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PROJECT

ON
STRATEGIES FOR SUSTAINABLE
DEVELOPMENT IN FMCG SECTOR

SUBMITTED TO: SUBMITTED BY:

Dr. RAJUL SINGH SHUBHADIP BISWAS

ROLL--FT-10-948

SEC—A

PGDM 10-12

IILM-GSM

DATE OF SUBMISSION- 9-11-2010


SUSTAINABLE DEVELOPMENT IN FMCG SECTOR:

1.INTRODUCTION

Sustainable development is a pattern of resource use that aims to meet


human needs while preserving the environment so that these needs can be
met not only in the present, but also for generations to come. The term was
used by the Brundtland Commission which coined what has become the
most often-quoted definition of sustainable development as development
that "meets the needs of the present without compromising the ability of
future generations to meet their own needs."

Sustainable development ties together concern for the carrying capacity of


natural systems with the social challenges facing humanity. As early as the
1970s "sustainability" was employed to describe an economy "in equilibrium
with basic ecological support systems." Ecologists have pointed to The Limits
to Growth, and presented the alternative of a "steady state economy" in
order to address environmental concerns.

The field of sustainable development can be conceptually broken into three


constituent parts: environmental sustainability, economic sustainability and
sociopolitical sustainability.

INDIAN SCENARIO:
In 1972, the then Prime Minister of India, Mrs. Indira Gandhi emphasized,
at the UN Conference on Human Environment at Stockholm, that the
removal of poverty is an integral part of the goal of an environmental
strategy for the world. The concepts of interrelatedness, of a shared planet,
of global citizenship, and of ‘spaceship earth’ cannot be restricted to
environmental issues alone. They apply equally to the shared and inter-
linked responsibilities of environmental protection and human development.
History has led to vast inequalities, leaving almost three-fourths of the
world’s people living in less-developed countries and one-fifth below the
poverty line. The long-term impact of past industrialization, exploitation and
environmental damage cannot be wished away. It is only right that
development in this new century be even more conscious of its long-term
impact. The problems are complex and the choices difficult. Our common
future can only be achieved with a better understanding of our common
concerns and shared responsibilities.
GLOBAL SCENARIO:

Whole World is identifying the need of the SUSTAINABLE


DEVELOPEMENT, Environmental Marketing and Ecological marketing
environmental issues influence on all most all activities in our day today
lives.FMCG sector is a considerably large sector in the economy which has to
open their eyes on eco friendliness. As society becomes more complex with
the environmental pollution and unethical business practices, now both
consumers and business organizations are concerned with the natural
environment. So businesses have begun to modify their behavior in an
attempt to address this society's "new" concerns .The FMCG sector is one of
growing industry that concern about the SUSTAINABLE DEVELOPMENT
issues. Most of marketing practitioners are using green elements as powerful
marketing tools. In this context, this study focus on examine the consumer
attractiveness towards green products of FMCG Sector.

While green marketing came into prominence in the late 1980s and
early 1990s, it was first discussed much earlier. The American Marketing
Association (AMA) held the first workshop on "Ecological Marketing" in 1975.
The proceedings of this workshop resulted in one of the first books on green
marketing entitled "Ecological Marketing" (Henion and Kinnear 1976a). Since
that time a number of other books on the topic have been published
(Coddington 1993, and Ottman 1993). Green marketing incorporates a
broad range of activities, including product modification, changes to the
production process, packaging changes, as well as modifying advertising.
(Polonsky, 1994) World-wide evidence indicates people are concerned about
the environment and are changing their behavior accordingly. As a result
there is a growing market for sustainable and socially responsible products
and services. (Environmental protection agency -2000) Green consumerism
is often discussed as a form of ‘pro-social’ consumer behavior (Wiener and
Doesher, 1991). It may be viewed as a specific type of socially conscious
(Anderson, 1988) or socially responsible (Antil, 1984) consumer behavior
that involves an ‘environmentalist’ (Schlossberg, 1991) perspective and may
thus be called ‘environmentally concerned consumption’ (Henion, 1976). A
classic definition (Henion, 1976) describes ‘environmentally concerned
consumers. Business organizations tend to concern about environments
issues due to several reasons such as environmental pressure, governmental
pressure, competitive pressure, cost or profit issues (Environmental
protection agency -2000) Unfortunately, a majority of people believe that
green marketing refers solely to the promotion or advertising of products
with environmental characteristics. (Polonsky,1994) and terms like
Phosphate Free, Recyclable, Refillable, Ozone Friendly, and Environmentally
Friendly are some of the things consumers most often associate with green
marketing. . (Polonsky,1994) While these terms are green marketing claims,
in general green marketing is a much broader concept, one that can be
applied to consumer goods, industrial goods and even services (Roberts and
Bacon, 1997).
Hopes for green products also have been hurt by the perception that
such products are of lower quality or don't really deliver on their
environmental promises. And yet the news isn't all bad, as the growing
number of people willing to pay a premium for green products — from
organic foods to energy-efficient appliances — attests. (D’Souza et al.
2004)Green or Environmental Marketing consists of all activities designed to
generate and facilitate any exchanges intended to satisfy human needs or
wants, such that the satisfaction of these needs and wants occurs, with
minimal detrimental impact on the natural environment. [Polonsky 1994b, 2]
Green marketing has not lived up to the hopes and dreams of many
managers and activists. Although public opinion polls consistently show that
consumers would prefer to choose a green product over one that is less
friendly to the environment when all other things are equal, those "other
things" are rarely equal in the minds of consumers. (Hackett, 2000)

They must always keep in mind that consumers are unlikely to


compromise on traditional product attributes, such as convenience,
availability, price, quality and performance. It's even more important to
realize, however, that there is no single green-marketing strategy that is
right for every company. (Prothero,, and McDonagh, 1992) Despite the
increasing eco-awareness in contemporary market economies, it is generally
recognized that there are still considerable barriers to the diffusion of more
ecologically oriented consumption styles. In lay discourse as well as in much
of consumer research, these barriers are usually attributed to the
motivational and practical complexity of green consumption (Hackett, 2000).
Increased use of Green Marketing is depending on five possible reasons.
(Polonsky 1994b)

 Organizations perceive environmental marketing to be an


opportunity that can be used to achieve its objectives [Keller 1987,
Shearer 1990]

 Organizations believe they have a moral obligation to be more


socially responsible [Davis 1992, Keller 1987,]

 Governmental bodies are forcing firms to become more responsible


[Davis 1992];
 Competitors' environmental activities pressure firms to change their
environmental marketing activities [Davis 1992]
 Cost factors associated with waste disposal, or reductions in
material usage forces firms to modify their behavior [Keller, K.L.
(1993]
Moreover, environmentally responsible behavior usually involves
difficult motivational conflicts, arising from the fundamental incompatibility
of environmental protection-related collective goals and individual
consumers’ personal or self-interested benefits and the resulting free-rider
problem (Wiener and Doesher, 1991) Public policymakers will continue to
develop more efficient ways to regulate waste and pollution, and scientists
will continue to gather information about the environmental risks from
various substances or practices. As they do, pricing structures will evolve
that communicate even more accurate information to manufacturers and
entrepreneurs about the true cost of commercial activities and the potential
rewards from innovative solutions to environmental problems. This definition
incorporates much of the traditional components of the marketing definition
that is "All activities designed to generate and facilitate any exchanges
intended to satisfy human needs or wants" (Schlegelmilch et al,1996). There
are usually severe external constraints to green consumerism, arising from
the cultural, infrastructural, political and economic circumstances in the
markets and society (McIntosh, A. 1991). Both individual and industrial are
becoming more concerned and aware about the natural environment. In a
1992 study of 16 countries, more than 50% of consumers in each country,
other than Singapore, indicated they were concerned about the environment
(Ottman 1993). A 1994 study in Australia found that 84.6% of the sample
believed all individuals had a responsibility to care for the environment. A
further 80% of this sample indicated that they had modified their behavior,
including their purchasing behavior, due to environmental reasons (EPA-
NSW 1994).

Owing to the conceptual and moral complexity of ‘ecologically


responsible consumer behavior’ and to the perplexity of ecological
information, different consumers have different conceptions of ecologically
oriented consumer behavior and, thus, myriad ways of acting out their
primary motivation for being green consumers (Antil, 1984). These
innovations aren't being pursued simply to reduce package waste. (Prothero,
1990) Food manufacturers also want to improve food preservation to
enhance the taste and freshness of their products. The cost of the foods
would be lower; consumers could enjoy the convenience of pre-sliced
ingredients, and waste peelings (Prothero, 1990). It can be assumed that
firms marketing goods with environmental characteristics will have a
competitive advantage over firms marketing non-environmentally
responsible alternatives. There are numerous examples of firms who have
strived to become more environmentally responsible, in an attempt to better
satisfy their consumer needs. (Schwepker, and Cornwell, 1991) While
governmental regulation is designed to give consumers the opportunity to
make better decisions or to motivate them to be more environmentally
responsible, there is difficulty in establishing policies that will address all
environmental issues. (Schwepker, and Cornwell, 1991). Hence,
environment-friendly consumption may be characterized as highly a complex
form of recognized that marketers can use different tools relating to
independent variables in order to determine the effectiveness of
SUSTAINABLE DEVELOEMENT practices. consumer behavior, both
intellectually and morally as well as in practice.

2.EXAMPLE OF IMPLEMENTATION IN INDIA IN BY FMCG COMANY---

Itc--- Contribution to Sustainable Development

In pursuit of its abiding commitment to create stakeholder value through


service to society, the Company continued to make progress during the
quarter in its social and environmental initiatives.

The Company deepened its imprint on the social sector by expanding to


newer districts during the period. Social development projects are currently
being progressed in 50 districts spread over the states of Andhra Pradesh,
Bihar, Kerala, Karnataka, Maharashtra, Madhya Pradesh, Orissa, Rajasthan,
Tamil Nadu, Uttar Pradesh and West Bengal.

The pioneering social development projects include initiatives in watershed


development, social farm and forestry programmes, soil & moisture
conservation programmes designed to assist farmers in identified moisture-
stressed districts, preservation of precious topsoil for agriculture and group
irrigation projects. Towards improving the income earning capability of the
farming community, sustainable agricultural practices were provided a major
boost during the year with the promotion of organic fertiliser units through
vermi-composting and NADEP technologies. Similarly, a programme for
genetic improvement of cattle was undertaken through artificial insemination
to produce high-yielding crossbred progenies. Integrated animal husbandry
services were provided during the year. These included addressing the needs
of problem breeders, vaccines, feed additives and awareness drives. The
initiative for the economic empowerment of women also continued apace
with provision of gainful employment either in micro-enterprises or through
self-employment with the support of income generation loans.

The Company's social sector footprint can be seen at a glance in the


following chart:

2008-09
Unit of
Intervention Areas (Cumulative
Measurement
Achievement)
Total Districts Covered Number 50
Social and Farm Forestry Hectare 90132
Soil and Moisture Conservation
Hectare 43841
Programme
Sustainable Agricultural
Practices
Organic Fertiliser Units Number 13548
Sustainable Livelihoods
Initiative
Cattle Development Centres Number 121
Animal Husbandry Services Milch Animals 277054
Economic Employment of
Women
SHG Members Persons 18032
Women Entrepreneurs Persons 18428
Primary Education
Beneficiaries Children 183457
Health and Sanitation
Low Cost Sanitary Units Number 2712

The Board of Directors, at its meeting in Kolkata on 22nd May 2009,


approved the financial results for the year ended 31st March 2009.

3.HOW TO ACHIEVE? STRATEGY:--

Following are some perspectives and approaches towards achieving a


sustainable future:
Poverty Eradication and Sustainable Livelihoods
Poverty and a degraded environment are closely inter-related, especially
where people depend for their livelihoods primarily on the natural resource
base of their immediate environment. Restoring natural systems and
improving natural resource management practices at the grassroots level
are central to a strategy to eliminate poverty.
The survival needs of the poor force them to continue to degrade an already
degraded environment. Removal of poverty is therefore a prerequisite for
the protection of the environment.
Poverty magnifies the problem of hunger and malnutrition. The problem is
further compounded by the inequitable access of the poor to the food that is
available. It is therefore necessary to strengthen the public distribution
system to overcome this inequity.
Diversion of common and marginal lands to ‘economically useful purposes’
deprives the poor of a resource base which has traditionally met many of
their sustenance needs.
Market forces also lead to the elimination of crops that have traditionally
been integral to the diet of the poor, thereby threatening food security and
nutritional status.
EFFECT ON ECONOMY
While conventional economic development leads to the elimination of
several traditional occupations, the process of sustainable development,
guided by the need to protect and conserve the environment, leads to the
creation of new jobs and of opportunities for the reorientation of traditional
skills to new occupations. Women, while continuing to perform their
traditional domestic roles’ are increasingly involved in earning livelihoods. In
many poor households they are often the principal or the sole breadwinners.
A major thrust at the policy level is necessary to ensure equity and justice
for them. Literacy and a basic education are essential for enabling the poor
to access the benefits offered by development initiatives and market
opportunities. Basic education is therefore a precondition for sustainable
development.
A sizeable proportion (about 60 per cent according to some estimates) of
the population is not integrated into the market economy. Ensuring the
security of their livelihoods is an imperative for sustainable development.

Changing Unsustainable Patterns of Consumption and Production


With increasing purchasing power, wasteful consumption linked to market
driven consumerism is stressing the resource base of developing countries
further. It is important to counter this through education and public
awareness.
In several areas, desirable limits and standards for consumption need to be
established and applied through appropriate mechanisms including
education, incentives and legislation.
Several traditional practices that are sustainable and environment friendly
continue to be a regular part of the lives of people in developing countries.
These need to be encouraged rather than replaced by more ‘modern’ but
unsustainable practices and technologies.
Development decisions regarding technology and infrastructure are a major
determinant of consumption patterns. It is therefore important to evaluate
and make development decisions which structurally lead to a more
sustainable society. Technologies exist through which substantial reduction
in consumption of resources is possible. Efforts to identify, evaluate,
introduce and use these technologies must be made.
Subsidies often lead to wasteful and unsustainable consumption by distorting
the value of a resource. All pricing mechanisms must be evaluated from a
sustainable development point of view.
Protecting and Managing the Natural Resource Base of Economic and
Social Development
The integration of agriculture with land and water management, and with
ecosystem conservation is essential for both environmental sustainability
and agricultural production.
An environmental perspective must guide the evaluation of all development
projects, recognizing the role of natural resources in local livelihoods. This
recognition must be informed by a comprehensive understanding of the
perceptions and opinions of local people about their stakes in the resource
base.
To ensure the sustainability of the natural resource base, the recognition of
all stakeholders in it and their roles in its protection and management is
essential.
There is need to establish well-defined and enforceable rights (including
customary rights) and security of tenure, and to ensure equal access to land,
water and other natural and biological resources. It should be ensured that
this applies, in particular, to indigenous communities, women and other
disadvantaged groups living in poverty.
Water governance arrangements should protect ecosystems and preserve or
restore the ecological integrity of all natural water bodies and their
catchments. This will maintain the wide range of ecological services that
healthy ecosystems provide and the livelihoods that depend upon them.
Biomass is, and will continue for a long time to be, a major source of fuel
and energy, especially for the rural poor. Recognizing this fact, appropriate
mechanisms must be evolved to make such consumption of biomass
sustainable, through both resource management and the promotion of
efficient and minimally polluting technologies, and technologies which will
progressively reduce the pressures on biomass, which cause environmental
degradation.
The traditional approaches to natural resource management such as sacred
groves and ponds, water harvesting and management systems, etc., should
be revived by creating institutional mechanisms which recapture the
ecological wisdom and the spirit of community management inherent in
those systems.
Globalization as it is taking place today is increasing the divide between
the rich and the poor. It has to be steered so that it serves not only
commercial interests but also the social needs of development.
Global business thrives on, and therefore encourages and imposes, high
levels of homogeneity in consumer preferences. On the other hand, for
development to be locally appropriate and sustainable, it must be guided by
local considerations which lie in cultural diversity and traditions. Therefore
recognition at the policy level, of the significance of diversity, and the need
to preserve it, is an important precondition for sustainable development.
In an increasingly globalizing economy, developing countries, for want of the
appropriate skills, are often at a disadvantage in negotiating and operating
multilateral trade agreements. Regional cooperation for capacity building is
therefore necessary to ensure their effective participation in all stages of
multilateral trade.
Globalization is driven by a vast, globally spread, human resource engine
involving millions of livelihoods. Their security is sometimes threatened by
local events causing global distortions (e.g. the impact of the WTC attack on
jobs in India or, in a wider context, sanctions against countries not
conforming to ‘international’ prescriptions in human rights or environment
related maters). Mechanisms to safeguard trade and livelihoods, especially
in developing countries, must be evolved and negotiated to make
globalization an effective vehicle of sustainable development. War and
armed conflict are a major threat to sustainable development. It is
imperative to evolve effective mechanisms for mediation in such
situations and to resolve contentious issues without compromising the larger
developmental goals of the conflicting parties.
Health and Sustainable Development
Human health in its broadest sense of physical, mental and spiritual
wellbeing is to a great extent dependent on the access of the citizen to a
healthy environment. For a healthy, productive and fulfilling life every
individual should have the physical and economic access to a balanced diet,
safe drinking water, clean air, sanitation, environmental hygiene, primary
health care and education.
Access to safe drinking water and a healthy environment should be a
fundamental right of every citizen.
Citizens of developing countries continue to be vulnerable to a double
burden of diseases. Traditional diseases such as malaria and cholera, caused
by unsafe drinking water and lack of environmental hygiene, have not yet
been controlled. In addition, people are now falling prey to modern diseases
such as cancer and AIDS, and stress-related disorders Many of the
widespread ailments among the poor in developing countries are occupation-
related, and are contracted in the course of work done to fulfil the
consumption demands of the affluent, both within the country and outside.
The strong relationship between health and the state of the environment in
developing countries is becoming increasingly evident. This calls for greater
emphasis on preventive and social medicine, and on research in both
occupational health and epidemiology.
Because of the close link, there needs to be greater integration between the
ministries of Health and Environment, and effective coordination and
cooperation between them. Basic health and educational facilities in
developing countries need to be strengthened. The role of public health
services must give preventive health care equal emphasis as curative health
care. People should be empowered through education and awareness to
participate in managing preventive health care related to environmental
sanitation and hygiene.
Most developing countries are repositories of a rich tradition of natural
resource-based health care. This is under threat, on the one hand from
modern mainstream medicine, and on the other from the degradation of the
natural resource base. Traditional medicine in combination with modern
medicine must be promoted while ensuring conservation of the resource
base and effective protection of IPRs of traditional knowledge. Developing
countries should also strive to strengthen the capacity of their health care
systems to deliver basic health services and to reduce
environment-related health risks by sharing of health awareness and medical
expertise globally.

4.ACHIEVEMENTS/BENEFITS:
FMCG SECTOR -INCLINING TO GREEN PRODUCTS:
The growing social and regulatory concerns for the environment lead an
increasing number of companies to consider green issues as a major source
of strategic change. In particular, this trend has major and complex
implications on the technological strategy of a company and on its product
innovations

environment friendly products and packages make the significant impact of


customer buying decisions. The marketing communication with the
environment friendly product information will also significantly impact on the
buying decisions.

green marketing elements consists of four variables such as product,


package, place and promotion. Out of those variables, except eco friendly
distribution and promotions as green products other variables strongly
influence in selecting products of foods, beauty soap and detergents.

Nowadays customers are considering green marketing as the important


factor in their store choice decisions. Trend says that young consumers are
selecting eco friendly package as the most important variable.

Though consumers are willing to purchase green products, many business


organizations still in behind the need of the eco friendly society.
5.CONCLUSION:

business organizations should follow strategies in order to get benefits from


the environmentally friendly approach as SUSTAINABLE DEVELOPMENT
offers business incentives and growth opportunities while it may involve
start-up costs, it will save money in the long term. Therefore, in the product
strategy, marketers can identify customers’ environmental needs and
develop products to address this issue, produce more environmentally
responsible packages. (Recycle, biodegradable, reuse), and ensure that
products meet or exceed the quality expectations of customers. In addition
to that marketer can charge high price with highlighting eco friendliness of
the products. In the case of distribution, obtaining dealer support to green
marketing practice is essential. And also, the location must differentiate from
competitors and it can achieve by in-store promotions and displays by using
recycled materials to emphasize the environmental and other benefits.
Finally, organization can reinforce environmental credibility by using
sustainable marketing and communications such as public relations and
creative advertising associated with green issues.

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