GREEN MARKETING – OPPORTUNITIES & CHALLENGES
BY
Miss. P. PIRAKATHEESWARI, Lecturer in Commerce,
Sri Sarada College for Women (Autonomous), Salem – 16.
"Progress is possible, No one can stop it, but obstacle is there, we have to face it."
- Amartya Sen
Introduction
Yes, green marketing is a golden goose. As per Mr. J. Polonsky, green marketing
can be defined as, "All activities designed to generate and facilitate any exchange
intended to satisfy human needs or wants such that satisfying of these needs and
wants occur with minimal detrimental input on the national environment."
Green marketing involves developing and promoting products and services that
satisfy customers want and need for Quality, Performance, Affordable Pricing and
Convenience without having a detrimental input on the environment.
Meaning
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 it or produced and/or packaged in an environmentally
friendly way.
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.
Definition
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. Yet defining green marketing is not a simple task where
several meanings intersect and contradict each other; an example of this will be
the existence of varying social, environmental and retail definitions attached to
this term. Other similar terms used are Environmental Marketing and Ecological
Marketing.
The legal implications of marketing claims call for caution. Misleading or
overstated claims can lead to regulatory or civil challenges. In the USA, the
Federal Trade Commission provides some guidance on environmental marketing
claims.
Three keys to successful green marketing
Show potential customers that you follow green business practices and you could
reap more green on your bottom line. Green Marketing isn't just a catchphrase;
it's a marketing strategy that can help you get more customers and make more
money. But only if you do it right.
Ads by Google
For green marketing to be effective, you have to do three things; be genuine,
educate your customers, and give them the opportunity to participate.
1) Being genuine means that a) that you are actually doing what you claim to be
doing in your green marketing campaign and b) that the rest of your business
policies are consistent with whatever you are doing that's environmentally
friendly. Both these conditions have to be met for your business to establish the
kind of environmental credentials that will allow a green marketing campaign to
succeed.
2) Educating your customers isn't just a matter of letting people know you're
doing whatever you're doing to protect the environment, but also a matter of
letting them know why it matters. Otherwise, for a significant portion of your
target market, it's a case of "So what?" and your green marketing campaign goes
nowhere.
3) Giving your customers an opportunity to participate means personalizing the
benefits of your environmentally friendly actions, normally through letting the
customer take part in positive environmental action.
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.
Why Green Marketing?
As resources are limited and human wants are unlimited, it is important for the
marketers to utilize the resources efficiently without waste as well as to achieve
the organization's objective. So green marketing is inevitable.
There is growing interest among the consumers all over the world regarding
protection of environment. Worldwide evidence indicates people are concerned
about the environment and are changing their behavior. As a result of this, green
marketing has emerged which speaks for growing market for sustainable and
socially responsible products and services.
Benefits of Green Marketing
Companies that develop new and improved products and services with
environment inputs in mind give themselves access to new markets, increase
their profit sustainability, and enjoy a competitive advantage over the companies
which are not concerned for the environment.
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
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: -
ü Ads that address a relationship between a product/service and the
biophysical environment
ü
Those that promote a green lifestyle by highlighting a product or service
ü
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.
Strategies
The marketing strategies for green marketing include: -
* 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
Challenges Ahead
ü
Green products require renewable and recyclable material, which is costly
ü
Requires a technology, which requires huge investment in R & D
ü
Water treatment technology, which is too costly
ü
Majority of the people are not aware of green products and their uses
ü Majority of the consumers are not willing to pay a premium for green
products
Some Cases
ü
McDonald's restaurant's napkins, bags are made of recycled paper.
ü Coca-Cola pumped syrup directly from tank instead of plastic which saved 68
million pound/year.
ü Badarpur Thermal Power station of NTPC in Delhi is devising ways to utilize
coal-ash that has been a major source of air and water pollution.
ü
Barauni refinery of IOC is taken steps for restricting air and water pollutants.
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.
References:
1. Chopra, S. Lakshmi (2007), "Turning Over a New Leaf", Indian Management,
Vol-64, April-2007
2. Ottman, J.A. et al, "Avoiding Green Marketing Myopia", Environment, Vol-48,
June-2006
3. www.greenmarketing.net/stratergic.html
4. www.epa.qld.gov.au/sustainable_ industries
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2
onventional marketing is out. Green marketing and what is increasingly being
called "sustainable branding" is in. According to the new rules of green marketing,
effectively addressing the needs of consumers with a heightened environmental
and social consciousness cannot be achieved with the same assumptions and
formulae that guided consumer marketing since the post-war era. Times have
changed. A new paradigm has emerged, requiring new strategies with a holistic
point of view and eco-innovative product and service offering.
New Game, New Rules
Historically, marketers developed products that met consumers' needs at
affordable prices and then communicated the benefits of their brands in a
memorable way. Paid media campaigns characterized by ads with catchy slogans
were de rigueur. Green or "sustainable" marketing and branding is more complex.
It addresses consumers' new heightened expectations for businesses to operate
and requires two strategies:
1. Develop products that balance consumers' needs for quality, performance,
affordability, and convenience with the lowest impact possible on the
environment, and with due concern for social considerations, e.g., labor,
community.
2. Create demand for the resulting brands through credible, values-laden
communications that offer practical benefits while empowering and engaging
consumers in meaningful ways about important environmental and social issues.
These communications represent value to consumers for what they provide
functionally and what they represent, and often positively reinforce the
manufacturer's track record for sustainability as well.
The new rules being laid down by today's eco-conscious consumers cannot be
addressed with conventional marketing strategies and tactics. Brand builders in
the 21st century are accountable to tough new standards. Sustainability
represents deep psychological and sociological shifts -- not to mention seismically
important issues -- as did one of its predecessors, feminism, which forced
marketers to develop more convenient products in step with two-income
lifestyles and to portray women with a new respect.
Beware "Greenwash"
Meeting the challenges of today's level of green consumerism presents its own
mandates for corporate processes, branding practices, product quality, price, and
promotion. To realize that the rules of the game have changed in a big way, one
need only recall the unsavory backlash that is now occurring over what is
perceived by environmentalists, regulators, and the press as inconsistent and
often misleading eco-labels and messages.
The resulting deluge of skepticism, confusion, and regulatory nightmares that
spurious green claims -- dubbed "greenwash" -- are spawning in the marketplace
proves that environmental marketing involves more than tweaking one or two
product attributes and dressing up packages with meaningless and often
misleading claims. Too many marketers are learning the hard way that leveraging
environment-related opportunities and addressing sustainability-related
challenges requires a total commitment to greening one's products and
communications.
Green marketing done according to the new rules also affects how a corporation
manages its business and brands and interacts with all of its stakeholders who
may be affected by its environmental and social practices.
The seven strategies for green marketing success
Under the new rules, the currency of sustainable branding is innovation,
flexibility, and heart. I have formulated seven strategies which I believe can help
businesses address these deep-seated and lasting changes in consumer
sensibility. Reflecting our learning from working with sustainability leaders over
the past 20-plus years, they can be summarized as follows:
1. Understand the deeply held environmental and social beliefs and values of your
consumers and other stakeholders and develop a long-term plan to align with
them.
2. Create new products and services that balance consumers' desires for quality,
convenience, and affordability with minimal adverse environmental and social
impacts over the life of the product.
3. Develop brands that offer practical benefits while empowering and engaging
consumers in meaningful ways about the important issues that affect their lives.
4. Establish credibility for your efforts by communicating your corporate
commitment and striving for complete transparency.
5. Be proactive. Go beyond what is expected from stakeholders. Proactively
commit to doing your share to solve emerging environmental and social problems
-- and discover competitive advantage in the process.
6. Think holistically. Underscore community with users and with the broad array
of corporate environmental and societal stakeholders.
7. Don't quit. Promote responsible product use and disposal practices.
Continuously strive for "zero" impact.
3
Next Generation Marketing: An Indian Perspective
Faculty Contributor: Nagasimha Balakrishna Kanagal, Associate Professor
Student Contributors: Manish Kumar Urele and Suman Verma
The changing profile of the Indian customer has made it imperative for the
marketer to change the way he communicates with the customer. The next
generation Indian customers are educated, smart, equipped with technology and
well informed through various media channels available now. On one hand, while
rural markets have shown a tremendous growth Internet advertising has become
the fastest-growing segment of total ad spending; rising at a rate of 20%1 in the
first half of 2008. This article provides an integrated marketing view on the
efficient use of next generation tactics such as blue ocean strategy, green
marketing, permission marketing, buzz marketing, social marketing, ambush
marketing etc. for the marketer to optimally utilize these favorable trends and
reap the maximum benefits in terms of revenue growth and value creation to the
customers.
India has been an attractive destination for marketers because of its growth
potential as an emerging market. The average Gross Domestic Production (GDP)
growth rate2 of India is 8.37% which indicates that future consumption will
increase. The affluence level of the average Indian household has increased
significantly. The per capita income has doubled from the 2002 - 2003 level of Rs.
18885 to Rs. 380843. Education level has reached to 79.9% in 2009 from a meager
34% in 19714. As shown in Exhibit 1, the research findings of McKinsey Global
Institute indicate that the Indian consumer market is expected to quadruple by
2025, making it the fifth largest consumer market in world5.
Exhibit 1: Growth in Indian consumer market
With the saturation of urban market, a shift towards the rural market is evident
and high growth is expected in rural consumption. As the market is expanding,
the customer is becoming rich, educated & tech-savvy with an increasing concern
for society and environment. There are several implications for Indian marketers
from this trend.
Next-Generation Marketing Strategies
In the view of the changing profile of Indian customers, marketers have been
experimenting and utilizing different strategies to communicate and influence the
new Indian customer. A number of techniques have been used to tap into wallets
of the next generation customer some of which are:
Social Marketing: Social marketing is a process for influencing human behaviour
on a large scale, using marketing principles for the purpose of societal benefit
rather than for commercial profit.
Viral and Buzz marketing: Any strategy that encourages individuals to pass on
marketing message to others, creating the potential for rapid multiplication to
explode the message to thousands, to millions. Buzz marketing is a viral marketing
technique that attempts to make each encounter with a consumer appears to be
a unique, spontaneous personal exchange of information.
Mobile marketing: Mobile Marketing is a set of practices that enables
organizations to communicate and engage with their audience in an interactive
and relevant manner through any mobile device or network.
Blue ocean strategy: A blue ocean is created when a company achieves value
innovation that creates value simultaneously for both the buyer and the
company. The innovation (in product, service, or delivery) must create value for
the market, while eliminating features or services that are less valued by future
market.
Green Marketing: Green marketing is the marketing of products that are
presumed to be environmentally safe so that the customers value the product.
Ambush marketing: Ambush marketing is as undeniably effective as it is
damaging, attracting consumers at the expense of competitors, all the while
undermining an event’s integrity and, most importantly, its ability to attract
future sponsors.
Permission marketing: Permission marketing is an approach to selling goods and
services in which a customer explicitly agrees in advance to receive marketing
information.
However, the perception of these marketing strategies is not the same for the
marketer and the customer. An analysis of the strategies adopted by the various
marketers was done to understand this difference.
Marketer’s Perspective
With the changes in lifestyle there is increased pressure on the marketer to grab
the attention of the customer. Increasing emphasis is laid on interactive social
media tools such as radio channels, text messages and e-mails as well as social
networking sites such as Orkut, Facebook, Twitter and company blogs. These
media platforms enable the customers to discuss about the issues, likes-dislikes
and recommendations.
Increasingly Indian consumers are also aware and concerned about the efforts
companies make towards the conservation of environment and community
development. The concept of Societal Marketing and Green marketing although
decades old, is being increasingly used in recent times. In face, companies have
started leveraging on these concepts to entice the “aware” customers. The ‘Jaago
re’ campaign of Tata Tea, launched to create awareness about the voting right of
Indian citizen, was very successful. ITC’s camapign of donating Re. 1 towards the
education of poor students on every purchase of notebooks is an example of new
tactics used by the “modern marketer”.
A study of bajaj and Hero Honda in the 2-wheeler segment presents the similar
story. In the wake of the competition provided by Hero Honda, Bajaj has
completely transformed its image of being a traditional family ‘scooter’ to a
younger generation bike with marketing techniques like Bajaj pulsar ‘stuntmania’
which has been possible through the use of next generation marketing techniques
such as gaming, virals, green marketing, buzz and rural marketing. Similarly Hero
Honda has utilized these techniques consistently to remain a market leader in the
category.
Thus our marketer is entirely focussed on integrating the current technologies
with the marketing program in the form of emails, text messages, internet blogs,
networking sites etc. However the attitude of customers towards these strategies
is a bit different from the marketer’s viewpoint.
Customer Perspective
The customer’s perspective about these strategies has been collected and
analysed through a survey about their preferences regarding various new
generation marketing strategies. A distribution of consumer preferences for
marketing strategies utilised in Fast Moving Consumer Goods (FMCG) and
Durables segment was obtained as shown in Exhibit 2.
Exhibit 2: Consumer preference to various advertizing techniques in FMCG
For a typical Indian customer the new technological means are still way into the
future and they are not able/willing to access them.
The survey findings revelaed that in FMCG category the customers value
offers/discounts in the marketing efforts of the company as their highest priority.
Consumers gave a clear distinction in terms of choosing three offerings of the
marketers. A typical consumer rates discount offers, advertisements and the
environmental benefit of a product over the other features. Mobile text messages
and e-mails proved to score the lowest among all the offerings by marketers. For
a typical Indian customer the new technological means are still way into the
future and they are not able/willing to access them. As the executive of a leading
car manufacturing company states “the customers are not very tech-savvy, and
specially the buyers of luxury products are elderly persons who are very particular
about the look and feel of the product.”
In the durable products section customers are more likely to prefer
advertisements as shown from Exhibit 3. It is because the customers are mainly
from the high end segment and less price sensitive. Mobile text messages still
have the lowest preference in the mindset of the customers as far as marketing is
concerned.
Exhibit 3: Consumer preference to various advertizing techniques in Durables
From the qualitative analysis it is shown that the customers are slightly inclined
towards the traditional methods such as advertising and communications using
billboards.There is a need to educate people about the advancements in
marketing techniques so that they may adapt to the more convenient and
effective strategies which are coming in place in the 21st century.
FMCG and Durables’ Marketing
Based on the above analysis and by mapping the marketer’s perspective to the
consumers’ preferences certain trends can be seen.
Visual and Interactive Ads on Mobile
Although Indian customer has become technologically advanced owing to
changing demographics, as per the analysis he is still more affected by the
traditional methods of marketing. Hence, communicating the same message to
the customers on a new technological platform will enhance its acceptability.
Customers need more visual and interactive platforms of marketing. Hence,
marketers may send innovative multi-media messages (MMS) exhibiting the TV
commercials to exploit the high mobile proliferation among the customers.
Focus on Green Marketing
As the customer has become more educated and affluent, the awareness
regarding harmful effects of pollution and chemicals has increased. Therefore, the
companies need to develop and emphasize their environmental friendly products
in durables such as cars and hygienically safe products in FMCG such as eatables
and soaps to tap potential customers.
Rejuvenating Customer Relationship Marketing (CRM)
In the changing trend of marketing innovations, customers should be involved in
the marketing phase to capture a greater hold over the market. Some of these
changes could be:
1. Testimonials by customers: In products like ‘Pureit’ the testimonials from
customers are utilized that exhibit that they are satisfied from the product. These
strategies should be used and improved to involve customers in the marketing of
products.
2. Inviting suggestions for added features: For FMCG products such as ‘Kurkure’
inviting recipes from customers for preparing delicacies provides them incentives
to spread Word-of-Mouth about these products.
Focus on Rural Masses
Given the fact that rural market is booming, marketers need to evolve and pursue
rural marketing. It is desirable to provide the products in different SKUs so that
their price comes in the range of the rural market’s affordability. Demonstrations
about the product through workshops or camp based activities should be done
for the less educated rural customer. Marketers can use innovative financial
schemes to increase their reach to the rural customer particularly in the Durables
product category.
Conclusion
The income of a typical Indian customer has risen and so has their preference for
tech-savvy products. Yet, customers are still connected to the traditional ways of
marketing. They have become more aware and have shown an inclination
towards environment-friendly products. CRM has emerged as an important tool
for marketers and it should be renovated by involving customers in the marketing
phase through testimonials. Rural markets offer potential and need to be tapped
by innovative strategies. Thus, though India has changed but traditional marketing
strategies on new technology platforms can aid the marketer in reaching the new
customer.
Keywords
Green Marketing, Mobile Marketing, CRM, FMCG, Marketing
Contributors
Nagasimha Balakrishna Kanagal is an Associate Professor in the Marketing area at
IIM Bangalore. He holds a B.E Degree from Bangalore University and PGDM from
IIM Ahmadabad. He has also done his MA, MS and PhD from University of Texas
at Dallas. He can be reached at kanagal@iimb.ernet.in.
Manish Kumar Urele (PGP 2009-11) holds a Bachelor's Degree in Electrical
Engineering from National Institute of Technology, Bhopal. He can be reached at
manish.urele09@iimb.ernet.in.
Suman Verma (PGP 2009-11) holds a Bachelor's Degree in Electronics &
Communication Engineering from National Institute of Technology, Jaipur. She
can be reached at suman.verma09@iimb.ernet.in.
References
1. Jessica E Vascellaro, Sep 4, 2008, “Gap Widens in Online Advertizing”, The
Wall Street Journal, Asia Edition
2. TradingEconomics.com Market watch, 2010, “India GDP growth Rate”, May
05, http://www.tradingeconomics.com/Economics/GDPGrowth.aspx?Symbol=INR, Last accessed on September 24, 2010
3. Press Trust of India (PTI) News, 2009, “India’s per capita income doubles in 7
years to Rs38,08”, Feb 09,
http://www.livemint.com/2009/02/09150714/India8217s-per-capita-incom.html,
Last accessed on September 24, 2010
4. Adlakha, Arjun, 1997, “International Brief, Population Trends: India”, April
1997, http://www.census.gov/ipc/prod/ib-9701.pdf, Last Accessed on September
24, 2010
5. McKinsey Global Institute, 2005, “The ‘Bird of Gold’: The Rise of India’s
Consumer Market”,
http://www.mckinsey.com/mgi/publications/india_consumer_market/slideshow/
main.asp, Last accessed on September 24, 2010