Sustainability Marketing Practices of Samsung Electronics
The modern business environment, globalization and increased public awareness have influenced companies to engage themselves in sustainable activities. The companies and policy makers are in the phase of developing and improving existing business practices for sustainable development of the surrounding. Furthermore, the companies design their marketing activities to support the companies’ sustainable activities in the development of the sustainable surrounding. Samsung Electronics is one of the responsible companies following sustainable business practices. However, the company needs to improve its communications and marketing efforts to strengthen its marketing mix and brand reputation.
Corporate sustainability has become an important concern for stakeholders (both direct and indirect) and the media. Globalization has increased the need for proper communication and sustainable marketing activities for sustainable growth of organizations. Due to the increasing in pollution and climate change around the world, environmental executives, media, stakeholders and policy makers have realized that companies should engage themselves in sustainable activities. To understand the sustainable practice of a multinational company, this report is design to analyze the concept of sustainable marketing and the Corporate Social Reporting of Samsung Electronics.
There are many internal and external factors that have a direct as well as indirect impact on the decision making process of an organization. Over a period of time, the concern and awareness of the financial and non-financial stakeholders regarding the macro environment have increased pressure on companies to adopt activities that are sustainable. The Macro environment of a business includes political, economic, technological, international, natural, demographic and socio-cultural environment. Therefore, businesses adopt a sustainable marketing approach to create better business opportunities, a better business environment and business relationships.
Some of the macro issues Samsung is facing are:
- Need for increased Social Contribution: The modern business environment and increased communication and networking have influenced corporate engagement with the society, environment and economy. The changing economic environments due to recession in many countries have affected the non-financial stakeholders which have influenced companies to take necessary measures and contribute more to society.
- Climate Change and Energy: Climate change is an international level issue as it is already affecting many people in their daily lives. Climate change has resulted in unexpected weather conditions, droughts and flooding. It is a global challenge that requires the involvement of both governments and companies in taking the necessary measures to reduce its effects on the mass. Samsung also face this challenge worldwide and is engaged in developing a greenhouse gas management system. Therefore, to stay competitive, the companies must understand the consequences of climate change due to their business activities (Karbassi et al., 2011).
- Water Management: Water management is one of the key macro issues that must be catered for sustainable development. Due to increase in industrial need for corporate sustainability, almost all the electronic companies are responsible for the water management. The Electronic Industry Citizenship Coalition (EICC) and World Business Council for Sustainable Development (WBCSD) have developed water resource management guidelines. All the electronic companies are required to manage water for sustainable development.
- Chemical Management: Samsung operates in many countries of which some are advanced and have developed proper rules, regulations and laws related to chemical management, whereas some countries do not have any formally defined set of laws. The challenge for Samsung is to reduce and manage any chemical waste that may affect people or the environment in the developed as well as developing countries. The companies though are engaged in better activities to minimize negative impact on the surrounding are considered responsible Matten and Moon (2008).
- Growing Customer awareness and product safety: In the modern business environment, customers are becoming reasonably aware of product quality, development and safety. The impact of products on the environment, society and economy are also an important also consideration. The products produced by Samsung Electronics require safety against electric shock, fire and injury. The company has engaged itself in controlling such issues by operating a certified laboratory by 29 accreditation bodies in thirteen countries. Corporate sustainability is one of the important elements that the customers consider before getting interested in a particular product (Tomas & Hult, 2011).
- Customer Information and communication: The companies need to communicate with its customers and other stakeholders regarding the sustainable activities and also reducing any misconception about the company that may have arisen due to miscommunication or lack of communication with the stakeholders.
- Green House Gases: Another macro issue is greenhouse gasses that may be released in the development of the product. The greenhouse gases are reaching a dangerous level that can upset the existing climate system (Emanuel, Sundararajan & Williams, 2008). The challenge is to create and develop clean production technologies along with material reduction and recycling. Factory emissions on land, air and bSamsung engages them in maximizing the energy efficiency.
- Theoretical Review of Sustainable marketing issues: Paetzold (2010) describes the term corporate social responsibility as the process in which a company set its standard operations according to international norms. The company’s operations should have a positive impact on the employees, communities, consumers, stakeholders and most importantly, the environment.
Sustainability marketing has become an important concern for the marketers of the current generation. The scope of sustainability marketing is very broad and many researchers, including students and philosophers, are focused toward learning this important subject. Ottman (2011), in his study, reveals that the sustainable marketing can be referred as innovation and flexibility. Now days, the companies are offering more sustainable products and services which often empower an educational message to the communities.
There are seven strategies suggested by Ottman (2011), with regards to sustainable marketing. They are:
- To develop a long term relationship with shareholders and customers by developing an understanding of social and environmental beliefs.
- To balance the consumer’s desires, the company has to offer new products and services based on convenience, affordability and quality with almost no negative social and environmental impacts on the product life cycle.
- Offer products that deliver practical benefits, empowering and affecting customers in a positive way.
- Companies should strive for transparency and credibility.
- Act proactively on social and environmental issues by discovering competitive advantage.
- Companies should think holistically, with broad array of societal and corporate environment.
- Companies should always be striving for “zero” impact.
Disposal practices should be adopted and responsible products should be offered.
Researchers have revealed the significance of sustainable marketing in their studies. For example, Nguyen and Slater (2010) found out that the two of every three companies, listed on Fortune’s Global 100 most sustainable corporations, were able to outperform their competitors with less sustainable business activities. This ranking is an important marketing instrument, as the companies are able to get the media coverage and stakeholders awareness about the company’s sustainable activities. However, in cases where the company lacks the sustainable activities against its competitors, then the low ranking can affect the company’s image.
Furthermore, many other researchers have pointed out that sustainability is a basic ingredient for the success of private as well as public sector organizations (Kuosmanen and Kuosmanen, 2009). Moreover, a study by Ferrell, Gonzalez-Padron, Hult & Maignan,(2010) on sustainability and marketing activities revealed many important points. According to the research, the market orientation that involves stakeholders, financial and non-financial, is able to develop strong competitive advantage over its competitors. The research further reveals that the sustainable activities, based on mass stakeholders concerns, are able to cater cultural and behavioral concerns in market orientation.
Sustainable marketing require the marketer to market organizational activities and practices that are developed by focusing on the environment, society and economy. The organizations do not exist in isolation and therefore, the sustainable marketing supports and promote organization’s sustainable economic developments (Hunt, 2011).
Other researchers like, Closs et al. (2011) and Crittenden et al. (2011), believes that sustainability initiatives by the companies lead the direction of marketing activities, business procedures, activities, policies, strategies products and services, HR policies and dealing with stakeholders. The said influence of sustainability initiative on marketing activities may include branding, advertising, promotional activities, packaging, product mix and also pricing.
There are many reasons due to which the companies are influenced and engage themselves in sustainable activities. . The pressure from stakeholders, media, public, communities and government influences the organization’s sustainable and marketing activities. According to Cronin et al. (2011), sustainability oriented marketing strategies are the function of public and customers’ awareness about the triple bottom line practices, globalization concern, cost of materials and energy.
Measurement of Sustainable Marketing Practices
According to Akdeniz et al. (2010), benchmarking is one of the important tools to measure the performance of an organization’s sustainable activities. The benchmarking helps in improving the activities and also moving in the marketing activities in the correct direction. Akdeniz et al. (2010) study reveals three major theoretical perspective which supports benchmarking. First is resource based view, which focuses on firm’s resources and capabilities as an important major of sustainability marketing. Second and third perspectives are based on market orientation and organizational learning theory, respectively.
Moreover, many industries have developed their own benchmarks to compare their performance in relative terms. Companies engage themselves in sustainable activities to gain market reputation and competitive advantage. Companies have internal as well as external benchmarks and measuring tools to measure the response or the performance of sustainable activities.
The benchmark and reporting standards provided by Global Reporting Initiative (GRI) activities and the International Integrated Reporting Committee (IIRC) can also be used to measure the performance of the company’s sustainable practices. Furthermore to measure the performance, organizations can also compare themselves with the standards like the standards proposal released by International Auditing and Assurance Standards Board for Assurance Engagements on Greenhouse Gas Statements
Challenges of Sustainable Marketing
In the modern business environment, increased communication and public awareness has lead companies to voluntarily engage themselves in sustainable practices. However, the companies are exposed to many challenges.
The main challenge company faces is limited resources as sustainable activities demands more time and costs. Moreover, the companies may also get influenced by the financial stakeholders though are influential. It is noted that the influence of the financial stakeholders is more in small companies than in big companies. The reason is that the small companies have limited number of stakeholder whereas, the large companies have a bigger pool of financial stakeholders and that is why their role in management is limited.
Review of Samsung’s sustainable marketing practices Use of traditional and digital media to communicate sustainable practices Samsung communicates its sustainable marketing and other activities with its financial and non-financial stakeholders through a separate corporate sustainability report, annual report, website, print and other media. The company typically uses newsletters and digital media to communicate its sustainable practices. The traditional and digital media is used to communicate following:
- Shareholders: Samsung Electronics is always communicating its business results and practices with investors and shareholders. Meetings are also arranged to discuss the corporate social responsibility achievements and policies.
- Customers: Samsung acknowledges and entertain the inquiries of the customers. These inquiries were raised significantly in the past year. As per Annual Sustainability Report (2011), to ensure the full satisfaction of the customers, the company launched the Voice of Customers (VOC) program to get connected with the customers and receives comments, suggestions and queries from the customers.
- Government: Samsung has engaged itself in developing strong relationships with the countries it operates in. The company believes that it can reach sustainability by working close with the government and welcoming any change in laws and rules and regulations. According to 2011 Corporate Sustainability report of Samsung, the recent focus of the South Korean government is to develop a relationship between the SMEs and multinationals. Samsung Electronics took an active participation in private and public dialogue.
- NGO: Many NGOs across the world are working for environmental protection and they are concerned with the corporate social responsibility of the multinational companies. According to Samsung’s corporate sustainability report for 2011, the company is continuously responding to all the environmental issues raised by NGOs.
- Employees: For adopting a sustainable marketing approach, Samsung Electronics takes care of its employees through its creation of Samsung LiVE – which is an open communication platform for all employees. As per Annual Sustainability Report (2011), the main purpose of this online platform is to develop a better, clearer understanding of the internal issues of the company.
- Local Communities: Local communities are very actively concerned with the corporate social responsibility of the company. Samsung Electronics engages in partnerships with local communities to highlight the efforts made in regards to corporate social responsibility.