Green Marketing

GREEN MARKETING

1. INTRODUCTION: People around the world are becoming more aware of the environmental stresses humans are placing on the planet. Newspapers, magazines, television, and other media feature wide coverage of environmental problems, whether they are local (e.g., depleted fisheries and air pollution) or global (e.g., ozone depletion and climate change). Many consumers now display concern about environmental deterioration. Increasingly often they ask how much impact a product will have on the environment during its lifespan or during its disposal. This is the major impetus for green products and green marketing. A closely related reason is the competitive advantage or sales potential that some corporations now see in green products. Green Marketing is an attempt to characterize a product as being environmentally friendly. In general green products are made from recycled content and/or designed for reuse, recycling, or remanufacturing. They are usually non-toxic, energy efficient, and durable. However, green is a relative term and depends on the individual situation.

2. DEFINITION: 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 Conventional marketing involves selling products that satisfy consumer needs at affordable prices. Green marketing must also satisfy customer needs at affordable prices, but green marketing has the additional challenge of defining what is green and developing and selling products that consumers will like. Green products balance environmental compatibility with performance, affordability, and convenience. They are typically durable, non-toxic, recyclable, and are often made from recycled materials. Green products have minimal packaging, and should carry low environmental impact. Green product is a descriptive idiom to distinguish a product that has been designed to have minimal impact on the environment. Grenn marketing not only focuses on advertisements and promotion of products with environmental characteristics, but it pervades all the activities of designing, production, packaging and promoting greener products.Green marketing thrives on the underlying philosophy ‘Reduce,Reuse and Recycle.

Unlike the conventional marketing green marketing not only ensures the interests of the manufacturers and consumers but it also ensures environmental friendliness by including the activities related with the protection of natural environment. Thus green marketing should look at minimizing environmental harm, not necessarily eliminating it. 3. NEED: On our planet sources are limited and human needs (wants) unlimited. Recyclable or renewable goods are needed to fulfill the unlimited needs of a costumer. As industries are having limited resources, they have to search for new and alternative ways to satisfy the consumer needs (wants). Thus green marketing is important for the firms to utilize the limited resources satisfying the consumer needs as well as achieving the organization’s selling objectives. Few reasons why firms are adopting Green Mrketing: 1. Social responsibility: Organizations believe that to keep the environment clean is there moral as well as social responsibility. 2. Laws: Laws imposed by various authorities. 3. Competition: Competitor’s environmental activities pressure firms to go for green marketing. 4. Cost Reduction: Reduction in cost due to recycling and material usage forces firms to look for green marketing. 4. COMMERCIAL OPPORTUNITIES:

The demand for greener products undoubtedly exists. And, therefore, the opportunities to capitalize on that demand. Much of the demand will continue to be driven by regulations as producer responsibility, product take-back and recycling schemes evolve. As recent history has shown, the more innovative companies will reap benefits, and those which are radical re-thinking products and processes will be the leaders of the future. The environmental marketplace represents a fertile area for entrepreneurs and existing businessmen alike. The Economist magazine has gone so far as to claim that "For farsighted companies, the environment may turn out to be the biggest opportunity for enterprise and invention the industrial world has ever seen." Indeed, the scope of possible new environment-related enterprise is virtually limitless. Environmental issues affect everybody's lives everywhere, encompass such basic needs as food, clothing, shelter, energy and transportation, and need to be addressed on the international, regional and local levels. A study by Jacqueline A. Ottman found that green offerings accounted for 13.4 percent of all products in 1991 and 20 to 40 percent of all new products in certain categories, including health and beauty aids, pet care, and household and laundry products. It appears the corporate world has sensed a competitive advantage in green marketing that outweighs the risks.

However, early enthusiasm for green products dizzled out in no time to peak again in 1990. Various surveys conducted in 1990’s are an ample testimony to it. In a study made in 1992 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 behavior, including their purchasing behavior, due to environmental reasons. Several surveys conducted in Australia have charted green behavior in the retail market, tracking environmental attitudes, knowledge, and behavior. One of these surveys, conducted in 1997 for a large supermarket chain, aimed to establish opportunities for growth through green marketing. Results of this survey: Of the 95 percent of customers who would consider solar hot water heating, 70 percent were prepared to pay $1,000 more to do so. They showed their willingness to pay 20 – 25% more for greener products. Given these figures, it can be assumed with certainty that firms marketing goods with environmental characteristics will have a competitive advantage over firms marketing non-environmentally responsible alternatives. Marketing green goods will be successful only if there is a demand for green products. Establishing how many environmentally conscious consumers exist in the marketplace is important, but a much greater target is the mass of passive green consumers. If passive green consumers can be motivated by cost-effective and easy-to-execute solutions, big

environmental gains are possible. Hence as long as the people, world over ‘Think Green, Think clean, Think Ecofriendly’ green marketing concept has oceans to made across. 5. MARKETING MIX: Marketing by any company for its product is spelled out in term of promotion, placement, prizing, product differentiation, positioning etc. It is a strategy a company adopts for he marketing of its product i.e. the 4 P’s of marketing. In case of green marketing one can talk of 4 S & 4 Ps of marketing mix4 S's of green marketing mix are: 1) Satisfaction of customer needs. 2) Safety of product and production for consumers, workers, society and the environment. 3) Social acceptability of a product, its production and the other activities of the company. 4) Sustainability of the product, their production and other activities of the company.

Ps of Green Marketing are: 1) Paying customers. What are their needs in relation to green products and services? What information are they receiving about green products? 2) Providers. How green are suppliers of services and the materials to the company? 3) Politicians. Public awareness and the concern over green issues are beginning to have a strong influence on the legalization, which appears, and this directly impacts on the conduct of business. A modern organization must make this part of its concern 4) Pressure groups. What are the main issues of concern? Which groups are involved and what new issues are likely to concern them? 5) Problems. Which environmental issues have been a problem for the company, or part of the area in which it works, in past? 6) Predictions. What environmental problems loom in the future? Awareness of scientific research can be strategically vital. 7) Partners. How green are my allies? How are business partners perceived? Will these pose problems?

6. PROBLEMS ASSOCIATED WITH GREEN MARKKETING: Credibility No matter why a firm uses green marketing there are a number of potential problems that they 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. For example marketers in the US must ensure their green marketing claims can meet the following set of criteria, in order to comply with the FTC's guidelines. Green marketing claims must: Clearly state environmental benefits; ● Explain environmental characteristics; ● Explain how benefits are achieved; ● Ensure comparative differences are justified; ● Ensure negative factors are taken into consideration; and ● Only use meaningful terms and pictures. Don’t Follow Consumer’s Perception Blindly Another problem 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. Take for example the McDonald's case where it has replaced its clamshells with plastic coated paper. There is ongoing scientific debate, which is more environmentally friendly. Some scientific evidence suggests that when taking a cradle-tograve 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. Back Up Your Marketing With Good Technical Assistance 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 (dimethyl ether) as an aerosol propellant, which may also harm the ozone layer. Given the limited scientific knowledge at any point in time, it may be impossible for a firm to be certain they 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. Lack Of Policies 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

Don’t Follow The Competition Blindly Reacting to competitive pressures can cause all "followers" to make the same mistake as the "leader." A costly example of this was the Mobil Corporation who followed the competition and introduced "biodegradable" plastic garbage bags. While 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. Try To Minimize The Waste, Rather Than Find Appropriate Uses For It 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. 7. SUGGESTED SOLUTION: SUPPORT GREEN MARKETING PROGRAMS WITH CORPORATE CREDIBILTY

Introduction of a new green product without the support of a positive track record of corporate credibility will adversely affects the product’s image. That's the message being sent back to the companies from skeptical consumers. Consumers typically cannot experience environmentally oriented product benefits--they can't see the air pollution spared from the environment when they use a less polluting gasoline; they can't see the energy saved when they recycle aluminum cans. Often, environmental marketing claims are confusing. So, consumers must rely on their impressions of the corporations behind the greener products and ads to feel that claims can be trusted, that products marketed as such are truly less harmful to the environment. Companies that market products as green without the credentials to back it up also risk retaliation from consumers, environmentalists and the media who may feel a company is exploiting the environment. The green bottom line: it is not enough to talk green. Companies must be green or at least be perceived as making a concerted effort in the right direction. Strategies in the arsenals of companies who do right by their consumers and the environment include: •

Benchmarking

Establish a benchmark upon which to measure the progress of company in term of eco

aspects. Self certify the company’s progress and the efforts made by company. •

External Audit

Conduct a thorough environmental audit to assess current performance. To build credibility, have your audit certified by an independent third party and voluntarily report results to the Environmental Protection Agency, and to the public via a corporate Environmental Progress Report. •

Back Up From Top level

It's not enough to have the top-level support for a corporation's environmental program. That commitment must be projected to the consumer as personal and direct. In doing so, an emotional link is forged between the company and its customers. •

Employee Awareness Program

It is only when employees are aware of the issues and given the authority to make changes that greener products will be developed and environmentally sound corporate practices be put into place. Conduct innovative and thought-provoking educational programs to heighten awareness for the issues and empower employees to act positively on ecological issues. Invite

outside speakers to talk about trends in population, technology, the economy and the environment. •

Constantly Refine The Product

Consumers intuitively understand that no product or company is truly "green". What they want from companies is reasonable progress. Constantly integrate, learn, and refine products and processes. Develop a plan, set measurable goals, and work towards them. •

Effective Communication

Effectively communicate with the consumers; always look for feedback from consumers as well as from environmental organizations. Be publicly accountable, Regularly issue reports on environmental performance, advertise them & use them as a tool to improve public relations. Clearly state the benefits, clearly tell the consumers what are the cost savings and how the product is eco friendly. 8. GREEN MARKETING IN ASIA: While green marketing has taken the US and Europe by storm, marketers and consumers in Asia show few signs of jumping on the bandwagon...yet. Fad mad Japan is the main exception, where eco-friendly slogans are emblazoned on goods ranging from designer clothes and beer cans to gift-wrapping in department stores. Just how deep this

commitment goes is anyone's guess. Elsewhere in Asia, environmental problems receive scant attention as both consumers and producers concentrate their energies on attaining the goals of economic development. Tropical rain forests continue to be cut down, waterways and air are befouled and concern for the environment is often dismissed as a luxury for rich countries only. The ways of the West have spread to Asia, changing age-old, environmentally sound traditions. The supermarket is replacing wet markets; the convenience of canned and bottled products is weaning housewives away from fresh foods bought daily; plastic, glass, tin and polystyrene are wrapped around purchases with blithe disregard for their future as garbage or litter, and plastic bags are supplanting the housewife’s basket in which all purchases once traveled home from the market. The concepts of convenience and disposability — the very qualities which appeal to evolving consumer markets — have dangerous implications for the environment and its resources. This cannot go on forever — the problems facing the future of the Earth will not get solved by themselves. At the very least, as wealth grows in this part of the world, consumers will demand better surroundings in which to enjoy their rising standards of living. Then the pressure will be on marketers to provide buyers with goods produced

and presented in a more ecologically friendly way. This trend is already apparent in South Korea and Taiwan where consumer pressure groups are fighting for a cleaner environment. Marketers may not feel motivated to change until more Asians demand greenness with their purchasing power But those who wish to capture some of the North American, European or Australian markets had better be prepared to make their products meet the standards now being demanded by consumers there.

9. GREEN MARKETING IN INDIA: It's far from a groundswell yet, but slowly corporates across India are hitching themselves to the green bandwagon. A survey is conducted by BT(Business Today) & Tata Energy Research Institute (TERI) to identify top ten green companies of India. In March 2000, BT and the Tata Energy Research Institute (TERI) decided to conduct the first-ever study of environmental practices in corporate India. The survey had two aims. The first was to analyze key trends and dominant environmental practices as observed in Indian companies. The second was to identify the 10 'greenest' companies in terms of the maturity of their environmental systems and practices. A total of 11 parameters were identified for analyzing and evaluating the corporate.

Ten greenest companies are: 1. ABB 2. Bayer (India) 3. Clariant (India) 4. Coromandel Fertilisers 5. Gujarat Ambuja Cements 6. ICI India 7. Indian Aluminium Co 8. Orchid chemicals and pharma. 9. Philips India 10. Tata Iron & Steel Co Results of this survey is given here:

• Of the 47 companies surveyed more than three quarters had an environmental policy in place. While only four out of 10 had a formal environment certification (ISO 14001), 60 per cent had a separate environment department. •

In four out of 10 cases, the environment head had a direct reporting line to the CEO.

• Ironically, while benchmarking was the preferred means of identifying improvements, only about a quarter the polled companies used rival companies, Indian or foreign, as measures. The majority benchmarked themselves against their own other facilities. • Encouragingly, 70 per cent had an environmental audit system in place, but more than half adhered only to the mandatory audits, which were usually annual and conducted by internal auditors. • Chemicals and pharmaceutical companies showed a greater maturity of environmental management practices. Green policies at these companies were more prevalent at the plant level, whereas in the minerals and mining sectors both the corporate office and facilities were covered. • Engineering came off as one of the weakest sectors in terms of eco-efficiency. Consider: Only two-thirds of engineering companies polled had environmental policies (the figure was 80 per cent in the case of mining, chemicals and pharma sectors); only a

third of the engineering firms had a separate environment department, and an equal number had no internal reporting system. Worse, only half of the engineering corporates had an audit system in place. • The survey, however, leaves little doubt about the growing importance of environment in corporate strategy. Four-fifth of the respondents had a firm environmental training programme in place, while nine out of 10 did some form of safety training at their installations. A tendency to reward green practices among employees was also noticed. Four of 10 companies had systems for rewarding environmental performance, and most of these rewards were either at the individual level or at the department level. But what should gladden the heart of green activists is that more than half of the companies surveyed had planned improvement measures. Most of them were related to manufacturing processes and housekeeping measures, followed by upgradation and modernization of production equipment. Better still, three out of 10 planned to adopt better pollution control systems, and a quarter their environmental management systems. And 42 per cent of the respondents said that those improvements would be part of their expansion programmes. An unmistakable sign that corporates are waking up to the fact that it pays to be green. Result of this survey showed that ABB is at leading edge as far as eco friendliness is concerned.

What ABB is doing? The Maneja plant of ABB Ltd near Vadodara had planted 2,500 trees in its 100-acre premises as part of a green campaign. But the disposal of twigs, dry leaves, and wooden waste proved to be a nightmare. So they used vermiculture to solve this problem. The investment was to the tune of Rs 10,000 towards buying the first lot of earthworms and finding them a place in the plant's premises. The dry leaves became the fodder for the earthworms; they proliferated rapidly and converted the deadwood into organic manure. Today, the plant generates 5,000 tones of organic manure per month; 80 per cent of it is used in the company's own gardening efforts, preempting the need to buy synthetic manure at Rs 5 per kilo-a straight saving. The rest is sold at a national rate of Rs 1.50 a kg-a straight profit. There are 39 operational performance indicators that ABB regularly tracks: the reduction of waste; the identification of environmental hazards; and the optimization of resources, among others. 11. COMPANIES USING GREEN MARKETING: There are two types of firms one who claims that their products are green i.e. the product itself is eco friendly. Others are those companies which may promote itself as environmentally friendly but the product being sold may not be - such as when a

telemarketer donates a portion of its revenues to progressive causes, even though it makes no claim or effort to assure that the product being sold is environmentally friendly. Companies using the green marketing are: 1. Coca-Cola: 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 2. Walt Disney World: 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. McDonald’s: McDonald's also uses recycling. McDonald's replaced its clam shell packaging with waxed paper because of increased consumer concern relating to polystyrene production and Ozone depletion. 4. AMKETTE: Amkette is a major floppy disk manufacturer which uses recycled cardboard box for packaging. They are putting logo with “Recycled Saves Environment” phrase. 5. Blue star: Blue Star is the largest single source for air-conditioning equipment in

India. It offers the widest range of air-conditioning products. Blue Star has completely phased out use of CFC in their Centrifugal Chillers Blue Star is predominantly using HCFC's (HydroChloroFluoroCarbons), which have to be much less ODP (Ozone Depletion Potential). 6. Colourtex: Colourtex is a famous die manufacturing company they are also using recyclable packagings and also investing a sufficient sum on environmental programs within the organization. 7. Xerox: Xerox introduced a "high quality" recycled photocopier paper in an attempt to satisfy the demands of firms for less environmentally harmful products. 8. Rhone Poulenc: Rhone Poulnec is to continue its long term study comparing organic and conventional farming so as to get environmental friendly crops. 9. Henkel: Henkel is involved in the manufacturing of detergents. Henkel is publicizing their products as “phosphate free detergents”. 10. Automobile companies: A large number of automobile companies are introducing new technologies in manufacturing as well as investing on in house eco friendly programmes. GM, Ford, Chrysler and US government creating an alliance to develop advanced battery technology for electric vehicles. 11. Canon: At Canon, a corporate philosophy of "kyosei" (living and working together for the common good) guides the company toward cause-related marketing that reinforces the company's position as a market and environmental leader. In the US it began with the Clean Earth Campaign in 1990 which donated $1 to be

divided between the National Wildlife Federation and the Nature Conservancy for each Canon toner cartridge returned to the company. The five-year effort resulted in the recycling of several million toner cartridges along with a corresponding donation. The success of the program inspired Canon to deepen and enhance their cause-related marketing efforts. 12. Philips: Electronics industry giant Philips Electronics is one of Europe's leading proponents of green marketing and green design. A pioneer in environmental design, Philips has run a corporate-wide EcoVision program since 1998, the program requires that each Business Group design or redesign one "Green Flagship" product per year. A few energy-efficient products resulting from this initiative are the Kala and DECT telephones, a 32 inch TV set, and a video cassette recorder among others. There are large number of firms investing to make their products eco friendly including giants like Maruti, Hero Honda, L&T, kirloskar, Infosys, Tata Exports, Mathura refinery (IOC), NTPC etc. There are a great variety of eco friendly products now available in the market. 11. FUTURE: Companies are likely, either due to regulation or voluntary action, to provide their customers with more and more information about their product's environmental impact so that they will be able to decide for themselves if a product suits their needs.

Environmental marketing presents important opportunities for industry. Taking advantage of them requires creativity, foresight and environmental commitment. It means redefining the roles of business and products and working co-operatively with governments, consumer groups and NGO's. It may also mean a more visible role of CEOs. Products can certainly increase the 'quality of life', but their environmentally destructive impacts must be amended if we are to move towards sustainability. 12. CONCLUSION: As the demand for green products undoubtedly exist, Green Marketing provides an opportunity to the companies to increase their market-share by introducing eco friendly products. Stricter environmental regulations across the world, growing consumer preference for eco-friendly companies, and the inherent cost advantages in lowering toxic waste, are encouraging industries big and small to clean up. Result of a survey conducted showed that, consumers are not overly committed to improving their environment and may be looking to lay too much responsibility on industry and government. Though it’s the responsibility of the firm to produce products, which are having minimum impact on the environment, but ultimately it’s the consumer who is having responsibility to use eco friendly products. Consumers are not too much concerned about the environment but as they have become more sophisticated, they require clear information about how choosing one product over another will benefit the

environment. Consumer education results in their empowerment. Empowered consumers choose environmentally preferable products when all else is equal. Ultimately green marketing requires that consumers ‘Think Green, Think clean, Think Ecofriendly’ i.e. they 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. References: •

Kotler, Philips & G. Armstrong. Principles of marketing. New Delhi, Prentice Hall.

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Richa Agrawal, Green Marketing: An Emerging Trend (PJMR, Vol. 5,April 2000)

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Excerpts from the survey report conducted by BT-TERI.

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www.ecomall.com

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www.greenmarketingcorner.com

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www.greenpeace.org

Acknowledgement: We are thankful to Ms. Juhi Khan (Lect. Deptt. Of Industrial Engg, SGSITS) who helped us in every step and made the things easier by providing guidance to carry out this paper. Submitted by: Anurag Tiwari & Manish Thakkar, SGSITS,INDORE