Download European Retail Forum - the European Environmental Bureau

European Retail Forum
Issue sheet # 3
Marketing and effective
communication
In a globalised economy, average consumption levels are on the rise due to:

increasing world population;

the expansion of middle and lower-income consumers and of a general culture of consumerism

economic systems in industrialised societies based on consumption and production
These levels of consumption are unsustainable, and the improvements in energy efficiency and the emergence
of new technologies do not outweigh them (called the ‘rebound effect’), resulting in increased environmental
damage. Changes in lifestyles are therefore necessary. For consumers this entails considering whether
material consumption is necessary and modifying the ways in which they choose and use products and
services. Given that the public behaves within the societal structure in which it lives, there is also a need for
economic models, public policy and business behaviour and models to reflect sustainable consumption and
production as a central objective.
Introduction
Advertising1, communications2 and marketing3 aim to encourage the purchase of goods or services, in other
words to encourage consumption. They are used to create customer demand, satisfy customer requirements
and retain customer loyalty. Product communication to the consumer is mainly part of the promotion
instrument. The effectiveness of marketing instruments is usually measured in increased sales. Improvements
in customer satisfaction or customer loyalty could also be objectives of marketing instruments even if it is hard
to measure direct impact.
Within the context of sustainable consumption and production (SCP), future use of these sales tools will need
to refined, to help in addressing the issue of the ‘rebound effect’ and to make consumption patterns more
sustainable. For instance, they can be used to communicate more sustainable lifestyle messages, rather than
simply aiming to increase sales of better performing (environmentally and socially) products. This requires
coherence between a companies CSR or sustainability objectives and its marketing objectives and practices.
However, retailers and producers alone cannot achieve such a shift – public policy frameworks and more
sustainable economic models are needed, to ensure a harmonised approach and the right framework
conditions for SCP.
As a start, corporate and product advertising, communications and marketing have a role to play alongside
According to Wikipedia, advertising is a form of communication intended to persuade its viewers, readers or listeners to take some
action. It usually includes the name of a product or service and how that product or service could benefit the consumer, to persuade
potential customers to purchase or to consume that particular brand. Modern advertising developed with the rise of mass production in
the late 19th and early 20th centuries. Commercial advertisers often seek to generate increased consumption of their products or
services through branding, which involves the repetition of an image or product name in an effort to associate related qualities with the
brand in the minds of consumers.
1
According to Wikipedia, corporate communication is the communication issued by a corporate/organization/body/institute to all its
public(s). Publics can be both internal (employees, stakeholders, i.e. share and stock holders) and external (agencies, channel partners,
media, government, industry bodies and institutes, educational institutes and general public). The Corporate Communication area will
help this organization to build its message, combining its vision, mission and values and will also support the organization by
communicating its message, activities and practices to all of its stakeholders. Organizations can strategically communicate to their
audiences through public relations and advertising.
2
According to Wikipedia, marketing is the process by which companies advertise products or services to potential customers. It is an
integrated process through which companies create value for customers and build strong customer relationships in order to capture
value from customers in return. Marketing is used to create the customer, to keep the customer and to satisfy the customer. The
evolution of marketing was caused due to mature markets and overcapacities in the last decades. Companies then shifted the focus from
production to the customer in order to stay profitable. The term marketing concept holds that achieving organizational goals depends on
knowing the needs and wants of target markets and delivering the desired satisfactions. It proposes that in order to satisfy its
organizational objectives, an organization should anticipate the needs and wants of consumers and satisfy these more effectively than
competitors.
3
1
consumer information and education in general, in changing consumer consumption patterns. These enable
consumers to question whether material consumption is necessary, and when it is, to find, choose and use
environmentally friendlier products and services, by providing information, ensuring availability and
affordability.
Sales tools can also have a role in leveraging the company’s sustainability credentials to build brand equity. In
order to do this, it is vital to ensure consistency with the respective corporate sustainability strategy; any
claims made must be presented in a specific, accurate and unambiguous manner.
Scope
The subject of marketing and effective communication in the context of SCP is not easily addressed, given that
the financial success of a retail company is based on its sales. At the heart of the debate is how to develop a
public that is informed of sustainability issues to be able to behave sustainably, beyond their purchasing
decisions – that is, in their use and end-of-life management decisions of the products they purchase. The
starting point is to make it much easier to behave sustainably than unsustainably, including without making
conscious decisions to make sustainable choices.
Retailers are well-placed to help add to solutions as they form a bridge between the supply base and customers,
with the potential to influence a very large number of people. “Retail is almost unique in its ability to reach out to
a very large number of people in their everyday lives to push the sustainability agenda and raise awareness of
the issues.”5
Since retailers alone cannot create a sustainably behaving public, the focus of this issue paper is in what
retailers can do now, before looking at what more is needed for retailers to be able to do more. Helping people
to behave more sustainably means making better performing products more easily available and attractive to
the public, and communicating messages of sustainable behaviour. Coherence between CSR/sustainability
objectives and the communications strategy/activities/messages of retailers is central to this, as is the
availability and easier accessibility of these better performing products.
Marketing instruments to promote green buying
For the marketing of better performing products, companies use marketing instruments which are well
established for other products. The key challenge is to build trust that such products produce real advantages
for the environment and perform equally well as the product formerly used.
In the competitive world between different brands, named brands and own brands and between numerous
retailers, consumers decide on the success of different marketing instruments through their daily purchasing
decisions.
Customer-focused marketing is based on the four Ps: product, promotion, price and placement. For fast
moving consumer goods (FMCG)6, a consumer will stay in a store up to 45 minutes but will decide, on average,
within 5 seconds which of a different product type to choose from the shelf. Furthermore, studies show that a
typical consumer can take in a maximum of 7 messages for each product, including the name of the product.
The most important determinants in the consumer’s decision to purchase or not to purchase a particular
product are the price and performance/quality of products. The marketing ‘mix’ used by the retailer, is
therefore very important in helping to shape the sustainable consumer before they enter the store and after
they have left it.

Assessing the effectiveness of marketing and consumer information
Methods for assessing the effectiveness of marketing and communication tools differ depending on the actor
(producer, retailer, environmental or consumer NGO etc.) and the initiative. For retailers and producers the
success of a marketing initiative will usually be assessed on the basis of increased sales, numbers of people
visiting the store etc. Sales data and market research allow for a better understanding of consumer attitudes,
beliefs and behaviours that can then be fed into the planning process, driving innovation and guiding key
business decisions, including pricing, packaging and distribution. Nevertheless, from a sustainability
« Stern – Initial comments from the Retail Sector », Retail Sector Working Group, 2007. The response from the retail sector to the
Stern Report on the economics of climate change.
6
Frequently purchased at relatively low cost of essential or non essential goods such as food, toiletries
REFERENCE MISSING HERE
5
2
perspective the real challenge is to ensure that the consumer will develop loyalty to better performing products
(purchasing these instead of poorer performing ones), and changing their habits when using and finally
disposing of the product. For instance, reverting to compact washing powder requires using less product.
The EU Legal Framework
At European level, the renewed sustainable development strategy adopted by the European Council in 2006
called for an action plan on Sustainable Consumption and Production. The SCP and SIP (sustainable industrial
policy) action plan was adopted in June 20088. The Action Plan is the EU’s contribution to a global (UNEP)
process on sustainable consumption and production, building upon both the Rio and the Johannesburg
Summits. The Johannesburg Plan of Implementation includes the following as measures to be taken as part of
plans and programmes on SCP:

Develop production and consumption policies to improve the products and services provided, while
reducing environmental and health impacts, using, where appropriate, science-based approaches, such
as life-cycle analysis;

Develop awareness-raising programmes on the importance of sustainable production and consumption
patterns … through … education, public and consumer information, advertising and other media…;

Develop and adopt, where appropriate, on a voluntary basis, effective, transparent, verifiable, nonmisleading and non-discriminatory consumer information tools to provide information relating to
sustainable consumption and production, including human health and safety aspects

The EU’s action plan sets out measures aimed at improving the environmental performance of products and
fostering their uptake by consumers and public authorities. It contains other concrete proposals: on the
production side:
extension of the Eco-design directive to cover all energy related products. Minimum requirements are
set for products with significant environmental impact, focusing on key environmental aspects
revision of the EMAS Regulation




On the consumption side:
extension of the energy labelling directive to include more products;
revision of the eco-label Regulation;
the setting up of the Retail Forum;
communication on green public procurement.

However, there is currently no public policy framework on ecodesign (beyond energy-related products), to help
to send clear signals to manufacturers on the need to make improvements to their products, nor are there
harmonised, agreed tools on how to identify the key environmental or sustainability impacts of products or
how to choose between impacts when deciding improvement measures (for example between water
consumption and chemical substances). There is also not a clear consensus, based on sound scientific,
measurable and transparent criteria, of what is meant by “sustainable” “green”, “ecological”, “environmentally
friendly”, “environmentally friendlier” etc. products.
Despite these fundamental policy gaps, retailers need to move forward on making better performing products
available on the market. Better performing products, we propose, include all products which go beyond
minimum legal requirements from an environmental perspective. It therefore includes products such as ecolabelled products and other certified schemes, but also those which are not subject to third party verification.
The EU’s SCP action plan did not propose the development of sustainable consumption policy. This is needed if
we are to address this important issue, beyond the current Action Plan approach of labelling and consumer
information.
There is also currently no specific EU legislation regulating environmental communication and marketing. There is
however a general directive on unfair commercial practices, which covers misleading commercial practices and
applies therefore to misleading environmental claims (see Art. 6 of Directive 2005/29/EC). This Directive ensures
that consumers are not misled and that any claim made by traders in the EU is clear, truthful, accurate and
substantiated, thus enabling consumers to make informed and meaningful choices. Furthermore, the Directive
aims to ensure, promote and protect fair competition in the area of commercial practices. In order to develop a
common understanding and a convergence of practices when implementing and applying the Directive, the
Commission has recently published a document ("Guidance on the implementation/application of directive
8
(COM (2008) 397 final)
3
2005/29/EC on unfair commercial practices") on the key concepts and provisions of the Directive, perceived to
be problematic. A chapter of this document is devoted to misleading environmental claims. 9
Opportunities and Barriers
The EU’s SCP action plan does not include a vision on where we need to go, nor clear objectives to help us
achieve that vision. Such a public policy framework is needed to help retailers, manufacturers, governments
and civil society organisations to work together towards a common goal.
A major challenge towards sustainable consumption patterns is to foster in consumers long-term
environmental values which they integrate into purchasing behaviour and decisions. Such values changes are
better supported by coherent messages from ‘education’ tools such as awareness-raising, formal education,
advertising, media, etc. For such education to be effective, however, identical or similar messages must be
given by a number of different sources.
Due to their strategic position in the supply chain, retailers are important conveyers of such messages. They
also have a long experience in working with other players along the supply chain, such as manufacturers,
NGOs, media, public authorities etc. These messages have maximum effect if they are clear, simple and, when
possible, highlight the financial advantage for the consumer.
The current EU2020 (Lisbon Strategy post-2010) offers the opportunity for the Retail Forum to communicate
on the need for economic policy to include measures on truer pricing, such as VAT reduction on better
performing products. Support for economic policy that is coherent with sustainability needs to be made public.

Opportunities
Consumers are increasingly aware of environmental issues - in particular, climate change - and are more and
more receptive to environmental messages. For instance, according to the Eurobarometer survey on
Europeans’ attitudes towards SCP, the level of environmental awareness of the impact of consumer products is
high: some 55% say they fully know or know the most significant impacts of the products they buy.
Consequently, there is an opportunity to develop national messages on sustainability issues, to which retailers
can contribute and participate.
Environmental sustainability has already become a competitive tool for retailers, particularly due to public
interest in climate change. Individual retailers are already competing on climate change activities, and on
other sustainability issues. The opportunities for better coherence between sustainability objectives and
marketing objectives and messages is therefore much easier than in the past.
To demonstrate their commitment and increase their credibility, many large retailers have already set up
partnerships and/or are running campaigns with environmental or consumer NGOs, manufacturers and public
authorities (environment ministries, environmental agencies) etc. Partnerships with NGOs may take different
forms. Most frequently, NGOs provide assistance in the development of the environmental sustainability
strategy of the company, the communication of environmental information and the identification of
environmentally friendlier products.
Retailers may also decide to promote voluntary initiatives from manufacturers (such as the wash right
campaign), or other schemes such as the EU eco-label as part of their product selection activities. The easier
availability of better performing products on shop shelves can be improved through increased efforts by buyers
to identify the better performing products across a wider range of product groups.
On the wider public policy framework, 2012 is a key year when reviews of SCP Action Plan and the Ecodesign
of Energy-Related Products Directive will take place. These will be a prime opportunity to develop an Action
Plan with more details, clearer objectives, and more support mechanisms including ‘education’ elements
involving collaborative activities in which retailers could participate more systematically.
9
Beyond the "black list" contained under Annex I of the Directive, where some practices are always considered unfair, and therefore
prohibited, regardless of the impact they have on the consumer's behaviour, the above mentioned Guidelines highlight two different
situations, regarding environmental claims, which may occur:
(i)
Objective misleading practice: the environmental claim is misleading because it contains false information and is therefore
untruthful.
(ii)
Subjective misleading practice: the environmental claim is misleading because it deceives or is likely to deceive the average
consumer, even if the information contained therein is factually correct.
Breaches of binding codes of conduct containing environmental commitments may also be considered misleading actions
4

Barriers
Gaps in key public policy areas, including in SCP and products mean the wider societal framework does not
exist to help guide retailers, manufacturers, or the public towards sustainable behaviour. Where tools do exist
– Energy-related Products Directive, Ecolabel – these cover a very narrow range of products and on their own
cannot build the ‘critical mass’ of sustainable behaviour. Additionally, recent political decisions on consumer
successes such as the Energy Label now no longer communicate clear messages about the performance of the
products in relation to the A-G range.
Many studies on consumer behaviour demonstrate the wide gap between what consumers say and what they
do. Understanding and overcoming this barrier should be a priority, using research that already exists10. When
asked, consumers often identify the following barriers to environmentally friendly consumption habits:

lack of understanding how they, as consumers, can make a difference;

lack of information about what they can do;

that purchasing environmentally friendlier products is financially onerous;

doubts about the quality and level of performance of environmentally friendlier products.
These remarks partially stem from the absence of a definition of environmentally friendlier products. Making
better use of the scientific research already available (recognised LCA approaches with sound criteria for each
product category, etc.) could solve some of the confusion.
In the absence of definitions and clear rules of what can be called “environmentally friendlier”, some
environmental claims appear merely to be “green washing” These tend to be picked up by the media and are
therefore potentially damaging to a company’s credentials, and to consumer confidence in general. Only 6 %
of respondents to the EU barometer survey claimed to fully trust producers’ claims.
For this reason, many retail companies, fearing attacks from NGOs, the media or legislators, are reluctant to
promote products which meet standards beyond legal minima, such as the GlobalGan (the BRC consumer
goods standard which covers 100% of non-food products).
Well-designed LCA tools can identify what the key environmental impacts are and where along the lifecycle of
the product they occur, whether in production, use or disposal. Misconceptions about areas of greatest
environmental impact lead to the general conclusion that claims may not always convey the overall picture.
Yet to deliver an effective communication, it is important to convey the whole picture.
Consumers also sometimes expect environmentally friendlier products to cost more than standard products:
they therefore tend to be niche markets. However, prices could be reduced by means of public procurement,
which would allow economies of scale. Consumers also occasionally question the performance of
environmentally friendlier products. These issues become especially relevant in periods of economic
uncertainty. What about economic reform policy? There is a COMM strand of work on this – roadmap on
elimination of environmentally harmful subsidies, ecological fiscal reform (including reduced VAT, bonus-malus
schemes, etc).
The competitive nature of purchasing (individual retailers trying to get the best ‘offer’ on a product) has
prevented retailers from sharing best practice on sustainability issues such as criteria selection for better
performing products. Overcoming the challenges of sustainability (how to encourage manufacturers to make
better performing products, how to identify these, how to reduce environmental impacts, etc) requires
collaborative effort. The tension between sustainability and competition needs to be reduced, with retailers
working together more than in the past, to create a market-wide demand for better performing products. DG
Competition needs to be part of the discussion, to avoid anti-trust arguments coming when these are not
appropriate.
There is also a practical obstacle to the promotion of environmentally friendlier products, namely that the
supply does not always meet the demand, as is the case for organic products. This forces retailers to source
globally (for example organic products from China), jeopardising the environment credentials of the product.

Legal barriers
Lack of public policy and appropriate legislative measures to back-up sustainable consumption, and particularly
Most notably, studies undertaken by Tim Jackson, Professor of Sustainable Development at Surrey University in the UK. For a list of
his relevant work, see: http://www.surrey.ac.uk/resolve/view_profiles.php?teamMember_ID=15
10
5
product policy. No comprehensive legal basis for improving products, beyond the Energy-related Products
Directive, Ecolabel, and Energy Label. General Product Safety Directive does not link safety and sustainability.
The legal dimension can also prove to be an obstacle. In particular, the amount of mandatory on-pack
information required may cause that the key messages are overlooked.
National implementation is not always in line with EU legislation, as in fishing quotas, preventing clear, simple,
homogeneous information as well as an agreement on what is sustainable.
Increasingly, positions taken by Commission officials on antitrust rules may also create barriers as they
prevent collective choice-editing decisions (e.g. energy efficient light bulbs in the UK).

Internal barriers
In smaller retail companies, environmental challenges are often misunderstood or under evaluated.
For larger companies, diverging views can be had between the marketing and sustainability departments as to
what is a “sexy” product or message to put forward. Moreover, retail companies are often structured in such a
way as to leave as much discretion as possible to each shop regarding what they sell and the messages they
convey, limiting the possibilities for large scale marketing and communication. According to a recent study on
retailers and CSR11, progress along change trajectories towards effective CSR requires both ‘internal’ and
‘external’ strategic and operational alignment.
To communicate their general company sustainability strategy, larger retailers use sustainability reports. Yet
generally these are not directly addressed to consumers but to shareholders etc. Communication on this point
needs to be improved to help improve the credibility of the retail brand.
Transfer of Good Practices
Companies to give one, max. 2 examples of successful
Conclusions and possible areas for action
Changing consumer habits and consumption patterns towards more sustainable ones is a long-term objective.
Key challenges
Development of clearer policy on SC and SP – links to innovation
Economic policy that reflects sustainability of products and services – stimulate discussion during EU2020 and
economic recovery exit strategies

sound definition and common understanding of what are better environmentally performing products and
what the key environmental hot spots are for each product family (making better use of available science +
framework to elaborate guidelines);

identifying what messages should be conveyed, in order to support consumers making informed choices
and to promote behavioural change;

closing the gap between what consumers say and what they do;

make environmentally friendlier products affordable;

convincing consumers to buy an environmentally friendlier product a second time with a view to a final
change in consumer behaviour;

reconciling product information and broader messages (sustainable life-style etc.), without ignoring the
fact that information overload negates the benefit of the information.
What retailers can do

facilitate access to environmentally friendlier products (choice editing) at affordable prices;
“CSR business models and change trajectories in the retail industry: A Dynamic Benchmark Exercise (1995-2007); LEI Wageningen
UR, The Hague; October 2009
11
6

all environmental claims should be clear, credible and comparable. “Green washing” should be avoided by
relying on verifiable, transparent information and easy-to-understand labels;

relaying sustainable consumption messages through participation in government and civil society
campaigns (e.g. sustainable energy Europe week, mobility week, world environment day…);

communicate the company’s vision on sustainability and ensure that the stores concerned meet the
respective messages communicated and are consistent at all stages.
What policy-makers can do

improve the knowledge base, identifying the hot spots according to consistent and credible LCAs. Current
environmental LCA databases are often incomplete (missing emission factors for many common ingredients
and components). Harmonisation between these databases is needed to make them interoperable.

Intensify efforts for better consumer education by public authorities and other players consumers trust.
Messages must also be consistent over time.

facilitate access to environmentally friendlier products (choice editing) at affordable prices; - bonus/malus,
VAT reduction, shift from labour to resources

Revise mandatory rules on packaging information. Other instruments like additional information by SMS or
on websites probably appropriate.

Stimulate and promote the ecolabel and organic schemes to increase the number of products with such
labels. Enhance knowledge and credibility of these schemes.
What retailers and other stakeholders can do

collaborate further with all the relevant stakeholders along the supply chain, including public authorities,
to share best practices regarding the promotion of environmentally friendlier products and to develop simple
common messages on issues to be identified and/or build on existing initiatives.

conduct marketing and communication assessments to focus more on sustainability criteria, including
comparison between the effectiveness of different communication tools;

conduct campaigns linking consumption and lifestyle. For some products the major environmental impacts
are related to the way the products are used and dealt with as waste; some types of products promote more
sustainable lifestyles than others. Involve all relevant parties in such campaigns to make a sustainable lifestyle
trendy.

build-on existing best practices, partnerships, campaigns and voluntary actions carried out by relevant
stakeholders
7