Document jg531w66ra797z9Jg5q3rx6Jk

in our earner review ot contingency planning tor disasters. (ENDS Report IS, p 8) Mr Norman Woodhouse (Deputy Director of Public Relations, National Coal Board) advised that: "Public relations must be as well organised as any other company activity. The same degree of effort that is devoted to setting up the production line or launching the computer service is needed for the right PR organisation. In the context of PR strategy in emergency situations some guidelines to effective communi cations are particularly significant: the company's policy must be clearly defined and include a commitment to communicate; the public relations responsibility must also be clearly defined and be widely understood within the organisation; the head of public relations must advise the Board on public relations policy, and be responsible for providing external and internal information services; company's network of communications, with direct responsibility to the chairman or chief executive; communication must be credible to be effective and the priorities are: be accurate, honest and prompt." In a smaller company, however, where there is no format public relations department, the advice given by Mr Woodhouse is unlikely to be relevant. ITT Semiconductors is a self-contained and largely autonomous division within the ITT group. It was possible therefore for Dr Thomas to respond quickly and effectively to events, without the need to refer to to higher layers of authority. The company's success in dealing with the disaster therefore depended not on a previously agreed strategy, but on a clear line of command, and a managing director with a strong sense of responsibility for the environment. Marketing and the Environment. 9 A SURVIVOR'S GUIDE TO THE MARKETING OF ECOLOGICALLY UNSOUND PRODUCTS Tile consumer of tomorrow, if we are to believe the survey data published by McCann-Erickson International (ENDS Report 20, p 17), will be concerned about environmental issues. But the markets lor environmentally-suspect products are far.more likely to be constrained by Government intervention (as in the case of chlorofluorocarbon aerosol propellants) than by consumer preferences. Chemical products hive been particularly hard-hit by the so-called Environmental Revolution. A ready example of a chemical product which eventually proved environmentally unsound is that of polychlorinated biphenyls (PCBsl. The OECD statistics on pi 2 show the way in which PCS production was curtailed in thr 5 year period from 1973 lo 1977. Meanwhile, tile US Environmental Protection Agency has haued final regulation* for the control of PCBs -- with PCB manufactorc banned and limited use of tile compound* permitted for three to five years. The economic implications of the PCB problem have been considerable. General Electric I USA). for example, accepted joint tesponsibility for the discharge of PCBs into the Hudson River - and for the ensuing pollution. A $7 million settlement was eventually agreed, with General Electric paying S3 million towards cleaning up the Hudson sod paying for further research on PCBs. The estimated cost of cleaning up the Hudson is in excess of $2S million (ENDS Report 6, p 3). ENDS to currently reviewing the ways in which managers are introduced lo environmental issues - and briefed on methods of avoiding environmental conflict (ENDS Report 20, p 5). Dr David Ford (Programme Director, Industrial Marketing, University of Bath School of Management) has been particularly interested in the tactics adopted by companies when confronted by the environmental disruption of their markets. His review of the field focuses on the recent history of PCBs - and, in particular, on Monsanto's success in containing wliat could have been a commercial disaster. Aerosol Propellants ' Recent events in the aerosols industry, with chloro- fluorocarbon (CFC) propellants under considerable pressure from environmentalists, provide a classic 16 MONS 008907 example of the various options open to embattled industry (ENDS Report 11, p 6). The manufacturers of aerosols and of aerosol propellants adopted a range of different responses to the long term threat to their markets. First, they could (and did) form a powerful lobby to push their side of the story. The US Manu facturing Chemist's Association reports that "freeworld" producers of CFC propellants have invested $6 million since 1973 in assessing the environmental effects of their products - and the companies involved plan to spend a further f 1-2 million during I979.1 The response of both the MCA and of the British Aerosols Association (BAMA) was reviewed in ENDS Report 11. Second, they could (and have done so) intensify research into alternative propellants - such as "sweetened" liquefied petroleum gas, dissolved gas, and compressed gas (see p8). And third, they could try to diversify their business by switching to the manufacture of substitute products such as rnlt-on deodorants and manual atomisers. The third option has, to date, proved the least popular. In Dr Ford's view, this option represents the most positive approach, with an environmental problem seen as a future market opportunity. However, he continues, the routine formula to the effect that "every problem represents a potential opportunity" may have more to do with wishful thinking than considered market analysis; Figure I: Typical Stages In an Environmental Conflict Faced with the problem ofcoping with environ mental threats, while at the same time aware of the pitfalls of simplistic solutions, how should the manager develop his strategy? From Skirmish to Total War The first step in developing such a strategy is to understand the process of environmental conflict Figure 1 shows the typical stages in such a conflict It is worth pointing out that these represent what frequently does happen, rather than what should happen -- and that there is no inevitable progression from one stage to the next. Stage 1 -- Peace Products are marketed regularly and there is little apparent doubt about their safety or any adverse environmental effects which they might have. However, research may be being carried out by organisations or individuals outside the company. Alternatively, products of the same type may have already been criticised in other countries. An example here is the case of herbicidal weed killers, sold for use on lawns, of the "feed and weed" variety. These have attracted considerable opposition in Canada but not, as yet, elsewhere. This stage is rather unstable. It may last for a short time if concerns are communicated rapidly. On the other hand, it may last as long as the life of the products - due to lack of adequate research or of obvious dangers. Stage 2 - Skirmish (The Shape of Things to Come?) At this stage there is little activity. An article may appear in a scientific magazine or on the inside pages of newspapers. A typical company reaction to this stage may be that of apathy, or to dismiss the issue. For example, Cadbury Schweppes refused invitations to appear in tele vision discussion with Friends of the Earth after the first newspaper articles over non-returnable bottles in 1971. Similarly, press enquiries elicited "no comment". However, the management response at this point is crucial. Sadly, instead of anticipating events, companies are frequently led by them. Control is lost and the issue escalates to the next stage -- that of conflict. 9 0 6 8 0 0 SNOW He points out that some companies which have opted for environmentally "safe" products have had their fingers burned. An example of this was the additional costs home by the first manufacturers of lead free petrol in the United States. Stage 3 - Conflict The issue receives increasing publicity and usually the controversy is taken up by organisations which start to pressure the company. In the previous example. Friends of the Earth dumped non-returnable bottles on the doorstep of Cadbury Schweppes. The conflict rtf.eiv f Companies typically And themselves alone in the flCt ofhostile yMtlMUilWltliy lobbying and seemingly hostile press. The initial silence or negative reaction was summarised in a recent article in The Guardian as follows: ".....The shortcomings of business are now widely exposed, with no similar weight of responsibility on the other side. This has led many businessmen to feel that they are unfairly treated, culminating in the complaint to the Allen Committee by the CBI about the bias of broadcasting and of television in particular. "Businessmen refused to co-operate with the media or to defend themselves when attacked, because they do not believe they will be allowed to state the case properly." Where companies adopt this tactic, there may be public scepticism when the silence is Anally broken. However, the change almost inevitably occurs and the company starts to publicise its case. The company feels threatened and attempts to recruit its own allies and to generate a lobby in its own defence. Towards the end of this stage, companies are likely to be engaged in research looking for alternatives to criticised products. They may also consider modifying their marketing policies to take more account of ecological considerations. However, it may already be too late for such action. State 4 - Defeat or Tactical Withdrawal This stage marks the outcome of the previous conflict. Its nature will of course depend on who is the victor although, of course, the war may be fought to mutual exhaustion. O Company defeat -- The product may be completely withdrawn as a result of legislation, or under pressure, or voluntarily by the company. O Tactical withdrawal -- The company may make modifications or concessions -- either voluntarily or by force of law. These could involve withdrawal of the product from applications with adverse ecological effects, or changes in specification or properties. These modifications could be the result of research undertaken in the previous stage, or initiated to ensure long term technical or economic competiveness. O Pressure defeat - External pressures may be relieved because the product is proved to be harmless, because of the discredit or failure of a pressure group, or because of external factors which mean that the environmental costs of a product are felt to be excessive. Stage S - Victory From Defeat This can follow on from "Tactical withdrawal". In Stage 5 the company takes advantagesof the changes in Its products or methods which have resulted from the conflict. The "environmental safety" of the modiAed product may become a positive feature of the company's marketing policy. We make a clear distinction at this poim. When a product has passed through the previous four stages, positive marketing in relation to ecological factors is applied only to this product Figure 2. Examples of Products at Different Stages of the Environmental Pressure Process State 1. PM* Product Non* Phoaphatee ntanp In aMt Leaded dalargant* bottler DDT petrol PO DDVP Fly Blue killer ibeeioe Fluoride in water Herbh cttal lawn weed kitten Aeroaole (UK) M contra* captfri Puck* aping Cipaeawaa (1) (law ear) ee ISkinnM 3. Conflict 4.(i) Company defeat (b)Tacttal witMnval (c) Procure defeat a. a a 5. Victory from defeat a aa t, Pre-emptive ittike HONS 008909 --------* i (I) There hawe been reeent ImiiMM of companies imrod*cine mudified. biodegradable parhepln* * m4 mUif pedtfru fbiw of ihm m IKit marketing. u wB m the introduction by a new market entry of nrTT-nntrniilty "benign" pirtipln) j-1 not to the whole product range of the company. When this experience leads to changes which affect the whole company then it may be aid that it has moved yet another step - to Stage 6. State 6 - Preemptive Strike This occurs where companies' products are designed to alleviate (or at least not to exacerbate) environmental problems. Instead of being on the defensive, companies now market positively to satisfy ecological demands - in addition to other wants and needs. The fact that a company finds itself at Stage 6 docs not mean that it has necessarily passed through the previous stages. It may have used the experience and misfortunes of others to short-circuit the evolutionary process outlined in stages 1-5. Figure 2 summarises the current position of a number of products (Dr Ford's assessment) in relation to the stages outlined above. Company Report. 23 MONSANTO AND PCBa: MARKETING THE UNMARKETABLE The experience of Monsanto, which holds a monopoly position in the manufacture of polychlorinated biphenyls (PCBs) in both the UK and USA, provides an interesting example of the fairly drastic pruning which may be required where a product proves to be environmentally unsound. Monsanto cut away some SO per cent of its PCB mica, to safeguard its ales of PCBa for "controllable" uses - and to ensure that tha company's proposed antry into tha pollution control equipment market wo not prejudiced. Polychlorinated biphenyls (PCBs) have many uses in capacitors, ss a coolant in transformers and as plasticisers in paints, sealants and adhesives. They were also used in food, pharmaceuticals, thermostats and in industrial hydraulic fluids. The hazardous effects of PCBs came to light, by accident, in the early 1960a - when laboratories were monitoring insecticide residues. Several unexplained peaks in the residues were found on the print-outs which, in 1966, were shown to belong to PCBs. Since then, PCBs hive typically been monitored alongside insecticide residues. PCBs are manufactured by a variety of firms throughout the world. Although there are no patents, Monsanto holda a monopoly poaition in both the United States and Great Britain. Once the hazardous elTccts of the product became known, tile company carried out extensive research in order to establish the hazard's dimensions. Their lindings were published on'completion and their conclusions on the extent of PCB contamination of the environment were said to be sufficient to "panic even an experienced ecologiat". Monsanto proceeded to classify the markets for its products, with respect to environmental impact, as either controllable or non-controllable. Controllable uses were in electrical equipment and as a Tire resistant ingredient in heat transfer applications. PCBs have considerable safety value here. Additionally, the products for there applications are bought by a limited number of companies direct from the manufacturer. All the other uses were deemed to be noncontrollable -- in paints, sealants, pharmaceuticals, food, and so on. The manufacturer had a large number of customers in these areas, often supplied via agents. Some of the products (e.g. marine paints) are in intimate contact with the environ ment. Otheis could be released down drains or by incineration into the atmosphere. There were alternative products available for most of there applications. Monsanto next adopted a policy of partial with drawal from non-controllable markets. This started in Canada and the USA in 1970, and in the UK during 1971. Users in this category were asked to employ alternative products. New users were vetted to determine their application for the product The company's policy in controllable applications was as followa: an eighteen month educational campaign was mounted to make customers pollution-conscious (a representative spent a week with each to explain necessary controls): Monsanto encouraged bulk deliveries by a system of quantity discounts; it extended its acceptance of spent PCB fluids for reclamation; it retained a firm to collect unrectahnable material in Older to incinerate it at a high enough ENDS Rapori 26/May 1979 19 HONS 0 0 8 9 1 0 temperature to oxidise PCBs. There wu no cherge for this service; users were encouraged to switch to less chlorinated PCB homologues. Although these are more toxic, they are more easily biodegradable and thus less penistent. 3. A lack ofopenness, when faced with an environ mental threat, can have severe repercussions. For example: it pushes the process into the conflict stage. This means that control over the situation is lost by the company as pressure escalates; A Total Ban on PCBs? Monsanto is an American company, and thus msy have been more convinced than its European counterparts of the potential strength of environ mental lobbies. It realised that a total ban of PCBs was on the cards. In addition, the company were manufacturers of cyclamates - which had recently been banned. The company was convinced that controllable uses caused no significant environmental hazard, and they did not want to put these applications in danger. Furthermore, Monsanto was about to begin marketing anti-pollution, and realised that a good ecological "track-record" would help their sales. Although figures have not been given, it is probable that the company lost something like SO per cent of its PCB sales. This was a short term loss. In the long term, the company may have avoided a total bun on the product, since environmentalists decided not to take any further action. Although there were those who said that PCBs should be banned completely, the company's co-operative stance allowed little room for accusations of bad faith. Finally, the firm's overall image gained from the process and they received favourable press comment. This case is an example of a company moving from Stage I (Peace) to Stage 6 (Pre-emptive Strike), avoiding the intervening conflict, by learning not only from its own previous experience, but also from the experience of similar processes in different industries. it leads journalists into a position of opposition rather than neutrality, with consequent harmful effects on reporting of the company; the company becomes isolated, and silence may be taken as an indication that the company has something to hide; when the company does disclose information after a silence, then its previous reticence means that the information may be greeted with scepticism. 4. There is a widely held view amongst businessmen that the press and television are biased against them. One company said that it had been subjected to editing of taped interviews to give a misleading impression. Another manapr felt that he was an amateur on television. In this situation it is clearly necessary for the company to acquire pro fessionalism, rather than to refuse discussion. 5. The PCB case involved the company in losing considerable sales in its action over environmental danger. However, the short term costs were out weighed by the long term pins in corporate image, in putting the company in a position to market environmentally-safe products, and in the safe guarding of at least part of its market which might otherwise have been threatened. 1 A S3 M* Mmmry of dM work cwtM out W 4m to vvwMta from WWun H BaflavbMp, MCA, IPS CamuPmt Amw, NW, WaahMftoii DC 20099, USA. The Price of Peace The PCB example illustrates a number of conclusions about the development of strategy for coping with environmental problems which Dr Ford summarises ss follows: 1. ft is important for companies to learn from the cases of other companies which have encountered environmental resistance to their products. Although these pressures may appear very different in nature, they have many common characteristics and the required management approach may well be similar. 2. More generally, the company should build environmental considerations and contingency plans into its corporate strategy. :o HOMS 00*911