Credo

What does sustainable Marketing mean?

Marketing is the economic explanation for the principle according to which companies or organisations operate. It means to meet the prevailing human needs with an offer to satisfy them. Therefore, marketing is the basis of the existence of companies and organisations in market-oriented social systems. It starts with the design and presentation of a stand operator’s range of products at a local marketplace and ends with the establishment of commercial enterprises, as well as of non-profit organisations. From a theoretical point of view, religious organisations also conduct marketing. They satisfy a basic human need, the faith. Religions exist on the basis of this need. In the respective cultural areas, the various churches have developed a range of services thereon tailored to help people satisfy their need to believe. Thus, over a long period of time, this business model church has established itself as the organisational form of religion.

Each entrepreneur who has established a business model is constantly engaged in optimising his or her offer in order to gain enough customers. She or he conducts marketing and profitability is the measure of whether the company operates successfully. Thus, it is the ethics and morals of the acting persons, determining on whether the use of production resources is responsible or not. Historically, with the beginning of industrialisation, economic science has also been concerned with the description of the mechanisms of action of the production factors of companies. From this, the concept of the so-called ”marketing mix” (product, price, communication and distribution policy) emerged over time as a theoretical explanatory model.

A Trend toward man-made cutting of product life cycles

Through success and the growing size of the North American national economy since the mid 19th century, its economic policies and strategies have also gained a larger relevance. At the beginning of the twentieth century, a strong orientation towards profit maximization by mass production emerged in the United States. This was accompanied by the strive for market power through size. Skalierungseffekte) heraus, mit damit einhergehendem Streben nach Marktbeherrschung durch Größe. Diese Marketing-Strategie setzte sich dann in der Automobilindustrie durch, als General Motors (GM) den bisherigen Marktführer Ford verdrängte. Ford hatte bis dahin Wert auf Qualität und Langlebigkeit seiner Fahrzeuge gelegt und war damit lange unangefochtener Marktführer. Im Kern war das neue Geschäftsmodell von GM die Umstellung auf die bewusste Verkürzung von Produktlebenszyklen (sog. geplante Obsoleszenz) durch die Konstruktion und Herstellung weniger langlebiger Produkte. Das Ziel war damit den Kunden im Zeitverlauf öfter ein Produkt verkaufen zu können und somit den Produktumschlag des Unternehmens zu erhöhen. Damit verbunden war gleichzeitig die Verbreiterung des Sortiments auf Basis von oft nur das Design betreffenden Produktvariationen. Dies wurde mit mehr Werbung und Rabattaktionen flankiert, um bei den Kunden immer wieder die Begehrlichkeit zu wecken. Da aber diese sogenannten Produktwiedereinführungen nicht auf qualitativen Produktinnovationen basieren, werden die Produkte beliebig und austauschbar, wodurch die Kundenbindung sinkt. So musste GM inzwischen vom Staat durch Subventionen aus der Insolvenz geholt werden.

In Europe, the orientation of marketing models towards the acceleration of growth by artificial reduction of product life cycles began decades after it did in the United States of America. After the world war II, the industries still largely worked on manufacturing and marketing methods which had evolved indigenous for decades. In Germany, the industries relied upon the ”know-how“ of the engineers and the skills of its craftsmen to manufacture versatile and durable products. Only in the eighties, management consulting companies with American philosophies and origin introduced the idea of artificial reduction of the product life-cycles. In Germany, this first took place in primary industries like automotive and electrical engineering. Other leading countries followed the trend. More and more companies from appending industries and supply chains followed soon. Today, in the automotive sector, almost all manufacturers are aligned with this marketing strategy.

As an example of planned obsolescence, let us look at the case of the desktop printer which was introduced into households with the advent of information technology. The manufacturer offers a printer for sale at a reduced price to lure customers in to buy the product. It has a refill system of ink and toner cartridge which is specific to that particular manufacturer’s design. Thus, when the cartridge needs a refill, one can only obtain it from the same manufacturer, who can now control the scale of production of the cartridges to meet the replacement demand. The manufacturer now makes a profit by the excessive pricing of the print cartridges. Within no time, this business model settled in as the new paradigm within which industries would operate in their economic course. Consequently, young and fresh marketing talents were trimmed in their ideologies towards this new marketing philosophy.

Consequences of planned obsolescence

Since product life-cycles amount to a few years, the long-term effects of it do not show until significantly later. Given the time scale, the consequences are therefore not attributed to their original cause. As a result, with time, shorter product life-cycles lead to higher consumption of materials and resources. In the light of present challenges regarding nutrition, environment, climate, etc. the need to manufacture more durable, recyclable and user-friendly products arise. To achieve this goal, the complex and convoluted causes that hinder the elimination of planned obsolescence need to be understood because many present-day sectors in the national economies have become dependent on planned obsolescence.

Thus, market research has focused more on capturing fast-moving trends. Nowadays, brief questionnaires about product preferences provide illustrative results on the press of a button. Thereby, the psychological opinion research, although informative, often does not tend to concur with other statistical surveys. For example, although statistical surveys display a trend of usually 1-2 people riding a car, customers still tend to prefer a car with 4 seats. The customer’s rationale behind this decision is that he wants to be prepared for the rare cases in which he might have several people to accommodate for a ride. Such latent customer needs often have a crucial impact on the purchase decision. Besides this, there could be other reasons why customers prefer a car with four seats which need to be interpreted. However, if a company fails to attract buyers in the relevant customer segment because of misinterpretation of customer needs, the chances to reach the required quantities to be sold decreases. Those missed out quantities, on the other hand, can be crucial to reach more profitable areas within the economies of scale. Consequently, only 20% of all product innovations have a successful outcome.

In the company personnel, the switch to short-term product cycles was aided by implementing profit-related stipendiary components (so-called bonuses) in all the suited business units such as procurement, sales, and others. To compensate for the expenses of bonuses, consultation fees, higher advertising budgets, etc. in the overall balance, the personnel costs were reduced in low-wage sectors. This is done, amongst other ways, by the outsourcing of the low-wage personnel to new subcontractors, which do not share their collective agreements with the major companies. One can see the establishment of personnel leasing in this context. This reveals the objectification of the working personnel, which discards their importance, as is stated in the corporate identity draft. Companies then resort to employee retention programs to compensate for their mistreatment of them.

Again, it is only a matter of time that these low paid laborers cannot make a reasonable living on their income anymore. The government then reacts by implementing minimum wage laws, whereas the actual cause of the issue still resides in the business model of planned obsolescence. Its management philosophy regards outsourcing business risks and costs to third parties, which leads to issues mentioned above.

By introducing the concept of departmental and hierarchical organization, organizational structures of companies have been aligned to simplify the execution of restructuring and to make partial sales. Government grants can also be applied for through company-critical announced layoffs. The general public might then have to take responsibility for the shortcomings in the company’s business practices.

An organizational unit with excess personnel and a high budget often generate more power in an organization. The sales department usually has a greater number of employees and to the outside, seems to be the division, which solely secures the orders at the front line. Thus, in an organization matrix, sales and marketing leadership roles often are arranged at equal status. However, the sales department, functionally speaking, is a component within the scope of marketing and is dependent on interacting with the other components (departments). This is the reason why the sales departments should be sub- ordinate to marketing authorities; so that urgent business perspectives do not disproportionately affect decisions in the course.

Sustainable marketing strategy

Eine Marketing-Strategie mit nicht geplanter Obsoleszenz ist keine Absage an die industrielle Massenproduktion. Die Blaupausen dafür liegen beispielhaft in einigen, meist mittelständischen und inhabergeführten, Unternehmen noch vor. Diese agieren oft schon seit langem erfolgreich nach dem Prinzip von Qualität und Langlebigkeit am Markt. Denn die Konzentration auf die bestmögliche Herstellung des Produktes, auf das ein Unternehmen spezialisiert ist, führt zu einer immer höheren Qualität und damit zu einer immer besseren Bedürfnisbefriedigung des Kunden. Wenn der Kunde ein solches Produkt zu einem höheren Preis präferiert, da es besser und langlebiger ist, konzentriert sich die Kundenpräferenz stärker auf diesem Anbieter. In Folge profitiert er nun auch von den Skalierungseffekten, da sich höhere Stückzahlen auf ihn vereinen. Der Hersteller kommt in die Situation mit höheren Margen gewinnbringender zu arbeiten und kann dementsprechend auch bessere Löhne bezahlen. Arbeiter und Angestellte, die besser verdienen, können wiederum qualitativ hochwertigere und langlebigere Produkte kaufen – der Kreis schließt sich in einer positiven Aufwärtsspirale.

As a result, the manufacturer’s competitors usually tend to adapt the business model of the market leader (me-too strategy) or make their products of better quality to provide themselves a competitive advantage (unique strategy). This leads to the emergence of competition among the manufacturers to produce better quality and thereby leading to an achievable market price.

The European Economic and Social Committee (EESC) aims to restrict the philosophy of planned obsolescence and strives to promote durable manufacturing. This would also help to overcome the big challenges in environmental policies and bring about sustainable and environmentally friendly consumption. Lastly, these efforts are rational, pertinent, and promising for the cultural regions with years of experience in craftsmanship and engineering traditions.