Describe about the following report simply discusses and outlines ethical consumerism and what value it holds in businesses, where ethical consumerism refers to the emphasis on the consideration of ethics and morals when producing and delivering products?
The following report simply discusses and outlines ethical consumerism and what value it holds in businesses, where ethical consumerism refers to the emphasis on the consideration of ethics and morals when producing and delivering products. For the purpose of this report, Starbucks, one of the largest retailers of coffee worldwide, is used as an example so as to explain the significance of ethical consumerism to business originations. A detailed analysis and explanation has been provided below so as to understand how and why Starbucks operates ethically. Additionally, a short summery of a self conducted opinion survey regarding the factors influencing consumer buying behavior has been included.
A frequently asked question regarding ethical consumerism would be “are the customers always right?” in response to this question, several organizations have begun to please their customers by fulfilling their demands and needs in order to secure their social and personal wellbeing. Research conducted by Tallointire, Rentsendorj & Blowfiled in 2001, identified ethical consumerism as the underlying key to reinforcement of ethical trade activities. It has been since the 1970s, a considerable amount of attention has been paid to ethical problems regarding businesses which in turn are of great interest to several business and academic practitioners.
Ethics can be defined as the values and morals underlining behavior (Smith, 1990). We all are aware of the concept of right and wrong; ethics simply serve the purpose of determining whether a behavior or action is right or wrong. Ethics play an essential role, especially when making decisions; those who possess morals, eliminate their changes of “behaving unethically” in society. Hence, ethics can be said to play a significant role be it in any aspect of society i.e. business, education etc. For this particular report, an understanding of the term consumer ethics is required; consumer ethics refers to the consideration of ethics from a consumer’s perspective.
Ethical consumerism refers to the emphasis on the consideration of ethics and morals when producing and delivering products. Several moral and ethical aspects such as environmental and social issues have become of high significance especially in the business world. Sensitive issues like animal testing, child labor, suppression or prevention of labor unions etc. are attended with high regard especially when launching products into the market. Valor (2007) defines the act of consumers “demanding” implementation of human rights in the product manufacturing process, as the ethical consumerism. Similarly, Barnett et al. 2005 shed light on how consumption processes are nowadays shaped by ethical dispositions.
This notion of ethical consumption has led to the development of a new culture, often regarded to as the consumer culture, known to have found its way into every aspect along with all types of consumer related businesses. In the recent times, a great amount of growth of ethical consumerism has been witnessed across the globe; this is demonstrated by their increasing consumption (per capita) of western countries, which also happens to parallel at a constant rise with consumer expenditure that is also well adjusted to inflation.
According to Strong (1996), there are four specific reasons behind the increase in ethical consumerism in the recent years, where these reasons include shifting values in regards of sustainable development, increased availability of alternative products, greater availability & increased amounts of information and increasing media coverage. Adding to this list, Harrison et al. (2005) has recognizes the shift of market power favoring consumers, rising transnational brands & corporations and market globalization, as other possible reasons to why and what may be causing or resulting in this ethicality boom. These listed reasons are known to have affected the number of ethical consumers present in the current market, to a great extent. A recent report on ethical consumerism in UK by the co-operative Bank, discussed the willingness of one third of the UK consumers to challenge organizations not complying with the decided ethical standards.
Ethical consumerism allows consumers to think and question the production and sourcing of the products available in market i.e. the environmental and social impact the product’s manufacturing process has had. Several product areas such as travel & tourism, food & beverages, clothing, banking & influence, energy etc. fall within the ethical category (Hurtado, 1998).. For this reason, a number of initiatives for creating codes of conduct and ethical trade labels have been taken up; one example would be the Fair-trade Labeling Organizations International.
For this particular segment of the report, ethical sourcing or ethical consumerism at Starbucks has been reviewed. Launched in the 1970s, Starbucks currently holds the position as the world’s largest retailer of coffee, with being spread over 19000 locations across 60+ countries; they consider themselves as being positioned at the higher quality end of coffee supplies. As their motto specifies, they believe in “inspiring and nurturing the human spirit – one cup, one person & one neighbor hood at a time.” In collaboration with Conservation International, Starbucks has been able to develop ethical sourcing guidelines that allow them to purchase ethically traded and responsible grown coffee; they ensure sustainable supply of high quality coffee.
From what is known, Starbucks has developed several coffee and farmer equity practices along with cocoa practices that guarantee ethically sourced and high quality supply of cocoa and coffee. Their practices of C.A.F.E and Cocoa, include environmentally sound processing and cultivation practices, economic accountability and social responsibility. Starbucks is known for its holistic approach that comprises of responsible practice purchases, programs for forest conservation, loan programs and farmer support centers. They believe that “buying coffee” at Starbucks helps foster a better and improved future for its farmers and alleviates the effect of climate change on the planet.
Apart from serving high quality coffee, Starbucks is also known for having impacted the lives of millions of farmers employed by the thousands of contributing farms (King, 2000). Their C.A.F.E i.e. Coffee and Farmer Equity approach not only ensures delivery of premier quality coffee but alongside is regarded for promoting economic, social and environmental standards. The practices of C.A.F.E. had been developed in collaboration with Conservation International (CI) over a decade ago. It allows them to measure the true and accurate impact of their purchasing programs on the producers and farmers participating in the production of their products; they intend to increase the long-term sustainability of their contributing farms.
As of 2015, Starbucks has managed to successfully achieve their goal of having their entire coffee products meet the outlined standards for ethical sourcing through their C.A.F.E practices along with other Fair-trade or other externally certified or verified programs. By the end of 2013 95.3% of their coffee products had be ethically sourced. Starbucks believes that their purchase of third-party verified or certified coffee not only effectively meetings the expectations of their customers but also allows them to ensure environmental protection along with a promising livelihood for its farmers (Collinson, 2000). As previously mentioned, Starbucks in collaboration with Conservation International, has developed ethical sourcing guidelines that allow for them to help their farms and reduce the impact of climate change on the planet. Their guidelines comprise of an inclusive set of quantifiable standards focused on four areas: economic accountability, product quality, social responsibility and environmental leadership.
In order to ensure economic accountability, Starbucks expects its workers and suppliers to maintain an economic transparency (Robins, 2007). For instance, it expects its suppliers and workers to maintain a record of all the payments made through the chain of coffee supply so as to able to provide evidence for the expenditure being made on obtaining coffee from the farms. Similarly, Starbucks maintains product quality by ensuring that their coffee meets their standards of high quality. Additionally, as a measure for social responsibility, their guidelines include measures protecting worker rights along with ensuing fair, safe and humane living and working conditions. Starbucks ensures fulfillment of the minimum wage requirements and prohibits any forced or child labor activities. And finally, for acquiring environmental leadership, the outlined guidelines allow Starbucks to help manage their waste and water quality, encourage preservation of biodiversity, reduction of use of agrochemicals and conservation of energy & water.
In response to the conducted opinion survey, four factors seem to be coming across as the major factors influencing consumer buying behavior, where these would be social, cultural, psychological and personal factors. But first let us defined “buying behavior;” buying behavior refers to the decision process of the consumer that is involved in the act of purchasing and using goods (Mori, 1998). The outlined factors are highly responsible for developing brand and product preferences among consumers. Although, it is highly unlikely for organizations to ensure control of all these factors, an understanding of their effect on consumerism can be studied so as to develop strategies that appeal to the targeted market.
During a purchase, the consumer is subjected to a decision process which includes recognition of problem, searching for information, evaluating alternatives, decision for purchasing and post behavior purchase. This decision process along with the buying behavior is to a high degree influenced by social, cultural, psychological and personal characteristics. Social factors refer to one’s social group, his/her role, relationship within family, social status etc. In other words, it takes into account the influences of “others” on one’s decision making process (Piu, 2000). Similarly, social factors refer to the subcultural, cultural and social class of the consumer; such factors are often inherited and built into our values and morals.
On the other hand, psychological factors refer to one’s perception, belief, attitude, level of motivation and learning. One’s view of a product is highly crucial, making it the most influencing factor out of all. Finally, personal factors such as occupation, age, lifecycle stage, lifestyle, economic status, self concept, personality etc. also influence consumer decision process (Mintel, 1998). These may be the reason why consumer preferences change with personal changing circumstances or situation. Apart from these, it is important to understand that “other people” are also highly responsible of influencing consumer buying behavior; for this reason, it becomes essential for marketers to know of the individuals involved in decision making and their roles in order for them to aim their marketing strategies at these individuals too.
Conclusion
Ethical consumerism has become the central dimension within the organizational culture, known for influencing an organization’s decision regarding the marketplace. Studying ethical consumption allows organizations to step out of their economist point of view that solely allows for them to rationally set goals that aim for maximum utility (Coddington, 1993). It is essential to understand that by questioning organizations of their ethical sourcing, consumers are not evaluating the product quality and prices, but simply adding another criterion to the produce selection process. For this reason, the definition of ethical consumerism has become an issue of concern worldwide.
In 1996, strong argued that ethical consumerism simply refers to the consumer’s buying behavior that simply reflects its concern for the emerging third world problems. Similarly, Langeland in 1999 defined ethical consumerisms as the process of considering the wider implications of a consumer’s purchase decision and attempting to favor consumer products that ensure social and environmental responsibility. In other words, this concept can be considered in line with the idea of “caring at distance.” Barnett et al, in 2005, discusses the concept of transforming the concern consumers have for their close ones to active caring for distant others.
Starbucks should get a better understanding of its weaknesses and strengths of its programs allowing their organization to adopt better practices over time. For instance, Starbucks may want to focus on obtaining feedback through conducting surveys among their suppliers, farmers, workers regarding their organizational system and use it leverage the network or system of the farmer support center that addresses ethical issues.
Similarly, they may want to identify the specific regions that result in higher rates of their program practices and perhaps also identify the regions where their practices are easier or more difficult to implement. Furthermore, by investing in monitoring programs such as chain certification and verification programs, Starbucks can develop an insight into how effective their C.A.F.E practices have been in impacting farm management and the farmers’ livelihood.
References
1. CODDINGTON, W. (1993) Environmental Marketing. Positive Strategies for Reaching the Green Consumer. Maidenhead: McGraw Hill.
2. COLLINSON, C., LEON, M. (2000) Economic Viability of Ethical Cocoa Trading in Ecuador. Chatham, UK. Natural Resources Institute, Natural Resources and Ethical Trade Programme. www.nri.org/NRET/nret.htm
3. HURTADO, M. E. (1998) Changing consumer expectations and choices. In: Environmental Responsibility in World Trade. London: British Council.
4. KING, MARCUS (2000) Small Hands, Big Business. London: Save the Children.
5. LANG, T., HINES, C. (1993) The New Protectionism. London: Earthscan Publications.
6. LANGLAND, L. (1998) On Communicating the Complexity of a Green Message. Part 1: The Max Havelaar Case. Greener Management International.
7. MINTEL (1998) Marketing Intelligence: Fresh Fruit and Vegetables.
8. MORI (1998) Citizens want Tough Environmental Action Now. Summary of MORI polls and surveys.
9. MURPHY, D. F., BENDELL, J. (1997) In the Company of Partners. Bristol: Policy Press.
10. NEWHOLM, T. (1999) Considering the Ethical Consumer and Summing up the Case Studies. Excerpts from draft PhD thesis.
11. PIU (2000) Rights of Exchange: Social, Health, Environmental and Trade Objectives on the Global Scale. London: Cabinet Office, Performance and Innovation Unit.
12. ROBINS, N., ROBERTS, S. (207) Unlocking Trade Opportunities. Changing Consumption and Production Patterns. London: International Institute for Environment and Development (IIED)/UN Department of Policy Co-ordination and Sustainable Development
13. SHAW, D., SHUI, E., CLARKE, I. (in press) Ethical consumption: the contribution of ethical obligation and self-identity to the theory of planned behaviour. Journal of Marketing Management.
14. SMITH, N. C. (1990) Morality and the Market. Consumer Pressure for Corporate Accountability. London: Routledge.
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