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Case study on Oatly - A research report Sustainable Marketing Management
Article · January 2021
University of Gothenburg
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Case study on Oatly - a research report
XXXXXXXXXXBy: Shaharyar Sha
1. Background description
With the intensification of global environmental problems, consumers' environmental awareness is gradually increasing in recent years. More and more consumers are showing environmental protection needs for companies and their products (Mohr, We
is, XXXXXXXXXXFood industry received significant attention as the consumption and production of food significantly impacted the environment (Otles, Despoudi, Bucatariu & Kartal, XXXXXXXXXXAs the sustainability concept gains popularity, consumers increasingly expect food companies to combat climate change. At the same time, companies have gradually realized the long-term significance of sustainable development (Boiral, Baron & Gunnlaugson, XXXXXXXXXXIn this context, green marketing and sustainable marketing have become essential strategies for companies to achieve economic benefits, social benefits and environmental sustainability.
The Swedish company Oatly AB (hereinafter Oatly) is a vegan food company that produces oat drinks as its main product. Because oats are more sustainable than animal milk products, as it costs less amount of water, land and other resources. Furthermore, oat milk is responsible for less greenhouse gas emissions than soymilk or dairy milk (Röös, Patel & Spångberg, XXXXXXXXXXOatly is considered a representative company willing to participate in sustainable consumption. They have recently begun to explore the topic of "sustainable growth" as well (Bocken & Lehner, XXXXXXXXXXOatly has several owners, such as The Blackstone Group, Verlinvest, China Resources, Industrifonden, Östersjöstiftelsen, and other individual owners. In 2020, Oatly sold $200 million of shares to investors, including the Blackstone Group, which funds some companies to ca
y out extensive deforestation in the Amazon region and
ing road development deep into the jungle to export food (Westra, XXXXXXXXXXWith the innovation of food technology, the demand for plant milk has increased from consumer groups such as animal protectionists, vegetarians, and people who are intolerant to milk. The dairy market in Europe and the United States has begun to actively cater to the above groups, thereby
inging safety and nutrition. Plant milk has become more popular in the market. For example, more than 540,000 people in the UK are now vegans, triple what that number was a decade ago (Askew, 2018), which provides opportunities for Oatly's rapid development.
Green marketing, as an essential way to promote sustainable consumption, can effectively construct a functional fit between the company and environmental protection, corporate social responsibility, and building corporate image, and thereby enhancing consumers' purchasing intentions. To fully understand the situation Oatly and the food industry is facing, one must understand the concept of sustainable development and the challenges ahead. Oatly is a fast- growing company, which is visible in major parts of the organisation (Oatly, XXXXXXXXXXAmong others, transportation between factories has increased due to the continuous, and additional travel is required in order for colleagues to establish new partnerships and introduce them to new offices around the world (Oatly, 2018).
2. Research Questions and Purpose Discussion
The purpose of this case study was to explore the strategies and challenges that are faced in sustainable marketing practices within the food industry. The perspective that was studied derives from how public consumption is affected by external factors such as the transparency of a company and the challenge of facing issues in regard to maintaining legitimacy. Firms are able to create and increase their value through marketing efforts in order to maintain and attract their consumers, by purchasing the firm's products, a consumer should be able to make conscious choices socially and environmentally (Hart & Milstein, XXXXXXXXXXHowever, it remains crucial for firms to engage their stakeholders and to enhance their reputation as a firm by spreading the sustainable practices throughout their whole business system (Hart & Milstein, XXXXXXXXXXThis study also sought to examine the relevancy of these matters through a qualitative research approach, creating a suitable theoretical framework and also presenting information in regard to sustainable marketing issues. The following research questions presented are for further analysis and examination of how sustainable marketing practices can be applied for firms operating in the food industry and their main challenges by doing so.
· What kind of sustainable marketing strategies can a firm within the food industry apply?
· What challenges can be faced within the sustainable marketing segment in the food industry?
3. Theoretical framework
In order to answer and provide perspective to the research questions, this theoretical framework was created. It is based on three following articles.
Deegan XXXXXXXXXXexplains in his article “the legitimising effect of social and environmental disclosures – a theoretical foundation” that without legitimacy, an organisation will have troubles surviving. Deegan XXXXXXXXXXdefines legitimacy as a resource that can be managed and affected by the firm putting in efforts to change it. Legitimacy is something that a firm can gain as a result of publishing specific social and environmental information about their operations, where the information could picture the firm’s operations as either good or not so good. The information could be published in an aim to comply with rules and regulations, gain economic benefits by being transparent operational areas, a belief from the management that the public have “a right to know” about their social and environmental performance, to be a good corporate citizen or as a response to negative press regarding accidents or incidents that already have affected the firm’s reputation (ibid). Deegan XXXXXXXXXXalso develops on the mutual impact and influence between the society and the firm.
The firm will publish information about their operations with an expectation that the society will accept and legitimise them. If the society or the local community where the firm is operating disapproves of an action from the firm, it is essential that the firm need to co
ect it in order to retain their legitimacy. If not, customer loyalty might diminish, the financing actors could withdraw their funding or even laws and regulations to restrict the firm’s operations will be lo
ied for, due to the actions of the firm. It is the most powerful stakeholders that can influence the firm’s actions, as the firm is trying to act in a way that gain those stakeholders approval. (Deegan, 2002)
Although, when a firm have gained legitimacy from the society, it is not considered to be a static resource. Instead legitimacy is described by Deegan XXXXXXXXXXas dynamic, since the constantly developing society and stakeholders increased interest in CSR.
Lindblom XXXXXXXXXXin Deegan, 2002) outlined four actions that a firm can conduct in order to obtain or maintain legitimacy:
1. “Educate and inform it’s “relevant publics” about actual changes in the organisation’s performance and activities;
2. Change the perceptions of the “relevant publics” but to not change its actual behaviour
3. Manipulate perception by deflecting attention from the issue of concern to other related issues through an appeal to, for example emotive symbols; or
4. Change external expectations of its performance.” (Deegan, 2002, p.297)
In the article “Why ethical consumers don’t walk their talk: towards a framework for understanding the gap between ethical purchase intentions and actual buying behaviour of ethically minded consumers” by Ca
ington, Neville and Whitwell (2010), the authors explain the issue of understanding how ethically minded consumers actually consume, as there seem to be a gap between their intentions and actual behaviour. Ethical consumption is a concept that has developed during the last years as a result of increased attention towards social and environmental sustainability from the society. There are a constantly increasing number of products that are labelled ethically produced, as a consequence to increased demand of those kinds of products (Ca
ington et al., XXXXXXXXXXThis has led to the emerge of a new type of consumer: the ethically minded customer. However, a study showed that out of the thirty per cent of the respondents that answered that they consumed ethical products, only three per cent actually conducted the purchase.
The discrepancy between intention and action is explained by that the consumer is affected by both internal and external complex processes which needs to be considered. To be able to reduce the gap between intention and action Ca
ington et al XXXXXXXXXXsuggests three following actions in a framework. First, the customer should be exposed to both in-store and out-of-store visual media so that they would not forget why they intentionally though about buying the ethical products. Second, involve the household of the consumer to also request ethical products by educating them, which would lead to an increased probability that those products will be purchased. Third, increase the visibility of the product in store, educate the staff in store to be able to pass information on to the consumers regarding the product and use symbols to extend the marketing communication (ibid).
Prakash XXXXXXXXXXexplains that green marketing includes evoking claims about industrial ecology, increased responsibility taken by suppliers, life-cycle improvement, waste reduction and regulating how environmentally damaging the product/service is. The author further develops that either a firm can position their products as sustainable, or their entire firm, including the firm
and, and it can be done in three alternative ways. First, a firm can position themselves as green by enhancing its value-adding process, second, enhance their management systems as green, or third, enhance their products as green. By doing so, and present measurable performance indicators, which will simplify the customer to compare competitors, customer approval can be gained (ibid). Prakash XXXXXXXXXXstates that powerful stakeholders can influence and impact firm to green themselves and their products, but simultaneously, firms can experience a gap between what the stakeholders