Business Marketing
Societal marketing: McDonald's
Business executives are often perplexed by the continuous expansion of
society's expectations of corporations. For example, in the corporate
world, numerous laws and extensive government regulation affect
virtually every aspect of business activities. They touch "almost every
business decision ranging from the production of goods and services to
their packaging, distribution, marketing, and service" (Carroll, 1979,
p. 98). Thus, not only are companies held responsible for maximizing
profits for the owners and shareholders and for operating within the
legal framework, they are also expected to support their employees'
quality of work life, to demonstrate their concern for the communities
within which their businesses operate, to minimize the impact of various
hazards on the global environment, and to engage in purely social or
philanthropic endeavors.
Among
researchers, this issue has provoked an especially rich and diverse
literature investigating the role of business in society. Research in
this area has followed two major streams. The most popular of these
studies have focused on the relationship between a firm's social
responsibility and its financial performance (McGuire, J., Sundgren, A.,
& Scheeweis, T., 1988, p. 858). The other stream of studies has
examined the effect of board members' demographic and non-demographic
characteristics on their individual corporate social responsiveness
orientation (Wood, 1991, p. 389).
Since the societal marketing
involves some kind of corporate response to social demands, the first
step is to identify and classify the numerous social needs. There are
three categories of such needs. First, survival needs consist of the
various needs that are necessary for individual members of the social
segment to survive, such as food, shelter, and the preservation or
restoration of one's health.
A second category is concerned with
safety needs. These are the needs that are necessary to protect the
members of the social segment from external and internal threats. Not
only do nations have defense establishments for protection from external
threats, but they also enact and enforce laws to protect individuals
and groups from others in society. Such laws cover numerous areas
ranging from environmental protection to safeguarding individual
liberties.
The third category is composed of various growth needs
which, in turn, can be broken down into material needs and spiritual
needs. The former are concerned with the enrichment of the social
segment through economics (the allocation of limited resources) and
technology (the use of tools and techniques to generate wealth).
Spiritual needs are related to the spiritual growth of the social
segment; they include metaphysics, education, science, arts, and
entertainment.
Social segments expect different agents to fulfill
these needs. These agents can be an individual (e.g., a parent who
supports a family), a group (e.g., political parties and interest groups
who represent their members), a business organization (e.g., a
corporation which supports inner city revitalization), a not-for-profit
organization (e.g., a hospital that provides services to the community),
and government (e.g., for protection from external threats). Both the
type and extent of the needs to be fulfilled and the agent who is
expected to satisfy these needs will depend upon the social segment's
culture and ethics, the legal environment, and the degree to which the
members of the social segment perceive that such needs are not
fulfilled.
As a key member of society, a corporation should take
into account the societal needs that are expected to be met by business.
These needs constitute a social demand. Thus, social demand
incorporates not only demand for a firm's products and services, but
also extends to the fulfillment of other societal needs. With this
framework in mind, it can be stated that the scope of a business
organization, i.e., what products and services it provides, is
determined both by the organization itself and by society's
expectations. In other words, it can be said that a given firm operating
in two different social segments has, in effect, two different scopes.
Failure on the part of an organization to understand and satisfy the
various demands of the social segments within which it operates will
lead to its rejection by society and its eventual demise. Consequently, a
firm's mission and objectives should not only address traditional
organizational concerns such as profitability and markets served, but
should also be concerned with determining and meeting various societal
expectations.
One of the aspects of the societal marketing includes
alliances that have arisen between environmentalist groups and
businesses in the last decade. The new relationships have been described
as path breaking and innovative (e.g., Long & Arnold, 1995; Wasik,
1996). Typically, they are distinguishable from the prior charitable
(e.g., donations to or sponsorships of environmental causes) and
commercial relationships (e.g., calendars, T-shirts produced for
environmental groups) because they engage the expert knowledge of the
environmental group and involve it, to varying degrees, in joint problem
solving or strategic decision making with the corporate partner (Clair,
Milliman, & Mitroff, 1995, p. 188). In this category are green
product endorsements, audits by environmental groups of business
programs or practices, and joint projects of the type engaged in by
green alliance between McDonald's and Environmental Defense Fund, where
the corporate partner's business practices are evaluated and improved
according to ecological criteria.
Green alliances also function
rhetorically in a more complex way than traditional
business-environmentalist relationships. Here I follow Levy who has
pointed out that environmental management - that is, corporate practices
to reduce the ecological harm of economic processes - serves symbolic
and political purposes by helping to construct business as green and
thus to legitimate its role as manager of the natural environment (1997,
p. 127). Green alliances, a strategy within corporate environmental
management, also have symbolic and political value - for both partners.
The corporation borrows not only the environmental expertise, but also
the credibility, of the ecology group, which by its allegiance
implicitly or explicitly endorses company actions - e.g., producing
earth-friendly products and services or operating in pollution-free ways
(Ottman, 1994, p. 86). The partnership also brings corporate actors
into the group of those to be entrusted with the work of saving the
earth.
McDonald's is the leader of the fast-food industry, with
worldwide operations employing approximately 500,000 people in 11,000
restaurants and serving 22 million customers a day. At the time
Environmental Defense Fund (EDF) approached McDonald's, its entanglement
in controversy over its packaging frustrated the company. From EDF's
perspective, McDonald's leadership position, its problematic history of
waste management, and the iconic value of waste management as an
environmental issue made the company an attractive candidate for
partnership. EDF saw significant opportunity for both environmental
action and a major, high visibility, opportunity to test its innovative
approach to environmental problem-solving through corporate
partnerships.
With environmentalism on the rise among the general
public in the 1980s, consumer-driven businesses were particularly
subject to and sensitive about public pressure (Livesey, 1993, pp. 2-4).
Plastic had been demonized by several environmentalist organizations
including the grassroots groups Greenpeace and CCHW. The use-and-dispose
philosophy at the core of McDonald's business and its distinctive
plastic clamshell sandwich boxes, which helped to make the company one
of the largest single users of polystyrene in the United States, had
made McDonald's a continuing target of ecology groups (Livesey, 1993, p.
4).
Throughout the late 1980s, McDonald's instituted and
publicized a number of environmentally positive steps in its domestic
operations. It reduced consumption, for instance, by using lighter
weight paper in straws, paper bags and other items and recycled paper
and cardboard packaging. In 1987, it switched from polystyrene (used for
the clamshells) blown with CFCs, the family of chemicals which destroy
the ozone layer, to plastic foam that used hydrocarbon blowing agents
(Annual Report, 1989, pp. 10-15). In 1989, the company instituted a
pilot program in 450 New England stores to recycle its plastic
clamshells (Livesey, 1993, pp. 12-14). In April, 1990, it committed $100
million, or one quarter of the company's annual building and remodeling
budget, to buy recycled materials for restaurant construction,
remodeling, and operations under a program called "McRecycle" (Livesey,
1993, pp. 13-14).
In 1989 and 1990, McDonald's bolstered its
environmental management practices with a proactive public relations
campaign. The centerpiece was the 1989 Annual Report, which highlighted
the issue of the natural environment. McDonald's also offered in-store
flyers to educate customers about the company's environmental management
practices, policies, philosophies, and positions on particular issues
such as rainforest beef and the ozone problem. Brochures on
environmental topics, including packaging, were available from its
public relations department. In addition, McDonald's worked with several
different environmental and nonprofit groups (e.g., the World Wildlife
Fund and the Smithsonian Institution) to coproduce elementary school
materials on the environment.
McDonald's 1989 annual report
represents an aggressive attempt by the company to manage the public
discourse around the company's role as an environmentally responsible
corporate citizen and construct itself as green. The report belongs to
the category of epideictic advocacy, the discourse of praise and blame
that is commonly used to establish or consolidate value premises,
especially in corporate issue management campaigns; such discourse often
serves as a basis for later persuasive efforts (Cheney & Vibbert,
1987, p. 183). Epideictic rhetoric works by building on shared premises
and borrowing from values and beliefs embedded in the common culture. In
this case, given the new ecological awareness of the public, McDonald's
positions itself as having concerns ecological and practical, social as
well as economic.
As described by the media, the 1989 Annual Report looks "more like an
Audubon Society brochure than a financial statement" (Horovitz, 1991, p.
D2). Nature pictures, poetry, and quotations from national and
international figures prominent in the environmental movement (e.g., Gro
Brundtland) are interspersed throughout the report, along with product
and financial information. The cover contains a four-page foldout
picture of the Northwest American forest with a quotation from Chief
Seattle about man's proper relationship to the earth. The report itself
is "dedicated" to a "discussion of the [environmental] challenges which
lie ahead" (McDonald's Annual Report, 1989, p. 2). The discussion is
contained in a 10-page supplement.
The themes of dialogue, rational
discourse, pragmatic solutions, the value of individual effort, and
stewardship or shared social responsibility for the earth that are
played out in the supplement are initially articulated in the
shareholders' letter. This letter is as notable for what it omits as for
what it says. It at once implicates the reader, inviting dialogue, and
yet leaves the situation ambiguous, particularly vis-a-vis the company's
responsibility and intentions.
The supplement contains several
distinct parts: an answer to a letter from Dan Getty, an 11-year-old boy
who calls for responsible action from McDonald's (Annual Report, 1989,
pp. 7-8); a general outline of McDonald's philosophy and historical
commitment to "responsible [environmental] conduct," including company
founder Ray Kroc's mandate to crews to clean up litter near McDonald's
restaurants (p. 9); three sections addressing facts and expert opinions
about solid waste management, resource conservation, and recycling (pp.
10-15); and a collective call "to Help [sic]" in solving the challenge
of the environment (p. 16).
The letter of response to 11-year-old
Dan Getty illustrates several of the rhetorical strategies McDonald's
uses to achieve a symbolic identification with its customers and the
general public. First, McDonald's constructs itself as a naive,
non-expert, and innocent individual actor. Like Dan Getty and "people of
all ages," McDonald's is "asking questions about our environment" and
learning that the answers to environmental issues are "complex" (Annual
Report, 1989, p. 7). It eschews inaction in the face of complexity:
"It's easy for each of us to claim we're not responsible for these
complex forces. But then we have to ask, 'Who is?' "(p. 8). At the same
time, it sounds a cautionary note: It is important "to do what is
environmentally sound, when the responsible course of action becomes
clear" (p. 7). Who or what will provide clarity leading to action is
left ambiguous.
Second, McDonald's positions itself as one of a
community of stewards of the earth: "Each of us, knowing what we have at
stake, must make a commitment to a course of action that will preserve
and enhance the environment we hold in trust for future generations. . .
. You can count us in" (p. 8). Through appeal to the words of Gala
theory originator James Lovelock - "It's personal action that counts"
(quoted in McDonald's, 1989, p. 8) - and founder Ray Kroc's dictum -
"None of us is as good as all of us" (quoted in Annual Report, 1989, p.
8) - the boy's call for help from McDonald's is transformed into a call
for everyone to act. The actions and identification that it invites are
personal. Identifying with its customers, McDonald's asks that they
identify with it. McDonald's puts itself on a level with the
11-year-old. Thus, through rhetorical sleight, of-hand - in Cheney's
(1992) words "the sheer juxtaposition of images . . . as a substitute
for reasoned discourse, for argument" (p. 174) - McDonald's equates
natural persons with the corporate persona, and power differences - the
differences between producer and consumer, corporate giant and small
child - are made to disappear: The people at McDonald's, no different
from people everywhere, must act to save the earth. Of course, at one
level, McDonald's people are like people everywhere and, like them,
probably hold a range of opinions about the problem of the natural
environment. However, at another level and at the same time, McDonald's
people constitute a corporate body.
McDonald's defends its
environmental record by listing specific actions that it has taken to
manage waste and conserve resources by reducing, reusing and recycling
materials. It cites experts who support its position on plastic
packaging and who point out the small contribution of the entire
quick-service restaurant industry to America's waste. It also criticizes
"the 'Not In My Back Yard' syndrome - or NIMBY" (for instance, people
in McDonald's communities who opposed company incinerators in their
neighborhoods) as posing barriers to responsible waste solutions (Annual
Report, 1989, p. 11).
Also, McDonald's emphasizes individual
personal action: Plant a tree, switch off a light, recycle a clamshell.
Yet, it also describes itself as a proactive corporate actor looking for
opportunities to work with individuals, public officials, and other
companies, as well as with the communities we serve.
The more
McDonald's constituted itself as "green," the more it was required to
accommodate environmental issues affected by its business practices.
McDonald's attempts at recycling, resource reduction, incineration, and
the like were not simply symbolic. The company was both the subject and
the object of its own eco-discourse. The emerging storyline it
constructed had positive environmental effects at the material level, in
addition to opening the company to potential dialogue with EDF.
In
April 1991, the McDonald's-EDF joint task force released its final
product, a corporate waste reduction policy and a comprehensive waste
reduction action plan with 42 initiatives. Many real environmental
improvements were generated by the task force. For instance,
environmental criteria were integrated into corporate packaging
decisions which before had been driven by quality and cost criteria (see
McDonald's Final Report, 1991). The media mostly praised the results of
the alliance (Reinhardt, 1992, p. 14), and the story was recycled over
several years (e.g. Gutfeld, 1992). Ultimately, the partnership entered
the green business literature as a milestone marking a change in the
relationships between business and environmental groups (Long, F. J.,
& Arnold, M. B., 1995, p. 80).
Thus, McDonald's steps in
managing environmental issues are the examples of societal marketing.
People become increasingly aware of the damage that can be caused to the
environment by products, packaging, by-products and production
processes. They may gradually learn to adopt more environmentally
friendly products and, in particular, reject throwaway products. Green
issues are increasingly seen as important by consumers and this is being
reflected in the types of products consumers want to use. Organizations
have to change the nature of their products to meet these requirements.
Many companies appear to possess a social conscience or see the
benefits of meeting the demands of green issues; this is the case with
McDonald's.
The belief that environmental responsibility is now a
corporate function is based on research indicating that consumers want
such changes and will theoretically repay industry investments by
accepting higher prices. In a survey by Dagnoli (1990), 82% of the
respondents claimed to have changed their purchasing decisions because
of environmental concerns. Seventy-seven percent of those surveyed also
reported that a company's environmental reputation influenced their
choice of brands. Environmentalism is enough of a concern that 78% of
the respondents said they would switch to an environmental container if
it were priced 5% higher than a less-environmentally friendly container.
Another 47% said they would pay as much as 15% more for environmental
packaging.
Businesses currently involved with the environmental
movement have noticed the increasing number of markets influenced by
environmentally concerned consumers, and naturally are hoping this trend
can boost their companies' long run profits. Proactive companies like
McDonald's are attempting to take leadership roles in the area of
environmentally friendly products in order to gain a competitive
advantage (Smyth, 1991, p. 70).
For McDonald's, environmental
marketing has become one of the primary societal marketing tools.
Although much confusion still exists concerning the specifics of green
marketing, one thing that has been learned is that consumers will not
always pay more for green products (Winski, 1991, p. 3). Despite
consumer claims to the contrary, the initial sales of environmentally
friendly products and packaging have been slow (Reitman, 1992, B1).
Recent trends indicate a lack of willingness to actually pay premium
prices for such products (Wasik, 1992, p. 17).
Thus, today's market
for environmentally-friendly goods is greater than ever. To capitalize
on this movement, managers and marketers, as McDonald's case shows, must
promote the environmental benefits of their products and maintain
prices in a range near that of their competitors that do not emphasize
environmental concerns. Promoting the environmental friendliness of
products will be most attractive to some customers, while attributes
aimed at convenience will be attractive to others. Although these
aspects of the product mix are important, competitive pricing of
environmentally-friendly goods may be the key to capturing a significant
market share. Once high market shares are reached, cost reduction
programs should allow producers to increase profit margins from green
products.
