Download Low-carbon Marketing Strategy Based on the SWOT

Low-carbon Marketing Strategy Based on the SWOT
JIANG Fazhu, SHI Kun, WU Dan
College of Economic and Management, Heilongjiang Bayi Agricultural University, China, 163319
[email protected]
Abstract: A new marketing concept——Low-carbon Marketing Concept was proposed in this paper,
where it first measured the feasibility of companies carrying out low-carbon marketing after the
financial crisis by means of SWOT analysis and then gave some suggestions on how to implement
low-carbon marketing strategy and how to operate in the era of low-carbon economy with creatively
using of 4P mix strategies. Suggestions included devising strategic plans for low-carbon marketing,
all-round R & D low-carbon products, making win-win low-carbon prices, building simple and smooth
low-carbon distribution channels, and low-carbon promotions.
Keywords: low-carbon economy, low-carbon marketing, SWOT, marketing strategies
1 Preface
A series of new concepts——"low-carbon economy", "low-carbon technology", "low-carbon
development", "low-carbon lifestyle", "low-carbon society", "low-carbon city", "low-carbon world" are
becoming more and more concerned throughout the world[1]. Furthermore, the Climate Change
Conference held in Copenhagen on December 7, 2009 took this concern into the peak. At the Congress,
Premier Wen Jiabao, on behalf of the Chinese government, solemnly made a public commitment that
greenhouse gas emissions per unit GDP in 2020 would be lower by 40%-45% than that in 2005.In order
to practice this solemn commitment, China will vigorously develop low-carbon economy, promote
low-carbon concept, and advocate low-carbon life. Low-carbon economy focuses on the whole
economic activates and takes full account of greenhouse gas emitted from every aspect of production
and consumption. It mainly deals with making more efficient choices between production and
consumption of energy so as to minimize greenhouse gas emissions [2]. The coming of low-carbon
economy will bring enterprises enormous business opportunities as well as challenges, and at the same
time, there will be a broad space for low-carbon marketing.
2 Low-carbon marketing concept
2.1 Content of low-carbon marketing
Low-carbon marketing is an operation and management process, which initiatively finds and actively
guilds consumer demands and coordinates the interests between enterprises and consumers centered on
sustainable development of human, society, and environment.
Low-carbon marketing concept guides enterprises’ production and operation against the background that
low-carbon economy is becoming a very important form of the new economic ideologies [3] and the
focus of the new round of international economic growth and competition. Traditional marketing
concept thinks that companies operating under market economy should always pay attention to
consumer demands, business conditions and status of their competitors, so it concludes that meeting
consumer demands, improving business conditions and creating more advantages than their competitors
would achieve the expected results of marketing activities. However, low-carbon marketing concept
innovates the theoretical framework of traditional marketing concept and breaks its marketing center.
That is, low-carbon marketing concept focuses not on the primary issue that how to coordinate those
three relationships to achieve their own interests in terms of traditional marketing, but on the
relationship between low-carbon economy. Business decisions must be first based on the new economic
development model with low energy consumption, low pollution, and low-emissions.
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In the era of low-carbon economy, enterprises actively carry out low-carbon marketing for two reasons.
On the one hand, it is a performance of enterprises obliging social responsibility. It is helpful to establish
a good corporate image among target markets. On the other hand, it is winning chips for enterprises to
enhance their strengths, to seek long-term, sustainable development in this new and competitive era of
economic development.
2.2 Differences between low-carbon marketing and traditional green marketing
Low-carbon marketing and traditional green marketing are both originated from the concept of
sustainable development and based on the traditional marketing theory. However, low-carbon marketing
and green marketing are two different stages of marketing concept.
2.2.1 Theoretical background
Green marketing concept can be dated back to 1970s, when a series of contradictions and conflicts
between resource shortage and irrational using brought it forward. Low-carbon marketing concept is
budded from British Energy White Paper "Our energy future: creating a low-carbon economy" in 2003.
From then on, low-carbon marketing is concerned in our society. It is rooted in the devastation on
human environment caused by imbalance development of economy and society.
2.2.2 Marketing concept
Green marketing concept is an environment-friendly marketing concept. It advocates reasonable
allocation of internal marketing resources under the premise that consumer interests, business interests
and social environment interests are coordinated [4]. Low-carbon marketing concept requires deeper
rather than complying with environment-friendly. It promotes that all business organizations operate to
coordinate the interests between consumers and business on the basis of sustainable development and
protecting social environment interests.
2.2.3 Basic point of marketing
Green marketing concept is anchored in the target customers with green consumption themselves to
carry out marketing activities, so green consumption is the prerequisite of green marketing. And green
marketing concept is a passive marketing concept. Low-carbon marketing concept is based on
initiatively promoting low-carbon consumption concept among target consumers to make them know,
understand, and accept it and to popularize low-carbon lifestyle. Thus, low-carbon marketing concept is
a proactive marketing concept.
2.2.4 Performance Assessment
Corporate performance, ecological performance, and social performance are three basic performance
assessment indicators of marketing. Green marketing concept thinks that corporate performance is the
core of green marketing performance, and its most important indicator variable is GDP, while,
environmental performance is only a condition of enterprise performance[5].Low-carbon marketing
concept views environmental performance as the core of low-carbon marketing performance and its
most important indicator variable is the emission of carbon per unit GDP. Also, in the low-carbon
marketing performance appraisal system, environmental performance is far greater than corporate
performance and on this basis, adds the assessment of human existence performance.
2.2.5Target of marketing
Although, both low-carbon marketing and green marketing are originated from sustainable development,
they have respective marketing objectives. Green marketing is aimed to increase the net growth of
economy, while low- carbon marketing is to reduce greenhouse gas emissions per economic growth.
3. SWOT analysis of low-carbon marketing
SWOT analysis is also known as trend analysis. On the whole, SWOT can be divided into two parts: one
part is SW to analyze strengths and weaknesses of internal conditions; the other is OT to analyze
opportunities and threats of external environment. According to SWOT, and comprehensively using
systematic analysis to match various factors together helps to draw a series of corresponding
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conclusions with a certain degree of decision-making.
3.1 Internal conditions of low-carbon marketing
3.1.1Strengths
(1) Market demand is growing. With the holding of Copenhagen Conference on Climate Change, how to
reduce carbon emissions becomes a topic of common interest. Low-carbon life comes into the homes of
ordinary people and is becoming a lifestyle coming up without times. A British survey in 2008 showed
that more than two-thirds of people would give priority to buy products supplied by those companies
who are active in energy-saving. In recent years Hollywood stars strongly seeking after hybrid vehicles
also demonstrates that low-carbon consumption is gradually becoming a new consumer-oriented.
(2)Low-carbon marketing leads business to success. President of Beijing Siji Micoe Solar Energy
Technology Co., LTD, Li Jun leading thousands of its elite parters and cooperators released to the world
“Work together and lead low-carbon economy” on the deck of the aircraft Minsk on January 29, 2010.
He called on all businesses and citizens throughout the world “Love blue planet, and build low-carbon
homes”. This clever marketing action reflected the rapidly growing Chinese solar water heater
business’s unique view of the world. For decades, Siji Micoe has found an effective way to low-carbon
marketing. From acquainting it in Beijing University to hand in hand with aerospace, then to allying
with Honeywell——one of the top 500 in the world, Siji Micoe indisputably becomes the leader of its
industry as a result of low-carbon marketing.
(3)Low-carbon marketing can create a good corporate image. At the beginning of 2010, the case of
Toyota global recalling its cars intensified and it reshuffled the global auto industry. On the occasion of
new 2010 cars entering markets, Land Rover announced that it officially launched the plan of reducing
carbon dioxide emissions and compensating for it in China. Shortly, General Motors also launched a
public service activity “Low-carbon for the New Year” so as to call on the public to choose a low-carbon
way to celebrate the Spring Festival. Chinese Changan Auto within minutes published a message in its
website of CHANA BENNI Mini body painting contest, whose subject was “Paint carbon, Paint
fashion”. Almost all car brands in the world have played the banner of low-carbon one after another
trying to create good corporate image and to occupy greater market share in the reshuffling.
3.1.2Weaknesses
(1)Low R & D ability. Take wind power technology for example, while it is the fastest growing new
energy industry and has already had the capacity to manufacture a whole fan machine below 1.5MW, the
technology of some of its core components such as bearings, converters, control systems, gear boxes, etc.
is still difficult to capture.
(2)Low energy efficiency. In 2009, China has consumed 6.31t standard coal. Crude oil consumption
increased by 7.1%, electricity consumption by 6.2%, copper consumption by 39.7%, and ethylene
consumption by 8.0%[6]. China's energy efficiency is improving year by year, but the level is still
relatively low. Especially the recent years in 21st century, investments in high energy consumption
industries such as steel, cement, electrolytic aluminum, nonferrous metal have been overheated, so that
per unit GDP energy consumption has showed an upward trend and improving energy efficiency is
imperative.[7]
(3) Do not let low-carbon be a gimmick. Low-carbon is highly appreciated over the world; however,
carrying out low-carbon marketing should not be only an empty slogan. Whether it is marketing
products or marketing culture, one that can really enhance and achieve brand value is far from one or
two activities, but having a faith in low-carbon faith and persistently following it.
3.2 External conditions of low-carbon marketing
3.2.1Oppotunities
(1)Vast space. Zhou Dadi, a Chinese energy expert said in an interview on Dec. 8, 2009 that developing
low-carbon economy is in concert with China's pursuit of sustainable development, and meets the
requirements of China's current economic restructuring. Developing low-carbon economy will be as an
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important content written into the 12th National Economic and Social Development Five-Year
(2011-2015) plan.
(2)Good financing environment. The capital invested in "green industry" has almost doubled,
accounting for 19% of the total investment in recent years. In 2007, investments in clean energy projects
(excluding large hydropower) increased by 91% compared with 2006, reaching $ 10.8 billion. It is
estimated that by 2020 it will come up to $ 268 billion [8].
(3) Infinite potential market. China is yet the world's largest emitter of greenhouse gases, accounting for
2% of global emissions. It means that the market space that can be created in the era of low-carbon
economy is also the largest. For Chinese enterprises, there will be clear comparative advantages with the
huge market, coupled with government’s firm belief in reducing.
3.2.2 Threats
(1) International barriers. In the new era of low-carbon economy, environmental responsibility measured
by carbon footprint will become another basic commitment that enterprises must provide. The largest
retailer Wal-Mart required its 100,000 suppliers to build mechanism of carbon footprint tests within 5
years in April, 2009. In mid-January, 2010, EU held a meeting to discuss the feasibility of imposing
carbon tariff on those trading partners who didn’t reduce their greenhouse emissions. Once EU imposes
carbon tariff, Chinese goods exported to Europe will be forced to afford 26% additional tariff costs.
These moves of the western world raise barriers for Chinese enterprises entering low-carbon field and
increase the difficulty of carrying out low-carbon marketing.
(2) Questionable market. Many consumers doubt that whether low-carbon products are really
low-carbon and green, and various low-carbon and environmental certificates and certification are also
questioned. Since many consumers have no personal experience and they do not want to spend money in
having a try because of the high price of low-carbon and environmental products, some products are
unsalable.
4 Suggestions on implementing low-carbon marketing
The main idea of making marketing strategies is to make use of strengths, and overcome weaknesses; to
take advantage of opportunities and resolve threats; to sum up the past, be based on the present, and look
to the future. This paper innovatively used the marketing mix strategies, with all factors considered, so
as to make an optional marketing strategy for enterprises’ future development.
4.1 Devising strategic plans for low-carbon marketing
Low-carbon economy will bring huge business opportunities to Chinese enterprises; as a result, all
enterprises should be forward-looking and deep-seeking trying to make a long-term strategic plan to
meet the rapid development of their industry.
First of all, enterprises should change their marketing concept and establish a comprehensive view of
low-carbon marketing. In the era of low-carbon marketing, enterprises should center on low carbon
emissions, improving the environment and sustainable development and choose low-carbon marketing
concept as a guiding principle in their everyday operation activities. Not only the marketing department,
but all sectors in enterprises should work under the principle of low-carbon concept. Secondly,
enterprises should build low-carbon-based forms of organization and establish a comprehensive
low-carbon management mechanism. Low-carbon marketing goes through the whole process of
production and operation, involving all departments evens every individual in the enterprise. This
encourages companies to break the traditional organizational structure, and actively build
low-carbon-based forms of organization to make low-carbon management systematic, standardized,
comprehensive and measurable. Furthermore, nurture a low-carbon corporate culture, and wildly
popularize it among employees in enterprises. Corporate culture is spiritual pillar; intangible wealth and
power source for continuously forge ahead. Nurturing low-carbon corporate culture is conducive to
enhancing the cohesion and centripetal force, to the implementation of low-carbon strategic plan, and to
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raising core competitiveness’s of enterprises. Finally, make a low-carbon corporate image and raise the
overall enterprise value. In the era of low-carbon economy, making low-carbon corporate image is an
inevitable choice for enterprises’ development, and it is beneficial to enhancing the overall enterprise
value, improving corporate appeal and expanding its influence.
4.2 All-round R & D low-carbon products
Product strategy is the premier among marketing mix strategies. To R & D a product or service includes
three interrelated meanings. R & D low-carbon products and low-carbon design is the first. In product
design, in order to meet demands for low-carbon consumption in target markets, companies should
comprehensively consider various factors, such as material selection, manufacturing process, function
and product characteristics, among which the most important is the demand for low-carbon function of
products. The second is low-carbon products’ brand management. Brand is the foundation of enterprises
shaping their image, enhancing popularity and reputation. In the era of low-carbon economy, companies
should examine whether their ideas are in accordance with the value of low-carbon consumption,
whether it will lead to resonance of low-carbon consumers, and then they should apply low-carbon
terms that can be understood by consumers to convey brand appeal and establish a brand image. The last
is low-carbon products’ packaging management. Packaging management includes the design of product
packaging, the selection of packaging material, the production of packaging and the processing of
post-packaging. Successful implementation of low-carbon packaging is a booster for low-carbon
marketing. Enterprises should abandon the traditional packaging idea——packaging to promote, and
highlight low-carbon concept throughout the whole chain of packaging management under the guidance
of low-carbon concept.
4.3 Making win-win low-carbon prices
Pricing is the most flexible factor in marketing mix strategies. Pricing low-carbon products should take
all internal and external factors into account. Enterprises should adopt flexible pricing strategies
according to production costs, target market, life cycle and policy factors. First, keep in mind that
environment should be compensated. Companies should embrace the expenditure of reducing carbon
emission into costs, as a major part of the price of low-carbon products. Second, low-carbon products
are still novelty for consumers. Due to high R & D expenses, part of the high-end and international
market-oriented products may take skim pricing. In domestic market, pricing on low-carbon products
must be oriented on popular consumers taking penetrating pricing. Third, pricing strategy of mixing
products. There is a big price gap between the prices that can be accepted by consumers as levels of
economic development and region differs. Companies may seek a series of different prices, and strive to
maximize profits in the premise of keeping market share. Pricing strategies for business include product
line pricing, options pricing, ancillary product pricing, product pricing and product bundle pricing [9].
Fourth, price adjusting strategy. Low-carbon products are also subject to changes in the demands of
target markets, evolution of product life cycle, changes of policy and other factors. Enterprises may
consider taking discount pricing, segment pricing, geographical pricing, and policy pricing in different
stages.
4.4 Building simple and smooth low-carbon distribution channels
Products and service transmits from manufacturers to consumers through distribution channels.
Low-carbon distribution channels are the key to marketing. Only construction of smooth low-carbon
distribution channels can ensure successful implementation of low-carbon marketing. So enterprises
should spare no effort to establish them. There are four distribution channels for us to choose. The first
one is direct distribution channels. Products are directly sold to consumers without intermediary.
Companies can choose this way to minimize the emissions of carbon and resource depletion at the
places where low-carbon markets are more mature. The second one is intermediary distribution channels.
There is a layer of intermediaries in distribution channels. Companies in places where low-carbon
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markets are yet not mature can choose this indirect marketing channel. The third one is changes in
channel structure. The development of IT and the mature of direct and online marketing have had a
tremendous impact on the organization of marketing channels. A major tendency is the weakening of
intermediaries, which accelerates the flat and simplification of channel organizations. The last one is
logistics management. In the era of low-carbon economy, companies must decide the best model for
storage, handling and transportation of products and service so that consumers can get low-carbon
products at the right time by right means. The efficiency of logistics management plays a very important
role in building simple and smooth distribution channels.
4.5 Low-carbon promotion
Low-carbon promotion tries to spark consumers’ desire to buy low-carbon products and eventually reach
a deal by using a variety of low-carbon ways, communicating with consumers, popularizing low-carbon
concept and promoting low-carbon lifestyle. Low-carbon promotion is the substantive phase that can
lead consumers into low-carbon life. First of all, low-carbon ad. Advertising is the most important way
to transmit information. Enterprises should choose different advertising strategies according to the
characteristics of low-carbon products and different life cycle, including leading advertising, told
advertising, persuading advertising and reminding advertising. Secondly, promotions mix of low-carbon.
Promoting low-carbon is the extension of enterprises transferring their low-carbon concept.
Demonstration, explanation and field marketing of low-carbon products help to promote the low-carbon
features and functions of their products, impart low-carbon knowledge, increase the loyalty of
low-carbon consumption, balance market share, and enchance corporate reputation. What’s more,
low-carbon public relations. Low-carbon public relations are an effective way to establish a broad social
base for successfully carrying out low-carbon marketing. They can promote their efforts in reducing
carbon emissions and the low-carbon features of products by press and other mass media to enhance the
awareness and loyalty of low-carbon products. Corporate public relations should strengthen the intensity
of using of the Internet when the Internet is very popular in our everyday life. Enterprises can also
participate in some public relations activities such as charitable and public service activities to establish
a low-carbon enterprise image and improve corporate reputation.
5 Conclusion
The value of low-carbon marketing strategy lies in creating value for the enterprise through strong
enforcement. In view of the diversity of the environment and the complexity of their operating
conditions, the organization should give full consideration to the level of integration between their own
low-carbon marketing strategy and enterprise's own diversity, complexity in the course of developing
and implementing low-carbon marketing strategy. According to the different stages of enterprise
development, the enterprise should target to develop, carry out low-carbon marketing strategy, in order
to face the challenge of the times, seize opportunities and seek a broader living space and sustainable
development prospects in the low carbon economy.
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