COURSE: CODE: STUDENT NO: SUBMISSION: DATE
STRATEGIC MARKETING THEORY BUSA7078 9506134M TAKE-HOME EXAM 2012 MARCH 27
TITLE The Coca Cola company’s sustainability initiatives on water management in developing countries: Environmental window-dressing initiatives - driving Greenwashing marketing campaigns Keywords: Sustainability dimensions, Responsible Marketing, Societal Marketing Strategy, Responsible Consumption, Brand Reputation
WORD COUNT: 2990 1/13
INTRODUCTION Today at least 1.1 billion people in developing countries have inadequate access to water whilst 2.6 billion people lack basic sanitation (Shah 2010). The water crisis has also affected health matters of human beings with half of the bed-occupants in hospitals noted as suffering from water-related illnesses. The costs associated with health spending, productivity losses and labour diversions, are greatest in some of the poorest countries with Sub-saharan Africa loosing about 5% of its GPD to aid relief resulting from water scarcity (Shah, 2010). The need to chance current ways in which essential resources are used and water as a resource has become mandatory (Mark, Cristiano, Vicente, Karel and Totti, 2010). Against the backdrop of water scarcity has been a growing base of consumers who have become health-conscious towards consumption of non-fizzy or carbonated, sugared-drinks. This has spearheaded the growth of health conscious beverage segments such as bottled water, juices, sports as well as fruit drinks (Australian Review Case Study Centre, 2012). To Coca Cola, given the invaluable role water plays in the production and packaging of its products, not only for bottled water brands, it is clear that the company would simply not exist without water. The need for the company to pursue sustainability strategies aimed managing water shortages is critical to the survival of the business. In this paper the question of how sustainable are Coca Cola’s initiatives in water management in developing countries given the global shortage of water will be answered. The paper will argue 3 key objectives: firstly, Coca Cola has set out to turn water into a profit-driven commodity like oil to the degradation of the developing countries’ environments. Secondly, the paper will assert that Coca Cola’s global sustainable initiatives are greenwashing marketing initiatives which are false claims intent on driving brand reputation management rather than achieve the holistic ethical purpose of sustainability into the future for water management. Lastly, the paper will highlight the growth of the Ethical Beverage Consumer and the role this individual is
WORD COUNT: 2990
playing using a global platform in driving the Coca Cola company to be accountable in the role they have played in environmental degradation to date in India. It is imperative that this paper starts with an outline of the mandatory role of global companies within the 21st century in driving the discipline of Responsible Marketing. This understanding, which will be constructed within the context of the growing concern for accountability on sustainability initiatives by companies, will then enable a thorough critical analysis of Coca Cola’s sustainability efforts to date. BACKGROUND In a paper aptly titled “Marketing and Sustainability”, Jones, Clarke-Hill, Comfort and Hillier (2008) profile the varied arguments to date regarding the relevance of sustainability and marketing to each other respectively. Sustainability is defined by McCann-Erickson (2007) (Jones etal 2008) as an all inclusive term for everything to do with responsibility for the world in which we live in. This definition emphasises the 3 dimensions’ roles of sustainability i.e. economic, social and environmental in driving the pursuit of consuming differently and consuming efficiently. Lastly, the definition outlines that it is during this consumption that the global environment must be protected while not jeorpardising the needs of future generations. These 3 dimensions have continually been referred to by other research scholars when the construct of sustainability is discussed (Sheth, Sethia and Srinivas 2010). However, in arguing a comprehensive, all -embracing view of sustainability, Closs, Speier and Meacham’s (2010) definition which encompasses the 4 dimensions is worthy of notation in this regard. Closs etal (2010) identify the 4 key dimensions to ensuring this as Environment, Economics, Ethics as well as Education. Of relevance to the paper, is the review of the Ethics dimension which focuses strongly on the issues relating to Corporate Social Responsibility (herein referred to as CSR). CSR refers to the obligations to society and
WORD COUNT: 2990 3/13
stakeholders within societies impacted by the firm (Chiara and Spena, 2011). When a company is driving a comprehensive sustainable strategy, it is in essence actioning initiatives across all 4 dimensions. Within the ethical dimension context of these initiatives, this implies the involvement of employees as well as community involvement in actioning ethical sustainable projects aimed at addressing or providing solutions to meeting the needs of the present without compromising the ability of the future generations (Closs etal, 2010). The relevance of sustainability with marketing is in fact in the definition of the growing construct known as “sustainable marketing” (Jones etal 2008). Sustainable marketing, as defined by Charter et al (2006) is expressed as creating, producing and delivering sustainable solutions with higher net sustainable value whilst continuously satisfying customers and other stakeholders (Jones etal 2008). The obvious link, cites Jones etal (2008), is in the growing number of companies who are looking to emphasise their commitment to sustainability in their pursuit to differentiate themselves from their competitors. In turn, by so doing they would also be elevating as well as strengthening their corporate brand and its reputation. This can be achieved through the utilisation of societal marketing strategies which allow companies to differentiate themselves from competitors by creating an emotional bond with consumers (Chattananon, Lawley, Trimestsoontorn, Supparerkchaisakul and Leelayouthin, 2007). Chattanon etal (2007) argue that societal marketing has been shown to create competitive advantages for a company by building brand awareness; enhancing corporate image as well as stimulating consumer’s purchase intention. Societal marketing is best understood to be a concept that calls on marketers to fulfill the need of the target audience in ways that enhances the well-being of consumers and society as a whole whilst meeting the company’s objectives (Chattananon etal, 2007). In implementing varied programs under this intent of Societal marketing, CSR defined already has been one example in driving the involvement of the organisations in internal and external stakeholders’ aimed at benefiting a charity. What remains conclusive from
WORD COUNT: 2990 4/13
a research perspective then is the undeniable existence of a relationship between the implementation of a societal marketing initiative and the attitude formed towards the corporate’s brand (Chattananon, 2007). This is then a key strategy to deploy in pursuit of building or improving or addressing a company’s reputation. Given the global water crisis unpacked at the commencement of this paper, the role of Responsible Marketing as a discipline becomes that much more important to review when companies are constructing their Societal marketing strategies. Responsible marketing is “socially conscious marketing where focus is o reviewing the negative effects of marketing activities of a company on its society to date with the intent of mitigating those effects” (Wood, Pitta and Franzak, 2008: #427). Wood etal (2008: #427) emphasise that this is done with a conscience enabling consumers who engage with the company’s products to have “ease of choice, ease of use as well as ease of heart” in the process. If anything then, again we see how Responsible Marketing can also play a meaningful role in overcoming negative feelings towards a company or a brand and thereby help influence positive imagery towards the brand. Stated differently, the link between addressing perceptions of the brand, inherently taking care of the brand’s reputation, exists strongly with the consciouslycentric strategies of Responsible Marketing initiatives. When an organisation is armed with the facts and figures availed at the beginning of this paper with respects to global water crisis, it is clear that sustainable efforts which are initiated have to also enable driving of Responsible consumption of the water category. Responsible consumption as a theory refers to “rational and efficient use of resources with respect to the global human population” (Sodhi, 2011:#180). Here marketers work hard to encourage consumers to “do more with less”. Is it then possible for global companies to develop sustainable strategies which utilises societal marketing initiatives to address the global water crisis. Is it possible to also
WORD COUNT: 2990
encourage Responsible consumption whilst ensuring the reputation of the brand’s offering remains intact? To answer this question, the Coca Cola company’s sustainable strategy in addressing the management of shortage of water globally merits our critical analysing.
THE COCA COLA COMPANY WATER STRATEGY In revisiting the company under review, Coca Cola, it is clear that the company’s activities resound a company that is holistically intent on driving the course of water management effectively (Australian Review Case Study Centre, 2012). Through the company’s Global Water Stewardship Initiative, a strategy with four-pronged objectives was developed. In turn these objectives were noted for implementation through focus on 3 main areas namely: Improving operational efficiencies; Maintaining Sustainability as well as through Partnerships. It is undeniable that these 3 areas can be identified nor can one question their existence or even activations of the outlined initiatives as documented in the 2 case studies of Coca Cola: Water, water everywhere and Make every drop matter. It would deem fitting to conclude that Coca Cola is an organisation which has pursued an Innovator leadership approach in addressing water shortages globally by championing a number of key initiatives proactively especially within the Environmental dimension of Sustainability. A firm that pursues an Innovator Leadership approach is defined by Closs etal (2010: #108) as a company that “establishes sustainability as a strategic priority and often seek best practice performance regarding the manner in which each sustainable dimension is implemented.” With reference to the case studies notations, CCA in Australia is known for example in driving ethical dimension of sustainability in periodic reporting to the local governments regarding its water levels’ usage to date. It has been noted of its championing of environmental dimension of sustainability strategy through technology-centric initiatives. Increasing safe water
WORD COUNT: 2990 6/13
supplier, promoting sanitation and hygiene, enhancing and conserving local water resources by the company, are initatiatives which are well resonated from reviewing both case studies (Australian Review Case Study Centre, 2012) However, a review of the Coca Cola company’s operational conduct in some of the developing countries, begs for questioning the extent of ethical and moral accountability of the organisation in staying true to its Sustainability plans.
THE RISE OF THE ETHICAL BEVERAGE CONSUMER India is well known for its aggravating water crises with in fact nearly a third of its well over 570, 0000 villages declared as water-deficient areas (Chaudhary, Jacks and Gustafsson, 2002). In fact according to a report prepared jointly by UNICEF ad WWF, India will become a “water-stressed” nation by 2017 (Chaudhary etal (2002). Yet a closer look at Coca Cola company’s activities in India highlighted problems also noted around the world (Shah 2010). Coca Cola, was found to have been pumping water from local well inciting farmers to keep digging for water even under dangerous conditions. For every litre of drink from Coca Cola, some 3 litres of water are needed this in a country that is already in dire straits constraints of water shortage. Shah (2010) confirms that when Coca Cola was questioned regarding its lack of ethical behaviour, the company chose to highlight all the activities it is pursuing to date in being a responsible company. The company also denied contributing to water levels in the country, in spite of government figures confirming differently. The rise and rise of anti-Coca Cola sentiment has since grown with a number of villagers and organisations mobilizing under the banner of People’s Committee for Struggle intent on pursuing the driving out of Coca Cola from India (http:// wwww.indiaresources.org/campaigns/coke/2004/risingstruggles.html.) Farmers in fact
WORD COUNT: 2990
hold the company accountable for the declining ground water levels in some of the regions resulting in harm to local agriculture as well as diminishing livelihoods. Coca Cola’s response to these protests, in 2004, was to provide tricycles to physically handicapped kids, provided scholarships to kids in 13 schools in the area where the protests where intensifying. In addition they also provided sewing machines to 50 widows - activities which were aimed ay creating goodwill for the company and undermining the Anti-Coke movement of of at least 22 villages who demanded that a Coca Cola plant be shut down. In 2003, experts in the Centre for Science and Environment, a New Delhi-based NGO, tested and confirmed that Coca Cola and Pepsi’s drinks contain unacceptable levels of pesticide residues. Coca Cola exceeded its rival with contaminants’ content which exceeded the norms by 45 times according to the findings (http:// www.indiaresources.org/bnews/2003/4725.html). According to The Economist (2005) although Coca Cola was not the problem, however an Indian parliamentary committee has since been commissioned to develop the world’s first pesticide standards for soft drinks. This move has been opposed vehemently by Coca Cola and its Pepsi companies (http://www.indiaresources.org/bnews/2003/4725.html THe number of incidents truly positioning the Coca Cola brand in a negative manner are growing at an arm’s length including the unauthorised dumping of hazardous waste which Coca Cola later denied as not harzadous (http://www.indiaresources.org/news/ 2005/1062.html). In the midst of these incidents, the rise of the ethical consumer has emerged. This consumer has enabled the convergence of all villagers’ voices into one voice. All agree to the mandate that Coca Cola “is stealing water, poisoning the land, selling drinks laced with pesticides, destroying lives, destroying livelihoods and communities across India.” Coca Cola considers India as vital to its plans for global growth and so it has had to work hard in fending off a Mr. Srivastava’s global rallying. Mr. Srivastava, is the global
WORD COUNT: 2990 8/13
voice for the voiceless in India on Coca Cola’s activities to date. With 2004 having achieved the shutting down of one of Coca Cola plant, Mr Sreivstava, a one-man NGO company, is now known for rallying support not just in India but also in the US and Europe. Using the global platform, Indians are finally conveying the struggles they put up with as a result of Coca Cola’s water-shortage and pollution activities. Finally, India is able to inform the world of Coca Cola’s waste disposal practices which polluted the land and the water in surrounding areas. The world finally got to hear that the company failed to conduct tests on a dumping site used by its biggest plant in India ,only doing so after a Wall Street Journal reported the case (http://www.indiaresources.org/news/ 2005/1062.html). In fact a study done by the company itself concluded that the company’s selection of where plants were located was based purely on “businesscontinuity” perspective with no thoroughfare consideration to the community at large. The Corporate Accountability International, herein referred to as CAI, is also another activist group which has turned its attention to Coca Cola (The Economist, 2005). The group argues that the bottled-water business is a misleading marketing campaign which has in fact undermined the confidence in tap water. These similar sentiments are articulated as people “paying a high price” for deception by Folsom (2006). Folsom (2006) outlined that CAI has intensified its “Think outside the bottle campaign” which is aimed at directly challenging the marketing muscle and myths of the bottled water industry. After all, Folsom (2006)concludes, more than a quarter of bottled water comes from public tap water. India’s formidable community campaign to hold Coca Cola accountable for its environmental abuses leaves no further questioning with respects to Coca cola’s action plans of its strategy on sustainability on water management in India. The latter deserves the labeling of its strategic efforts as “Greenwash.” Greenwashing “can make a company to appear more environmentally friendly that it really is (Sustainability Lecture Notes, 2012). The concept, according to The Economist (2005), implies environmental window-dressing.
WORD COUNT: 2990
This is exactly what Coca Cola has continued to do when responding to the growing international scrutiny. It fostered ahead with a Corporate Social Responsibility campaign intent on creating and maintaining an image of itself as a “water steward”. According to cokejustice.org, “nothing could be further from the truth.” Their written sustainability intent has not materialised into actionable as well as accountable activities that are founded on Ethical dimensions of what is deemed to be a globally-sound sustainability program in India. If anything else, they have merely been greenwashing marketing activities window dressing unethical behaviour in taking advantage of unregulated environments in developing countries to further their profits’ objectives.
FUTURE IMPLICATIONS A legislative framework needs to be developed to independently monitor the sustainability strategies being deployed by companies within developing countries. Further research confirming the origins of packaged bottled water needs to be undertaken with the intent of creating legislation aimed at banning bottled water should the results confirm a majority of bottled water brands coming from what Folsom (2006) refers to as public tap water well-source. Water crisis global mandates a much more stringent global legislative framework for companies selling bottled water. If over a billion people are already in water-stressed areas surely sourcing limited water and packaging it to be sold is degrading the environment. It also begs for questioning the ethicalness of selling that which should be a basic human right’s access to.
CONCLUSION The water crisis globally is mostly felt in developing countries where at least a billion people do not have easy access to this basic human right. This paper argued that there is a need to develop sustainable strategies aimed at managing water usage and
WORD COUNT: 2990 10/13
resources of water production by global companies. The role of global companies is to carry such sustainable strategies utilizing a comprehensive 4-dimensions action plan encompassing Environmental, Economic, Education as well as Ethical whilst building the reputation of their brands by deploying societal marketing strategies. Coca Cola’s questionable and environmental abusive sustainability activities in India were highlighted. This confirmed their Environmental window-dressing use of Greenwashing marketing campaign efforts. Lastly, this also confirmed the existence and rise of an Ethical consumer, in India, who demanded the exiting of Coca Cola in protecting the limited resource of water in their country. The existence of such a consumer defines the consumer of the future: demanding what is rightfully theirs.
WORD COUNT: 2990
REFERENCES Australian Review Case Study Centre, (2012) Water, water everywhere Australian Review Case Study Centre, (2012) Make every drop matter Bonn, I. and Fisher, J. (2008) Sustainability, the missing ingredient in strategy, Journal of Business Strategy, Vol. 32 (Issue 1), pp. 5-14 Chattananon, A. Lawley, M. Trimestsoontorn, J. Supparerkchaisakul, N. and Leelayouthin, L. (2007) Building corporate image through societal marketing programs, Society and Business Review, Vol. 3 (Issue 3), pp. 230-253 Chaudhary, Jacks and Gustafsson, (2002) An Analysis of ground water vulnerability and water policy reform in India, Environmental Management and Health, Vol. 13 (Issue 2), pp. 176-193 Chiara, A. and Spena, T (2011) CSR strategy in multinational firms: focus on human resources, suppliers ad community, Journal of Global Responsibility, Vol. 2(Issue 1), pp. 60-74 Closs, D. Speier, C. and Meacham, N. (2010) Sustainability to support end-to-end value chains: the role of supply chain management, Journal of Academy of Marketing Science, Vol. 39 (Issue 1), pp. 101-116 Folsom, S. (2006, Last Updated 2006) Corporations Tap Public Water, last accessed 26.03.2012 http://www.thirdworldtraveler.com/water/Corps_Tap_Public_Water.html Jones, P. Clarke-Hill, C Comfort, D and Hillier, D (2008) Marketing and Sustainability, Marketing Intelligence and Planning, Vol. 26 (Issue 2), pp. 123-130
WORD COUNT: 2990
Mark, B. Cristiano, C. Vicente, C. Karel, H. and Totti, K. (2010) Facing the Future: time for the EU to meet global challenges. Shah, A (2010, Last Update Date 2010) Water and Development, last accessed 26.03.2012 http://www.globalissues.org/article/601/water-and-development) Sheth, J. Sethia, N. and Srinivas, S (2010) Mindful consumption: a consumer-centric approach to sustainability, Journal of Academy of Marketing Science, Vol. 39 (Issue 1), pp. 21-39 Sodhi, K (2011) Has marketing come full circle? Demarketing for sustainability, Business Strategy Series, Vol. 12 (Issue 4), pp. 177-185 World Population Awareness (2010, Last Updated 2010) Sustainability and Water, Last accessed 26.03.2012 http:// www.overpopulation.org/water.html The Economist (2005, Last Updated 2005 ) In hot water, Last accessed 26.03.2010 http://www.economist.com/node/4492835 Wood, Van R. Pitta, D. and Franzak, F (2008) Successful marketing by multinational firms to the bottom of the pyramid: connecting share of heart, global “umbrella brands”, and responsible marketing, Journal of Consumer Marketing, Vol. 25 (Issue 7), pp. 419-429 http://www.cokejustice.org http://www.indiaresource.org
WORD COUNT: 2990