GREEN MARKETING



Green Marketing 300
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Environmentally responsible or "green" marketing refers to the satisfaction of consumer needs, wants, and desires in conjunction with the preservation and conservation of the natural environment. Considered an oxymoron by many environmentalists (because it still promotes consumption, albeit so-called responsible consumption), green marketing manipulates the four elements of the marketing mix (product, price, promotion, and distribution) to sell products and services offering superior environmental benefits in the form of reduced waste, increased energy efficiency, and/or decreased release of toxic emissions. These benefits are frequently estimated using life-cycle analysis (LCA) studies, which measure the environmental impact of products over their entire life cycle—resource extraction, refining, manufacturing, transportation, use, and disposal.

Green consumerism is based on public awareness of pressing environmental issues. Green marketers hope to capitalize on this by developing strategies that allow consumers to integrate green products into their lifestyles. Many such efforts by green marketers have met with considerable success. The "organic" industry, for example, which specializes in the sale of organically based foods, health and nutritional products, and other green lifestyle items, saw its sales boom in the 1990s, from $1 billion in 1991 to $3.3 billion in 1996.

BEGINNINGS OF ENVIRONMENTALISM

Environmental concern in the United States has ebbed and flowed with the times. The first wave of environmentalism began in the late 19th century and was hallmarked by the preservationist-conservationist debates between naturalist John Muir (1838-1914) and Gifford Pinchot (1865-1946), the first chief of the U.S. Forest Service. Many of the early attempts to promote environmentalism involved simply setting aside relatively undisturbed natural habitats in parks or reserves, but little attention was paid to what was happening on land already occupied by human industry. In 1962, Rachel Carson's (1907-64) monumental book on the harmful effects of the pesticide DDT, Silent Spring, touched off another wave which took hold in the turbulent 1960s and lasted until the early 1970s. Much of our current environmental legislation stems from concerns raised during this period. In 1976, marketing scholars Karl E. Henion II, and Thomas C. Kinnear introduced the concept of ecological marketing as being "concerned with all marketing activities (1) that have served to help cause environmental problems and (2) that may serve to provide a remedy for environmental problems." Shortly thereafter, the nation was hit by hard economic times and little attention was paid to either the impact of business on the environment or ecological/green marketing strategies for the remainder of the decade.

In the late 1980s, a renaissance of environmental concern swept through the country, sparked by fears of global warming, loss of the earth's protective ozone layer, destruction of tropical rain forests, and changing perceptions of mankind's place in the world. This "third wave" of environmentalism differed from earlier periods in two significant aspects: (1) the most pressing environmental problems were now seen as global, rather than local, in scope; and (2) businesses were responding much more proactively and much less antagonistically than in former times. Many businesses believe long-term success in the 21st century will require increased attention to environmental issues.

Green marketing emphasizes environmental stewardship. Alma T. Mintu and Hector R. Lozada define green marketing as "the application of marketing tools to facilitate exchanges that satisfy organizational and individual goals in such a way that the preservation, protection and conservation of the physical environment is upheld." Walter Coddington defines environmental marketing as "marketing activities that recognize environmental stewardship as a business development responsibility and business growth responsibility." Others have focused more on strategic dimensions in defining green marketing; for example, Martin Charter defines it as "a holistic and responsible strategic management process that identifies, anticipates, satisfies and fulfills stakeholder needs for a reasonable reward, that does not adversely affect human or natural environmental well-being." Finally, Robert D. Mackoy, Roger Calantone, and Cornelia Dr6ge differentiate among three aspects of green marketing, which they identify as demarketing (managing demand to maintain optimal long-term profitability), green marketing (addressing the needs and wants of a segment of consumers expressing environmental concerns), and social marketing (adapting marketing tactics and strategies to the development and promotion of social goals).

All of these definitions enlarge the traditional objective of business to maximize profits by including some notion of maintaining the integrity of the natural environment. Operationally, green marketing seeks to satisfy the needs and wants of individual consumers while simultaneously seeking to improve environmental quality of life for society as a whole. Environmental concerns thus act as constraints on business operations, echoing a passage from the Great Law of the Iroquois Confederacy: "In our every deliberation, we must consider the impact of our decisions on the next seven generations."

THE GREENING OF BUSINESS

A number of factors have caused business firms to behave more responsibly towards the natural environment. Perhaps foremost among these is the possibility of capitalizing on opportunities from the sale of environmental services and/or "earth-friendly" products. Environmental awareness has increased dramatically, particularly since the organized environmental movement emerged in the late 1960s. Issues ranging from global warming to animal rights to species preservation to the protection of wetlands are now prominent in the media and in the minds of consumers. "Green" consumers have thus arisen with preferences for products made from recycled materials or products whose use entails reduced environmental impact. Often such products command premium prices, and therefore the task of marketers has become all the more crucial.

As landfills fill up and public opposition mounts against opening new ones (the NIMBY, or "Not In My Back Yard," syndrome), waste treatment and disposal costs rise. Storage, transport, and disposal of hazardous wastes is quickly becoming unaffordable for many firms, stimulating a search for less-toxic alternative processes. Furthermore, liability and litigation costs for environmental damages are skyrocketing with little sign of abatement. At the time of the first Earth Day in April 1970, there were approximately 2,000 federal, state, and local environmental regulations. In the late 1990s there were approximately 100,000 such rules. By some estimates, U.S. businesses have spent well over a trillion dollars since the 1970s on environmental law compliance.

Faced with a growing environmental consciousness, many business firms are adopting a pro-environment stance in hopes of improving credibility with the public. Unfortunately, some companies have been a bit overzealous with their environmental claims, prompting cries of "greenwashing" from critics. Another impetus causing business to embrace environmental concerns is to attract better employees and/or improve working conditions. Many young people entering the workforce today exhibit greater social concerns than those of ten years ago, and many wish to join firms perceived to be making a positive contribution to society.

Environmental regulations continue to increase in both number and complexity. Some firms have identified opportunities in this changing legal environment and are making changes to drive regulation for purposes of competitive advantage. Because many regulations require use of the "best available technology," firms actively involved in developing and implementing new technologies may achieve the benefits of monopoly status for a short while.

Companies are also becoming more environmentally responsible as part of an overall commitment to Total Quality Management or sustainable development. Sustainable development involves meeting the needs of the present without compromising the ability of future generations to meet their own needs.

CRITICISMS OF THE CONSUMPTION
CULTURE

Traditional marketing attempts to identify and meet latent, current, or future consumer needs by manipulating the so-called four Ps: price, promotion, product, and place (distribution channels). These objectives have historically been identified with efforts to increase consumption of material goods and services, practices not particularly compatible with the notion of a sustainable society. Environmentalists have criticized various aspects of the consumption culture, particularly its wasteful and pollutive production and disposal processes. Managers should keep these critiques in mind when creating green marketing strategies. Green marketing can accommodate these concerns in a way that remains attractive to consumers by addressing the environmental and consumer advantages inherent in the product.

GREEN PRODUCTS

There is no widespread agreement on what exactly makes a product green. Some general guidelines include that a green product

Other favorable attributes from the green point of view are the incorporation of recycled materials into the product and the product's own recyclability.

A great deal of work in the determination of these factors is concerned with a product's environmental impact at various stages of its useful life. Life cycle analysis (LCA) and product line analysis (PLA) studies measure the environmental impact of products over their entire life cycle, that is, from the "cradle to the grave." Such studies track resource use, energy requirements, and waste generation in order to provide comparative benchmarks enabling manufacturers and consumers to select products involving the least impact upon the natural environment. Though useful, LCA studies have been criticized for their subjectivity in setting analysis boundaries and for difficulties in establishing comparable impacts across environmental media, e.g., "How many tons of carbon dioxide emissions equal the release of one picogram of dioxin?"

Information from these studies and additional consumer research is being used to develop new products and to redesign existing products and services in order to reduce environmental impact. The U.S. Office of Technology Assessment (OTA, a congressional research department that was closed in 1994) advocated green design: "a design process in which environmental attributes are treated as design objectives, rather than as constraints … green design incorporates environmental objectives with minimum loss to product performance, useful life or functionality." "Design for the environment," "design for durability," and "design for disassembly" have become popular phrases at companies seeking to prevent waste and manage material flows more efficiently. Products and packaging are being redesigned to use less materials or to be easily disassembled so high-value components can be recycled or refurbished more readily. Of course, numerous trade-offs must be made weighing health and safety attributes and consumer desires for convenience against packaging, energy use, and recycling requirements.

GREENER PRICING

A central concern of many environmentalists is that product prices do not reflect total environmental costs. Waste disposal costs, for instance, are frequently incurred on a fixed-fee basis, regardless of how much waste is actually generated. Similarly, the national accounting systems of most countries do not incorporate the costs of environmental degradation or depletion. After-the-fact expenditures on pollution control and remediation are included, albeit as income. Greener pricing decisions are based on the premise that goods and services associated with greater environmental damage should cost more.

A number of companies have undertaken audits of their production processes to identify hidden environmental costs and to provide better information for pricing decisions. Emissions charges, carbon taxes, and increased fines are possible methods governments might use to implement better environmental costing. European firms have been particularly proactive in this area, developing a method of environmental auditing (the ecobalance) bridging the gap between standard accounting practice, in which data are expressed solely in conventional monetary terms, and qualitative environmental impact reports.

Research conducted by the Roper Organization in 1990 identified five different groups of environmental consumers with varying degrees of commitment to purchasing environmental products. The premium on a product's price tag people were willing to pay for perceived environmental benefits varied widely from about 3 percent for the least-committed group to approximately 20 percent for individuals espousing the highest level of commitment. Across the board, consumers indicated a willingness to pay an average premium of approximately 6.6 percent for products with positive environmental attributes. Attitudes do not always translate into action, of course, but environmental attributes do seem to be "tiebreakers" for customers faced with a choice between two products offering similar benefits and prices.

In 1996 Roper conducted another study to examine the demographics of green consumers. The study revealed, for example, that women were on average slightly more likely to be green-conscious consumers than were men. Those over the age of 60 constituted the least likely green consumption demographic. Furthermore, there was a general indication of greater green consciousness in the consumption habits of people in higher income brackets and with greater educational backgrounds. However, between 1990 and 1996, the overall percentage of the U.S. population committed to green products actually seemed to decline, particularly as measured by how much extra they were willing to pay. The average premium among all environmental consumers was just 4.5 percent, according to the survey, down by nearly a third from 1990. Overall, the number of people who expressed the highest commitment to the environment declined, and the number voicing the least concern grew. The middle group, which expressed only limited commitment to environmental causes but was still willing to pay on average 4 percent extra for green products, expanded from a quarter of the population to one-third. As of 1996, the two of the five groups that were most committed made up just 15 percent of the population, while the two groups that were least committed accounted for 52 percent.

GREEN PROMOTION

Perhaps no area of green marketing has received as much attention as promotion. In fact, green advertising claims grew so rapidly during the late 1980s that the Federal Trade Commission (FTC) issued guidelines to help reduce consumer confusion and prevent the false or misleading use of terms such as "recyclable," "degradable," and "environmentally friendly" in environmental advertising.

The FTC offers four general guidelines for environmental claims:

  1. Qualifications and disclosures should be sufficiently clear and prominent to prevent deception.
  2. Environmental claims should make clear whether they apply to the product, the package, or a component of either. Claims need to be qualified with regard to minor, incidental components of the product or package.
  3. Environmental claims should not overstate the environmental attribute or benefit. Marketers should avoid implying a significant environmental benefit where the benefit is, in fact, negligible.
  4. A claim comparing the environmental attributes of one product with those of another product should make the basis for the comparison sufficiently clear and should be substantiated.

The FTC's Environmental Marketing Guidelines provides additional guidance for a number of specific claims including "Degradable/Biodegradable/Photodegradable," "Compostable," "Recyclable," "Recycled Content," "Source Reduction," "Refillable," and "Ozone Safe/Ozone Friendly." They strongly recommend avoidance of overly general claims such as "environmentally friendly." In 1996, the FTC updated the guidelines, substantially refining and detailing these issue-specific guidelines in order to over-come what critics called the ambiguous nature or "flexibility" of private labeling practices.

ECO-LABELING.

Environmental certification or labeling programs attempt to increase consumer awareness and knowledge of environmental issues. Marketers use eco-labels to convey information about a product's environmental benefits and to differentiate among competing products. Eco-labels may identify a product's contents, e.g. the triangular arrangement of arrows on recycled paper and plastic products, or highlight other benefits, e.g., reduced water usage or increased energy efficiency. At least 25 countries maintain eco-seal programs, usually whereby seals are awarded for specific environmental attributes. Germany's "Blue Angel" program is the oldest and most successful eco-labeling program. Introduced in 1977 by the federal minister and ministers for environmental protection of the various German states, it now appears on more than 4,000 different products. The Blue Angel is awarded on the basis of comparisons with similar products, and is designed to guide consumers in their purchasing decisions. For instance, a product may have particularly low pollutant or noise emissions, entail less wastes in its production, or be designed for easier recycling than its competitors. The Blue Angel has proven to be a useful selling tool in Germany's ecologically conscious society. A few other countries have established eco-labels, though none has yet had as great an impact as the Blue Angel.

In the United States, two private firms, Scientific Certification Systems and Green Seal, have developed guidelines to identify environmentally preferable products. Scientific Certification Systems, a private testing concern, awards a "Green Cross" for products meeting very specific criteria, e.g. X percent recycled content, less than Y percent pesticide residues, and so on. Green Seal, a nonprofit organization formed in 1990, is engaged in more ambitious efforts using life-cycle analysis to identify a product's impact on the environment at all stages of its life. The group has demarcated 84 categories of products (and according standards) that qualify for certification.

Eco-labeling programs increase awareness of environmental issues, set high standards for firms to work towards, and help reduce consumer uncertainty regarding a product's environmental benefits. They have also been criticized as confusing, misleading, overly simplistic and prone to manipulation by firms with less-than-honorable intentions. Thus far, aside from some Environmental Protection Agency (EPA) programs discussed below, the U.S. government has resisted instituting an officially sanctioned eco-label program.

ECO-SPONSORING.

Another avenue for companies to promote their ecological concern is to affiliate themselves with groups or projects engaged in environmental improvements. In its simplest form, firms contribute funds directly to an environmental organization to further the organization's objectives. Another approach is to "adopt" a particular environmental cause, e.g. a community recycling program, demonstrating the company's willingness to put its money and its reputation on the line. Sponsoring educational programs, wildlife refuges, and clean-up efforts communicates a firm's commitment to finding environmental solutions. Partnerships with environmental organizations can open lines of communication and provide new perspectives on "business as usual."

The EPA, for example, sponsors the Energy Star and Green Lights Buildings programs, in which partners in industry agree to upgrade their facilities over time to reflect environmental concerns (usually energy efficiency and waste minimization). The EPA, in turn, agrees to provide technical support and labeling, which contributes to a green marketing program.

In considering an eco-sponsorship, firms must address the problems of legitimacy and believability. Not all environmental sponsorships are legitimate or appropriate for a particular company's needs. Chemical firms, for instance, may find it difficult to support Greenpeace's anti-chlorine campaign. Believability is even more critical. Business firms consistently rate lowest in surveys of credibility with consumers. Ecosponsoring should not be used as an alibi for a firm's day-to-day actions.

GREENER DISTRIBUTION

Logistics and transportation costs are coming under greater scrutiny due to rising fuel prices, congested highways, and global-warming concerns. Package redesign for lighter weight and/or greater recyclability reduces waste while simultaneously reducing costs. In some countries, marketers must also consider two-way flows, as governments pass legislation requiring manufacturers to take back products at the end of their useful life ("reverse logistics"). Germany is again the world leader in this arena; it has already passed ordinances targeting the electronics, automobile, and packaging industries.

Faced with the undesirable option of accepting used packaging from consumers, German manufacturers banded together in 1990 to create the "Dual System"—an alternative, country-wide waste management system that guaranteed the collection and recycling of various packaging materials. Administered by the Duales System Deutschland (DSD), a consortium of retailers, distributors, manufacturers, waste haulers, and recycling firms, the system requires manufacturers to pay a small fee for the right to display a green dot (griiner Punkt) on their products, indicating that the packaging is eligible for recycling by the DSD.

Green marketing strategies are also reducing inventory and production costs. Standardization and identification of product parts and packaging materials benefits the environment by reducing complexity and improving efficiency. Substituting electronic or computer controls for analog devices improves quality and reduces waste.

STRATEGY AND TACTICS

Green marketing as a subdiscipline is only a few decades old, and much remains to be learned about consumer preferences, product substitutions, and environmental tradeoffs. Nonetheless, a few principles useful in developing a green marketing strategy have emerged.

Perhaps most obviously, the more recognizable the "green credentials," the greater the chances of a successful marketing campaign. A green product that properly addresses a well-known environmental issue of prominent concern, or that displays a well-established and respected eco-seal, will be more likely to win favor among green consumers.

In reacting to environmental constraints required by green marketing, managers should apply the Precautionary Principle. Environmental issues are fraught with scientific and social uncertainties. There is significant debate, for example, regarding the effects of global warming and thinning of the ozone layer. In designing new products and services, marketers should choose a strategy providing benefits even if the environmental issue proves inconsequential. For example, improving energy efficiency reduces carbon dioxide emissions, a primary factor in global warming. It also reduces energy use and saves money, making it a "no regrets" decision, even if global warming is not as severe a problem as some environmentalists suggest.

Governments are increasingly adopting the "polluter pays" principle, establishing environmental liability for manufacturers and businesses engaged in polluting activities. Neither environmental legislation nor waste cleanup costs are likely to decrease in the coming decades, suggesting that a proactive strategy aimed at reducing waste and pollution at the source will yield both financial and environmental benefits. Indeed, pollution prevention is recommended by the U.S. Environmental Protection Agency as the most appropriate course of action for dealing with environmental problems. Firms needing an extra nudge towards this position might consider the features of the federal government's Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (Superfund), which assigns retroactive and shared liability to owners, transporters, and generators of hazardous wastes that violate its requirements.

The so-called principle of cooperation advises marketers to interact more closely with communities and governments in addressing environmental problems and communicating their respective expectations and concerns. Failure to work together on a voluntary basis may lead to additional regulations and requirements. For example, the Chemical Manufacturers' Association, a trade organization representing approximately 90 percent of basic industrial chemical production in the United States, requires its members to subscribe to the principles of Responsible Care, a program designed to improve communication about environmental, health, and safety issues between workers and communities. The European Union's Eco-Audit program, also administered on a voluntary basis, shows promise in creating greater opportunities for communication and cooperation between industry, communities, and governments.

Numerous product success stories are associated with the implementation of these strategies. Low-phosphate detergents, CFC-free refrigerators, high-efficiency light bulbs, low-emissions gasoline, lighter-weight packaging, powder paint sprays, and high-quality clothing made from recycled soda bottles are among many examples which might be mentioned. Partnerships between environmental groups and business organizations, such as the Environmental Defense Fund's work with the McDonald's restaurant chain, have increased communication and fostered better understanding of each group's objectives.

CONCLUSION

Green marketing is based on the premise that businesses have a responsibility to satisfy human needs and desires while preserving the integrity of the natural environment. That this latter concern has been ignored throughout most of recorded human history does not mean it will be unimportant in the future. Indeed, there are significant indications that environmental issues will grow in importance over the coming years and will require imaginative and innovative redesign and reengineering of existing marketing efforts on the part of many businesses. Solutions to environmental problems can be characterized into roughly three categories: ethical, legal, and business (economic and technological). Long-term sustainability of the planet is likely to require some rather distinct changes in the ethical behavior of its human population. Barring a crisis, these changes will probably be a long time coming. Legislation is a useful tool for effecting social change; it has a tremendous advantage over moral persuasion in terms of speed and efficacy of implementation, although its results are not always as intended. In the short term, business solutions—the enlightened self-interest of commercial enterprises finding new ways to incorporate technology and carry on exchanges with greater concern for heretofore unpriced environmental goods and services—offer particular promise. Green marketing and the promotion of responsible consumption are part of that solution.

SEE ALSO : Business and Society ; Environmental Law and Business

[ Mark A. White ]

FURTHER READING:

Fuller, Donald A. Sustainable Marketing: Mancigerial-Ecological Issues. London: Sage Publications, 1999.

Mintu-Wimsatt, Alma T., and Michael J. Poloinsky, eds. Environmental Marketing; Strategies, Practice, Theory, and Research. Binghamton, NY: Haworth Press, 1995;

Ottman, Jacquelyn A. and Reilly, William K. Green Marketing:

Opportunity for Innovation. Lincolnwood, IL: NTC Business Books, 1998.

Smith, Toby. The Myth of Green Marketing: Tending Our Goats at the Edge of Apocalypse. Toronto: University of Toronto Press, 1998.

Speer, Tibbett L. "Growing in the Green Market." American Demographics, August 1997.



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