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A research on enterprise competence improvement based on green marketing
A research on enterprise competence improvement
based on green marketing
Xiao Guojian, Lv Xueqing
(School of Management, China University of mining and technology, XuZhou, Jiangsu221008, China)
Abstract: This article analyses enterprise competence and its determining factors, which concludes the
relationship between green marketing and enterprise competence. Meanwhile, based on different situations of
green marketing in domestic and foreign companies, it calls for the necessity of practicing green marketing in
domestic companies. At last, it analyses how domestic companies improve enterprise competence based on
green marketing.
Key words: enterprise competence sustainable development
green marketing
1 Introduction
Today with the deterioration of eco-system and shortage of natural resource, which seriously affect human
beings existence and development, Environmental protection has become the worldwide focus. In China,
environmental pollution and damage of eco-system have become the major barrier limiting economic
development. On abroad, our major trade partners such as European Union, USA, Japan and Singapore have
improved and enforced strict environmental protection laws. So green barrier appears. At the same time,
domestic companies’ attachment to foreign trade has been increasing, and so was the attachment to
international market. Under such background, if domestic companies want to improve their competence, they
must seek for a new strategy, which is green marketing. To practice green marketing is an effective way to
improve competence, a must way to break green barrier, a must choice for domestic companies.
2 Definition of enterprise competence and its influential factors
2.1 What is enterprise competence
Enterprise competence is a concept often mentioned. It seems to be very familiar, but even by now,
economic field and enterprises field haven’t reached unanimity of what enterprise competence is. They both
have reasonable opinions. On one hand, enterprise competence is a comprehensive concept with system feature.
It is a comparative privilege after integrating resources, and is an engine to profit increase in the long term. On
the other hand, enterprise competence is an active concept, not stable, it is influenced not only by internal
factors but also by external factors. In different period of time and different economic situation, it has different
characters. So companies should master this rule. Here are the several different opinions [1]:
Table2-1: Views on enterprise competence
Capacity
theory
Life theory
Function
theory
Situation
theory
System
theory
Quality
Provide good product, service in international market, improve domestic living standard in
free market.
Enterprise is a living system. If the processes of input, shift, output and response are in
positive circle, it will show competence as a whole.
Continuously produce enough high-quality products to cater for social demand
The result of dynamic balance of interaction between enterprise and the external factors
A system to obtain and maintain a speedy increase in profit
Good staff and leader’s quality
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A research on enterprise competence improvement based on green marketing
theory
The views above generally summarize the connation of enterprise competence in different aspects, but
they are all not in a systematic and comprehensive approach. This article holds that enterprise competence is
the continuously developing ability, a comparative privilege, capable of adapting to different changes after
integrating resources and making best use of them.
2.2 Influential factors to enterprise competence
To improve enterprise competence needs many factors’ interaction. It can be concluded in two aspects:
one is visible assets, which can be easily recognized and valued, including capital, marketing network, human
resource. The other is invisible assets, which is hard to be mastered by rivals, including venture image, venture
culture, brand image and operation philosophy [2].
In resent years, in both domestic and foreign companies, the trend is to shift attention from visible assets
to invisible assets. Soft measures are practice such as venture culture, brand image and operation philosophy.
They are seeking for how to improve enterprise competence by these measures. P&G, as an example, has an
independent marketing strategy for each brand of their products as their band management, which becomes
their unique competence.
2.3 Relations between green marketing and enterprise competence
As the world has more environment awareness, countries all over the world are practicing sustainable
development. In this condition, green marketing appears. The so-called green marketing is a marketing idea,
method and strategy based on environmental protection, green culture values and green consumption. It
requires enterprise to take account of profit, consumer right and environment protection.
Green marketing is different from traditional marketing idea. It not only focuses on profit but also social
benefits. It emphases social responsibility and comprehensive benefits. By designing, choosing material,
packing ways and treating waste, companies cater for consumer demand and get profit. With green marketing,
on one hand enterprise can coordinate with the social benefits and environment relationship, on the other hand
enterprise can improve image, enlarge market share and improve enterprise competence by propagandizing its
green products and green concept. Since 1990s, green marketing has become a more and more important way
to improve enterprise competence, and been recognized as an effective way by many companies.
Firstly, green marketing is a foundation for sustainable development. It adapts the need to protect
environment, and is an evitable trend for marketing. It provides enterprise the ability to meet with the resource
problem, and promote the sustainable development in this era.
Secondly, green marketing makes enterprise competence more secret. There are two enterprise
competences: invisible and visible. Tradition theories all improve enterprise competence in visible aspect. In
last 10 years, both enterprise field and scholars have researched the invisible enterprise competence, because
invisible enterprise competence can maintain longer privilege than visible enterprise competence, and can
promote enterprise competence more effectively.
Thirdly, green marketing adapts social need and trend. It is a must choice and an essential way for
sustainable development.
3 Green marketing in China [3]
As a whole, green marketing in China now is not good enough. Many domestic companies have no idea
about green marketing. The tradition and non-continuous concept plays the main role in the sales concept and
methods. However, green marketing has attracted more and more attention of domestic companies, such as
Haier, Keloen, Huiyuan, Mengniu. They all began to produce following the environment clean standard. Now
in China, thousands of companies have passed the ISO1400 certification. To produce green product has
become their principle. Green demand in China is coming into being. But there are still some problems in
practicing green marketing in China as follows:
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3.1 Weak awareness of green marketing
Now, a part of domestic companies has awareness of environment protection. Driven by consumers’ green
demand, green products have become the winning factor in competition. Yet it is still not the mainstream.
Many companies don’t regard green product as the essential way to develop continuously, and don’t research
more deeply on green marketing. Even some companies import foreign waste to get profit. Some saying is that
import waste to get rich. Though some companies have paid more attention to green marketing, yet it is not to
a high extent. Green products haven’t become companies’ first choice; non-green products are still the
mainstream in production and sale.
3.2 Low demand of green products
In many countries, green products are very popular. They are consumer’s first choice. But in China,
because of the high cost, weak awareness of environment, many consumers, especially those in rural areas, still
prefer cheaper non-green products. Green demand is weak, which is the main reason for companies’ weak
green awareness.
3.3 Out of date marketing method
One big difference from traditional marketing is that Green marketing aims for sustainable development,
increasing consuming quality to reduce quantity. However, traditional marketing is to stimulate consumption,
focus on quantity, and ignore to lead consumers to proper consumption.
So, marketing methods of domestic companies have left far behind the green marketing’s requirement.
Compared with green propagandas, green channel has not been paid enough attention.
3.4 Laws lack of effectiveness
In China, the strategy of sustainable development requires that companies’ operation must practice green
marketing by laws and policies. But it still needs to improve. In addition, local governments have their own
policies, so laws are not effectively carried out.
4 Green marketing on abroad
On abroad, since 1990s, people’s environment awareness has greatly improved, and green consumption
soared up. Green consumption is popular worldwide. As a survey shows, 67% of Dutch, 82% of German, 77%
of Americans will consider environment influence when they go shopping. 91.6% of Japanese are interested in
green products.
In Singapore, government plays decisive role in eco-system and green marketing. In Canada, products are
labeled clean and non-polluted. In USA, since 1970s, companies have begun to produce green products. some
consider the environment influence when new product is in R&D. In Japan, they have realized the green
marketing trend. Toyota enterprise announces to produce less polluted and more gas save cars. Young Japanese
prefer the green package.
We can see many foreign environmentalists have made the calling into a well-accepted social movement.
The public has changed their consumption concept. In addition, government of many western countries plays a
very positive role, on one side, government enlarges the supervision scale; on the other side, government
strengthens macro control. With the joint effort of public and government, companies begin to adopt a new
marketing strategy—marketing promotes environmental protection.
Green marketing is blooming, and continuous development becomes a common sense. No matter
consumers, companies or government, have environment awareness. People pay more and more attention to
environment and green marketing, and green products become mainstream in market.
5 Chinese measures to implement green marketing
Compared to foreign countries, domestic companies leave far behind in green marketing. The gap lies in
three aspects: One is government ‘s weak supervision; training system has not set up, laws and rules need
improving. Second is consumers’ weak awareness of environmental protection. Green products are not their
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first choice. They realize the connection between consumption and environment. Third is companies’ weak
awareness. It directly affects the green marketing process in China, and has a negative impact on continuous
development. China has entered WTO, so will face more competitions. China must keep up with the world.
Green marketing is a must way for domestic companies to improve competence, and an effective way to win
unique competence. According to the foreign experience, green competence should be improved in several
aspects as follows:
Improve enterprise green competence
Government function
Training
service
supervision
Consumers’ demand
green consciousness
green demand
Internal improvement
concept shift
structure upgrade
green marketing
Fig 5-1: Analytic hierarchy of increasing green competence
5.1 Government function
5.1.1Training
Marketing concept change is progressive. The top issue for practicing green marketing is to improve
enterprise manager’s green awareness. So it is necessary for government to give training to managers. Then the
whole companies will be influenced. There are several aspects in training:
Emphasis the importance of green marketing
Get green demand statistics and analyze it, ensuring managers know green marketing is a effective
way to increase profit
Select materials of environment pollution accelerates deteriorate of eco-system, indicating the
importance of sustainable development.
Study domestic and international laws and rules
5.1.2 Service
①
②
③
④
International standardization organization sets two standards: one is ISO9000 quality management and
quality guarantee standard, the other is environmental system standard, that is ISO14000. If ISO9000 is a
permission port to international market, ISO14000 is a passport. So far, there are over 500,000 companies
passed ISO9000, in which there are 20,000 Chinese companies. There are thousands of companies passed
ISO14000.
Without quality certification, products cannot enter into international market. There is a loss of average
7.4billion US dollars a year caused by the environment disqualified products. So domestic companies must set
up a quality management system based on ISO9000, and follow the international advanced standard. Then
environment protection management system must be set up based on ISO14000, and international advanced
environment protection standard should be followed. So it is necessary for government to set up more
certification agencies, which provide training and test, reduce the certification procedures and help qualified
companies to the certification as soon as possible.
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5.1.3 Supervision
Green marketing plays important role in coordinate the benefits of enterprise, consumer and society.
Though our government issues many relative laws and rules, and set up management system, but in the
practice, companies always focus on production first, ignoring the environment. Environment deterioration
was out of control. Recently, though government makes more investment on environment protection, yet it is
far behind foreign countries. Government supervision should include following aspects:
Set higher entry conditions, make strict rules for registration, forbid those who are environment
disqualified.
Revise relative laws and rules based on the international rules and domestic situation. Strengthen
government supervision. Punishment will be taken once rules are offended. Companies are obliged to practice
green marketing. Meanwhile, government should give favorite policies to green industry such as capital
investment.
①
②
5.2 Consumers’ demand
5.2.1 Green consciousness
Green products have become the best sellers in many countries, while in China the consumers have very
weak green consciousness. But Chinese consumers have been gradually educated with the significance of
environmental problems, the relevant regulations, green products’ essence and merits, etc. Through this
education, Chinese consumers’ green consciousness is raising unceasingly. The popularization of green
knowledge has forced the producers and operators to produce and operate the green products. Meanwhile the
consumers become supervisors to some extent after they pay much attention to the environment.
5.2.2 Green demand [4]
Since 1950’s, the green ideology has become popular in the developed countries that the natural
ecological environment should be protected and recovered. In China, this ideology has motivated the
consumers’ green consciousness, which dominates the green demand. People’s concept of consumption
develops with the rise of their living standard and green consciousness. The traditional concept of pursuing the
commodity’s materialist value has been substituted by the new one, i.e. the consumers highly value the benefit
of the enterprise and its commodities to the environmental protection and human health. Guided by this
concept, the green products are becoming more and more popular.
5.3 Enterprise’s internal improvement
5.3.1 Shift of the concept of management
The shift of the concept of management lies much in the establishment of the idea of green marketing.
The enterprise must realize what he pursues is not the maximum profits but the maximum social interests. The
enterprise’s marketing strategy must also shift from the original pursuit of the increase of sales volume and
market take-up to the improvement of marketing standpoint on the basis of saving energy and resources and
protecting the environment. The shift of the concept of management is the prerequisite of the implementation
of green marketing. As the Chinese saying goes “success is based on the idea”, so Chinese enterprise must set
up a high starting point to improve its competence once and for all.
5.3.2 Enterprise’s organizational improvement
Enterprise’s organization reflects all parts’ sequence, their space, ways of communication and the mode of
their interdependence. It is a mechanism for executing the tasks of management and operation. A certain
organization is essential for an enterprise but it is not stable but dynamic. It must reform and adjust itself with
the change of the enterprise environment continuously. It becomes reasonable, efficient and competitive only
when it is suitable for the environment and the operation strategy. If Chinese enterprise wants to improve its
competence by green marketing, it must upgrade or develop its previous organization to adapt to the strategy
of green marketing.[3] In doing so, the enterprise organization must adjust as follows:
The enterprise must strengthen the management of products including the middle products and those
under foreign agreement and contract. The special supervision and quality inspection department must be set
①
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up to ensure the green products.
The enterprise must remake the whole line, paying more attention to the management of the several
sections as manufacturing, marketing and recycling, etc.
The enterprise must strengthen the management of raw materials, strictly examining and controlling
the suppliers.
The enterprise must replace the old equipments with the new ones in time to guarantee the
advancement of the technology and products. According to a survey, only 15% of the equipments in Chinese
enterprises have reached the international technical standard of late 80’s or early 90’s. This is a common
drawback for all Chinese enterprises.
The enterprise must set up a special management department to superintend and manage the
implementation and development of green marketing. The department’s main task is to manage green
information, control green resources and products development, supervise and control the quality of green
products and make and manage the green norm including the “three wastes” harness.
5.3.3 Complete implementation of green marketing [5]
②
③
④
⑤
5.3.3.1 Development of green products
The strategy of products is marketing’s first important strategy. The enterprise must use the green product
as a carrier to carry out green marketing. The green product means the product that is beneficial to the social
and environmental improvement, so it is also called non-pollution product. When developing a green product,
the environmental effect must be considered in all steps such as, choice of materials, formulation of its
structure, function and producing process, packing and ways of transportation, utilization and dispose of its
waste, etc. The strategy of development of green products may be considered from the following aspects:
he product’s core function should not only meet the consumers’ traditional needs but also satisfy the
green demand of benefit to the society, the natural environment and the human health.
The entity part of the product must reduce the consumption of resources, so the recyclable resources
should be used to the maximum extent. Meanwhile in the course of production, the “three wastes” effect on the
environment must be eliminated or reduced.
he package of the product should use dissoluble and recyclable materials.
The aesthetic concept of production should be established. The guideline should be changed from
mass production based on mass consumption to appropriate production based on right consumption.
he green brand should be gradually set and protected.
5.3.3.2 Fixing of the green price
Price is the market’s sensitive element, so price fixing is a very important strategy of marketing. Green
marketing cannot be carried out smoothly without a careful study of price fixing of the green product. A survey
shows that many consumers are willing to pay more for the green products and the number of those is
increasing daily. What’s more, the cost of the green products is more than that of common ones because the
enterprise has to put in more expenses for the environmental protection during research and development.
These products have higher technical volume and green value. They are good for the consumers’ health.
Therefore, the enterprise could fix a higher price. Take the green food for instance, the Finland government
allows its price to be 30% higher than that of the ordinary food and the Japanese government allows 20%
higher. However, this strategy can only be treated as a short-term one. For the long-term being, the enterprise
should emphasize on the research and development of environmental protection technology so as to innovate
the technology and reduce the cost. It can be easily foreseen that the one who possesses advanced technology
and products will surely win the market in the fierce competition.
5.3.3.3 Opening of the green channel
Green marketing channel is the passage where the green products transfer from the producers to the
consumers. A good channel is a key for the success of green marketing, so the enterprise must establish a
stable one. When selecting a channel, the following aspects should be taken into consideration.
①
②
③
④
⑤
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A research on enterprise competence improvement based on green marketing
① The enterprise should inspire the middleman’s green consciousness, observe its green reputation and
establish the proper mutual-benefit relationship. The enterprise should choose those brokers who have the
same green consciousness, good green image and are worthwhile to cooperate.
The enterprise should pay much attention to the work of the relevant steps of green marketing channel.
In order to carry out the green marketing truly, the enterprise should do a series of work carefully from the
selection of green transportation means, establishment of green warehouse to the appointment and
implementation of ways of green handling, freight, storing and management.
The enterprise should set up special sales counters or a green commodity purchase and sale enterprise
with the symbol of “back to the nature” to attract the customers. The enterprise should hold green products
direct-sale activities and reduce the pollution by establishing short and wide channels.
5.3.3.4 Implementation of green promotion
Since the green demand in China is still in its infancy, Chinese enterprises are obliged to guide the
consumers to green consumption. Green marketing is motivated by green demand. It cannot succeed without
the increase of green demand. Therefore the enterprise must focus on promotion, inspiring the consumers’
green demand by the means of media and ads. The main methods of green promotion are as follows:
Green advertisement. The enterprise could define the green function of the product by ads to direct the
customers to understand and accept the green product; it could also create a green atmosphere by ads to
motivate the customers’ desire of purchasing.
Green advocate. The enterprise could propagate and popularize the green message to the consumers
face to face, demonstrate the green function of the products, answer the consumers’ consultation and lecture on
environmental situations and prospect of green marketing.
Green public relations. It is an important medium for the enterprise and its products to set up a green
image. It can help the enterprise to bring the green message more direct and wider to the market where the ads
cannot reach, thus giving the enterprise more advantage. For example, in 1980’s McDonald’s was criticized by
environmental protectors for making rubbishes every day. Under this circumstance, McDonald’s held a public
relations activity named “plant a tree” in the early 90’s. Besides, McDonald’s began to carry out the three
works: first, reduce the packs; second, reduce the use of materials that may damage the environment; third, use
the materials that are easily disposable and transferable to fertilizers. By doing so, the polluters reduced by
60% and McDonald’s created in public a new image of “green McDonald’s” successfully which gave good
social and business atmosphere for its success in the competitive market.
②
③
①
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③
6 Conclusion
Green marketing is the enterprise’s strategic reaction to the rapid change of the society and natural
environment. Chinese enterprises must execute this strategy in order to break through the green barrier and
form their peculiar advantage in the fierce competition and improve their competence finally. This paper,
beginning with the enterprise itself, introduces some specific measures on how to improve the enterprise
competence by green marketing. However, these are just some directional suggestions. Since Chinese green
marketing is in its elementary state, Chinese enterprises have a lot of work to do before the complete
implementation of green marketing.
References:
[1] Xiaowen Zhang, Wu Yu, Yunquan Hu, “Quantitative Evaluation Methods of Enterprise Competence”,
“Criticism on Management”, June, 2003.
[2] Haiwei Zhou, “Core Competence: Intellectual Management Strategy & Practice”, Southeast University
Press, 2002, p.p.10-12.
[3] Genrong Shen, “Green Marketing”, Fudan University Press,2000, p.p.191-200.
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A research on enterprise competence improvement based on green marketing
[4] Qing Shen, “Green Marketing is a New Way to Improve Enterprise Competence”, “Economist”, June,
2003.
[5] Donglong Yang, “500 Most Effective Management Tools”, China Economy Press, 2001, p.p.540-542.
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