MARKET SUCCESS FACTORS OF SUSTAINABLE PRODUCTS
Janine
Fleith de Medeiros
Universidade
Federal do Rio Grande do Sul (UFRGS) - Brazil
E-mail:
janine@upf.br
José
Luis Duarte Ribeiro
Universidade
Federal do Rio Grande do Sul (UFRGS) - Brazil
E-mail: ribeiro@producao.ufrgs.br
Submission: 08/04/2013
Accept: 23/04/2013
ABSTRACT
This
article investigates dimensions and factors that according to the perception of
business managers drive the market success of environmentally sustainable
products. Initially, publications related to new products introduced to the
market (with or without environmental focus) were evaluated. Four complementary
dimensions were identified as responsible for proper performance: (i) Market
Knowledge, (ii) Interfunctional Collaboration, (iii) Knowledge Integration
Mechanisms, and (iv) Generative Learning. Considering the above, an exploratory
study following a qualitative approach was conducted with managers that work in
the Brazilian market. For the choice of the respondents, some characteristics
were considered, such as growth in the sector of activity where the
organization works, and the area that they manage. Results lead to the
validation and ranking of the factors and dimensions mentioned in the
literature. They also allowed the identification of new factors as:
technological domain, competitive price, quality, company's brand, and payback.
Moreover, considering the variables described and the relationships established
among them, it was inferred that technological domain can be considered as a
dimension. This suggestion is based on the respondents' perception concerning
"technological domain", such as: specialized people, research budget,
and also budget for facilities and equipment. The study also shows deeper
difference among practice areas than among sectors. Based on
the
list of factors that was generated, new studies are recommended to measure the
impact of the factors and dimensions on the success of green products.
Keywords:
Environmental;
Innovation; Marketing Success Factors
1.
INTRODUCTION
Focus
on product innovation is one way to impart a competitive advantage to an
organization working in the industrial market. For this reason, studies on
successful product innovation practices have been gaining ground since the late
1980s. At the same time, in light of the current scenario of natural resource
limitations, product innovation practices which are environmentally sustainable
take on greater importance for companies, apart from being strategic and
economically viable.
Within
this context, this article investigates which dimensions and factors, from the
perspective of managers in the manufacturing industry, drive the marketing
success of environmentally sustainable innovation. The objectives center around
(i) analyzing whether such individuals consider the measurement suggestions
proposed in the literature to be sufficient for evaluating the performance of
green products, (ii) discovering what factors they consider most relevant, and
(iii) identifying if the sector in which the organization operates promotes
differences in regards to the importance of the factors.
This
article is organized into five sections. It first presents the dimensions and
factors identified through a state-of-the-art survey. Then, the methodological
procedures used for conducting the research are outlined. After this, the
findings from the field research are analyzed and compared to the data arising
from the literature review. Lastly, a list of dimensions and success factors
for green product innovation is proposed.
2.
LITERATURE
REVIEW
2.1 Market Knowledge
According
to Iyer (1999), Rennings (2000), Chen (2001), Beise e Rennings (2005), Zhu,
Sarkis and Geng (2005), Mickwitz et al. (2008), Kammerer (2009) and
Carrillo-Hermosilla et al. (2010), environmentally sustainable product
innovation depends on consumers willing and able to acquire such products,
environmental-friendly legislation and government incentives, and educational
campaigns that disseminate sustainable culture among society. According to the
mentioned authors, organizations will invest efforts towards innovative cleaner
technologies and production processes if these three forces are well
intertwined and if companies recognize these external factors.
Complementarily,
Cambra-Fierro et al. (2008) and Fraj-Andrés et al. (2009) argued that, when
market realizes that organizational practices minimize negative environmental
impact, companies tend to obtain benefits related to cost and differentiation.
To Chen et al. (2006) and Chen (2009), environmentally sustainable practices
add value to a brand as they generate positive awareness towards the brand, as
well as increased perceived quality and trust that may positively impact
customer satisfaction.
Hanssen
(1999), Baker and Sinkula (2005), Lee, Gemba e Kodoma (2006), González-Benito
and González-Benito (2008), Peng and Lin (2008), Brito et al. (2008) and
Naranjo-Gil (2009) all confirm that market knowledge and organizational
adaptation towards market characteristics are positively related to success of
environmentally sustainable innovations. Thus, organizations operating at
global levels must adapt processes and products to local demand in order to
reap increased profitability.
Foster
Jr. et al. (2000) state that knowledge about buyers’ intentions and buyers’
level of involvement in production and consumption of green products directly
impact environmental activities promoted by companies. Also Pujari et al.
(2003) and Visser et al. (2008) observed that green product development and
market success depend on customer behavior analysis, which can generate
increased satisfaction, loyalty and positive word-of-mouth. Cetindamar (2007)
and Triebswetter and Wackerbauer (2008) also highlight the importance of
competitor practice analysis.
Still
on the topic of knowledge about buyer behavior and intentions regarding
environmentally sustainable products, Bhate and Lawler (1997) found that
psychological and situational factors are more influent to the development of
environmentally friendly behavior than demographic factors. Similarly, Halme et
al. (2006) and Houe and Grabot (2009) showed that when environmentally friendly
products increase buyer perceived quality of life, consumers are more likely to
acquire them independently of sex, social class, employment and age group.
2.2 Interfunctional Collaboration
Considering
interfunctional collaboration, it is worth noting the study by Byrne and
Polonsky (2001), who identified that synergy among different sectors must
happen not only internally, but also among the stakeholders involved in
environmentally sustainable product development and delivery processes.
According to Chen (2007, 2008) and Triebswetter and Wackerbauer (2008),
successful environmentally friendly innovation is driven by a mixture of
internal and external factors, such as available technology, development costs,
consumer pressure and governmental regulations.
In a
similar tone, Jabbour (2008) highlight the importance of both organization
maturity level and relationships between organizational areas and other players
from the delivery chain (especially those responsible for the logistics) for an
adequate environmentally sustainable product development process. The same
trend is observed by Carrillo-Hermosilla et al. (2010), who evidenced not only
how marketing, R&D and operations must act systemically, but also the need
for key stakeholder involvement and integration in order to implement green
innovation.
Specifically
regarding integration among areas as a success factor for environmentally
sustainable products, Pujari et al. (2003) identified that there is more
interaction than conflicts between traditional and environmentally-oriented
product development models. Similarly, Maxwell and van der Vorst (2003)
proposed a method for developing effective sustainable products and services
integrated into company strategies, business functions and overall supply
chain. Hallstedt et al. (2010) confirmed that superior green product
development performance requires the complete incorporation of an
environmentally sustainable vision into all areas of the organization, as well
as the internal availability of incentives for this approach.
As a
last aspect of the factor dealing with interfunctional collaboration, Ellram et
al. (2008) identified that concurrent engineering can be an important tool for
improving environmentally responsible practices in companies. Gonzalez-Benito
(2008) states that widespread proactivity and continuous exchanges between
different areas promote a distinctive characteristic that drives sustainable innovation
performance improvements.
2.3 Knowledge Integration Mechanisms
Damanpour
(1991) map the organizational variables that negatively impact the established
mechanisms for knowledge integration, among which are included: risk aversion,
traditional rewarding mechanisms, bureaucracy, conservative organizational
culture and structure, internal rivalries, and complex, rigid and centralized
organizational hierarchies. On the other hand, Sinkula et al. (1997) contend
that issues with the interpretation of organizational data and memory can
negatively impact organizational performance. Similarly, the study by Barczak
et al. (2007) highlights how the use of information and communication
technologies can contribute to integrate and preserve knowledge related to new
product development processes, and the study by Zancul, Marx and Metzker (2006)
suggest that concurrent engineering must be use.
According
to Hurley and Hult (1998), an organizational culture that emphasizes learning
is a key element for generating positive innovation results in market-oriented
organizations, along with participative decision-making, support and
collaboration, and power sharing, all of which can be understood as knowledge
integration mechanisms. As the authors aptly put it, “researchers would be
hard-pressed to make the case that market and learning orientations are not
simply antecedents or phases of a process that could be labeled ‘market-driven
innovation’”. Similarly, Noble et al. (2002), Baker and Sinkula (2007) and
Berchicci and Tucci (2010) conclude that management must translate and
disseminate market information all over the organization, allowing the
employees to question and adapt organizational knowledge used for innovation
means. It seems clear the role of organizational knowledge integration
mechanisms as antecedents to innovation.
2.4 Generative Learning
Generative
learning is especially dependent on cultural barriers. As
To
Jabbour (2008) and Arevalo (2010), companies oriented towards developing
environmentally sustainable solutions are primarily those that develop a
consistent way of learning through critical reflective analysis of their
actions. Hallstedt et al. (2010) complement this reasoning by emphasizing
companies' support mechanism (in particular, its flexibility) among the
variables that underpin the success of green product innovation.
2.5 Synthesis of the Critical Success
Factors
Considering
the literature reviewed, table 1 shows a synthesis of the critical success
factors and its constituent elements that influence environmentally sustainable
product innovation.
Table 1 - List of
Factors for Successful Innovation with Environmentally Sustainable Products
Dimension |
Factors |
Market Knowledge |
Meeting the expectations of consumers |
Meeting the expectations of society |
|
Knowledge of the variables that motivate sustainable
purchases |
|
Complying with laws and legislation imposed by the
government |
|
Knowledge
about Competitors |
|
|
|
Cross-functional Collaboration |
Willingness of teams to collaborate |
Organizational Climate that fosters Sustainable
Innovation |
|
Integration of the R&D, Production and Marketing
departments |
|
Formalization and documentation of the PDP |
|
Systemic
Vision |
|
Integration
of key stakeholders |
|
Knowledge Integration
Mechanisms |
Risk
Propensity |
Low
Bureaucratization of Processes |
|
Effective
Internal Communication |
|
Investment
in Empowerment |
|
Use
of Simultaneous Engineering |
|
Use
of Information Technology |
|
Generative Learning |
Elimination
of cultural barriers |
Development
of green skills |
|
Critical
reflective analysis ability |
|
Flexibility |
3.
METHOD
This
study is exploratory in nature. Exploratory research is commonly used to
measure attitudes and study the behavior of small groups (GIL, 1999). In terms
of approach, it was qualitative in nature. Qualitative research is based on
small samples, and by delving into the issues, can provide a better
understanding of the context under study (MALHOTRA, 2006).
With
respect to the data collection procedure, the technique of individual
interviews was chosen. To perform the data collection, the interviews were
scheduled in advance and conducted personally by the researchers. The
elaboration of the data collection instrument took into account the dimensions
and factors revealed in the state-of-the-art survey.
Judgmental
sampling, a non-probabilistic sampling technique, was used in the study. The
Indicators of Industrial Production by Subsectors and Activities of Industry
(Brazilian Institute of Geography and Statistics - IBGE) were used as the
selection criterion for the sectors that were covered, choosing three for the
collection that have been experiencing growth in the last six years (Table 2). After this, different criteria were observed for defining
the companies, such as proximity and ease of access for the researchers.
Lastly, in terms of those interviewed, managers from marketing, production and
research and development departments were considered qualified to answer,
totaling nine persons sampled, three per organization.
For
the data analysis, relevant excerpts were separated and isolated for coding and
categorization, for which a systematic coding framework for comparison purposes
was used. The collected data was then first compared with the list generated in
the state-of-the-art survey (theoretical comparison), after which a comparison
was made between the sectors and departments of the managers who responded in
these interviews (internal comparison) (RIBEIRO,
Table 2 - Indicators
of Industrial Production by Industry Subsectors and Activities of Industry
(IBGE)
Manufacturing Industry of Rio Grande do
Sul (Brazil) |
Feb/06 |
Feb/07 |
Feb/08 |
Feb/09 |
Feb/10 |
Feb/11 |
|
Food |
92.35 |
98.83 |
110.13 |
94.31 |
87.31 |
105.11 |
|
Beverages |
99.15 |
98.79 |
87.45 |
94.45 |
99.14 |
98.06 |
|
Tobacco |
65.32 |
70.54 |
63.24 |
45.98 |
40.67 |
110.27 |
|
Footwear and Leather Articles |
75.31 |
69.02 |
71.71 |
51.73 |
52.65 |
98.27 |
|
Pulp, Paper and Paper
Products |
117.66 |
115.39 |
119.5 |
120.61 |
132.23 |
93.23 |
|
Publishing, Printing,
Reproduction of Recorded Media |
78.33 |
82.39 |
81.39 |
78.48 |
71.43 |
101.52 |
|
Oil Refining and
Alcohol Production |
83.21 |
94.9 |
125.03 |
128.5 |
105.64 |
90.23 |
|
Other Chemical Products |
91.04 |
97.73 |
101.72 |
74.45 |
102.92 |
102.75 |
|
Rubber and Plastic |
96.92 |
105.01 |
108.98 |
79.89 |
95.81 |
94.96 |
|
Basic Metallurgy |
104.16 |
108.45 |
124.5 |
65.13 |
111.83 |
94.35 |
|
Metal Products |
99.47 |
98.08 |
108.31 |
80.85 |
99.77 |
105.09 |
|
Machinery and Equipment |
90.23 |
100.39 |
125.99 |
87.17 |
111.99 |
111.97 |
|
Motor Vehicles |
121.86 |
139.82 |
174.6 |
115.67 |
167.21 |
103.35 |
|
Furniture |
75.99 |
72.8 |
87.31 |
63.81 |
109.97 |
96.81 |
|
Base: 2002 average = 100
4.
Results
Analysis
The
first question in the interview sought to discover out how the managers who were
surveyed view the practice of environmentally sustainable innovations. The
majority said that developing green products is important for expanding the
organization's competitiveness, in other words, enabling the company to enhance
the value of its brand and increase its sales share. Apart from that, some
managers understand that engaging in green innovation yields financial benefits
from government agencies, promotes significant changes in the structure of the
organization and affords technological training. Table 3 contains a summary of
the most frequently cited responses.
Table 3 - Importance
of developing Environmentally Sustainable Innovations
Important
Factors |
Times
Cited |
Expands the company's competitiveness |
6 |
Brings about financial gain |
4 |
Promotes
changes in the organization |
3 |
Engenders technological growth |
2 |
In
question two, the interviewees were asked what factors they believed to be
drivers for successfully marketing green product innovations. The factor
everyone cited is the knowledge that companies must have about their target
markets. In explaining why they consider this to be a factor that ensures
success, the managers stated that design and performance must be in line with
consumer expectations ("there's no
point having a sustainable product if the design does not stimulate sales").
Another
factor cited by the majority of the managers interviewed deals with
technological mastery, that is, employee skills, research and machinery that
organizations must have so that proposed green innovations will generate good
market results. Another commonly-cited factor was price. According to managers
there is a certain leeway on the part of consumers regarding how much more
they'll pay for a product that is greener than another, and this must be respected
("success depends on the perception
consumers have of the product and what they are willing to pay for it").
Table 4 summarizes the most frequently-cited responses.
Table 4 - Factors that
Drive the Marketing Success of Green Product Innovations
Success
Factors |
Times
Cited |
Consumer
Market Knowledge |
9 |
Technological
Mastery |
7 |
Competitive
Prices |
5 |
Good
Quality |
4 |
Company
Brand |
3 |
Financial
Return |
3 |
The
third question on the survey asked managers about possible interplay between
the factors cited in the previous question. All the interviewees agreed that
the aforementioned factors are related to each other. In terms of the interplay
that managers deemed most important, all mentioned consumer market knowledge as
the initial factor, on the basis of which improvements need to be considered
and put into effect (but for this technological mastery is needed). In
addition, the managers realized that technological mastery is interrelated as a
factor giving rise to good quality, competitive prices and desired financial
return. The interviewees also listed good quality as a factor that generates
positive associations with the company's brand image (reliability) and due
financial return.
The
next questions refer to the dimensions and factors mapped in the literature as
drivers for the successful marketing of green innovations. To make it easier
for respondents, they were shown cards with each dimension and its factors, and
requested to identify the three most important. The results obtained for market
knowledge (Table 5) will be presented first.
Table 5 - Importance of
the Factors from the Market Knowledge Dimension
|
Degree
of Importance |
||
Factors from the Market Knowledge Dimension |
1 |
2 |
3 |
Meeting the
Expectations of Consumers |
3 |
2 |
2 |
Meeting the
Expectations of Society |
|
1 |
1 |
Knowledge of the variables that motivate sustainable
purchases |
1 |
4 |
1 |
Complying with laws and regulations imposed by the
government |
5 |
1 |
|
Knowledge
about Competing Products |
|
1 |
5 |
Looking
at Table 5, it can be seen that the managers interviewed considered compliance
with laws and regulations imposed by the government as the most important
factor from the market knowledge dimension. The second most important is
knowledge of the variables that motivate sustainable purchases, that is, knowledge
of the consumer market and the attributes that are valued in this type of
purchase. Lastly, monitoring the activities of competitors ranks as the third
most important factor in regards to market knowledge. Table 6 presents the
results obtained for the cross-functional collaboration dimension.
Table 6 - Importance of
the Factors from the Cross-functional Collaboration Dimension
|
Degree
of Importance |
||
Factors from the Cross-functional Collaboration
Dimension |
1 |
2 |
3 |
Willingness of teams to collaborate |
1 |
1 |
4 |
Organizational Climate that Fosters Sustainable Innovation |
1 |
3 |
1 |
Integration of the R&D, Production and Marketing
departments |
6 |
2 |
1 |
Formalization and documentation of the PDP |
1 |
|
1 |
Systemic
Vision |
|
1 |
|
Judging
from the importance attributed by managers to the cross-functional
collaboration dimension, it is clear that opinions are more divided on this one
than in relation to the market knowledge dimension. However, the results
indicate that integration between the R&D, Production and Marketing departments
is considered the most important factor for successful innovation. Also in
regards to the factors from the cross-functional collaboration dimension, it
should be noted that the culture of the organization must be geared toward
sustainability. Table 7 presents the results obtained for the factors from the
dimension of knowledge integration mechanisms.
Table 7 - Importance of
the Factors from the Knowledge Integration Mechanisms Dimension
|
Degree
of Importance |
||
Factors from the Knowledge Integration Mechanisms
Dimension |
1 |
2 |
3 |
Risk
Propensity |
1 |
|
|
Low
Bureaucratization of Processes |
2 |
2 |
3 |
Effective
Internal Communication |
3 |
4 |
2 |
Investment
in Empowerment |
|
3 |
4 |
Use
of Information Technology |
3 |
|
|
For
the dimension of knowledge integration mechanisms, two factors tied in the
number of times they were cited as first in importance: "use of IT
tools", especially with regard to forming the organization's memory, and
"effective internal communication". Several managers commented that
proper communication coupled with a good organizational climate decreases
internal rivalries. Lastly, Table 8 deals with the importance ascribed by
managers to the generative learning factors.
Table 8 - Importance of
the Factors from the Generative Learning Dimension
|
Degree
of Importance |
||
Factors from the Generative Learning Dimension |
1 |
2 |
3 |
Elimination
of cultural barriers |
7 |
1 |
|
Development
of green skills |
2 |
4 |
2 |
Critical
reflective analysis ability |
|
1 |
3 |
Flexibility |
|
3 |
4 |
Most
of the managers interviewed rated the elimination of cultural barriers within
the organization as the most important factor in this dimension, Development of
green skills and flexibility are the next most-cited factors. To conclude the
interview, the managers, from their perspective, had to rank the dimensions in
order of importance. Table 9 contains a summary of the results.
Table 9 - Importance of
the Dimensions
|
Degree
of Importance |
|||
Importance
of the Dimensions |
1 |
2 |
3 |
4 |
Market
Knowledge |
8 |
1 |
|
|
Cross-functional
Collaboration |
|
5 |
2 |
2 |
Knowledge
Integration Mechanisms |
|
|
2 |
7 |
Generative
Learning |
1 |
3 |
5 |
|
According
to the managers who responded to the survey, market knowledge is the most
important dimension, corroborated by the responses given in questions two and
three. This is followed by cross-functional collaboration and generative
learning.
Comparing
the results of the importance given to the factors mapped in the literature by
sector of activity investigated and by functional area, it was possible to
pinpoint more differences between the areas of activity than between the
sectors in which the study was conducted. For example, in the dimension of
market knowledge, the R&D and production departments for the most part
ranked "compliance with laws and regulations" as the most important
factor while managers from the marketing department pointed to the factor
"meeting consumer expectations" as the most important.
As
for the differences noted between the sectors, the most striking is that none
of the managers who work in the furniture sector highlighted the "use of
IT" as an important factor in the dimension of knowledge integration
mechanisms. Moreover, "integration of key stakeholders" was not
designated among the three most important factors for managers working in the
automotive sector, when the cross-functional collaboration dimension factors
were assessed.
5.
Factors driving
the marketing success of green innovations
This
study enabled new factors to be identified that serve as drivers for the market
success of environmentally sustainable innovations. According to the managers
interviewed from the manufacturing industries, technological mastery,
competitive prices, good quality, company brand and financial return need to be
considered, in addition to consumer market knowledge.
Furthermore,
taking into consideration the above variables, as well as the established
interrelationships, it can be concluded that technological mastery constitutes
a dimension. This proposal is based on the variables linked together by the
respondents, such as specialized personnel, investments in research and
investments in facilities and equipment. Added to this, are the relations
between this factor and the others cited in the responses to question three.
Following
is a summarized list of the factors that drive the marketing success of green
innovations (Table 11). It contains those factors mapped through the literature
review, as well as those generated via the managers selected for the
interviews.
Table 11 - Final List of
Factors for Successful Innovation with Environmentally Sustainable Products
Dimension |
Factors |
Market Knowledge |
Meeting the expectations of consumers |
Meeting the expectations of society |
|
Knowledge of the variables that motivate sustainable
purchases |
|
Complying with laws and legislation imposed by the
government |
|
Knowledge
about Competitors |
|
Company Brand |
|
Competitive Prices |
|
Cross-functional Collaboration |
Willingness of teams to collaborate |
Organizational Climate that fosters Sustainable
Innovation |
|
Integration of the R&D, Production and Marketing
departments |
|
Formalization and documentation of the PDP |
|
Systemic
Vision |
|
Integration
of key stakeholders |
|
Knowledge Integration
Mechanisms |
Risk
Propensity |
Low
Bureaucratization of Processes |
|
Effective
Internal Communication |
|
Investment
in Empowerment |
|
Use
of Simultaneous Engineering |
|
Use
of Information Technology |
|
Generative Learning |
Elimination
of cultural barriers |
Development
of green skills |
|
Critical
reflective analysis ability |
|
Flexibility |
|
Technological Mastery |
Investments in Research |
Investments
in Facilities and Equipment |
|
Investment in Technological Training |
|
Quality Assurance |
|
Financial Return |
6.
Final
Considerations
This article
explored what factors manufacturing industry managers perceive as being drivers
for the market success of environmentally sustainable innovation. In this
sense, the dimensions (i) market knowledge, (ii) cross-functional
collaboration, (iii) knowledge integration mechanisms and (iv) generative
learning, mapped through a literature review, were confirmed as important. In
addition, a new dimension emerged which was called (v) technological mastery.
In
that focusing on better products is an alternative for imparting a competitive
advantage to organizations, it should be noted that the classification of
success factors for environmentally sustainable innovation is an important
aspect to be taken into consideration by organizations in strategic decisions
related to their portfolio. Thus, the list of factors generated can be used to
(i) to support a diagnosis or (ii) serve as a starting point for developing a
study of structural equations which quantify the relationship between the
variables listed.
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