ratings.

In large cities, there has been a move to discourage plastic bags. This has given brands with a significant presence the opportunity to create their own unique bags. One such retailer managed to make bags using recycled newspaper.

ITC Limited publishes a sustainability report and several of its hotels proudly display that they have the highest energy ratings. Is this having an impact on the customers? I am sure the top-end customers who frequent ITC Hotels are bound to feel a little better.

Hotels around the world have tried to send a message of conservation to their guests by doing small things that get them to be aware of energy and water conservation. One common trick is to request the guest to reuse the towels for more than one bath.

Kochi airport has been fully powered by solar energy—a unique achievement. While this is known widely, the airport can use this to help build its own unique brand, and blend with the ‘God’s Own Country’ promise of Kerala. Just as Las Vegas airports display slot machines in the arrival and departure lounges, Kochi can tom-tom its environmental chops, by saying that even the energy they consume is ‘God Given’.

With growing concern over the use of pesticides and chemical fertilizers, there is a growing opportunity for brands to exploit this trend. Farmers’ markets displaying organically grown vegetables have started being noticed in many cities. Fabindia and 24 Mantra offer organically grown food ingredients and have ready takers. I am sure more such brands will rise in the coming years.

how do you address the cause of sustainability when making marketing plans?

Obviously, some elements of sustainability have to be done at the production level. However, there are many more elements that can be thought of as the brand starts rolling off the shelves.

Alex Bogusky and John Winsor’s book Baked In presents a unique way product and services have to be created for the 21st century. They recommend the need for products to ‘bake in’ elements that will help them market themselves. This could be design features or
usage features that are highly valued by customers, to the extent they become instant brand ambassadors. I see yet another interesting application for the ‘Baked In’ concept. If brands can start baking in a sustainability mantra into their core, they can have a strong position in the emerging marketplace.

how is this possible?

If we take a consumer product like soap or shampoo, one can start with the product formulation and audit if the product is made in the most energy-efficient manner. Is the factory labor treated with utmost care? Is the company ensuring that the factory and its neighborhood is adequately taken care of? The creation of Jamshedpur by the Tatas, with its vast foliage, comes to mind when we speak of how environmentally sustainable a factory city can be. Then moving to packaging, can the brand be packaged in the most eco-friendly materials, recyclable and reusable?

When we look at consumer durables, we can address the above issues and also look at the ‘in use dimension’. With energy efficiency becoming more and more important, brands have to consciously display their energy ratings and also provide comparison charts on their websites. Add to this the kind of materials used in the fabrication of the product. Finally, what are they doing about taking back old models? How are they recycled?

In the service sector too, there are many ways to ‘bake in’ sustainability. Some of the travel and hospitality brands have embraced ideas such as energy and water conservation. But there are many other small ways of signaling conservation—stationery in a hotel could be made out of recycled paper, they can encourage reuse of towels, use energy-efficient vehicles for transferring guests, complete LED lighting, special glazing of windows to conserve energy, solar heating of water, etc.

Finally, all these efforts by brands to ‘bake in’ sustainability need to have some support from the government bodies. For instance, in some South Indian cities the municipal bodies insist on rainwater harvesting. Why cannot this be the norm all over India? Similarly, why cannot municipal bodies insist on solar water heating? Obviously there are many other ways in which government can nudge corporates to embrace sustainability. But that is just the icing on the cake. The heart lies elsewhere.

Customers are the core of any business. As we see customers becoming more and more sustainability oriented, brands will start benefiting from embracing sustainability. There will be a hidden pay off through intense brand loyalty from customers who value the green agenda of brands. Indian consumers have always been value conscious. Which is why even luxury cars sell more diesel models. But that is also a blessing, since diesel cars consume less fuel per kilometer driven [pollution issues relating to diesel comes from old-generation trucks and busses]. But will an Indian consumer pay a 10% extra for their meal, just because the restaurant is using solar power and is recycling all its waste in the most environmentally friendly manner? I think that is an experiment that is worth conducting.

Marketing of the future will have to bake in sustainability, for the simple reason consumers will see value in that promise.

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