THE APPLICABILITY OF SOCIETAL MARKETING CONCEPT BY MULTINATIONAL OIL COMPANIES (A STUDY OF SHELL AND CHEVRON IN NIGER DELTA REGION)

THE APPLICABILITY OF SOCIETAL MARKETING CONCEPT BY MULTINATIONAL OIL COMPANIES (A STUDY OF SHELL AND CHEVRON IN NIGER DELTA REGION)

 

 

ABSTRACT

 

The fundamental objective(s) of most businesses is primarily to maximize profit(s) without any regard to the threat posed on the environment due to their multifarious businesses activities. This insatiable and inexhaustible quest for profit maximization is been brought under strict scrutiny and great criticisms. Over the years, various stakeholders have indeed opined that businesses are not in essence set up solely to make profit(s) only rather should include the advancement of the interests and  protection of the totality of  the society and its environment as a whole. Due to the recent awareness in the proper role of businesses in the society and has led to an increased sensitivity to social, environmental and ethical issues. This has further necessitated the need for effective and efficient adoption, implementation and execution of policy guidelines in line with the rudiments, tenets and principles of societal marketing concept postulated by Philip Kotler. Multinational oil companies after a careful perusal of data obtained in the field have not adequately internalized the principles of societal marketing concept. In contrast to the expectation(s) of their host communities, thus, resulting in a situation where residents of the host communities feel marginalized, abandoned, neglected and left at their own whims and caprices without bearing in mind that their immediate environment (both flora and fauna) have been greatly ravished and abused.  As a measure in streamlining and mitigating the adverse impact on the lives of the residents of host communities as gathered from analysis of data obtained by the researcher in the field, basically due to the presence and activities of these multinational oil companies.  There is indeed an urgent need for an increased and routine periodic review on the scope and implementation of societal marketing concept by these multinational oil companies.

CHAPTER ONE

 

INTRODUCTION

 

1.1     BACKGROUND OF THE STUDY

 

Marketing can best be described as a “social process by which individuals and groups obtain what  they need and want through creating, offering, and exchanging products and value with others” (Kotler,2000). Modern conceptions of marketing philosophy are usually traced back to the early part of the twentieth century. Many marketing theoreticians have concurred that there are five distinct eras in the development of marketing theory and includes the production orientation, product orientation, sales orientation, market orientation, and the societal marketing orientation (Keith,1960; Dawson, 1969; Bartels, 1974; Kotler and Keller, 2006). The various perspectives on the development of marketing theory are in reality the differences in perspective, with some  researchers viewing it not simply as a managerial and economic activity but also as a social process (Bartels, 1970; Bartels, 1974; Hunt, 1976; Kotler, 2000].

The objective of businesses to maximize profit has been under great criticism. There have been several views that the fundamental objective of businesses should not be to maximise profit only, but should include the advancement of the interests of the society as a whole. Today’s awareness and interest in the proper role of businesses in society has promoted the increased sensitivity to social, environmental and ethical issues. Environmental damage and improper treatment of workers are highlighted in the media. In some countries, government regulation regarding environmental and social issues has increased, and standards and laws are often set at a supranational level (e.g.  by the European Union).

DEFINITION OF SOCIETAL MARKETING CONCEPT

Societal marketing concept is an enlightened marketing concept that holds that a company should make good marketing decisions by considering consumers’ wants, the company’s requirements, and society’s long-term interests. It is closely linked with the principles of corporate social responsibility and of sustainable development. The concept has an emphasis on social responsibility and suggests that for a company to only focus on exchange relationship with customers might not be suitable in order to sustain long term success. Rather, marketing strategy should deliver value to customers in a way that maintains or improves both the consumer’s and the society’s well-being. Most companies recognize that socially responsible activities improve their image among customers, stockholders, the financial community, and other relevant publics. Ethical and socially responsible practices are simply good business, resulting not only in favorable image, but ultimately in increased sales.

The societal marketing concept holds that the organisation should concentrate on the needs and wants of their customers, and then deliver the desired satisfactions more effectively and efficiently than competitors, in a way that maintains or improves the consumer’s and the society’s well-being. It considers as well the possible conflicts between consumer short-run wants and consumer long-run welfare. Taking care of society’s well-being is good for business. Societal marketing managers believe that consumers will respond more favourably to companies which are socially responsible, and react unfavourably to companies, which they feel, are not socially responsible. This gives socially responsible companies a competitive edge over their competitors.

Environmentally damaging developments should not be financed or financed only following modification to make them more environmentally benign. Similarly, enterprises and projects promoting environmentally friendly development should be supported. Companies should seek to achieve:

• reduction in energy consumption and improve energy efficiency
• conserve resources and use renewable or recyclable materials
• minimise or recycle waste
• dispose of waste in an environmentally responsible manner
• reduce the use of chlorofluorocarbons (CFCs)
• favour suppliers and contractors who adopt environmental initiatives through sponsorship.

Societal marketing concept should not be confused with social marketing. The societal marketing concept was a forerunner of sustainable marketing in integrating issues of social responsibility into commercial marketing strategies. In contrast to that, social marketing uses commercial marketing theories, tools and techniques to social issues. Social marketing applies a “customer orientated” approach and uses the concepts and tools used by commercial marketers in pursuit of social goals like anti-smoking campaigns or fund raising for NGOs.

According to the free internet encyclopaedia (Wikipedia), societal marketing concept is an expression used to describe what some see as a company’s obligation to be sensitive to the needs of the stakeholders and the environment in its business   operations.  Societal marketing concept can be defined as the organizations task which tries to identify the needs and interests of the consumers and delivers quality services or products  as compared to its competitors and in a way that consumer’s and society’s well being is   maintained. In other words, organizations have to balance consumer satisfaction, company profits and long-term welfare of society. This is a new marketing philosophy and tries to reduce the inequalities at various levels. This theory emphasizes that organizations should not only think of cutthroat policies to achieve targets and jump ahead of competitors but should have ethical and environmental policies and then back them up with action and regulation.
Societal marketing can be achieved by following a few principles. It should always be remembered that consumer’s needs are of paramount interest. Improvements in products, which are both real and innovative, should be carried out to give long term value to the product; do what is good for the society with a sense of mission and trust. In this way, the focus shifts from transaction to relationships. If a client ‘repeats business’ a bond is created between him and the product and is worth its while for the organization to nurture this bond.

A company’s stakeholders are all those who are influenced by, or can influence a company’s decisions and actions. These include employees, customers, suppliers, community organizations, subsidiaries, affiliates, joint venture partners, local neighbourhood investors and shareholders. It is important to distinguish between societal marketing concept from marketing concept.  Corporations in the past, spent money on community projects, scholarship endowment and establishment of foundations. They have also often encouraged their employees to volunteer to take part on community work thereby creating goodwill in the community and further enhance the reputation of the company. Societal marketing concept goes beyond charity and requires that a responsible company will take into full account the impact on all stakeholders and on the environment when making decisions. Pertinent to balance the needs of all stakeholders and the environment when making decisions.

Societal marketing concept is closely linked with the principles of ‘Sustainable Development’ in proposing that enterprises should be obliged to make decisions based not only on the financial/economic factors but also on the social and environmental consequences of their activities.  A widely quoted definition by the World Business Council for Sustainable Development states that ‘Corporate Commitment by business is essentially to contribute to economic development while improving the quality of life of the workforce as well as the community and society at large’.(1999) This holistic approach to business as regards organizations in their communities, rather than seeing them more narrowly as being primarily in business to make profits  and serve the needs  of their shareholders.

The Policy Statement by Committee on Economic Development (CED) (1997) highlighted activities by business to improve societal welfare on the aggregate; the major areas are as follows:

• Education;
• Employment and trading
• Civil Rights and Equal; opportunity
• Pollution Abatement;
• Conservation and Recreation
• Culture and Arts;
• Health care; and
• Government Activities.

Therefore, evident that organization(s) in pursuit of social responsibility will have to address these areas. Multinational oil companies being corporate bodies no doubt need to embark on different societal marketing programmes/strategy such as corporate social responsibility in their areas of operation to sustain a cordial relationship with their host communities.

Chevron Producing Limited and Shell Petroleum Development Company of Nigeria Limited, being among the companies in the upstream petroleum sector embark on some kind of societal marketing activities/programmes aimed at ensuring a continuous and justifiable existence.  The oil companies’ management see themselves as good corporate citizens behaving in accepted ways with the public however; host communities hardly share the same view. They view oil companies as uncaring organizations licensed by Government to destroy and degrade the environment and exploit the people. The oil producing communities believe that activities of the oil companies have several adverse effects on their social, economic and cultural environment and consequently the need for adequate compensation is non-negotiable. Ken Saro Wiwa (1993) summaries the feelings of the oil producing communities as follows:-

“in Nigeria   because of the lack of care in oil exploration and because the rulers of Nigeria are in collusion with the oil companies, the environmental damage to the Delta is totally irreparable”.

 

The Niger Delta Region has been an area of turbulence for several years because of the communities demand for the control over the oil resources in the area.  This could be attributed to the fact that other means of livelihood of the people have been destroyed by oil exploration activities. Thus, the people believe they have to compel the Government and oil companies to finance projects that would protect the environment.  The Niger Deltans are of the opinion that these multinational oil companies have a natural prejudice towards environmentalism, which they perceive slow down innovations, and restrict growth in the industry. The Ogoni dispute and campaign against oil companies have raised issue of political and ethical dimension in the nation’s political economy.

Chevron and Shell multinational oil companies have employed community strategies to sustain relationship with their host communities. Whether the societal marketing programmes/strategies adopted by these oil companies are applicable or not is not clear and forms the focus of this research.

 

1.2     STATEMENT OF PROBLEM

Over the years, Nigerian Government had enunciated policies geared towards improving the living standard and the environment in the Niger Delta. A proper evaluation and appraisal of the socio-economic needs of the citizens has made it imperative that multinational oil companies operating in the region should assist the Federal and State Governments should in the discharge of certain obligations ensure effective and efficient implementation of the rudiments of societal marketing concept, which includes:

1. Provision and Development of Education at all levels;
2. Adequate protection of both the flora and fauna in the environment.
3. Development and Improvement of the rural communities;
4. Provision of clean water and rural electrification;
5. Provision and improvement of medical care;
6. Provision of micro credits to aid in business development
7. Youth Empowerment.

The poor socio-economic situation in the Niger Delta region spells out poverty, which calls for immediate attention and remedy in order to improve the welfare of the populace. In addition, host communities land have been degraded and turned into environmental refugees due to displacement from their lands. As already stated, according to Policy statement issued by the Committee on Economic Development (CED) (1997), there are certain societal marketing concept strategies                                                                                                                                              that ought to be carried out by business taken together towards improving the welfare of the populace.  However, in the area of operation, no organization is expected to cover all the areas extensively. This study will therefore consider all relevant area that applies to the needs of the populace of Chevron and Shell catchments areas.

Oil companies engage in some form of community development programmes (corporate social responsibility) in showing their interests in carrying out the tenets of societal marketing concept bearing in mind that the future growth and development are dependent on cordial relationship with their host communities. As a measure to enhance the cordial relationship between the oil companies and host communities thereby creating an enabled business environment and confidence, the Federal Government enacted Decree 23 1988 establishing the Oil Mineral Producing Area Development Commission(OMPADEC) to handle the  transformation of these areas and create a better standard of living. OMPADEC was also commissioned to rehabilitate and develop these oil-producing communities. The Obasanjo led Government created the Niger Delta Development Commission (NDCC) to take over from the default OMPADEC.

Despite all these efforts by these multinational oil companies and the Government to develop these oil communities in the Niger Delta region, there have been persistent allegations of utter negligence by the inhabitants of these areas. They accuse the oil companies of carting away their natural heritage and the Government for using their money in developing other parts of the country. It is against this background that the researcher wants to make an in depth assessment of the applicability of societal marketing concept among these multinational oil companies and also address this problem of finding out whether policy decisions of these oil companies reflect on the interest of their host communities, whether their host communities believe that these oil companies are partners in development, what strategies these companies use in addressing this subject  and whether the operational activities of these oil companies have any environment and socio-economic effect on the host communities.

 

1.3     OBJECTIVES OF THE STUDY

This research work is carried out among other things to access the impact and applicability of societal marketing concept by adopting the corporate social responsibility strategy by business organization(s) in their host communities as well as identify the effects of these on their host communities. A research of this nature ought to cover all the oil-producing states in the Niger Delta as these states have been clamouring of marginalization and resource control. The time required for the completion of the study is limited to enable the researcher carry out an elaborate study covering all the oil producing communities of the Niger Delta region hence the study of Warri and Port Harcourt was done. In addition, the researcher has limited financial resource to enable her expand the communities under study.

The objectives of this research are as follows:-

1. To assess the applicability of societal marketing concept by these companies and also the impact of some of the social strategies such as corporate social responsibility adopted by these companies on the environmental and socio-economic lives of host communities.
2. To identify and study the corporate social activities, strategies and programmes of these companies and determine how they fit into the doctrine of societal marketing concept.
3. To appraise the extent to which the multinational oil companies are able to meet with the environmental and socio-economic requirements of their host communities.
4. To identify the basic problems that confront the organization in their bid to undertake the effective applicability of societal marketing concept and its strategies or approaches adopted and to make appropriate suggestions and recommendations in line with the findings of this research.

 

1.4     RESEARCH QUESTIONS

To guide the researcher an attempt will be made to answer the following questions:-

1. To what extent are multinational oil companies truly committed to the applicability of societal marketing concept?
2. To what extent are the strategies adopted in the applicability of societal marketing concept such as corporate social responsibility by multinational oil companies commensurate to the resources they get from their host communities?
3. Are the host communities satisfied with the level of applicability of societal marketing concept and its strategies such as corporate social responsibility?
4. Does the policy decision taken by multinational oil companies reflect the interest of the host communities?
5. Is the Federal Government doing enough to ensure that these multinational oil companies duly enforce the rudiments of societal marketing concept and its strategies such as corporate social responsibility to their host communities

 

 

1.5     REASEARCH HYPOTHESES

1. H_o: Multinational oil companies in Nigeria do not effectively       and efficiently  apply the rudiments of societal marketing            concept in their host communities

H₁:     Multinational oil companies in Nigeria effectively and efficiently apply the rudiments of societal marketing concept    to their host communities

2. H_o:    Host communities of multinational oil companies are not      satisfied with the applicability of societal marketing concept          so far rendered to them by oil companies

H_o2:   Host communities of multinational oil companies are   satisfied with the applicability of societal marketing concept          so far rendered to them by oil companies.

3. H_o: The policy decisions of multinational oil companies do not    reflect the interests of their host communities

H₃:     The policy decisions of multinational oil companies reflect    the interests of their host communities

4. H_o:       There is no cordial relationship between the multinational oil          companies and their host communities.

H₄:      There is a cordial relationship between the multinational oil companies and their host communities.

 

1.6     SIGNIFICANCE OF THE STUDY

This study will enable multinational oil companies to understand whether there is adequate applicability of societal marketing concept and if their strategies are achieving their cardinal objectives  and also provide them with requisite information to decide whether to sustain their current programmes or  not.

It is also expected to highlight the dispositions of the communities within the operating environment. Furthermore, provide the communities with valuable information on the feasibility of their demands and expectations from these companies.  This study will invariably help the Government to direct and monitor the activities of oil companies in meeting the current and future aspirations of the oil producing communities.

 

1.7   SCOPE AND LIMITATION OF THE STUDY

This study will cover multinational oil producing companies in Nigeria but with particular focus on Chevron Producing Limited and Shell Petroleum Development Company (SPDC) as they have taken requisite steps in the implementation of the tenets of societal marketing concept and have further rendered great measure of corporate social responsibilities to their host communities. The study will also cover the Nigerian National Petroleum Corporation (NNPC) as these oil companies are in joint venture agreement with NNPC. The study is conducted in two oil-producing communities namely: Port Harcourt in Rivers State and Warri in Delta State due to their strong influence.  These two communities were selected to represent the whole Niger Delta Region, which is made up of eight oil-producing states.

Generally, research of this nature does experience some obstacles as some managers do withhold certain vital information required  and reluctant to offer such information as they see it as exposing their company’s inefficiencies/deficiencies or an avenue to obtain the information  by competitors. Despite these limitations, the researcher is optimistic to achieve the stated objectives with the available information gathered.

 

1.8    OPERATIONAL DEFINITION OF TERMS

These include-

1.     Concept:

This refers to an idea/principle relating to something abstract.

2. Societal Marketing Concept (SMC)

Refers to an enlightened marketing concept that holds that a company should make good marketing decisions by considering consumers’ wants, the company’s requirements, and society’s long-term interests.

3. Corporate Social Responsibility (CSR)

Corporate Social Responsibility is the realization of business contributions to sustainable development goals. It refers to how business takes account of its economic, social and environmental impacts in the way it operates by maximizing the benefits and minimizing the downsides.

4. Sustainable Development

This means the deliberate and continuing commitment by business to be socially and ethically committed to economic development while improving the quality of life of the work force, the local community and society at large.

5. Niger Delta Region

Wetland situate in the south –south of Nigeria of about 20,000 square kilometres containing a number of ecological zones: sandy coastal ridge barriers, brackish or saline mangroves, freshwater, seasonal swamp forests, and lowland rain forests. Subsistence farming and fishing is the mainstay of the people. More than 3,000 long-settled communities of about 27million and the oil-producing region hosting multinational oil companies under study inhabit the area.

 

6. Multinational Companies (MNCs)

Refers to such corporations, which have their home in one country but operate and live under the laws of other countries as well.  Features associated with multinational companies are: their activities involve more than one nation, responsible for most foreign direct investment (FDI), certain share of revenues must be achieved in other countries other than the home country.

 

THE APPLICABILITY OF SOCIETAL MARKETING CONCEPT BY MULTINATIONAL OIL COMPANIES (A STUDY OF SHELL AND CHEVRON IN NIGER DELTA REGION)

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