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Responsible Marketing

Responsible Marketing: Doing Well by Doing Good

CB Bhattacharya

Business value and social or environmental value can go hand in hand if companies apply the right levers.

Opening up the marketing horizon
Traditionally, profit maximization has been the primary objective of marketing activities, which tend to be predominantly firm-centric. Very little or no attention is paid to the numerous social actors who have the potential to influence and be influenced by companies’ actions. Nevertheless, recent pressing issues such as global warming, human rights violations and food security, among many others, which are in large part fueled by the consumption hype created by marketers have provoked a backlash from various stakeholders. These stakeholders, including activists, employees, regulators and investors, are now regularly pressuring companies to go beyond a focus on customers and adopt a broader and more inclusive approach in their marketing activities. In other words, companies and customers should no longer be the major beneficiary of marketing, and marketing as a discipline needs to take responsibility for its actions.

To illustrate the tension between the current dominant paradigm of profit maximization at all costs and that of responsible marketing, let us hark back to the 19th century and the tragedy of the commons.  The phenomenon of the tragedy of the commons was originally noted by William Forster Lloyd to illustrate a situation where individuals act in their own best interest without considering the total welfare of the group and as a result end up depleting a common resource. His specific example focused on the effects of unregulated grazing on common land. Maximizing private gain led to collective loss, and it still does in our times.

Today, this dilemma is connected with sustainable development and used to demonstrate issues around economic slowdown in emerging economies, environmental protection and global warming. In the United Nation’s Bruntland Commission’s report in 1987, sustainable development was defined as “meeting the needs of the present without compromising the ability of future generations to meet their own needs.” According to the World Wildlife Fund (WWF), we are currently consuming resources worth 1.5 planets, and if we continue business as usual, this consumption level will rise to 3 planets by 2050. Given these facts, sustainability is a business imperative, and if businesses do not get this by themselves, stakeholder pressures will rise to untenable levels.

More value by sharing value: Using a triple bottom line
Figure 1 shows that business value and social or environmental values can go hand in hand. Simply put, companies can no longer afford to be on the top-left quadrant of Figure 1 where they had their glory days and maximized business value while depleting socio-environmental value. To have the license to operate, creating positive social and environmental value is a must in today’s day and age.

Authors

CB Bhattacharya, Pietro Ferrero Chair in Sustainability and Director, Center for Sustainable Business at ESMT – European School of Management and Technology, Berlin, Germany cb@esmt.org

Further Reading

Bhattacharya, CB; Korschun, D. (2008): “Stakeholder Marketing: Beyond the Four Ps and the Customer,” Journal of Public Policy & Marketing, Vol. 27, No. 1, pp. 113–116.

Bhattacharya, CB; Sen, S.; Korschun, D. (2011): Leveraging Corporate Responsibility: The Stakeholder Route to Maximizing Business and Social Value, Cambridge University Press.

Lloyd, William Forster (1833): Two Lectures on the Checks to Population.

WCED, U.N. (1987): “Our Common Future,” World Commission on Environment and Development, Oxford University Press.

WWF (2010): Living Planet Report, WWF.