Ethical consumerism is buying things that are made ethically. Generally, this means without harm to or exploitation of humans, animals or the natural environment.
The role of the consumer here is to avoid products that cause the exploitation of women and children in sweatshop factories overseas, and also the depletion of the natural resources, as consuming these products means encouraging these actions.
The Genetically Modified food Campaign showed everyone how powerful are the consumers, who succeeded by the removal of the GM from the market and forced many food companies to label their products as being GM-free.
Four types of ethical buying:
Ethical consumption means that consumers support companies perceived as “ethical ones”, and withdraw their support to those perceived as unethical.
Positive buying:
This means favouring particular ethical products, such as energy saving light bulbs, or products produced locally.
Negative Purchasing:
This means avoiding products that you disapprove of, such as disposable batteries, instead of rechargeable ones.
Company-Based Purchasing:
This means targeting a business as a whole and avoiding all the products made by one company. For example, the Nestle boycott has targeted all its brands and subsidiaries in a bid to get the company to change the way it markets its baby milk formula across the world.
Fully screened Approach:
This means looking both at companies and at products and evaluating which product is the most ethical overall.
In United Kingdom, the Ethical Consumer Magazine, launched since 1989, tries to recommend to the readers the ethical products by using the fully screened approach.
Ethical boycotts, recycling, second hand purchasing, support of sustainable fishing or farming are the ways of preserving our planet’s resources, and the actions of the ethical consumers.
Ethical boycott:
Ethical consumers choose to boycott products which contribute to human rights violations, environmental destruction and animal abuse. For example: cosmetics tested on animals, or boycott clothing retailers with poor labour conditions. One of thecommon boycotts is the one against South Africa’s oranges because of the Apartheid.
According to the Ethical Consumerism Report 2007, published by the Cooperative Bank in United Kingdom, 52% of the consumers claim to have boycotted at least one product once in 2005, because of their principles. Furthermore, two thirds of consumers claim not to return to a brand once they have boycotted it, resulting £338 million loss for the clothing companies.
Recycling:
The local authorities have made recycling easy for everyone by placing different coloured bin to divide waste into separate compartments. In United Kingdom, 1.5% of the Gross Domestic Product is split on treating waste. Last year, 96% of this population reported that they have recycled their waste.
Re-use or second hand purchasing:
In our everyday life, we often throw away things which can still be used, like no longer fashionable clothes or television.
Indeed, our volume of waste is increasing. In United Kingdom, there is around 27millions tonnes of household waste produced in one year, representing 1.2 tonnes of waste per household. People should buy products with less plastic packaging,or should minimise waste by cooking less food, rather than to throw away leftovers.
Sustainable fishing and farming:
Seafood isexhaustible. Today, all the fish stocks around the world are under threat.
According to the United Nations, nearly 70% of the marine fisheries are fully or overexploited. For example, the North Sea cod.
The European Commission had introduced a regulation ensuring traceability. Since then, fish are clearly labelled with all basic information, like the country of origin.
According to the Ethical Consumerism Report 2003, published by the Cooperative Bank, 86% of consumers are opposed to the use of caged egg production. They prefer free range eggs. So, in 2006, the sale of these eggs increased to £259 million, and contributed to 40% of total retail egg sales.
Fair Trade products:
The Fair trade sector is growing every year, with the support of the increasing consumers. In United Kingdom, the sales of products carrying the Fairtrade Mark have been growing by 49% to reach £285 million in 2006. The sales of Fairtrade tea and coffee have reached £118 million, a rise of 43% since 2005.
And in 2006, the sales Fairtrade wines, has increased by 68 % in retail value
The role of Global Communications and public commitment
Today, thanks to Medias,people are aware of current events and though become more concern about climate change, poverty, fair-trade.
Advertising, and also campaigns for ethical consumption is one effective way to touch people.
People are now shifting to ethical products as, either they are the only products that these consumers can find at their supermarkets, or really because they are looking for ethical products.
In Paris, normally during the hot days of summer, the local authorities advise the Parisians not to use their car and rather use the public transport, which is more ecological. Moreover, since last year, in Paris, everyone can rent bicycle everywhere in the city, which cost around 1€ for every 30 minutes or have a package for one year, at only 30€.
Sometimes, people do not have to think ecologically or ethically, all is done such a way by local authorities, that they will automatically choose the ethical solution.
In fact, in Paris, the population prefer using the public transport, as when using their car, they will have to face traffic jam, expensive parking, which is also difficult to find, and also because of the cost of petrol.
The awareness of consumers has provoked a change for big companies.
The role of big companies
In United Kingdom, Sainsbury, Waitrose and Marks & Spenser are considered as the greenest supermarket, according to a recent report of the National Consumer Council. In France, it is the supermarket Monoprix, which is following this trend.
People are now asking for more information about the product’s origin or company’s identity before buying. In fact, consumers are willing to pay more for guarantees of fair labour practices and sustainable sourcing.
Big companies like Nestle, Cadbury, Danone, are now offering fair trade products.
Moreover, Nestle is a “founding member of the Sustainable Agriculture Initiative Platform”, a 19-member strong food industry body, along with Danone and others, that support the development of agricultural practices that preserve current resources and enhance their efficiency.
The coffee shop Starbucks has made a deal with the Ethiopian farmers by paying them well, and makes long term collaboration with them.
“Innocent Drinks is a good example of ethical business. “It produces 100% natural drinks, made from 100% pure fruit and fresh juices, with no concentrates, colourings, preservatives, water or sugar. Their range includes ethical smoothies (fruit in a bottle), thickies (live probiotic yoghurt, real fruit and honey), juices, super smoothies and juicy water. Since 2003 all their drinks have been supplied in bottles made with 25% recycled plastic, which is the maximum that current technology will allow. To offset its environmental impact, Innocent funds social programmes including planting trees and donating money to an NGO who buy mango trees and cows for farmers in poor rural areas of southern India”.
Energy suppliers are also proposing to their customers, renewable energy, and are advising them to use energy efficient appliances, light bulbs.
Big companies are now conscious that to preserve their consumers, they will have to make efforts, particularly, by making ethical business.
Conclusion: Ethical consumption, a trend or a step to responsibility?
In my opinion, it is a trend which companies, are compelled to follow, as consumers are now aware of all their activities, thanks to Medias,and can either choose to support them, by buying their products or rather boycott them if they are considered as unethical.
This “ethical” concept is also a new opportunity to win market share, it enables companies gaining image advantage with consumers
Still, nowadays the sales of ethical products remain low compared with the overall market, but it is expected that they will increase in the coming years. Prices are still too high. For many people, they will first look for the price before buying a product, not because they do not feel ethical, but because sometimes they do not have the choice.
But with competition, after the arrival of other companies on this market, prices will be lowered and thus these products will become more accessible for more people.
By consuming consciously and ethically we can create change. Being aware of current issues in labour exploitation, environmental conservation, and human rights is the best way to spend ethically.
Launched in 2001 by Alpheus Bingham and Jill Panetta, Innocentive is based in Waltham, Massachussets.
It works as a platform for seekers and solvers.
Seekers can be companies (for example: Procter & Gamble, Eli Lily), engineers, scientists, business people, inventors, government agencies and other thinkers. They post issues in any discipline, such as Chemistry, Engineering, Maths, Physical sciences, business, etc, on the Innocentive website.
Solvers can be anyone, who wants to solve the problem by finding the right solution. The challenge is posted and has a deadline of 60days to 5 months, depending on the complexity of the problem.
Registered solvers represent more than 60 different scientific disciplines and are about 135 000. About 35% are located in Asia-Pacific region, 26% in North America, 15% in Western Europe, 9% in Eastern Europe and Russia.
Solvers send their solution and the most appropriate or the right solution is awarded, and the reward is from 5000$ up to 1000 000$. Sometimes, it may happen that this solution is not found.
Both Seekers’ and Solvers’ identity are kept confidential and Innocentive guarantees also the protection of Intellectual Property.
In fact, Innocentive uses internet to connect seekers who formulate complex issues, and solvers to “evaluate promising solution”.
Since 2006, the company is in partnership with the Rockefeller Foundation, in order to find solution due to problems faced in developing countries, for the non-profit sector.
The revenues of Innocentive are mainly the annual access fee of the Companies (seekers) of 80 000$ to post anonymously their issues. When the best solution is rewarded to the solver, Innocentive has a commission of 20% or more.
The benefit for Seeker companies is that they do not have to invest a lot in Research & Development. They can find solutions, for example to innovate, by the “grand talent” from all around the world. It is an outsourcing of their R&D issues. It also reduces risk of research failure and enable them to save time.
Example of problems posted on the website to be solved:
INNOCENTIVE 5644660 Theoretical-IP Transfer 386 project rooms open
Solar-powered wireless routers
POSTED: NOV 28, 2007 DEADLINE: JAN 28, 2008 $20,000 USD A design for a solar-powered wireless router composed of low-cost, readily available hardware and software components is needed. The router is to become part of a reliable Internet communication network connecting metropolises and remote towns in developing countries. This challenge sponsored by the Rockefeller Foundation requires only a written proposal.
INNOCENTIVE 5658154 Ideation 289 project rooms open
Marketing video aimed at recruiting new Solvers
POSTED: NOV 29, 2007 DEADLINE: FEB 29, 2008 $5,000 USD This challenge is looking for creation of marketing videos aimed at energizing the recruitment of new InnoCentive Solvers. There will be two winning videos: one chosen by the InnoCentive staff and the other by the whole InnoCentive Solver community. Both winning videos will be used in future marketing campaigns.
Advantages of this business model:
Connecting the most creative minds.
The guarantee of confidentiality of both seekers and solvers.
Seekers spent less in time and money to have the best solution for their problem.
Disadvantages:
It is difficult to evaluate the cost for the solvers for a specific issue.
Some companies may be “reticent” to post their R&D issues on internet.
Good ideas sent by solvers not chosen, would be lost
The business model could exist offline, but with internet, can connect talented people from all around the world, with those in need of this talent.
It is a sustainable business model as issues will always form part of the everyday life of companies and organisations. It helps them to improve their business technologies and to find innovations, and thus be more competitive.
It is a great idea, to have stretched the business to non-profit organisations, which can help developing countries to progress faster.
Somehow, Innocentive could make more online and offline advertising, as I personally did not know this great model. Furthermore, Innocentive should reward good ideas received from solvers, which can be used to solve other problems, not yet defined.
Innocentive can be very useful to start-ups, in innovative sectors.
“Social entrepreneurs identify resources where people only see problems. They view the villagers as the solution, not the passive beneficiary. They begin with the assumption of competence and unleash resources in the communities they’re serving.”
David Bornstein, author of How to change the World: Social Entrepreneurs and the Power of New Ideas
According to the encyclopaedia Wikipedia, a social entrepreneur is someone who recognizes a social problem and uses entrepreneurial principles to organize, create, and manage a venture to make social change.
Muhammad Yunus, Victoria Hale, Jeff Skoll are considered as the new heroes. They are entrepreneurs with a social mission.
Today, there is nearly 50% of the world’s population living on less than $1 a day. In fact, in every corner of the planet, these people are struggling to make a living, for themselves, for their family.
These new heroes try to find new ideas in order to change societies for the better, in a non-profit perspective.
Muhammad Yunus is the founder and manager of the Grameen Bank, who was awarded a Nobel Peace Prize in 2006.
The Grameen Bank’s mission is “to empower the world’s poorest people to lift themselves out of poverty with dignity through access to financial services and to information”.
This bank do not work as the other banks, it gives small loans to people in need to launch a new business idea for example, without any guaranty and charges only 20% interest yearly, of which 10% is reinvested in operations.
For Yunus, “poor people are far more likely to pay back their loans than rich people, and poor women are the lowest risk of all”.
The bank’s revenues are donations and the global network of microfinance partners, from private capital.
Since its foundation in 1983, the Grameen Bank has lent more than $5.7 billion to over 6.1 million borrowers.
In my opinion, this new generation of entrepreneur is not a trend, but really an awareness of doing good to others who are in need. A good example is Jeff Skoll, first President of eBay, he created the Skoll Foundation, which uses business ideas to affect social change.
These new heroes have brought electricity, water, medicine, telephone to the poor in many rural areas. I think that such good actions bring a personal satisfaction.
Somehow, to start such a business with a social mission must be difficult. The entrepreneur must be able to attract investors, and even since he must be able to convince them to give funds.
The business is very risky, as there is no guarantee of returns, and though of continuity of the business itself.
Another drawback is that some companies with no scruples like the Banco Compartamos, a Mexican Bank, lends money to people in need in Mexico, and charges them interest rates that can exceed 100% yearly , and thus became the most profitable bank of the country. This bank only benefits investors and makes profit on the poor.
Created in 2001, Vente-privee.comis a branch of Oredis, which is a wholesaler of closeouts.
Vente-privees.com is a private club on line which organizes exclusively for its members occasional sales of top brand products with discounts up to 70%.
To join this private club, existing members must sponsor new ones. Two days before a sale, each member receives an invitation by email to subscribe to the sale. These sales start at 7h a.m and last for two or three days. They buy on line by paying with credit card and then received the order by post. The member has seven days to return it, if he is not satisfied.
These sales are the results of partnership of luxury brands, like Gucci, Louis Vuitton, Swatch, Givenchy, etc. and vente-privee.com. These brands give their closeout inventory to vente-privee.com to be sold on line and the latter retains a commission per item sold.
The items for sale include luxury apparel and accessories, wine and champagne, household liners, small household appliances and baby clothes.
With a staff of 750 employees, Vente-privee.com is located in the Parisian suburb of La Plaine Saint Denis. The private club has today about 4.5 millions members.
According to an article of ComScore, vente-privee.com has been the second website visited by the French, with 1,225,000 and 1,937,000 visitors in August and September 2007 respectively.
Vente-privee.com is a very successful business model, which started as a leader in France, with 95% market shares and is already present on the German and Spanish market since September 2006. The company is planning to add the Italian, British, and in two years, the American markets.
Recently, Vente-privee.com has handed over 20% of its capital to the American Company Summit Partners. According to the CEO of vente-privées.com, Jacques-Antoine Granjon, the goal of this operation is to accelerate their industrial and commercial development on the American market.
The company is working with more than 600 famous brands, which prefer to deal with their innovative concept, which protects their brand image and brings in new customers.
The success of the business model is due to the fact that vente-privee.com does not buy any overstock, but only acts as a “middleman” between the luxury brands and the members.
In 2006, the company’s turnover and profit has reached 240 millions Euros and 50 millions Euros respectively and in 2007, the turnover was of 360 millions Euros.
The model is today copied all over world. In France, the company has about 70 competitors offering discount and closeout items on line and the main ones are 24h00, Bazarchic and AchatVIP. Its main British competitor is buyvip.com.
The CEO, Jacques-Antoine Granjon does not seem to be worried about these copycats as he knows well that the company has strong relationship with the brands. Moreover it is the first company to use such concepts, as flash sales, discounted high brand products and at the same time protecting their brand image.
It is a sustainable model as the company provides their consumers with high discounted products of their favourite brands, prices which are impossible to find in their shops and also because overstock is unavoidable.
Though the model has some disadvantages; there is a telephone number with a premium rate on the website and thus paying more to ask questions. It is difficult to return a product when unsatisfied, as the member has to send a mail, and then will receive a mail with a return number, which he adds on his returned order. Some people rather doubt using their credit card on line, they will prefer using cheques.
The freemium business model was first articulated by venture capitalist Fred Wilson on March 23, 2006
The freemium business model works by offering a basic service for free, then offer premium versions and add-ons, available for a fee. The word freemium has been created by combining the two aspects of the business model: free + premium. The business model has gained popularity with Web 2.0 companies.
Examples: Skype – basic in network voice is free, out of network calling is a premium service Flickr – a handful of pictures a month is free, heavy users convert to Pro Trillian – the basic service is free, but there is paid version that is full featured
Advantages: Freemium offer free services to every user, and sometimes some of them are willing to pay more to have premium service. Moreover, nowadays payments through internet are secure and quick.
Disadvantages: It may be hard to convert free users to paid users, willing to pay on-line. Furthermore, this business model is a very competing one.
Easygroup was created in 1995, when the young Greek entrepreneur Stelios Haji-Ioannou launched Easyjet, a famous airline company known for its competitive airline ticket prices.
Today, Easygroup is present in many sectors, like Finance, Telecom, Cruise, car rental, internet café, DVD rentals, pizza…..
The company makes benefits by selling shares in the various businesses and by licensing or franchising the brand.
This is a successful business model, as it gives opportunities to people that cannot afford to pay higher price. For example; the EasyCruise.
And also, the company which has targeted the mass as its customers, is conscient that they would definitely continue to use its products and services.
Yield management, which is the process of understanding, anticipating and reacting to consumer behaviour in order to maximize revenue or profits, is used by Easygroup. The company is applying the principles of yield management in all the different sectors in which it has invested.
The Easy group offers higher discounts more frequently for off-peak times, while raising prices only marginally for peak times, resulting in higher revenue overall.
EasyCinema had opened in 2003, in Milton Keynes, a town in the South East of England, with 2000 seats.
The booking policy: Reserve early to pay less.
The tickets costs from 20p to 5£, depending also on time, at off peak-time, the rates was cheaper.
The customer reserved his booking on internet; either printed his ticket from home or printed it on the PC provided in the cinema lobby.
There was a choice of 10 movies, but not the Box Office.
At the beginning, there was no Pop corn, and then the option was proposed for £1. However, people were allowed to bring their own food
According to some interviews on the BBC news website, customers were satisfied with the concept and mainly with the low price.
EasyCinema used yield management to price the tickets based on demand and thus maximise yield, while reducing the average price.
Most cinemas run on a 20% occupancy rate, while the EasyCinema had around 50%.
The business stopped in 2006, after 3 years fight with the major film distributors who wanted to charge £1.30 per ticket.
EasyCinema is now on the DVD rental business. People book on internet and pay the rental around £2 (while rental in other shops costs rental £3.13). They received it by post and then just return it by post to get another one. There is no late fee.
EasyCinema proposes various movies, and even Bollywood films! The Website proposes a summary on every proposed movie and a rating.
EasyCinema should better send the download version of films via internet to have more members, and to save cost.
I'm from Mauritius, an island in the Indian Ocean. In 1999, I came to Paris for studies. I'm soon to be graduate in Masters of International Trade. In the meantime, I have enrolled in a MBA in Hospitality Management at the CMH- European Center of International Hotel Management.
