“Green marketing”
Presented to
• product modification,
• changes to the production process,
• packaging changes, as well as
• Modifying advertising.
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. The legal implications of marketing
claims call for caution. Misleading or overstated claims can lead to regulatory or civil
challenges. In the USA, the Federal Trade Commission provides some guidance on
environmental marketing claims.
So, in simple terms Green marketing refers to the process of selling products and/or
services based on their environmental benefits. Such a product or service may be
environmentally friendly in itself or produced and/or packaged in an environmentally
friendly way.
2
The obvious assumption of green marketing is that potential consumers will view a
product or service's "greenness" as a benefit and base their buying decision accordingly.
The not-so-obvious assumption of green marketing is that consumers will be willing to
pay more for green products than they would for a less-green comparable alternative
product - an assumption that has not been proven conclusively, specially the mild effect
which it had had on consumers has washed away by the present recession (2008-09) only.
Green marketers though argue that it is a way to use the environmental benefits of a
product or service to promote sales. Many consumers will choose products that do not
damage the environment over less environmentally friendly products, even if they cost
more. With green marketing, advertisers focus on environmental benefits to sell products
such as biodegradable diapers, energy-efficient light bulbs, and environmentally safe
detergents.
People buy billions of dollars worth of goods and services every year—many which harm
the environment in how they are harvested, made, or used. Environmentalists support
green marketing to encourage people to use environmentally preferable alternatives, and
to offer incentives to manufacturers that develop more environmentally beneficial
products.
The concept of green marketing has been around at least since the first Earth Day in
1970. But the idea did not catch on until the 1980s, when rising public interest in the
environment led to a demand for more green products and services. Manufacturers
responded to public interest by labeling hundreds of new products "environmentally
friendly"—making claims that products were biodegradable, compostable, energy
efficient, or the like.
3
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 first wave of Green Marketing occurred in the 1980s. Corporate Social
Responsibility (CSR) Reports started with the ice cream seller Ben & Jerry's where the
financial report was supplemented by a greater view on the company's environmental
impact.
Two tangible milestones for wave of green marketing came in the form of published
books, both of which were called Green Marketing. They were by Ken Peattie (1992) in
the United Kingdom and by Jacquelyn Ottman (1993) in the United States of America.
In the years after 2000 a second wave of Green marketing emerged. By now CSR and the
Triple Bottom Line (TBL) were widespread. Such publications as a 2005 United Nations
Report, then in 2006 a book by Al Gore and the UK Stern Report brought scientific-
environmental arguments to a wide public in an easy to understand way.
GREEN WASHING
4
In spite of its growing popularity, the green marketing movement faced serious setbacks
in the late 1980s because many industries made false claims about their products and
services. For instance, the environmental organization Corp Watch , which issues
annually a list of the top ten "green washing" companies, included BP Amoco for
advertising its "Plug in the Sun" program, in which the company installed solar panels in
two hundred gas stations, while continuing to aggressively lobby to drill for oil in the
Arctic National Wildlife Refuge. Green marketing can be a very powerful marketing
strategy though when it's done right. In a similar kind of case Chad’s green marketing
campaign bombed because he made the mistake of packaging his environmentally
friendly product in Styrofoam, emitting CFC’s.
Without environmental labeling standards, consumers could not tell which products and
services were truly beneficial. Consumers ended up paying extra for misrepresented
products. The media came up with the term "green washing" to describe cases where
organizations misrepresented themselves as environmentally responsible.
So, While green marketing was growing greatly as increasing numbers of consumers
were willing to back their environmental consciousnesses with their dollars, it can be
dangerous. The public tends to be skeptical of green claims to begin with and companies
can seriously damage their brands and their sales if a green claim is discovered to be false
or contradicted by a company's other products or practices. Thus, in other words
presenting a product or service as green when it's not is called green washing.
In 1992, the Federal Trade Commission (FTC) stepped in to prevent further deception.
The FTC created guidelines for the use of environmental marketing claims such as
"recyclable," "biodegradable," "compost-able," and the like. The FTC and the U.S.
Environmental Protection Agency defined "environmentally preferable products" as
products and services that have a lesser or reduced effect on human health and the
environment when compared to other products and services that serve the same purpose.
The label "environmentally preferable" considers how raw materials are acquired,
5
produced, manufactured, packaged, distributed, reused, operated, maintained, or how the
product or service is disposed.
Today, special labels help the public identify legitimate environmentally preferable
products and services. Several environmental groups evaluate and certify products and
services that meet FTC standards—or their own tougher standards. One popular product
that has received certification is shade-grown coffee, an alternative to coffee beans that
are grown on deforested land in the tropics.
During the late 1990s, green marketing received a large boost when President Bill
Clinton issued executive orders directing federal offices to purchase recycled and
environmentally preferable products. Some industries adopted similar policies.
Energy-efficient light-bulbs
Energy-efficient cars
Energy from renewable sources of energy such as windmills and solar power
6
THE GREEN DILEMMA
The past decade has shown that harnessing consumer power to effect positive
environmental change is far easier said than done. The so-called "green consumer"
movements in the U.S. and other countries have struggled to reach critical mass and to
remain in the forefront of shoppers' minds. While public opinion polls taken since the late
1980s have shown consistently that a significant percentage of consumers in the U.S. and
elsewhere profess a strong willingness to favor environmentally conscious products and
companies, consumers' efforts to do so in real life have remained sketchy at best. One of
green marketing's challenges is the lack of standards or public consensus about what
constitutes "green," according to Joel Makower, a writer on green marketing.In essence,
there is no definition of "how good is good enough" when it comes to a product or
company making green marketing claims. This lack of consensus -- by consumers,
marketers, activists, regulators, and influential people -- has slowed the growth of green
products, says Makeover, because companies are often reluctant to promote their green
attributes, and consumers are often skeptical about claims.
Despite these challenges, green marketing has continued to gain adherents, particularly in
light of growing global concern about climate change. This concern has led more
companies to advertise their commitment to reduce their climate impacts, and the effect
this is having on their products and services
There are basically five reasons for which a marketer should go for the adoption of green
marketing. They are -
7
* Government pressure
* Competitive pressure
* Cost or profit issues
Every company has its own favorite marketing mix. Some have 4 P's and some have 7 P's
of marketing mix. The 4 P's of green marketing are that of a conventional marketing but
the challenge before marketers is to use 4 P's in an innovative manner.
Product
The ecological objectives in planning products are to reduce resource consumption and
pollution and to increase conservation of scarce resources (Keller man, 1978).
Price
Price is a critical and important factor of green marketing mix. Most consumers will only
be prepared to pay additional value if there is a perception of extra product value. This
value may be improved performance, function, design, visual appeal, or taste. Green
marketing should take all these facts into consideration while charging a premium price.
Promotion
8
There are three types of green advertising: -
Place
The choice of where and when to make a product available will have significant impact
on the customers. Very few customers will go out of their way to buy green products.
CHALLENGES AHEAD
ONGOING DEBATE
The popularity of such marketing approach and its effectiveness is hotly debated.
Supporters claim that environmental appeals are actually growing in number–the Energy
Star label, for example, now appears on 11,000 different companies' models in 38
product categories, from washing machines and light bulbs to skyscrapers and homes.
The difference is, however, that green—rightfully so—is on the wane as the primary
sales pitch for products. On the other hand, Roper’s Green Gauge shows that a high
percentage of consumers (42%) feel that environmental products don’t work as well as
9
conventional ones. This is an unfortunate legacy from the 1970s when shower heads
sputtered and natural detergents left clothes dingy. Given the choice, all but the greenest
of customers will reach for synthetic detergents over the premium-priced, proverbial
"Happy Planet" any day, including Earth Day. New reports, however show a growing
trend towards green products.
CONSUMER’S CONFUSION
One challenge green marketers -- old and new -- are likely to face as green products and a
message become more common is confusion in the marketplace. "Consumers do not
really understand a lot about these issues, and there's a lot of confusion out there," says
Jacquelyn Ottman (founder of J. Ottman Consulting and author of "Green Marketing:
Opportunity for Innovation.") Marketers sometimes take advantage of this confusion, and
purposely make false or exaggerated "green" claims. Critics refer to this practice as
"green washing".
STATISTICS
According to market researcher Mintel, about 12% of the U.S. population can be
identified as True Greens, consumers who seek out and regularly buy so-called green
products. Another 68% can be classified as Light Greens, consumers who buy green
sometimes. "What chief marketing officers are always looking for is touch points with
consumers, and this is just a big, big, big touch point that's not being served," says Mintel
Research Director David Lockwood. "All the corporate executives that we talk to are
extremely convinced that being able to make some sort of strong case about the
environment is going to work down to their bottom line."
ITC
10
* ITC has been 'Carbon Positive' three years in a row (sequestering/storing twice the
amount of CO2 than the Company emits).
* 'Water Positive' six years in a row (creating three times more Rainwater Harvesting
potential than ITC's net consumption).
* All Environment, Health and Safety Management Systems in ITC conform to the best
international standards.
* ITC's globally recognised e-Choupal initiative is the world's largest rural digital
infrastructure benefiting over 4 million farming families.
* ITC's Social and Farm Forestry initiative has greened over 80,000 hectares creating an
estimated 35 million person days of employment among the disadvantaged.
11
protection and energy conservation at its manufacturing facilities, and in development of
products that use fewer natural resources and are environment friendly.
The company credited the 'Just-in-Time' philosophy adopted and internalized by the
employees as the prime reason that helped to excel in this direction.
The company has been promoting 3R since its inception. As a result the company has not
only been able to recycle 100% of treated waste water but also reduced fresh water
consumption. The company has implemented rain water harvesting to recharge the
aquifers. Also, recyclable packing for bought out components is being actively
promoted.
The green co-efficient of this system is much better than the conventional system
12
management procedures into its business processes thereby protecting the environment,
health, and safety of all its stakeholders. HCL commits to manufacture products that are
environment friendly in all respects and are free from hazardous chemicals.
HCL ecoSafe focuses on product lifecycle management to ensure that our products right
from when they are manufactured, bought by customers, recovered at their end-of-life
and recycled after useful life are done in an environmentally responsible manner Key
initiatives undertaken through HCL ecoSafe program are:
MORE EXAMPLES
* Coca-Cola pumped syrup directly from tank instead of plastic which saved 68 million
pound/year.
* Badarpur Thermal Power station of NTPC in Delhi is devising ways to utilize coal-ash
that has been a major source of air and water pollution.
* Barauni refinery of IOC is taken steps for restricting air and water pollutants.
13
and was based on interviews with over 6,400 shoppers.
Now eco packaging is poised to become the next low-hanging fruit of the clean tech
world. Investors and entrepreneurs this week at Europe's most important annual clean
tech conference reported unprecedented interest in reducing the use of raw materials
while finding superior protection for food and other products.
Consumers are increasingly putting plastic shopping bags and non-green wrapping items
on their naughty list, according to Deloitte's 2008 Annual Holiday Survey. Nearly half of
the 13,000 consumers polled said they'd be willing to pay more for green gifts. This was
up from 17 percent last year.
The survey, by the research firm Global Market Insite, quizzed more than 15,000 online
consumers in the U.S. and 16 other countries about their socially conscious business
practices.
Americans placed the highest value on corporate community involvement; when asked
what factor was the most important in determining if a business is socially responsible,
"contributing to the community" (e.g. sponsorship, grants, employee volunteer programs)
14
came in highest with 47%. On the other hand, all of the other countries surveyed (India,
Canada, Australia, Germany, China, and Japan) selected environmentally preferable
practices (recycling, using biodegradable products) as the top factor.
"In the high-tech era where employees are expected to work 24/7, it's significant that
Americans rate giving back to the community as their top priority in recognizing socially
responsible companies," said Marjorie Thompson, co-author of Brand Spirit: How Cause
Related Marketing Builds Brands. "It shows that people want to feel connected to each
other and that they are willing to reward businesses who tap into this sense of mutual
support and belonging. Companies will need to start thinking of their community
programs as core to their businesses and brands, and central to how they market
themselves."
Not surprising, the U.S., along with other countries such as India and China, which have
experienced environmental disasters caused by corporations (e.g. Love Canal, Bhobal,
Exxon Valdez) or have had to deal with major polluting issues (e.g. coal plants,
manufacturing), believe that damaging the environment is associated with acting socially
irresponsible. Other countries, including France (60%), Denmark (52%) and Italy (45%)
selected the use of child labor as the main factor in making them think a corporation is
socially irresponsible.
15
Thompson advertisements: "Based on the findings, Generation Y is obviously more
environmentally conscious and socially savvy, which is expected given that many are
aware of the issues surrounding globalization and trade and how this can negatively
affect the environment, labor pool and the local communities."
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.
16
addressed, greenhouse gas trading can play an important role supporting activities that
benefit people’s lives and the environment.
One of the most popular trend in the business is emission trade or Emissions trading (or
emission trading) which is an administrative approach used to control pollution by
providing economic incentives for achieving reductions in the emissions of pollutants. It
is also called cap-and-trade .A central authority (usually a governmental body) sets a
limit or cap on the amount of a pollutant that can be emitted. Companies or other groups
are issued emission permits and are required to hold an equivalent number of allowances
(or credits) which represent the right to emit a specific amount. The total amount of
allowances and credits cannot exceed the cap, limiting total emissions to that level.
Companies that need to increase their emission allowance must buy credits from those
who pollute less. The transfer of allowances is referred to as a trade. In effect, the buyer
is paying a charge for polluting, while the seller is being rewarded for having reduced
emissions by more than was needed. Thus, in theory, those who can reduce emissions
most cheaply will do so, achieving the pollution reduction at the lowest cost to society.
There are active trading programs in several air pollutants. For greenhouse gases the
largest is the European Union Emission Trading Scheme. In the United States there is a
national market to reduce acid rain and several regional markets in nitrogen oxides.
Markets for other pollutants tend to be smaller and more localized.
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
17
"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.
Car-sharing services address the longer-term solutions to consumer needs for better fuel
savings and fewer traffic tie-ups and parking nightmares, to complement the
environmental benefit of more open space and reduction of greenhouse gases. They may
be thought of as a "time-sharing" system for cars. Consumers who drive less than 7,500
miles a year and do not need a car for work can save thousands of dollars annually by
joining one of the many services springing up, including ZipCar (East Coast), Flex Car
(Washington State), and Hour Car (Twin Cities).
Electronics sector
The consumer electronics sector provides room for using green marketing to attract new
customers. One example of this is HP's promise to cut its global energy use 20 percent by
the year 2010. To accomplish this reduction below 2005 levels, The Hewlett-Packard
Company announced plans to deliver energy-efficient products and services and institute
energy-efficient operating practices in its facilities worldwide.
New Delhi, capital of India, 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.
CONCLUSION
Green marketing is still in its infancy and a lot of research is to be done on green
marketing to fully explore its potential .Think of a refrigerator for example. While we
may have had to be convinced in the 1950s to buy a refrigerator, we would have wanted
18
the great white box to have attractive looks till the 1970s, but in today's uncertain world,
we might ask ourselves about the impact of the chlorofluorocarbons (CFCs) that our
refrigerator is emitting and demand a more environmentally friendly refrigerator.
So, if today's successful marketing is about appealing to personal values and delivering
consumer empowerment, then surely the time is right to inject sustainable development
into the marketing mix to help address some of the gritty issues presently faced by our
planet .Green marketing methods may produce highly effective results if used cautiously
and with integrity.
19