Research Article: 2021 Vol: 25 Issue: 4S
Hosam Azat Elsaman, York St. John University
Rommel Pilapil Sergio, Abu Dhabi School of Management
Many modern organisations have faced critical issues in Corporate Social Responsibility (CSR). It pushes the enterprise to continue its commitment to ethical and moral values while improving the overall quality of the organisation. The research aims to find out as to what extent the adoption of CSR policies would improve organisational performance, and how the application of green marketing strategies in the lubricant sector in the Kingdom of Saudi Arabia (KSA) can maximise the profitability of the companies. Furthermore, the paper analyzed the perception of lubricant industry experts and end users in KSA toward the new green lubricants concept. The methodology is based on positivism philosophy with deductive approaches and descriptive design, while the sampling technique followed the snowball and accessibility sampling frame with 176 respondents. Through quantitative method, particularly survey, the key finding of this research is that consumers and industry experts support the creation of environmentally friendly products. The study also discusses the positive implications of green marketing strategies for the organisation as the result of the implementation of CSR policies.
Green Marketing, Strategy, Lubricant Sector, Corporate Organisational Growth, Corporate Social Responsibility, Consumers‘Perception, Value, Ethics
Nowadays, most organisations in different industries consider environmental preservation as an important goal. Green activities are implemented in the organisation to ensure that all the processes, products, and manufacturing are based on the principle of environmental safety. Corporate Social Responsibility (CSR) means that the company should not only depend on economic and legal factors to gain profit but should do more by considering social and ethical factors as well. Management style should be approaching profits while improving people's lives and sustaining the environment. Green marketing strategies are considered as valuable tools in practicing CSR. Based on the definition of American Marketing Association, green marketing refers to the marketing of concepts or goods that are believed to be eco-friendly by modifying the promotion tactics to increase awareness of the new product (Yazdanifard, 2011; Rajeshkumar, 2012). It is also defined as the promotion of ecological concept or meeting the demands of the present market without reducing the chances of the future generations to meet their own needs (Sergio, Refaat & De La Cruz, 2016; Rajeshkumar, 2012; Suki, 2013).
Green marketing was mainly developed in the modern marketplace. The concept of green marketing is connected to the business opportunity to improve the quality of a green product. The government and the public are demanding for green marketing because of the need for sustainability around the world, and recently, many countries have already pursued sustainability.
The environmental disaster caused by human-made activities and pollution has direct impacts on the ecological system (Ahmed, Sultana & Khan, 2018). It is crucial to save nature by considering specific goals and objectives. For instance, the lubricant sector has been rapidly expanding in the international market while producing waste materials and greenhouse gases. For this reason, the sector has adopted sustainable and environment-friendly practices by implementing green activities in organizations. This ensures that all products, processes, and manufacturing are based on the principle of environment safety. It also implements CSR, highlighting the relationship between stakeholder and corporate, including safety parameters related to environment.
Numerous amounts of natural resources are being consumed on regular basis, thus increasing the need to control and manage the consumption to ensure sustainable development and reduce environmental pollution. The increasing pollution rate has put significant pressure on governments, corporates and most of the industrial sector, particularly the oil and gas industry. Therefore, international efforts are working to promote the implementation of green marketing in the lubricant industry (Krane, 2018; Suki, 2013). It helps control the harmful emissions of carbon dioxide, the result of operational activities in the organisation. Moreover, many countries are aware of the pollution while setting up a strict environment law because of climate change.
The Kingdom of Saudi Arabia (KSA) is the largest producer, consumer, and exporter of lubricants and oil in the Middle East, with a capacity of 450,000 tons per annum. That is why KSA is facing challenges in greenhouse gas management because of its vast quantity of lubricant consumption. Therefore, it requires reducing the environmental footprint and enhancing sustainability. Once set up, the green lubricants technology will produce half of KSA’s power by 2025. Through green marketing strategy, the goals and objectives of ecological targets can be achieved (Ahmed et al., 2018).
The Primary Aim of Green Marketing
The strategy is to provide awareness among organisations to increase sustainability, reduce the price of operation, maintain wealth, and reduce pollution. The next step is identifying the barriers related to environment. The barriers are different from one nation to another. Hence, political, cultural, and economic factors can influence the severity and quantity of challenges.
The research investigates the oil lubricant industry, particularly how the application of the new green oil technology will make an organisation a market pioneer in KSA. Currently, the lubricant sector consists of upstream, midstream, and downstream. KSA has a growing number of oil-based firms, increasing KSA’s production of oil and supply to other countries. This, however, also means generating heavy pollution which has direct impacts on the environment (Krane, 2018).
Many organisations in the lubricant sector will implement green marketing strategies to improve their overall performance. They will introduce the revolutionary new green technology which can be applied for the first time in KSA. The study describes the standards for identifying the effects of launching eco-friendly green items for business to increase productivity and profitability and to consider social and environmental factors (Ahmed et al., 2018). The research also outlines the feedback of lubricant industry experts and other end users in KSA, particularly how they can use the different green items for business expansion. Furthermore, the study reviews the effectiveness of applying CSR policies.
The paper has the following research objectives:
1. To ascertain how the CSR policies improve organisation performance as perceived by the respondents;
2. To identify the feedback of lubricants industry experts and end users in KSA regarding the green products; and
3. To apply green marketing strategies that contributes to organisational growth.
The Green Marketing Strategies in Lubricant Industry
Organisations can apply green marketing to maximise profits. Green marketing can also achieve the equilibrium between saving the environment and satisfying consumer's needs. Thus, green marketing can increase the competitive advantage of the organisation. Nowadays, people are more aware of the benefits of healthy lifestyle. Consequently, green marketing is not only an environmental factor tool but also a marketing strategy. Applying this new, eco-friendly concept will attract more consumers; hence adopting green marketing strategy will be most advantageous to the organisation (Yazdanifard, 2014).
To enhance the effective implementation of green marketing, the use of environment friendly tools, like biodegradable labels and ecological advertisement, should be part of green marketing methods. Applying proper marketing campaigns to increase customer awareness of the features of eco-friendly products will promote more profound perceptions and positive impact toward the new technology. Also, it restructures the consumer behaviour from conventional products to eco-friendly products (Delafrooz, 2014; Shabbir et al., 2021; Sergio et al., 2016).
However, not all organisations are interested to apply green marketing because the company might face complications in the implementation due to lack of technology and extra cost of new innovative products (Kinoti, 2011).
The green marketing strategy is based on the philosophy of organised and integrated marketing. It aims to create positive impact on consumer preference in order to motivate them towards the sustainable and ecological products. It works to provide better-integrated marketing mix based on creativity, which may increase the preservation of the natural environment. The application of green marketing concept is based on modifying the usage of natural resources and another type of raw materials. It is the most suitable for environment requirement and production activities modification to match with specific objective of green marketing (Ali, 2019).
Green marketing provides better opportunities for the oil industry in terms of environmental accountability and evaluation. It also considers the expected responsibilities of organisations so that it easily understands the behaviour of consumers, group of stakeholders and government towards green consumerism. Through strategy, lubricant industry is concerned about sustainable development to handle the intense pressure because of pollution and climate change.
Green marketing is the best approach as it mainly focuses on environmental safety in the performance of different enterprise activities. It consists of production, modification in packaging and another type of green advertisement. In order to engage client practices and environment friendly actions, the oil-based lubricant industry implemented green marketing and the effects are seen in business operations (Alamri, 2019). Therefore, it has raised the concern towards the commitment to sustainable development.
In KSA, many oil companies are under pressure to address their ecological footprint. The economic development within the oil industry is vital for managing and controlling overall business opportunities. Thus, it is difficult for the company to apply green marketing strategies for cost- effective factor because it is expensive and not simple to implement in the short run. Also, the environmental benefits are intangible to the end-user; for instance, the customer could not feel or realise the emission reduction when using green products instead of conventional oil in cars (Ottman, 1997).
Jacobson (2019) argues that green marketing is a subject of promotion, which may refer to an environmental condition where positive activities are implemented in business to reduce environmental issues and problems. This type of marketing emphasises ethics. It is useful for the oil industry to expand its branches and fields through sustainable development.
The strategy consists of a wide range of business operations which intend to satisfy client requirement and to reduce the adverse effects on the natural environment. Designing and implementing the green marketing strategy is not a simple mission for the oil industry because it requires the proper and available resources, goals, and objectives. In order to increase the business profitability in marketplace, organisations should have a clear vision.
Other energy sources, like crude oil, remain to have the essential role to play in the lubricant industry. Nowadays, there are several divergent interests existing in oil exploration, which may be growing. The pressures also reduce the environmental impact though production of energy as well as consumption.
Utilising green marketing will increase the opportunities for the organisation where the client prefers the new green oil product and aware of the natural environment. In this way, the oil lubricant industry has changed their business activities while using green marketing strategies (Jones & Jain, 2019).
Many organisations realise that they have raised the opportunities in terms of competitive advantage. In terms of marketing, the government wants to protect clients and secure their lives. Therefore, it made environmental legislation which intends to protect consumers by ensuring that the lubricant industry controls the hazardous waste as well as the production of motor oil. Otherwise, it will increase the environmental issues on a regular basis. Considering the scope of green marketing, switching to a more energy-efficient option is highly beneficial for organisations focused on the environmental condition where various energy-efficient technologies, combined with operating practices, result in high productivity of business in the global marketplace.
The sustainability concept for business can be determined as a strong collaboration between goals of gaining more profitability through green marketing strategies. Oil companies make their business more sustainable by investing in renewable energy sources mainly generated from wind, tides, and sunlight. While organisations investing in the renewable source would not completely prove as profitable, they also increase the demand for it in KSA. The concept of environmental responsibility should be considered with legal obligation and economic condition for the oil enterprise.
Kontic, in his book “Greening the Marketing Mix”, identifies the difference between the conventional and green marketing mix. Usually, conventional marketing techniques involve product, price, place, and promotion. However, in green marketing, environmental concern is the main factor to be highlighted (Kontic, 2010).
The green product customer can be recognised as a customer who supports eco-friendly trend and products. Similarly, the end-user is aware of the aspects of green products (Boztepe, 2012; Sergio et al., 2016).
Most customers are potentially green consumers. But with the application of a proper method or technique to explain the advantages of being green, for example, any customer will choose the eco-friendly product over the conventional one if the price is equal or just a little higher (Awan, 2011).
In the same way, the uncertainty avoidance index could affect the decision of buying new technology. Uncertainty index measures the reaction of individuals to new ideas or future events. To what extent people will accept or resist future changes or new ideas, cultural awareness plays a significant role in customer behaviour. The KSA considers a high uncertainty avoidance index score. It means there is a challenge in convincing the end user to shift from conventional product to new green technology product (Bart Frijnsa, 2013).
As per Islam & Huda (2020), when it comes to improving energy efficiency, the oil industry has achieved success over past decade. The international energy agency has decreased the production of oil and gas in KSA due to lack of processing efficiency. Even if the efficiency increases, it still requires large amount of energy extraction, transportation, and processing. In this way, the opinion of expert has completely transformed towards sustainability to reduce emission of carbon dioxide. Sources and suppliers of renewable energy have continuously overgrown. The production of global biofuel production increased by 14% and constituted one of the most abundant sources of liquid products in the global world. It plays an essential role within the organisation to produce low carbon fuels while contributing significantly to sustainable development.
Oil and gas industry can transform the operation and function through increased energy efficiency and use of sustainable product. This strategy is considered as an alternative method for increasing the profitability and productivity in global marketplace (Nunes, Causer & Ciolkosz, 2020).
The lubricant industry has recognized technology by running energy efficiency products, which are also beneficial for improving economic condition. It also requires the oil industry to reduce power consumption while increasing the machine output in terms of energy efficiency.
Moreover, the lubricants industry utilised smart energy strategy to support the reduction of carbon emission. This strategy is the most suitable for organisations to handle the overall business operations and functions. The expert knows about energy improvement while increasing opportunities and reducing the rate of carbon emissions. In this way, it becomes easier to measure energy efficiency such as selecting appropriate lubrication items that directly give positive impact on the environment. Thus, it the organisation to maintain the safety and ecological condition in order to improve the work environment and handle the business challenges professionally (Vogl, Weiss & Helu, 2019).
Based on previous studies, there is a research gap on the relation between applying CSR and improving the business performance of the oil and gas industry. Further studies are highly recommended to bridge this gap between the recent research and the current market situation in oil and gas industry in the Middle East, specifically in KSA. Introducing the concept of new technology for green products lubricants sector and evaluate the consumer perceptual toward this ecological vision is a consideration.
Role of CSR in Organisation Performance
CSR has become a critical issue for today's organisations. It mainly aims to continue the commitment of the enterprise towards ethical and moral value in terms of economic development while continuously improving the overall quality of the organisation. Traditional enterprise approaches are emphasizing the economic aspects of the organisation's activities, but it was found that these also increase social and environmental issues. Applying CSR in the lubricants industry will bring more advantages and improve the reputation of business. It also increases employee engagement and customer satisfaction. Besides, it is expanding the business through consumer baseline while applying the organisational policies related to the social and environmental subjects (Zhang & Lim, 2019).
In KSA, many organisations have emphasized the structure of corporate strategic marketing based on different factors such as corporate resources and corporate culture. In contrast, Friedman (2007) defines the main goal for business to maximize the company benefits. That goal is to exploit the resources, get involve in planes designed to increase income for the corporation, and invest more assets to expand the organisation‘s activities in free and fair competition without fraud and dishonesty (Friedman, 2007). The benefits of CSR are creating an engagement programme and including the profitability while enhancing the reputation, brand recognition, employee engagement, and risk management. CSR policies always encourage the staff to develop social as well as sustainable change within the organisation. It is totally based on building a corporation that has a substantial value, helps manage risks, and is more competitive brand. Moreover, environmental disaster has become a significant issue that would be exposed by different marketing. Nowadays, it is possible to be aware of the corporate scale due to lack of trust. Therefore, there are chances to increasing the social responsibility issues in the lubricants industry. However, crafting effective CSR policies may increase pressure on the organisation. Environmental issues have been pushed into the limelight; hence corporations are now looking for sustainable change. Accountability and transparency play a vital role in CSR (Trivellas, 2019).
According to Zhu, Zou & Zhang (2019), CSR is simply the best way to hide the mask of responsibility and obligation. It is a situation where many organisations integrate with the environmental concern in their daily enterprise and their significant interaction with other stakeholders. It is not only making money for multiple shareholders, it also improves the overall condition of business in the global market. In most cases, decisions should be based on financial reasons, environmental impact, investment, enterprise ethics and human rights. In the lubricants industry, CSR is all about being accountable for the activities and practices that affect the overall social community and environment.
The key to improving the working capabilities of employees is implementing CSR initiatives while building secure communication among staff members in order to motivate every employee responsible for maintaining sustainable development.
CSR policies will help transform the entire business into growth and development. In the lubricant sector, rigorous CSR policies become key component to improve the overall business performance in terms of sustainable development. It helps in maintaining position in terms of ethical and moral values. These types of CSR serve to create sustained trust between the organisation and consumer. Thus, it is easily attracting new business partner and reinforcing relationships while increasing market share (Frynas & Yamahaki, 2019).
Newman, Rand & Trifkovic (2020) argued that CSR becomes far from the solution to different social problems due to fewer resources, but in most of cases, CSR consists of essential guidelines to follow as future strategies. The organisations in the lubricant industry are preventing their limited resource from coping with various social obligations where government has more responsibilities to handle the situation. CSR captures sustainable development and attention towards companies that focus on environmental issues. In this way, the lubricants sector has a contribution towards sustainable development, which is to adopt stakeholder theory and improve business management.
Stakeholder approaches may involve inconsistencies in the pursuit of sustainability because not all stakeholders could benefit from CSR policies, which are putting more effort to maintain equality and ensuring that the organisation will create more value through stakeholders (Walker, Zhang & Ni, 2019).
Organisations are adopting CSR policies as a control system that integrates the social with the environmental, and to increase business performance. Management trends are impacting on the business strategies, which mainly adopt themselves for changing the environments (Sergio et al., 2016; Gernal, Sergio & Musleh, 2020). It may include enterprise models and stakeholder pressure for CSR compliance. Therefore, many organisations can take advantage through CSR while achieving the significant goals and objective of a business. Recently, stakeholders have engaged with CSR policies, involving different processes such as identifying environmental issues and stakeholder management. In this way, it can be determined that CSR is a vital concept which is always helpful in corporate identity and communication. Also, creating the long-term growth always involves initiatives towards CSR policies which will promote the lubricant sector and help in targeting consumers. In this way, it will be creating a workforce and generating more profits while repeating the enterprise to enhance productivity and profitability in the global market (Srivastava & Shree, 2019).
Furthermore, CSR is considered as an essential part of strategic planning for the lubricants industry that strives to be successful and wants to improve the business reputation, especially those companies that want to take their business to a competitive environment. CSR can be integrated with business policies within the organisation and supplement the significant goals. Thus, it becomes a significant part of business capitals that will monitor targets and incentives.
The data gathering process is a method used to collect various types of research data. This research survey is based on primary data. The web-based technique is a time and cost-effective process. The researchers collect data directly from key sources through a questionnaire to maintain the relevance and effectiveness of the data. A web-based survey collects the primary data directly from respondents. For this survey, Monkey Survey tool was used to start the questionnaire. Through this approach, it is possible to target a large number of samples.
The policies recognized that CSR is not merely a compliance and commitment to support initiatives that aim to improve the lives of people in the organisation. On the other hand, it also promotes equality to implement an innovative idea, which helps improve the overall business capabilities and abilities (Crane, Matten & Spence, 2019). As a synthesis, the review of literature supports the current study.
In this paper, the quantitative data type was used to meet the objectives of the study. The research design is related to the overall methodology that the researchers decided to apply in order to ensure that the research problem is adequately investigated. The researchers followed the descriptive-correlation design with a survey that ensures no manipulation of any study variables and data collected. The method for analyzing relations between the variables is often referred to as the term “correlation“ in order to prove the research objectives. The respondents were selected through accessibility-snowball sampling technique. To investigate the research objectives, the researchers conducted two surveys by answering research questions (n=163). The first survey (N1 Survey, n=126) concerns lubricant green oil end users, such as motorists and vehicle owners. The second survey (N2 Survey, n=37) targets experts in the oil and gas industry. The questionnaire reliability used Cronbach's Alpha values 0.70 for variable, and the questionnaire error factor σ=5% which indicates that it is appropriate for this study. Data for this study were collected using a questionnaire web-based links on survey monkey platform at peak of the pandemic.
CSR Policies Improve Organisation Performance as Perceived by Respondents
Table 1 shows the experts with different years in the field, and their point of views regarding CSR policies. Across different expert levels and varied years of experience (high, medium, and low) in the oil and gas field, 100% of them agree that CSR policies can bridge the gap between gaining more benefits for the organisation and business sustainability for ecological responsibility.
| Table 1 The Correlation Between Respondents with Different Experiences and Their Opinion About CSR Policies and Approaches |
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|---|---|---|---|---|---|---|---|---|---|---|
| Less than 5 years | 5 to 10 years | 11 to 15 years | 16 to 20 years | Total | ||||||
| Count | PCT | Count | PCT | Count | PCT | Count | PCT | Count | PCT | |
| Yes | 7 | 100.00% | 10 | 100.00% | 13 | 100.00% | 7 | 100.00% | 37 | 100.00% |
| No | 0 | 0.00% | 0 | 0.00% | 0 | 0.00% | 0 | 0.00% | 0 | 0.00% |
| Total | 7 | 100.00% | 10 | 100.00% | 13 | 100.00% | 7 | 100.00% | 37 | 100.00% |
The consensus from all expert respondents is that having a positive attitude and great expectations for CSR policies will maintain the organisation’s improvement aside from gaining profits.
The researchers recorded the industry experts’ opinion that having more social responsibility will bring more investment and improve the organisation’s financial performance. The findings match the recent research conducted by Zhang & Lim (2019) showing how expanding the business happens through consumer baseline while applying the organisational policies related to the social and environmental subjects. In addition, the results support the recent research finding of Srivastava & Shree (2019) which emphasizes that CSR generates more profit while arranging enterprise to enhance productivity as well as profitability in global marketplace.
The Feedback of Lubricants Industry Experts in Terms of Gender and End User in Saudi Arabia Market toward Green Products Use
| Table 2 End User Respondents’ Feedback Toward Green Oil Technology as New Concept |
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|---|---|---|
| Option | Respondent | Pecentage |
| Extremely innovative | 28 | 22.40% |
| Very innovative | 64 | 51.20% |
| Somewhat innovative | 31 | 24.80% |
| Not so innovative | 2 | 1.60% |
| Not at all innovative | 0 | 0.00% |
| Total | 125 | |
As elucidated in Table 2, it is observed that more than 70% are between extraordinarily innovative and very innovative. The 24.80% of respondents are neutral regarding this concept.
The data points to the innovative concept of green motor oil with eco-friendly advantage. This creative idea helps in inspiring many customers to purchase the green motor oil. Therefore, the new concept is becoming popular in KSA while gaining more profit margin regularly. The feedback for the use of green technology products as part of green marketing strategies in the sale of lubricants shows that the KSA market has noticed very positive and supportive attitude. This result has been supported by the study of Sergio, et al., (2016) showing that green marketing strategies and innovation support the eco-environment and promote organisational profit.
The Green Marketing Strategies that Contribute to Organisational Growth
| Table 3 How CSR, Through Green Marketing, Can Increase Profitability In KSA |
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|---|---|---|---|---|---|---|---|---|---|---|
| Less than 5 years | 5 to 10 years | 11 to 15 years | 16 to 20 years | Total | ||||||
| Count | PCT | Count | PCT | Count | PCT | Count | PCT | Count | PCT | |
| Strongly agree | 1 | 14.30% | 3 | 30.00% | 1 | 7.70% | 0 | 0.00% | 5 | 13.50% |
| Agree | 6 | 85.70% | 6 | 60.00% | 9 | 69.20% | 6 | 85.70% | 27 | 73.00% |
| Neither agree nor disagree | 0 | 0.00% | 1 | 10.00% | 2 | 15.40% | 1 | 14.30% | 4 | 10.80% |
| Disagree | 0 | 0.00% | 0 | 0.00% | 1 | 7.70% | 0 | 0.00% | 1 | 2.70% |
| Strongly disagree | 0 | 0.00% | 0 | 0.00% | 0 | 0.00% | 0 | 0.00% | 0 | 0.00% |
| Total | 7 | 100.00% | 10 | 100.00% | 13 | 100.00% | 7 | 100.00% | 37 | 100.00% |
Table 3 shows that senior managers (with more than 16 years of experience in the field) thought CSR might initially cost finance in business but they also believed it will certainly lead to enhanced performance branding and public relations as well as increased profitability, with 85.7% of respondents agreeing. The 15% are neutral and 2.70% disagree with the CSR strategy to contribute to organisational growth. Both industry experts and end users agree with the need to adopt the green motor oil technology, which helps increase the customer base of companies in the KSA. Furthermore, most of customers show interest in buying the green motor oil if it is available in the market with consideration of the price. The green motor oil should be at the same price or slightly higher compared with other conventional products. Additionally, saving fuel and investing in environmental and ethical practices by using vegetable oil and eco-friendly additives in the motor oil formula improve engine performance, considered as a privilege and outweighs the rivalry between the new green oil and motor oil. It adds excellent impression for both customers and industry expert. This procedure undoubtedly leads to enhanced performance branding plus increased profitability. The studies of Crane, et al., (2019); Gernal, et al., (2020); Sergio, et al., (2016) support the major findings of this study.
The results show the positive attitude and encouraging consumer behaviour toward the new motor oil, which has extraordinary benefits such as extra mileage performance, saving petrol and ecological considerations. Based on data collected from surveys, it becomes essential to start a marketing campaign to introduce more awareness among customers; therefore the crucial role of green marketing can be identified. This research highlights the critical role of green marketing in business, particularly in the oil and gas field. New chemical projects with excellent product specifications are not enough to increase the market share or approach more profits for the company, but it is the mix between two types of science: marketing and chemistry. The researchers examined the interactions of respondents and how the environmental and ethical practices are considered as commercial and business benefits. CSR policies can play a crucial role in the organisation’s growth, and the green marketing strategy is also a vital tool in modern corporate planning and strategy. The findings proved that adopting a CSR strategy increases employee engagement and commitment. Moreover, CSR improves the image of the organisation, enhances the confidence and adds a positive impact for the staff, suppliers, customers, and shareholders. Also, the company can gain more profits by promoting new technology in the oil and gas field. Therefore, the business can attract more investors and funding by investing in environmental projects.