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Societal Marketing


1.   Introduction

The globalization and technological advancement has changed the trends in society・s values.  People are increasingly concerned for environmental problems, resource shortages, worldwide economic problems, neglected social services and ethical issues.  Organizations today are therefore experiencing profound pressures towards societal marketing to meet the expectations.  According to Kotler (2000), .societal marketing concept holds that the organization・s task is to determine the needs, wants, and interests of target markets and to delivery the desired satisfactions more effectively and efficiently than competitors in a way that preserves or enhances the consumer・s and the society・s well-being・. 

The societal marketing concept urges organizations to build social and ethical considerations into their marketing practices.  Social responsibility refers to an organization・s obligation to strive to have a positive impact on society through its ethical marketing decisions based on fairness, justices and trust (Dibb et al, 2001).  This has posed tough decisions dilemma to organizations because there are often conflicts when balancing company profits, consumers want satisfaction, and public interest.

2.   Good corporate citizen

According to Carroll (1998), organizations are good corporate citizens when they perform their responsibilities that extend beyond profit-making (Figure 1).

Carroll argues that good corporate citizens should perform their responsibilities in four dimensions.  At the economic level, organizations are profitable so they can fulfill their economic responsibilities to their stakeholders.  They should sometimes sacrifice some profit for the sake of making things better for the consumers and society.  At the legal level, organizations should obey the law in terms of business・ performance.  It is often said that law is at the floor level of acceptable behavior.  The upright corporate citizen must go beyond mere compliance with the law.  Thus organizations should strive to operate in an ethical fashion at the next level.  Finally, organizations should help humankind through philanthropic activities such as voluntary services, voluntary associations and voluntary giving for quality of life and better future.   

3.   Arguments against societal marketing

Traditionally, organizations have tied marketing performance to profits.  Some critics have accused that this marketing approach harms consumers through short-term satisfaction and neglects society well-being in the long run.  However, organizations argue that such a balance (Figure 2) is difficult to achieve because profits are reduced with the costs associated with consumer and society・s demands, for example costs for research and development, or costs for compliance for societal concerns. 

Example of such a controversy is whether tobacco companies should close their factories, losing shareholders・ life-savings, sacking a substantial workforce and hurting the economy, or to sell a product which medical research says can cause cancer and other medical problems, and discomfort and harm other people with the inhaled smoke.  Others include alcoholic beverages, soft drinks, fast foods, motorcars, wooden furniture, air-conditioners, etc, which harm either consumers or environment. 

4.   Arguments for societal marketing

McCarthy et al (1997) remind that all consumers need their well-being and the environment, whether they realize it or not.  Thus, organizations are responsible to control and regulate their own behavior to design desirable products to give both high immediate satisfaction and high long-run benefits (Kotler et al, 1999).  Societal marketing concept does not merely refer to product industry, it also relates to services or other related disciplines. 

Customers are increasingly pressuring companies for more responsibility through exerting the influence of their purchasing power.  A survey from Business Ethics (Dibb et al, 2001) indicates that consumers are more likely to buy from a company with the best reputation for social responsibility when quality, service and price were equal among competitors. 

The recent ethical lapses at Enron, Andersen and Merrill Lynch can illustrate the fact.  Joyce Haboucha of the Enterprise Global Socially Responsive Fund (Dierdorff, 2002) emphasized that these days they use social and financial criteria in choosing their investments.  Although they are focused on producing good financial returns, they believe that corporations will affect their quality of life at many levels.
They think that the community cares about how corporations behave as social citizens as well as how they make money.  

Sirgy and Lee (1996) argue that only by addressing consumers and societal long-term interests, organizations can transform feelings of satisfaction with the product to feelings of commitment and loyalty to the organization.  Some organizations have seen that part of the operating budgets formerly used for conventional advertising and promotion can be diverted to campaigns with social responsibility, which can obtain greater effectiveness and efficiency than they would otherwise achieve (Andreasen et al, 2000).  This is aligned with the business social responsibility view of Investment to Increase Return Model as shown in Figure 3 (Wallace, 2000).  

Organizations invest in the society taking social and ethical considerations can build better company image.  Better image can help in business success and increase sales, which finally achieve surplus income to satisfy stakeholders・ needs.  This proves that the long-term value of conducting business in a socially responsible manner far outweighs short-term costs from the arguments against societal marketing. 

There are numbers of companies who are successful to balance the three considerations while practicing societal marketing concept, for example Procter & Gamble (P&G), IKEA, Levi Strauss, IBM, Fed Ex Corp, Hewlett-Packard, Motorola, etc.  IBM and P&G are used to illustrate the arguments for societal marketing.

IBM

IBM is a world leader in developing and producing information technology.  It has been ranked as number one among the .100 Best 2002 Corporate Citizens・ (Business Ethics, 2002) for its commitment to environmental protection leadership and corporate philanthropy.  IBM has also obtained many different awards for its commitment in environmental protection.  Through its corporate policy, IBM provides a safe and healthful work place, protects the environment (by improving operations and technologies to minimize waste, prevent air, water and other pollution), conserves energy and natural resources (by reusing and recycling materials), and market safety products under the environmental philosophy.  IBM・s philanthropic donations in 2000 totaled US$126.1 million, in which 31 percent was cash and the remainder was technology, technical services and reinventing education. 

Furthermore, IBM is able to integrate the social responsibility into its company culture.  It encourages employees・ involvement by offering leaves of absence for community services.  When employees contribute 20 percent of the market value of selected IBM equipment and software to a school of their choice, IBM makes up the difference.

IBM views balancing the needs of the world's people, economies and environment remains as priority as ever.  The success of such balance can be proved by the company・s financial returns in Figure 4.  Although IBM・s sales revenue is decreasing, it can maintain its net profit in 2001 as 1999.  This implies that company profits are not necessarily decreased when considering consumer want satisfaction and public interest. 

US$

2001

2000

1999

1998

Sales Revenue

85.9 billions

88.3 billions

87.5 billions

81.6 billions

Net profit

7.7 billions

8.0 billions

7.7 billions

6.3 billions

Figure 4: IBM Revenue and Net Profit from 1998-2001
(Source: IBM, 2002)

P&G

P&G is a recognized leader in the development, distribution and marketing approximately 250 brands of consumer products.  It has been ranked as number five among the .100 Best 2002 Corporate Citizens・ (Business Ethics, 2002) and has also obtained other different awards for its social responsibility to the community.  P&G has adopted sustainable development as a business approach to create long-term shareholder value by embracing opportunities and managing risks deriving from economic, environmental and social developments.  This is achieved by producing products to improve the lives of consumers, health, hygiene or convenience, and ensure to address any environmental and social issues associated with the products/services.

In addition, P&G has a corporate contributions system in place that coordinates contributions to local communities.  Contributions made by the P&G fund and corporate contribution in North America in 2000/01 was US$27.5 million.

P&G has integrated its sustainable development to economic progress, social development and environmental concerns with the objectives of ensuring a quality of life for future generations at least as good as today.  Although the company is having a decreasing financial return (Figure 5), its net profit in 2001 still has 7% returns on revenue.  It shows that the company is willing to contribute itself with acceptable profits to balance the other considerations. 

US$

2001

2000

1999

1998

Revenue

39.2 billions

39.9 billions

38.1 billions

37.1 billions

Net profit

2.9 billions

3.5 billions

3.7 billions

3.7 billions

Figure 5: P&G Revenue and Net Profit from 1998-2001
(Source: P&G, 2002)

5.   Conclusion

In order to be good corporate citizens, organizations should not only concern their own interests in economic returns, they must also build social and ethical considerations into their marketing practices.  Many of the farsighted organizations such as IBM and P&G have seen that improvements in social and community welfare can have major payoffs for the company and their commercial goals.  While organizations not paying attention to societal marketing concept would lead to hostile from the public and possible business failure.  Therefore, social responsibility becomes a vital factor in major marketing strategy decisions for the dynamic and ever-changing environments.  Organizations must balance company profits, consumer want satisfaction, and public interest to make their marketing efforts effective and efficient.


Reference Lists

Andreasen, Alan R and Drumwright, Minette E (2000), .Alliances and Ethics in Social Marketing・, Social Marketing Institute, [Online, accessed on 10 July 2002]
URL:http://www.social-marketing.org/papers/allianceJan2000.html

.100 Best 2002 Corporate Citizens・ (2002), Corporate Social Responsibility Report, Business Ethics, [Online, accessed on 10 July 2002]
URL:http://www.business-ethics.com

Carroll, Archie B (1998), .The Four Faces of Corporate Citizenship・, Bucknell University, [Online, accessed on 10 July 2002]
URL:http://www.facstaff.bucknell.edu/pagana/mg312/carroll.html

Dibb, Sally; Simkin, Lyndon; Pride, William M and Ferrell, O C (2001), Marketing: Concepts and Strategies, Fourth European Edition, Houghton Mifflin, Boston

Dierdorff, Jack (2002), .Searching for Good-Citizen Companies・, Business Week Online, [Online, accessed on 14 July 2002]
URL: http://www.businessweek.com/investor/content/feb2002/pi20020212_7952.htm

IBM (2001), [Online, accessed on 10 July 2002]
URL:http://www.ibm.com

Kotler, Philip (2000), Marketing Management: The Millennium Edition, Tenth edition, Prentice-Hall, New Jersey

Kotler, Philip; Armstrong, Gary; Saunders, John and Wong, Veronica (1999), Principles of Marketing, Second European Edition, Prentice Hall, New Jersey

McCarthy, E Jerome; Perreault, William D Jr and Quester, Pascale G (1997), Basic Marketing: A Managerial Appoach, 2nd Australasian Edition, Irwin/McGraw-Hill, Sydney

Procter & Gamble (2001), [Online, accessed on 10 July 2002]
URL:http://www.pg.com

Sirgy, M Joseph and Lee, Dong-Jin (1996), .Setting Socially Responsible Marketing Objectives: A Quality-of-Life Approach・, European Journal of Marketing, [Online, accessed on 10 July 2002]
URL:http://tisbe.emeraldinsight.com/pdfs/200253.pdf

Wallace, Alan (2000), .Two Models of Corporate Social Responsibility to Communities・, Mountain Plains Management Conference, [Online, accessed 10 July 2002]
URL:http://www.mountainplains.org/articles/mpa4.htm


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