CRADLE-TO-CRADLE: A NEW
APPROACH FOR MARKETING
GREEN PRODUCTS TO THE MASS
CONSUMER
Geoffrey Brooks
Dana Marohn
Kiersten Regelin
Daianna Rincones
June 3, 2009
AGENDA

Executive Summary

Green Mass Marketing – Why Now?

Key Questions for Mass-Consumer Marketing

Case Study: Earth-Friendly Products

Findings and Recommendations

Some Questions to Consider
EXECUTIVE SUMMARY

Mass-market green products are increasingly important to companies
Consumer “pull”: the market for green products is growing
 Government “push”: greater regulatory/legal pressure to become more green


To penetrate mass market, firms must address key consumer questions:
What is a green product?
 What are the benefits of green products?
 Can green products be affordable?


Leading firms are in a position to meet this demand
Companies need to clearly articulate green benefits important to their own
mass-market consumers
 Cradle-to-cradle can be a tool to enable mass marketing of green products

Green Mass Marketing – Why Now?
GROWTH IN GREEN CONSUMERISM
Despite the global recession, the green consumer base is growing…
Source: BCG, January 2009

1/3 of Americans claim they are more likely to buy green products
today than they were one year ago

1/3 of European consumers actively seek out green products (up 2%)

1/4 of global consumers claim they will pay a higher price (up 4%)
GROWTH IN GREEN CONSUMERISM
…but even mass-market consumers are increasingly demanding
sustainable performance
Source: Cone, January 2009



More than 33% of American consumers believe it is more important
than ever for companies to be environmentally responsible
66% of consumers think companies should offer green products
69% will purchase green products if it is within their budget and
70% will pay attention even if they are not in a position to buy
POLICY IS ALSO DRIVING CHANGE
Green product producers can achieve long-term cost benefits by jumping
ahead of policy and can also leverage progressiveness for marketing efforts

Cap-and-trade system


California Cradle-to-Cradle Product Bill


Representative Chicago Climate Exchange (CCX) member companies:
Would require California Integrated Waste Management Board to adopt
regulations by July 1, 2011
Some forms of product stewardship legislation exist in the E.U.,
Japan, South Korea, and Canada
Source: http://sloanreview.mit.edu/beyond-green/2009/03/03/california-proposes-cradle-to-cradle-product-bill
A FAMILIAR MARKETING CHALLENGE
There is a thin line between providing relevant, useful information
and overloading the consumer with details

Companies are unsure how to communicate
Which green attributes to highlight
 How to manage tradeoffs
 Exposing weaknesses


Most consumers lack knowledge or interest
in the details
Most need clear, simple messaging
 Too much detail causes confusion

CRADLE-TO-CRADLE
C2C can be used to guide the design, production, distribution and
take-back of green products – it is an ideal to strive toward

Covers the entire life-cycle, and “reincarnation”, of a product

Attempts to create essentially waste-free products


Non-biological inputs be recycled/reused
Biological inputs can be composted/consumed
Source: California Product Stewardship Council
A JOURNEY TOWARD CRADLE-TO-CRADLE
Green products should offer incremental environmental benefits using
cradle-to-cradle as a guide and ultimate goal
Reduced
carbon
footprint
One possible
journey
Original
product
Reduced
packaging
Reduced
toxicity
Sustainable
sourcing
Reduced
impact of
use
Minimal
cradle-tocradle
impact
Key Question: What is a green product?
WHAT IS A GREEN PRODUCT?
GREEN PRODUCT ATTRIBUTES
Lack of clarity limits adoption by mass-market consumers
2009 GMA/Deloitte Green Shopper Study

Many competing and imprecise terms in marketplace
“Organic,” “local,” etc. have no (or many) uniform definition(s)
 Many trade-offs exist between definitions – consumers cannot synthesize


Unclear definitions inhibit purchase behavior
Few customers willing or able to research definitions and may walk away
 True benefits are unclear, reducing purchases

WHAT IS A GREEN PRODUCT?
ATTRIBUTES AND CREDIBILITY
Consumer marketing must provide a definition of green and identify it
to consumers prior to purchase
Green Product
Product Attributes

Credibility
Consumer view of question has two key sub-components
What are attributes of green products – “What does it mean for a
product to be sustainable?”
 What is credibility of my purchase – “How can I tell a green product
when I go to buy it?”

WHAT IS A GREEN PRODUCT?
ATTRIBUTE FRAMEWORK
A definition of green products must encompass a variety of attribute areas
Cradle-to-Cradle Product Lifecycle
Development
Manufacture
Distribution
Purchase /
Use
End of Life
Material Sourcing/Consumption
Energy Consumption
…Externalities
Product…
Social Responsibility

Attribute areas represent a collection of green characteristics


Characteristics are relevant at various phases in the product lifecycle
Difficult for consumers to conceptualize trade-offs between areas
Consumers lack time to understand details and relative costs/benefits
 Similar to nutritional labeling on food products

WHAT IS A GREEN PRODUCT?
CREDIBILITY OF GREEN CLAIMS
Perceived greenwashing can limit adoption by mass-market consumers
Examples of Greenwashing
Hidden trade-offs
E.g., locally produced, but more carbon intensive
Lack of proof
No evidence to support claims
Vague claims
Ambiguous language or lack of clear definitions
Misleading labels
Suggestive but unsubstantiated images or messages
Irrelevant benefits
Emphasizing minor impacts or legally required action
False advertising
Erroneously claiming benefits or certification
Adapted from "The Seven Sins of Greenwashing", Terra Choice, May 2009

Greenwashing makes it difficult to compare similar products

Destroys perceived value of green products
WHAT IS A GREEN PRODUCT?
CREDIBILITY OF GREEN CLAIMS
Mistrust of corporations and lack of credible third-party certification
causes confusion and limits adoption by mass-market consumers

Consumers have little trust in companies’ green claims

81 certifications for consumer goods, but
Many global
 Many unique to region/company
 Often unique only to one “step” in lifecycle

Key Question: What are the benefits of a green product?
PRODUCT?
BUYER VALUE AND ENVIRONMENTAL
IMPACT
Consumers must obtain value and/or understand the environmental
benefit from green product purchase
Green
Product Benefits
Consumer Benefits
Environmental
Impact
Buyer Value
 Health
concerns
 Altruistic motivations
 Perception (status
related)
 Efficacy (i.e., on par with/
better than competitors
 Reduced

Carbon created by
production/distribution of a
product or service
 Reduced

carbon footprint
water footprint
Total water volume used,
recycled, or disposed of as
waste water to produce a
good/service
WHAT ARE THE BENEFITS OF A GREEN
PRODUCT?
ENVIRONMENTAL IMPACT
Quantifying/labeling environmental impact, such as carbon
footprinting, is highly complex
Carbon Footprint of
Tropicana Pure Premium Orange Juice

Carbon Footprint Challenges
Costly to quantify (requires
both pre- and post-studies)
 Multiple methods available
 Difficult to use data



Hard for consumers to
interpret and compare
Illustrates (again!) the
importance of education
WHAT ARE THE BENEFITS OF A GREEN
PRODUCT?
ENVIRONMENTAL IMPACT (CON’T.)
How do you calculate carbon metrics? And what do they mean?
Companies must make metrics relevant, not just identify them

At least two methods exist to measure carbon footprint

Carbon Trust


Found original Tropicana estimate off by > 20%
Greenhouse Gas Management Institute

U.S.-based non-profit providing GHG accounting, auditing and training
1 L of
Tropicana
1 gal. of
Gasoline
3.75 lbs. CO2
19.4 lbs. CO2
1
Cheeseburger
6.3–6.8 lbs. CO2
1 day in studio
Apartment
9 lbs. CO2
Sources: http://www.epa.gov/OMS/climate/420f05001.htm; http://openthefuture.com/cheeseburger_CF.html;
http://www.epa.gov/climatechange/wycd/calculator/ind_assumptions.html
WHAT ARE THE BENEFITS OF A GREEN
PRODUCT?
ENVIRONMENTAL IMPACT (CON’T.)
And we thought measuring carbon was challenging - quantifying the
impact of water is less established, but feasible

Perception is that water is cheap and unlimited


View distorted due to lack of global pricing mechanism
1 KG Beef
1 L Rice
1 L Milk
1 KG
Maize
16,000 L H2O
3,000 L H2O
1,000 L H2O
900 L H2O
1 KG
Wheat
1,350 L H2O
Case Study – water used in Netherlands coffee consumption
140 liters H2O/cup = 2.6 billion cubic meters H2O per year
 Dutch account for only 2.4% of world coffee consumption

Sources: http://www.waterfootprint.org/?page=files/home; http://www.waterfootprint.org/?page=files/CoffeeTea
Key Question: Can green products be affordable?
CAN GREEN PRODUCTS BE AFFORDABLE?
VALUE AND PRICING
To enable mass market adoption, companies must leverage internal and
external capabilities to align pricing/value with mass market expectations
Consumers
13-24%
Consumers
76-87%
Perceived Benefits
Premium
Mass-Market

Price premiums are acceptable only for some segments

BCG study says 24% of consumers will pay more, but….
•
•
Additional studies reveal most consumers don’t follow through at register
Green-focused CPG companies say 13% is more accurate estimate of “niche” market
Sources: Cone Consumer Survey, Jan 2009; Capturing Green Advantage, BCG, Jan 2009; Interview, Earth Friendly Products
Case Study: Earth Friendly Products
CASE STUDY: EARTH FRIENDLY PRODUCTS
Earth Friendly Products is successfully mass-marketing green products by
educating consumers and pricing in line with competitors
Revenue ($M)
$100M

$54M
$35M
Clearly articulates green benefits and impact
Provides detailed info on packaging, but too much confuses mass consumer
 Detailed information available on new website with interactive blog
 “Key element is to prove efficacy on a consistent basis”


Leveraged to drive pricing down to mass market
1 Costco/Sam’s Club SKU provides 50% of revenues
 Prices below P&G’s and equal to store brand in wholesale club stores
 Vertically integrated and efficiently produced compared to competitors

Findings and Recommendations
FINDINGS AND RECOMMENDATIONS

Every product has environmental impact, but goal is to mitigate
impact as much as possible


Tradeoffs exist in each stage of the product lifecycle - green needs to be
an on-going ideal towards continuous improvement
Companies need to clearly articulate green benefits important to
their own mass-market consumers
Must quantify and contextualize environmental benefits
 Need to distill varied aspects of green to a concise consumer message


Cradle-to-cradle can be used as a tool to enable mass marketing
Provides framework to consider aspects of sustainable products
 Aligning green products with mainstream prices opens doors for massmarket adoption and economies of scale

SUMMARY AND NEXT STEPS

Companies will be forced to mass-market green products eventually



Pulled by consumers
Pushed by governments
Firms can answer key marketing questions now to prepare

What is a green product?


What are the benefits of green products?


Green is an on-going ideal that encompasses specific attributes and credibility issues
Benefits must be quantified and concisely communicated
Can green products be affordable?

Cradle-to-cradle can be a tool to drive down costs and enable mass-market pricing
SOME QUESTIONS TO CONSIDER…
How green should a product be before it can be marketed as such?
SOME QUESTIONS TO CONSIDER…
What green aspects should be communicated to consumers?
SOME QUESTIONS TO CONSIDER…
What would the perfect green label look like?
SOME QUESTIONS TO CONSIDER…
What is the role of civil society in green product marketing?
SOME QUESTIONS TO CONSIDER…
How can companies gain more control over their C2C impact?
SOME QUESTIONS TO CONSIDER…
What are implications of taking green products to the mass market?
APPENDIX: SUPPLEMENTARY MATERIALS
KEY QUESTION 1: DETAILED ATTRIBUTE
FRAMEWORK
A definition of green products must encompass a variety of attribute areas
 “Minimalist”
Material
Sourcing/
Consumption
Energy
Consumption
product design
 Avoidance of environmentally-unfriendly materials
 Production process efficiency
 Packaging efficiency
 Reusable or recyclable content
 Responsible resource allocation
 Low
unified carbon footprint (at all life-cycle stages)
 Type of energy (clean alternatives vs. traditional
sources)
 Recyclability
Product
Externalities
 Product
return/usage
 Elimination of by-products (chemicals, fertilizers, etc.)
 Elimination of harmful externalities (e.g., antibiotics)
 Treatment
Social
Responsibility
of employees (including health/safety)
 Humane treatment of animals
 Interaction with unsavory governments/policies
 Community investment and philanthropy
KEY QUESTION 1: DETAILED CREDIBILITY
FRAMEWORK
Credibility can be earned and reinforced through education, engagement,
and third-party endorsements
Consumer
Education
Consumer
Engagement
 Clear,
simple messaging
 Be transparent about trade-offs
 Help consumers change behavior as well as attitude
 Involve
consumers in stakeholder discussions
 Collect consumer feedback, understand their values
 Leverage social media for word of mouth advertising
 Choose
Labeling
product labeling over brochures or web info
 Emphasize most significant environmental impacts
 Beware overwhelming with too much information
 Effectiveness
Certification
depends on credibility of the partner
 Standardize across industry or impact area
 Credibility at the expense of cost and differentiation
 Can
Partnerships
be transformational for a company
 Most credible with the most vocal activist NGOs
 Presents risks for both the company and the partner
FINDINGS AND RECOMMENDATIONS DETAIL:
#1

Every product has environmental impact, but goal is to mitigate
impact as much as possible

Tradeoffs exist in each stage of the product lifecycle - green needs to be
an on-going ideal towards continuous improvement


Companies need to understand tradeoffs internally and articulate them
externally to maintain credibility with consumers
Environmental benefits must be significant relative to alternatives
FINDINGS AND RECOMMENDATIONS DETAIL:
#2

Companies need to clearly articulate green benefits important to
their own mass-market consumers
Must quantify and contextualize environmental benefits to help
consumers understand reduced product impact
 Need to distill varied aspects of green to a concise consumer message
(e.g., labeling efforts currently underway, etc.)


Ultimately, consumers must obtain value from purchase whether through
environmental benefits or other product attributes
FINDINGS AND RECOMMENDATIONS DETAIL:
#3

Cradle-to-cradle can be used as a tool to enable mass marketing of
green products
Provides framework to consider aspects of sustainable products
 Provides levers for organizations to reduce their cost structures in line
with mass-market needs


Aligning green products with mainstream prices opens doors for
mass-market adoption and economies of scale
Price point is important for mass-market appeal
 Green benefits and efficacy will differentiate product and lead to growth
through word-of-mouth
 Small wins in mass-market can double revenues of niche market and is
often more efficient

TIMBERLAND’S GREEN INDEX
CARBON TRUST’S CARBON FOOTPRINT
CARBON TRUST’S CARBON FOOTPRINT