Green Marketing
Lalit Sharma

WHAT IS GREEN MARKETING?

A majority of people believes that green marketing refers solely to the promotion or advertising of products with environmental characteristics.
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.

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. Indeed the terminology used in this area has varied; it includes Green Marketing, Environmental Marketing and Ecological Marketing.

WHY IS GREEN MARKETING IMPORTANT?

Consider these statistics:

Every recycled ton of paper saves approximately 17 trees, which are then available for other uses. Recycling paper also reduces the air and water pollution due to paper manufacturing.
The question of why green marketing has increased in importance is quite simple and relies on the basic definition of Economics:

WHY ARE FIRMS USING GREEN MARKETING?

When looking through the literature there are several suggested reasons for firms increased use of Green Marketing. Five possible reasons cited are:

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

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

• Governmental bodies are forcing firms to become more responsible.

• Competitors' environmental activities pressure firms to change their environmental marketing activities; and
  Cost factors associated with waste disposal, or reductions in material usage forces firms to modify their behavior.

Firms may also use green marketing in an attempt to address cost or profit related issues. Disposing of environmentally harmful by-products, such as polychlorinated biphenyl (PCB) contaminated oil are becoming increasingly costly and in some case 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 also reduce the need for some raw materials. This serves as double cost savings, since both waste and raw material are reduced.
In other cases firms attempt to find end-of-pipe solutions, instead of minimizing waste. In these situations firms try to find markets or uses for their waste materials, where one firm's waste becomes another firm's input of production. The last way in which cost or profit issues may affect firms' environmental marketing activities is that new industries may be developed. This can occur in two ways:

• A firm develops a technology for reducing waste and sells it to other firms; or

• A waste recycling or removal industry develops.

For example, firms that clean the oil in large industrial condensers increase the life of those condensers, removing the need for replacing the oil, as well as the need to dispose of the waste oil. This reduces operating costs for those owning the condensers and generates revenue for those firms cleaning the oil.

BENEFITS OF GREEN MARKETING

1. 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 .A 1994 study in Australia found that 84.6% of the sample believed all individuals had a responsibility to care for the environment. A further 80% of this sample indicated that they had modified their behavior, including their purchasing behavior, due to environmental reasons. As demands change, many firms see these changes as an opportunity to be exploited.

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 .

• Tuna manufacturers modified their fishing techniques because of the increased concern over driftnet fishing, and the resulting death of dolphins.

• Xerox introduced a "high quality" recycled photocopier paper in an attempt to satisfy the demands of firms for less environmentally harmful products.

2. 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,

• They can use the fact that they are environmentally responsible as a marketing tool; or

• They can become responsible without promoting this fact.

3. DIFFERENTIATING PRODUCTS

The idea behind environment product differentiation is straightforward:
Companies create products or employ processes that offer greater environmental benefits or impose smaller environmental costs than those of their competitors. Such efforts may raise the business’s costs, but they may also enable it to command higher prices, to capture additional market share, or both.
A more recent example would be Hero Honda’s Splendour bike. Their whole positioning strategy was based on promoting it as an eco-friendly product. Thus by pioneering the concept of Green Marketing in India Hero Honda was able to differentiate its product and create a distinctive brand image

4. COMPETITIVE ADVANTAGE

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.

For example, it could be argued that Xerox's "Revive 100% Recycled paper" was introduced a few years ago in an attempt to address the introduction of recycled photocopier paper by other manufacturers. In another example when one tuna manufacture stopped using driftnets the others followed suit

5. EFFECTIVE UTILIZATION OF RESOURCES

Firms may also use green marketing in an attempt to address cost or profit related issues. Disposing of environmentally harmful by-products, such as polychlorinated biphenyl (PCB) contaminated oil are becoming increasingly costly and in some cases difficult. Therefore firms that can reduce harmful wastes may incur substantial cost savings.
Some organizations are able to cut costs and improve environmental performance simultaneously For instance; major hotel chains have started to follow this approach. These include reducing their solid-waste generation, cutting their water and energy use. Many hotels have replaced small bottles of shampoo and lotion with bulk dispensers saving money and reducing wastes. Others use recycled packages for amenities. Industrial companies have cut costs and enhanced environmental performance at the same time by redesigning inflexible and wasteful routines.

THE PROBLEMS

1. LACK OF CONSUMER AWARENESS

Another problem firms face is that those who modify their products due to increased consumer concern must contend with the fact that consumers' perceptions are sometimes not correct.

Take for example the McDonald's case where it has replaced its clamshells with plastic coated paper. There is ongoing scientific debate, which is more environmentally friendly. Some scientific evidence suggests that when taking a cradle-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.

2. LIMITED SCIENTIFIC KNOWLEDGE

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
This may explain why some firms, like Coca-Cola and Walt Disney World, are becoming socially responsible without publicizing the point. They may be protecting themselves from potential future negative backlash; if it is determined they made the wrong decision in the past.

3. FINANCIAL CONSTRAINTS

The technology involved in production and marketing of eco-friendly products is difficult to adopt due to huge costs involved. The additional costs involved may ultimately increase the price of the final product. This will cause a fall in the demand for the company’s product reducing its customer base.
For instance with the adoption of EURO I & EURO II standards by the car manufacturers in India, the prices of cars have risen sharply making them beyond the reach of average consumers.

4. DECEPTIVE MARKETING

All firms who undertake environmental marketing activities may not actually improve their behavior. In some cases firms have misled consumers in an attempt to gain market share. In other cases firms have jumped on the green bandwagon without considering the accuracy of their behavior, their claims, or the effectiveness of their products. This lack of consideration of the true "greenness" of activities may result in firms making false or misleading green marketing claims

5. LACK OF STRINGENT LEGAL STANDARDS

For effective and efficient implementation of this concept of Green Marketing the third factor that plays a major role is the Government. Unless the government creates specific and stringent laws and utilizes its authority to implement them the concept cannot be conceptualized. More often than not the government ignores the enforcement of these laws because of the huge revenues that it earns from the corporates.

For example the Delhi Government has recently put a ban on the use of polybags for the packaging of food products. But the fact is that, far from implementing the law, the manufacturers plus the marketers are not even aware of it.

THE IMPLEMENTATION

1. ROLE OF THE CONSUMER

The consumer needs to be motivated to become more environmentally responsible. Their eco awareness should reflect in their willingness to pay a higher premium for eco-friendly products. Also they should abstain from the use of products endangering the environment.

2. ROLE OF THE CORPORATES

There are various tools by which the business firms can incorporate the concept of Green Marketing. This will not only benefit the environment but also give the firms a competitive edge and a better quality product for their consumers.

3. ROLE OF THE GOVERNMENT

As with all marketing related activities, governments want 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,

1) Reduce production of harmful goods or by-products;
2) Modify consumer and industry's use and/or consumption of harmful goods; or
3) Ensure that all types of consumers have the ability to evaluate the environmental composition of goods.

CONCLUSION

Green marketing covers more than a firm's marketing claims. While firms must bear much of the responsibility for environmental degradation, ultimately it is consumers who demand goods, and thus create environmental problems.

One example of this is where McDonald's is often blamed for polluting the environment because much of their packaging finishes up as roadside waste. It must be remembered that it is the uncaring consumer who chooses to disposes of their waste in an inappropriate fashion. While firms can have a great impact on the natural environment, the responsibility should not be theirs alone.

Ultimately green marketing requires that consumers want a cleaner environment and are willing to "pay" for it, possibly through higher priced goods, modified individual lifestyles, or even governmental intervention. Until this occurs it will be difficult for firms alone to lead the green marketing revolution.

Having said this, it must not be forgotten that the industrial buyer also has the ability to pressure suppliers to modify their activities. Thus an environmental committed organization may not only produce goods that have reduced their detrimental impact on the environment, they may also be able to pressure their suppliers to behave in a more environmentally "responsible" fashion. Final consumers and industrial buyers also have the ability to pressure organizations to integrate the environment into their corporate culture and thus ensure all organizations minimize the detrimental environmental impact of their activities.

Lalit Sharma
MBA (IB), 2nd year
Indian Institute of Foreign Trade
School of International Business Management, New Delhi
Email: lalitsharma79@yahoo.com

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