Tag: marketing

Malcolm Mcdonald

What Makes a Good Brand?

Branding Marketing
Brand

Transcript of: What Makes a Good Brand?

Ed: Hello, everyone.

In this series of videos, we’re talking about marketing, shareholder value, and what makes a good company. And we can’t talk about marketing without, at some point, talking about branding.

And Malcolm has got rich experience in the branding arena. He’s been involved with a great company called Brand Finance, which actually does brand valuations.

Many of his books cover the subject. So it would be really good, Malcolm, just to get your thoughts on this.

And, as ever, I’ve got a very simple (simple being short) very short question for you, which is: What makes, in your experience, a good brand?

Malcolm: Perhaps of all the questions you’ve asked, maybe this is the easiest for the simple reason that there is so much manifestation of excellent branding around us in our everyday lives that you don’t need a degree in marketing to begin to understand what makes a successful brand.

Successful brands endure

What I will do is just draw your attention to – sadly he’s not with us anymore. He died a few years ago – but a guy called Laurie Young, and he wrote this article in Market Leader in Quarter Two, 2011, and it was called “Products die but brands live forever.”

And there were hundreds and hundreds and hundreds of brands. And it’s most extraordinary when you look at some of the brands and how old they are.

For example, Stella Artois was around in 1336, would you believe?

And even something like Coca-Cola is 150 years old, and I think it’s still successful and you get Gillette about 120 years old and so on and so forth.

But you know, I’ll tell you what the components in my view are of a successful brand. But I think you have to try and nail the jelly to the wall, if you’ll excuse the expression, in terms of what we think a brand is.

The brand is not just the logo

The simplest manifestation of the brand is, of course, the logo, and the world is awash with logos, and most of them are as useful as a bird-of-prey with a squint.

And it amazes me. Nobody gives a toss about your logo.

I reckon there are probably 15 or 20 logos in the world that any normal human being would actually recognize.

I’m not saying logos aren’t important for signage and things like that, but I was highly amused when I see Chief Executives coming in.

And the first thing a new Chief Executive tends to do is to start messing about with a logo. It costs a fortune and nobody gives a damn about the thing anyway.

So it’s not a logo unless that logo, like the famous brands unless that logo creates shareholder value.

The intangible value can be much higher than the tangible value

The second level of a brand is that sort of larger bundle of associated intellectual property rights. Like for example, Guinness, their recipe, and Mercedes, their engineering processes.

That’s the second very important element of branding. But the third one, which is really what most branding is about, is about the holistic company or organizational brand.

And what’s interesting, and not a lot of people realize this. But if you look at balance sheets today in the United Kingdom, about 65% of all corporate value is not tangible assets. It’s in intangible assets.

And in America, it’s about 73% of all corporate value is in intangible assets. And it’s those intangible assets that make money from an organization, not offices and lorries and factories.

I mean, for example, when Nestlè bought Rowntrees, the last thing they wanted was a factory in York. What they wanted was the brands and all those wonderful things that come with it.

[Editor’s note: Rowntrees now claims to be “vegan-friendly.” ]

And you’ve heard me quote this before, but I will quote it again. Procter and Gamble paid £31 billion to buy Gillette, and, you know, Ed, they only got £4 billion worth of tangible assets.

Now, Procter and Gamble aren’t stupid. Now that throws some light on the importance of intangible assets and brands.

Because everything a company does, if you think about it, manifests itself – well, everything a company does – from R&D to after-sales service, manifests itself in the offer that you make to the customer. That offer has a name on it, which, of course, is the brand.

So what is a successful brand? I’ll just draw it to a close now. And I’ve just made a shortlist here.

Trust is key

First of all, successful brands build trust. We do trust them. They’ve been around – many, many brands as I’ve already said – have been around for years and years and years.

They have a price-quality trade-off, offer consistently superior value, make the brand famous, easy to recognize, and that brings in advertising and all that kind of stuff.

They also make it easy to buy, which of course is distribution, logistics, and what have you. In other words, they get their basics right.

Now there’s more to it than that, obviously. But that’s where I’m going to draw this to a close and say most of the brands that have been around for years and years and years We trust them, we love them and we pay good money to buy them. So long live powerful brands.

Thank you for asking me this question about brands because I’m quite passionate about brands, Ed.

Ed: That was very good of you, Malcolm.

And actually, as you’re making your closing comments there, Malcolm, I was thinking the same thing about the Malcolm McDonald brand. It’s trusted,  people love it and they’re prepared to pay good money for it as well. So thank you very much for your time with us today.

Again, I’m sure there are really good nuggets there that people will find really helpful in their own businesses.

So thank you again, Malcolm, truly wonderful having you with me and talking about this. We have ended up having a lot of these conversations in cars and trains and planes.

But actually, it’s really good, it is really good to schedule some time and actually, focus on it and have a proper conversation.

That’s really good and thank you, Malcolm. And you enjoy the rest of the sunshine that we’re having here in the UK at the moment.

Malcolm: My pleasure, Ed

Malcolm Mcdonald

How Does a Good Market Strategy Help to Create a Good Company?

Corporate Social Responsibility Good Growth
Market Strategy

Transcript: How Does a Good Market Strategy Help to Create a Good Company?

Hello, everyone. I’m Edmund Bradford and I’m delighted to have with me today Professor Malcolm McDonald. We’re going to be talking about marketing, shareholder value and how that connects to being a good company.

And in this video, we’re going to be looking specifically at that link to being a good company.

So Professor Malcolm Mcdonald, thank you again for joining us.

How do you think a good market strategy can contribute to a company being a good or a better company in the future?

Some useful academic research

Well, Ed, I think of all the questions you’ve asked me over the past few years, that’s probably one of the easiest to answer and there is quite a lot of research to back up what I’m saying. Let me give you an example. I had a Professorial colleague at Cranfield called, Professor Hugh Davidson, probably quite well known to anybody who’s listening to this.

He did some research over a number of years and he wrote this book called The Committed Enterprise.  I forget how many respondents there were but I think it was something like 30 major companies that over many, many years had been successful.

And it was interesting that every single one of those organizations had been good citizens and properly embraced what we call CSR (corporate social responsibility).

A tale of two companies

If you bring yourself up-to-date and look at a company like Unilever, I was privileged to be sitting in an audience recently when we were interviewing Paul Polman who was the  group Chief Executive of Unilever. I can tell you that, and it isn’t just window dressing, every single thing that Unilever do: its ethical behavior permeates everything they do.

If I may, I’ll just read out a quote from Paul Polman. He said, “If you want to make the company grow longer-term, you have to get out of the rat race of quarterly reports and quarterly behavior. Many companies manipulate their behaviors and their spending to avoid missing expectations.”

And I mean, this is true. This is what he did and it’s quite interesting. Over ten years, the share value as tripled of Unilever. All of that hand-in-hand with CSR and good behavior. So a real exemplar.

You compare that with somebody like Enron. There may be people listening to this who can’t remember Enron. But Enron was focused on budgets and the short term, and people used to cheat and lie. And they got to the point where they even broke the law. And you know what happened to that organization.

The problem with cost-cutting

Now, just a quick aside here and that is that cost-cutting is not a strategy. I know, Ed, you’ve heard me talk about it before. I call it “anorexia industrialosa” or an excessive desire to be leaner and fitter leading to emaciation and eventually death. And I say, well, how many pence are there in a pound? How many cents are in a Euro? How many cents are there in the dollar? It’s finite. There are only so many of those you can cut.

I’m not suggesting you shouldn’t be cost-effective. What I’m suggesting is that you need to go back to the fundamentals of understanding your markets, understanding the needs of people in those markets and making an offer to them that makes people want to buy from you rather than from somebody who’s got something similar.

The goal: to create value

So to summarize this and to me, it’s easy to say this is very difficult to achieve the way Unilever has done it. But to me, what we should be doing is trying to build great relationships with markets and customers. If you can create value for customers, that’s great for those in the company who create that value. It’s great for all stakeholders and it’s great for the planet.

And that’s really where, I say, it’s not easy to do. But there are organizations around like Unilever, one of the biggest companies globally, that live and breathe good corporate behavior and the results are showing financially.

So that’s possibly not a direct answer to your question Ed, but they’re just my thoughts off the top of my head.

The moral: market strategy enables sustainability

No, you have answered it, and they’re excellent thoughts. And we’ve talked about Unilever before on these videos, and they’re a really good company to think about.

One interesting aspect of Unilever is how, when they were looking at having better labor conditions with their tea plantations.

They realized that actually there was going to be a problem if you pay your suppliers more money, of course, the danger is that you’re going to have to put the prices up, and therefore lose market share.

But they did their market research and realized that there was some price inelasticity there, and they could actually put prices up if they targeted tea in the right segment.

And I think for me, there’s a moral there that marketers and market strategy have a big role to play in companies becoming more sustainable because you can point your products, your brands, your whole company, towards those customers that are interested, that have those sort of needs.

And as you said in the earlier videos, Malcolm, try to steer away from the ones that may say they’re interested, but not when they get to the checkout and trying position yourselves better amongst the growing mass of consumers.

Let’s not forget B2B, Malcolm, the key accounts. So some people watching this may be serving Unilever. Those accounts themselves are generally interested in having a good supply chain.

Unilever has today launched a new initiative to encourage its suppliers to commit to reducing their greenhouse gas (GHG) emissions, in a bid to accelerate efforts to deliver on the consumer goods company’s target to achieve net-zero emissions across its value chain by 2039.

So marketing has got a good role to play in market segmentation, positioning, as well as helping the KAM community.

Is that right, Malcolm?

Hear, hear! Ed

Excellent. Okay, that’s great. Well, hopefully, that’s been helpful to everybody. I feel we are scratching the surface, but very, very useful.

In the final video, we’re going to get onto the subject of branding and get Malcolm’s views on what he thinks makes a really good brand.

So again, thank you, Malcolm. I look forward to catching up with you soon.

Malcolm Mcdonald

How does a Good Market Strategy Improves Shareholder Value?

Good Growth Marketing
Shareholder Value

Transcript: How Does a Good Market Strategy Improve Shareholder Value?

Hello everyone this is Edmund Bradford and I’m delighted to have with me my good friend and colleague, Professor Malcolm McDonald. We’ve done a lot of things together, both at universities and out there with real companies.

Malcolm has over 30 years I would say (without putting too much of a number on it ) over 30 years of experience in marketing and is truly one of the great marketers out there in the world and in this short series of videos we’re talking about shareholder value , we’re talking about marketing and how they both connect together and also how they connect into just being a good company. So, welcome again Malcolm and thank you for joining us. So I’ve asked now that simple question about, how does a good market strategy improve shareholder value?

Wow! Again Ed, you are known certainly to me and those who know you for asking very difficult questions and this isn’t the easiest question to answer but I will give it a go. I mean first of all to put it in perspective what are the components of a marketing strategy anyway and you know I’ve sort of made a bit of a list here it’s not complete but it’s got the essential elements in it.

First of all, you need in an organization an inspiring vision. You need clear strategies, you need rigorous segment and brand positioning, you need consistent innovation, you need superior customer value, you need high employee morale, you need tight cost control and concern for all stakeholders.

Now what could be easier than that and the thing is I’ve got 127 scholarly references which obviously I won’t bore people with today but over a long, long period, these scholarly references have drawn a link between successful marketing strategies and long-run financial success – and you know, they are very similar to the list I’ve just (you know) spoken about. I mean firstly, you know you’ve got a deep understanding of how the market works. That’s common across all successful companies.

Correct needs-based market segmentation, not that garbage that’s taught in many places about socioeconomics and demographics and geodemographics. I mean, for example, just to get it out of the way, Prince Charles and Ozzy Osborne are both in socioeconomic group A but I don’t think they behave the same!

And you’ve got understanding customer needs.  It sounds simple, hard to do but it’s a factor. And then differentiation, positioning and branding and planning for the future.

Now i know in my work, Ed, what kind of organization I’m going to be facing when I get the board of directors (the operating board of directors) and my first question to them is, without talking to each other, write down on a piece of paper (or type into your computer), “What are your key target markets in order of priority?”  The second part of that question is pretty obvious: “Against each of these key target markets what’s your company’s sources of differential advantage?”

And invariably companies that haven’t got those characteristics, instead of talking about key target markets, they start wittering on about their products. And it reminds me of (you know) the near disaster that IBM had when they thought they were in the mainframe market and more recently (oh, and Gestetner thought they were in the duplicator market) and more recently Kodak thought they were in the camera and film market and Nokia thought they were in the phones market. It’s not products – and it hasn’t been for ages – that give you differentiation and create satisfaction for customers. It’s the way you relate to your customers and your markets.

I just want to, by way of closing this off, to give you one quick example of the silly notion that people have about what is called CSR, Corporate Social Responsibility. Of course you have to have it but it has to go hand-in-hand with shareholder value-added because if it doesn’t it’s not going to work.

I give you one example there is a famous chemical company that used to be the bellwether of the British stock exchange and it was a wonderful company. It was good to its employees, loved working for it. It was good to local communities, it was good to charities and so on and so forth. The problem was, it wasn’t as good as satisfying customer needs as the DuPonts and the Siemens of the world. Consequently, their shareholder value was not in the same category and started reducing. The result of that was hundreds of thousands of people unemployed, no more money for charities, no more money for local communities and so on and so forth. So I’m afraid, in order to be a good citizen you also have to create shareholder value and I hope during these brief few minutes, Ed, I’ve given you the components of what the successful strategies are so I better stop wittering on now and say that’s my answer.

That’s excellent Malcolm and I know that you are a big believer in marketing not being in the basement of companies and in a way that it is dangerous being in the basement of companies. It needs to be in the boardroom of companies and there’s a big misunderstanding, I think, around marketing that  ‘strategy’ is done by somebody else, somewhere else. Another function, another person and marketing – I remember you saying – marketing is really the people that blow the balloons (you know) at corporate events. So I think the point you’re making is that marketing has a major role to play in actually creating shareholder value by the impact and the influence that they have on the market-facing strategy that the company is adopting.

Of course and if you think about that example I gave you when I’ve got a board of directors there and I asked them what their key target markets are and what – in order of priority – and what their sources of differential advantage are. If they can’t answer those questions, Ed, it tells you straight away that whatever they think marketing is they haven’t got it in the organization. Because what is it that makes organizations successful? It’s actually selling something to somebody, you better know who you want to sell it to, you’d better understand their needs and you’d better make them an offer that makes them want to buy from you rather than from somebody else who’s got something similar.

Now I don’t care whether you call that “marketing strategy” or what but it’s a bit fundamental and if companies can’t answer those questions then I know they haven’t got successful marketing strategies and therefore they will either be in a growth market but they won’t be profitable for long or they’re about to go belly-up because sooner or later you have to get those components in place.

Thank you Malcolm, that’s excellent. That is a huge subject as we said but we’re deliberately keeping these little conversations short.  In the next conversation we’re going to be talking about how a good market strategy helps you to be a better company. So thank you once again Malcolm and I look forward to speaking to you again shortly.

Malcolm Mcdonald

What is Shareholder Value Added and Why Should We Care About it?

Good Growth Marketing Risk
Shareholder Value-Added

In this interview we explain:

  • What is Shareholder Value-Added
  • Why is an important concept to understand
  • The importance of risk assessment

 

Transcript for: What is Shareholder Value-Added?

[00:00:05 –> 00:00:58] Edmund: Well, Hello, everyone. This is Edmund Bradford, and I’m delighted to have with me today, Professor Malcolm McDonald. And we’re talking about three things, really. We’re talking about shareholder value, marketing, and how that connects to being a good company. And in the last video, we just kind of got an introduction to the subject of shareholders and what shareholders are interested in. But I know I’ve heard about and talk about this a lot and it isn’t easy to package up into a few small minutes. I think it’d be interesting just to at least pick up on the subject of shareholder value-added, which can be very technical, but I think it’s worth just trying to get ahead around that particular area. So Hello, Malcolm, and welcome to the Interview again.
[00:00:59 –> 00:00:59] Malcolm: Hello Ed
[00:01:00 –> 00:01:08] Edmund: Could you summarize what is shareholder value and why anybody should care about it?
[00:01:08 –> 00:04:10] Malcolm: Well, I must say, it’s an enticing thought to try and make a topic like shareholder value-added interesting and exciting. It clearly isn’t other than to those people who benefit from it. In the main, these are shareholders. But let’s keep it simple. I mean, what is it? Well, everybody knows what net free cash flow is and its net free cash flow having taken account of the time value of money, and you think that’s not a difficult concept because of the time value of money, you’d rather have a pound or a dollar or a Euro today than you would in five years time. So having taken account for the time value of money, the cost of capital, which I’ll talk a little bit about because it’s not the most exciting topic in the world and of course, the risks associated with the company or the organization’s strategy. And let me give you one very simple example of this. If, for example, keeping the math simple, the cost of capital is 10% and you’re a small company and you’ve got £20,000 invested in your company. And as I say, the cost of capital is 10%. If you make a net profit net free cash flow of 1500 pounds, you have actually destroyed £500 worth of shareholder value. If you, on the other hand, make £2000 net free cash flow net profit, you have neither created nor destroyed shareholder value. If on the other hand, you’ve created, let us say £2500 worth of profit, you’ve created £500 with a shoulder value. And the question I ask most people, I say what sort of nutty what sort of idiot would deliberately set out to destroy shareholder value? Because the point is it started off with a guy called Rappaport and then morphed into what’s become shareholder value-added. Now the world is full of expressions like Return on Investment, Rona, DCF Payback, Net profit, EBIDTA, Brand Equity, Customer Equity, Customer Lifetime Value, and so on. Each one, in its own way, is very valuable and tells you something different. But the reality is that the one that has filtered to the top over the last 15 or 20 years is shareholder value-added. And, you know, if you rather than going into all the details, it’s quite important for marketers, for example, to understand what the cost of capital is because every organization has it. It’s the one hurdle you’ve got to get it over in order to justify investment funds.
[00:04:13 –> 00:05:47] Malcolm: That’s one side of it. I talked about the time value of money, the big one, however, and the complicated one is this expression. I use risk, the risk of the strategy of the organization. It’s extremely complex, and I don’t want to muddy the waters now, other than to say, you know, there’s a model called a capital asset pricing model, which explains how stock markets work. All I’d say is that, in summary, a normal, rational, risk-averse investor requires an increase in expected future returns for any more risky investment in order to compensate for any potential volatility. I mean, that, to me, is a blinding glimpse of the obvious, but risk assessment has risen very high on the agenda of those organizations and people like me who work with organizations globally in assessing risk. And the best companies in the world do assess risk. Formally, we call it due diligence, but the best companies have processes in place to make sure that they have taken account of risk in their predictions for shareholder value-added. I think probably I will stop there because, as I say, it’s not the most exciting topic in the world. But I hope I have at least explained how it works and why it is so important.
[00:05:47 –> 00:07:23] Edmund: You have Malcolm, and you’ve done that is normally when I hear you present this, you’ve got some charts and graphs and things to help. And I think in concept is actually quite simple, really, because what we’re saying is that an investor has different alternatives to where to put their money. And if you’re not delivering the minimum returns, the cost of capital that they’re looking for, they don’t need to invest in your marketing project or even your company at all. They can invest that money elsewhere and get a better return. So just because you’ve got a good payback plan, you’re making some good profit doesn’t necessarily mean that actually, you’ve reached the minimum cost of capital. And that cost of capital, as you said, is dependent on time, time adjusted returns, and is also dependent on the risk that’s factored into it. And that is a big area. And in a giving your book, for example, in marketing and finance book, you talk about different types of risk. For example, market share risk is one sort of risk. In our book we do together, there’s an implementation risk as well, that the objectives that you set out, the strategy that you laid out doesn’t get implemented successfully. So risk itself is a huge area. But I think in a way, marketers can’t shy away from it. Understanding risk and how it’s used as a major area to get head around.
[00:07:23 –> 00:07:46] Malcolm: Yeah. And I suppose it’s pretty obvious at the end of the day that if a company has a history of its profits going up and down and so on and so forth, it’s known as a volatile company, and therefore the shareholders will require a high return to take account of that risk. So it’s a pretty simple concept at the end of the day.
[00:07:47 –> 00:08:12] Edmund: Excellent. Thank you, Malcolm. Thank you for simplifying what can be very difficult and technical subject. I’m sure that’s really useful to a lot of people. In our next video, we’re going to be talking about how a good market strategy could improve shareholder value. So thank you again, Malcolm, for your time this morning. Much appreciated. And looking forward to our next conversation.
Malcolm Mcdonald

Are shareholders only interested in short-term profits?

Good Growth Marketing
Shareholder short-term

A key challenge for any company wishing to achieve long-term, sustainable, Good Growth is dealing with shareholder demands for short-term profits. But to what extent is this a real or a perceived problem?  In this interview, Professor Malcolm McDonald discusses:

  • The alignment between profits and long-term success
  • The reality of sustainable consumer behavior
  • The future trend towards sustainable corporate behavior

 

Transcript: Are shareholders only interested in short-term profits?

[00:00:06 –> 00:01:19] Edmund : Hello, everyone. I’m Edmund Bradford. In this short series of videos, we’re going to be talking about a very important subject, which is shareholder value and how it links with marketing and just being a good company. And to help us with that particular topic, I’m delighted (and I mean that from the bottom of my heart) I’m delighted to have my good friend and colleague, Professor Malcolm McDonald with us. Now, I could do a very long introduction, Malcolm, but I will keep it short. I think the only thing people need to know really, is that you’ve been in this business “for 600 years” as you would say, and you’ve written over 50 books on the subject of marketing and finance, etc, etc. You’ve got a very good book – and I don’t mind giving it a plug – called “Marketing and Finance, Creating Shareholder Value” now in its Second Edition. So if anybody wants to know more about the subject, please go and check out that book. And so you’re one of the best people. I think we could have to talk about the subject. So Hello, Malcolm.
[00:01:19 –> 00:01:21] Malcolm: Good morning. Good afternoon. Good day.
[00:01:21 –> 00:01:37] Edmund: Should we start with this simple question of what is a shareholder and are shareholders only interested in short-term profits?
[00:01:38 –> 00:06:18] Malcolm: Wow, Ed, you are a colleague and a friend, but you do ask very difficult questions. So let me think about the answer. First of all, there are many categories of shareholders, as you will know, from the individual to those who belong to things like mutual funds. For example, I’m an individual shareholder in a bank, but I also get to draw pensions from organizations like the University superannuation scheme which they invest on our behalf. And I don’t know how many of us pay attention to where they invest, but we assume that they’re decent human beings and don’t invest in organizations that are not good for our planet and society. But secondly, and I think this is most important, we know that there undoubtedly are shareholders who are not interested only in short term profits. But there’s really no conflict in this because, as I’ll show later, I hope I’ll spell out that most environmentally friendly companies also tend to be the most profitable. So there’s no conflict there. However, let me put one big “definite maybe” in here about all this, as often I perceive a big gap between what people say they’re going to do, what sounds good when being interviewed, and what they actually do. And let me give you an example. I mean, for example, more than 60% of younger consumers, according to Accenture, consider a firm’s ethical values before buying its products. The problem with that is if you look at Boohoo, for example, when it was revealed that they were paying their factory workers less than the minimum wage, did it affect them? Well, sales revenue is up by 41%. Profits increased by 37% to March 2021. And if you look at Amazon, you know, regularly criticized for their harsh employment conditions and aggressive tax avoidance measures. Yet customers spent more than £272 Billion with the company last year. And we’ll give you one last example: Volkswagen. They were found to have cheated on diesel emission tests. And yet, you know, five years later, the group achieved its highest market share ever, 22.1%. The reason, I think, is (perhaps it’s obvious or maybe it’s not obvious) that is if you ask someone, “Do you want brands to be ethical?” Nobody in their right mind is going to say, “No.” But the answer, of course, is that this social purpose will come very low on the list. Perhaps when money is involved and they get their wallets out, they get their purses out. Now, my personal view on this is that shareholders are very similar, but the consequences are grave indeed and just cannot go on. We have to change and we are changing and we will change. For example, the old Take,  Make, Waste model for the past 250 years is no longer sustainable. We just don’t have resources such as land, forest, water, metals, and mineral fuels to keep up with demand. In fact, according to Accenture, we’ll consume three planets’ worth of resources every year by 2050. And this will translate into trillion-dollar losses for companies and countries that remain tied to using these natural resources. And one last point, which I will conclude on this first question, let me say that we’re just one small step away from one lucky person, owning more wealth than the bottom half of the world’s population. Currently, it’s 62 people. Now that cannot go on. There will be legislation, if nothing else, to change that. The world cannot go on in that mode. So maybe I haven’t answered your question Ed, but they’re my rambling thoughts on the question of,  “Are shareholders only being interested in short-term profits?”
[00:06:18 –> 00:07:13] Edmund : I think that was excellent, Malcolm. I just wondered, because of course, you get different types of shareholder. Not all shareholders are created equal. And what some companies are finding is that, of course, some shareholders are actually more receptive to thinking about the long-term view, thinking about sustainability and ethics, for example. Do you think that actually, you could almost segment the shareholder market into different types of shareholders and almost in a way, they look for a balanced portfolio of products? You could also look for a balanced portfolio of shareholders with some that are more interested in the long term and some which are more interested in the short term. Can you borrow some thinking for marketing to do that?
[00:07:14 –> 00:08:11] Malcolm: Possibly that is a possibility, Ed. But all I would say is that by definition, the people who are shareholders tend to be better off people in the main, and they’re probably in the higher echelons of intelligence as well. It occurred to me that there is a change taking place, and increasingly there is a realization that it is those organizations who are good to the planet, who are also the most profitable. And I think that that will begin to come into play increasingly over the next five to ten years. So there is hope for us. And I think this endemic of short-termism is, in my perception, reducing slowly but surely.
[00:08:11 –> 00:08:29] Edmund: Thank you very much, Malcolm. That’s excellent. And in the next video, we’re going to be talking a little bit, and going to go down a little bit into a bit more detail, and talk about what we mean by ‘Shareholder Value Added.’ So for the moment, thank you very much for that Malcolm and I’m sure that has been very helpful to a lot of people.
Pooja Khosla

Why should marketers care about “ESG”?

ESG Marketing
Marketing and ESG

Interview Abstract: Marketers and ESG

Edmund Bradford says they want to relate the subject of ESG to the marketing profession. Pooja Khosla says that marketing people will be like the captain of the ship because they have to find out product ideas, that bring sustainability. Edmund and Pooja say that science has to meet business to create good growth. Edmund says that marketing has a huge impact because they are talking to customers continuously. Pooja and Edmund discuss the power of marketing to spread the message that sustainability is in everybody’s interest. Edmund says good marketers are multi-skilled and cross-organizational. Pooja says they need an agreement from the executive team to start the mission of sustainability. Pooja says marketers will look into how to add sustainability venturing into new markets.

Transcript of Why should marketers care about ESG

[00:00:09 –> 00:00:38] Edmund: Hello, everyone. I’m Edmund Branford, director of the Good Growth Academy. And in these short videos, we’re talking about the subject of ESG. And now in this video, I want to relate it a bit to the marketing profession where we have a lot of contacts and a lot of viewers. And I’m delighted to have with me Dr. Pooja Khosla, who’s Vice President of Client Development at Entelligent, good morning.
[00:00:38 –> 00:00:40] Pooja: Good morning Ed.
[00:00:40 –> 00:01:04] Edmund: Thanks for joining us again. And Yes, I know you’re not a marketer yourself Pooja, So you’re talking about this issue from outside the marketing profession, but why should marketers stand up and pay attention to this horrible acronym called ESG? Why does it matter to them?
[00:01:05 –> 00:02:51] Pooja: So I would say that you’re right. I’m not a marketing person by training, but definitely, I am learning marketing every day to learn and to spread knowledge of ESG more and more. Because if we talk about the ship of sustainability in an organization, I believe marketing people will be the captain of this ship. The marketing team will be the sailors on the ship to ensure that the ship is moving towards good growth because they have to find out product ideas, not only product ideas that bring revenues, but product ideas that bring sustainability. They have to be inventors of not just the product use, but consumer satisfaction also. That’s okay if I buy this product, how I am contributing to the environment, or what I am not extracting from the environment. To be very honest, I live in a really interesting town, Boulder (Colorado) where people do not look at price tags. Rather, they look into how much emissions have been produced using or getting that product to them. They are very aware and I know that this is going to spread. This is going to spread more and more as we sail towards sustainability. And now it’s time when marketers have to think like a scientist.
[00:02:53 –> 00:02:55] Edmund: That’s a very dangerous concept (ironic)
[00:02:56 –> 00:03:41] Pooja: So that’s right now they have to think like scientists in a way to innovate, messaging product future pathway of a company where they are not only increasing this revenue of the sales, but they are also bringing into concepts where people feel proud to possess those products because it is not only to satisfy a need, but it is also minimum impact on the planet. It is also a contribution towards management. So I think now it’s time where science has to meet business to create good growth.
[00:03:41 –> 00:05:21] Edmund: Actually, I think that’s a wonderful, wonderful idea. So I think many marketers maybe come in with a Master of Art background on a Bachelor of Arts background. And of course, through digital marketing, there’s far more science getting into marketing as well. So some of them are far more quantitative than they used to be. We know that understanding financials, it’s very important for markets as well. And I think from a wide perspective, there’s a huge impact that marketers can have in this area because they are talking to customers or should be talking to customers continuously. They need to be kind of helping to change the behavior of customers, nudging them more towards green options, maybe in the B2B area, you know, deprioritizing dirtier clients and prioritizing greener clients. And I would guess the more they can point their ship towards these better customers, the more it sends the right demand signals right through the supply chain, doesn’t it? People pay more for better products, higher-value products, more sustainably sourced, et cetera. That makes it easier. There’s enough for the supply chain guys to execute what needs to be done. So I think in my own saying that marketing has actually got a very big role to play here and making this happen.
[00:05:22 –> 00:06:35] Pooja: Absolutely. If we have to bend the temperature curve towards Paris goals (1,5-degree Celsius), if we really want to accelerate the speed of sustainability and we will need behavioral changes, we will need a new definition of value. And who can do that better than a person In marketing? They have the power to influence. They have the power to change how people think they have the power to create the demand for the product, even if the demand doesn’t exist yet. So I think they have to use their superpowers now to change it from inside the behavior to spread the message that sustainability is inside everybody. It is just like they have to look deep inside them and find ways how they can contribute. And I think that will come from our captains that are the people associated with marketing, people who have the power to change.
[00:06:36 –> 00:07:40] Edmund: I suppose if you’re taking your analogy of the ship as well. I mean, if the CEO is the captain of the ship, you say then maybe the marketer should be the Navigator, the kind of chief Navigator, and in your early video, you’re talking about ESG being the GPS of sustainability. The nice thing I think about good marketers is that they are multi-skilled. They’re used to working across functions with product development, finance, sales, operations. They are cross-organizational. So they used to deal with customer organizations, distributors, wholesalers, third party relationships, and actually, all those skills of dealing across the whole organization and between organizations can be applied here to try to turn this to your own company around and make it point it and help it to move to better greener water, better value market waters, as you would say.
[00:07:40 –> 00:08:47] Pooja: That is absolutely correct Ed because definitely, you are right. We need an agreement of the executive team to start with, but then this mission of sustainability value mix navigators, navigators, not only looking into where a company will progress often be the new products are who will be the new consumer targets, but navigators which will look into how we can add the sustainability venturing into new markets, how we can develop new products that we can associate closely with the change towards sustainability. So this navigation is very important, and it will become very critical to the organization moving forward.
[00:08:48 –> 00:09:02] Edmund: That’s an excellent Puja. Thank you very much. We’re trying to keep these videos short, so that’s all we’ve got time for now. And thank you again. Push for your time has been extremely helpful for anybody that wants to know more about this stuff.
[00:09:02 –> 00:09:02] Pooja: Done.
[00:09:02 –> 00:09:05] Edmund: Just look at the Growth Academy website. Thank you.
Stephen Mangham

The CMO and Sustainability Leadership

Branding Sustainability
CMO and Sustainability

Abstract: Can the CMO become a Sustainability Leader?

  • Edmund  Bradford says they are delighted to be joined by Stephen Mangham, a branding expert at Master of Scale international. Edmund says they will get down to more of the human level and talk about the person at the center of this, the Chief Marketing Officer (CMO).
  • Stephen says the CMO must define the sustainability conversation in terms of the customer and the brand in terms of its inherent usefulness. Stephen says the CMO must have an organizing idea that inspires and guides the brand behavior and the brand action.
  • Edmund and Stephen discuss the key challenges they will face, including getting educated about the subject.
  • Stephen says consumers prefer products with a social purpose agenda, and that doing good is good for business. Edmund says the risk of doing nothing is more dangerous than the risk of doing something.
  • Stephen says brand growth depends on memorability and relevance.

 

Transcript How can the CMO become a sustainability leader?

[00:00:09 –> 00:01:51] Edmund: I’m Edmund Bradford. I’m a director of the Good Growth Academy and in this series of short videos on marketing and sustainability, I’m delighted as ever, to be joined by Stephen Mangham, who’s a branding expert, much more of a brand expert than I will ever be, and also a Master at Masters of Scale International. Now, in the previous video, we’ve talked about sustainability and how it fits into the broad concept of good growth. We also talked about how it can be a real differentiator in the marketplace. But in this particular one, we’re going to get down to more of the human level and talk about the poor person at the center of this (from my perspective in many ways) which is the Chief Marketing Officer. So I think what’s interesting is that I’ve been in marketing for 25, 30 years or something, and I’m fairly new to sustainability in comparison. And I think what I found interesting is how very little in most companies, marketing seems to be involved in the whole sustainability conversation. They just don’t seem to be at the party. They’re sometimes at the end doing the brochures and the messaging about all the changes that the company is doing. But they seem to be like an add-on at the end rather than central to the whole journey. So, I’d be interested from your perspective, Stephen, how can a CMO, (a chief marketing officer), how can they get involved and how can they start driving and leading some of this change, if they can at all?
[00:01:51 –> 00:04:27] Stephen:  Good to be on-again, I think it does start with – if you like – with the Board, the C suite, they need to have defined the sustainability conversation in terms of the customer, and that’s when the CMO can help. So if their sustainability agenda is inherently customer focussed, customer-centric: “What is the purpose of our business, our brand, what is its usefulness?” That has to be a customer-facing conversation. If you start there, then the CMO has a chance of success and the CMO is engaged. What the CMO themselves have to do is, there’s a number of things, but perhaps the three most important things: First of all, I think it’s important that the CMO need to define the brand in terms of the brand’s usefulness or inherent usefulness. So they need to – as I mentioned in an earlier video -they need to put sustainability at the heart of the brand strategy. And to do that, they may need to look up various disruptive approaches where they look to re-frame the business they’re in or their role in it. So, for example, Tesla famously says, they’re not in the car business, they’re in the renewable energy business. They just happen to be…. cars are the particular way which they can make a contribution to that agenda. So number one is they need to re-frame the brand in terms of its inherent usefulness to consumers. What is its social purpose? Secondly, I think it’s important, then that there’s an organizing concept or organizing idea that inspires and guides the brand behavior and the brand action so that the integrated marketing communications is consistent with that. And then I guess the third thing is, is that they should have a plan. They should have a plan that says, “Okay, measurable objectives, and what’s our plan of action to get there?”. So I’d say that that’s what CMOs can do, from their perspective, to drive good growth.
[00:04:27 –> 00:04:59] Edmund: And I think we just pick up maybe one or two of the key challenges that they’re going to face. For me, an obvious one is their understanding of the subject. We don’t expect the CMO’s to be sustainability experts. So what do you think could be the first steps that they take in just getting their heads around the subject, getting educated in this area? Any thoughts on that?
[00:05:07 –> 00:05:40] Stephen: Well, listen and learn. There’s a lot of expertise out there. There’s a lot of informed opinions. I recently read a book (I am not looking to plug it particularly) called Greener Marketing, which is a fantastic place to start in terms of helping someone reassess the role of marketing in promoting the sustainability agenda and creating that good growth.
[00:05:41 –> 00:07:05] Edmund: Excellent. And if we’re doing book plugs, I think the one I really like is Rethinking Capitalism by Rebecca Henderson. It’s not about marketing, but it’s a very good business book. I completely agree, Stephen. I think what we should do as marketers – in a way – is just get educated a little bit about the subject and picking up a good book and getting better and looking for short courses and attending events. I’ll give a little plug for some of them: the Economist runs really good events. There are some really good speakers, like Unilever by the way that we mentioned, who talk at some of these events. So without much of an outlay and without committing yourself to a whole year of a Master’s on sustainability, you can actually get yourself up to speed with some of the key concepts. So there’s definitely an education challenge, I think, but they don’t need to become experts. They just need to know the basics. I would say. The other challenge, I suppose, Stephen, what about, let’s say some of the real challenges where you’ve got maybe a Board that isn’t that receptive to the green agenda. Any thoughts about how marketing or the Chief Marketing Officer (or the marketing official) can use the power of the customer?
[00:07:05 –> 00:07:57] Stephen: I think the answer lies in your question, the power of the customer. If I was a CMO, I’d be showing, as I said in an earlier video, there’s a wealth of evidence out there that consumers prefer products that have an articulated social purpose agenda. So there’s some very strong business arguments to be made to the Board to say, “We can grow our business, we can protect our business by pursuing this agenda.” So it’s not simply a nice to have or some form of do-gooding CSR exercise. It can be very hard-headed. Doing good is good for the business agenda.
[00:07:57 –> 00:08:24] Edmund: Yeah. Absolutely. I think it’s one thing I like about the examples of Rebecca Henderson talked about is that actually what we get to the point of doing is saying, actually, the risk of doing nothing is more dangerous than the risk of doing something. And the status quo, the “do nothing” option is no longer on the table. These changes are happening and we need to respond to them. 
[00:08:24 –> 00:08:43] Stephen: Absolutely. I mean, it’s an old saying: if you don’t stand for something, you stand for nothing. And there are plenty of disruptors in business today who will eat your lunch if you take the soft approach and do nothing.
[00:08:43 –> 00:09:11] Edmund: Yeah. So, of course, that’s a whole area, isn’t it, of competitiveness? I mean, we talked about the power of the customer, but the other area the CMO should be very attuned with is the competitor activity, and there’s a danger in any industry I think that the organization that’s the least is left behind in the marketplace. And it suffers accordingly.
[00:09:11 –> 00:09:25] Stephen: I mean, brands grow or don’t on memorability and relevance. And if you’re not memorable because you’ve got nothing particularly strong to save, you’re not relevant. You’re going to wither on the vine.
[00:09:26 –> 00:09:48] Edmund: That’s excellent, Stephen. That’s all we have time for now but in the final little video in this series, we’re going to just pick up on this subject a little bit more and talk about the tricky issue of implementation. So thank you very again, Stephen, for your support on this and I look forward to our next video together.
[00:09:48 –> 00:09:48] Stephen: My pleasure.
Edmund Bradford

What is “ESG” and why we should care about it?

ESG Good Growth
ESG

An interview with Dr Pooja Khosla

When discussing sustainability, “ESG” often comes up. What is it and why should we care about it?

To help answer these questions, I interviewed Dr Pooja Khosla, Vice President of Client Development at Entelligent.

Her thoughts can be summarized in three key points:

  1. “ESG” is about measuring how the actions of companies, consumers, investors and all stakeholders impact broader society.
  2. Before the industrial revolution, companies were focused on value creation. After the industrial revolution, the focus shifted to measurements of financial results and therefore value extraction.
  3. If “sustainability” is the destination that stakeholders want to reach, then “ESG”  is the measurement of progress towards that destination.

Transcript

The timings are shown to help you jump in to the video at the right point if needed.

[00:00:09 –> 00:00:48] Edmund: Well, Hello. I’m Edmund Bradford. I’m a director at the Good Growth Academy and in these short videos, we hope to help give people an understanding of some of the key areas around sustainability. In this little video, we’re going to talk about a term that you hear quite a lot when people are talking about sustainability, which is “ESG.” To help me with that, I’m delighted to welcome Dr Pooja Khosla, who is Vice President of Client Development at Entelligent. Good morning to you.
[00:00:48 –> 00:00:50] Pooja: Good morning, Edmund.
[00:00:50 –> 00:01:17] Edmund: Welcome to this little video. ESG is something that we hear all the time, and it’s a big abbreviation. It’s used a lot by a lot of people. Would you like to just give our viewers some background as to what it is and why, if you haven’t heard of it, why you should take ESG seriously?
[00:01:17 –> 00:03:17] Pooja: So, Edmund, I feel that when we started trading, when we started development, when we started to learn about business, ESG was always there because of all business. Initially, I’m talking about the Greeks. I’m talking about the era before the Industrial Revolution. All businesses were created for the purpose of value creation. There was always an exchange of value and how value can impact society, how value can improve or develop our state of living, or can add to our current living standards. But after the Industrial Revolution, there was a lot of focus on profits, the balance sheet indicators. The financial back sheet got more attention than the sustainability and development back sheets. Then there was a switch. Instead of value creation, people started believing in value extraction. That is what we see was happening earlier. Lots of value extraction . That is why we have to go through the climate emergency issues, exploitation, labor exploitation issues, lack of governance issues. I believe now it is time to take a U-turn. It is time to go back to the original concept that is value creation, because that is a pathway of sustainability, and we have to do it soon. We have to do it fast. We have to make a U-turn today and not wait for tomorrow.
[00:03:18 –> 00:03:47] Edmund: That’s very interesting Pooja.  By the way.  I have spent the last 25 years of my life working with companies and students trying to help them understand the importance of value. Value is such an important term in marketing as well as in shareholder value, etcetera. So I think it’s absolutely a very good point. And so what does ESG mean to start with and where does that fit into value creation?
[00:03:47 –> 00:04:16] Pooja: So ESG means Environmental, Social, and Governance. That it is much broader than the full form of this acronym. It is how actions of corporations, companies, consumers, investors and all stakeholders impact the broader society. A lot of people confuse ESG with sustainability, but they are very two different concepts. Sustainability is the destination that we want to reach by our actions. ESG is a pathway, a GPS, to this destination.
[00:04:45 –> 00:05:17] Edmund: And by the way, you’ve done a very good article on that whole point, I know, for us. So on that very point, Yes, people, please do read this article, which is on our Good Growth Academy blog. You were helpful in helping me understand this. So would you say that ESG is kind of the measurement of our progress to that destination? Is that what ESG is trying to do?
[00:05:18 –> 00:05:51] Pooja: Absolutely. ESG is how we can measure how we can look into that RV on the trajectory that we intend to be on our sustainability course, to set metrics, to set measurement, to set standardization, to set compliances. And we all know that what can be measured can be managed. So ESG is the first step to manage sustainability.
[00:05:52 –> 00:06:17] Edmund: Absolutely. And I think from my point of view, looking at it fairly new, I think, in comparison to you Pooja in the sustainability area, it seems to me that not only has there been an explosion in interest in sustainability, but of course,  also the whole metrics around how you measure sustainability has also exploded hasn’t it? Which is why we hear ESG mentioned so often, especially by investors, for example.
[00:06:19 –> 00:07:37] Pooja: That is so true. That right now, especially during the Covid era and two years before that, the interest in sustainability has exponentially increased. To be very honest, I am in this field when this field was called development economics, and then we graduated into fancy acronyms like ESG, SDGs, SRI, PRI, and all but the hard nice in development economics, how we can make our economy, business and finance revolve around real development. Development is very different from growth. Growth can be measured because it’s a  monetary term. It’s the financial faction: growth accompanied by contribution and improvement and standard of living,  lifestyles, betterment of humanity, betterment of the environment, betterment of governance. That is development. So absolutely, we need to look into ESG from “transparency towards development,” which is growth! Growth is a part of it.
[00:07:38 –> 00:08:07] Edmund: That’s excellent. Thank you, Pooja. And that’s been a really useful conversation for me as well. We will pick up on this subject of growth in our next video. So hopefully that has helped people understand ESG, why it’s important and how it’s different from sustainability. We’ll look at how it links to good growth in our next video. So thank you, Pooja and I look forward to connecting with you again soon.
[00:08:08 –> 00:08:11] Pooja: Thanks. It was a pleasure being here with you today.
Stephen Mangham

What is a Sustainable Brand?

Marketing Sustainability
Sustainable brand

An interview with Stephen Mangham

The marketing function is often seen as the greenwasher of sustainability. Some would say that the other functions do all the hard work of making real progress and the marketers simply share the stories!

Yet, marketing and sustainability actually have a strong connection.   In this interview, we explore the subject of sustainable brands with Stephen Mangham.

Transcript

The timings are there to help you dive into the video at the right point if needed.

[00:00:05 –> 00:01:02] Edmund: Hello, everyone. I’m Edmund Bradford. I’m a Director of the Good Growth Academy and today we’re going to be talking about sustainability and marketing, which I think is a really interesting area.  I’m delighted to have with me Stephen Mangham, who is a branding expert and also a Master at Masters of Scale International. You and I, Steven, have chatted a little bit in the past about branding, sustainability and another concept that we’re kicking around called “good growth.” It’d be really interesting to get your thoughts on what we mean by Good Growth, a good growth brand, and how that is different to other brands that are out there. So any thoughts are very well received!
[00:01:02 –> 00:01:29] Stephen: Okay. Thanks. Well, the purpose of marketing has always been to produce growth. So in today’s world, I’d argue that the role of CMOs is to produce good growth, where sustainability is a strategic imperative at the core of their brand strategy.
[00:01:31 –> 00:01:40] Edmund: When we talk about good growth, do we mean sustainability? Is that something different to sustainability?
[00:01:40 –> 00:02:29] Stephen: We do mean sustainability. But I’d say two things about it. First of all, that it is where sustainability is at the core of the brand strategy. It’s defining the brand in terms of its social purpose rather than being an add-on or an addendum or a part of the brand, it’s core to the brand. Arguably, it goes further than simple damage limitation or mitigation. It’s about the idea of being that good that you put in more than you take out.  When you define a brand in terms of its social purpose, ultimately it’s putting more into the ecosystem than it takes out.
[00:02:29 –> 00:03:02] Edmund: That reminds me of something that I saw a couple of weeks ago from Professor Steve Kempster, who’s a Professor at Lancaster University. He was telling me about the fact that we now talk about a regenerative company as being a higher goal. You’re thinking there about being “net good”. Is that a higher goal than just being sustainable? 
[00:03:02 –> 00:04:12] Stephen: Yes, I think it is. Net-zero is a very laudable target, don’t get me wrong. But it’s about a different way of looking at your business as your brand. It’s about the idea that it isn’t looking at sustainability in terms of damage limitation or defining it in terms of mitigation or what steps can we take to mitigate the impact we have on our world. It’s looking at it in terms of what is the inherent usefulness of our brand or our business? Where is it actually a promoter of good things in some way? And it’s about looking in terms of the brand as saying, on balance, that it has a strong social purpose that is inherently useful to society in some way. It’s taking all the right steps in terms of its impact on our world, both in positive terms as well as negative terms. But at the end of the day, it’s actually about being net good.
[00:04:13 –> 00:04:24] Edmund:  Which companies would you put down as at least attempting to do this in a proper fashion?
[00:04:24 –> 00:05:00] Stephen: There are so many companies that are doing that at the moment, and obviously, there are some companies that were created from scratch with a sense of social purpose. Who Gives a Crap, for example? But actually, there’s also a large number of the larger companies who are taking significant steps. So if you think of Unilever, for example, Alan Jope has famously gone on record as saying that if a brand in their stable of brands doesn’t have a social purpose that they can define, they’ll sell it.
[00:05:01 –> 00:05:04] Edmund: Yes, that’s right.
[00:05:05 –> 00:05:19] Stephen: They’re taking major steps in terms of giving all of their brands a defined social purpose and measuring the impact and the success – or otherwise – of that purpose.
[00:05:20 –> 00:05:38] Edmund: Excellent. And I think when we’re talking about a kind of good growth brand, it’s a brand that can be applied at a company level or could be applied at a product or service level. Do you see that? Or is it only a corporate level where this works?
[00:05:38 –> 00:06:52] Stephen: It can work at a corporate level. Of course, it can. It must because you have to look at the way you do business as an organization. But I guess what we’re talking about here more specifically, is defining your brands in these terms. By doing that, you are looking at your brands. At the end of the day, you define your brand in terms of consumer appeal, and a brand lives or dies. Of course, in terms of how strongly it resonates with customers and how it persuades more consumers to buy it more often. So when you’re looking at sustainable brands as opposed to sustainable companies, you’re defining it in customer-facing terms. How is the brand inherently useful for its customers and defining it in terms of social purpose? How will a brand, as a result, be more relevant to consumers, drive talk-ability, even protect its price elasticity, for example? So with brands, we’re talking about a customer orientated centric conversation.
[00:06:53 –> 00:07:06] Edmund: Excellent. And that, by the way, is a great teeing up for our next video, which is going to be all about differentiation. So many thanks, Steven. And I look forward to another conversation with you shortly.
[00:07:06 –> 00:07:08] Stephen: Thank you very much. Great to talk to you. Ed.
Edmund Bradford

Why a Sustainable Marketing Plan is Essential

Marketing Sustainability
Marketing Planning Sustainable

In brief:

  • Sustainability is a rising business issue that needs to be included in your marketing plan
  • Customers are demanding more transparent sustainability in choosing their provider
  • We explain why and how including it will help you and your brands to grow

The rise and rise of sustainability 

Global investment in sustainable companies (also known as ESG)  has risen dramatically over the past seven years.  In 2014, less than $20 trillion was held as assets under management. In 2020, this had risen to over $30 trillion.

There are now more funds being invested in sustainable companies than in other companies. This rise in investor interest in sustainability shows no sign of stopping. This is a major driver to work on a sustainable marketing plan.

By 2025, Bloomberg estimates that over $50 trillion will be invested, which is about one-third of forecasted total global assets under management (see ESG assets may hit $53 trillion by 2025, a third of global AUM by Adeline Diab and Gina Martin Adams).  The rise of ESG as an accepted measurement system for sustainability has been a key driver in the rise of investor confidence.

At a Government level, there are trillions of dollars being invested in sustainability. For example, in December 2020, the European Union agreed a €1.82 trillion Green Deal to support a green recovery. In February 2021, U.S. President Joe Biden announced a $2 trillion Green New Deal.  The UK Government has committed itself to legally binding targets in its 2008 Climate Change Act and will showcase its efforts at the COP26 UN Climate Change Conference in Glasgow, Scotland this November.  There is also rare cooperation between Western Governments and China on sustainability.

Consumers are also forcing change. A recent report by GfK has shown how environmental awareness and eco-activism are rising across global consumers.  For example, 24% of consumers are now taking prompt measures to cut their plastic waste (see “Eco-activism in FMCG is rising” image below from research done by Growth From Knowledge https://www.gfk.com/). Moreover, the Covid pandemic has driven an increase in environmental awareness as people breathe cleaner air and rediscover nature.

Eco-Activism-marketing sustainability

These changes are driving more sustainable practices throughout supply chains. In the B2B area, work is being done by procurement teams on how to measure supply chain sustainability. Unilever is one company driving its supply chain to become more sustainable and amongst many activities has recently announced that it will be asking its suppliers to add their carbon footprint to their invoices.  Joint programs are underway in many industries to reduce total waste. For B2C consumers and B2B customers, sustainability is becoming a key need alongside needs like cost and brand experience.

Why sustainability needs to be taken seriously by marketers in their plan

Sustainability is reshaping the marketing landscape.

Changing customer needs

Firstly, it is changing customer needs.  Research by GfK (Crisis as Catalyst report, 28 Apr 2021, by Growth From Knowledge ) suggests that consumer needs such as lower waste, preserving nature and more energy efficiency are rising in importance.  In the B2B space, customers like Unilever are demanding better marketing plans and more accurate measurements from suppliers about how they will become more sustainable.  Failure to produce viable plans and track implementation progress could lead to deselection as a supplier.

Sustainability is changing customer demand

The most obvious example of this is in the Electric Vehicle (EV) market where the IEA expects a 13 fold increase in the number of EVs on the world’s roads by the end of this decade. But this is not just happening in the automotive market. According to a 2020 report by Deloitte (Shifting sands: Are consumers still embracing sustainability?) between 28-45% of consumers have already bought more locally produced goods, or actively chosen sustainable or ethical brands, or stopped purchasing brands because of sustainable or ethical concerns.  The change in demand is already happening.

These changes are driving the appearance of new segments, new products/services and new competitors.

So where is sustainability in the marketer’s world? Change is being driven by CEOs, by CFOs, by procurement, the supply chain function and new Chief Sustainability Officers, but rarely by marketing.  For the worst companies, marketing is tasked with talking up the meager investment being put into sustainability as a mere tick-box or greenwashing exercise. For the average company, marketing is left with the role of communicating to customers (and other stakeholders) the work being done by others. But for the best companies, like Unilever and Pepsi, marketing plays a key role in re-shaping the sustainable market strategy of the firm and its entire supply chain.

Stephen Mangham, a branding expert and Master at Masters of Scale International, summarizes this well when he says, “The purpose of marketing has always been to produce growth. The role of CMOs today is to produce ‘good growth’ where sustainability is a measurable, customer-driven strategic imperative.”

Why we need sustainable marketing plans

After all your communication efforts over the years, how trusted is your brand on sustainability?  Very trusted? Somewhat trusted? How about not trusted at all! Sadly, according to the GfK report, only 25% of consumers trust businesses to tell them the truth.  This compares to 64% who trust academics, 34% who trust the media and is only two percentage points above celebrities!

It’s time for marketers to stop being the brand spin doctors and to become the brave sustainability do-ers.  Marketers need to help their firm find the best green segments, introduce and grow new greener products and services, change its purpose and reap the rewards from customers, from investors and from available government incentives. The brand will then reflect the true work being done.

The experience of leading companies like Unilever and Pepsi is that being truly sustainable is not a trade-off between profits and planet, it is a mutually inclusive journey that drives stronger growth.

Dr. Pooja Khosla, Vice President of Client Development at Entelligent Smart Climate Investing reinforces this point: “Many businesses are struggling to define the real and measurable impact of their offerings on the environment and society.  Marketers can help achieve this and empower sustainability.”

Sustainable thinking needs to be in most areas of the marketing plan: the mission statement, the financial projections, the market overview, the SWOT, the competitor analysis, the objectives, the strategies, the value propositions, the digital marketing tactics, the resources, the actions, the measurement, and the assumptions.

Doing this develops a better growth path for the company to follow. That is better for the customer, the company, the brands, the supply chain, and the planet.

Developing skills in sustainability is better for marketers as well.  The demand for people with sustainability skills is skyrocketing. I have personal knowledge of a recent master’s graduate in sustainability who was recruited by an international engineering firm and is now working with the United Nations on developing better measurement standards.

Conclusion

Going green is not just for the eco-warriors.  It makes good business sense. Marketers can play a massive role in making this happen. They need to stop being seen as the greenwashers of the past and act more like the leaders of real sustainable change. Marketers need to move from the edge to center-stage in building real sustainable companies built on “good growth brands.” A key tool to do this is a sustainable marketing plan.

We are currently developing such a tool.

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