This paper highlights the key points regarding consumption, anti consumption and marketing strategy. The purpose of the paper is the investigate those key points in the context of non profit organisation and medium scale company in New Zealand respectively. The scope of this study is relevant as both consumption and marketing strategy have impact on current New Zealand economy. Part A of the study deals with anti consumption strategy of Greenpeace and the part B of the study deals with marketing strategy of Seeka and its effect on financial performance of this company. In this segment, overall marketing strategy has been discussed. Limitation of this study is that anti consumption, strategy has been discussed from the demand side and mainly quantitative analysis has been followed. No specific contemporary marketing theory has been applied in this section. On the other hand, quantitative analysis has been presented in part B. Details study has not been possible due to limited scope of study.
Causes of river pollution due to dairy farming
As per report of Environment Aotearoa, use of land for dairy farming in New Zealand has increased by 28% over the last ten years. Increasing dairy farming has detrimental impact on the overall environment of New Zealand including water pollution. As mentioned by Kirk (2013), the main source of water pollution caused by dairy farming is animal dung. As per 2014 figure of Ministry of Environment in New Zealand is that 61% of the monitored waterways of this country is unsafe for swimming (safe.org.nz, 2017).
Some farmers hold the animal waste into the large ponds or lagoons, where as some farmer allows cows to access waterways directly. Wright (2017) argued that beef and dairy farming both needs to take equal share of blame for water pollution. Main contaminants of water are nitrogen and phosphorus from livestock urine and fertiliser along with E.Coli from the livestock excrement. As described by Kirk (2013), urine of cows penetrates into the soil and nitrogen within the urine flows into the waterways through the soil. Nitrogen contained in the urine may generate toxic algae and block the oxygen of the water. Algea takes the oxygen out of the river and hence the river species die to harm ecological balance. Hence, many fish and river plants are under risk.
Chatzidakis, Maclaran & Bradshaw (2012) pointed out the sediment from deforestation is another cause of river pollution along with dairy farming. Dairy farming is blamed as a part of the sediment problem in river and not the only problem as dry stock farming is more responsible for increasing sedimentation. Another source of water pollution in New Zealand is ‘ponding’. In case of ponding., the waste of dairy animals are over applied to the paddocks by the irrigation system of a farm. Consequently, wastes are accumulated on the outer surface of the soil and flows into the waterways.
Role of farmers and Greenpeace in the anti consumption strategy
Farmers are the important stakeholders of the environment as the water pollution affects harvesting. As dairy farming is important part of New Zealand economy, it is important to maintain sustainable environment practice in this industry. According to Greenpeace Company, dairy industry releases emissions in the form of chemical fertilisers, supplementary fee and contaminated water to pollute river (greenpeace.org, 2017). It has also been mentioned that farmers of the industrial dairy farming are into debt due to having negative externality on environment.
Greenpeace is a global campaigning non-profit organisation, which works to conserve environment and to promote sustainability. This organisation focuses on the climate change, marine reserve, and protection of forest, creating toxic free future and protecting biodiversity. Greenpeace applies anti consumption strategy to reduce environmental contamination. However, they are not against the anti farming. However, they just work to change the way of farming for the benefit of the environment. Greenpeace works with the farmers to produce food in an innovative way so that emissions can be reduced.
In the view of Chatzidakis & Lee (2013), consumption in the society are driven by two factors such as internal and external. Internal factors that determine consumption behaviour are psychological and personal. External factor are cultural and social. Anti consumers in the society chooses to reduce consumption of a certain good or service due to having negative externality of the product. McDonagh & Prothero (2014) described that negative externality occurs when a production affects other species of the society negatively, who are not directly related to the production. Environmental concern drives the anti consumption behaviour.
Greenpeace creates awareness among dairy farmers to promote green consumption through eco farming. Eco farming is used to improve soil, water health, weed control. Anti consumption, policy is basically undertaken by Greenpeace to reduce over use of farming in the country to conserve environmental balance. Farmers are acting with collaboration of Greenpeace by rejecting high input intensive dairy farming (greenpeace.org, 2017). Low input system requires low number of cows per hectare. Moreover, farmers use nitrogen fertiliser with no chemical, which increases the marginal productivity of milk per year. Anti consumption, policy through low input system is environment friendly as it reduces the pollution. Anti consumption policy does not restricts input consumption totally. It only reduces the intensity.
Another objective of the organisation to promote eco farming is to bring food sovereignty. Through this process, they try to reduce the production wastage and excess supply in the market. In the view of Chatzidakis, Maclaran & Bradshaw (2012), excess supply of production can be reduced through control. Producers and consumers regarding what to produce and how to produce can do control. As opined by McDonagh & Prothero (2014), only anti consumption policy is not enough for the green environment and green farming. Consciousness of the farmers plays an important role in this respect. Environment Canterbury report mentioned that more than one third of the dairy farms broke the effluent discharge rule. Environmental pollution created by dairy industry has cleaning cost that is estimated to be $ 15 bn. Anti consumption policy undertaken by Greenpeace is against the agricultural policy of the New Zealand in order to increase revenue. Increasing productivity in the national dairy herd, intensive farming opposes the non-profit environmental policy of Greenpeace.
Greenpeace arranges campaign for animal feed, destructive fishing and cattle ranching. Anti consumption, policy is applied from the demand side. As stated by Akenji (2014), consumption is influenced by utility and demand. Consumption decreases with decreasing demand. Hence, Greenpeace encourages people to eat less no fish and meat so that demand can decrease. If overall consumption demand is reduced, producers would have less incentive for dairy production in the keep the market clear. Overall livestock agriculture such as cows, sheep and pig comprises 18% of the total greenhouse gas emission (safe.org.nz, 2017). They arrange campaign not only to reduce direct consumption, but also to reduce the by-products produced from the body parts of the dairy animal.
Industrial dairying needs extensive amount of water and chemical fertilisers in order grow more grass to feed cows. Greater use of chemical contaminates the river water. Greenpeace is an independent organisation, which runs with public donation and does not take any government grants. Greenpeace campaigns against government funded river pollution. Government of New Zealand provides subsidy to the farmers to use chemical fertilisers in order to produce greater amount of cattle feed and cattle. This subsidy is provided to enhance overall production of the economy. However, this subsidised industry dairying model hampers the ecological balance negatively. Therefore, in the words of Antal & Van den Bergh (2013), unnecessary subsidy creates marker failure in the economy by creating negative externality. Those who create negative externality do not compensate the affected person and no penalty is charged upon them. Hence, the product does not reflect its true value in the market price. Farmers have significant role in this respect. They can refuse to take subsidy on the chemical fertilisers and may collectively use organic fertilisers. This policy in one hand would save public money and reduce water pollution in river in order to bring sustainability in the eco system.
Part 2: Impact of marketing strategies on financial position of Seeka
Seeka is an orcharding, post harvest supply and retail services company in New Zealand. One of the missions of this company is to deliver higher value to the stakeholders compared to the New Zealand stock exchange NZX50 and to improve the financial wellbeing of the stakeholders. As published in the annual report of the company, financial performance of Seeka has improved from 2013 to 2016 in terms of total revenue, EBITDA, earning per share, cash dividend.
In the view of Baker (2014), sustainable marketing not only brings value to the customers, suppliers or employees, but also brings value to the entire society. This section of the study evaluates the effectiveness of the marketing strategy on the value of the financial performance. Leonidou et al. (2013) describes that sustainable marketing is the actions, which are socially and environmentally responsible. Yu, Ramanathan & Nath (2014) argued that marketing increases the product prices at a artificially high level. Sometimes false information about products or services reaches to the customers to create misperception. Therefore, company uses deceptive practices for the delivery of product or services. Therefore, marketing has a social cost.
Seeka uses direct marketing and selling method in Australian and New Zealand market. This company focuses on infrastructure expansion to contribute in the increasing revenue in future. Capacity expansion enhances efficiency in the post harvest operation. Innovative collaborative marketing programme is used for this purpose. In case of post harvest performance, revenue has increased to $110.82 mn in 2016 from $59.6 mn in 2013 (seeka.co.nz, 2016). It signifies efficiency enhancement in the supply chain management. Retail service operation of this company provides fruit marketing services in New Zealand as well as international market.
Impact on net profit
According to the annual financial report 2016 of Seeka, net profit after tax has increased to 143% on previous correspondence periods. This figure has increased from $2.30mn in 2013 to $10.39 mn in 2016.
Figure 1: net profit after tax in Seeka
(Source: seeka.co.nz, 2016)
Net profit figures for last four years signify good Seeka is improving its financial health. Cash flow generation is also improving. However, as compared to 2013, net profit before tax has initially decreased from 2012 to 2016.
Impact on assets
Net assets of the company are 7 pack house and cool stores complex, 3 retail services, 97 hectares of orchards on leased land, 459 hectares of leased orchards. Total assets have increased to $197.31 mn in 2016 compared to previous years. Net assets per share were $4.02 in value terms and that increased to $4.88 in 2016. In order to finance the expenditure for investment, net debt of this company has increased by $19.80mn to 72.76 mn, along with increment in assets. The focus behind these activities is increase in shareholders’ value.
Seeka generally has adapted the sustainable marketing strategy, which comprises stakeholder oriented marketing, sense of mission marketing and societal marketing. Increasing customer satisfaction, improvement in supply chain management and customer value creation are the important part of the marketing strategy of the company. Quality improvement and future growth are the vision of this company. Net profit attributed to the equity holders has increased from $10.385mn in 2016 from $4.272 mn in 2015. As investment has increased, current assets has decreased from $44 mn during 2015 to $41 mn in 2014. Main reason behind this fall is decrease in account receivables and crops along with increase in inventory. All these elements signify decrease in liquidity of the company (Wei, Samiee & Lee, 2014). Therefore, it can be seen that increase in marketing activities has positive effect on net profits and total asset value, whereas cost of operation has increased due to investment operation. Investment in capacity expansion is expected to have effect on the financial performance of the company in future.
The company marks up its products 21.18% above cost (referred to appendix). The marketing return on assets amounts to 5.26%. Further, the marketing return on investment is 6.68%. This clearly indicates that marketing the product has resulted in increase in sales of the company. The increase in marketing expenditure has led to a corresponding increase in the sales.
This assignment has focused on the marketing strategy of both non profit and profit making organisation. The common view for both the companies is increase in the value of the stakeholders. Part A of this paper focuses on the severe river-water pollution problem of New Zealand due to dirty dairy farming. Greenpeace has been playing an active role in promoting anti consumption campaign against highly input intensive farming. Farmers are shifting from high intensive to low intensive industrial dairy farming by less use of input such as cattle, land, chemical fertilisers. Anti Consumption Campaign discourages over consumption of resources to conserve bio diversity. Part B focuses on the effect of marketing strategy on the financial performance of Seeka. Integrated marketing strategy of the company has positive effect on the net profit of the company and on the total assets. However, investment in capacity enhancement, stakeholder oriented marketing has increased the cost of operation of the company with the hope of long term positive growth of Seeka.
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