British Petroleum Green Marketing Business Essay

Introduction

The essay is based on the marketing practises of British Petroleum (BP) in relation to their corporate social responsibility and the suitability of its marketing mixes application in society. The question asked is “Green and fair trade marketing are just marketing ploys to get more money from consumers without really furthering the goals of sustainability or fairer trade?” Corporate Social Responsibility (CSR) is the way in which an organisation expresses its values and ethical behaviour towards its stakeholders and society. Further, in light of public scrutiny and questioning; it is imperative to establish what exactly green marketing in relation to businesses CSR is and what it is doing in business today, especially in BP an oil company.

After investigating BP promotional elements of its marketing mix. I watched a green advertisement; it begins with a lush green healthy forest with water dripping and sparkling from the tips of their leaves. In a distance a bird singing in the morning air, a man appear I believe is an environmentalist. The man is protecting the animal within the lush forest and the as the advertisement continues, I learn that the man works for an oil company called BP and I learn further how BP is doing such a wonderful job protecting the environment.

However let’s investigate BP profoundly. The company started in 1908 under company called Anglo-Persian, when oil found in a rugged part of Persia from explorer George Reynolds and British investor William D’Arcy. Over the next few decades, gas and electricity would largely replace kerosene for home heating; the invention of gasoline-fuelled vehicles would challenge the railways and roads. These social changes would open a door to the growth of Anglo-Persian and expand its sales both in Britain and in mainland Europe. In 1954, the Anglo-Persian board changed the company’s name to The British Petroleum Company www.bp.com/sectiongenericarticle. Downloaded 14-09-10.

Today BP has transformed; growing from a local oil company into a global energy group. Employing over 80,000 people and operating in over 100 countries worldwide <http://www.bp.com/subsection downloaded 14-09-10> with brands such as Aral, Arco, Castrol and Wild Bean Café under the BP umbrella. In 2009 financially BP had a very good year where the company made £13,955 billion pre net profit, see appendix for full financial review.

In their CSR; BP had these core values; BP pledge to help the world meet its growing need for heat, light and mobility. They strive to do that by producing energy that is affordable, secure and doesn’t damage the environment. BP is progressive, responsible, innovative and performance driven see appendix for CSR and suitability reports.

Progressive: We believe in the principle of mutual advantage and build productive relationships with each other, our partners and our customers.

Responsible: We are committed to the safety and development of our people and the communities and societies in which we operate. We aim for no accidents, no harm to people and no damage to the environment.

Innovative: We push boundaries today and create tomorrow’s breakthroughs through our people and technology

Performance driven: We deliver on our promises through continuous improvement and safe, reliable operations.

<http://www.bp.com/subsection downloaded 14-09-10>

Using Hennison and Kinnear (1976) ecological marketing concept; BP emphasizes environmental issues with geographic focus for example climate change. The basis of their green marketing campaigns is using evidence of current environmental issues and environmental views with business interaction. BP focuses on the interrelationship between business society and the environment within their marketing mixes and sustainability reports.

BP saves the day

Over the last few decade environmental concerns has given raise to a “green consumer” with increasing demands, this has led to the emergence of ‘green marketing’, which attempts to balance the pursuit of sales and profit with a concern for the environment and society. According to Prothero (1990) defines “green marketing” as

“The holistic management process responsible for identifying, anticipating and satisfying the needs of customers and society, in a profitable and sustainable way”(Responsible business marketing. PG 115)

Today consumers worldwide expect large companies with recognizable brands such as BP to have first-class environmental and social credentials or their brand image could suffer from the negative publicity. Ignoring social and consumers demands for high-quality ethical practices can destroy customers’ trust and can lead to government legislations being imposed within Archie Carroll (1979) pyramid of legal responsibilities.

Incorporating ethics and sustainability programmes can enhance and build public reputation, which can increase market share, costs savings and profits worldwide. Thus sustainability is the foundation of the green marketing concept which has 2 simple criteria which are about consumption and pollution. Using BP sustainability report which is accessible on their website this is how BP meets this criteria bp.com/sustainability

Using natural resources at a rate at which environmental systems or human activity can replenish them (Responsible business marketing. PG 116)

Using BP marketing mixes; BP’s product produces fuel, energy and funds research into environmentally friendly fuel this illustrates the innovative and progressive element of their valves which strives to reduce the use and dependence on fossil fuel by society. Additionally, this helps reduce global warming through research techniques such as fuel with lower carbon monoxide that helps reduce the carbon emissions responsible for adverse climate changes beneficial to all living creatures on earth.

Producing pollution and waste at a rate which can be absorbed by environmental systems without impairing their viability (Responsible business marketing. PG 116)

As a producer of oil; BP does not overproduce fuel, as it benefits financially from a stable price within the profit and market share elements of the business. Within their organisation, BP has become more conscientious and develops strategies that centralize deliveries into larger but less frequent loads by improving vehicle utilisation with the use of eco friendly trucks which has less carbon foot print. This is an illustration of the place elements with the marketing mix, the performance-driven and responsible elements of their values. BP is a voluntary member and committed to (OCIMF) Oil Companies International Marine Forum for the past 23 years which they aim to reduce marine pollution. http://www.ocimf.com/ downloaded 18-09-10.

Vandermerwe and Oliff (1990) found that in response to the green challenge; 92% of businesses had changed their product offerings with 85% changes in their production systems and 78% had changed the focus of their marketing communications and BP is no expectation to this survey (Responsible business marketing. PG 115)

BP over the last few decades has risen to the green challenge. They have change their product offering by investing $4 billion in alternative energy, with its activity focused on advanced bio-fuels, wind business in the US, solar power, and carbon capture and storage (bp.com/speeches downloaded 18-09-10). The company has responded from the Copenhagen conference on climate change 2009 by reducing carbon emissions from their factories, vehicles and promoting the use of natural gas.

In addition; BP work sensitively around plants and animals which is integral part of their efforts to manage environmental impacts; such as in Canadian Beaufort Sea where the use of sound techniques to mitigate the potential impact of sound on marine mammals. The company focuses on education with investments in science resources in UK classrooms to supporting for China’s Tsinghua University in building strengths in management education.

In Trinidad & Tobago the company is promoting community development by building schools, hospitals, providing training to local residents on reproductive health and personal hygiene which created a drop in malaria prevalence from 23% in 2000 to less than 1% in 2009 www.bp.com/liveassets/bp_internet/globalbp/STAGING/global_assets/e_s_assets/e_s_assets_2009/downloads_pdfs/bp_sustainability_review_2009.pdfHYPERLINK “http://www.bp.com/liveassets/bp_internet/globalbp/STAGING/global_assets/e_s_assets/e_s_assets_2009/downloads_pdfs/bp_sustainability_review_2009.pdfand downloaded 19-09-10″and downloaded 19-09-10 and by employment of local staff. Villagers have been assisted to create better livelihoods in activities such as fishing and farming through training and better equipment provided by BP.

BP has capitalised on these sustainability achievements and has involved them into the promotional elements of their marketing mix. Their brand image focuses on being an eco friendly company, with an emphasis on quality and environmentally friendly fuel. Plus their Partnership with Virgin has supported the Africa Eden Project. www.edenproject.com/documents/Annual_Review_06_07.pdf downloaded 19-09-10

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BP the biggest environmental crimes in history

BP aims to be the leading environmentally friendly producer and supplier with eco friendly petrol and gas. BP has a strong CSR and sustainability policies and has become more ethically and socially aware with the realisation of customers and stakeholders needs and expectations from the company.

However, a more in depth analysis indicates that BP advertisements and public relations within its marketing mixes are designed to make it look more environmentally friendly than it actually is. The term is called “green washing “This phenomenon of making small environmental concessions while otherwise continuing business” (Responsible business marketing. PG 45)

According to the Advertising Standards Agency; the raise of this phenomenon is becoming a very serious problem and have adopted new guideline to curve this new trend. The Advertising Standards Authority has seen a huge rise in the number of complaints about environmental claims in advertisements. Their consumer research has shown that awareness of green issues is high, but there is also confusion and a lack of basic understanding about environmental and ethical claims and what they really mean. http://asa.org.uk/ downloaded 23-09-10

This is because profit and the interests of the shareholders always seen to come first before the environment. In comparison; BP’s sustainability report to its actions. In July 2000, BP launched a massive $200 million public relations and advertising campaign with the new slogan and name change “Beyond Petroleum”. It changed its logo to a green and yellow sun and claimed to be a greener business.

In 2005, a fire and explosion occurred at BP Texas City Refinery, killing 15 workers and injuring more than 170 others, its claims to have safety as one of its highest priorities. BP was charged with criminal violations of federal environmental laws and has been subject to lawsuits from the victim’s families. BP had a £53 million fine from The Occupational Safety and Health Administration in the US for hundreds of safety violations, and subsequently imposed an even larger fine after claiming that BP had failed to implement safety improvements following the disaster http://www.guardian.co.uk/business/2009/oct/30/bp-texas-city-safety-fine downloaded 19-09-10

In March 2006, BP spilled 200,000 gallons of crude oil in Alaska. The spill happened because BP failed to perform routine maintenance on its pipeline. It claims to work sensitively around the environment and animals. In October 2007, BP was ordered to pay more than $60 million by the U.S. Department of Justice for breaking environmental laws in Texas and Alaska. According to the Environmental Protection Agency in the US http://yosemite.epa.gov/opa/admpress.nsf/8b770facf5edf6f185257359003fb69e/1af659cf4ce8a7b88525737f005979be!OpenDocument downloaded 19-09-10, this was the largest fine ever handed out for breaking Clean Air regulations in the U.S.

In addition, BP then lobbied continuously to open up the Alaska National Wilderness Reserve for oil drilling to add to their increasing profits with no success. It claims to support conversation and wants to protect the environment from its green advertisements. In 2007 BP invested $1.5 billion to extract oil from the Canadian wilderness using methods which environmentalists say are part of the “biggest global warming crime” in history which 2 years earlier the company publicly said they would never invest or use such damaging environmental technology <http://www.independent.co.uk/environment/the-biggest-environmental-crime-in-history-764102.html downloaded 19-09-10> .

In May 2010 BP was involved in an oil spill in the Gulf of Mexico which is now the biggest environmental disaster in American history blamed yet again on poor safety and maintenance. Yet in June 2010 BP decided to spend $50 million on green advertisement presenting a squeaky clean image which back fired adding to the growing tide of resentment by American consumers. http://www.digitaljournal.com/article/293020#ixzz0zsryzPBl

Illustrating BP practises within the green marketing mixes; green products. BP produces and supplies a range of products and services. However, fossil fuels production and supply are their main source of profit which is environmentally damaging as its produces carbon emissions. Thus their core business is not environmentally friendly.

As illustrated by Chick (1992), BP cannot use green packaging or reduce layers for their core business, which is the production of oil. Oil and fuel need to be stored correctly in drums and depot containers which cannot be reduce for safety reasons. There are a range of issues in managing the green promotional mix; BP has adopted a green branding marketing strategy which as indicated is environmentally friendly. However, the adoption of this green brand in its advertisement for example its marketing strategy has not been assimilated in some of BP’s production mechanisms.

Consequently, a range of disasters caused by BP has emerged at alarming rates, intensity and adversity within recent years. The inability to follow through on their green brand with safer production procedures will invariably result in outraged by the public. Going green may affect the cost structures of a business with a knock-on effect on prices. However with the recent oil disaster in the Gulf of Mexico BP has spent £8 billion and rising http://www.bbc.co.uk/news/business-11174375 HYPERLINK “http://www.bbc.co.uk/news/business-11174375 downloaded 19-09-10″downloaded 19-09-10 on the cleanup operation. BP had to sell assets to fund this massive cleanup operation with the CEO making a few disastrous statements in public. With this negative publicity and unpopular public image especially in the US it will affect the business and particularly its green pricing for its products.

BP has green logistics; their centralized distribution centres and use of eco- friendly trucks have added to their green strategies, however producing crude oil from the tar sands a heavy mixture of bitumen, water, sand and clay found beneath more than 54,000 square miles of prime forest in northern Alberta was a backtrack from claiming 2 ago never to invest in this technology. Infrastructure had to be in place and created by forests being cleared to transport this product. http://www.independent.co.uk/environment/the-biggest-environmental-crime-in-history-764102.html downloaded on 19-09-10.

Additionally, an area the size of England and Wales in their tar sands project combined generates up to four times more carbon dioxide, the principal global warming gas, than conventional drilling. The oil sands industry will produce 100 million tones of CO2 equivalent to a fifth of the UK’s entire annual emissions which BP is currently undertaking.

From there $200 million worldwide advertising campaign, BP has won many awards including Nikkei BP Advertising Awards 2008. However, since the Gulf of Mexico oil spill the company has the spent $93 million on advertising to clean their image. Angry protesters have claimed that this money should have been allocated to the people who have lost their livelihoods from the disaster.

(www.ft.com/cms/s/0/09ee7e22-b5ee-11df-a048-00144feabdc0.html) downloaded 19-09-10

Conclusion

BP is first and foremost a business; further BP operates in many countries with different environmental laws and policies. In some countries legislations were changing to reflect the environmental public interest for going green. In turn, BP has allocated profits to green branding with use of green marketing strategies, but in some instances the company was not successful in implementing its green marketing strategies into its production units. This resulted in oil spills and other environmental disasters. On the other hand, the business has good achievements within their sustainability and CSR policies. Exploiting these achievements to reinforce their green credentials is business suicide when it goes wrong.

The amount spent on green marketing is way out of proportion to their actual green energy investments. Their investments into the oil sands is very environmentally damaging because of its massive CO2 emissions. Additionally, BP responsibilities on safety are very poor which is stated as BP’s top priorities in their sustainability policy. Thus BP is Progressive for building relationships between the business and their shareholders. The company is Responsible for countless environmental disasters across the world through poor safety and maintenance procedures. The company is Innovative through finding new ways to spinning their green marketing propaganda and very Performance driven in keeping their promises to their shareholders by finding new ways to damage the environment.

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Reference

http://www.bp.com/liveassets/bp_internet/globalbp/STAGING/global_assets/e_s_assets/e_s_assets_2009/downloads_pdfs/bp_sustainability_review_2009.pdf

<http://www.bp.com/subsection downloaded 14-09-10>

http://www.independent.co.uk/environment/the-biggest-environmental-crime-in-history-764102.html downloaded on 19-09-10

www.ft.com/cms/s/0/09ee7e22-b5ee-11df-a048-00144feabdc0.html downloaded 19-09-10

<http://www.bbc.co.uk/news/business-11174375 downloaded 19-09-10>

http://www.digitaljournal.com/article/293020#ixzz0zsryzPBl

http://yosemite.epa.gov/opa/admpress.nsf/8b770facf5edf6f185257359003fb69e/1af659cf4ce8a7b88525737f005979be!OpenDocument downloaded 19-09-10

http://www.guardian.co.uk/business/2009/oct/30/bp-texas-city-safety-fine downloaded 19-09-10

www.edenproject.com/documents/Annual_Review_06_07.pdf downloaded 19-09-10

http://asa.org.uk/ downloaded 23-09-10

http://www.ocimf.com/

<http://www.bp.com/subsection downloaded 14-09-10>

B324 Marketing and Society Block 3 Responsible business marketing, Open University Worldwide, Michael Young Building, Walton Hall, Milton Keynes MK7 6AA, United Kingdom 2008 Prepared for the Course Team by Anja Schaefer based on a draft by David Faulkner