Towards customer-centred new product development

Sustainable green living gives promise for better wellbeing and it is linked very closely to the way of living possibilities different countries. For example, ethical living and shopping works as a counterforce for legalized procedures. Ethical choices rise from people’s free will. Entrepreneurs operate in both the institutional environment as well as the consumer environment. The entrepreneurs’ role can be passive or active. A passive role means e.g.

implementing rules of organic farming but not certifying the operations. An active role includes certifying the operations and for example, gathering feedback from customers. In the United Kingdom, ethical shopping or “responsible consumerism” and ecological lifestyle is today more relevant than ever (Clark 2004 & 2006). The things we buy and consume link us to a huge range of social, economic, political and environmental issues. This doesn’t mean, however, that people have been shopping “unethically” before. After all, the label doesn’t show if an item of clothing has been made in a factory that denies workers the basic right to join a union and bargain for decent pay and conditions. As most people in the ethical consumerism movement are keen to point out, shopping ethically can make a positive difference too. By supporting progressive businesses, or products bearing labels that testify to their social and environmental credentials, we may help to make a deeper change. Furthermore, by buying socially and environmentally focused products the profile of issues otherwise ignored may be raised. The very availably of an “ethical” option inevitably gets people thinking whether it is about the real costs of fossil fuels (in the case of a solar roof) or the environmental and animal-right impacts of intensive agriculture (in the case of organic food). Enterprises can

be more active in assisting consumers in identifying and adopting new, less environmentally harmful ways of satisfying their needs (Heiskanen 2004).

Organic foods are widely marketed as safer and healthier, but the benefits are not universally accepted. The claims fall into two separate categories, the first of which relates to the potentially harmful effects of pesticide residues in our food. Unsurprisingly, organic foods carry incomparably fewer of these residues, and no one denies that this is a good thing.

However, toxicologists are not universally convinced that the levels of pesticide residues in conventional food even those that exceed the official safety limits are a serious cause for concern. Another issue is whether organic foods are more nutritious. There have been studies showing organic food to be higher in levels of vitamin C, essential minerals, cancer-preventing phytonutrients and other beneficial things. But the differences tend to be slight, and there is a possibility that organic food may bring risks, too, such as according to at least one study a higher proportion of certain bugs in chicken meat (Clark 2004). The organic “idea” is more of an entire agricultural philosophy, incorporating animal welfare and social justice as well as environmental and health concerns.

The emergence of new ethics in business and corporate responsibility are rapidly changing.

The new ethics is market-driven but based on values. Market-driven means that the underlying logic is “If you want your business to succeed, here is a new set of measurable performance standards you have to meet”. This new ethic is called “planetary” because it expands the code of business conduct to the globe. It encompasses the company’s responsibility for society and the environment. Planetary ethics call for operating within the earth’s social and physical limits. Planetary ethic is not only about environmental sustainability, it is also about the social dimension. Planetary ethics by its nature is indivisible: a company cannot be responsible in its environmental practices and negligent in its community relations or social impacts. Ethic is about offering a better understanding of the nature of business and its impacts now and in the future. (Observatory of European SMEs 2007). Opposed to industrial-scale companies, small enterprises have the possibility to be near the customer. This is an advantage and it is desirable to keep the chain short between the enterprise and the customers.

The relevance of international standardisation can be easily seen in the context of environmental and ethical claims. The Nordic Consumer Ombudsmen have adopted a joint guideline on the use of ethical and environmental claims in marketing. Claims must be unequivocal and easy to understand. Vague claims, which may have various meanings, must be specified. Specifications should be clear, accurate, and easy to read, and appear in close proximity to the claim/statement. General ethical or environmental claims such as “environmentally friendly”, “ecological”, “organic” or “green” are vague and inaccurate, and should be reserved for products whose life cycle has been thoroughly examined and substantiated (The Nordic Consumer Ombudsmen 2005).

Volunteers provided by the authorities of eco-labels have been replaced by the idea emerged to establish the credibility of ecoproducts through branding the image. Brand is the personality that identifies a product, service or company (name, term, sign, symbol or design or combination of them) and how it relates. The markets of SME ecoproducts are marginal and to be able to expand them, international dimension needs to be built for the brand. The EU level can be thought of as multinational level (EU-25) and, in addition to this, there are global brands, regional brands and local brands. “Global brands can make more efficient use

of the new international media and the internet” (Doyle 2006: 243). The SME’s website can be seen as a means to develop global brands. The local brand can include attributes such as local language, preferences and tradition as well as climate. Regional brands can make use of the common cultural heritage of certain regions, for example, Lapland and Sámi traditions.

Brand values are included in the building process of brands. “A successful brand image B^s can be thought of as the combination of three elements: a good product (P), a distinctive identity (D), and added values (AV): B^s = P x D x AV. The relationship is multiplicative, indicating that all three elements are necessary to create a successful brand” (Doyle 2006:232). Brands can be used to create economic added value and they answer to consumers’ expectations of ecoproductization quality. Visual, verbal and illustrated information passes the entire process of innovative product development. Krake (2005) offers the following guidelines for the building of strong brands by SMEs. The guidelines include concentrating on one or two strong brands. Then marketing efforts could be focused on one or two important brand associations. Brand image and awareness could be supported by using an integrated mix of brand elements. The communication could be consistent and the policy the enterprise follows could be logical. A link between the character of the entrepreneur and that of the brand could be built. Finally, a marketing campaign could be designed to attract as much media attention to the brand as possible.

Brand positioning is an important phase when launching a product onto the market.

Positioning a brand as a green brand includes active communication and differentiation of the brand from its competitors through its environmentally sound attributes. A green positioning strategy can be based either on functional or emotional attributes. A green positioning strategy based on functional attributes strives to build brand associations by delivering information of the environmentally sound product attributes. This strategy should be based on relevant environmental advantages compared to conventional competing products. Positioning a green brand merely by its functional attributes may not be successful, because then the customer does not get any individual benefits from the product and it is easy for the competitors to copy the positioning strategy. As an alternative, an emotional green brand positioning strategy delivers individual benefits to customers such as feeling of wellbeing or self-expression. Functional and emotional strategies could be considered as alternatives. The brand could deliver emotional benefits and also make sure that consumers perceive real environmental benefits (Hartmann et al. 2005).

Strong brands attract suppliers and raise interest which helps management in SMEs.

They also create emotional links over and above the functions of the product, which creates stronger customer relationships (Doyle 2006:224). A brand can be luxury, or desirable, of good quality and better than the other competing brands, even though the product is not meant or available just for a small target group. A strong brand communicates both the technical product information and emotionally appealing attributes, and with these aspects an image is created in the customer’s mind that makes the customer choose the product.

In the positioning of green brands, it should be noticed whether they correlate with positive values or negatively loaded values. Green marketing is the starting point of the building of green brands. The qualities of green brands then emphasise the green marketing language and accepted operation models (Hartmann et al. 2005:19). Emotional qualities bring social and cultural issues as part of the building of green brands and this means that all the

dimensions of sustainable development should be realized in the building of green brands. As a competitive advantage, this means that SME possibilities to commercialise enterprise and entrepreneur values as part of verified ecoproductization becomes possible.

In brand oriented marketing, a brand could be connected from the following aspects of customer-centred new product development. Kotler et al. (2008:566) has written that development of successful products needs more weighting, and customers need and value and less technical research. Firstly, specific details of product information including environmental performance factors could be studied. This contributes more to the customer’s buying decision-making than merely the brand name. The second key point is product brand logos. A realistic model is built for the logos and professional assistance should be used in this process. Thirdly, in the building of the brand the entire process should be described and consumer perspective should be considered (Ackerstein & Lemon 1999:246). In brand oriented SMEs, the brand is an important and active part of the marketing strategy (Wong

& Merrilees 2005). Brand orientation can be a positive force which influences the success of the SME’s brand. It also motivates the SME to participate actively and positively in the multidimensional and complicated world of ecoproductization. Positive brand building functions as a counterforce for the hard environment of environmental legislation.

4 Marketing management via multi-criteria decision making

Palojärvi (2000) supports the conception of entrepreneurship as bound to environmental factors, entrepreneur’s values and the values of interest groups. In SMEs, complicated relationships exist between the decision maker, making situation and decision-making models (Carlson et al. 1995). The economic thinking of entrepreneurs often focuses on knowledge of costs and the SME entrepreneur often makes investment decisions alone.

The factors and issues that affect the entrepreneur’s decision include values, human factors, the situation in life and environmental factors such as the need to improve competitive advantage or the demand from markets and the will to be an entrepreneur. Psycho-social values such as religion, ethics, justice and social values affect the decision. Human factors such as knowledge, emotions, intuition, willingness and beliefs also have their role in the decision-making process (Keeney 1992). The decision is experienced as rational, even though the solution would be formed on the basis of human factors. The final selection between different alternatives often occurs on the basis of these factors. Personal characteristics and qualities explain the decision to become an entrepreneur (Calson et al. 1995). Positive attitude creates new entrepreneurship efficiently and it affects society’s wellbeing (e.g. Palojärvi 2000).

The success of small and medium-sized enterprises (SMEs) substantially depends on some principal characteristics like high flexibility in production, high variability and adaptation capacity of products, processes and supply chains, and continuous and incremental innovation of products in order to adapt them to clients’ wishes. Because such innovation is seldom driven by the environment, environmental aspects should be added together with those aspects that are driving the innovation process already from the beginning of product

development and design. The main barriers for IPP in SMEs are low sensitivity of the market to green products, costs and lack of in-house expertise, inability to influence life cycle steps outside the firm, unavailability of life cycle data and the high number of products and rapid variability.