Marketing Mix Design-for-Environment (Dfe): A Systems Approach

Article excerpt

INTRODUCTION

Sustainability can be visualized as a state in which the use of resources in consumption does not pollute and undermine the functioning of basic life-support ecosystems. To limit unfavorable ecosystem impacts and move towards sustainability, consumer societies have generally relied on the regulation of business facilities and processes as the primary ways and means of controlling waste, the antecedent of pollution. Through the mid-1990s, business interests generally dismissed voluntary initiatives to lessen pollution as unprofitable, altruistic exercises in social marketing. However, as we enter the 21st Century, the dimension of sustainability is exerting a much more direct influence on revenues and costs; the evaluation of sustainable marketing strategies under the standard "Total Profit = Total Revenues-Total Costs" equation is yielding more attractive results. Given marketing strategy is defined as the traditional "marketing mix[right arrow]target market" model, this suggests that the voluntary developmen t of sustainable marketing mixes by private sector firms can play a much larger role in achieving environmental improvements in the future.

MARKETING MIX: THE DELIVERY VEHICLE

The marketing mix is the delivery vehicle through which strategy is actualized. Using available information and expertise, managers customize the marketing mix in relation to given target markets by making decisions concerning (1) product, (2) place (channels), (3) promotion (communications), and (4) pricing; a systems perspective is utilized to maximize effectiveness. The inclusion of ecosystem impact as a design factor (criterion) in this process is still somewhat novel to many marketing managers. However, in order to understand the direct linkage between marketing mix decisions and ecosystem impacts, one need only observe the former cause the latter. This cause[right arrow]effect assumption is valid because marketing mix decisions directly trigger conversions of natural capital/ resources, and all such conversions generate consumption waste. And, given the resource-intensive lifestyles of the western world's consumer societies, marketing mix-induced consumption waste represents a worthy target for environmental improvement.

Sustainable marketing is defined as "... the process of planning, implementing, and controlling the development, pricing, promotion, and distribution of products in a manner that satisfies three criteria: (1) customer needs are met, (2) organizational goals are attained, and (3) the process is compatible with ecosystems" (Fuller 1999, p. 4). Its environmental goal is to operationalize "low-waste, no-negative-discharge" product systems. Under the "marketing mix[right arrow]target market" model, this means that marketing mixes must be designed with the objectives of (1) significantly reducing the generation of waste, and (2) properly managing all remaining waste discharges into ecosystems. When this is the case, the production-consumption cycle becomes sustainable because it can be replicated over time without degrading ecosystems (i.e., the process is compatible with ecosystems/moderates pollution). This important result is necessary even if the broader goal is de-consumption (i.e., achieving a reduction in co nsumption level). However, sustainable marketing mixes must concurrently deliver genuine benefits to customers and financial rewards to firms; achieving compatibility with ecosystems is not an end in itself.

DECISION FRAMEWORK: PRODUCE SYSTEM LIFE-CYCLE (PSLC)

In order to capture a true picture of how marketing mixes impact ecosystems, and therefore be in position to implement decisions that support sustainability, a broad cradle-to-grave interpretation of where product systems begin and end is required. The product system life-cycle (PSLC) defines the appropriate decision framework. It represents the merger of two complimentary concepts: (1) the resource life-cycle (Tchobanoglous et al. 1993) and (2) the marketing channel network. The generalized PSLC for consumer products (see Exhibit 1) consists of five normative stages depicted as a set of linked channel networks. Stages 1-4 are aligned in series; Stage S represents concurrently functioning networks that process outbound waste streams at all levels of the PSLC. Also, the organizations and markets of the PSLC are bound by economic interest, which is designated by the marketing strategy symbol (MS) on Exhibit 1.

The PSLC demonstrates that waste generation is a holistic, interconnected phenomenon. The true ecological impact of any marketing strategy is a function of the collective decisions of all PSLC organizations and customers, which occur before, during, and after final consumption. For example, the life-cycle analysis for aluminum soft-drink containers must include the activities of all resource suppliers who precede and support finished products manufacturing (i.e., aluminum mining and smelting), actual soda-canning and wholesale/retail distribution, target customers, and final container disposal.

Much environmental improvement strategy focuses on how to reduce the waste outputs and other impacts of industrial/commercial facilities and processes, without regard to the marketing mixes they support. This suggests that marketing mixes, which are essentially "solutions" to consumption problems, are a constant factor in the scheme of things; merely "cleaning up" the waste generated by sets of apparently independent manufacturing and distribution locations and customers is the "environmental answer." Market-oriented PSLC analysis portrays a different state of affairs. By first defining the ultimate benefits sought by customers, the ways and means of delivering them in the marketplace become apparent. Therefore, marketing mix decisions determine PSLC structure and processes. This places marketing managers in a uniquely empowered position to address the environmental challenge where it counts most -- up front at the point of inception. The "environmental answer" is to (1) first develop innovative, ecologically sound marketing mixes (i.e., solutions to the customers' problems that have fewer unintended ecological consequences) that (2) trigger changes in PSLC structure and processes which (3) deliver long-term environmental improvements. Given the presence of significant profit incentives, marketing managers are very likely to take up the challenge. A recent example makes this point: Airlines typically spray 500 or more gallons of glycol to de-ice the surfaces of an aircraft. The cost is between $1,5003,000 which includes the eco-costs of containing, recovering, and disposing of spent glycol, a severe water pollutant. Focusing on the problem (the de-icing airplane surfaces), Radiant Energy Corporation crafted an environmentally-compatible solution: erect a pre-fabricated "hothouse hanger" that uses infrared beams to remove the ice in three to six minutes at half the former cost. Although new energy sources now play a role, glycol producers, and the unacceptable ecological impacts associated with their product's man ufacture, distribution, and use have been eliminated from the PSLG (Licking 2000).

ROLES OF MARKETING MIX ELEMENTS

The customization of the marketing mix is always situation-specific reflecting the demands/needs of customers, the nature of the product, the technological setting, type of firm (i.e., manufacturer, supplier, distributor, retailer, etc.), and other unique local factors. When "compatibility with ecosystems" (sustainability) is introduced as a decision criterion, the firm's position in the PSLC will likely determine which marketing mix elements are most actionable and what decisions may be most appropriate in a specific case. However, the general role played by each element in achieving overall progress towards sustainability is relatively constant (see Exhibit 2). Overall, the sustainability challenge centers on waste management issues, that is, reducing and remediating the wastes generated across the PSLC so as to moderate pollution. Two marketing mix elements are direct generators of wastes: (1) product decisions are the primary source, and (2) channel decisions are a secondary source.

However, given relatively "clean" products and channels exist, the work remains half done. This is because the total waste impact of any marketing mix is generalized as I = (W)(Q), where I = ecosystem impact, W = waste per unit, and Q = units sold. Obviously, a low waste per unit (W) scenario must achieve adequate sales volume (Q) before a substantive contribution will be made to reducing total waste impact (I). Therefore, increasing Q becomes an important challenge, one that will be met only if targeted buyers (1) have reasonable access to the product, (2) are aware of the brand, and (3) perceive its characteristics and value to be line with their expectations and competitive offerings. This means that the potential to reap environmental gains will go unrealized unless complimentary, transaction-facilitating decisions in the areas of channels, promotion, and pricing are also implemented for the purpose of building Q.

As indicated above, the scope and depth of a firm's involvement in the sustainability aspects of each element of the marketing mix will vary. However, finished product manufacturing firms will likely find actionable "sustainability" opportunities in all elements of the marketing mix because they constantly must interpret the changing wants and needs of final customers. Such firms function as market gatekeepers controlling final "form and function," and are also instrumental in the other marketing mix decisions. In short, the marketing decision-makers in these firms occupy positions of great ecological empowerment. Similarly, heavily integrated firms (i.e., forward and/or backward) will likely have more "sustainability" opportunities to pursue across the entire spectrum of the marketing mix. In contrast, specialist firms, such as transportation/distribution firms, will likely have no direct involvement in product design activities; their decision-making will concentrate on developing low-waste forward channels , or efficient reverse waste management channels (Stage 5). Therefore, they are dependent on manufacturers to create the recyclable product and package designs that will allow them to achieve the high volume, low cost operations necessary to be profitable.

DESIGN-FOR-ENVIRONMENT (DFE) PERSPECTIVE

Design-for-environment (DFE) is a design management application that has evolved within the industrial/product design community (Graedel and Allenby 1995). Its purpose is to embed positive ecological attributes (eco-attributes) in product "form and function." As product components, eco-attributes reflect waste management enhancements, such as making packages easier to recycle, eliminating unnecessary quantifies of materials from product construction, or designing durable products to be efficiently re-manufactured for a second marketing cycle.

In essence, DFE erects formal screening processes within the framework of the PSLC that insure that the various aspects of sustainability are fully taken into account during product design. When generalized beyond "product" to the other elements of the marketing mix (i.e., channels, promotion, and pricing decisions), the DFE perspective insures that each is scrutinized in regard to its potential to directly moderate waste impact and/or facilitate the sales (Q) of "clean" products.

POLLUTION PREVENTION (P2) AND RESOURCE RECOVERY (R2) STRATEGIES

DFE is operationalized through two proactive strategies: (1) pollution prevention (P2), and (2) resource recovery (R2). They are derived from the integrated waste management (IWM) hierarchy in which pollution prevention (P2) is the first priority followed by resource recovery (R2)(Freeman et al. 1992). Exhibit 3 defines these terms and provides a typology of sub-strategies. The essence of P2 is to engage in up-front preventative actions that eliminate waste before it occurs. In contrast, R2 focuses on devising efficient remedial actions that recover various resources (i.e., products, materials, energy values, etc.) from waste streams and re-deploy them in future production-consumption cycles, thereby closing the resources loop. R2 assumes waste streams will always be present because (1) all products wear out or become obsolete, (2) minimal packaging will always be required, and (3) conversion processes using best available technology (BAT) will never be 100 percent efficient.

The type and degree of change called for by P2 and R2 applications suggests the general sequence in which these strategies will be implemented by on-going firms. P2 involves significant change and investment in basic product design, manufacturing, and other support systems; it can be described as evolutionary, relatively high-cost, high risk, and long-term in nature. Implementing entirely new production technology, or re-inventing product form and function are examples. R2 often involves immediate, but often minimal, modifications to a firm's present systems; it can be described as incremental, reactive, low-cost, low risk, and short-term in nature. Adding-on a materials recycling system to a current manufacturing process to reduce waste disposal costs, or replacing outbound disposable packaging with a reusable system, are examples. When responding to the sustainability challenge, on-going firms are likely to first "green-up" present marketing mixes by implementing less disruptive R2 strategies. Success, and the institutional learning that occurs by doing so, then leads to the gradual introduction of potentially more disruptive P2 approaches overtime. However, this P2 - [greater than]R2 serial application is not the whole story. For, as noted above, all P2 approaches will continue to need an immediate R2 component to manage the inevitable waste/residual streams that will continue to exist.

Because the product and channel elements of the marketing mix are direct generators of waste, the applications made in these areas fall into a natural classification as either pollution prevention (P2) and resource recovery (P2) in purpose; the DEE discussions of these marketing mix elements utilize this dichotomy. However, promotion and pricing applications can not be naturally classified as either P2 or R2 in purpose; they are generally facilitative in character and can cover a variety of situations. The discussion of promotion DFE that follows is organized around the traditional components of the promotion mix. The discussion of pricing DFE is organized around a set of pricing policies that have linkages to sustainable practice.

PRODUCT DESIGN-FOR-ENVIRONMENT

Product decisions are the primary determinants of the quantity and character of waste generated by consumption because:

Product design is a unique point of leverage from which to address environmental problems. Design is the stage where decisions are made regarding the types of resources and processes to be used, and these ultimately determine the characteristics of waste streams (Office of Technology Assessment 1992, p. 3).

This makes product design the core issue of sustainable marketing strategy and the cornerstone upon which all other sustainable marketing mix decisions are built. The design goal is to achieve low product ecosystem impact (W) by minimizing waste generation and maximizing remediation, while maintaining product efficacy in terms of customer benefits and financial returns to the firm.

Product Design-for-Pollution Prevention (P2)

Product P2 applications are double-edged. First, the nature of P2 is to "get more from less" resources. This translates into reduced demand for initial energy and materials inputs in Stages 1-3 of the PSLC due to gains in productivity which also means less waste is generated "upstream." Second, this demand reduction, along with physical product enhancements, results in the downsizing of waste streams in the distribution and later stages of the PSLC, so future "downstream" waste management costs are also reduced ("Waste Reduction Works Like Magic" 1993; Freeman et al. 1992; Reilly 1991). Product design for P2 has two major sub-strategies: (1) manufacturing process-specific, and (2) product-specific (see Exhibit 4).

Manufacturing Process-specific. Products are accountable for the waste created by the total set of conversions up to and including the creation of final "form and function" (this can be visualized as all wastes left behind at the "plant" and earlier). The objective is to minimize resource inputs and the waste outputs of all manufacturing and inventory processes associated with product making. This is accomplished by reviewing production/inventory methods and modifying, or changing-out, technologies/procedures as necessary. The PSLC-orientation also requires scrutiny of the processes of a firm's suppliers as well.

Product-specific. Positive eco-attributes are incorporated directly into "form and function" (products) which then move forward into distribution. Any positive waste management gains then carry forward into the distribution, consumption, and post-consumption stages of the PSLC. Design enhances input resources productivity by: (1) reducing quantities of materials used in product/packages, (2) eliminating toxic/hazardous/radioactive/problematic materials, (3) extending product useful life, (4) reducing energy consumption and waste discharges (operating products), and (5) re-inventing the product's core benefit delivery system. These actions serve to de-materialize consumption and reduce waste management costs in later stages of the PSLC. In particular, product reinvention can take the form of eco-innovations, which utilize radically different ways and means to provide customer benefits (Fussler and James 1996; Ottman 1997).

Product Design-for-Resource Recovery (R2)

Resource recovery (P2) involves the continuous recapture of "already made once" products and materials and their re-deployment in future consumption cycles. This closes the resources loop and eliminates linear resources utilization (Neace 1995). For reasons cited earlier, R2 will remain a necessary follow-on to P2, but the scope and range of R2 activities are expected to narrow considerably as P2 becomes standard operating practice. R2 is focuses on making any future recovery options more efficient, and is accomplished through three sub-strategies: (1) product reuse, (2) materials recycling, and (3) materials transformation (see Exhibit 4). In addition, it is important to note that all R2 strategies depend on complimentary reverse channel systems to accomplish their goals (see channels discussion below).

Product Reuse. Product reuse preserves original (already made once) product "form and function" and creates a series of back-to-back usage cycles. Reusable packaging systems employ "beefed-up" structural designs that withstand the rigors of multiple cycles. Achieving a high trippage rate (i.e., the number of times the package is cycled) radically reduces investment in materials per unit of delivered product. Complex products, such consumer appliances and office equipment, can be designed to anticipate re-manufacturing. This involves talking a "once-used" item and restoring it to new product specifications for re-sale. Design features include easy disassembly and the use of modular component systems to facilitate the restoration process.

Materials Recycling. In contrast, materials recycling involves re-capturing large quantities of "already made" products/packages and materials from diverse sources and physically reducing them to status of homogeneous raw materials/commodities; original "form and function" is discarded. This requires anticipating the type of future "reduction" (sorting-out) activities and technologies that will be involved, designing-in eco-attributes (features) that make it efficient to accomplish reduction from form and function to generic materials status. Design features include (1) materials simplification (reducing the number of materials in a product simplifies the sorting process), (2) easy disassembly (complex products), (3) use of materials compatible with recycling technologies, (4) adopting materials coding systems, and (5) specifying recycled-source materials to stimulate demand. Enhancing reduction efficiency is a critical issue because recycled-source raw materials/commodities are marketable products that direc tly compete head-to-head with virgin-source counterparts on price and quality.

Materials Transformation. Transformation involves chemical, biological, or thermal processes that are applied to waste streams for the purposes of harvesting energy values, or converting original materials/substances into different forms. Their application is particularly relevant to large mixed municipal waste streams that can not be economically sorted-out (reduced) for materials recycling purposes. The main product design feature is the avoidance of materials in product/ packaging construction will cause contamination of outputs or release pollutants during processing.

CHANNEL DESIGN-FOR-ENVIRONMENT

The move-store functions performed in forward (out-bound) channels are programmed to enhance customer access to products, thereby increasing potential sales (Q). In contrast, reverse channels perform recapture functions in support of the various product design-for-resource recovery strategies discussed earlier. Both forward and reverse channels continuously convert resources and generate wastes that can be described as significant, but of secondary importance. A common design goal of both forward and reverse systems is minimizing move-store wastes and maximizing the remediation of those that remain. An additional environmental goal associated with reverse channel operations is to enhance the efficiency of performing the resource recapture function.

Under the broadened DFE perspective, a finished product manufacturer must also look at reducing negative ecological impacts caused by (1) suppliers (input) channels, (2) wholesale/retail distribution (output) channels, and (3) end-customers. On the input side, "greening the supply chain" can occur when buyer organizations mandate supplier conformance with environmental management standards, such as those available through ISO 14000 certification. On the output side, "greening" wholesale-retail distribution is more of a two-way Street with some manufacturers establishing environmental standards as a channel member selection criterion, while retailers sometimes turn the tables by mandating manufacturer (supplier) environmental conformance as an element of terms of sale. In addition, end-customers face final disposal decisions that can (and must!) be anticipated through PSLC analysis.

Channel Design-for-Pollution Prevention (P2)

Transportation and inventory holding are traditional move-store functions performed in both forward and reverse channels. Channel design-for-pollution prevention (P2) serves to minimize the wastes generated by the performance of these activities (see Exhibit 5).

Transportation Wastes Minimization. Because transportation vehicles consume energy (fuel) and discharge air emissions, the adoption of policies that stress fuel economy and the use of reduced emissions technology is an important consideration in achieving sustainability. Also, moving goods fewer times, utilizing large and/or consolidated shipments, and the avoiding distribution mistakes (i.e., wrong goods, wrong place) tends to lower waste per unit (W) of final delivered product.

Inventory Wastes Minimization. Minimizing inventory levels and associated storage facilities/space in relation to given levels of production, and minimizing damage/breakage, are factors that have hardly escaped scrutiny by logistics experts seeking to cut costs. Doing so also minimizes total resource requirements, thereby initiating parallel savings in waste (fewer resources must be converted to support given demand). Inventory minimization results from a more precise match between supply (inventories) and demand (sales). Computer-based techniques, such as electronic data interchange (EDI) and just-in-time (JIT) inventory systems, can help achieve this result.

Fugitive Emissions Minimization. Fugitive emissions result from transportation- and inventory-related accidents. This factor is of particular concern in PSLC's that routinely handle large quantities of hazardous or toxic materials. Given these materials are absolutely essential to operations, one minimization strategy is to reduce the quantities of these items being moved and stored in the first place which limits risk exposure. Another strategy is to redesign transportation equipment, facilities, and materials handling systems so that the probability of accidental discharges is reduced, while those that do occur are anticipated and immediately contained.

Channel Design-for-Resource Recovery (R2)

R2 strategies require logistics support to accomplish the task of diverting products/materials/wastes from terminal disposal, and re-deploying them in future consumption cycles. This closes the resource loop and eliminates the phenomenon of linear resource use (Neace 1995). The functional systems required to recapture resources are quite diverse and must meet the unique requirements imposed by specific situations.

Reverse Channels for Reusable Packaging. Reusable packaging is a product take-back system that can be employed in either industrial or consumer markets. Conditions that favor its use include (1) short channels (few participants), (2) short distribution distances (local, regional), (3) frequent, routine, and standardized transactions (time/place/quantity), (4) standardized package sizes/dimensions, and (5) motivated end-users. The presence of such conditions increases trippage, the number of times a package is cycled through a system. They generally characterize industrial transactions (including within-channel transfers of consumer goods), but are much less typical of consumer transactions. This is because the allure of disposal convenience has led to the almost 100% adoption of single-use packages in consumer food marketing in the United States. Additionally, the use of proprietary packaging to differentiate brands has also tended to dampen the use of standardized reusables in consumer markets. Marketing mix designers must first recognize when and where conditions favor deployment of reusable packaging, then, in collaboration with physical distribution specialists, work out the logistics infrastructure and processes necessary to accomplish the necessary recapture, back-hauling, and reconditioning/inspection functions.

Reverse Channels for Remanufactured Products. Although re-manufacturing involves diverse types of products, everything from automotive radiator cores to copying machines and toner cartridges, most applications focus on relatively high-value items in which "take-back" (trade-in) also plays a major role in pricing. In contrast to the high volume and continuity that characterize materials recycling and reusable packaging systems, re-manufacturing recapture operations tend to be much more selective, sporadic, and low volume in nature. Equipment recapture likely involves a wide geographic array of user locations that must be serviced on an occasional, as-needed basis, frequently in conjunction with the sale of new equipment (i.e., an exchange/trade-in is part of the transaction). Various degrees of de-installation are involved, as well one-time, non-standardized packaging and transportation functions. In this context, manufacturers have a number choices including (1) using existing forward channel partners, (2) co ntracting with third-party specialists, or (3) having customers participate in de-installation and other tasks. The intermittent nature of the functional activities involved seems to explain the apparent lack of manufacturer corporate integrated networks to handle recapture (out-sourcing is the norm).

Reverse Channels for Materials Recycling. The availability of large quantities of disposal packaging from industrial and consumer sources, plus other potentially recyclable items (e.g., discarded appliances and electronic equipment, newspapers, production wastes, traded-in automobiles, automobile tires, lead-acid batteries, used oil, etc.) sets the stage for materials recycling. In all cases, Stage 5 materials recycling channels must be designed to perform functions that (1) continuously recapture relatively large quantities of materials, (2) process those materials to the required quality specifications of industrial buyers, and (3) maintain exchange continuity. Meeting the often quite demanding quality specifications of industrial buyers is particularly important because price and quality are positively correlated in recycled materials markets. In most cases, there is no ownership linkage between the initial producer of items recovered through reverse channels (i.e., containers, appliances, automobiles, etc .), the entity disposing of those items i.e., (industrial/consumer source), and the collector of those items. This is because passage of product title occurred in an earlier time period, and significant gaps have likely developed in terms of time and location of consumption and disposal in relation to point of manufacture. Reverse channels for post-consumer recyclables face the particular problem of collecting wastes from a large number of low volume sources; this intensifies channel coverage requirements. In contrast, industrial/commercial waste sources (operating locations) are typically few and tend to produce relatively large quantities of homogeneous materials; this simplifies channel design. In response, a number of basic reverse channel types have evolved that reflect the economic conditions, legal arrangements, the functional requirements associated with specific commodities, the strategies of specific industrial buyers, and public policy mandates (Fuller et al. 1996). They include:

Corporate integrated channels. A legitimate/ownership power base controls the required accumulation and sorting processes. This approach requires extensive investment in processing equipment/facilities, transportation equipment, and promotional programs to stimulate and maintain collection levels (Fuller 1991).

Waste-hauler/public recovery/curbside channels. This often the choice for solving the intensive post-consumer collection problem. Consumers provide the vital "first sort" of designated items from mixed wastes, a behavior that is usually mandated by local ordinances requiring the diversion of wastes from landfills (National Solid Wastes Management Association 1990).

Specialized reverse dealer-processor channels. These are independent wholesaler intermediaries who often perform heavy-duty processing functions such as dismantling, shredding, baling, and large quantity transporting. They often specialize by type of materials handled (e.g., metals, paper, glass, plastics).

Traditional forward retailer-wholesaler channels. These channels evolve where bottle-bill mandates require retailer-wholesaler participation in return bottle programs. Mandates may also cover items such as automobile tires, used oil and other automobile fluids, and lead-acid batteries.

Reverse Channels for Materials Transformation. These channels are supply sources for (1) waste-to-energy (WTE) and (2) materials composting systems. Mixed industrial and commercial waste streams are sources of combustible materials, such as food-related and agricultural by-products, and containers (all materials); households contribute all types of contaminated packaging and containers, yard wastes, and food-related items. Given it is uneconomic (or impossible!) to sort-out these items for recycling purposes, the opportunity exists to extract economic values by incineration in waste-to-energy (WTE) conversion processes. The high volume of mixed wastes required to "feed" such systems is generally available through public waste-hauler systems. In contrast, composting processes require separated, organic waste as feedstock. Consumer sources can be tapped through separate curbside collection programs. Industrial-commercial sources generate organics fewer locations such as schools, food service businesses/restaura nts, supermarkets, food wholesalers, and food processors; each tends to generate relatively large quantities of presorted items. Prompt separation at the source is a basic requirement. Others factors influencing channel efficiency include: (1) refining routing to efficiently reach prime generators, (2) developing specialized collection vehicles (standard solid waste packer trucks are inefficient in this role), (3) utilizing specialized collection containers (to accommodate semi-liquid/putrefying materials), and (4) accounting for the seasonal variations in the composition of organic waste streams (e.g., lawn clippings in spring-summer; leaves in fall-winter) ("Hauling Food Residuals" 1995).

PROMOTION DESIGN-FOR-ENVIRONMENT

In contrast to the decisions that underlie product designs and channels, promotion is not a significant functional generator of wastes in and of itself. Rather, promotion's contribution toward reducing waste impacts is found in its capacity to increase the sales (Q) of sustainable products. The information made available through promotion makes it possible for customers to make more environmentally informed choices. The goals of sustainable promotion are two-fold: (1) establishing and maintaining the environmental credibility of both the product and firm behind it, and (2) educating a diverse set of stakeholders about the nature of environmental issues and solutions and how the firm's actions serve as positive solutions. In general, the environmental decisions/actions reflected by a firm's product and channel designs serve as valuable information resources for use in promotion. The implementation tools that translate these resources into marketing action are these traditional promotion mix elements: (1) adver tising, (2) personal selling, (3) sales promotion, and (4) publicity/public relations. None of these tools is inherently P2 or R2 in character. Therefore, the designation of specific applications of these tools as support for either pollution prevention (P2) or resource recovery (R2) initiatives is simply a function of the "information contents" being communicated through them at the time (see Exhibit 6).

Advertising Applications

Advertising provides the opportunity to communicate environmental information to large numbers of customers and other stakeholders. Specific types of advertising can serve different purposes in this process. The major objective of product advertising is to communicate relevant attributes and features. Because "environment" is not the primary consideration in most product purchases, experts suggest that eco-attributes be communicated in a low-key (understated/implicit) manner, while continuing to stress the primary product benefits the customer can expect. All other things equal, the presence of positive eco-attributes may represent a "tie-breaker" feature for many customers. Institutional advertising is designed for the purpose of positioning the firm as ecologically sensitive, responsible, credible, and trustworthy. Developing a positive environmental aura is consistent with the low-key product advertising approach mentioned above. Subject matter may include the company's environmental record, its alliances with activist groups, or its position on environmental issues such as global warming or air quality standards. Trade association advertising deals with how specific materials (e.g., plastics, petrochemicals, paper, ferrous and non-ferrous metals, etc.), and the products made from them, positively impact our lives. Pooling the resources of a number of producers and suppliers is a natural sustainable promotion application, the thrust of which is engender a positive environmental image for the material in question. Public service announcements represent a pooling of resources among private enterprise and public sector organizations (e.g., manufacturers, retailers, public interest groups, regulators, etc.) for the purpose of educating the general public about an environmental issue, such as air quality in urban areas.

Personal Selling Applications

Sales personnel are often the only contact intermediary organizations and end-customers have with a seller. The primary role of the sales force in sustainable promotion is to serve as a conduit for communicating the firm's environmental policies, profile, and commitment to its PSLC partners and customers. The importance of the sales force in this role will vary in relation to the types of sales tasks carried out at various levels within the PSLC. Those performing low level order-processing will be of limited usefulness in this regard. In contrast, those engaged in missionary and creative sales tasks represent a highly flexible medium through which important environmental messages can be delivered. These individuals, in particular, must be educated so they understand that environmental information can play a significant role in closing sales over the long run.

Sales personnel need to be knowledgeable about the following types of environmental information:

(1) Product environmental benefits: basic knowledge of ecological concepts, basic P2/R2 strategy, and applications to company brands.

(2) Regulatory/environmental compliance issues: basic knowledge of relevant environmental statutes that must be complied with by both the seller and buyer. "Compliance" must be treated as an eco-attribute that is sought by the buyer.

(3) ISO 14000 certification: when mandated as a buyer requirement, detailed knowledge of the firm environmental management system (EMS) will be necessary to get on the "to consider" list.

Because the above represent a variety of complex and highly technical issues, and are not included in the usual sales training curriculum, educational programs will be required to initially indoctrinate, and then constantly update sales personnel in these areas. This can be accomplished through formal sales training activities using in-house personnel and/or specialized vendors, sales meeting presentations, and sales personnel involvement on cross-functional teams (see Exhibit 6).

Sales Promotion Applications

Sales promotions are commonly directed at (1) customers (i.e., consumers and organizational buyers) and (2) internal and/or middleman marketing personnel. They attempt to induce immediate actions (e.g.) increase quantity purchased by customers per transaction; increase the sales representative call rate per month), or serve as sales support devices. By imply adding "environmental contents," common sales promotion vehicles, such as catalogs/brochures, point-of-purchase displays, coupons/rebates, video presentations, allowances/trade-in programs, and trade show activities instantly assume the role of "communicator of sustainability" (see Exhibit 6).

Publicity-Public Relations Applications

The actions of firms sometimes lead to unintended environmental consequences: the Exxon Valdez Alaskan oil spill debacle is a case in point. This sort of negative publicity severely tarnishes the firm's environmental image and must be dealt with through responsive marketing communications that clear the air. Beyond the usual need to manage media relations (a public relations activity), advertising is also sometimes employed to accomplish public relations damage control by getting appropriate messages out to the general public. For example, Exxon ran full-page "Open Letter to the Public" advertisements in major daily U.S. newspapers shortly after the Exxon Valdez incident. On the positive side, well-designed out-bound public relations programs can have a positive impact on the firm's environmental image. Other proactive actions that can help a firm create and maintain a "sustainable aura" include entering into partnerships with environmental groups, developing a multi-stakeholder-oriented corporate environment al report (CER), and developing and documenting the firm's "environmental position" on the firm's web site (see Exhibit 6).

PRICING DESIGN-FOR-ENVIRONMENT

The setting and manipulation of price represents a major competitive weapon. Price is also usually the most important influence on the customer's purchase decision process. As with promotion, pricing decisions are not direct generators of wastes. Rather, pricing contributes to sustainability by increasing the sales volume of clean products (03 through clean channels, while maintaining acceptable profit margins. Costs play a particularly important in sustainable pricing. One of the main issues is that environmental costs are often not allocated to the products that cause them; rather, they are categorized as non-allocated general overhead expenses where they have no impact on unit cost calculations. Because these costs can be significant, this practice tends to under-cost products that are incompatible with ecosystems and over-cost products that are compatible, thereby misstating profits, which is the key to retention in the product line. Therefore, one goal of sustainable pricing is to create the situation wh ere the "Total Profit = Total Revenues - Total Costs" equation reflects a fair and full allocation of all relevant factors, including environmental costs. Again, the environmental decisions/actions reflected by a firm's product and channel designs can serve as valuable sources of information for developing cost accounting policies that result in more realistic cost allocations for guiding pricing.

A number of pricing practices have emerged that can be can be directly related to a variety of P2 and R2 strategies (see Exhibit 7). All face a general scenario in which most customers (both consumers and industrial buyers) assign much less importance to the relatively intangible benefits associated with eco-attributes than the usual primary benefits derived from product purchase (see Exhibit 7).

Meet-the-Competition/Level Pricing

Many consumer products fall into a "commodity-convenience" category, where customers focus on traditional benefits offered by many lookalike brands, and price competition is intense. Matching the customary price level of competitors becomes the dominant consideration. Given basic benefits and price are equal, any positive environmental attributes offered by a brand can then serve as a transaction tie-breaker.

Premium Green Pricing

The belief in the assumption that large groups of customers will pay a premium to obtain for "green benefits" comes from self-response surveys reporting what customers say they will do. But, actions speak louder than words, and purchase actions generally reveal that consumers simply do not do as they say. The exception is a generally reported small and upscale segment of U.S. consumers reported by Roper Starch Worldwide Inc. (1997), called the "Green-Back Greens," to whom a higher than market price might appeal given the presence of significant eco-attributes. However, because even this segment is based on self-report data, the issue of premium green pricing remains shrouded in doubt. However, for products like General Motor's By- electric car, which was lease-priced in the $30,000 to $40,000 range, the motive was likely to "skim-the cream" to achieve small sales while testing this strictly transitional technology in the marketplace ("GM Electric Cars..." 1996, p. E9).

Larger Quantity Pricing

Traditional packaged goods possess a unique eco-attribute: larger package sizes generally require less packaging material per unit of product, which translates into to less waste impact per unit of customer benefit. For example, the weight of paperboard packaging for a powdered detergent falls from 5.87 grams/load for an 18-load package to 4.55 grams/load for an 85 load package (a 23% difference)(Fuller 1999, p. 303). Although this reduced per unit price benefit is usually already passed along as a standard quantity discount, reporting the parallel environmental benefits of reduced packaging could serve as a low-key "tie-breaker" factor in some transactions.

Complimentary Product Pricing

When manufacturers link the sale of equipment to the long-term sale of replacement components, complimentary pricing can be employed.

When the component being continually replaced is relatively high-value, product design-for-re-manufacturing enhancements could make it profitable for the manufacturer to develop appropriate reverse channels to recapture and refurbish the component to "new" specifications. This would forge a long-term relationship with the customer and allow establishing long-term quantity discounts based on "buyer loyalty" over time. Remanufactured copier toner cartridges are an example.

Service-Life Pricing

Repetitive purchases of non-complimentary products over time set the stage for service-life pricing. One scenario is to use comparisons of costs! prices over time between "long-life, environmentally preferable" versus relative "short-life" products. Another scenario is to compare reusable and disposal product alternatives for the same applications. This has been done for many personal and medical products (e.g., diapers, surgical gowns, etc.) and brings into play life-cycle processes and associated total costs over time.

Take-BackPricing

Take-back pricing involves pricing products, usually durable goods, in such a manner as to recover the future costs of disposal. The idea behind take-back is that involving the manufacturer at the end of product life will instigate changes in product design and distribution that will reduce ecological impacts significantly. However, this shift in functional responsibility entails costs that can be recovered through pricing considerations. Approaches include implementing a discounted future handling fee or a guaranteed trade-in discount system. In particular, this approach suggests opportunities for actualizing design-f or-re-manufacturing and relationship marketing strategies.

Rent/Lease Pricing

Rent/lease pricing represents a shift in transaction format from outright ownership (title transfer) to the temporary transfer of property rights (product use) for a specified period of time, after which the product reverts back to the seller. For a sustainability perspective, this approach de-materializes consumption; customers obtain the benefits they need without accumulating large personal inventories of durable goods that are only occasionally utilized. Product take-back is also automatic, so disposal options for "taken-back" items (e.g., Remanufacture? Recycle?) must be considered during initial product design. Arrangements can be formally detailed in leases/contracts (e.g., automobiles, appliances, and furniture) or be quite informal in execution (e.g., 3-night video rental). The continuous customer contact associated with rent/lease tends to foster repeat purchase behavior over time; it is not single transaction focused. Because rent/lease pricing is essentially a relationship marketing approach, it h as the potential to grow both brand loyalty and long-term customer continuity.

CONCLUSIONS

Sustainable marketing views ecosystems as a non-negotiable physical limiting factor in marketing strategy decisions. Because the preservation of clean and healthy ecosystems is a prerequisite for human survival, sustainable marketing must not be viewed as an exercise in corporate altruism. Rather, it challenges marketers to reinvent product systems so that they are "low-waste, no-negative-discharge" in character, while also delivering equivalent benefits to customers through products and meeting organizational goals (financial and other).

Marketing strategies are a major determinant of the use of natural capital/resources, the generation of wastes, and subsequent pollution. Sustainable marketing requires that marketing mix decisions be designed to be compatible with ecosystems; this mandates a systems approach when developing product, channel, promotion of P2 and R2 into the marketing decision-making process. P2 deals with preventive action; the point is to design product systems so that waste is eliminated from the start. R2 deals with remedial action; the point is to design product systems so that resources can be used over and over again. To attain these goals, sustainable marketing strategies are actualized through the design-for-environment (DFE) process. Within the marketing mix, product and channel design for-environment decisions directly serve waste management objectives. These decisions, in turn, provide valuable environmental information for use in promotion and pricing decision-making.

Because production-consumption processes and human well being are totally interconnected, the study of sustainable marketing cannot ignore social-moral issues. The ultimate answer to the question "Who is responsible for waste management?" will largely reflect the character and moral beliefs of the managers and customers who have to address it, as well as economic ramifications. The need for all parties to "cover their wastes" mandates that free riders cannot be tolerated; this includes customers, firms, and countries. Overall the prognosis for achieving sustainable marketing practice is positive: the changing values of individuals appear to be bringing pro-environmental beliefs to bear more heavily on business and customer decisions, and the economics of sustainable costs and prices are becoming more attractive when evaluated using traditional profit measures.

REFERENCES

Atlanta Journal/Constitution. 1996. "GM Electric Cars to Go on Sale in California, Arizona This Fall." January 5, p. E9.

BioCycle. 1995. "Hauling Food Residuals." August, p. 40.

Freeman, Harry, Teresa Harten, Johnny Springer, Paul Randall, Mary Ann Curran, and Kenneth Stone. 1992. "Industrial Pollution Prevention: A Critical Review." Journal of the Air & Waste Management Association 45:616-56.

Fussler, Claude and Peter James. 1996. Driving Eco-Innovation. London: Pitman Publishing.

Fuller, Donald A. 1991. "Recycling Post-Consumer Aluminum Containers: A Marketing Commentary." In: Robert L. King (ed.) Developments in Marketing Science, Vol. 14, Proceedings of the Academy of Marketing Science, pp. 101-5.

Fuller, Donald A. 1999. Sustainable Marketing: Managerial-Ecological Issues. Thousand Oaks, CA: SAGE Publications.

Fuller, Donald A., Jeff Allen, and Mark Glaser. 1996. "Materials Recycling and Reverse Channel Networks: The Public Policy Challenge." Journal of Macromarketing 16(1): 52-72.

Graedel, T. E. and B. R. Allenby. 1995. Industrial Ecology. Englewood Cliffs, NJ: Prentice Hall.

In Business. 1993. "Waste Reduction Works Like Magic." May-June, p. 1.

Licking, Ellen. 2000. "Hothouse Hangers to Fight Water Pollution." Business Week, March 20, p. 81.

National Solid Wastes Management Association. 1991. The Future of Newspaper Recycling. Washington, DC: NSWMA.

Neace, M. B. 1995. "Marketing's Linear-Hierarchial Underpinning and a Proposal for a Paradigm Shift in Values to Include the Environment." In: Michael J. Polonsky and Alma T. Mintu-Wimsatt (eds.) Environmental Marketing: Strategies, Practice, Theory, and Research, New York: Haworth, pp. 55-73.

Office of Technology Assessment. 1992. Green Products by Design: Choices for a Cleaner Environment. Washington, DC: Government Printing Office.

Ottman, Jacquelyn A. 1997. Green Marketing: Opportunity for Innovation. Lincolnwood, IL: NTC Business Books.

Reilly, William K. 1991. The Next Environmental Policy: Preventing Pollution. Washington, DC: U.S. Environmental Protection Agency, Office of Communications and Public Affairs.

Roper Starch Worldwide Inc. 1997. Green Gauge Report. New York: Roper Starch Worldwide Inc.

Tchobanoglous, George, Hilary Theisen, and Samuel A. Vigil. 1993. Integrated Solid Waste Management: Engineering Principles and Management Issues. New York: McGraw-Hill.

EXHIBIT 2: Marketing Mix Elements--Roles in Sustainable Strategy

Sustainable Product Design Decisions

* Are the primary functional determinants of wastes (W), which derive from the types of resources and processes used in manufacturing and earlier life-cycle stages.

* Result in "low-waste, no-negative-impact" form and function product designs.

* Must protect customers' primary benefits.

* Must protect firm's revenue-cost relationship.

Sustainable Channel Design Decisions

* Are secondary functional determinants of wastes (W), which derive from the performance of forward and reverse channel move-store functions.

* Result in "low-waste, no-negative-discharge" forward and reverse channel systems.

* Facilitate reverse channel resource recovery volume and trippage rates by providing waste source access.

* Facilitate forward channel sustainable product sales (Q) by customer providing access.

Sustainable Promotion Decisions

* Are not significant functional determinants of waste (W).

* Facilitate reverse resource recovery participation by providing information.

* Facilitate sustainable product sales (Q) by providing information.

Sustainable Pricing Decisions

* Are not significant functional determinants of waste (W).

* Facilitate reverse resource recovery participation efforts through monetary incentives.

* Facilitate sustainable product sales (Q) by reflecting full costs and value added.

EXHIBIT 3: Integrated Waste Management Hierarchy/Pollution Prevention (P2) and Resource Recovery (R2) Strategies

Sustainable Marketing Strategies Actualized Through Design-For-Environment

(1) Proactive Strategy: Pollution Prevention (P2)

Conserve resources and eliminate waste through up-front process and product design changes/decisions; eliminate alter-the-fact waste processing costs.

(2) Proactive Strategy: Resource Recovery (R2)

Manage unavoidable waste streams by recapturing materials, energy values, and products for future use; enhance efficency-effectiveness of recovery functions through reverse channel and product design changes/decisions; build markets for recovered materials, energy, and reusable products.

(3) Default Option: Terminal Disposal

Wastes are released into ecosystems; this is not a strategy - it is an occurrence/event often beyond the marketer's control; prior implementation of P2 and R2 strategies will reduce TD volume and also render benign products/wastes that undergo TD due to uncontrollable and varying local circumstances.

EXHIBIT 4: Sustainable Product Applications

Pollution Prevention (P2)

* Manufacturing process-specific: Substitute hydrogen peroxide for chlorine bleaching systems in paper making; eliminate inventories of toxic chlorine and replacing them with benign materials.

* Product-specific: Light-weigth/downsize 12-ounce aluminum beverage containers by 25%; eliminate mercury, lead, and volatile organic compounds (VOCs) from paints; increase an appliance's operating life from 10,000 to 20,000 cycles; use "power down" technology to reduce computer energy use: replace traditional chemicals-based "west photography" with digital imaging.

Resource Recovery (R2)

* Product reuse: Develop heavy-duty, multi-cycle reusable plastic containers with functional features such as collapsibility, nestability, stackability, side-door access, easy cleaning/sanitization, and standardized size/shape/cube.

* Materials recycling: Standardize container construction around one material (e.g., 100% aluminum, 100% polyethylene terephthalate -- PET); design single-use cameras with two-way fasteners for quick tear-down; specify PET to compliment availability of DuPont's breakthrough Petretec recycling process; identify all the major metal and plastic appliance parts with industry standard codes; specify PET in package construction to compliment widely available recycling programs.

* Materials transformation: Use soy-based inks (eliminate heavy-metal based inks) in product labels and literature; replace nickel-cadmium batteries in non-recyclable hand-held appliances with benign battery technology.

EXHIBIT 5:

Sustainable Channel Applications

Pollution Prevention (P2)

* Transportation wastes minimization: Utilize low-emission vehicles; minimize product movement by employing computer scheduling.

* Inventory wastes minimization: Reduce inventories and associated storage facilities through computer control systems such as electronic data interchange (EDI) and just-in-time (JIT) approaches.

* Fugitive emissions minimization: Design transportation equipment to reduce probability of spills/accidents (e.g., double-hulled oil tanker designs, and requiring collision-avoidance alert systems on all trucks).

Resource Recovery (R2)

* Reverse channels for reusable packaging: Utilize company-owned vehicles and reusable 4-gallon plastic "cases" for delivery and back-hauling in local retail food store distribution.

* Reverse channels for remanufactured products: Utilize third-party specialists nationwide to de-install complex computer systems and ship them to processing centers; provide the necessary packaging and postage as an incentive for customers to de-install and ship used toner cartridges to centralized locations for processing.

* Reverse channels for materials recycling: Use waste-hauler/public recovery/curbside collection systems to separately recapture large quantities of pre-sorted plastic/aluminum/glass containers and newsprint; mandates require supermarkets handle returned disposable containers in bottle-bill states; specialized dealer-processors serve local manufacturers, shopping centers, and supermarket chains to recover corrugated packaging, newsprint, scrap metals, plastics, glass, and other materials.

* Reverse channels for materials transformation: Use waste-hauler/public recovery/curbside collection systems to recapture large quantities of mixed municipal solid waste (MSW) for input into local municipal waste-to-energy systems; employ separate curbside collection of post-consumer organic materials to support municipal composting operations.

EXHIBIT 6: Sustainable Promotion Applications

* Advertising: Develop a product advertisement indicating the "percent of post-consumer recycled contents" in the package; create an institutional advertisement heralding the safety record of the firm's fleet of double-hulled oil tankers; support a multimedia campaign to improve the environmental image of products made from plastics; tri-venture a 30-second radio spot, with the U.S. Environmental Protection Agency and the Natural Resources Defense Fund, concerning the need for water conservation.

* Personal selling: Sub-contract sales training seminars in the specialized area of state-level environmental regulations; develop a detailed brochure explaining your firm's completion of ISO 14000 certification and what it means in terms of customer benefits (for use by the sales force).

* Sales promotions Develop a "customer friendly" toner cartridge return-to-manufacturer program consisting of instruction brochure, mailer, pre-paid postage and labeling, and 1-800 information "hot line"; develop consumer brochures that explain the supermarket's role in recycling paper and plastics wastes.

* Publicity/public relations: Develop a quick-response information program that anticipates hazardous materials spills and provides factual and accurate information about the situation, and the actions being undertaken to remedy the problem; publicize corporate sponsorship of a national environmental organization.

EXHIBIT 7: Sustainable Pricing Applications

* Meet-the-competition/level pricing: Maintain price at "look-alike" competitor levels while allowing positive eco-attributes to serve as the "tie-breaker."

* Premium green pricing: Develop a premium-priced electric village-transporter targeted at occupants of exclusive gated communities.

* Larger quantity pricing: Offer products in larger quantity packages at per unit discounts that reflect savings in packaging materials.

* Complimentary product pricing: Offer discounted remanufactured toner cartridges at discounted prices in association with new equipment purchases.

* Service-life pricing: Use price comparisons to show that compact fluorescent bulbs cost less than frequently replaced incandescent bulks when both energy costs and replacement costs are considered over time.

* Take-back pricing: Manufacturer offers a "back-end" discount coupon to be applied to a future purchase from that same manufacturer at some future point in time (loyalty discount).

* Rent/lease pricing: Execution of a non-title transfer contract that results in the product being automatically returned to the manufacturer at the end of service life or contract period.

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