Building Green – Marketing Green

INTRODUCTION

The construction sector is increasingly important for the Indian economy. It contributes
nearly 12% to India's GNP and is growing at more than 9% per year. India saw a growth
of around 30% in the real estate sector, constructing around 40 million sq. m every year
divided equally between the residential and the commercial space, 50% of which is the
public sector construction.

According to 'Housing Skyline of India 2007-08’, a study by research firm, Indicus

Analytics, there will be demand for over 24.3 million new dwellings for self-living in
urban India alone by 2015. Simultaneously, the rapid growth of the Indian economy has
had a cascading effect on demand for commercial property to help meet the needs of
business, such as modern offices, warehouses, hotels and retail shopping centers. The IT
and ITES alone is estimated to require 150 million sqft across urban India by 2010.
Similarly, the organized retail industry is likely to require an additional 220 million sqft
by 2010. An additional 60,000 quality rooms are to be added in the Indian hotel industry
by 2012.

The building sector accounts for 30-40% of the total global energy consumption, 80% of
which is consumed during the operational stage of a building and 20% during its
construction phase. In Commercial Buildings, the Annual energy consumption per sq. m.
of the floor area is about 200 kWh or even more.

Judicious building and system design can reduce energy consumption by 30-40% over
the conventionally designed buildings. Such building which caters to the saving of energy
and provides other tangible and intangible benefits is called a Green Building. The term
‘Green’ quantifies the eco friendliness of a building.

With 40m sq. m. of floor area being constructed every year in India, it has only 173m sq.
ft. of green building footprint. 308 buildings have been registered with 35 been certified
by GBC (LEED) and 10 buildings have been registered with TERI (GRIHA)

GREEN BUILDINGS

Definition

Green building is the practice of increasing the efficiency with which buildings use
resources — energy, water, and materials — while reducing building impacts on human
health and the environment during the building's lifecycle, through better siting, design,
construction, operation, maintenance, and removal.

Green buildings are designed to reduce the overall impact of the built environment on
human health and the natural environment by:
 • Efficiently using energy, water, and other resources
• Protecting occupant health and improving employee productivity
• Reducing waste, pollution and environmental degradation

‘Greenness’ of a building is actually determined on the basis of the energy saving

achieved during its construction and operation. Ratings to a building as regards to the
‘Greenness’ are awarded by certification agencies based on certain preset norms: LEED
India by Indian Green Building Council, GRIHA by The Energy Research
Institute(TERI), certification norms are beyond the scope of this paper.

A green building uses less energy, water and natural resources, creates less waste and is
healthier for the people living inside compared to a conventional building. Green
buildings consume at least 40-50 % less energy and 20-30% less water vis-à-vis a
conventional building. This comes at an increased up front cost of 5-8% which is paid
back in 3-5 years of the operation of the building.

Considering the total construction activity within the building sector and recognizing the
established savings, over the life cycle of the building, there is a tremendous potential of
‘Green Building’ construction in India. Apart from the economic saving, another factor
acting as a catalyst towards the growth of green buildings is the concern for the
environment.

With increasing energy prices, diminishing conventional sources of energy and increased
production of GHG (Green house Gases), ‘Green Buildings’ are the need of the hour.

CATALYSTS FOR GOING GREEN

Environment

Part of the CSR is considered being able to help conserve the environment and be a
contributor towards reducing the carbon content. Corporate, Real estate developers,
architects and the public are increasingly becoming aware of the green house effect and
the benefits of harnessing the limited natural resources. It is extremely important to
reduce and perhaps, one day, eliminate those impacts.

Vaastu Science being part of Indian heritage has encouraged Indians to adopt the same
which reflects the sensitivity of the end users towards thoughtless exploitation of the ever
depleting natural resources. Use of the Vaastu Science in a building knowingly or
unknowingly makes a building go green to a certain extent.

The building industry in India has taken up the lead in going green. Builders like DLF,
Hiranadani, Raheja etc are coming up with a large number of Green projects with the
basic idea of green as change, environmental impact of buildings being one of the
concerns for the change. The Indian Corporate sector is also embracing this change with
the IT sector taking the lead. Giants like WIPRO, Infosys, TCS have joined the Green
Movement.

Operational Costs

Energy

Green buildings are 25-30% more energy efficient. Perhaps the most compelling
argument for green buildings is their proven ability to provide monetary savings over
time. Small initial investments produce big savings, which come from the following
sources:
• Better energy performance
• Smarter material and system selection
• More desirable product
• Reduced payroll costs

Several studies have borne out the fact that our building design does not take into
consideration efficiency aspects. As a result, in Commercial Buildings, the Annual
energy consumption per sq. m. of the floor area is about 200 kWh or even more. Efficient
design alone has the capability to reduce the same to 120-160 kWh.

Table (i) shows the savings in Green buildings by reduction of energy consumption.
Green buildings advocates the use of renewable resources and implement designs which
would consume least energy for air temperature control, lighting and air flow, the three
being major consumers of energy in a servicing building.

Table (i) Energy Consumption Savings in Green Buildings

Consumption Annual
Consumption of LEED Energy
%
Built-up of Designed Savings
Building Reduction
Area(Sq.ft) Conventional Building (Rs in
Building(kWh) (kWh) Lakhs)

Wipro
Technologies, 102
1,75,000 48,00,000 31,00,000 40%
Gurgaon

ITC Green
Centre, 90
1,70,000 35,00,000 20,00,000 45%
Gurgaon

CII Godrej
GBC, 9
20,000 3,50,000 1,30,000 63%
Hyderabad

Source – CII GBC

India lies in the sunny regions of the world and boasts of around 200-300 clear sunny
days in a year, with estimates suggesting that it receives about four-seven kwh / sq m of
sunlight in a day. This equals to over 5,000 trillion kw /year, which is far more than total
energy consumption of the country in a year. Also, the solar energy received is thousand
times higher than predicted electricity demand in India by 2015.

Water

Water use in buildings represents the vast majority of the world’s consumption of potable
water. A green building addresses the need for efficient and reduced water use in
buildings foremost through conservation. Savings in a green building due to water are not
only due to conservative use of water but also through waste water reduction and
treatment of waste water for reuse. Green buildings achieve reduction of water
consumption by 20-30% vis-à-vis conventional building.

Indoor Environment Quality

A major tenet of green building design is the improvement of indoor environmental

quality. Providing brighter, better-ventilated spaces not only benefits the environment —
by reducing pollutant emissions in workspaces through the use of non-toxic cleaning
chemicals, paints, sealants and furniture — but also improves the productivity of workers
in that space. Studies have uncovered productivity increment of a green building of the
order of 1-25%. In a residential set up this would mean a healthier environment to live in
with improved air and light quality.

Government Involvement

The Energy Conservation Building Code (ECBC) sets a minimum efficiency standard for
commercial buildings in all five climate zones in the country. The estimated reduction in
energy use for new buildings ranges from 25% to 40%. Green building is invariably
aimed at reducing this usage of energy in buildings. Thus, if a building is built green it
would satisfy the requirement of saving energy as laid down by the ECBC

Ministry of Power recognizes building units which achieve energy savings and has
incepted awards ‘National Award for Energy Conservation’ for the same as a mark of
appreciation.

In a joint initiative undertaken by The Energy and Resources Institute (TERI) and the
Ministry of New and Renewable Energy, green buildings will now be rated on a national
scale called GRIHA. The Union Ministry outlined an incentive program for buildings
which will henceforth register with GRIHA, the national ratings for green buildings.
Under the incentive program, one such is the waiver of nearly 90 per cent of the
registration fee if the building acquires a three star rating.
ISSUES IN PROMOTING ‘GREEN BUILDINGS’

Awareness and Reach Out

Everyone talks ‘Green’, but the irony of the whole issue is the lack of understanding and
awareness of the concept of green. With the growing concern of the depleting energy
sources in the general educated masses the awareness of countering such situations has
been a matter of discussion with a select few, largely the academicians, environmentalist
and the practitioners. However, a product is successful only if there is a demand for it and
demand for Green buildings shall grow with the growing awareness of the end users of
such built up environments. The benefits, both tangible and intangible, have to be
conveyed to the end user for him to appreciate the green concept and demand for such
buildings.

First Cost

Green building skeptics sometimes think that it is difficult or even impossible to build a
green building without paying a big higher upfront cost. A 2004 study by Davis Langdon
Adamson, a construction cost-planning and management company found that the first
costs of constructing a sustainable building tend to match or only slightly exceed those of
comparable non-green buildings. The study, Costing Green: A Comprehensive Cost
Database and Budgeting Methodology, measured the square-foot construction costs of 61
buildings(US based) seeking certification under the LEED green building rating system
against those of buildings of similar type that did not aim for sustainability. Taking into
account a range of construction factors including climate, location, market conditions and
local standards, the study found that for many of the green projects, pursuing LEED
certification had little or no budgetary impact. This report looked at only the construction
cost. However, it is a well known fact that the cost analysis of a green building should be
done holistically considering the operational and maintenance implications, user
productivity and health and the likes.

The Indian scenario for the upfront cost of a green building is slightly different. In mature
markets the premium upfront cost for a green building is in the range of 1-6%. Cost
premium in India ranges from 6-18% as mentioned in a report ‘Greenomics – Cost
efficiency of green buildings in India’ as study conducted by JLLM. Table (ii) looks at
some of the LEED certified buildings in India.

Table (ii) – LEED certified buildings in India

Green Buildings in India
Increas Paybac
Built-up
e in k
Area Rating
Name of the Project Location Cost Period
(sq ft) Achieved (%) (years)

Hyderaba
CII-Sorabji Godrej GBC 20,000 Platinum 18 7
d
ITC Green Centre Gurgaon 170,000 Platinum 15 6
Gurgaon
Wipro 175,000 Platinum 8 5
Technopolis
Kolkata 72,000 Gold 6 3

Spectral Services Noida

15,000 Platinum 8 4
Consultants Office
Grundfos Pump Chennai 40,000 Gold 6 3
Hyderaba
HITAM 78,000 Silver 2 3
d
Source: CII

The cost premium being on the higher side in the Indian scenario is attributable to the
following issues
• The still-evolving nature of green buildings;
• The lack of technical information;
• The incomplete/inefficient execution of green projects;
• The short-term view on returns, instead of focusing on lifetime return on
investment (ROI) of these buildings

This difference in cost premium should realign to the mature markets with increase in
awareness and availability of resources.

Life cycle analysis of a building project is rarely carried out at the conception stage.
Though the upfront cost of a green building is higher in majority of the cases, the benefits
that flow to the end users should be included when understanding the financial
implications of the project. Should the operating costs, maintenance cost and the quality
of life within the built up space be considered, green project would always be preferred
over a conventional building.

Other issues

A major bottleneck in the growth of green buildings is the availability of green materials.
Green building materials are composed of renewable, rather than nonrenewable
resources. Green materials are environmentally responsible because impacts are
considered over the life of the product. The lack of available materials might also
discourage developers to pursue green building developments. Another issue which
restricts the popularity of green buildings is the lack of professional support for
facilitation of ‘Green Building’ certification and consultancy services for earning carbon
credits. However with the growing awareness on sustainability within India, competency
among consultants in the construction and real estate industry will increase. This will in
turn facilitate developers with their professional support. Also, any turbulence in the real
estate industry will directly affect developers’ propensity to invest in additional cost
centers such as a premium on green buildings.
Going green may need integrated design process and involvement of new agencies, and
this is where uncertainty creeps in. Lack of experienced workforce in this field is a huge
problem as untrained service providers pose a huge risk here. Due to the shortage of well-
trained project managers, there is a possibility of specifications being ignored; poor
workmanship could affect the quality of work. What is required to resolve such problems
is the scaling up of training and research & development initiatives.

MARKETING STRATEGY TO PROMOTE GREEN

BUILDINGS
Segmentation Targeting and Positioning

STP or the ‘Segmentation, Targeting and Positioning’ forms the essence of any
marketing strategy. With a view to develop our strategy for marketing, applying the
concepts of STP is essential.

Segmentation

Market segmentation facilitates understanding of the most profitable segments for any
product. Considerations of demography, geography, physiography etc enables
segmentation. It is certain that age, sex, income etc will have negligible impact on buying
green buildings. However, geographical location would/could have a minor effect on a
buyer with regards to the creating a conducive environment for a working or a dwelling
unit.

An effective segment which is likely to take up a green building project would be the
innovators willing to take up risk. This segment tends to be the industry leader.
Segmentation for a green building can be viewed as two different focus areas, the B2B
(Business to Business) and B2C (Business to Consumers). Even within these two the
B2B would me most promising and the sectors within the business to be sought at would
be the corporate houses, the commercial offices and retail spaces and government
buildings. The industrial units would not be an advisable segment.

Trends have shown that B2B marketing could be the most effective tool of selling green
buildings. Corporates have shown keenness for going green, be it public or private, profit
or non-profit making. However one should consider the requirements of different sectors
before approaching the same.

As discussed in the paper green buildings have a higher upfront cost, therefore it becomes
financially more difficult to take up a green project. Customers who have greater
financial capabilities are the ones likely to adopt green buildings more easily. Point worth
mentioning here is the life cycle cost of the green buildings is much less than the
conventional building. Corporates and industrial houses which can demonstrate financial
capabilities and where the nature of the work is more desktop oriented like banks, IT and
ITeS, educational institutes, government offices etc. are likely segments willing to go
green. Such customers would adopt green buildings also because it would add to their
brand name and reflect as being and organization concerned about the society at large.
Such an issue is recognized as societal marketing covered later in the paper.

Individuals concerned about the environment would also join the bandwagon provided
they are willing to pay an extra amount at the initial phase of their purchase of the built
environment. Also, as individuals who would be experiencing the benefits of green
buildings at their workplaces would, over a period of time, want such an environment in
their homes reaping the benefits and eventually add to their savings.

Targeting

• Targeting is a critical component of setting marketing strategy; one simply must

limit the number of competitive targets in order to focus on those most likely to
be successful.

While deciding the target strategy for green buildings, the one strategy which makes
sense is the niche marketing. A niche market is a focused targetable portion (subset) of a
market. A business that focuses on a niche market is addressing a need for a product or
service that is not being addressed by mainstream providers. A niche market may be
thought of as a narrowly defined group of potential customers.

Prime targets for green buildings could be those B2B customers which share the
following characteristics: -
• Early adopters of new technology
• Significant users of new approach
• Opinion leaders
• Approachable at low cost i.e. existing clients

Positioning

Positioning is a communications activity that aims in changing the view of an

organization in the mind of the target prospect, so as to create a ‘difference that makes a
difference’. Such an activity is important when the product/innovation has already been
diffused in the market and the product/concept/innovation has been accepted by the end
users.

Unfortunately, a green building is fairly a very new concept yet to mature in the Indian
market. It is in the development phase of its life cycle. Thus there are not many players
competing to be working for green projects. Thus making a difference as compared to the
other competitors is not an issue at this stage of the life cycle of the green building in the
Indian environment.
Societal Marketing Strategy

The societal marketing concept is an enlightened marketing concept that holds that a
company should make good marketing decisions by considering consumers' wants, the
company's requirements, and society's long-term interests.

The concept has an emphasis on social responsibility and suggests that for a company to
only focus on exchange relationship with customers might not be suitable in order to
sustain long term success. Rather, marketing strategy should deliver value to customers in
a way that maintains or improves both the consumer's and the society's well-being. The
societal marketing concept holds that the organization’s task is to determine the needs,
wants, and interests of target markets and to deliver the desired satisfactions more
effectively and efficiently than competitors, in a way that preserves or enhances the
consumer's and the society's well-being.

The sole function of a built environment is not to provide shelter but to provide an
efficient shelter which would require minimal maintenance and operation and should
create a healthy living environment for its dwellers. Preservation of energy and water
becomes the most important factor for saving costs and simultaneously saves the society
by conserving the pereshing natural resources.

Joining the new Green Market Place is done so out of commitment towards the
environment, enhancing the buildings’ USP and simply to be part of an emerging
movement. However, it is hard to ignore the bottom line — sustainable developments are
the most lucrative business model of the future, both in India and elsewhere in the world.
For companies that deal in real estate, environmental sustainability is not a concept too
distant from business sustainability. Growing awareness of this fact, and also that
sustainable real estate will be the primary focus of foreign investments has helped keep
interest in this concept alive.

Product Life Cycle Strategy

All products and services have certain life cycles. The life cycle (Fig (i)) refers to the
period from the product’s first launch into the market until its final withdrawal and it is
split up in phases. During this period significant changes are made in the way that the
product is behaving into the market. Life Cycle of a product or a service can be divided
into four basic stages –
• Introduction phase
• Growth phase
• Maturity phase
• Decline phase
 Fig (i) Product Life Cycle

In the introduction stage, the product is introduced to the market through a focused and
intense marketing effort designed to establish a clear identity and promote maximum
awareness so as to create primary demand for green buildings as a product. Many trials
and impulse purchase will occur at this stage. In India green building as a product is in its
introductory phase. A product in its introduction phase concentrates on knowledge
creation which is the requirement of a green building as concept and a product.

Once the product gets introduced it enters the growth phase, which is distinguished by the
increase in the sales and emergence of competitors. As the green building product gets
diffused completely into the masses and make its presence felt the demand would
multiply. In such a stage the growth of the product would certainly encourage emergence
of multiple players providing the product. This would lead to generation of more intense
competition and would advocate a change in the marketing strategy. However, during this
stage the players which are veterans of the field will have a certain advantage as they
would be high on the learning curve.

CONCLUSION
The need of the green buildings has been long felt. It is for the industry and the
government to see that more and more buildings go green. Green buildings are yet to
make their mandatory presence felt within the masses. From a business point of view the
need of the time for going green is the right kind of marketing approach – the niche
marketing strategy with a tint of societal marketing approach and slowly transfer to the
differentiation strategy as and when the product enters the growth phase.
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