Andrea Prothero and, P McDonagh

Tags: the environment, organizations, companies, Andrea Prothero, environmentalism, business, Marketing News, societal marketing, acceptable products, environmental policies, environment, BUAV Nott, BUAV, waste Company Suppliers, Production processes, activities, socially responsible, Toiletries Industry The Cardiff Business School, environmental issues, cosmetics and toiletries, pp, social responsibility
Content: Jourttal af Marketifist Mana^emait, 1992,8, 147-166
Andrea Prothero and Pierre McDonagh Cardiff Business School, University of Wales
Producing Environmentally Acceptable Cosmetics? The Impact of Environmentalism on the United Kingdom Cosmetics and Toiletries Industry
The Cardiff Business School, University of Wales, is currently undertaking a research progrumme on the influence of environmentalism upon the United Kingdom cosmetics and toiletries market. This paper examines four main areas in relation to the environment and the development of environmentally acceptable products. The survey considers products and their environmentally acceptable attributes; the research of companies into the production of environmentally acceptable products; the production processes of companies and the environmaitally conscious activities of companies.
Introduction
In recent years the activities of businesses and their impact upon the environment have become more apparent. Within society, organizations no longer face the problem of whether or not to behave in a socially responsible manner but rather which areas of responsibility should they be involved in; be it the amount of money they donate to their local charity or decisions as to where to dump their toxic waste. Problems have developed in the definitions of the concepts of both social responsibility and environmentalism, since each is perceived differently not only by academic writers but by the organizations themselves and individuals within those organizations (Arlow and Gannon 1982). The writings on social responsibility are vast and all suggest different activities for business, some advocating business proceed in a socially responsible manner and other criticizing such a role. The problem with those works that support social responsibility is, however, as Abratt and Sacks (1988) indicate, that few suggest what behaving in a socially responsible manner actually entails. This paper is not aiming to consider the advantages and disadvantages of social responsibility but rather where the role of the marketing department fits and what activities it should be developing in the light of increased environmental awareness. It is however important for the reader to be aware of the social responsibilities of business where, if one considers social responsibility as a system, environmentalism and the response of business to environmental issues can be classified as a sub-set within that system.
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If one accepts the trusteeship view of social responsibility (Smith 1990), where business must be accountable for its activities, it becomes possible to develop this in the context of the marketing departments' function. As has been widely mentioned, business must consider the impact of its actions on society (Petit 1967; Abratt and Sacks 1988; Carroll 1989). What does this then mean for the marketing department in terms of its response to environmentalism by assessing the effects of its activities upon the natural environment and ultimately society? Many environmentalists, such as environmental lobby groups, green politicians and the environmentally conscious consumer are supporting the notion of Sustainable development where such a practice "meets needs of the present without compromising the ability of future generations to meet their own needs" (Source: Gro Brundtland, Report of World Commission on Environment and Development). It has been proposed that such sustainability will go some way towards eradicating global environmental problems. The increased emphasis placed on the social responsibilities of business including greater concern for the environment has led to new business activities in many organizations, one of which includes the practice of societal marketing where in such instances: Companies may be allowed to produce those goods that consumers need for day to day sundval (and make a profit), but those goods and sendees that consumers want in the short term can only be provided on a long term hasis so long as the production of such goods and services will have no adverse effects on the environment. (Prothero 1990) Adoption of such a strategy means businesses are beginning to change the context of their marketing function so that marketing now requires a wider definition to include the social as well as econoniic impacts of their activities (Nickels 1974). The global concerns of many groups have hence led to social responsibility being back on the corporate agenda (if it ever went away at all) where one element of such responsibilities is the practice of societal marketing by organizations who only produce goods at a sustainable level.
Environmentalism and the Marketing Function Increased concern for the environment has then led to new debates surrounding the issue of societal marketing and the role of the marketing function in the 1990s. A look at some of the more important issues of environmentalism is thus required to enable the reader to consider such effects for the marketing function. Since environmental issues are now a matter of concern on a global scale (Chuckman 1990; Cope 1990; Kirkpatrick 1990; Krauer 1990; Smith 1990), industrialists can no longer be allowed to ignore the impact of their business activities on both society and the environment, whether or not they wish to be perceived as socially responsible institutions. In the next decade, most organizations will be faced with having to develop their business in a more environmentally sound manner, albeit the impact will be greater in some than in others. The "global crisis" has increased the number of green consumers (Smith 1990) resulting in many companies developing greener products as a result of increased consumer demand. Kreitzman (1989) and Knappe (1990) proposed that companies
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that fail to produce environmentally friendly products will face difficult times and consumers will purchase products from those who address the issue more favourably. The greening of consumers, along with a number of other factors (see Prothero 1990), may lead to an increase in the number of companies practising societal marketing. Companies would still aim to make profits and satisfy customer needs, but the consequences of business activities on the environment would also be taken into consideration so as to eliminate any harmful effects for society and the environment (Abratt and Sacks 1990). As Krauer (1990) suggests, the environmental activities of a com.pany must become part of the overall strategy of the organization and need to be integrated with all other major functions of the organization, where top management becomes involved with major environmental concerns (Glazer 1990; Kenward 1990) and as a result of such involvement organizations adopt the policy proposed by Wells (1990) of "market-oriented Environmental Management". Such a strategy will impinge upon the marketing mix policies of the organization where these decisions will now have to include three considerations proposed by Shuptrine and Osmanski (1975) within the marketing mix; consumerism, clean-up and conservation. Definitions of the marketing mix will be redefined so as to include societal considerations (Schwartz 1971; El-Ansary 1974) where the practice of societal marketing will enable the efforts of the marketing department to be more effective (Abratt and Sacks 1988) in the new society in which business is operating.
environmental impacts Upon the Product The major mix element under scrutiny is the product itself and it has been suggested by numerous sources that organizations need to develop more environmentally acceptable products where such products will provide one of the most important marketing challenges of the 1990s (Foster 1989). The problem arises however when one tries to find a definition for this term (Schlossberg 1990). Peattie (1990) has gone some way in trying to clarify this problem by suggesting that the development of "friendlier" products involves looking not only at the finished product but also, more importantly, the production processes involved. He proposes the adoption of a 45 strategy to enable production of more environmentally acceptable products. (i) Satisfaction of customer needs and wants; (ii) Suslainahility of products consumption of energy and resources; (iii) Social acceptability of both the company and its product offerings; (iv) Safety of the product. The remainder of this paper concentrates on the effects of environmentalism on the United Kingdom's cosmetics and toiletries market and considers the steps taken by such companies in the following areas: --products and their enviromentally acceptable attributes; --research of companies into the production of environmentally acceptable products;
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--production processes of companies; --environmentally conscious acti^dties of companies.
The United Kingdom Cosmetics and Toiletries Industry Environmentalism has had a major impact upon some industries where such industries are involved in some of the major areas of concern such as --depletion of Natural Resources; --the use of substances which are harmful to/pollute the environment; --waste generation through production processes; and --cruelty to animals for cosmetic/scientific purposes (McDonagh and Prothero 1991). The cosmetics and toiletries industry was seen as one industry for study as a result of the controversies surrounding animal based substances, the testing of ingredients and finished products on animals and the industry's use of harmful substances (such as CFCs). The global market is estimated to be worth $60 million (Brady 1989), the UK industry Ј1-7 billion (National Westminster Bank 1990) and it has been proposed that the weekly household expenditure for cosmetics and toUetries is 2%. The combination of the controversies surrounding cosmetics and the size of the industry globally led to this research study. Globally the cosmetics industry has been faced with many changes in recent years, one of the more notable being the increase in the number of mergers and acquisitions (Redmond 1988). Acquisitions include that by L'Oreal of Helena Rubenstein, Unilevex of both Rimmel and Faberge (Mintel 1991), and Revlon of Max Factor and Almay (Key Note Report 1989). Some large corporations are also moving towards mergers/acquisitions with pharmaceutical companies (Redmond 1988) which has led to the development, in some instances, of the "cosmeceutical market" (Levy 1989). The development of cosmeceuticals can be related with new products on a global scale. Two new market segments appear to be developing in the industry, the skincare range of "anti-ageing" creams (Larson 1989) and the development of more environmentally acceptable products such as "cruelty-free" and natural products (Mintel 1991). New product development plays an important part in the industry itself, e.g. Revlon, one of the largest cosmetic companies, introduced 63 new products in 1988 (Anonymous 1989a). The move towards anti-ageing creams are attributed to a number of factors; namely the increase in the number of working women (Mintel 1991) and hence increasing the number who can afford to purchase such products and demographic changes, i.e., the population is becoming older (Johnson 1990): de Jouvenal (1989) estimates that by 2025 one in four Europeans will be aged 65 years or over. The increase in more environmentally acceptable products may be attributed to the general rise in the number of green customers. A recent Mintel (1991) survey found that 39% of consumers look for green products. A survey of women (Dagnoli 1990) in the US (women are the majority of purchasers for cosmetics, although the number of male purchasers is increasing, Mintel 1991) found that 56% in 1989 refused to purchase a product for environmental reasons.
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The strategies for companies adopting such new products are very different and involve many issues. This paper concentrates on the segment of the development of more environmentally acceptable products as a result of increased consumer demand for green products, whether they are newly developed products oi modifications of existing ones, although the conclusions of this paper will also consider the anti-ageing segment.
Research Design Methodology The sample consisted of 357 companies chosen from three main sources. The first 170 companies comprised cosmetic manufacturers and suppliers identified from the 1989/90 Kompass directory and the 1989/90 Key British Enterprise Directory. The remaining 187 companies were taken from the 1990/91 BUAV (British Union for the Abolition of Vivisection) approved product guide of cosmetics and toiletries. There are two classifications in the guide; those cosmetics companies who produce goods whose finished products and ingredients do not contain animal ingredients and have not been tested on animals during the past 5 years; the second somewhat smaller section includes companies whose finished products' and ingredients have not been tested on animals but where some of the products' ingredients include animal derived substances. Those companies who were in both the BUAV list and the business directories were included only in the BUAV sample for the purpose of analysis. A self administered questionnaire was sent to the managing directors of all companies and was distributed during the summer of 1990. A reminder was also distributed approximately 2 weeks after the initial mailing had taken place. From the selected sample of 170 companies identified from Kompass and Key British Enterprise Directory, 17 questionnaires were unusable either as a result of the firm no longer being at this address (questionnaires were returned by the post office stating "gone away') or with the companies stating they were not in the cosmetics industry and should have therefore not been included in the initial mailing. The sample for these companies was then reduced to 153 companies. After both the questionnaire and the reminding letter had been sent out, the total response rate from these companies was 45 (2940%). Of these responses there were only 23 (15%) completed usable questionnaires, six usable letter responses (3-9%), and 16 unusable letter/telephone responses (10-5%). Various reasons were cited by these companies for non-completion of the questionnaire, the main one being that the company was "too busy" to respond to questionnaires since they dealt with so many. The usable letters were helpful since although the respondent failed to complete the questionnaire, data were still provided on the company's policies on issues such as animal testing. Of the 187 BUAV companies, three (1 -6%) were no longer at the mailing address, (reducing the sample to 184 companies), three (1-6%) provided us with usable letter responses, two (1-1%) companies provided unusable letter response and 62 companies completed the questionnaire (33-70%). A summary of the total responses is shown in Table 1. It should be noted that where the number of respondents is less than 62 or 23,
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Table 1. Response rate by respondent type
Total responses
BUAV
Non-BUAV
Unusable Usable letter Completed questionnaire TOTAL response Number [«]
5-30 2'70 25-20 « = 85 33-20 337
1-10 1-60 33-70 11 = 62 36-40 184
10-50 3-40 15-00 n = 23 I 29-40 153
respectively, in the research findings this indicates that some companies did not respond to the question being considered. In response to the caD by Conant et al. (1991) for more accurate mail survey design information. Table 2 summarizes the mail survey design used.
Table 2. Mail survey design infortnation
Qverali response rate: 33-20%
BUAV:
[n = 85] 36-40%
Non-BUAV: [n = 23] 29-40
Usable response rate: 27-90%
,,
35-30%
,,
18-90%
Faeiiifation technique Preliminary notification Foot-in-the-door Personalization Anonymit}' Response deadline Appeals Sponsorship Incentives Follow-ups
Used + -*+ + +
Not Used + + + +
Description Addressed to Person resp. Findings reported Reminder
Type of postage--outgoing Type of postage--return Questionnaire length Questionnaire size, reproduction & colour
1st class FREEPOST 12 pages back to back A4 B&W for Non-BUAV and A4 Green for BUAV
Research Analysis Initial comparison between the results from the two samples used percentages to consider any initial differences occurring. In order to reject the Null hypothesis, {Ho--The proportion of environmental acceptability is the same in the two samples for the variables being considered} the Chi-square (x^) statistic was used to consider if there were any significant differences between variables that were not occurring simply by chance. Hence, if the Null hypothesis for each area of consideration cannot be rejected then one would expect the same proportion of environmental acceptability in both samples. Chi-square values obtained were then compared with the x^ distribution using the probabOity level of 0-001 and the appropriate degrees of freedom to establish if the value obtained was unusually large in order to reject the Null hypothesis. In a few instances the x^ statistic was not used since the main criterion {only 20% or
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153
below of cells being considered can have an expected count of less than 5} could not be met. In these cases percentages only were examined. The x^ values were also obtained using the frequency of occurrences and not the percentage in order to follow one of the major criteria laid down for the use of x^ analysis. Chi-square analysis was conducted for all responses (where possible by following the above criteria). For the purposes of this paper however, the results have only been included in areas where the Null hypothesis can be rejected, hence proving that differences between the two samples did not occur simply by chance. These results then show that there is a difference between the environmental acceptability of products in such instances for the two samples. Other x^ figures were not included in order to allow a more general discussion of the findings.
Respondents
A breakdown of companies by type of respondent is illustrated in Table 3.
Table 3. Type of respondents
BUAV
Non-BUAV
Manufacturer Supplier
30-5
50
20-3
22-75
Both Retailer Agent
37-3
22-75
8-5
4-5
1-7
--
Sub-contractor
1-7
Number
59
22
The majority of respondents in both samples are either manufacturers, suppliers or both of these. Respondents thus play a significant part in the shaping of the UK cosmetics and toiletries industry. Average annual sales turnover for respondents has also been identified (Table 4).
Table 4. Average annual sales turnover of respondents
BUAV
Non-BUAV
<Ј50,000
21-3
--
Ј51-500,000
27.6
5
Ј501,000-2 miUion
34
10
Ј2-1-5 million
64
15
Ј6-10 million
6-4
25
Ј11-25 million
10
Ј26-50 million
--
15
Ј51-100 miUion
4-3
5
Ј101-f million
--
5
Number
47
20
There is then a sizeable difference between the two sets of respondents; the table indicates that non-BUAV companies are considerably larger in terms of sales turnover than the smaller BUAV sample. The impact of their actions will thus be far greater than that of the smaller organizations upon the industry.
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The approximate armual sales turnover for 21 of the 23 respondents of the nonBUAV sample totals Ј515-2 million (1989 figures). In 1989 the anticipated sales turnover for the UK industry vkfas estimated at Ј1,800 million. The respondents of the survey therefore hold a sizeable proportion (29%) of the industry in the UK. For this reason, the authors feel that despite a iow response rate in the non-BUAV sample the results are still valid since the key players within the industry responded to the questionnaire.
Research Findings In developing new products on an environmentally acceptable platform companies must not only consider the final product but also the manufacturing processes involved (Elkington with Burke 1987). The major hypothesis considered by the authors therefore was that BUAV organizations would be responding to the issues outlined earlier in a more environmentally acceptable manner than other cosmetic companies.
I. Products and their Environmentally Acceptable Attributes
Respondents were asked if they considered any of their products to be environmentally acceptable and if so what percentage of their product range is marketed on an environmentally acceptable platform.. All respondents in both samples stated they had products considered by them to be environmentally acceptable; the percentages for the whole product range are listed below in Table 5.
Table 5. Percentage of products marketed on an environmentally acceptable platform (Summer 1990)
Less than 50% 51-75% 76% + Number
BUAV <%) 9-7 12-9 77-4 62
Non-BUAV <%) 56-5 21-75 21-75 23
Ho--The proportions in the three categories for the percentage of products marketed on an environmentally acceptable platform are the same for BUAV companies as for non-BUAV companies. X^ = 25-667, df = 2, Probability 0-001, x^ distribution value = 13-81. Table 5 indicates that over three-quarters of BUAV products are marketed on an environmentally acceptable platform in comparison with less than a quarter of nonBUAV companies. The observed x^ value in this instance is also much larger than the distribution value. Therefore the Null hypothesis of there being no relationship between variables can be rejected and it would appear that BUAV companies are more likely to market a larger percentage of products on an environmentally acceptable platfonn than their:non-BUAV counterp'arts.
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155
When asked how many products would be marketed on such a platform in 3 years time the 76%+ platform increased to 30-4% for non-BUAV companies; perhaps suggesting a trend where more products will be considered environmentally acceptable by non-BUAV companies in the future. Whilst these indicate a possible trend for non-BUAV companies to market environmentally acceptable products this does not indicate how environmentally acceptable such products are but rather whether the company markets them on this platform. Respondents were thus asked which of the following attributes their environmentally acceptable products have (where more than one box could be ticked).
Table 6. Attributes of environmentally acceptable products
BUAV
Non-BUAV
Not overpackaged
74-2
52-2
Recyclable packaging/container
45-2
52-2
CFC
free
75-8
82-6
Not tested on animals
98-4
78-3
No animal based substances
80-6
43-5
In all cases except one, over 75% of BUAV companies have the above attributes in their products. Figures are lower for non-BUAV companies and some attributes are in more companies' products than others. The high percentage of companies who do not test their finished products on animals will be considered in more detail in the "cruelty-free" section of this paper. Table 6 shows that BUAV companies' products have a greater number of environmentally acceptable attributes than those of non-BUAV comparties although figures for these companies were higher than anticipated. These attributes are not the only ones that need to be considered as far as environmentally acceptable attributes are concerned, but at the time of this work, from their readings on the issue for the cosmetics industry, the authors considered them to be the most important. In order to establish how long companies have been producing environmentally acceptable goods, respondents were asked when they first introduced a product to attract an environmentally conscious user (Table 7).
Table 7. When did company Srst introduce product to attract environmentally conscious consumer
BUAV <%)
Non-BUAV (%)
Pre 1987 1987-88 1989-90 Never
54-2
21-7
27-1
34-8
18-7
25-]
17-4
Number
59
23
When we consider that nine BUAV organizations had not been established in 1988 it would appear that most BUAV companies have been tackling environmental issues since the mid 1980s, something which is not surprising when we consider this is the major strategy of these companies. A large proportion of the non-BUAV
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companies have only recently started to address the area of environmentalism for their product range. It is interesting to note here that 17-4% of the non-BUAV companies stated that they have never introduced a product for an environmentally conscious user although they did stress earlier that some of their products do have environmentally acceptable attributes. It may be that some elements of a product are considered environmentally acceptable but not all of them since the company is not aiming to attract the "real" green consumer but those who may be swayed by for example CFC-free goods but would not know or even be interested in the issue of animal testing. Companies were asked to identify the major products that their company produced. This showed that a large number of BUAV companies concentrate on a small segment of the whole range of cosmetics and toiletries, for example soaps and skin care products, whereas non-BUAV companies tend to have a more diverse range of products in all of the major segm.ents for the industry. This factor can be attributed to the sheer size difference between the respondents. The survey asked if companies had phased out any of their products because they were not considered environmentally acceptable; responses in both instances were categorically no (88-3% BUAV and 87% non-BUAV) although reasons for such responses may be somewhat different. Most, if not all of the BUAV companies will have started their business on an environmental platform because of the very nature of their products. Hence most of these companies would not consider themselves to be producing environmentally unacceptable products. What is interesting is the small number of other cosmetic companies who have phased out products, especially when one considers the intense pressure the industry has come under from environmental lobbyists in recent years. Although very few non-BUAV companies have phased out products, 78-3% have modified some products during the past 3 years and 69-6% are expecting to make further modifications in the next 3 years. The modifications introduced or expected to be introduced are listed below (bearing in m.ind that some respondents stated more than one modification would be taking place).
Table 8. ModiBcations of products
Fast 3 i^ears
BUAV In)
Packaging
5
Removal of CFCs
1
Removal of animal based substances
3
Change to vegetable substances
6
New formulas/ingredients
1
Monitoring of raw materials
--
Manv changes
4
n = Number,
Non-BUAV M 4 15 -- 4 2 1 1
Next 3 years SUAV (n) 5 -- 3 2 -- 1 6
Non-BUAV (n) 7 -- 2 6 1 7 2
CFC removal was the area of most change, not a surprising factor when one considers the increased attention being paid to the issue recently. Changes during the next 3 years indicate that companies will be responding to the issue of "cruelty free" products where some expect changes in both the removal of animal based substances and the introduction of vegetable substances. Packaging changes were also expected by both samples, again an area of important consequences in the
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157
cosmetics industry because of the vast importance placed on packaging by the industry especially the larger organizations, since it is often the package which persuades people to buy and not the product itself (National Westminster Bank 1990). It is estimated that packaging costs may represent up to 35% of a product's total manufacturing costs in the cosmetics and toiletries sector (National Westminster Bank 1990). As far as environmentally acceptable products are concerned BUAV organizations appear to market more products on an environmentally acceptable platform, although not all products have environmentally acceptable attributes, which is highlighted, for example, by less than half of the packaging used by BUAV companies being recyclable. This section of the findings concerning products and their environmental acceptability may indicate that the two samples equate environmental acceptability with different definitions; non-BUAV companies are more likely to equate the term with CFC-free goods (as a result of increased consumer pressure for these goods); BUAV companies on the other hand would appear to equate the term with "cruelty-free" products, with possibly some other attributes also included. What is apparent from Tables 5 and 6 is that organizations who are operating ory a cruelty-free platform may not be environmentally acceptable when one considers other aspects of environmentalism, such as the use of recyclable packaging. These issues then leave us with the question, "Does being 'cruelty-free' also mean an organization is producing environmentally acceptable products?" The answer to this seems to depend on the definition of environmental acceptability. What we may find happening in the future is products becoming more "environmentally acceptable" in certain fields when customers demand such attributes from the products they are purchasing. In today's market it may be that as far as cosmetics and toiletries are concerned there may be three types of environmental purchasers; those who require the product they purchase to have as many environmental attributes as possible; those who only require "cruelty-free" products; and those who require CFC-free products with consideration also made towards the environmental friendliness of the products' packaging. With increased emphasis being placed upon the environmental attributes of goods and services consumers in the future are expected to adopt a "Dark green" attitude when purchasing products. They will then be more likely to fall into the first of these categories, hence requiring both sets of respondents to improve the number of environmental attributes that their products contain.
2. Researching of EtwironmentallY Acceptable Products Environmentalists have emphasized the importance of organizations researching the production of environmentally acceptable products for future new product development. Respondents were asked if their company was currently researching the production of such products (Table 9). The data provide no significant evidence to suggest that one sample is more involved in the researching of environmentally acceptable products than the other. What is interesting about this question however is that those BUAV respondents who replied no to this question stated they need not become involved in this research since the products they currently produce are already environmentally
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Table 9. Researching of environmentally acceptable products
BUAV (%}
Non-BUAV (%)
Yes
41
59-1
No
59
40-9
Number
61
22
acceptable. In future years they may need to consider whether such products, their ingredients and the production processes involved will be considered environmentally acceptable (bearing in mind CFCs were the answer to many problems when they were first introduced (Kenward 1990)). BUAV companies may therefore find themselves guilty of complacency if they consider themselves to be environmentally acceptable and see no urgent need to be monitoring future directions of environmentalism, assessing for example the future environmental performance of not only its final product but also the acceptability of the production processes involved. The BUAV sample may find that in future years they have no market for their product since they have not researched the possible future environmental requirements of their customers. Of the non-BUAV companies who said they were involved in such research only two of these companies stated the research had a separate budget which may also highlight the importance (or lack of it) placed on the issue by non-BUAV respondents. The questions asked only skim the surface of the subject and further investigation is required to discover what such research involves and what amount of resources is being ploughed into the researching of environmentally acceptable products. With the majority of BUAV organizations being very small in comparison with large non-BUAV companies the research processes of larger companies may have a greater impact upon the industry, simply because of the avaUability of resources. Globally the industry itself is estimated to be worth $60' million; the resources that may be available for research have the potential to be phenomenal. Many larger cosmetic companies are also part of a wider conglomerate of companies such as Unilever and Procter & Gamble, again highlighting the resources of such large multinational corporations.
3. Production Processes and Suppliers A number of writers (Peattie 1990; Elkington with Burke 1987) have commented upon the need for production processes to be monitored and for the need to monitor or at least be aware of suppliers activities (Kenward 1990). TMs section considers the production processes of respondents and their relationship, if any with their suppliers. Respondents were firstly asked if they have total control over the production process for the products they market; 42% of BUAV and 36-4% of non-BUAV replied no to this question. Many of the cosmetic companies thus receive goods from suppliers. Whether these are for packaging purposes or ingredients for products is not known. What is important is that many companies do not have total control over theii production processes and rely, at
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least to some extent, upon suppliers. All non-BUAV companies and 94-8% of BUAV ones receive Packaging Materials from suppliers even if some of them are suppliers of other products themselves. This research does not clarify how large a role suppliers play but it does indicate that suppliers are used. Respondents were asked whether they monitor the supply of products they require: the answer was yes in all cases. Respondents were then asked how they would rate the importance of their company requesting the supply of environmentally acceptable items from their suppliers; a scale of 1-5 was used where 1 was not at all important and 5 very important. The mean score for BUAV and non-BUAV companies respectively was 4-6 and 4-2. In order to delve further into this issue the authors tried to establish whether "what companies say and what they do" axe actually the same. The next section considers the environmentally conscious activities not just of respondents but also their suppliers.
4. Environmentally Conscious Activities A number of areas were considered such as the ingredients of the product, the production processes involved and the packaging of the products; three areas which as outlined earlier should be of importance to environmentally conscious organizations. a. Production Processes. Respondents were asked if they: (i) monitor waste generated as a result of their production processes, and (ii) research the effects of their production processes on the environment (Table 10).
Table 10. Production processes of respondents
Monitoring of waste
Company
Suppliers
BUAV Nott'BUAV BUAV Non-BUAV
(%) (%)
(%) (%)
Yes
63-2 72-7
No
29-8 27-3
Unsure
7
26-9 17-4
15-4
8-7
57-7 73-9
Number 57
22
57
22
Researching effects of production processes
Cmnpamj
Suppliers
BUAV Non-BUAV BUAV Non-BUAV
<%) (%)
(%) (%)
49-1 40-9 49-1 59-1 1-8
23-1 174
19-2
8-7
57-7 73-9
57
22
26
23
A large majority of respondents in both samples emphasized that they do monitor waste. It is interesting to note, however, that respondents in both samples were unsure as to the role of their suppliers in the monitoring of waste and in researching the effects of current production processes upon the environment. Some BUAV companies also did not respond to the question of researching the effects of production processes for their suppliers, perhaps suggesting they are again unsure about their suppliers activities. b. Crueky Free Products. Environmentally acceptable products in many industries are difficult to define since many groups argue over the properties of such products. For the cosmetics industry however this task is made easier in so far as cruelty-free products are concerned. It is suggested that cruelty-free goods have
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three characteristics; they should contain no animai based substances; they should not include ingredients tested on animals and their finished products should not be tested on animals (RSPCA 1990). This area has caused great controversy within the industry since companies use different definitions of the term resulting in companies condemning each other's activities over dubious claims that have been made. Firstly, Hogan (1990) highlighted that most ingredients have been tested at some point in time, although testing on animals is currently decreasing (Anonymous 1989). In 1988 there were 16,989 animal tests for cosmetic purposes (Source: Home Office Statistics) accounting for only 0-5% of the total number of annual animal tests (Hogan 1990). The controversy has led to some companies leaving the Cosmetics Toiletry and Perfumery Association (CTPA), the major association for companies in this industry, for example The Body Shop International pic and one of its suppliers, Creightons Naturally. Standard settings have also caused problems since the rules for animal testing are different; e.g., the 5 year rule of the BUAV organization means ingredients tested in 1985 can be included in their cruelty-free catalogue in 1991. Beauty without Cruelty have condemned companies such as The Body Shop for adopting the BUAV principle and state that companies should not use ingredients tested on animals after 1976 when the European Community (Law) Directive on cosmetics was introduced. Considering all these factors and the confusion such disagreements have caused for consumers respondents were asked the following questions: (i) Does the company use non-animal based substances, and (ii) Does the company not test its finished products on animals? (Table 11).
Ta We 11.
Cruelty-free products?
Non-animal bused substances
Finished products not tested on animals
BUAV Non-BUAV BUAV
Non-BUAV
Yes
90
31-8
96-7
82-6
No
10
68-2
3-3
17-4
Number
60
22
61
23
Ho- The proportions in the tn^o categories for compame.s using non-animal based substances are the same for BUAV companies as for non-BUAV companies. X^ = 28-603, df = 1, Probabilit)' 0-001 x^ distribution = 10-83.
As far as non-animal based substances are concerned there is a significant difference between the two sets of respondents i.e., the differences in x^ values show that the NuD hypothesis may be rejected. BUAV companies are more likely to produce products which do not contain animal based substances, a factor of vital importance to the environmentally conscious purchaser of cosmetics. Nearly all BUAV organizations also do not test their finished products on animals; however in this instance the figure for non-BUAV companies is also high. As mentioned earlier this may be attributed to the fact that most ingredients have been tested at some point thus not requiring the finished product to be tested unless new ingredients are used.
Producing Environmentally Acceptable Cosmetics
Table 12. Does company use ingredients not tested OB animals
Since 19S5
Since 19S0
Yes No Unsure Number
BUAV (%) 94-9 3-4 1-7 59
Non-BUAV (%) 47-8 43-5 8-7 23
·BUAV (%) 85-5 14-5 55
Non-BUAV (%) 17-4 60-9 21-7 23
Ho- The proportions in the two categories for companies using ingredients not tested on animals since 1980 are the same for BUAV companies as for non-BUAV companies. X' for 1980 (without unsure). X^ 25-754, df = 1, Probability 0-001 x^ distribution = 10-83.
161
The x^ statistic for 1985 (see footnote Table 12) could not be used since more than 20% of the cells had an expected count of less than five. Even so, if we consider the figure for 1980 (using only Yes and No answers) we can state that there is a difference between the x^ statistic and the distribution figure allowing us to reject the Null hypothesis. BUAV companies are then more likely to use ingredients which have not been tested on animals since 1980; again an extremely important issue for the environmentally conscious cosmetics and toiletries consumer. At this point it is important to state that some BUAV companies may be confusing customers by adopting the 5-year principle of the BUAV organization. Here companies operating under the BUAV logo may use in 1990 ingredients tested on animals before 1985. This issue has caused conflict amongst "green" cosmetics companies themselves where some are happy to adopt the 5-year rule which is criticized by others as being misleading to consumers. Respondents were asked all these questions for their suppliers as well. Very few answered these questions and those that did did not say anything unfavourable about their suppliers. This may mean that organizations may use cruelt}'-free products themselves but either they do not know about their suppliers activities or if they do are not saying anything about them because their suppliers activities may be less favourable than their own. The results that were obtained show that there is considerable confusion within the industry and this needs to be tackled. In the case of new products it would appear that although many non-BUAV companies can claim they do not test the finished product on animals a large proportion still use ingredients that have been tested on animals, especially if we go back further than 1985, 68-2% also profess to using animal based substances in their products. With new developments in the market place increasing attention has been placed on the issue by major cosmetic companies; both Revlon and Avon for instance have recently stopped testing on animals. The CTPA also recommended the following changes: (i) to reduce the need for animal testing to an absolute minimum; (ii) to refine the tests to make them more acceptable; (iii) to replace tests using live animals by altemative methods. Companies such as The Body Shop state that these recommendations do not go far
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Andrea Prothero and Pierre McDonagh
enough (Hogan 1990) aithough they appear to be a step closer towards more environmentally acceptable products. c. Packa_sring. As already highlighted, packaging plays an im.portant role in the cosmetics and toiletries industry. It has been proposed that when considering such strategies packaging must not only be economical and ergonomical but ecological as well (see Miller 1990). Following initial steps by environmentalists to encourage the use of recycled, recyclable and biodegradable packaging the terms have come in for some criticism as being no more than marketing pioys (Schlossberg 1990). Miller (1990) has highlighted that there has been much "misinformation about plastic and its disposal", she emphasizes the case of biodegradability where some plastic properties take years to degrade into plastic dust which is potentially more dangerous than the plastic itself. Another author argues (Anonymous 1990) that surely something which takes 5 to 10 years to degrade is better than something which takes 300 to 400 years. Despite such criticisms the aim towards more acceptable packaging is still being encouraged by environmentalists provided the strategies are conducted properly. Consumers are now also demanding more environmentally acceptable packaging (Kashmanian 1990) which is another important reason for supplying it: a survey of US consumers in 1988 showed that 30% of respondents stated that recycling is an extremely important issue and another 50% said it was somewhat important (Lallande 1988). Respondents were asked whether they used recycled packaging and if the packaging is biodegradable (Table 13).
Table 13. Environmentally acceptable packaging (a) BUAV companies
Recifded
Biodegradable
3987 (%)
1990 (%)
1993 (expected)
3990 (%)
1993 (expected)
0-25%
51-8
41-4
20-4
26-50%
10-7
22-4
25-9
51-75%
5-4
12-1
14-8
76% H-
7-1
15-5
25-9
Unsure
8-9
8-6
13
Co. did not exist 16-1
38-2
21-6
20
21-6
23-6
27-4
14-6
25-5
3-6
3-9
Number
56
58
54
55
51
(b) Non-BUAV companies
Recycled
1987
3990
1993 (expected)
Biodegradable
1990
3993 (expected)
0-25% 26-50% 51-75% 76% + Unsure Number
85-7
59-1
38-1
4-8
22-7
23-8
9-5
18-2
33-3
4-8
21
22
21
50
40-9
22-7
22-7
13-7
18-2
9-1
13-7
4-5
4-5
22
22
Producing Eitvironmentally Acceptable Cosmetics
163
Table 13 (a, b) highlights the finding that both samples are aiming to increase their use of recycled and biodegradable packaging in the future. However BUAV companies tend to use more recycled and biodegradable packaging at present and this trend looks likely to continue. This factor may be attributed to the very nature of the BUAV companies' business which is to provide environmentally acceptable products in the first instance. However, with the non-BUAV sample representing a much larger part of the industry it seems that their influence will play a greater part than their non-BUAV counterparts on the future direction of the industry.
Implications of research study From the research findings a number of points can be raised when one considers the actions taken by respondents towards environmental issues. Firstly, it can be noted that BUAV companies are more interested in the environmentally acceptable attributes of their products than their non-BUAV counterparts. However, there are discrepancies in some of the attributes of BUAV companies where the issue of cruelty-free products becomes complicated. In future years BUAV connpanies may be required by the environmentally conscious consumer to clarify such problems as consumers become better informed and require information on ali of the attributes of a company's products. In such cases products may require more environmentally acceptable attributes, cruelty-free products packaged in an "unfriendly-package" for example may not be deemed "environmentally acceptable" to the newly emerging and better informed green consumer. Non-BUAV companies may find that one or two environmentally acceptable attributes are not enough to attract the market segment of the newly-informed environmentally conscious consumer. Research by both samples into the production of environmentally acceptable products requires improvement. As outlined previously, environmentally acceptable goods now may become unacceptable as available information on environmental issues increases in the future. When analysing the production processes and the environmentally conscious activities of companies again it appears that there is room for improvement in both samples. Marketing managers in these organizations should realize that an environmental strategy is required for all of a company's activities, not only the finished product and its ingredients. Subsequently, they should help plan for the future by communicating the benefits of a rigorous environmental strategy which is regularly reviewed. Very few respondents in either sample were clear as to their suppliers' strategies in environmental areas, despite both samples emphasizing the request of environmentally acceptable goods from suppliers being a very important issue. It may be that stricter specifications are required when accepting goods from suppliers, especially if companies are operating on an "environmentally-friendly" platform. If one considers the non-BUAV sample, whose sheer size and strength in the marketplace will have much more of an impact upon future developments than the smaller sized BUAV sample, a number of points may be raised. It would appear that non-BUAV companies are only paying lip service to the issue of environmentally acceptable products (although the results obtained also suggest that BUAV companies are also paying lip service to certain environmental areas). "Environment friendlier" goods for the non-BUAV sample are marketed to
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Andrea Prothero and Pierre McDonagh
only one distinct segment amongst many others within the company's customer groups. The fact tbat these companies are currently developing new products aimed at the over 35 age group involving new animal testing of products and ingredients suggests that environmental issues are not a top priority. The environment segment is then isolated as a profit generating segment within non-BUAV companies, but environmental policies are not adopted across all of the organizations' activities. This situation is what environmentaKsts are seeking to reverse; where the practice of both sustainable development and the production of environmentally acceptable products requires the organizations' overall philosophy to consider environmental issues at all times and for all market segments. Such a reversal would find itself manifested in increased resources allocation towards the environmentally acceptable resource budget. That this is not the case implies that such budgets are still discretionary and not compulsory. From the environmentally conscious consumer's point of view it seems that overall production of cosmetics and toiletries by non-BUAV companies will remain environmentally unacceptable for some time yet if organizations continue to take a reactive action towards environmental issues. BUAV companies it seems may take more of a pro-active role when responding to environmental issues, their current environmental activities however require improvement if such companies wish to be perceived as environmentally acceptable to the green consumer of the future.
Conclusions From the practitioner's point of view the response of companies towards environmental issues in the future will be required to follow a number of routes which do not allow organizations to simply change a company's packaging, but rather to reorganize the whole structure of the firm. Any environmental scanning and analysis techniques will need to take on a new meaning for the marketing manager when s/he is considering new directions for the business. Firms will not be expected to respond tO' certain environmental issues but rather to integrate environmentalism into the overall strategy of the organization. For the marketing practitioner this will require involvement in the environmental audit conducted by the company and adherence to new environmental strategies laid down by the company. This and only this action will ensure that the product or service offered will match and indeed anticipate the changing needs of the consumer. Some possible areas of consideration for marketers include, (a) assessing tbe promotional tools of the company to ensure no dubious green claims are made hence leading to claims of the marketing function adopting a window-dress strategy towards environmental issues; (b) examining the pricing mechanism of products to ensure too high a price is not set simply because the product is green; but also ensuring any extra costs incurred by going green are included; (c) Nevif marketing research will be required to assess how environmentaHsm will proceed into the 1990s and beyond. By far the most important tasks will be to develop an organization which is environment-led and the structure of which allows environmental issues and their
Producing Environmentally Acceptable Cosmetics
165
impact upon society to be considered and acted upon not only by the marketing department but by the wbole organization.
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