Sustainable market orientation

Traditionally, market orientation (MO) focuses on microenvironment and the functional management of an organisation. However, contemporary organisations have widened their focus to incorporate more roles, functions and emphasis on the macro environment.Elliot, G.R.(1990)The marketing concept- Necessary but sufficient? An environmental view. European Journal of Marketing., 24, 20-30. Firms have been concerned with short run success and often not taken into account the long-run ecological, social and economic effects from their activities. Despite growth in the MO concept, there is still a need to reconceptualise the concept with a greater emphasis on external factors that influence a firm.Mitchell, R.W., Wooliscroft, B., & Higham, J. (2010) Sustainable Market Orientation: A New Approach to Managing Marketing Strategy. Journal of Macromarketing. 30 (2) 160-170

Sustainable market orientation (SMO) combines the principles of MO with a macro marketing systems management approach, a stakeholder approach to integrated corporate social responsibility and marketing strategy, and the use of the sustainability management concept. SMO will serve to move corporate management beyond the micro economic and functional management prescribed by MO and provide a more comprehensive, stakeholder based approach. Mitchell et al. believe an avenue for the reformulation of MO to create SMO lies in the synthesis of MO, macromarketing, corporate social responsibility (CSR), and sustainable development management concepts.

Background

Unsustainable practices using traditional ideas have a number of consequences with detrimental effects to the external environment. Creative destruction implies destruction is essential for sustained economic growth. Whilst this may be economically beneficial, in many instances it can have overarching negative impacts on the social and ecological environment.Tonts, M. & Greive, S. (2002) Commodification and creative destruction in the Australian rural landscape: the case of Bridgetown, Western Australia. Australian Geographical Studies, 40, 58-70. Marshall Berman's take on creative destruction identifies that everything is built to be later torn down.Berman, M. 1983. All that is solid melts into air: The experience of modernity, Verso. This capitalistic approach relates to the idea tragedy of the commons. When firms and individuals only think about their own self-interest as opposed to society as a whole, it will result in over exploitation of finite resources with long term consequences.Daniels, B. (2007) Emerging Commons and Tragic Institutions. Envtl. L., 37, 515.

Rise of sustainable marketing concepts

The issues raised in these traditional self-motivated approaches pave the way for a new wave of concepts and theory.

Ecological economics promotes preserving natural capital with emphasis on sustainability and sustainable development.Soderbaum, P. (2004) Politics and ideology in ecological economics. Online Encyclopaedia of Ecological Economics. The potential negative impacts of creative destruction and tragedy of the commons are central to what ecological economics addresses, specifically the earth's carrying capacity.Harris, J. M. (2002) Environmental & natural resource economics. Recherche, 67, 02. Self invested firms without sustainable practices no longer have a place in the modern corporate world.

In terms of marketing, this shift has led to the development of concepts trying to promote and incorporate these ideas see: green marketing, triple bottom line, sustainability marketing, sustainability brand, and CSR. This shift towards adopting sustainable practices is both consumer and company driven.Mendleson, N & Polonsky, M.J. (1995) Using strategic alliances to develop credible green marketing. Journal of Consumer Marketing, 12, 4-18. Governments are also looking for more long run approaches towards the achievement of sustainability.Dabholkar, U. (1989). Environmental perspective to the year 2000 and beyond: A framework for world development. Environmental Conservation, 16, 49-53. The Brundtland Commission or Our Common Future which was published in 1987 from the United Nations World Commission on Environment and Development. It is crucially important to the conceptualisation of SMO and is commonly seen as defining sustainable development. It has been the catalyst for the emergence of work on sustainability. It signaled the surfacing of issues regarding sustaining the environment as critical to international governance.Sneddon, C., Howarth, R. B. & Norgaard, R. B. (2006) Sustainable development in a post-Brundtland world. Ecological Economics, 57, 253-268.

Definition

SMO differentiates from other sustainable business strategies by focusing on the institutional marketing management aspects of the firm and taking a more stakeholder based approach to corporate management. Through the use of sustainable management principles the firm is able to: Achieve objectives such as market competitiveness and profitability through the application of economically, socially, and environmentally responsible value systems; Use marketing strategies that anticipate and meet customer needs through the effective integration of comprehensive environmental intelligence with operational and marketing systems; Generate positive, long-run outcomes in economic, social, and environmental terms that are acceptable for primary stakeholders who derive direct financial benefits from the firms and secondary stakeholders who gain indirect economic, social, and environmental benefits.

Theoretical foundations

Theoretical foundations for SMO have come from three prior sustainable marketing models.

"Socio-ecological market orientation" is the first theory that has led to the conceptualisation of SMO.Sheth, J.N. & Parvatiyar, A. (1995) Ecological imperatives and the role of marketing. Environmental marketing: Strategies, practice, theory, and research, 3-20. Social and ecological problems that arise from a free market approach could be mitigated by developing a framework of social, political, economic and ecological norms agreed upon corporations and society that govern the marketing based economy. However, it has a focus on corporate environmental marketing management, as opposed to sustainability and this concept relies on government regulation to ensure compliance.

A second, academically popular, approach relates to green corporate marketing strategies and lifecycle ecological management of product and service management.Fuller, D. A. (1999) Sustainable marketing: managerial-ecological issues, Sage Publications Thousand Oaks, CA. However, this approach, whilst recognising the importance of incorporating environmentally responsible management fails to incorporate social, economic and environmental management aspects that are paramount to sustainable development.

A third approach to sustainable marketing is using a macro marketing approach to sustainable corporate marketing. This criticises the traditional micro and short term economic strategies and its lack of consideration for externalities and costs associated with environmental deterioration. What is fundamental to this approach is that despite company restraints, sustainable marketing practices can improve efficiency within corporations and looks to trade off between commercial and environmental concerns.

Framework

Synthesis of market orientation and sustainability

Market orientation has several definitions; Narver and SlaterNarver, J. & Slater, S. (1990) The Effect of a Market Orientation on Business Profitability. Journal of Marketing, 54 (4), 20-35. discuss MO in terms of culture and the fundamental characteristics of the organisation. Kohli and Jaworski,Kohili, A. & Jaworski, B. (1990) Market orientation: The construct, research propositions and managerial implications. Journal of Marketing, 54 (2), 1-18. 1990 refer to MO as the organisation wide information generation and distribution and the appropriate responses to this information considering current and future customer needs. Key components of MO include market intelligence gathering and synthesis of market information to develop and implement competitive profitable marketing strategies.Cano, C., Carrillat, F. & Jaramillio, F. (2004) A meta-analysis of the relationship between market orientation and business performance: Evidence from five continents. International Journal of Research in Marketing, 21, 179-200. A market oriented business knows that to maximise its long-run performance it must build and maintain long-running mutually beneficial relationships and be effective in creating sustainable competitive value for their customers.

It has been noted MO has a need to address the interests of a spectrum of social, political and business (environmental) stakeholders by corporate management. Its current emphasis places internal corporate dynamics as the way to achieve efficiency and profitability. The combination of MO's emphasis on internal corporate dynamics with an added reliance on long-term external social and ecological interactions creates the concept of SMO. SMO allows companies to build on advantages gained through an MO strategy to create a greater alignment of long-term commercial performance with the interests of a wider range of stakeholders. The model of corporate SMO provides for a more comprehensive, stakeholder based approach to corporate management.

Macromarketing

An early version of sustainable marketing was proposed by van Dam and Apeldoorn through the combination of ecological marketing, green marketing and sustainable marketing, resulting in the concept 'environmental marketing'. Furthermore, Kilbourne, McDonagh and ProtheroKilbourne, W., & McDonagh, P. (1997) Sustainable consumption and the quality of life: A macromarketing challenge to the dominant social paradigm. Journal of Macromarketing, 17 (4), 4-23. recognised the dilemma of corporate reliance on the dominant social paradigm and micromarketing. A new marketing paradigm in which macromarketing takes the central role was suggested with the emphasis placed upon business embeddedness in social relationships. It was said corporate marketing management should manage economic, social, cultural and environmental considerations, however marketing practitioners focused on green marketing and overlooked these broader social and environmental responsibilities required. This is where macromarketing literature distinguishes MO from SMO. SMO combines the pursuit for economic benefits with the alignment of corporate marketing activity with social and environmental normsVarman, R. & Costa, J. A. (2008) Embedded Markets, Communities, and the Invisible Hand of Social Norms. Journal of Macromarketing, 28, 141-156. and offers a more comprehensive framework for sustainable marketing. The framework is supported by social, environmental and economic responsibilities.

Corporate social responsibility

As early as 1969, LazerLazer, W. (1969) Marketing's changing social relationships. Journal of Marketing, 33 (3), 3-9. recognised a need to bridge the gap between the profit motive and social responsibility. Orlitzky, Schmidt, and RynesOrlitzky, M., Schmidt, F. L. & Rynes, S. L. (2003) Corporate Social and Financial Performance: A Meta-analysis. Organization Studies, 24 93), 403-441. found corporate social performance and corporate financial performance are interlinked. MO holds little commitment for corporations to meet the social and environmental expectations of society. The importance of the combination of corporate social and economic responsibility with environmental responsibility is accounted for in the SMO model thus providing a more holistic approach to corporate marketing management.

Sustainable development