University of Hertfordshire Business School

MBSP0194 Evaluating Strategic Marketing Assignment No. 1 Unilever A Critically Reflective and Scholarly Perspective on Sustainability in the Extraction of Talc for Cosmetic Products

Authors Student Number Hand In Date Course Tutor Word Count

Sarah Mellon & Fabio Oliveira 06144782 & 06132095 24th November 2006 MSc Strategic Marketing Chris Brown 2066

Introduction The concept of sustainability centres itself on economic development being mindful of its surroundings, embracing issues such as environmental concerns, global warming and energy (Brundtland Report, 1987), in order that future generations needs are not compromised by the activities carried out today (WCED 1987). According to Nigel (1998), sustainable development is a social and institutional response to the environmental (or ecological) dimension of global change. Sustainability as a market concept The public has been pressuring governments and companies to reduce the levels of pollution and detrimental activities that have an impact upon the environment. According to Nigel (1998), the pressure for sustainable development has been brought about by two distinct problems. The first concerns the resource and energy demands of industrial activity in developed and rapidly industrialising economies. The second problem is the cycle of poverty, mainly experienced in developing countries. The costs of continuing devastation and pollution are increasing annually from the global economy and industries. These pressures have led to companies adopting the concept of corporate social responsibility (CSR) in order for many to ameliorate their public image. Davis (2006) suggests that CSR requires integrity to be sustainable so the image projected must be consistent at all levels of the organisation, the community and society. Unilevers Sustainability Strategy Due to their power of being such a large multinational, Unilever, one of the worlds largest consumer goods companies, with ranges of foods, household and personal

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Evaluating Strategic Marketing

care products, has a lot of pressure to perform business in a socially responsible manner. Perhaps due to this, Unilever widely promotes their strong focus on sustainability. They have also established a mission to attain sustainable growth in order to achieve better results for their stakeholders, as declared in the companys statement: As a multi-local multinational we aim to play our part in addressing global environmental and social concerns through our own actions, and working in partnership with stakeholders at local, national and international levels. They carry out sustainable activities in all three aspects of sustainability including environmental, economic and social projects (Veleva, 2003). Some of the projects they have been involved in include the cleaning of rivers in Indonesia, helping to combat HIV/AIDS in Kenya, helping to tackle climate change with the researching into advanced refrigeration, and sustainable fishing in South Africa (Unilever, 2006). In 2001, Unilever spent 57million euros on community projects (BBC, 2002). These efforts towards sustainability have seen their food production businesses at the top of the Dow Jones Sustainability Index (DJSI), and also being ranked third in the 100 top companies that count for corporate responsibility (Foodproductiondaily.com, 2004). These measures, as well as Unilevers own voluntary measurements should ensure, as Veleva (2003) discusses, that progress is actually being made rather than just being talked about, as well as helping create a very positive company image. These actions taken by Unilever appear to show their great concern in the sustainable development of their business. There are however many other possibilities to explain their reasoning behind the extent of their action. One possibility is the increased public concern for the environment, which has led to the recent concept of green marketing (Prothero, 1996), which could explain Unilevers motives. Unilever uses this idea to help establish superior customer value, as they are seen as having the

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Evaluating Strategic Marketing

highest standards of responsible and sustainable behaviour. However critics believe that these reports and projects embarked on by companies are only greenwash, in order to improve their public image (Veleva, 2003). This could be why they are under a great deal of pressure from watchdogs, and environmental groups such as Friends of the Earth and Greenpeace. Smith (1990) explains that this pressure group activity has led to the boycott of products both for environmental and social reasons, therefore outlining one of Unilevers motives for acting in a sustainable manner, in order to avoid any bad press which could lead to the boycott of their products. Furthermore, Unilevers sustainability strategy benefits the company, as being the leader of the industry on the DJSI has led to an increase in investments. This investment is linked to the increase in shareholder value, as according to Dow Jones (2006), leaders of this index usually show superior performance and favourable risk/return profiles, so would therefore be more favourable to invest in. Unsustainable Practices Despite the aforementioned efforts, Unilever has been the subject of bad press for several unsustainable practices. For example, the dumping of mercury toxic waste into Indian rivers, child labour in developing countries, and the illegal mining of talc. Unilever, as well as a number of other companies in the cosmetics industry, including Avon, and Johnson & Johnson, have been found to be involved in purchasing illegally mined talc from suppliers in India. Talc is one of the ingredients that make up several of their cosmetics products. Its purpose is to give cosmetics stability, texture, skin adhesion, slip and water resistance (Golcha Group, 2005) and it can be found in skincare products such as makeup and soap, including Unilevers range of Dove products. The use of talc as raw material for manufacturing cosmetics by the extraction of soapstone has had a great impact on the environment, devastating huge areas,

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Evaluating Strategic Marketing

including natural sanctuaries, such occurred in 2003 in the Jamwa Ramgarh Wildlife Sanctuary in Rajasthan, India. This area is a protected nature reserve, however it was found that local companies had nevertheless been allowed to operate in an unsustainable manner (Environmental Investigation Agency, 2003). According to Friends of the Earth (2003), these operations are threatening tiger habitats, increasing their vulnerability to local extinction, as well as destroying the forest and watersheds which has negative effects for the local people. Furthermore, talc has been seen to be toxic, a skin irritant, and has been linked to cancer in the press (Cancer Research UK, 2006). This process therefore appears to come under Level 3 Facility Effects of The Lowell Centre Indicator Hierarchy, meaning that this activity has environmental impacts (Veleva, 2003). It is important for Unilever to use this indicator in order to help achieve more sustainable production systems, particularly as there is a strong link with using these indicators to resulting in improved performance (Gahin et al, 2002). For a company that appears to have such a strong stance on sustainability, this behaviour certainly does not agree with the definition of sustainability, as it is compromising the ability of future generations to meet their own needs (WCED, 1987) with the destruction of the protected environment. Furthermore, it is important to note that Unilever reached the top of the DJSI in the food production category, it does not reflect their sustainability performance in the personal care market, therefore perhaps they are not putting as much effort into this area. An increasing number of consumers are looking at more natural, ethical products, and have become very sceptical about the behaviour of companies (Aiking, 2004). Therefore, it is recommended that Unilever adopt more sustainable practices to satisfy the growing environmental concerns of humanity (Johri, 1996). If an alternative, more sustainable product/process is not used, it may well damage Unilevers reputation and decrease the level of superior customer value that they provide, which will have an adverse impact on their competitive advantage.

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Evaluating Strategic Marketing

Research has been undertaken for the purpose of this assignment, in order to find a more sustainable ingredient or way of extracting this ingredient, which will not have such an affect on its local environment. One problem however might be that talc is relatively cheap for the multinationals to purchase, therefore any alternatives must take this into consideration. However this cost saving would be a lot less than the incalculable value of a tarnished public image, and as Schlegelmilch (1996) suggests, a growing number of consumers are more willing to pay higher prices for green products, therefore higher costs could be accounted for. Product concept and the initial marketing brief In general, the cosmetics industry is investing in sustainable projects, and has a clear interest to do so. Unilever invests great sums of money in sustainability, and has key performance indicators in chemical oxygen demand, water, energy, CO2 from energy, hazardous waste, boiler/utilities and Ozone-depleting potential. One alternative researched for this project is the use of Nylon-12, a synthetic substance that could be an excellent substitute to the natural talc powder in cosmetics. Similar to talc, this substance also has tremendous absorbent powers. It remains on the skins surface to absorb skin oil as it is secreted, making the skins surface imperfections less apparent. Nylon-12 is an artificial substance that can be produced by the plastic industry with sustainable manufacture process and can be more easily monitored and measured than mineral extraction. Some cosmetics company such as Procter & Gamble and Revlon are already using this substance in their products. There are many advantages for the Cosmetics industry to change the ingredients of their products from talc to Nylon-12. The industry will reduce the risk of future shortages and the impact on the environment. According the Industrial Mineral Association, the use of non-renewable resources may mean that these will not be

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Evaluating Strategic Marketing

available for future generations, and extractive operations can have a lasting negative impact on the environment if not managed efficiently. Moreover, mining remains one of the most hazardous occupations causing more fatalities than other occupations (IEE, 2001). Impact on the different business processes, and Issues to Implementing these Changes Unilever appears to be committed to managing their social and environmental impacts responsibly, working in partnership with stakeholders and contributing to sustainable development. The mission that determines the strategies and positioning in the marketplace, suggests that Unilever role is to add vitality to life with brands that help people feel good, look good and get more out of life. Unilever uses target scorecard measurements to evaluate indicators such as chemical oxygen demand, hazardous waste, water, energy, and CO2 from energy and Boiler/utilities. Moreover, Unilever acts together with all the stakeholders involved in the process. Their strategy to be the multi-local multinational determines how they are effectively competing, and delivering superior customer value through the analysis of the external environment, identifying the key value generators, applying the necessary modifications and alterations in the products and communication, and the efficient management of the supply chain (Kotler, 2002). Furthermore, a marketing strategy which includes environmentally-friendly packaging and ecolabelling must be at the heart of any companys forward planning. This is where environmental differences will be communicated and where a companys commitment will often be judged (Welford et al, 1993). The development and delivery of this modification requires the commitment of application from R&D, marketing, suppliers, and manufacturers. Therefore the following recommendations have been proposed:

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Evaluating Strategic Marketing

R&D evaluation and analysis of the impacts in the manufacturing process, with an external benchmark;

Marketing and manufacturing departments working together with the suppliers, to analyse and evaluate the impact of production in terms of quantity, costs and process alterations.

Marketing and Public Relations evaluating the impact in local communities where the talc suppliers are operating, in terms of unemployment and environmental recuperation.

Learning and understanding the outcomes and communicating to the community, employees and suppliers.

Understanding the customers values and applying this in the development of the products.

Communicate changes to the customers through alterations in the packaging.

Internal marketing is another relevant aspect for achieving the success of this alteration. Internal Marketing has come to be seen as a mechanism for reducing departmental and inter-functional friction, as well as overcoming resistance to change (Ahmed, 2004). Conclusion

In conclusion, it is vital that companies explore sustainable development and corporate social responsibility, in order to attempt to increase their competitiveness and to improve their superior consumer value offering. This will reflect the growing

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concern among consumers about environmental issues as they are becoming increasingly suspicious of multinationals activities. Another important aspect concerns the investigation of companies relationships. The company should understand their role as a part of one whole system where its responsibility includes the management and monitoring of their partners activities, including their suppliers, employees, and other commercial partners. In conclusion, companies should place a strong emphasis on sustainability, incorporating it as part of their corporate culture. They should also work with their partners to develop new strategies to reduce their impact on the environment, in order to increase their competitiveness in line with consumers increasing environmental concerns, improve their public image, and to prevent any further depletion of the external environment.

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Evaluating Strategic Marketing

Bibliography Journals: Aiking, H, & J de Boer. (2004) Food sustainability. British Food Journal. 106 (5) pp.359-365 Gahin et al. (2002) Do indicators help create sustainable communities?. Local Environment. 8 (6) pp.661-666 Johri, L.M & K Sahasakmontri. (1998) Green marketing of cosmetics and toiletries in Thailand. Journal of Consumer Marketing. 15 (3) pp.265-281 Prothero, A. (1996) Environmental decision making: research issues in the cosmetics and toiletries industry. Marketing Intelligence & Planning. 14 (2) pp.19-25 Schlegelmilch, B et al. (1996) The link between green purchasing decisions and measures of environmental consciousness. European Journal of Marketing. 30, (5) pp.35-55 Smith, N. (1990) Morality and the Market: Consumer pressure for corporate accountability. Journal of Economic Psychology. 11 (4) pp.633-634 Veleva, V et al. (2003) Indicators for measuring environmental sustainability. Benchmarking: An International Journal. 10 (2) pp.107-119 Books: Ahmed, P.K & M Rafiq. (2004) Tools and concepts for customer-focused management. Burlington,MA: Elsevier Butterworth-Heinemann Brundtland, G.H. (1987) Our common future / World Commission on Environment and Development (WCED). Oxford: Oxford University Press. Davies, A. (2006) Best practice in corporate governance: building and sustainable success. UK: Gower Publishing Limited Kotler, P & K.L Keller. (2006) Marketing Management, 12th Ed. Upper Saddle River, N.J: Pearson/Prentice Hall Roome, N. (1998) Sustainability Strategies for Industry: The Future of Corporate Practice. Washington,D.C: Island Press

Stephens, C & M Ahern. (2002) Worker and community health Impacts Related to Mining Operations Internationally A rapid review of the Literature. London: London School of Hygiene & Tropical Medicine Welford, R & A Gouldson. (1993) Environmental Management & Business Strategy. London: Pirman Publishing Websites: Barnett, J. (2003) West's love of talc threatens India's tigers. [Online] URL: http://observer.guardian.co.uk/international/story/0,6903,982537,00.html [Accessed 04/11/06] BBC. (2002) Inside the Global Giants. [Online] URL: http://www.bbc.co.uk/worldservice/ specials/151_globalgiants/page2.shtml [Accessed 04/11/06] Cancer Research UK. (2006) UK Ovarian Cancer Risk Factors. [Online] URL: http://info.cancerresearchuk.org/cancerstats/types/ovary/riskfactors/#talc [Accessed 04/11/06] Dow Jones (2006) Dow Jones Sustainability Indexes. [Online] URL: http://www.sustainability-indexes.com [Accessed 10/11/06] Environmental Investigation Agency. (2003) UK Cosmetics Industry Risks Tiger Forests. [Online] URL: http://www.eia-international.org/ cgi/reports/reports.cgi? t=template&a=58 [Accessed 05/11/06] Food Production Daily Europe. (2004) Unilever tops lucrative sustainability index for fifth year running. [Online] URL: http://www.foodproductiondaily.com/ news/ng.asp? id=54640 [Accessed 05/11/06] Friends of the Earth. (2003) UK Cosmetics Industry Risks Tiger Forests. [Online] URL: http://www.foe.co.uk/resource/briefings/cosmetics_tigers.pdf [Accessed 05/11/06] Golcha Talc. (2005) Golcha Soapstone Producer/Manufacturer. [Online] URL: http://www.golcha.com [Accessed 05/11/06] Household Products Database. (2006) Nylon-12. [Online] URL: http://householdproducts.nlm.nih.gov/cgi-bin/household/brands?tbl=chem&id=1572 [Accessed 01/11/06] Industrial Mineral Association. (2006) Mining Sustainable Report. [Online] URL: http://www.ima-eu.org [Accessed 05/11/06]

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Ingredient Glossary (2006) Nylon-12. [Online] URL: http://www.nuskin.com/corp/science/glossary.shtml [Accessed 01/11/06] Unilever. (2006) Our Values. [Online] URL: http://www.unilever.com [Accessed 04/11/06]

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