COURSE: STRATEGIC MARKETING THEORY

CODE: BUSA7078

STUDENT NO: 9506134M

SUBMISSION: TAKE-HOME EXAM

DATE: 2012 MARCH 27

TITLEThe Coca Cola company’s sustainability initiatives on

water management in developing countries:

Environmental window-dressing initiatives - driving

Greenwashing marketing campaigns

Keywords:

Sustainability dimensions, Responsible Marketing,

Societal Marketing Strategy, Responsible Consumption,

Brand Reputation

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INTRODUCTION

Today at least 1.1 billion people in developing countries have inadequate access to

water whilst 2.6 billion people lack basic sanitation (Shah 2010). The water crisis has

also affected health matters of human beings with half of the bed-occupants in

hospitals noted as suffering from water-related illnesses. The costs associated with

health spending, productivity losses and labour diversions, are greatest in some of the

poorest countries with Sub-saharan Africa loosing about 5% of its GPD to aid relief

resulting from water scarcity (Shah, 2010). The need to chance current ways in which

essential resources are used and water as a resource has become mandatory (Mark,

Cristiano, Vicente, Karel and Totti, 2010).

Against the backdrop of water scarcity has been a growing base of consumers who

have become health-conscious towards consumption of non-fizzy or carbonated,

sugared-drinks. This has spearheaded the growth of health conscious beverage

segments such as bottled water, juices, sports as well as fruit drinks (Australian Review

Case Study Centre, 2012). To Coca Cola, given the invaluable role water plays in the

production and packaging of its products, not only for bottled water brands, it is clear

that the company would simply not exist without water. The need for the company to

pursue sustainability strategies aimed managing water shortages is critical to the

survival of the business.

In this paper the question of how sustainable are Coca Cola’s initiatives in water

management in developing countries given the global shortage of water will be

answered. The paper will argue 3 key objectives: firstly, Coca Cola has set out to turn

water into a profit-driven commodity like oil to the degradation of the developing

countries’ environments. Secondly, the paper will assert that Coca Cola’s global

sustainable initiatives are greenwashing marketing initiatives which are false claims

intent on driving brand reputation management rather than achieve the holistic ethical

purpose of sustainability into the future for water management. Lastly, the paper will

highlight the growth of the Ethical Beverage Consumer and the role this individual is

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playing using a global platform in driving the Coca Cola company to be accountable in

the role they have played in environmental degradation to date in India.

It is imperative that this paper starts with an outline of the mandatory role of global

companies within the 21st century in driving the discipline of Responsible Marketing.

This understanding, which will be constructed within the context of the growing concern

for accountability on sustainability initiatives by companies, will then enable a thorough

critical analysis of Coca Cola’s sustainability efforts to date.

BACKGROUND

In a paper aptly titled “Marketing and Sustainability”, Jones, Clarke-Hill, Comfort and

Hillier (2008) profile the varied arguments to date regarding the relevance of

sustainability and marketing to each other respectively.

Sustainability is defined by McCann-Erickson (2007) (Jones etal 2008) as an all

inclusive term for everything to do with responsibility for the world in which we live in.

This definition emphasises the 3 dimensions’ roles of sustainability i.e. economic, social

and environmental in driving the pursuit of consuming differently and consuming

efficiently. Lastly, the definition outlines that it is during this consumption that the global

environment must be protected while not jeorpardising the needs of future generations.

These 3 dimensions have continually been referred to by other research scholars when

the construct of sustainability is discussed (Sheth, Sethia and Srinivas 2010). However,

in arguing a comprehensive, all -embracing view of sustainability, Closs, Speier and

Meacham’s (2010) definition which encompasses the 4 dimensions is worthy of notation

in this regard.

Closs etal (2010) identify the 4 key dimensions to ensuring this as Environment,

Economics, Ethics as well as Education. Of relevance to the paper, is the review of the

Ethics dimension which focuses strongly on the issues relating to Corporate Social

Responsibility (herein referred to as CSR). CSR refers to the obligations to society and

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stakeholders within societies impacted by the firm (Chiara and Spena, 2011). When a

company is driving a comprehensive sustainable strategy, it is in essence actioning

initiatives across all 4 dimensions. Within the ethical dimension context of these

initiatives, this implies the involvement of employees as well as community involvement

in actioning ethical sustainable projects aimed at addressing or providing solutions to

meeting the needs of the present without compromising the ability of the future

generations (Closs etal, 2010).

The relevance of sustainability with marketing is in fact in the definition of the growing

construct known as “sustainable marketing” (Jones etal 2008). Sustainable marketing,

as defined by Charter et al (2006) is expressed as creating, producing and delivering

sustainable solutions with higher net sustainable value whilst continuously satisfying

customers and other stakeholders (Jones etal 2008). The obvious link, cites Jones etal

(2008), is in the growing number of companies who are looking to emphasise their

commitment to sustainability in their pursuit to differentiate themselves from their

competitors. In turn, by so doing they would also be elevating as well as strengthening

their corporate brand and its reputation.

This can be achieved through the utilisation of societal marketing strategies which allow

companies to differentiate themselves from competitors by creating an emotional bond

with consumers (Chattananon, Lawley, Trimestsoontorn, Supparerkchaisakul and

Leelayouthin, 2007). Chattanon etal (2007) argue that societal marketing has been

shown to create competitive advantages for a company by building brand awareness;

enhancing corporate image as well as stimulating consumer’s purchase intention.

Societal marketing is best understood to be a concept that calls on marketers to fulfill

the need of the target audience in ways that enhances the well-being of consumers and

society as a whole whilst meeting the company’s objectives (Chattananon etal, 2007). In

implementing varied programs under this intent of Societal marketing, CSR defined

already has been one example in driving the involvement of the organisations in internal

and external stakeholders’ aimed at benefiting a charity. What remains conclusive from

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a research perspective then is the undeniable existence of a relationship between the

implementation of a societal marketing initiative and the attitude formed towards the

corporate’s brand (Chattananon, 2007). This is then a key strategy to deploy in pursuit

of building or improving or addressing a company’s reputation.

Given the global water crisis unpacked at the commencement of this paper, the role of

Responsible Marketing as a discipline becomes that much more important to review

when companies are constructing their Societal marketing strategies. Responsible

marketing is “socially conscious marketing where focus is o reviewing the negative

effects of marketing activities of a company on its society to date with the intent of

mitigating those effects” (Wood, Pitta and Franzak, 2008: #427).

Wood etal (2008: #427) emphasise that this is done with a conscience enabling

consumers who engage with the company’s products to have “ease of choice, ease of

use as well as ease of heart” in the process. If anything then, again we see how

Responsible Marketing can also play a meaningful role in overcoming negative feelings

towards a company or a brand and thereby help influence positive imagery towards the

brand. Stated differently, the link between addressing perceptions of the brand,

inherently taking care of the brand’s reputation, exists strongly with the consciously-

centric strategies of Responsible Marketing initiatives.

When an organisation is armed with the facts and figures availed at the beginning of this

paper with respects to global water crisis, it is clear that sustainable efforts which are

initiated have to also enable driving of Responsible consumption of the water category.

Responsible consumption as a theory refers to “rational and efficient use of resources

with respect to the global human population” (Sodhi, 2011:#180). Here marketers work

hard to encourage consumers to “do more with less”.

Is it then possible for global companies to develop sustainable strategies which utilises

societal marketing initiatives to address the global water crisis. Is it possible to also

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encourage Responsible consumption whilst ensuring the reputation of the brand’s

offering remains intact?

To answer this question, the Coca Cola company’s sustainable strategy in addressing

the management of shortage of water globally merits our critical analysing.

THE COCA COLA COMPANY WATER STRATEGY

In revisiting the company under review, Coca Cola, it is clear that the company’s

activities resound a company that is holistically intent on driving the course of water

management effectively (Australian Review Case Study Centre, 2012). Through the

company’s Global Water Stewardship Initiative, a strategy with four-pronged objectives

was developed. In turn these objectives were noted for implementation through focus

on 3 main areas namely: Improving operational efficiencies; Maintaining Sustainability

as well as through Partnerships.

It is undeniable that these 3 areas can be identified nor can one question their existence

or even activations of the outlined initiatives as documented in the 2 case studies of

Coca Cola: Water, water everywhere and Make every drop matter.

It would deem fitting to conclude that Coca Cola is an organisation which has pursued

an Innovator leadership approach in addressing water shortages globally by

championing a number of key initiatives proactively especially within the Environmental

dimension of Sustainability. A firm that pursues an Innovator Leadership approach is

defined by Closs etal (2010: #108) as a company that “establishes sustainability as a

strategic priority and often seek best practice performance regarding the manner in

which each sustainable dimension is implemented.” With reference to the case studies

notations, CCA in Australia is known for example in driving ethical dimension of

sustainability in periodic reporting to the local governments regarding its water levels’

usage to date. It has been noted of its championing of environmental dimension of

sustainability strategy through technology-centric initiatives. Increasing safe water

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supplier, promoting sanitation and hygiene, enhancing and conserving local water

resources by the company, are initatiatives which are well resonated from reviewing

both case studies (Australian Review Case Study Centre, 2012)

However, a review of the Coca Cola company’s operational conduct in some of the

developing countries, begs for questioning the extent of ethical and moral accountability

of the organisation in staying true to its Sustainability plans.

THE RISE OF THE ETHICAL BEVERAGE CONSUMER

India is well known for its aggravating water crises with in fact nearly a third of its well

over 570, 0000 villages declared as water-deficient areas (Chaudhary, Jacks and

Gustafsson, 2002). In fact according to a report prepared jointly by UNICEF ad WWF,

India will become a “water-stressed” nation by 2017 (Chaudhary etal (2002).

Yet a closer look at Coca Cola company’s activities in India highlighted problems also

noted around the world (Shah 2010). Coca Cola, was found to have been pumping

water from local well inciting farmers to keep digging for water even under dangerous

conditions. For every litre of drink from Coca Cola, some 3 litres of water are needed -

this in a country that is already in dire straits constraints of water shortage.

Shah (2010) confirms that when Coca Cola was questioned regarding its lack of ethical

behaviour, the company chose to highlight all the activities it is pursuing to date in being

a responsible company. The company also denied contributing to water levels in the

country, in spite of government figures confirming differently.

The rise and rise of anti-Coca Cola sentiment has since grown with a number of

villagers and organisations mobilizing under the banner of People’s Committee for

Struggle intent on pursuing the driving out of Coca Cola from India (http://

wwww.indiaresources.org/campaigns/coke/2004/risingstruggles.html.) Farmers in fact

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hold the company accountable for the declining ground water levels in some of the

regions resulting in harm to local agriculture as well as diminishing livelihoods.

Coca Cola’s response to these protests, in 2004, was to provide tricycles to physically

handicapped kids, provided scholarships to kids in 13 schools in the area where the

protests where intensifying. In addition they also provided sewing machines to 50

widows - activities which were aimed ay creating goodwill for the company and

undermining the Anti-Coke movement of of at least 22 villages who demanded that a

Coca Cola plant be shut down.

In 2003, experts in the Centre for Science and Environment, a New Delhi-based NGO,

tested and confirmed that Coca Cola and Pepsi’s drinks contain unacceptable levels of

pesticide residues. Coca Cola exceeded its rival with contaminants’ content which

exceeded the norms by 45 times according to the findings (http://

www.indiaresources.org/bnews/2003/4725.html). According to The Economist (2005)

although Coca Cola was not the problem, however an Indian parliamentary committee

has since been commissioned to develop the world’s first pesticide standards for soft

drinks. This move has been opposed vehemently by Coca Cola and its Pepsi

companies (http://www.indiaresources.org/bnews/2003/4725.html

THe number of incidents truly positioning the Coca Cola brand in a negative manner are

growing at an arm’s length including the unauthorised dumping of hazardous waste

which Coca Cola later denied as not harzadous (http://www.indiaresources.org/news/

2005/1062.html). In the midst of these incidents, the rise of the ethical consumer has

emerged. This consumer has enabled the convergence of all villagers’ voices into one

voice. All agree to the mandate that Coca Cola “is stealing water, poisoning the land,

selling drinks laced with pesticides, destroying lives, destroying livelihoods and

communities across India.”

Coca Cola considers India as vital to its plans for global growth and so it has had to

work hard in fending off a Mr. Srivastava’s global rallying. Mr. Srivastava, is the global

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voice for the voiceless in India on Coca Cola’s activities to date. With 2004 having

achieved the shutting down of one of Coca Cola plant, Mr Sreivstava, a one-man NGO

company, is now known for rallying support not just in India but also in the US and

Europe. Using the global platform, Indians are finally conveying the struggles they put

up with as a result of Coca Cola’s water-shortage and pollution activities. Finally, India is

able to inform the world of Coca Cola’s waste disposal practices which polluted the land

and the water in surrounding areas. The world finally got to hear that the company failed

to conduct tests on a dumping site used by its biggest plant in India ,only doing so after

a Wall Street Journal reported the case (http://www.indiaresources.org/news/

2005/1062.html). In fact a study done by the company itself concluded that the

company’s selection of where plants were located was based purely on “business-

continuity” perspective with no thoroughfare consideration to the community at large.

The Corporate Accountability International, herein referred to as CAI, is also another

activist group which has turned its attention to Coca Cola (The Economist, 2005). The

group argues that the bottled-water business is a misleading marketing campaign which

has in fact undermined the confidence in tap water. These similar sentiments are

articulated as people “paying a high price” for deception by Folsom (2006). Folsom

(2006) outlined that CAI has intensified its “Think outside the bottle campaign” which is

aimed at directly challenging the marketing muscle and myths of the bottled water

industry. After all, Folsom (2006)concludes, more than a quarter of bottled water comes

from public tap water.

India’s formidable community campaign to hold Coca Cola accountable for its

environmental abuses leaves no further questioning with respects to Coca cola’s action

plans of its strategy on sustainability on water management in India. The latter

deserves the labeling of its strategic efforts as “Greenwash.” Greenwashing “can make

a company to appear more environmentally friendly that it really is (Sustainability

Lecture Notes, 2012). The concept, according to The Economist (2005), implies

environmental window-dressing.

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This is exactly what Coca Cola has continued to do when responding to the growing

international scrutiny. It fostered ahead with a Corporate Social Responsibility campaign

intent on creating and maintaining an image of itself as a “water steward”. According to

cokejustice.org, “nothing could be further from the truth.” Their written sustainability

intent has not materialised into actionable as well as accountable activities that are

founded on Ethical dimensions of what is deemed to be a globally-sound sustainability

program in India. If anything else, they have merely been greenwashing marketing

activities window dressing unethical behaviour in taking advantage of unregulated

environments in developing countries to further their profits’ objectives.

FUTURE IMPLICATIONS

A legislative framework needs to be developed to independently monitor the

sustainability strategies being deployed by companies within developing countries.

Further research confirming the origins of packaged bottled water needs to be

undertaken with the intent of creating legislation aimed at banning bottled water should

the results confirm a majority of bottled water brands coming from what Folsom (2006)

refers to as public tap water well-source.

Water crisis global mandates a much more stringent global legislative framework for

companies selling bottled water. If over a billion people are already in water-stressed

areas surely sourcing limited water and packaging it to be sold is degrading the

environment. It also begs for questioning the ethicalness of selling that which should be

a basic human right’s access to.

CONCLUSION

The water crisis globally is mostly felt in developing countries where at least a billion

people do not have easy access to this basic human right. This paper argued that there

is a need to develop sustainable strategies aimed at managing water usage and

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resources of water production by global companies. The role of global companies is to

carry such sustainable strategies utilizing a comprehensive 4-dimensions action plan

encompassing Environmental, Economic, Education as well as Ethical whilst building

the reputation of their brands by deploying societal marketing strategies. Coca Cola’s

questionable and environmental abusive sustainability activities in India were

highlighted. This confirmed their Environmental window-dressing use of Greenwashing

marketing campaign efforts. Lastly, this also confirmed the existence and rise of an

Ethical consumer, in India, who demanded the exiting of Coca Cola in protecting the

limited resource of water in their country. The existence of such a consumer defines the

consumer of the future: demanding what is rightfully theirs.

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