Green Marketing Differs From Traditional Marketing Marketing Essay

Green Marketing Differs From Traditional Marketing Marketing Essay Green Marketing can be defined as the holistic management process responsible for identifying, anticipating and satisfying the needs of customers and society, in a profitable and sustainable way. Therefore, one can say that green marketing is a careful integration of social and environmental requirements with the economic desires of the company. Green marketing is also known as environmental, sustainable and eco marketing. Green Marketing differs from Traditional Marketing Differences between green marketing and traditional marketing can be seen from various aspects. Green marketing expands on the fundamental functions of traditional marketing. Consequently, green marketing can achieve goals that traditional marketing cannot meet. For example, green marketing not only focuses on the direct benefit of a product but also on long term environmental benefits. Traditional marketing involves soliciting new customers by using television advertising, print advertising, direct mail and telemarketing. This is known as outbound marketing where focus is on push strategies. Green marketing by contrast uses inbound marketing where the focus is a pull strategy. According to Cordero (2012); Inbound marketing works by creating content that people actually want to see, encouraging potential clients to seek out the company being marketed, rather than the company seeking out people. Social media is the primary marketing platform for inbound marketing. By linking the companys website with external social media sites such as: YouTube, Facebook and Twitter; along with blogs. All these platforms form an interactive media that fosters interaction with potential customers. Why Green? Green marketing has been growing rapidly since it came into existence; it is not only leading companies to environmental protection, but also creates job opportunities and opens new markets. Green Marketing has emerged as a mainstream marketing tool in business over the last decade. With the mobilisation of socio-environmental groups and the vastly increased sources of information in society it is no longer possible for companies to ignore green. Thus green marketing has evolved enough to become significant for the long term sustainability of companies. Filho, et al. (2008), state; The growing concerns with the environment, increased competition, and customer demands are immediate challenges to green marketing. And according to the Harvard Sustainability Initiative, (2012); Companies are under growing pressure to be accountable not only to shareholders, but also to stakeholders such as employees, consumers, suppliers, local communities, policymakers, and society-at-large. Socio-environmentalism (sustaining the future of our Planet) has become a leading concern for all. They are leading motivations for change and reform. Society needs to pressure environmental reform to safeguard the future of our planet for future generations. Table 1 below lists some of the more pertinent socio-environmental concerns; Global Warming Finite Natural Resources Water Waste Management Deforestation Pollution Synthetic Chemicals Genetically Modified Foods Table Socio-Environmental Concerns Green Drivers Figure 1 below demonstrates the green drivers affecting sustainable marketing. Green drivers are divided into two categories: internal drivers and external drivers. Figure 1 Summary of green drivers Environmental Management Catalysts (Khanna, 2005) cited by (Valentine, 2009) External Drivers External drivers include stakeholder pressures, regulation and competition. Figure 2 below lists the various sources of stakeholder pressures. Figure sources of stakeholder pressures Company strategies are often strongly motivated by competition. Competitive analysis is a key element in the strategic direction of the company. The company must ask itself what are the competition doing and how can we gain use from that information to create a competitive advantage. In many cases green marketing is about reacting to industry movements towards green policies. Government legislation and regulations are often driven by demand from society and environmental concerns have increasingly become key election agendas over the last 20 years. Governments are now compelled to implement new regulations at an accelerated rate. For example the EU has implemented the EU Sustainable Development Strategy  (SDS).The SDS sets out the objective of achieving improvement of the quality of life for present and future generations. Prosperity, environmental protection and social cohesion are to be achieved through sustainable communities which are able to manage resources efficiently and to tap into the ecological and social innovation potential of the economy. The SDS supports the EU in evaluating, monitoring, developing and improving the EUs collective carbon footprint. For a company to be truly green it needs its entire supply chain to be green as well. The Company needs to know all subcontractors, which are providing support to main suppliers, practice have green responsibility at the core of their business. A company is only as green as its least green supplier. Local Communities have become increasingly aware of the environment in their vicinity. While they are always thankful for job creation, local communities are less tolerant of company caused environmental and social negatives. GIY Ireland is a social society that encourages members to grow their own food stocks. GIY would be less necessary if produce was sourced locally and sold at reasonable prices. Green activist groups such as Greenpeace can have a very public and damaging effect on companies. They through societal support have the means of lobbying governments and creating campaigns that reduce profits. By going green companies can reduce the impact of activist groups. Internal Drivers Sustainable marketing has emerged as a vibrant economic source of profits. The overall market for green marketing is said to be worth $ 3.5 trillion by the year 2017 (Global Industry Analysts Inc. 2011). Any company interested in growth and profits should have a desire to share in this growth sector. Odell (2007) explains that graduates are now looking to environmentally friendly companies first when seeking employment. She also states employees working at companies with clear corporate responsibility (CSR) programs, including environmental and social programs, are most satisfied. Savvy companies realise that green increases competitive advantage in recruiting, brand reputation, employee recruitment and retention. Corporate Social Responsibility According to the Harvard sustainability initiative (2012), CSR encompasses not only what companies do with their profits, but also how they make them. It addresses how companies manage their economic, social, and environmental impacts, as well as their relationships in all key spheres of influence: the workplace, the marketplace, the supply chain, the community, and the public policy realm. CSR implies that sustainability starts with the senior management and permeates throughout the company, where the corporate level is active in guiding the company strategy with social and environmental concerns addressed along with profit. Wiley cited by Odell (2012) states, Those organizations that have a clear CSR policy set themselves apart from the competition in terms of employment brand. Partaking in CSR activities not only has positive societal effects, but also increases an organizations competitive advantage. To be effective CSR must be: Voluntary, Transparent, and Credible, Integrated into organisation culture, provide value for organisation, stakeholders and society and work diligently with sustainable strategies. Sustainability Sustainability is about ensuring a greater quality of life for current and future generations. Kolter (2011) states, Companies must address the issue of sustainability. Sustainability raises the question whether this generation can leave future generations with the same or a larger basket of resources than we have now. According to Paul Hawken (2012), The first rule of sustainability is to align with natural forces, or at least not try to defy them. Figure 3 below illustrates how social, economic and environment integration form the sustainability direction of a company. Figure the triple bottom line Sustainability Triumvirate (Greenlaw, 2011) C:UsersLeon BehalAppDataLocalTempNew Picture (1).bmp The idea of sustainability is to reconcile the needs of society, the environment and the companys profits to create long-term shareholder value (Greenlaw, 2011). Sustainability and green marketing are evolving as growing drivers of business in the post-recession world. As part of this agenda savvy consumers are pressuring companies to become transparent with their business practices. No longer is it acceptable to be solely for profit maximisation. Unilever is a recognised advocate of sustainability and CSR, as evidenced by their Sustainable Living Plan (SLP). SLP offers transparency and clarity about Unilevers sustainability targets and progress reports. Greenwashing According to GIA (2012) Greenwashing refers to exaggerated green claims and falsified green claims and is a major challenge for industry, as it leads to consumer scepticism pertaining to such green claims. Despite the risks associated with greenwashing companies continue to practice this. Kock Industries is an US based conglomerate, with interests in multiple environmentally damaging industries such as: mining, oil, and chemicals. Kock Industries actively lobbies the US government against global warming and other green concerns, and has also incurred $400 million in environmental fines and judgements over a four year period in the early 2000s. Despite this Kock Industries website proclaims sustainability and CSR as core elements of its strategic direction. Monsato LLC is a US owned publicly traded company. Like Kock industries Monsato claims sustainability and CSR as key themes in its strategy. Monsato is a global leader in genetically modified foods. There primary focus is on seeds, and they have even obtained patents on these products. Terminator seeds are seeds without reproduction capabilities created by Monsato. The long term effects of terminator seeds on the seed gene pool are unpredictable and should never be commercialised. Green Myopia Companies should strive to avoid Green Myopia, where products are absolutely green and alienate their customer base. The primary reason for being green is to create customer satisfaction through motivating and providing green benefits. It is very difficult to get consumers to switch brands without meeting satisfaction criteria, and absolute green in general will disappoint consumers. Another alienating possibility is overpricing, consumers will select the best alternative is the price differential is too great. Green Consumers NBC Universal the US media conglomerate proposes that consumers conform to one of four green consumer categories. Figure 4 below identifies the four categories as: true brown, potential green, thinking green and behavioural green. Figure Green Consumer Types based on NBC Universal Model True Brown consumers are the hardnosed anti-green types. They are likely to actively seek out non green products and usually apathetic about environmental concerns and are seeking traditional marketing benefits, such as quality, price. They will not go out of their way to source green products. Potential Green (PG) consumers are green aware, but do not actively buy green. PGs need effective encouragement to buy green and their purchases may be coincidental. Think Green (TG) consumers have an interest in favouring green, but it must be convenient. TGs will go non-green when not positively motivated. According to Vernekar and Wadhwa (2011), Consumers with neither strong positive nor strong negative attitudes towards green products are more likely to be persuaded by a non-green benefits message than a green message. Behavioural green (BG) consumers are passionately green. BG consumers are often environmental advocates and only buy eco-friendly or neutral products. BG consumes strongly favour green products, but distrust green advertising. Thus careful consideration needs to be placed on where green marketing is utilised. Green Consumer Segments There are many types of green consumer segments including: resource conservers, health fanatics, animal lovers, and outdoor enthusiasts. It is important to use green strategies effectively when targeting favourable consumer demographics. The 4 Ps of Green Price: Although many consumers state willingness to pay slightly more for green products, the price needs to remain close to alternatives to attract less green consumers. There must be a careful balance between: profits, productivity, environment and people. To justify extra charges green products should offer increased product value through: performance, function, design. Product: Green products need proof of reduction of resource consumption, pollution. Eco-friendly products can state there green as a differentiating factor. Product labelling trends include: energy saving, organic, green chemicals, local sourcing. Companies can label products green simply by using eco-friendly packaging. Place: Companies can reduce their carbon footprint by: managing logistics, such as transport costs, and raw materials sourcing. Companies should carefully consider where and when to sell green products. Many consumers will travel out of their way to buy green, but most want ease of access and will buy non-green when convenient. Promotion: Matching marketing mix to customer green needs by: focusing on relationship between product/ service and environment, promoting green lifestyle benefits. Corporate image is important and CSR demonstrates commitment to green. Social media plays a central role in promoting the activities of green companies. There is even scope for consumer interaction and tastemaker associations from this platform. Green Strategies Industry green norms and potential green market size are key issues for companies looking to gain competitive advantage with green marketing. Companies should consider the likely size of green markets in its industry as well as how can they differ their green products or services from their competitors ones before they take steps on going green. C:UsersLeon BehalAppDataLocalMicrosoftWindowsTemporary Internet FilesContent.WordNew Picture (15).bmp Figure the Four Green Strategy Positions There are four types of green strategies: Lean Green, Defensive Green, Shaded Green and Extreme Green. Figure 5 above illustrates the need for companies to identify their position in regards to substantiality of green market segments and differentiability of greenness in order to choose the right strategy to enter a green market. Promotions tools adopted by this strategy are rather quiet such as public relations versus mass advertising. According to Ginsberg and Bloom (2004), the Shaded Green strategy puts some secondary emphasis on greenness in its more overt promotional efforts and also pursues green product development as well. Finally, they also state, Extreme Green strategy involves heavy use of all four marketing mix elements, including place as distribution systems, massive advertising, retailers etc. Applying the 4Ps of Green Product Price Place Promotion Lean X Defensive X X Shaded X X X Extreme X X X X Table : Applying 4Ps to Green Strategies Differences among these four green strategies can be seen by considering how the 4Ps of the marketing mix are utilised in each strategy. The Lean Green strategy is the one who mainly focuses on product development, design and manufacturing, Ginsberg and Bloom (2004). The Defensive Green strategy also pursues greenness in product section but additionally, it involves the promotional aspect of the marketing mix. Lean Green Companies that choose lean green strategy indicate that they are low at both substantiality of green market segments and differentiability of greenness. Lean greens are interested in reducing costs and improving efficiencies at the same time through pro-environmental activities. Their initial competitive advantage would be a lower-cost advantage instead of green one. Because they are at a very low position in both dimensions, they are not focused on publicizing or marketing their green initiatives, Ginsberg and Bloom (2004). Lean greens are not often motivated to promote their green activities or green product attributes because of the fear of being held up to a higher standard; and they are not always able to live up to it or differentiate themselves from competitors, Ginsberg and Bloom (2004). Coca Cola can be characterised as a lean green company. Most consumers are not aware that the company has invested heavily in various cycling activities and package modifications. Because the wide target market and brand breadth of the company, Coca Cola has chosen not to market its effort even though it is concerned about the environment. Defensive Green Defensive green companies usually see green marketing as a precautionary measure, or as a response to a crisis or a response to a competitors actions. They seek to enhance brand image and mitigate damage, Ginsberg and Bloom (2004). They recognise green marketing is important and profitable but they cannot afford to go green. Their environmental initiatives seem to be sincere, but their efforts to promote these initiatives are rather sporadic and temporary because they are not able to differentiate themselves from their competitors on greenness. Defensive greens do not normally launch an overt and significant green campaign because aggressive promotions could be wasteful and would create expectations that cannot be met. They pursue actions such as small environmentally friendly events and programs. An example would the Gap Inc. Gap has long promoted energy conservation and waste reduction. However Gap was criticised by environmental activists and press due to the involvement with an environmentally unfriendly company that was owned by Gaps CEOs relatives. Luckily, the company managed to weather the attack with a measured, quieter response through public relations. Shaded Green Shaded green companies invest in long-term, system wide, environmentally friendly processes that require a financial and non-financial commitment. According to Ginsberg and Bloom (2004), these companies see green marketing as an opportunity to develop innovative needs-satisfying products and technologies that result in a competitive advantage. Shaded green companies are well able to differentiate themselves from competitors on greenness but they chose to stress other attributes of the product with better financial returns possible. They primarily promote the direct, tangible benefits of the products and environmental benefits are only promoted as a secondary factor. Toyota Prius can be characterised as shaded green. The brand is advertised as an environmentally advanced, fuel efficient hybrid. In fact, upon Launch in the US market the Prius environmental attributes were not stressed; the company focused on advertising fuel efficiency of the car. Extreme Green Extreme green companies use a holistic approach with environmental green values shaping there philosophy. Environmental concerns are fully integrated in the business and product life-cycle processes. Extreme green companies pursue actions such as life-cycle pricing approaches, total-quality environmental management and manufacturing for the environment, Ginsberg and Bloom (2004). Extreme companies often serve niche market and sell their products through boutique stores and specialty channels. Honest Tea is one of the fast growing organic tea companies in the natural foods industry. Social responsibility is embedded in its identity and purpose from manufacturing to marketing its products, Ginsberg and Bloom (2004). Green Energy Unfortunately Green Marketing and sustainability is dependent upon green energy for long term effectiveness. It is only when companies source their energy needs from renewable energy sources that they may be considered truly green advocates. Fossil fuels are a leading cause of global warming, and are a finite resource. Industry needs to prepare for the eventuality of a future without oil. Alternative or green energy resources include water, wave, wind, solar, geothermal, etc. Although alternative energy resources are being developed at a rapid rate however they are still too costly in comparison to hydro carbon based energy. Case Studies Case Study 1: SCFI ® Super Critical Fluids International Water conservation has become a real pressing socio-environmental concern. SCFI is an Irish based and owned water reclaiming company. SCFIs patented AquaCritox ® is a revolutionary technology which can completely destroy organic wastes and generate renewable energy. SCFI is a B2B and B2G provider and is currently considered one of the greenest companies on the planet. With water scarcity becoming a very real possibility in the future, water purification processes are becoming paramount for the sustainability of our planet. SCFI is a leading exponent of water reclamation from waste technology. Their balsamaceous water reclamation process is a vast improvement on previous technologies in their sector; Aquacritox offers 99.98% efficiency rating. Evidence that SCFI is generating positive feedback on its Aquacrotix ® technology can be seen by its coverage by Discovery Channels Green Planet show, and nominations for multiple green energy awards. Case study 2: The Body Shop The very first The Body Shop store opens in 1976 in England and ever since it came into the market, it has been taking steps on protecting the environment. In 1985, the Body Shop sponsored posters for the Green Peace and one year later, the Body Shop launched its very first major window campaign save the whale with the Green Peace. The Body Shop has made a commitment to reduce impact on the environment by reducing energy that it consumes and to generate less waste. Steps are as follows: Reduce CO2 emissions by 50% by reducing consumption of hydro- carbon fuels, through electricity, heating and transport cost reductions. Reduce waste by 50% Reduce domestic water use by 25% The Body Shop has joined the Carbon Reduction Commitment and it is the first global cosmetic company to join the commitment. It also focuses on against animal testing by supporting Cruelty Free International. However the body shop has been acquired by LOreal and its greenness is diluted as a result, because youre only as green as your weakest affiliates. Case study 3 Volkswagen Volkswagen the German owned automobile industry giant has a reputation of being consistently ahead of the competition in regards to green initiatives and green product development. Volkswagen has a long history of providing affordable and economical vehicles. The Volkswagen ThinkBlue Symphony advert (2012), shows a historical timeline of Volkswagens consistent fuel economy policy. ThinkBlue inspired by their 1960s think small United States advertising campaign; designed to popularise the Beetle model car. The advert is designed to demonstrate the journey from think small to ThinkBlue. Table 3.1 below summarises the timeline of events presented in the ThinkBlue advert. TimeLine Product Benefits Progression 1959 Beetle Efficient mobility 1960s Camper Van Efficient mobility people carrier 1974 Golf Era begins Fuel efficiency 1993 Turbo Injection Diesel TDI Fuel economy, remains ranked as one of the most fuel efficient on market 1999 Lupo 3 litres per 100Km first mass production car ever to achieve 2005 Polo BlueMotion CO2 emissions reductions, one of most economic cars on market 2006 TSI Turbo injection petrol engines 2014? XL1 prototype 1 litre fuel per 100km 2014 Golf Blue-e-Motion Electric Vehicles, 150km per charge Table Volkswagen Green Product Evolution Take for example their entry into the USA market with the Beetle; a market that was notoriously favouring larger model vehicles. They have consistently delivered cars that have industry leading fuel consumption rates. Take for example their introduction of the Turbo Diesel Injection (TDI) Golf model, a model that is still considered to be amongst the most efficient in its class. While Hybrid vehicles have become mainstream products in recent years and Volkswagen have the Tourneg in this class; they have decided to enter the riskier fully electric market using their celebrated Golf brand. The automotive industry is still closely associated with environmental damaging industries like oil, and mining. Despite this Volkswagen has made significant strides in the last generation to move towards greener products. The Golf Blue-e-Motion is just the start of a new wave of vehicles becoming available through green innovation and marketing. Insights Recommendations Companies interested in green marketing should carefully analyse which green strategy is best suited to their products, services and processes, and match their strategy to the relevant consumer segments. Companies should be self-organising rather than regulated or morally mandated. Paul Hawken states that by embracing a restorative (rather than destructive) economy, companies can begin to repair the abyss between ecology and business. He also believes that business is the chief cause of the most destructive abuses of the environment, but crucially business is potentially the most persuasive driver of environmentalism, through green marketing and sustainability. Engaging in Greenwashing is a very real and dangerous practice for companies to engage in. Brand image is essential for the growth of any company. If the company becomes associated with greenwashing and or environmental crisis, it could become a fatal error in judgement. Even though it is difficult for certain industries to be seen as environmentally friendly, companies in these industries must endeavour to have green products, processes or services in their portfolio. Green myopia is also a potentially harmful viewpoint, if a company becomes too green it risks alienating its target market, thus reducing demand for its products. A careful balance of social, ecological, technological and financial gain is the desired result of going green. Green products must offer better alternatives to existing products, be accessible, and easy to understand. They should also educate/inform consumers of their benefits, as a lack of knowledge is a significant barrier of green marketing. The perception of green lifestyles is a problem, and this is an area where packaging design and functionality become an issue. Green alternatives should be quality and functionally superior, comparative in price, provide labelling that is believable, and easy to find. It is only when functionality and quality are superior that consumers will be willing to pay a premium price. Companies need to create green supply chains, especially if like Unilever they are presenting green marketing as a key element of its CSR and sustainability policies. With consumers having unlimited access through social media to company information and their green activities, it is no longer possible to simply state a companys green agenda. A critical eye should be focused on the companys own green processes and the commitment of its upper management commitment. Senior executives / management should also cultivate this corporate culture. The organisation and its people should support a truly green strategy in order for it to succeed. In addition, it is important to educate consumers about the products as well. Another key element is credibility. Having a good reputation to start with can go a long way in helping to ease consumers scepticism. Companies with socially responsible values will appear more credible to its target audiences. Greenlaw (2011), states that failure to truly adopt sustainability will become a risk factor in the future, where it will affect customers, employees and potential investors. Conclusion Joel Makower founder and executive editor, GreenBiz.com , states; Green marketing is a potent engine for creating business value through innovation, while fomenting genuine societal change. While Paul Hawken states; Business is the only mechanism on the planet today powerful enough to produce the changes necessary to reverse global environmental and social degradation. Business can save the planet through working with society and the environment in a symbiotic relationship. It is societys responsibility to drive Business to adopt green marketing strategies: while it is organisations responsibility to encourage society to actively use their green products. Sharing responsibility is the future of green. Sustainability is the leading zeitgeist of modern western society. It is no longer acceptable for business to be solely focused on wealth maximisation. Figure Sustainable Planet Appendices