Marketing_-_Csr_on_Paper

MARKETING CONCEPTUAL PAPER CSR as a Marketing Tool Created by: 288614 INTERNATIONAL UNDERGRADUATE PROGRAM FACULTY OF ECONOMICS AND BUSINESS UNIVERSITAS GADJAH MADA Topic Global competition, changing society, evolution of marketing theory, and many other factors have forced a company to fully utilize its resource for the best output. The condition also applied for marketing sector where marketer should give its 100% of result for the company. This leaves marketer with some option to be chosen, one of them is to using a new style of marketing, a new concept of marketing. Abstract Company Social Responsibility (CSR) has been known as a simple charity concept. The program of Corporate Social Responsibility is the social program that provides a lot of contributions in solving social problems in job opportunities, health, education, economy, and the environment. The implementation of the CSR program still faces some obstacles, namely, the program has not been standardized. Another barrier is the difference of viewpoint between the Department of Laws and Human Right and the Department of Industry. The other is that there is no clear regulation on the implementation of CSR. However, CSR program can improve the spirit of togetherness among different communities especially between the company and the stakeholders. While CSR itself can be related as an ethical effort to fulfill its responsibility towards society, the charity can also be utilized as a marketing tools for gaining marketing advantage among the stakeholders, include the target market. Introduction The term "Corporate Social Responsibility" came in to common use in the early 1970s, after many multinational corporations formed. The term stakeholder, meaning those on whom an organization's activities have an impact, was used to describe corporate owners beyond shareholders as a result of an influential book by R. Edward Freeman, Strategic management: a stakeholder approach in 1984. Pro-side argue that company make more long term profits by operating with a more social perspective (as investment), while critics argue that CSR distracts from the economic role of businesses (as burden). While some others argue, CSR is merely window-dressing, or an attempt to pre-empt the role of regulation and government over powerful multinational corporations. On the other side, marketing have evolved definition towards professionals, one of the most popular definition about modern marketing is by American Marketing Association (AMA) on 1935: “the performance of business activities that direct the flow of goods, and services from producers to consumers.” Then, in 1985, they alter the definition of marketing as “The process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods and services to create exchanges that satisfy individual and organizational objectives”. While Michael Porter (1985) write about marketing’s objective which is to achieve sustainable competitive advantage. By giving the definition a quick look, there are slight similarity between CSR and marketing objective. For many years, debate about CSR always happen, is it investment for long term advantage; in other word as a marketing tools to form a good image, or just a burden with a persona to distract company from its economic role; or just simply unnecessary effort and cost. As time goes by and business environment changed, pro-side slowly shown how CSR can be used as an investment either for long term profit or a short term advantage. I. Marketing Audit and CSR According to Baker (2003), marketing audit is a systematic appraisal of all the external and internal factors that have affected a company’s commercial performance over a defined period. The process itself is very important for marketing process and performance as the core values of marketing audit is to analyze the result of one said process. On the other side, CSR as a concept also have similar activity in the core of the process. The necessity of CSR within a company can be shown by using Social Accounting, and evaluated using Social Audit. Social accounting emphasizes the notion of corporate accountability. D. Crowther defines social accounting in this sense as "an approach to reporting a firm’s activities which stresses the need for the identification of socially relevant behavior, the determination of those to whom the company is accountable for its social performance and the development of appropriate measures and reporting techniques." As in the definition, CSR’s Social Accounting can also be included as marketing audit because social and environment condition is strongly affecting company’s commercial performance. This is the basic relationship between marketing and CSR. Moreover, using marketing audit to determine how a social accounting can influence commercial performance from a company has been common practice. As the marketing audit found there is a link between social activity, brand image, public relation, market loyalty, and also regulation fulfillment. Based on the logic above, it is clear that CSR can be put into a marketing strategy of a company as the core concept, considering that CSR can cover large part of marketing. II. CSR and Target Market Modern marketing in its way is focusing mainly on the target market. Everything starts from target market, about the target market, and for the target market. Using modern marketing concept, a marketer should do everything based on the target market, as the only most important thing for marketer is possessed by the target market. As for CSR, the reason of why CSR exist is to embrace responsibility for the company's actions and encourage a positive impact through its activities on the environment, consumers, employees, communities, stakeholders and all other members of the public sphere. The form itself is usually in a form of nature preservation, social education, cultural preservation, or even communities service. While marketing concept started from its target market, CSR mainly operates as a responsibility effort towards its consumer as one of its stakeholders by giving a positive impact. Beside a direct influence on the target market, every activity on CSR concept will also ended with target market’s recognition towards the social activity in a positive way. III. CSR as Marketing Tool After going through the analysis of both goals and focus, there should be no question anymore about how a CSR can be used as a marketing tool. The process of calculating and evaluating the performance is heavily similar between the social accounting and marketing audit. The goals and target of both subject is heavily intercrossed. While CSR focusing to giving positive impact for the stakeholder as a responsibility effort, marketing mainly focus on influencing its target market to gain the financial measurement possessed by target market. There are several things to be taken care to gain a competitive advantage in marketing: brand image, public relation, and market loyalty. Those things can be covered through integration of marketing concept and CSR activity. III.1 Brand Image Basically, brand image is the perceptions and beliefs held by consumers, as reflected in the associations held in consumer memory. For a company, brand image is a strategic asset which can determine one’s success. As the important asset, brand image helps define company/product from its competitor. Company with better brand image is clearly hold better competitive advantage. As the perception and beliefs is held in the memory, brand image can determine which product will be bought by a consumer, what are consumers’s favored from the company, and differ between a company and others. Since CSR focusing to giving positive impact for its stakeholder, including consumers, the social activity will enhance brand value, reputation, and the development of closer links with customers and greater awareness of their needs. The enhance process will stored through consumers memory to used as differentiator towards existed competitor. The Cone Corporate Citizenship Study (2002) found 89% of Americans agreeing that, when price and quality are perceived as equal, Customers then choose products they consider socially responsible. "It is more important than ever for companies to be socially responsible." Some experts also believe there is benefit of marketing using CSR as the core: Bronn & Vrioni (2001) “ having a pro – social agenda means having a powerful marketing tool that can build brand image and brand equity sector” Girod & Michael (2003) “ CSR can be a key tool to create, develop and sustained differentiated brand names”. III.2 Marketing Public Relation Marketing publication relations are all about reputation: the result of what you do, what you say, and what others say about you. PR is almost similar with brand image in term of keeping good name and present another value which differ one company with others in consumers’ perception, but more concentrated on how a company keep good relationship in term of communication with the public. This part of marketing is majorly revolving on two main points, which are to manage perceptions of consumers and communicate with the public. On the other hand, Marketing Public Relation and CSR start to bound when there is a new concern for corporation image. The combination between two come to deal with several issues that stand between a company and public’s reputation, such as: human rights, government regulation, local norm, and activism concern. CSR came as a strong foundation for PR to handle and bridged between company and public on those issues. CSR also happen to be beneficial as one of consideration in decision making tools, in PR area as the consent of CSR is toward the public importance. Moreover, when a Marketing PR integrated with CSR concept, a marketer can do a better understanding on its stakeholder, especially with the consumers. This will resulted with build solid relationship, manage its vision for the stakeholders, and maximum avoidance of conflict. Regarding the connection of PR and CSR, some experts giving their opinion: Bernays (1995) “Public relations is the practice of social responsibility.” Grunig and Hunt (1984) “public, or social, responsibility has become a major reason for an organization to have a public relations function.” Integration between marketing and CSR concept have indirectly giving birth to two popular marketing concept: III.a Social Marketing Social marketing was "born" as a discipline in the 1970s, when Philip Kotler and Gerald Zaltman realized that the same marketing principles that were being used to sell products to consumers could be used to "sell" ideas, attitudes and behaviors. Kotler and Andreasen define social marketing as "differing from other areas of marketing only with respect to the objectives of the marketer and his or her organization. Social marketing seeks to influence social behaviors not to benefit the marketer, but to benefit the target audience and the general society. Although "social marketing" is sometimes seen only as using standard commercial marketing practices to achieve non-commercial goals, this is an over-simplification. The primary aim of social marketing is "social good", while in "commercial marketing" the aim is primarily "financial". Moreover, by the integration with CSR concept, a company should consider the impact of an activity on society. Marketing can be interlinked with accommodating the needs of society. A strategic social marketing strategy is one that can actively support the cause of CSR. Based on CSR’s goal, which is to giving long term benefit toward the stakeholder include society and environment, and also in another side (may) giving long term benefit for the company for its brand image and PR, social marketing held similar goal in the long term of social good. For example, 3-month marketing campaign to encourage people to get a H1N1 vaccine is more tactical in nature and should not be considered a perfect social marketing. Whereas a campaign that promotes and reminds people to get regular check-ups and all of their vaccinations when they're supposed to encourages a long-term behavior change that benefits society, therefore it can be considered as perfect social marketing. III.b Green Marketing According to the American Marketing Association’s workshop in 1975, green marketing is the marketing of products that are presumed to be environmentally safe. Thus green marketing incorporates a broad range of activities, including product modification, changes to the production process, packaging changes, as well as modifying advertising. Yet defining green marketing is not a simple task where several meanings intersect and contradict each other; an example of this will be the existence of varying social, environmental and retail definitions attached to this term. Other similar terms used are Environmental Marketing and Ecological Marketing. In other words, green marketing is dealing with combining products and CSR concept to giving stakeholders positive benefits such as environmental and consumers’ health. According to market researcher Mintel, about 12% of the U.S. population can be identified as True Greens, consumers who seek out and regularly buy so-called green products. Another 68% can be classified as Light Greens, consumers who buy green sometimes. This numbers shown, how big a marketing opportunity when a marketer decide to use green marketing concept. The numbers shown is boosted very high in the previous years regarding with the global warming issues. On a note, the 12% True Greens can be said as niche market, thus it serve higher chance to success but a limited opportunity. One of the popular examples of green marketing: Companies are offering more eco-friendly alternatives for their customers. Recycled products for example, are one of the most popular alternatives that can benefit the environment. These benefits include sustainable forestry, clean air, energy efficiency, water conservation, and a healthy office. Shoplet, the E-commerce business and office supply company offers a web tool that allows you to replace similar items in your shopping cart with greener products. However, some critics and concern have been delivered as the combination of CSR and marketing can endanger some points such as: Nature of business Milton Friedman and others have argued that a corporation's purpose is to maximize returns to its shareholders, and that since only people can have social responsibilities, corporations are only responsible to their shareholders and not to society as a whole. Although they accept that corporations should obey the laws of the countries within which they work, they assert that corporations have no other obligation to society. Some people perceive CSR as incongruent with the very nature and purpose of business, and indeed a hindrance to free trade Motives Some critics believe, that the concern is sometimes companies claim to promote CSR and be committed to sustainable development but simultaneously engaging in harmful business practices. CSR also said to distract the public from ethical questions posed by their core operations. They argue that some corporations start CSR programs for the commercial benefit they enjoy through raising their reputation with the public or with government. Stakeholder priorities Increasingly, corporations are motivated to become more socially responsible because their most important stakeholders expect them to understand and address the social and community issues that are relevant to them. Understanding what causes are important to employees is usually the first priority because of the many interrelated business benefits that can be derived from increased employee engagement (i.e. more loyalty, improved recruitment, increased retention, higher productivity, and so on). Key external stakeholders include customers, consumers, investors (particularly institutional investors), communities in the areas where the corporation operates its facilities, regulators, academics, and the media. Conclusion From the explanation above, it is clear, while CSR can become a powerful marketing tools through the use of brand image and public relation on social activity term as the competitive advantage. Some critics and concern also have stormed CSR concept upon some points. However, it is marketer’s job to choose and overcome the critics of the CSR marketing. CSR’s integration also resulted with evolution of the old “commercial” marketing concept to become more socially care. Reference Baker, M. (2003) "Companies in Crisis- What to do when it all goes wrong." Kotler, Philip and Gerald Zaltman. Kotler, P. & Zaltman, G. (1971). Social marketing: an approach to planned social change. Journal of Marketing 35, 3-12 Dahl,Stephan. Introduction to Social Marketing http://www.youtube.com/watch'v=zl0tR9YlJ1Y Kotler, Phillip and Kevin Keller (2009). Marketing Management 13th Edition. Ottman, Jacquelyn (May 2002). "THE REAL NEWS ABOUT GREEN CONSUMING" http://www.allbusiness.com/sector-92-public-administration/administration/1183444-1.html Weinrich, Nedra. Hands-On Social Marketing: A Step-by-Step Guide to Designing Change for Good (2nd Ed.) http://www.social-marketing.com/ http://www.greenmarketing.com/ http://www.creasionbrand.blogspot.com/2010/08/csr-penting-yah.html http://www.google.com http://mamrh.wordpress.com/2008/07/21/53/