Green Marketing: Definitions, Opportunities, Importance and Issues

Green Marketing is also known as environmental marketing or sustainable marketing. It refers to all activities that facilitate any exchange intended to satisfy human needs and wants in such a way that the satisfaction of the said needs and wants occurs with the minimum detrimental impact on the natural environment.

Green marketing companies seek to go above and beyond traditional marketing by promoting environmental core values in the hope that consumers will associate these values with their company or brand. Engaging in these sustainable activities can lead to creating a new product line that caters to a new target market.

Green Marketing incorporates broad range of activities including product modification, changes to the production process, packaging changes, and modifying advertising. Green marketing focuses on satisfaction of customer needs and wants with no or minimum harm to the natural environment.

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1. Definitions of Green Marketing 2. Opportunities of Green Marketing 3. Importance 4. Fundamentals Requirements for Effective Green Marketing 5. Green Product Development Issues 6. Problems with Green Marketing.

Green Marketing: Definitions, Opportunities, Importance, Fundamental Requirements and Problems

Contents:

Definitions of Green Marketing
Opportunities of Green Marketing
Importance of Green Marketing
Fundamental Requirements for Effective Green Marketing
Green Product Development Issues
Some Problems with Green Marketing

Green Marketing – Definitions Provided by American Marketing Association

According to the American Marketing Association, “Marketing is the performance of business activity that directs the flow of business from the producer to the consumer.” When this business activity is carried out in such a fashion that it causes the least damage to the environment it is known as green marketing.

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It refers to organisations efforts at designing, pricing, promoting and distributing products that will not harm the environment.

Green Marketing is a holistic marketing concept wherein the production, promotion, distribution, consumption and disposal of products and services take place in such a way that the least damage is inflicted upon the environment.

According to the American Marketing Association, “green marketing is the marketing of products that are presumed to be environmentally safe”.

Green marketing focuses on the green marketing efforts companies use, including corporate social responsibility plans and sustainability efforts. Many consumers are environmentally conscious, seeking eco-friendly products and services from organisations that are socially responsible.

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Being healthy is a new mantra of people around the globe. And catering to this population every company is going green. Green marketing is mostly misunderstood a majority of people believe that green marketing refers solely to the promotion or advertising of products which are environmentally safe.

Terms like Phosphate Free, Recyclable, Refillable, Ozone Friendly, and Environmentally Friendly are some of the things consumers most often associate with green marketing. Yet defining green marketing is not a simple task. According to American Marketing Association, green marketing is about marketing a product which is environmental friendly.

Facets of green marketing is not only restricted to consumer products it also has a have an impact in services. For example, around the world there are resorts that are beginning to promote themselves as “ecotourist” facilities, i.e., facilities that “specialize” in experiencing nature or operating in a fashion that minimizes their environmental impact.

Green marketing refers to holistic marketing concept and it incorporates a broad range of activities, including product modification, changes to the production process, packaging changes, as well as modifying advertising. Other terminologies are also used in this area. They are Green Marketing, Environmental Marketing and Ecological Marketing.

Although, Green Marketing came in to limelight during the late 1980s and early 1990s, the idea was seeded in to people’s minds much earlier. The first workshop on “Ecological Marketing” by the American Marketing Association (AMA) was held in 1975. The outcome of the proceedings of this workshop was one of the first ever books on Green Marketing, which was entitled as “Ecological Marketing”, Ever since that time, a lot many books were published.

The AMA workshop attempted to bring together academics, practitioners, and public policy makers to examine marketing’s impact on the natural environment.

At this workshop ecological marketing was defined as:

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The study of the positive and negative aspects of marketing activities on pollution, energy depletion and non-energy resource depletion.

This early definition comprises of three critical ingredients, namely:

1) It is a subcategory of the overall marketing activity

2) It assesses and evaluates not only the positive but also the negative activities and

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3) A narrow spectrum of environmental concerns are studied.

This definition fails to comprehend all the aspects of green marketing. The definition says the positive and negative aspects of marketing activities but nothing is discussed or mentioned about at what cost. Manufacturers and consumers are aware about the green marketing and are very much sensitive too.

The following definition is much broader than those of other researchers and it encompasses all major components of other definitions. This definition states that- 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.

This definition incorporates much of the traditional components of the marketing definition that is “All activities designed to generate and facilitate any exchanges intended to satisfy human needs or wants”. Therefore it ensures that the interests of the organization and all its consumers are protected, as voluntary exchange will not take place unless both the buyer and seller mutually benefit.

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The above definition also includes the protection of the natural environment, by attempting to minimize the detrimental impact this exchange has on the environment. This second point is important, for human consumption by its very nature is destructive to the natural environment. (To be accurate products making green claims should state that they are “less environmentally harmful” rather than “Environmentally Friendly.”)

Thus, green marketing should look at minimizing environmental harm, not necessarily eliminating it.

Green Marketing – Opportunities

Manufacturer may find this shifting to green marketing as a costly affair but it is just short term, in long run this shift is advantageous and indispensible. Companies which are equipped with a better grasp of ecological issues, have already shifted or are shifting to green marketing. A growing number of businessmen are now appreciating the link between environmental responsibility and more efficient and profitable business practices.

1. More Profits:

Today, major U.S. corporations regularly conduct environmental audits and ensure that they recycle the waste material. Many other companies have upgraded their facilities which are fitted with energy-efficient technology. Such energy and environment- friendly steps reduce operating costs of concerns and help in boosting profits.

Many companies, which operate in highly polluting environments such as chemical, oil and electrical power generation have established management systems which make sure that their environment profiles and products exceed consumer expectations thereby improving indirectly improving consumer acceptability of their products.

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These environmentally-friendly and sensitive changes that are made within the organizations also end up enhancing employee morale and productivity with the final payoff in improved customer relations and overall returns on investment.

Further, this enhanced corporate imagery can result in attracting healthy investors and top talent. Moreover, production of eco-efficient products results in less wastage, less debris creation and also finally saves on energy too.

2. Competitive Advantages:

Green marketing gives competitive edge to companies and many companies have already adopted this method of marketing. For example, Eveready introduced reusable alkaline batteries and redefined the market for rechargeable batteries. Philips Lighting, inventors of compact fluorescent lighting technology, stood ready when business and electric power utilities proposed for replacements for energy-guzzling incandescent.

Snickers when started their operation India they did not care to have a green marketing but within six months they changed their marketing activities and started focusing in green marketing.

Increased Market Share:

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With so many options available in the market for buyers, marketers are having tough time maintaining brand loyalty. Brand loyalty is waning day by day and the number of customers who feel that some brands are worth paying for are also decreasing. In such a competitive climate, customers are more inclined to buy products that are environmentally compatible because customers are inclined to those products and packages that can be recycled or safely disposed of without causing harm to the environment.

A marketer tried to persuade a customer to become a brand-loyal customer, on the other hand the customer took no time to switch to another company. Switching to companies that are environmentally sound and boycotting brand of companies with disappointing environmental track records is the order of the day.

As a result, market giants like Procter & Gamble and McDonalds go a great length to offer the greenest of mainstream products and take pains to project themselves and their products as environmentally-friendly and efficient.

For example, if you happen to pick up a bottle of Tide laundry detergent, you will learn that it is phosphate-free, contains biodegradable cleaning agents and is packaged in a recycled-content bottle. In case of McDonalds you can see that they have basic brown paper carry bags and recycled napkins. Now, they are testing Earth Shell compostable food wraps.

3. Personal Rewards:

More than obligation green marketing should be appreciated by companies. A company which by choice chooses to be environmental friendly, customers and all other stakeholders respect that company. Coming up with products that are in sync with nature lets companies to personally contribute to environmental protection and cleanup and this in turn ensures a more secure and green future for the coming generation.

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A mind that has been once attuned to a thought never goes back to its past. As a result, green marketers, who are once acclimatized to green thoughts, will do their best to cultivate higher levels of customer satisfaction and reward.

The end result is the prospect of healthier, more fulfilled lives, and the power to make the world a better place to live in. In turn, these green promises personal and professional rewards for the green marketers.

Green Marketing – Importance

There are several suggested reasons for firms increased use of Green Marketing.

Five possible reasons cited are:

1. Organizations perceive environmental marketing to be an opportunity that can be used to achieve its objectives.

2. Organizations believe they have a moral obligation to be more socially responsible.

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3. Governmental bodies are forcing firms to become more responsible.

4. Competitors’ environmental activities pressure firms to change their environmental marketing activities.

5. Cost factors associated with waste disposal, or reductions in material usage forces firms to modify their behavior.

Thus, the importance of green marketing can be explained under following points:

(a) Opportunities:

It appears that all types of consumers, both individual and industrial are becoming more concerned and aware about the natural environment. In a 1992 study of 16 countries, more than 50% of consumers in each country, other than Singapore, indicated they were concerned about the environment. Given these figures, it can be assumed that firms marketing goods with environmental characteristics will have a competitive advantage over firms marketing non environmentally responsible alternatives.

There are numerous examples of firms who have strived to become more environmentally responsible, in an attempt to better satisfy their consumer needs.

McDonald’s replaced its clam shell packaging with waxed paper because of increased consumer concern relating to polystyrene production and ozone depletion.

(b) Social Responsibility:

Many firms are beginning to realize that they are members of the wider community and therefore must behave in an environmentally responsible fashion. This translates into firms that believe they must achieve environmental objectives as well as profit-related objectives. This results in environmental issues being integrated into the firm’s corporate culture.

Firms in this situation can take two perspectives:

(i) They can use the fact that they are environmentally responsible as a marketing tool or

(ii) They can become responsible without promoting this fact.

(c) Government Pressure:

As with all marketing-related activities, government’s wants to “protect” consumers and society; this protection has significant green marketing implications.

Governmental regulations relating to environmental marketing are designed to protect consumers in several ways:

(i) Reduce production of harmful goods or by-products;

(ii) Modify consumer and industry’s use and/or consumption of harmful goods; or

(iii) Ensure that all types of consumers have the ability to evaluate the environmental composition of goods.

(d) Competitive Pressure:

Another major force in the environmental marketing area has been firms’ desire to maintain their competitive position. In many cases firms observe competitors promoting their environmental behaviors and attempt to emulate this behavior. In some instances this competitive pressure has caused an entire industry to modify and thus, reduce its detrimental environmental behavior.

(e) Cost or Profit Issue:

Firms may also use green marketing in an attempt to address cost or profit related issues. Disposing of environmentally harmful by-products, are becoming increasingly costly and in some cases difficult. Therefore, firms that can reduce harmful wastes may incur substantial cost savings. When attempting to minimize waste, firms are often forced to re-examine their production processes. In these cases, they often develop more effective production processes that not only reduce waste, but reduce the need for some raw materials. This serves as a double cost savings, since both waste and raw material are reduced.

Conclusion:

Green marketing is an approach to protect the environment using ecofriendly marketing techniques in order to perform all business functions such as- green production using eco-friendly raw materials and methods, green packaging, etc. This approach to marketing allows a firm to act in a responsible manner and to gain the competitive advantage as well.

Green Marketing – Fundamental Requirements

It is obvious that we cannot have an effective green market unless and until we have a truly competitive market in general.

This will require all of the following:

1. Low Entry Barriers:

The electricity industry has naturally high entry barriers because of its inherent capital-intensity, the long lead-time that is required for new projects, the associated permission difficulties, and so forth. That is, there is no easy exit and entry to begin with in this market. So, every effort must be made to keep entry barriers as low as possible. For starters, this means that there need to be a large number of competitors in every local market to curb market power.

But, with every merger that is approved, we will see less competition, not more. We must also have fair transmission access rules, truly independent system operators, and all the rest. It remains to be seen whether we will have a truly competitive market anytime soon.

This is particularly important to renewable energy because, if markets are competitive, we can expect to see entrepreneurs trying to break into the market using the environment, and renewable, as a marketing hook. But if entry is blocked, consumers will never even be presented with real choices.

2. Good Information:

A fundamental precondition to an efficient market is that consumers must have complete information about the choices that are available to them. To encourage a market in “green,” consumer must have information that is good enough to allow them to comparison shop among suppliers on the basis of their costs and the environmental characteristics of their resource portfolio. This necessarily requires disclosure of fuel sources and emissions, not just for those claiming “greenness” but also for all suppliers.

Without uniform disclosure requirements, the burden will fall on green marketers to investigate their competitors’ portfolios and educate consumers about them. This is a difficult and expensive task and, even if undertaken, consumers may not trust marketers’ claims.

Of those eligible to participate in the New Hampshire pilot programme, for example, 33% of consumers who did not switch suppliers cited confusing or deceptive advertising as the reason. Verifying marketers’ claims will be a task too formidable for most environmental groups, especially local ones, and many will be unwilling to spend their limited resources for this purpose.

So, without uniform disclosure requirements, consumers may have no reliable source of information that gives them confidence in marketers’ claims and the green market in general. If consumers are mistrustful of green claims, then the green market will be undermined.

We have seen tremendous controversy over claims that have been made, and how that can infuse the green market with suspicion. Any green marketer that has a worthy green product has an interest in disclosure requirements, because that is what will give legitimacy and value to its product.

3. Corrected Market Failures:

A market in which renewable gets no credit for their public benefits (such as environmental, energy security, and fuel price stability benefits) is one that will seriously hinder the development of renewable. Even perfectly competitive markets only work well when consumers receive the benefits of the goods they pay for. They do not work well when the benefits go to people that aren’t paying for them.

This is the classic public goods problem that underlies virtually every environmental law in the country, even in markets with relatively low entry barriers. While there will be some people perhaps an appreciable number who will be altruistic enough to pay more to make everyone else’s air cleaner, it is no more realistic to expect green marketing to substitute for renewable energy policy than it is to expect green marketing to substitute for the Clean Air Act, even though, if all consumers acted according to their values, that would be true.

That’s not doom saying the green market. It is just recognition of economic reality in particular, the “free rider” effect.

Green Marketing – Product Development Issues

1. Raw Materials Acquisition and Processing:

i. Conservation of natural resources like water, land, and air

ii. Protection of natural habitats and endangered species

iii. Waste minimization and pollution prevention, especially the use and release of toxins

iv. Transportation

v. Use of renewable resources: sustainable use to resources

vi. Use of recycled materials

vii. Energy consumption

2. Manufacturing and Distribution Issues:

i. Minimal use of materials

ii. Toxic use/release

iii. By-product/waste generation and handling

iv. Energy consumption

v. Water use

vi. Emissions to air, land, and water

3. Product Use and Packaging Issues:

i. Energy efficiency

ii. Conservation to natural resources such as water required for the use of the product

iii. Consumer health and environmental safety

4. After-Use/Disposal Issues:

i. Recyclability; ease of reuse, remanufacture and repair

ii. Durability

iii. Biodegradability/combustibility

iv. Safety when incinerated or land filled.

5. Ideas for Action:

Use the following checklist to explore the myriad opportunities for refining existing products or developing new ones that meet environmental imperatives and satisfy consumers’ primary demands.

6. Raw Material Procurement:

i. Can we minimize the potential for our raw-materials procurement process to avoid tropical deforestation? Land stripping? Oil spills?

ii. Can we use renewable resources or resources that are sustainably managed?

7. Manufacturing:

i. What steps can we take to prevent or otherwise reduce the production of solid and hazardous waste in our manufacturing processes?

ii. How can we reduce our use of water, emissions into the air and waterways?

8. After Use:

i. Can we redesign our products to make them more energy- or resource-efficient and thereby reduce operating costs?

ii. Can we make our products safer or more pleasant to use?

iii. Can we use alternative ingredients that help to minimize risks to health and the environment?

9. After-Use Recovery and Disposal:

i. Can we design our products to be durable? Refillable? Reusable? Repairable? Re-manufacturable? Rechargeable?

ii. Can we redesign our products or packages to reduce the need for land filling?

iii. Can we make our products and packaging safer to landfill or incinerate?

iv. Can we use materials and ingredients that are inherently biodegradable or compostable?

Green Marketing – Problems

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-

i. Clearly state environmental benefits;

ii. Explain environmental characteristics;

iii. Explain how benefits are achieved;

iv. Ensure comparative differences are justified;

v. Ensure negative factors are taken into consideration; and

vi. Only use meaningful terms and pictures.

Another problem firm’s 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- to-grave 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.

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 (hydrofluorocarbons) 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 publicising the point.

They may be protecting themselves from potential future negative backlash if it is determined they made the wrong decision in the past.

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. For example, guidelines developed to control environmental marketing address only a very narrow set of issues, i.e., the truthfulness of environmental marketing claims.

If governments want to modify consumer behaviour they need to establish a different set of regulations. Thus governmental attempts to protect the environment may result in a proliferation of regulations and guidelines, with no one central controlling body.

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.

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 minimise its short-term affects.

Ultimately most waste produced will enter the waste stream. Therefore to be environmentally responsible organisations should attempt to minimise their waste, rather than find “appropriate” uses for it.