Marketing Strategies for Green Business for sustainable future

Presented by,
V. ARAVIND
K. M. UDAY RAJ
 MARKETING STRATEGIES FOR GREEN BUSINESS FOR SUSTAINABLE
FUTURE

There is always a better strategy than the one you have; you just haven’t thought of
it yet
-Sir Winston Churchill, Former British Prime Minister

ABSTRACT

For almost half a century, environmentalists have been advocating for big businesses to
incorporate sustainability principles into their practices. Yet even ten years ago, it was
rare to hear of any business with dedicated green, environmental, or sustainability
initiatives (outside of those designed to protect them from regulatory fines and other
liability for polluting activities). In recent times, more focus has been geared towards
environmental issues such as global warming. Climate changes have brought attention to
people all over the world to take action in slowing down the causes of the ongoing global
warming crisis. In order for businesses to respond to climate change, companies have
gradually been changing ways of doing business to decrease the negative impact on the
environment. While most corporations have already implemented some form of green
strategies, the majority have yet to respond to the global crisis. In addition, other laws
such as Assembly Bill No. 32 have mandated companies to adopt greenhouse gas
emission measures to minimize greenhouse gas emissions by year 2012. Companies must
understand the importance of going green and construct enterprise-level green strategies
that best fit their business (Olson, 2008).Consumer awareness of going green has also
brought demand for green products. This in turn will encourage and force companies and
businesses to incorporate green alternatives to products and services. In the short term,
going green might mean higher costs, the long term benefits heavily outweighs the initial
costs of going green. As environmental awareness grows, a new trend of marketing
strategy will take its place. This strategy, known as the green strategy, will ultimately
dominate in the near future. This paper focuses on green strategies and green marketing
and their importance for corporations. Corporations can learn from this research paper
about the benefits of going green and what marketing strategies one can implement for
sustainable future.
Introduction:

Marketing is an organizational function and a set of processes for creating,

communicating, and delivering value to customers and for managing customer
relationships in ways that benefit the organization and its stakeholders.

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

 Does not present a health hazard to people or animals;

 Is relatively efficient in its use of resources during manufacture, use, and disposal;
 Does not incorporate materials derived from endangered species or threatened
environments;
 Does not contribute to excessive waste in its use or packaging; and
 Does not rely on unnecessary use of or cruelty to animals.

To utilize the resources which are limited efficiently and achieve organization’s
objective green marketing is the best – suited solution. 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. According to the American Marketing Association,
green marketing is the marketing of products that are presumed to be environmentally
safe. Thus green marketing incorporates a broad range of activities, including product
modification, changes to the production process, packaging changes, as well as
modifying advertising. 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."
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, in my opinion, has not been proven conclusively.

While green marketing is growing greatly as increasing numbers of consumers are

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. Presenting a product or
service as green when it's not is called green washing.

Sustainability is usually understood in the sense of planning for the future.

Example, sustainable practice in a resource and the industry into the future. on a
conceptual lever , it is useful to think of sustainability as balance – the midpoint
between destruction and restoration .
Motti Essakow
Sustainable lifestyle consultant.

Green marketing can be a very powerful marketing strategy though when it's done right.
In many cases, the green product is the tiebreaker or the cherry on top, thus green
consumers must see the product as the same, or better, than the competition.

Review of Literature

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. In 1987 a document prepared by the World Commission on Environment and
Development defined sustainable development as meeting ―the needs of the present
without compromising the ability of future generations to meet their own need‖, this
became known as the Brundtland Report and was another step towards widespread
thinking on sustainability in everyday activity. Two tangible milestones for wave 1 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.

According to Jacquelyn Ottman, (author of Green Marketing: Opportunity for

Innovation) from an organizational standpoint, environmental considerations should be
integrated into all aspects of marketing — new product development and
communications and all points in between. The holistic nature of green also suggests that
besides suppliers and retailers new stakeholders be enlisted, including educators,
members of the community, regulators, and NGOs. Environmental issues should be
balanced with primary customer needs.

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 Makowr, 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 Makower, 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.

Jacquelyn A Ottman and others have described green marketing at three different
levels:

1. Marketing:
Development of new technology, new process and new product and
communicating the same to the customer. Innovation is an integral part of it. New
process and technology to develop environment – friendly products and services.
2. Holistic Nature:
All stake holders need to be part of this initiative – marketer, supplier, retailer,
educator, community member, regulator, NGO-in deed all of them.
3. Environmental Issues:
Need to be balanced with primary customer needs. There are many ways wherein
along with making profits, marketers can take care of environmental issues.

Evolution of Green Marketing

The green marketing has evolved over a period of time. According to Peattie (2001), the
evolution of green marketing has three phases. First phase was termed as "Ecological"
green marketing, and during this period all marketing activities were concerned to help
environment problems and provide remedies for environmental problems. Second phase
was "Environmental" green marketing and the focus shifted on clean technology that
involved designing of innovative new products, which take care of pollution and waste
issues. Third phase was "Sustainable" green marketing. It came into prominence in the
late 1990s and early 2000.
Green Marketing Mix

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

There are three types of green advertising: -

1. Ads that address a relationship between a product/service and the biophysical

environment.

2. Those that promote a green lifestyle by highlighting a product or service.

3. Ads that present a corporate image of environmental responsibility.

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.
Keys to Successful Green Marketing

(Interpreted from the Green Gauge Report,) There are the four main factors that
influence Americans‘ (not so) green behaviors:

1) Lack of actionable information, with half of consumers who claim they,

 do not have the information to be personally involved in increasing their green

behavior
 aren‘t sure which products and packaging materials are recyclable
 would do more for the environment if they only knew how
 they have questions about the true impact of green products

2) Lack of convenient solutions to accommodate people‘s increasingly busy lifestyles,

with half admitting they know they should make the green lifestyle changes but are too
busy

3) Cost of green products compared to traditional alternatives

4) Need to protect personal/family health is cited by an equal number of consumers

(52%) as looking to personally protect the environment, as reason why they seek
environmental information.

Hence for green marketing to be effective, you have to do three things; be genuine,
educate your customers, and give them the opportunity to participate.

Let us take an example:

Suppose that you have decided that your business will no longer use plastic bags to wrap
customer purchases. You know that the traditional plastic bag takes about one thousand
years to decompose and want to do your part to stop the proliferation of plastic bags in
landfills. You feel that this is the kind of environmental action that will be popular with
potential customers and a good opportunity to do some green marketing.
To be genuine, you have to ensure that none of your business practices contradict your
decision not to use plastic bags. What if customers who happen to walk behind your store
see an overflowing trash bin filled with paper, cardboard and plastic bottles? Obviously,
he or she will decide that you don't care as much about recycling as you say you do in
your green marketing.

Not using plastic bags appears to be environmental no-brainer, but you will still need to
educate your target market. Did you know that a single use plastic bag takes about one
thousand years to decompose? I didn‘t until I researched this article and probably a fair
number of otherwise environmentally conscious people don't either. This one little
factoid about plastic bags could be used as part of your green marketing campaign - all by
itself it lets the public know why single use plastic bags are environmentally disastrous
and that you and your business care about the environment.

And the third element? By shopping at your store, the customer is taking action to protect
the environment by preventing at least one single use plastic bag from going into a
landfill. It doesn't sound like much, but he or she gets the satisfaction of physically doing
something that fulfills their beliefs. You can also reinforce your customers‘ green
decisions and increase their participation by offering them additional related actions, such
as buying cloth bags to use for future purchases.

Therefore for successful Green Marketing the following steps need to be considered:

1. Customers Want What They Want. Do your customers care about the benefits your
product or service offers? If customers are just learning about what it means to be green,
take baby steps in your introduction of why your product or service is important to the
environment.

2. Educate Customers to Empower Them. Through education, your customers can

learn to see that the choices they make when selecting your company's goods and
services do make a difference for the planet -- even on a small or local scale.
3. Truth in Advertising is Critical. Skip the hype and promote the truth about what's
good about your product. Buyers are skeptical, so it's up to you to give them proof.

4. Offer Proof. If your product or service does something wonderful, that's great. Just be
prepared to offer proof (see No. 3, above): test results and credible testimonials can make
the case for you.

5. Keep Pricing in Line With Expectations. For the customer who can afford a high-
end green product without questioning its price, all you need to do is to keep your price
where it is. However, if you want to entice non-premium buyers to the table, you may
have to change the price - or add more value so the price is more acceptable.

Green marketing cases

Philips Light's "Marathon"

Philips Lighting's first shot at marketing a standalone compact fluorescent light (CFL)
bulb was Earth Light, at $15 each versus 75 cents for incandescent bulbs. The product
had difficulty climbing out of its deep green niche. The company re-launched the product
as "Marathon," underscoring its new "super long life" positioning and promise of saving
$26 in energy costs over its five-year lifetime. Finally, with the U.S. EPA's Energy Star
label to add credibility as well as new sensitivity to rising utility costs and electricity
shortages, sales climbed 12 percent in an otherwise flat market.

Car sharing services

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 gase. 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), I-GO Car
(Chicago), 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.

Introduction of CNG in Delhi

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.

Case Study – Toyota’s Fuel Cell Hybrid Vehicle

The Chinese automobile is the second largest mobile in the world after that of us and is
soon slated to become number one, given the pace at which it is growing. Major
automakers across the world are jostling to strengthen their position in such a lucrative
and growing market .air pollution is quite high in china mainly because of smoke from
factories and houses, but in recent years automobile emissions have been increasing very
rapidly.

To control this pollution levels, Chinese authorities have recently put in place a number
of conditions on automakers entering the Chinese market. Toyota has taken the lead with
its environment –friendly fuel –cell technology and entered the Chinese market with its
fuel cell hybrid vehicle-prius, by the end of 2005wih china‘s FAW group.

Today, Toyota is known as pro-environment company in china.

Xerox Corporation and Canon

It has introduced high quality recycled photocopier paper to meet the demand for less
environmentally harmful products
Dell Computers

Recently, Dell has launched the ‗plant a tree for me‘ program in partnership
with ‗the conservation fund‘ and ‗carbonfund.org‘. It has been a very good initiative to
offset carbon emission and individuals and corporations can easily participate in that.

Benefits of Green Marketing

Today‘s consumers are becoming more and more conscious about the environment and
are also becoming socially responsible. Therefore, more companies are responding to
consumer‘s aspirations for environmentally less damaging or neutral products. Many
companies want to have an early advantage as they have to eventually move towards
becoming green. Some of the advantages of green marketing are:
A) It ensures sustained long-term growth along with profitability.
B) It saves money in the long run, through initially the cost is more.
C) It helps companies market their products and services keeping the environmental
aspects in mind. It helps in accessing the new markets and enjoying competitive
advantage.
D) Most of the employees also feel proud and responsible to be working for an
environmentally responsible company.

Adoption of Green Marketing

There are basically five reasons for which a marketer should go for the adoption of green
marketing. They are -

 Opportunities or competitive advantage

 Corporate social responsibilities (CSR)
 Government pressure
 Competitive pressure
  Cost or profit issues

Maybe policy makers, influencers, and green marketers ought to show some more
empathy towards themselves and others, and make sure they deliver on the following,
seven green marketing promises:

1. Asking people to do one thing at a time

2. Information support structures to help people navigate the green landscape, truly
designed to make their lives easier, not burden them with more
3. More visible and clear recycling directions on product packaging
4. Trusted sustainability standards for all products
5. Provide green solutions that are at least as easy and convenient as traditional
products and services
6. Lower costs so that cost does not become a barrier to adoption, including creative
financing solutions for higher ticket items, e.g. community purchase plans
7. Whenever possible tie in personal/family health into the environmental equation.

The larger organization at stake is the world, and its stakeholders are all the people on the
planet. The value to be created is a sustainable, healthier, greener world.

Green Marketing Strategies for sustainable future:

For the company which has a strong commitment to environmental sustainability in either
its design or manufacturing of a product or a service that's keen on green, follow these
steps for having effective green marketing and to put you ahead of the competition:

 Marketing Audit (including internal and external situation analysis)

 Develop a marketing plan outlining strategies with regard to 4 P's
 Implement marketing strategies
 Plan results evaluation
Hence, the marketing strategies for sustainable future one can follow are:

1. Lead from desirable primary product benefits - efficacy, naturalness, healthfulness

(rather than environmental product attributes). It‘s clear by now that consumers won‘t
trade off efficacy for the planet (and why should they - to go to stores with their shopper
hats on not citizen). Health is the number one reason why consumers are motivated to act
on green.

2. Underscore authenticity with packages that use renewable materials and are
compostable. It's not enough to have a green product; the package, indeed every aspect of
your product throughout its lifecycle must be green too.
3. Reinforce credibility through labeling and third party seals. EPA‘s Energy Star, Design
for Environment, used by Clorox Green works.
4. Provide transparency: 83% of consumers now want to know where their food comes
from. Representing a new development, Lay‘s is now making it easy for smackers to find
out which farmers supply the potatoes from Lays. I suspect this is a natural next step for
Sun Chips.
5. Cultivate relationships with new heroes. Celebrities are proven green spokespeople—
Leonardo DiCaprio, Better Midler, Gwyneth Paltrow all provided free exposure and
excitement for the introduction of Toyota‘s Prius.
6. Communicate processes as well as green product benefits.

7. Humanize your effort. Adopt a cause.

8. Educate and empower consumers. Thomas Oh, Frito-Lay‘s Sun Chips brand manager,
described their intriguing website entitled, GreenEffect.com that encourages consumers
to share ideas to save the planet.
9. Partner to extend credibility, reach and resources.

10. Leverage social networks. There are lots of blogging, twittering and Face book pages
going on. I did get the distinct impression though that Face book pages are not always so
 successful. We still understand how to use this powerful medium.

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 improve quality and reduces waste.

Suggestions to the companies which embark on green marketing

Green marketing involves focusing on promoting the consumption of green products.
Therefore, it becomes the responsibility of the companies to adopt creativity and insight,
and be committed to the development of environment –friendly products. This will help
the society in the long run. Companies which embark on green marketing should adopt
the following principles in their path towards ―greenness‖.

1. Adopt new technology/process or modify existing technology/process so as to reduce

environmental impact.
2. Establish a management and control system that will lead to the adherence of stringent
environmental safety norms
3. Use more environment-friendly raw materials at the production stage itself.
4. Explore possibilities of recycling of the used product so that it can be used to offer
similar or other benefits with less wastage.

Challenges Associated With Green Marketing

There are a number of challenges and problems associated with the understanding and
application of green marketing. Some of them are as follows:

1. Firms practicing green marketing must ensure that their activities are not misleading the
customers and are not violating any rules and regulations pertaining to environmental
protection
2. Firms must do their best to clearly state the benefits of green marketing. If customers are
explained the benefits of green marketing, then it is certain that they will appreciate the
same.

3. Lack of scientific knowledge on the part of firms sometimes creates unnecessary

problems. McDonald‘s replaced its clam shells with plastic –scooted paper. This lead to a
debate as to which is more environmental –friendly
4. Sometimes, steep competition can force a company to adopt unfair practices to cut costs.
Firms should be socially responsible and look for sustainable development.
5. Practising green is costly. Green products require renewable and recyclable products that
are more expensive. Green marketing can succeed in the long-run, only if the additional
can be recovered.
6. Majority of the people are not aware of this concept in the developing and under-
developed countries. As a result, in such situations, one faces the additional challenges of
creating awareness and willingness to spend on green products.
7. Substantial investments in research and development and innovative organizational
culture are a must for developing and marketing of green products. Innovation is, in fact,
the first step in the successful development of a green product.
8. Many people may not be prepared to pay higher prices for green products. Unless there is
widespread awareness about the long term implications of continuing to use non green
products, it becomes difficult for the companies to practice green marketing.
9. Water treatment technology is very expensive. This makes the use of recycled water
beyond the reach of most users, though there may be dire shortage of water.
10. The companies should actively put the efforts to reduce the carbon foot print

CONCLUSION

Green marketing should not neglect the economic aspect of marketing. Marketers need to
understand the implications of green marketing. If you think customers are not concerned
about environmental issues or will not pay a premium for products that are more eco-
responsible, think again. You must find an opportunity to enhance you product's
performance and strengthen your customer's loyalty and command a higher price. Green
marketing is still in its infancy and a lot of research is to be done on green marketing to
fully explore its potential. Hence to have sustainable future companies need to work on
Green Marketing as it 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.

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Marketing Mastermind January 2010, October 2010, January 2009, March 2008