Following is a paper I had written for my B-School's Journal related to Importance of Sustainable Strategies.
“Do you really dare put your head above the parapet by touting your greenness and attract very knowledgeable consumers who are going to crawl all over your business... and Greenpeace and every other environmental group you can think of?... If consumers think they can catch you telling a half-truth, they will"
- Mike Longhurst, Senior Vice President McCann-Erickson.
GREEN MARKETING - INTRODUCTION
The term Green Marketing came into prominence in the late 1980s and early 1990s. The American Marketing Association (AMA) held the first workshop on "Ecological Marketing" in 1975. The proceedings of this workshop resulted in one of the first books on green marketing entitled "Ecological Marketing".
The American Marketing Association (AMA) defines green marketing as marketing of products that are presumed to be environmentally safe. Another definition states that "Green or Environmental Marketing consists of all activities designed to generate and facilitate any exchanges intended to satisfy human needs or wants, such that the satisfaction of these needs and wants occurs, with minimal detrimental impact on the natural environment." This definition incorporates much of the traditional components of the marketing definition, that is "All activities designed to generate and facilitate any exchanges intended to satisfy human needs or wants" Therefore it ensures that the interests of the organization and all its consumers are protected, as voluntary exchange will not take place unless both the buyer and seller mutually benefit. The above definition also includes the protection of the natural environment, by attempting to minimize the detrimental impact this exchange has on the environment. This second point is important, for human consumption by its very nature is destructive to the natural environment. So green marketing should look at minimizing environmental harm, not necessarily eliminating it.
Green Marketing incorporates a broad range of activities, including product modifications, changes to the production process, packaging changes, as well as modifying communication. Yet defining green marketing is not a simple task where several meanings intersect and contradict each other; an example of this will be the existence of varying social, environmental and retail definitions attached to this term. Other similar terms used are Environmental Marketing and Ecological Marketing.
Jacquelyn Ottman, (author of Green Marketing: Opportunity for Innovation) states that from an organizational standpoint, environmental considerations should be integrated into all aspects of marketing — new product development and communications and all points in between. Green Marketing in practice connects many dots including traditional entities like suppliers, manufacturers, retailers & new stakeholders, including educators, members of the community, regulators, and NGOs and makes the whole process beautifully sustainable.
Green or Sustainable Marketing has found its way as a popular Marketing lexicon where very many Marketers pay lip service to it. However how much of it has actually translated into actual initiatives undertaken by corporate sector is yet unclear. Many customers are joining the so-called "green consumer" bandwagon however such movements in the U.S. and other countries have struggled to reach critical mass and to remain in the forefront of shoppers' minds.
Sustainable brands and sustainable marketing are often seen as synonymous with ecological responsibility and being green. But there are three key pillars to a sustainable strategy; ecology, economy and culture.
The ecological dimension
This is perhaps the best known and best understood dimension, and many brands are already working hard in this area.
The economic dimension
Is the economic and financial model sustainable? What effect will this have on the other two dimensions - will the pricing model unavoidably lead to offshore manufacturing, social exploitation or long distance transportation? How will the brand’s business plan impact upon increasingly globalised markets?
The cultural/social dimension
Brands operate in human societies: everything that happens is an interaction between people and the brand. And those interactions cause impacts and changes on both. We must weigh the effects of the brand upon the societies in which it operates - its employees, suppliers, customers and the world at large.
Consideration of these dimensions is not only socially responsible, but makes sound business sense as it can be seen as a differentiator of corporate social responsibility.
IMPORTANCE OF GREEN MARKETING
Man has limited resources on the earth, with which she/he must attempt to provide for the worlds' unlimited wants. There is extensive debate as to whether the earth is a resource at man's disposal.. In market societies where there is "freedom of choice", it has generally been accepted that individuals and organizations have the right to attempt to have their wants satisfied. As firms face limited natural resources, they must develop new or alternative ways of satisfying these unlimited wants. Ultimately green marketing looks at how marketing activities utilize these limited resources, while satisfying consumers wants, both of individuals and industry, as well as achieving the selling organization's objectives.
When looking through the literature there are several suggested reasons for firms increased use of Green Marketing. Five possible reasons are as follows:
1.)Organizations perceives environmental marketing to be an opportunity that can be used to achieve its objectives.
All types of consumers, both individual and industrial are becoming more concerned and aware about the natural environment. In a 1992 study of 16 countries, more than 50% of consumers in each country, other than Singapore, indicated they were concerned about the environment. A 1994 study in Australia found that 84.6% of the sample believed all individuals had a responsibility to care for the environment. A further 80% of this sample indicated that they had modified their behaviour, including their purchasing behaviour, due to environmental reasons. As demands change, many firms see these changes as an opportunity to be exploited. It can be assumed that firms marketing goods with environmental characteristics will have a competitive advantage over firms marketing non-environmentally responsible alternatives. There are numerous examples of firms who have strived to become more environmentally responsible, in an attempt to better satisfy their consumer need. McDonald's replaced its clam shell packaging with waxed paper because of increased consumer concern relating to polystyrene production and Ozone depletion. Xerox introduced a "high quality" recycled photocopier paper in an attempt to satisfy the demands of firms for less environmentally harmful products.
2.) Organizations believe they have a moral obligation to be more socially responsible.
Many firms are beginning to realize that they are members of the wider community and therefore must behave in an environmentally responsible fashion. This translates into firms that believe they must achieve environmental objectives as well as profit related objectives. This results in environmental issues being integrated into the firm's corporate culture. Firms in this situation can take two perspectives; (1) they can use the fact that they are environmentally responsible as a marketing tool; or (2) they can become responsible without promoting this fact. There are examples of firms adopting both strategies. Organizations like the Body Shop heavily promote the fact that they are environmentally responsible. While this behaviour is a competitive advantage, the firm was established specifically to offer consumers environmentally responsible alternatives to conventional cosmetic products. This philosophy is directly tied to the overall corporate culture, rather than simply being a competitive tool. An example of a firm that does not promote its environmental initiatives is Coca-Cola. They have invested large sums of money in various recycling activities, as well as having modified their packaging to minimize its environmental impact. While being concerned about the environment, Coke has not used this concern as a marketing tool. Thus many consumers may not realize that Coke is a very environmentally committed organization. Another firm who is very environmentally responsible but does not promote this fact, at least outside the organization, is Walt Disney World (WDW). WDW has an extensive waste management program and infrastructure in place, yet these facilities are not highlighted in their general tourist promotional activities.
3.) Governmental bodies are forcing firms to become more responsible.
As with all marketing related activities, governments want to "protect" consumers and society; this protection has significant green marketing implications. Governmental regulations relating to environmental marketing are designed to protect consumers in several ways, 1) reduce production of harmful goods or by-products; 2) modify consumer and industry's use and/or consumption of harmful goods; or 3) ensure that all types of consumers have the ability to evaluate the environmental composition of goods.
Governments establish regulations designed to control the amount of hazardous wastes produced by firms. Many by-products of production are controlled through the issuing of various environmental licenses, thus modifying organizational behaviour. In some cases governments try to "induce" final consumers to become more responsible. For example, some governments have introduced voluntary curb-side recycling programs, making it easier for consumers to act responsibly. In other cases governments tax individuals who act in an irresponsible fashion. For example in Australia there is a higher gas tax associated with leaded petrol.
4.) Competitors' environmental activities pressure firms to change their environmental marketing activities.
Another major force in the environmental marketing area has been firms' desire to maintain their competitive position. In many cases firms observe competitors promoting their environmental behaviours and attempt to emulate this behaviour. In some instances this competitive pressure has caused an entire industry to modify and thus reduce its detrimental environmental behaviour. For example, it could be argued that Xerox's "Revive 100% Recycled paper" was introduced a few years ago in an attempt to address the introduction of recycled photocopier paper by other manufacturers. In another example when one tuna manufacture stopped using driftnets the others followed suit.
5.) Cost factors associated with waste disposal, or reductions in material usage forces firms to modify their behaviour.
Firms may also use green marketing in an attempt to address cost or profit related issues. Disposing of environmentally harmful by-products, such as polychlorinated biphenyl (PCB) contaminated oil are becoming increasingly costly and in some cases difficult. Therefore firms that can reduce harmful wastes may incur substantial cost savings. When attempting to minimize waste, firms are often forced to re-examine their production processes. In these cases they often develop more effective production processes that not only reduce waste, but reduce the need for some raw materials. This serves as a double cost savings, since both waste and raw material are reduced. In other cases firms attempt to find end-of-pipe solutions, instead of minimizing waste. In these situations firms try to find markets or uses for their waste materials, where one firm's waste becomes another firm's input of production. One Australian example of this is a firm who produces acidic waste water as a by-product of production and sells it to a firm involved in neutralizing base materials. The last way in which cost or profit issues may affect firms' environmental marketing activities is that new industries may be developed. This can occur in two ways:
1) a firm develops a technology for reducing waste and sells it to other firms; or 2) a waste recycling or removal industry develops. For example, firms that clean the oil in large industrial condensers increase the life of those condensers, removing the need for replacing the oil, as well as the need to dispose of the waste oil. This reduces operating costs for those owning the condensers and generates revenue for those firms cleaning the oil.
SOME PROBLEMS WITH GREEN MARKETING
There are a number of potential problems that must overcome. One of the main problems is that firms using green marketing must ensure that their activities are not misleading to consumers or industry, and do not breach any of the regulations or laws dealing with environmental marketing. Green marketing claims must clearly state environmental benefits. A problem of the firms face is that those who modify their products due to increased consumer concern must contend with the fact that consumers' perceptions are sometimes not correct. For example the McDonald's case where it has replaced its clam shells with plastic coated paper. There is ongoing scientific debate which is more environmentally friendly. Some scientific evidence suggests that when taking a cradle to grave approach, polystyrene is less environmentally harmful if this is the case McDonald's bowed to consumer pressure, yet has chosen the more environmentally harmful option. When firms attempt to become socially responsible, they may face the risk that the environmentally responsible action of today will be found to be harmful in the future. Take for example the aerosol industry which has switched from CFCs (chlorofluorocarbons) to HFCs (hydro fluorocarbons) only to be told HFCs are also a greenhouse gas. Some firms now use DME (di-methyl ether) as an aerosol propellant, which may also harm the ozone layer. Given the limited scientific knowledge at any point, it may be impossible for a firm to have made the correct environmental decision. This may explain why some firms, like Coca-Cola and Walt Disney World, are becoming socially responsible without publicizing the point. They may be protecting themselves from potential future negative backlash; if it is determined they made the wrong decision in the past. While governmental regulation is designed to give consumers the opportunity to make better decisions or to motivate them to be more environmentally responsible, there is difficulty in establishing policies that will address all environmental issues. For example, guidelines developed to control environmental marketing address only a very narrow set of issues, i.e., the truthfulness of environmental marketing claims. If governments want to modify consumer behaviour they need to establish a different set of regulations. Thus governmental attempts to protect the environment may result in a proliferation of regulations and guidelines, with no one central controlling body. Reacting to competitive pressures can cause all "followers" to make the same mistake as the "leader." Mobil Corporation who has followed the competition and introduced "biodegradable" plastic garbage bags, as because technically these bags were biodegradable, the conditions under which they were disposed did not allow biodegradation to occur. Mobil was sued by several US states for using misleading advertising claims. Thus blindly following the competition can have costly ramifications.
The push to reduce costs or increase profits may not force firms to address the important issue of environmental degradation. End-of-pipe solutions may not actually reduce the waste but rather shift it around. While this may be beneficial, it does not necessarily address the larger environmental problem, though it may minimize its short term affects. Ultimately most waste produced will enter the waste stream, therefore to be environmentally responsible organizations should attempt to minimize their waste, rather than find "appropriate" uses for it.
OTHER CHALLENGES FACED BY GREEN MARKETING:
1.) Lack of Standards- No public consensus about what constitutes "green"- How good is good enough?
2.) Healthy consumer skepticism - People doubt the "Green Claims" made by many companies.
3.) Green Washing- Taking advantage of confusion and exaggerating your green marketing efforts.
4.) Corporate Lethargy - Complacency on part of companies to encourage more sustainable strategies.
CASE STUDIES ON GREEN MARKETING:
1.) Kyoto Protocol’s Clean Development Mechanism (CDM)
The emerging greenhouse gas reduction market can potentially catalyze projects with important local environmental, economic, and quality-of-life benefits. The Kyoto Protocol’s Clean Development Mechanism (CDM), for example, enables trading between industrial and developing nations, providing a framework that can result in capital flows to environmentally beneficial development activities. Although the United States is not participating in the Kyoto Protocol, several US programs enable similar transactions on a voluntary and regulatory basis.
While international trade in greenhouse gas reductions holds substantial promise as a source of new funding for sustainable development, this market can be largely inaccessible to many smaller-scale projects, remote communities, and least developed localities. To facilitate participation and broaden the benefits, several barriers must be overcome, including: a lack of market awareness among stakeholders and prospective participants; specialized, somewhat complicated participation rules; and the need for simplified participation mechanisms for small projects, without which transaction costs can overwhelm the financial benefits of participation. If the barriers are adequately addressed, greenhouse gas trading can play an important role supporting activities that benefit people’s lives and the environment.
2.) Philips Light's CFL
Philips Lighting's first shot at marketing a standalone compact fluorescent light (CFL) bulb was Earth Light, at $15 each versus 75 cents for incandescent bulbs. The product had difficulty climbing out of its deep green niche. The company re-launched the product as "Marathon," underscoring its new "super long life" positioning and promise of saving $26 in energy costs over its five-year lifetime. Finally, with the U.S. EPA's Energy Star label to add credibility as well as new sensitivity to rising utility costs and electricity shortages, sales climbed 12 percent in an otherwise flat market.
3.) Introduction of CNG in Delhi
New Delhi, was being polluted at a very fast pace until Supreme Court of India forced a change to alternative fuels. In 2002, a directive was issued to completely adopt CNG in all public transport systems to curb pollution. This is an example which can be followed by metros across the world to reduce their carbon emissions.
4.) Lush Cosmetics
The case is about Lush Fresh Handmade Cosmetics (Lush), a UK-based manufacturer and marketer of ethical beauty products with nearly 500 stores worldwide. The case focuses on the sustainable business practices of Lush, with a special emphasis on its sustainable packaging practices.
At a time when the world was experiencing an explosion in packaging due to the increasing importance of packaging as a marketing tool, 65 percent of Lush's products were sold ‘naked'(i.e. without packaging). The rest of the products came with minimal packaging. The retail chain used just enough packaging so that the products reached the residence of its customers safely.
It used grease proof paper, reusable tins; paper bags made from recycled materials and rewarded its customers for bringing back their containers and shopping bags. In 2007, it started using popcorn as loose fill instead of shredded paper (many other companies use polystyrene chips) in its shipping package. The same year, Lush also started a worldwide campaign ‘Get Naked' against excessive packaging by the industry. The much-publicized campaign strove to educate consumers regarding the adverse affect of packaging waste on the environment and urged them to shun excessively packaged products in favor of minimally packaged or ‘naked' products.
Lush, which marketed fresh and natural handmade products, had leveraged on its new product development to come up with ‘category defying’ products such as solid shampoos, solid conditioners, deodorants, massage bars, and solid bubble bath, which required no packaging. Moreover, these products were designed in the form of eatables such as cakes, cheese, ice-creams, and other desserts, and were displayed in the store in the form of an old-fashioned delicatessen. Experts felt that Lush through all aspects of its business – packaging practices, natural products, against-animal-testing stance, support for fair trade, decision to not use mass-media advertising and not go public to sustain its ethical practices – displayed a strong commitment to sustainable development issues and also successfully differentiated itself from its competitors. They felt that a key reason for the success of Lush was its corporate culture with everyone from the directors to the people working in the stores sharing the values of the brand.
5.) Body Shop
This case is about the issue of sustainability rhetoric and greenwashing. In March 2006, The Body Shop International Plc. (Body Shop), a retailer of natural-based and ethically-sourced beauty products, announced that it had agreed to an acquisition by the beauty care giant L'Oréal SA (L'Oréal) in a cash deal worth £652 million (US$ 1.14 billion).
The announcement brought in its wake a spate of criticism against Body Shop and its founder, Dame Anita Roddick (Roddick). Body Shop was regarded as a pioneer in modern corporate social responsibility (CSR) practices. The company was also strongly associated with Roddick's social activism.
Since its inception, it had endorsed and championed various social issues such as opposition to animal testing, developing community trade, building self-esteem, campaigning for human rights, and protection of the planet. Through these initiatives, the company had cultivated a loyal base of customers who shared these values.
L'Oréal, on the other hand, had been severely criticized by activists for allegedly testing its cosmetics on animals, exploiting the sexuality of women, and selling its products by making women feel insecure. Moreover, Nestlé owned 26 percent of L'Oréal and Nestlé was one of the most boycotted companies in the world for its alleged unethical business practices and aggressive promotion of baby milk in developing countries.
Some of Body Shop's critics and customers said that they felt betrayed by the deal as Roddick had previously been vocal in her criticism of companies like L'Oréal. They called for a boycott of Body Shop's products. However, Body Shop and Roddick defended the deal by saying that the acquisition by L'Oréal would not compromise Body Shop's ethics; the merger would, in fact, give Body Shop a chance to spread its values to L'Oréal. L'Oréal also announced that Body Shop's values would not be compromised and that it would continue to operate as an independent unit.
This case showcases the reactions of consumers, activists, and CSR experts to the acquisition of Body Shop by L'Oréal. The acquisition throws up some questions such as: Is Body Shop guilty of greenwashing? Does it have the influence to extend its values to L'Oréal? The case also looks into the issue of whether L'Oréal was trying to improve its own image and to buy CSR through this deal.
CONCLUSION
Green marketing covers more than a firm's marketing claims. While firms must bear much of the responsibility for environmental degradation, ultimately it is consumers who demand goods, and thus create environmental problems. One example of this is where McDonald's is often blamed for polluting the environment because much of their packaging finishes up as roadside waste. It must be remembered that it is the uncaring consumer who chooses to disposes of their waste in an inappropriate fashion. While firms can have a great impact on the natural environment, the responsibility should not be theirs alone. It appears that consumers are not overly committed to improving their environment and may be looking to lay too much responsibility on industry and government. Ultimately green marketing requires that consumers want a cleaner environment and are willing to "pay" for it, possibly through higher priced goods, modified individual lifestyles, or even governmental intervention. Until this occurs it will be difficult for firms alone to lead the green marketing revolution. It must not be forgotten that the industrial buyer also has the ability to pressure suppliers to modify their activities. Thus an environmental committed organization may not only produce goods that have reduced their detrimental impact on the environment, they may also be able to pressure their suppliers to behave in a more environmentally "responsible" fashion. Final consumers and industrial buyers also have the ability to pressure organizations to integrate the environment into their corporate culture and thus ensure all organizations minimize the detrimental environmental impact of their activities.
TEXT REFERENCES:
Crane, A. (2000), "Facing the backlash: green marketing and strategic re-orientation in the 1990s", Journal of Strategic Marketing, Vol.8, No.3
Elkington, J. (1994), "Towards the sustainable corporation: win win business strategies for sustainable development", California Management Review, Vol. 36 No.2
Mintel (1991). London, The green consumer report.
Ottman, J.A. (1993), Green Marketing: Challenges and opportunities, NTC Business Books, Chicago, IL.
Porter, M.E., Van der Linde (1995), "Green and competitive: ending the stalemate", Harvard Business Review, Vol.73, No.5
Shelton, R.D. (1994), "Hitting the green wall: why corporate programs get stalled", Corporate Environmental Strategy, Vol.2, No.2
Smithe, T. (1998), "The Green Marketing Myth: Tending out Goats at the Edge of Apocalypse, university of Toronto press, Toronto.
Wong, V., Turner, W., Stoneman, P.(1996), "Marketing strategies and market prospects for environmentally-friendly consumer products", British Journal of Management, Vol.7, No.3
ONLINE REFERENCES:
wikipedia.com & miscellaneous blogs on Green Marketing.
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