Journal Green Marketing
Finally, the article studies, at some length, the desirability of considering the aspects of sustainability factor and ecoinnovations which can help promote green consumerism. Keywords Green marketing, eco-market, green branding, eco-labelling, carbon footprinting, eco-innovations, green supply chain management, green consumerism Introduction Green Marketing: The Concept and Significance As a matter of common knowledge and understanding, ‘green marketing’ broadly refers to the promotion or advertising of products with eco-concerns.
Generally, terms like bacteria-free, recyclable, refillable, ozone friendly, zero carbon, renewable and eco-friendly, etc. , are some of the common expressions consumers most often associate with ‘green marketing’. In general, green marketing is a much broader concept; one that can be applied to consumer goods, industrial goods and even services. Thus, green marketing encompasses a broad range of activities, including product modification, changes to the production process, packaging changes, remodelling and stylising as well as modifying advertising. The terminology used in this rea has varied, and it inter alia includes green marketing, environmental marketing and ecological marketing. As for the genesis of green marketing as a concept, it is well worth looking at its evolutionary development over a time horizon. Environmental problems have got into a sharper focus since 1962, when Rachel Carson’s (1962) book, Silent Spring, was published, and it drew people’s attention to the anthropocentric root and frightening extent of environmental problems arising out of industrial and economic activities (Kilbourne & Beckmann, 1998).
Journal Green Marketing Essay Example
From the 1970s, ecological green marketing had been flourishing largely in the developed countries. In this early period, attention was paid to specific environmental problems, and solutions were searched for them separately. This is precisely the reason why only few products, companies and industries were influenced by this new trend. Main aims of green marketing at that stage were to minimise the dependency syndrome on special product groups responsible for environmental pollution and to increase awareness of new product categories.
From the second part of the 1980s, a gradual shift had been experienced in the role and necessity of ecological marketing. Great environmental catastrophes of the 1980s (such as the explosion in the nuclear reactor of Chernobyl, water pollution caused by oil tankers and discovery of the ozone hole) directed the attention even more to the interaction between economy and environment, and in the process, A. N. Sarkar, Officiating Director and Dean (Research), Asia-Pacific Institute of Management, 3&4 Institutional Area, Jasola (Opp. Sarita Vihar), New Delhi 110025.
E-mail: [email protected] com Downloaded from pdf. highwire. org by guest on May 22, 2013 40 led to the evolution of sustainable eco-technology. By the late 1980s and the 1990s, the notion of ‘green’ products became somewhat trendier, and the practice of marketing products as such became more commonplace in niche markets. But it was not until the start of the twenty-first century—when concerns over global warming and consequential eco-degradation started gaining momentum— that ‘green’ moved towards mainstream and began influencing the practices of ‘green’ product manufacturers.
This was synchronous with the promulgation of the ‘Kyoto Protocol’ that heralded the beginning of the ‘clean and green technology’ as well as ‘Clean Development Mechanism (CDM)’ concept to save the environment from the emerging ecological disaster. According to a survey carried out by the Roper Organization (in 1990), about 82 per cent of the American consumers were ready to pay 5 per cent more premium price for products which were eco-friendly. On the basis of these results, not only the value-conscious firms can benefit from green marketing but also those who focus on the eco-friendly consumers.
The most important concepts of the 1980s in essence were as follows: sustainability, clean technologies, environmental performance and green consumers. Beginning in the 1990s, the agenda of green marketing began to expand as new topics emerged that are related to individual’s motivation, such as perceived consumer effectiveness, cooperative behaviours and strategic alliances (Kilbourne & Beckmann, 1998), and these, put together, paved the way for ‘green marketing’. According to the American Marketing Association (AMA, 2007, 2008, 2010), 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. Thus, green marketing now refers to holistic marketing concept wherein the production, marketing consumption and disposal of products and services take place in a manner that is less damaging to the environment, with growing awareness about the implications of global warming, non-biodegradable solid waste, harmful impact of pollutants, etc.
In this sphere, both marketers and consumers are becoming increasingly sensitive to the need for a gradual shift toward green products and services. According to Pride and Ferrell (1993, 1995), green marketing—also alternatively known as environmental marketing and sustainable marketing—refers to an organisation’s efforts at designing, promoting, pricing and distributing products that will not harm the environment. Elkington (1994) defined green consumer as one who avoids products that are likely to endanger the health of the consumer or others; cause significant damage to the environment
A. N. Sarkar during manufacture, use or disposal; consume a disproportionate amount of energy; cause unnecessary waste; use materials derived from threatened species or environments; involve unnecessary use of, or cruelty to, animals; and adversely affect other countries. Polonsky (1994), however, argued that a majority of people believe that green marketing refers solely to the promotion or advertising of products having environmental characteristics, with terms such as recyclable, refillable and ozone friendly being some of the things consumers most often associate with green marketing.
While these terms are green marketing claims, in general, it is a much broader concept, one that can be applied to consumer goods, industrial goods and even services (Roberts & Bacon, 1997). Green marketing, thus, understandably incorporates a broad range of activities that include modification or changes into the design, production process, packaging as well as advertising of the product (Polonsky, 1994).
Elaborating it further, Polonsky stated that green or environmental marketing consists of all activities designed to generate and facilitate any exchanges intended to satisfy human needs or wants with minimal detrimental impact on the natural environment. This was supported by Peattie (1995), who defined green marketing as the holistic management process that is customised to identifying, anticipating and satisfying the requirements of various stakeholders in a profitable and sustainable manner.
Green or environmental marketing has also been viewed, in recent times, as a tool towards sustainable development and for strengthening brand image (Banyte & Gadeikiene, 2008). As rising environmental concerns are encouraging consumers to have greater awareness of their purchase decisions, firms are implementing measures geared to offering green substitutes for traditional products. Consumers and companies alike are consequently more willing to pay premium prices for green alternatives (Laroche et al. , 2001).
This corroborates well with what Maxwell et al. (2000) mentioned: ‘all things being equal, consumers would prefer a green product over the one that is less friendly to the environment with a growing number of people willing to pay a premium price for the former— from organic foods to energy-efficient appliances’ (D’Souza et al. , 2004). Grant (2007) has suggested that primary objective of green marketing is to educate and make people willing to go green, because it has an influence on changing the lifestyle and behaviour of potential consumers.
There are steady movements in public interest and concerns about the environmental issues. Companies like BASF and DuPont are leading the greening of heavy industry and have had the biggest impact on environment. Simula et al. (2009) stated that the word ‘green’ is widely used today for new Asia-Pacific Journal of Management Research and Innovation, 8, 1 (2012): 39–58 Downloaded from pdf. highwire. org by guest on May 22, 2013 Green Branding and Eco-innovations technologies and new products which have more sustainable impact on the environment. Green’, ‘pro-environmental’, ‘sustainability’, ‘environmentally friendly’ and ‘ecology’ are the terms commonly being used to describe that the firms’ processes and products consume less energy, they are recyclable, lessen waste and pollution and conserve natural resources. Viewed from that perspective, green marketing tries to harmonise environmental concerns and individual interests. 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 planned to help environment problems and provide remedies for environmental problems. Second phase was ‘environmental’ green marketing, in which 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 2000s. 41 environmentally responsible.
Many years later, the Federal Trade Commission’s (FTC) guidelines were established to set national green marketing standards (FTC, 2009, 2010), but it received several criticisms. The concept of sustainability, intrinsically bound to ‘green’ concept, reflects the long-term holistic understanding of a product’s impact. Therefore, when reviewing a product for its degree of ‘greenness’, one must also consider the impact of its entire life cycle from the point of raw materials extraction to the manufacturing process, to consumer use and finally, to the end-of-life waste passage.
This is called a life cycle assessment (LCA) and ensures that all the product’s impacts are taken into consideration. Life cycle analysis (LCA) and/or product line analysis (PLA) studies measure the cumulative environmental impact of products over their entire life cycle—from extraction of the resources used to create the product to all aspects of production (refining, manufacturing and transportation), to its use and ultimate disposal. The LCA can be measured in terms of reduction of impact on the environment, or for reasons of better safety and health considerations for builders and occupants.
Green products also show an increasing return on investment through energy savings, increased productivity of building occupants and overall resale values in buildings (Intini & Kuhtz, 2010) because of vastly expanding eco-market potentials and spiralling demand of green products with fast changing lifestyle. Today, terms like ‘green’ and ‘greener’ have become buzzwords of choice to describe all things sustainable and environmentally friendly. While they are often used interchangeably, each term actually means something different.
In their critical essay, ‘Green Versus Sustainability: From Semantics to Enlightenment’, Yanarella et al. (1999) explained that ‘green’ refers to individual products and processes, whereas ‘sustainable’ relates to whole systems of which individual consumer products and other commercial materials are a part. According to the authors, ‘“Green” evokes small incremental improvements in social practices, modern technology and human habitats, while sustainability implies a revolution in organising our personal and collective lives and inhabiting the planet’.
The expression ‘environmentally friendly’ refers to products or services that are not harmful to the outdoor environment or its inhabitants. However, for more than a decade, the US FTC (2010) has issued warnings about products or services marketed as environmentally friendly, environmentally safe, environmentally preferable or eco-safe, noting that products, packaging and services have some environmental impact and that such marketing terms do not help consumers make informed choices (FTC, 1999, 2010).
These stipulations will be relevant to all products claimed to be green and eco-friendly. What Makes a Product Green? Beyond the assumption that the term ‘green’ indicates environmentally friendly attributes, the term is quite vague and subject to multiple interpretations, depending on any number of factors, including local, national and international business practices; market structures; societal norms; politics; and government regulations.
In their book, The Green Consumer, John Elkington, Julia Hailes and John Makower (1993) discussed several characteristics that a product must have to be regarded as a ‘green’ product. They contended that a green product should not (ibid. ): 1. endanger the health of people or animals; 2. damage the environment at any stage of its life, including manufacture, use and disposal; 3. consume a disproportionate amount of energy and other resources during manufacture, use or disposal; 4. cause unnecessary waste, either as a result of excessive packaging or a short useful life; 5. nvolve the unnecessary use of or cruelty to animals; 6. use materials derived from threatened species or environments. Stephen and Kane (1996) noted in Business Horizons that a product can be recognised to be ‘green’ if it runs cleaner, works better or saves money and energy through efficiency. Practising green is inherently proactive; it means finding ways to reduce waste and otherwise be more Asia-Pacific Journal of Management Research and Innovation, 8, 1 (2012): 39–58 Downloaded from pdf. highwire. org by guest on May 22, 2013 2 A. N. Sarkar cent). In recent time, growing public awareness of environmental issues has brought with it a corresponding change in the buying decisions of a significant segment of American consumers. As the Encyclopedia of the Environment observed that ‘many consumers, and not just the most environmentally conscious ones, are seeking ways to lessen the environmental impacts of their personal buying decisions through the purchase and use of products and services perceived to be environmentally friendly’ (Stoeckle et al. 1994). In the field of green marketing, different studies have classified consumers based on different demographic, psychographic, cultural and personality variables. The most useful classification in the Indian context was found to be based on three parameters: concern for the environment, awareness of environmental issues and environmentally friendly behaviour (Davis, 1993; Jain & Kaur, 2004). The key findings of these studies show that though Indians lack sufficient knowledge about nvironmental issues, there is a generally high concern for the environment and most surprisingly, Indian consumers score very high on environmentally friendly behaviour, especially with respect to conservation of resources and purchase decisions, especially for buying greener products. The most important benefit that individuals seek from environmentally responsible behaviour is the desire to act in an environmentally responsible manner. Many companies are competing to push their green products in the eco-market space, and their green branding mechanisms are different.
For instance, green marketing encompasses special eco-centric focus and efforts such as Procter & Gamble’s developing disposable diapers that can be composted and detergents that are degradable, concentrated towards reducing packaging bulk in landfills. AT&T has substituted biodegradable cardboard for plastic foam packaging. Alberto–Culver markets ‘ozone friendly’ hairspray containing no chlorofluorocarbons (CFCs). The Body Shop has over 700 boutiques worldwide selling its non-animal tested, mostly natural, product line with recycling/refilling policies.
A Canadian survey of marketing executives from that country’s 500 largest firms found that 47 per cent had already altered their packaging to make their products more environmentally friendly. Biodynamic Agricultural Society of Australia and New Zealand has a focus on export-oriented ‘organic farming’ as a green marketing strategy. Companies use green marketing not only to increase consumer’s positive response but also to cut costs to make products economical to customers.
For example, McDonald’s used recyclable materials for wrappers and reduced its environmental waste by 60 per cent; their ‘give a tree away’ day led the way for other fast food companies to follow Objectives Given the broad scenario about the currently evolving concepts of green marketing, green branding, eco-labelling and green innovations, the broad objectives of the article may be stated as follows: 1. To look at how green consumerism can be linked to eco-market, and in doing so, what should be the future marketing strategy and to what extent this can be influenced by cross-cultural differences in consumer behaviour. . To study how the green marketing concept can be enlarged in the broader context of green environmentalism and corporate social responsibility. 3. To examine how the green branding can leverage the eco-market through the mechanism of eco-labelling, carbon footprinting, standardisation and certification. 4. To study how the corporations can create environmentally friendly eco-market by making ‘green claims’ in terms of maintaining eco-footprinting standard norms. 5. To study how critical is the supply chain management in effective green marketing. . To study how the sustainability factor and ecoinnovations can help promote green consumerism under a holistic green market framework. Green Consumerism: A Vital Link to Eco-market A green consumer is someone who is very concerned about the environment and therefore, only purchases products that are environmentally friendly or eco-friendly with little or no packaging, products made from natural ingredients and products that are made without causing pollution or detriment to the environmental quality (like emission hazards).
The green consumer would be the type to drive a hybrid vehicle and buy products made with hemp or those made from recycled or waste materials. 1 Green consumerism is essentially a movement to encourage people to buy food and other products, such as organic foods or lead-free petrol, which are regarded as environmentally friendly goods. One of the possible goals of green products is to encourage consumers to modify behaviour.
For example, some studies suggest that consumers are willing to pay more for some green goods at premium prices (Ottman, 1992, 1993), although more recent results in the Morgan Polls (Ha, 2008; Mobium, 2007) suggest that, globally, the majority of consumers believe green goods are overpriced (Australia, 65 per cent; New Zealand, 66 per cent; the United Kingdom [UK], 74 per cent; and the US, 72 per Asia-Pacific Journal of Management Research and Innovation, 8, 1 (2012): 39–58 Downloaded from pdf. highwire. org by guest on May 22, 2013
Green Branding and Eco-innovations suit. All of McDonald’s napkins and tray liners in the restaurants are made from recycled paper, as are the carry-out drink trays and even the stationery used at the headquarters. By making its drinking straw 20 per cent lighter, McDonald’s has saved one million pounds of waste per year. The effective use of green marketing has made the public aware that McDonald’s Corporation is an environmentally concerned company, and this has generated not only public’s consumer approval but additional revenues as well.
American seafood producers and distributors of tuna fish certify their products as ‘dolphin-free tuna’ and take stringent measures to minimise dolphin deaths in the tuna fishing industry. The increased environmental concern over ‘dolphin-free tuna’ by the US has effectively convinced foreign firms to follow stringent US eco-conservation standards. 43 redesigning them, eliminating some of them, modifying technology and/or inducting new technology—all with the objective of reducing the environmental impact aggregated for all stages. Ottman et al. 2006) suggested that all marketing activities must convince the consumers through identifying the basic product features by resorting to the following strategies: 1. Consumer value positioning: A firm should focus in designing a product which is differentiated from and performs better than the alternatives. 2. Calibration of consumer knowledge: In designing marketing communication, a firm should always present the product’s unique features, environmental benefits and solutions that match with the customer norms and values. 3. Credibility of product claim: By certification of claimed green products.
A firm should build confidence in the consumers’ minds by presenting or communicating benefits of the products that are specific and meaningful and satisfy the consumers. While consumer’s decisions are influenced by the media, as a stakeholder, the role of media cannot be ignored, and it is the only source through which consumers receive much of environment-related information (Ottman, 1993). Davis (1993) and Glaser (2009) explained that consumers want more particular and specific information about the product or service which they are about to buy in case they are claimed to be environmentally friendly.
Vaccaro (2009) presented two main strategies for the companies in responding to their external environment as ‘proactive strategies’ (first mover) and ‘reactive strategies’. The proactive strategies and reactive strategies move in a continuum and the response time may vary widely depending on the customer behaviour and the lifestyle. Companies make their offerings competitive through price/quality or prestige/image strategies from their competitors, but eco-friendliness and social responsibility can make companies more profitable on a sustainable basis. ‘Early mover’ companies have enhanced their image as environment friendly.
The municipality-owned electricity companies of Stockholm and Goteborg set an example as ‘early movers’. In 1999, Swedish state-owned railway company, SJ, bought ‘Bra Miljoval’ labelled electricity (Kaberger, 2003). Other studies conducted, such as by Karna et al. (2003), have suggested that companies can create competitive advantage if they use innovations related to environmental sustainability rather than simply comply with the government regulations. Fuller (1999) has presented the strategy matrix of environmentally improved and reinvented green products, as illustrated in Figure 1. Sustainable Green Marketing Strategy
For environmental advertising to be successful, a firm must first have an environmental strategy put in place (Easterling et al. , 1996). Advertising strategies have changed dramatically over time, from ‘image’ orientation to ‘product’ orientation in the 1990s (ibid. ). ‘Process’ and ‘factual’ orientations are the least utilised orientations which some management workers suggest to be a business opportunity (ibid. ). Two dimensions of the positioning strategies of newly created green brands are seen to have a significant impact on brand attitudes, namely, the ‘functional’ and ‘emotional’ dimensions, according to Hartmann et al. 2005). Their study indicates that there is an overall positive influence of green brand positioning on brand attitude. While the emotional dimension proves to be more effective for the product (a car) used in the study, it cannot, however, be concluded decisively which dimensional aspect is more effective. Both language and images can be used to craft such messages by promoting particular interests and ideologies (Hansen & Machin, 2008). Rivera-Camino (2007) suggests that a firm’s ‘greening process’ is not linear, but an ‘uneven process’ which several green marketing strategists have used to target different stakeholders.
Clearly, green marketing should be an integral part of the overall corporate strategy for the firms specialising in green eco-products (Menon & Menon, 1997). Green marketing also ties closely with issues of industrial ecology and environmental sustainability, such as extended producers’ liability, life cycle analysis, material use and resource flows and eco-efficiency. Firms can ‘go green’ in three ways: value-addition processes (firm level), management systems (firm level) and/or products (product level). Greening the value-addition processes could entail
Asia-Pacific Journal of Management Research and Innovation, 8, 1 (2012): 39–58 Downloaded from pdf. highwire. org by guest on May 22, 2013 44 Figure 1. Strategy Matrix of Environmentally Improved and Reinvented Products Column 1 Environmentally Improved Products Current Markets New Markets Market Penetration/Product Improvement Strategy Column 2 Environmentally Reinvented Products Product Development Strategy A. N. Sarkar through its environmentally sound attributes. Ecologically, sustainable products will not be commercially successful if green brand attributes are not effectively communicated (Pickett et al. 1995). Coddington (1993) and Meffert and Kirchgeorg (1993) suggest that green positioning is an essential factor in the success of green branding strategies. Cross-cultural Difference: The Epicentre of Green Marketing Strategy Green marketing actually began in the early 1980s in Europe when European companies began selling ‘green products’—new types of disposable diapers, detergents, batteries, aerosols and other products—that do not damage the environment. This manufacturing of new types of products grew quickly and soon caught on in the US and other parts of the world.
For the British, damage to the environment ranks with a world war as the most important threat to mankind. Air pollution in Athens has long been the subject of deep popular discontent and partly explains why the Greek government has aligned itself with hardline northern European Union (EU) countries in leading the fight to impose stricter new limits on auto emissions. The growing political power of green parties in Scandinavia, the Benelux and especially Germany has combined with public concern over such issues as the death of the forest (Waldsterben) from acid rain to force mainstream political parties to ndorse tough environmental legislation. In Italy, public outcry over the waste exported to developing countries prompted the country to adopt a tough new hazardous waste bill. In Italy, Fiat leads the world in ‘green’ cars. Since the 1970s, Fiat has been recycling 80 per cent of its factory waste, and it was one of the first European car manufacturers to produce cars which ran on lead-free fuel. Fiat has also established a huge recycling scheme called Fiat Auto Recycling. Under this scheme, second-hand cars are collected with the aim of recycling 100 per cent of the cars. Fiat is also the world leader in diesel car and electric vehicle technology. The electric car that was developed by Fiat is the first ‘truly green’ standard production car, a world’s first one which will likely be the start of a new generation of cars which are designed to support the environment. BMW and Mercedes Benz are examining clean technology for cars. Germany has passed the strictest green marketing laws.
The German ‘Blue Angel’ eco-label (first introduced in 1978) is used as a symbol of environmental friendliness in Germany, and by 1993, over 4,000 products in 58 categories carried the label. This Blue Angel logo originated because of the growing consumer demand in Germany for ‘environmentally friendly products’. Eighty per cent of Market Development Diversification Strategy Strategy Source: Fuller (1999). 1. The strategies presented in Column 1, ‘Market Penetration/ Product Improvement Strategy’ and ‘Market Development Strategy’, are based on making some changes in the product attributes and manufacturing process. . The strategies presented in Column 2, ‘Product Development Strategy’ and ‘Diversification Strategy’, require high management commitment and product is reinvented according to the ecosystems’ impact (Fuller, 1999). Similarly, Simula et al. (2009) proposed that in order to develop the product, companies should understand customer attitudes and norms towards greenness, by using pre-marketing campaigns. Simula et al. (2009) have presented a quadratic model of actual verses perceived greenness of the product (see Figure 2).
Herein sustainability superiority and actual greenness, based on standardised certification procedure, have a greater chance for market attractiveness to cater to environment-friendly green consumerism. Positioning a brand as a ‘green brand’, in this case, entails an active communication and differentiation of the brand from its competitors Figure 2. Simula’s Actual versus Perceived Greenness Model High Perceived Greenness Low Green washed product Sustainability superiority An honest Non- Missed green product Opportunity Low High Actual Greenness
Source: Simula et al. (2009). Asia-Pacific Journal of Management Research and Innovation, 8, 1 (2012): 39–58 Downloaded from pdf. highwire. org by guest on May 22, 2013 Green Branding and Eco-innovations German households are aware of the eco-label and it receives widespread support from manufacturers. On 1 December 1991, the German Packaging Order (called the ‘Topfer Law’ after its environment minister) became law. The guiding objective of the order is waste avoidance; waste which cannot be avoided shall be recycled (Micklitz, 1999).
Hoover was the first manufacturer to be awarded an EU eco-label and claims that as a result, its sales in Germany have trebled and sales in the premium sector of the UK’s washing machine market have doubled (EU Cross-border Monitor, 1995). Other nations are also sponsoring eco-labelling programmes. Canada has issued Environmental Choice, guidelines for products ranging from paints to reusable cloth diapers. Japan has its own eco-mark programme; its symbol consists of two arms embracing the world (Codington, 1993). In many Latin American countries, including Mexico, packaging requirements are less stringent and less sophisticated.
As such, it is difficult to meet the standards of Europe. Although they may cry foul, proposing these are hidden protectionist requirements, General Agreement on Tariffs and Trade (GATT) makes it clear that countries do have the right to impose stringent rules for ‘environmental reasons’. Mexicans are more concerned with economic priorities (basic necessities of life) rather than societal or environmental concerns. An economically developed country like the US or western Europe has the luxury of putting environmental and societal issues at the top of their agendas.
This is not so for undeveloped or developing countries like Mexico. Colombia is one Latin American country that is developing an eco-labelling programme. The objectives of the Colombian eco-label are to promote environmental conservation in several sectors, addressing a variety of aspects, including polluting emissions and energy and natural resource use, as well as to provide the domestic industry with the means and incentives to increase its competitiveness through the implementation of environmental management strategies.
This programme also assisted Colombian export firms in penetrating foreign markets, especially those such as the EU, with considerable ‘green consumerism’ interest (Gaviria, 1995). Japan is ambiguous about the environment. Japanese government budget allocation to the environment has increased from $617 million in 1988 to $3. 5 billion in 1991 and doubled again through 1995. Japanese consumers are becoming more bargain conscious, frugal and environmentally aware. Recycling of second-hand goods is flourishing. Consumers are leaning towards healthier, ecologically sounder products.
Suntory—a Japanese beer company— sells a brand called The Earth, with cans and bottles emblazoned with the slogan ‘Suntory is thinking about the Earth’. The can has stay-on rather than pull-off tabs. Japan’s 45 Economic Bureau found that consumers named Kao as the most environmentally conscious company in the country. Kao reduced its overall energy use by 40 per cent in the last 17 years. Japan’s Health Ministry devoted its 1990 White Paper to the environment, but the Japanese Environmental Agency has far less enforcement power than US’ Environmental Protection Agency (EPA).
Some 28,000 locally tailored environmental agreements in force between Japanese industry and local communities act as a non-tariff barrier (‘Back to basics’, 1993). In countries bordering on the Mediterranean, the ecological awareness of the average household is much less strongly developed than in countries further to the north, such as Germany, Holland or Norway (Simon, 1992). For example, in Italy, environmental issues are not nearly as important as in Germany. In Denmark, soft drinks may be sold only in glass bottles with refundable deposits.
In the Netherlands, old or broken appliances must be returned to the manufacturer for recycling (Oatis, 1996). Green consumerism first appeared in the Netherlands with a boycott of aerosols containing CFCs, and spread to Germany, thanks to consumer magazines which rated brands’ green qualities through their own laboratories. In Denmark, a power plant, an enzyme plant, a refinery and a wallboard factory, all use one another’s by-products as source materials. The Netherlands has effluent charges. Deposits are mandatory for bottles in Germany and cans in Norway.
Green Marketing vis-a-vis Corporate Social Responsibility Society expects businesses to act in a more responsible manner towards the social community as well as provide goods and services efficiently. By this, the social responsibilities of any corporate house have become an important aspect of the modern era, in which conscious efforts are being made by an organisation to maximise its positive impact and minimise its negative impact on society as a whole and on various groups and individuals within society (Davis & Fredric, 1984; Dutta, 2009).
The European Commission defined corporate social responsibility (CSR) as ‘a concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis’ (Juscius & Snieska, 2008). Companies should work for betterment of society as a whole, and more greening of the world. Sirsly and Lametrz (2008) suggested that CSR is not always meant to be generating the monetary and economic value for the firms, but it helps to promote firm’s unique efforts towards society.
When a third party endorsed its corporate efforts, the reputation of a firm is reinforced in the ‘eyes of both market and non market stakeholders’ Asia-Pacific Journal of Management Research and Innovation, 8, 1 (2012): 39–58 Downloaded from pdf. highwire. org by guest on May 22, 2013 46 (Sirsly & Lametrz, 2008). Karna et al. (2003), however, stated that environmental issues were considered solely the responsibility of the government. Proactive marketing strategies and government support can help build longterm environmental sustainability.
Globally, there has been a growing concern on issues pertaining to accountability linked to environmental quality and its safeguard, well within the purview of green marketing. A heightened awareness has been created in the minds of the consumers that their purchasing behaviour can actually wreak a serious dent to the ecological balance of the planet (Rahbar, 2008). Coupled with this realisation, the shifting demands and preferences of consumers are exerting pressure on the companies to transform their business activities to cater to the environmental needs in a more responsible way (Olson, 2009).
Being socially responsible by offering environmentally sustainable products and services, therefore, becomes the prime concern to those companies that are striving to attain a competitive advantage in the business world (Wahid et al. , 2011). Hence, ideally, green marketing concept as well as the green marketing strategies should be built around the key focus of CSR. Some recent corporate examples of compliance of CSR in the context of green marketing by some Indian business firms are illustrated next. 3 1.
Broadcaster New Delhi Television Ltd, or NDTV, in partnership with car maker Toyota Kirloskar Motor Pvt. Ltd, launched Greenathon on 7 February 2011—a 24-hour live television event to create awareness about environmental issues. 2. Reva Electric Car Co. is developing a market for electric cars and thereby a sustainable business— firms are gearing up to bring about a change in the way their businesses and products are perceived. 3. Panasonic Corp. is working out a go-to-schools interactive campaign to spread awareness among students on global warming and other environmental issues, to begin with. . Nokia India Pvt. Ltd has launched a campaign to recycle electronic waste. Consumers are encouraged to dump old mobile phones and accessories, irrespective of brand, at any of the 1,300 green recycling bins at Nokia priority dealers and Nokia care centres. 5. Henkel India Ltd launched ‘eco-learn’—a learning initiative—to inculcate environmental concern and sustainability. 6. Hindustan Unilever Ltd’s (HUL) Surf Excel Quick Wash talked about how housewives could save two buckets of water while using premium detergent powder to wash clothes. A. N. Sarkar 7.
Reckitt Benckiser Group Plc. has launched a global campaign, ‘Our Home Our Planet’, to help consumers save money and minimise their carbon footprint as part of its Carbon 20 programme. CSR has recently become increasingly topical: Its integration into different areas of activities, including marketing, is becoming a necessity and a priority task for many companies. More often, the consumers need to buy ‘ecofriendly, safe and clean’ products that can be identified. This underlines implied necessity of green marketing application in the implementation of CSR.
Since there is a lack of studies in the field of green marketing, the identification of its priorities in the context of green consumer’s decision making to purchase eco-friendly products is becoming increasingly relevant. Scientific studies (Bakanauskas & Liesionis, 2002; Ottman & Reilly, 1998; Ramanauskiene, 2008) show that properties of eco-friendly products have a big influence on consumers’ decision-making processes regarding the buying behaviour of eco-products, even at premium prices. Green Branding to Leverage the Eco-market Opportunities
The ‘going green’ movement continues to build momentum, and companies are quickly realising that they better become eco-friendly now or risk losing business. Plenty of new companies are starting out as a ‘green’ brand and older companies want to re-brand their products to be more ecofriendly. Since both new and existing customers surf the Web, one can accomplish ‘green’ branding through a variety of ways. Implications of green branding are widely known and the emerging green consumer purchase behaviour suggests this scenario4: 1.
Demand for green (or greener) products will increase over time as attitudes and social norms evolve. 2. Demand will increase as new product choices become available and information that enables consumers to make informed purchase decisions (for example, green labels) is introduced. 3. Consumers will start to shift spending to greener brands within a category. 4. Consumers will increasingly prefer to purchase from companies with a brand that is perceived as green, regardless of whether or not the product that they ultimately purchase is one of the company’s ‘green’ products.
As consumer behaviour towards green consumerism is inflicted by the opportunistic global climate change Asia-Pacific Journal of Management Research and Innovation, 8, 1 (2012): 39–58 Downloaded from pdf. highwire. org by guest on May 22, 2013 Green Branding and Eco-innovations challenge, companies have rapidly learned that being green—and being seen to be green—makes good business sense. To add value to the ‘green’ products, ‘certification marks’, labels and logos are increasingly being used by brand owners to signal their green credentials and so as to be able to boost their market share.
A properly controlled eco-label offers consumers a guarantee that a product or service has been independently verified to meet given environmental standards (Bowman, 2009). In the US alone, consumer spending on products and services that are perceived to be environment-friendly will double to US$500 billion, according to the 2007 Green Brands Survey conducted by Landor Associates, Penn, Schoen & Berland Associates, and Cohn & Wolfe (ImagePower® Green Brands Survey, 2007). Consumers not only want to buy green but are also prepared to pay a premium price for it.
Nearly 70 per cent of some 2,000 people surveyed in the US, the UK, Germany, the Netherlands, Australia and Japan said they would pay a premium price for green energy alternatives, such as wind, bio-energy and solar power. According to last year’s poll by IBM Global Energy and Utilities industry, Australians were the most willing to pay more for renewable energy, but Americans said they would pay the highest premium—20 per cent or more. Consumer brands have been quick to respond to shoppers’ desire to buy green.
Wal-Mart announced last year that it would provide carbon ratings for all its electronics items. Procter & Gamble, the consumer goods giant behind such brands as Gillette and Olay, has committed to selling $30 billion worth of greener products over the next five years. Rival Unilever—makers of Dove and Lipton—has pledged to reduce waste and water consumption in its supply chain. In Brazil, Unilever and Wal-Mart have built ‘sustainable houses’ within stores which are made from recycled products, showing how to make everyday living more ecofriendly.
Darnall (2008) examined the question of how an environmentally proactive hotel can gain competitive distinction by way of ‘green’ branding. It demonstrates that not all green branding options are created equal. Marketing of eco-products is not quite as simple as it seems. It is generally observed that the ecologically sustainable products will not be commercially viable to penetrate the market if green brand attributes are not effectively communicated.
Meffert and Kirchgeorg (1993) suggest that green positioning is an essential factor in the success of green branding strategies. Green brand positioning strategies may be classified as ‘functional’ or ‘emotional’. A car brand, for example, may be considered environmentally sound if the models in question cause significantly lower emissions than competitors. Several Toyota car brands recently launched in the US are branded as ‘green cars’ because of ‘zero emission’ claims. 7 Emotional elements should be considered prime among the visible choices of green branding and positioning of eco-products. As a corporate strategy, green positioning can be based on at least three conceptually different types of emotional brand benefits: (a) a feeling of well-being (‘warm glow’) associated with acting in an altruistic way; (b) auto-expression benefits through the socially visible consumption of green brands; and (c) nature-related benefits stemming from sensations and feelings normally experienced through contact with nature.
These are the results of a sensation of ‘emotional affinity towards nature’, for example, ‘loving nature’ or ‘feeling one with nature’. Most people experience feelings of well-being or even happiness when they are in contact with natural environment. Past communication campaigns for GM-Opel, British Petroleum (BP) and the Spanish power utility, Iberdrola, have embedded the brand in pleasant imagery of natural environments, aiming to evoke vicarious nature experiences as emotional brand benefits.
All these, in sum, mean, ‘Green consumerism masks its market-driven origins under a thick layer of morality packaging’. 5 Green positioning by leveraging through emotional appeal to the customer can be best illustrated through an advertisement brought out by Mercedes Benz. Research from the Carbon Trust Standard in March 2009 states that 62 per cent of consumers (from a sample of 2,000 UK consumers) are influenced by environmental considerations in their purchasing decisions and this has increased from a year ago (Carbon Trust Standard, 2009).
Some brands of Philips and Unilever have started to integrate sustainability criteria throughout their product lines, introducing both ‘green’ products as well as improving standards on product lines, in order to be more environmentally efficient. The challenge for companies today is to find a balance between informing consumers of responsible business practices, while innovating for a new lowcarbon economy by offering choice for consumers giving due cognisance to implicit corporate social responsibility. Carbon Footprinting and Eco-labelling
The term ‘carbon footprint’ is commonly used to describe the total amount of carbon-dioxide (CO2) and other greenhouse gas (GHG) emissions for which an individual or organisation is responsible. Footprints can also be calculated for events or products. Certification marks, labels and logos are increasingly being used by brand owners to signal their green credentials and thereby boost their market share. A properly controlled eco-label offers consumers a guarantee that a product or service has been independently verified to meet given environmental standards.
In Australia, for example, the Greenhouse Friendly™ label is Asia-Pacific Journal of Management Research and Innovation, 8, 1 (2012): 39–58 Downloaded from pdf. highwire. org by guest on May 22, 2013 48 a registered certification mark, administered by the government’s Department of Climate Change. Some companies are developing their own eco-standards and product labelling. Multinational companies (MNCs) like BASF and Philips have launched their green logo and tick symbol in 2011 to identify products with ‘significantly better energy efficiency than the nearest competitor products’.
Eco-labelling could be of two kinds: performance based and process based. An eco-labelling scheme based on product performance, such as labels claiming biodegradability of packaging, sustainability in production processes or non-pollutant aspects of product usage, will require certain trust on the part of the consumer. A systems approach to the eco-labelling of food and other products requires the involvement of multiple stakeholders as one party’s actions affect others’ environmental performance. The specific criteria used in eco-labels also vary.
In some cases, these might relate to specific types of claims being made relating to the composition of products and packaging—biodegradable or recyclable; process issues—dolphin-free or made with X per cent recycled content; use issues—saves X energy; and certifications based internationally, nationally or by industry—ISO 14001, Nordic Swan, EUREPGAP, Integrated Pest Management or Forestry Stewardship Council. In this way, labels are not merely messages but also claims about particular environmental properties or features of a product to help promote green ideas.
Eco-labelling is a voluntary approach to environmental performance certification that is practised around the world. An ‘eco-label’ identifies a product that meets specified performance criteria or standards. In contrast to ‘green’ symbols or claim statements made by manufacturers and service providers, an eco-label is awarded by a third-party organisation for products or services that are determined to meet specific environmental criteria. When specifying or purchasing a product that carries an Energy Star® label, for example, the purchaser knows that the product meets an energy efficiency standard set by EPA.
Different types of organisations, including government, non-profit and forprofit organisations, have developed eco-label programmes. The breadth of, and issues addressed by, eco-label programmes vary. For example, Energy Star® is focused on energy use during equipment operation, while other ecolabels address ‘life cycle’ environmental concerns and still others cover ergonomic and worker health and safety issues. Worldwide, there are numerous eco-labelling programmes, developed by businesses, government agencies and non-governmental organisations. Each eco-label has its own criteria that products need to meet in order to be certified.
The International Organization for Standardization (ISO) has identified and developed standards for three A. N. Sarkar broad types of eco-labelling fitting under the three types of designation: (a) Type I (ISO 14 024); (b) Type II (ISO 14 021); and (c) Type III (ISO/TR 14 025). The use of responsible labelling or certification methods has become universal in green marketing. Whether based on international systems (ISO), sectoral standards (Forest Stewardship Council) or internal programmes created by companies themselves, they can greatly enhance corporate credibility if they are overseen by independent bodies.
Nonetheless, a distinction needs to be drawn between official eco-labels developed and assigned by independent bodies or institutions and companies’ own eco-labelling. Scientific Certification Systems offer a wide range of green product certifications, including single-attribute claims, multipleattribute claims and comprehensive cradle-to-grave LCAbased claims. Comprehensive labels are generally based on LCAs and attempt to evaluate the overall environmental impact of a product or service against a set of comprehensive preestablished criteria. Many eco-labels and certification rogrammes certify products based on life cycle parameters, such as energy use, recycled content, and air and water emissions from manufacturing, disposal and use. Others focus on a single attribute, such as chemical emissions from products that directly impact indoor environmental quality (IEQ). While credible eco-labels and product certifications certainly help prevent the use of misleading environmental claims (known as green washing), they do not eliminate it. In fact, according to the 2010 TerraChoice report, more than 32 per cent of green products carry a fake green label—up from 26. per cent in 2009. Product manufacturers and consumers, therefore, still need to be cautious and vigilant (TerraChoice, 2010). In view of this scenario, ‘organic’ claims are now regulated in over 60 countries by a certification system based on official standards. Like the carbon footprinting, the ecological footprinting (EF) is among a number of emerging, progressive sustainability indicators that attempt to arrive at a value representing the impact of human activities and demand on the Earth’s ecosystems.
The EF compares human demand with the planet Earth’s ecological capacity to regenerate, and represents the amount of biologically productive land and sea areas, measured in global hectares (gha), needed to regenerate the resources a human population consumes and to absorb and render harmless the corresponding waste (Wackernagel, 2000). Ecological footprint is a tool for measuring and analysing human natural resource consumption and waste output within the context of nature’s renewable and regenerative capacity (or bio-capacity).
The ecological footprint is defined as ‘the area of productive land and water ecosystems required for producing the resources that the population consumes and assimilate the wastes that the Asia-Pacific Journal of Management Research and Innovation, 8, 1 (2012): 39–58 Downloaded from pdf. highwire. org by guest on May 22, 2013 Green Branding and Eco-innovations population produces, wherever on Earth the land and water is located’ (Wackernagel & Rees, 1996).
Ecological footprint is an ‘ecological camera’ that takes a snapshot of our current demands on nature. Ecological footprint could be useful in making socio-political decisions regarding optimal scale. Optimal scale is an ecological and socio-political target for sustainability. The footprint accounting process could be used to describe a rough, if cautious, target of optimal scale. Efforts are underway to standardise and refine the methodology underlying the footprint, and to incorporate areas or issues not currently captured. 9 considering the development of an environmental marketing or ‘green’ claims guide. This reference document draws together the common topics and areas found across current green claims guides known to the Working Group. This reference document outlines what could be considered for inclusion in an environmental marketing guide. However, it does not provide an exhaustive list of what may apply to a guide or for all situations. Further, the list is not necessarily endorsed by all members but is provided as a sample of examples for consideration.
As the world’s foremost business organisation, the International Chamber of Commerce (ICC) promotes high standards of business ethics through the development and dissemination of codes and guidance on responsible marketing and advertising communications. The ICC recognises that there indeed is a difference between claims that express an inspirational aspect of a company’s commitment to the three pillars of sustainable development, or to improving the environment, and claims about a particular product or service. As a general matter, the code already requires that all marketing communication be legal, decent, honest and truthful.
As applied to green claims, this overarching concept means that environmental claims should be based on sound, appropriate scientific information relevant to actual use, operation or disposal of the advertised product, not unsupported assumptions. Additionally, all marketing communication should be prepared with a due sense of social and professional responsibility, and should conform to the principles of fair competition, as generally accepted in business. The code also provides that marketing communication should not condone or encourage actions contrary to accepted standards of environmentally responsible behaviour.
One of ICC’s landmark achievements is the Consolidated ICC Code of Advertising and Marketing Communication Practice (Code) issued in 2006. The Code provides practical guidance to the business sector, including advertisers and advertising agencies, as well as to self-regulatory advertising organisations and national governments. The Code defines ‘advertisement’ or ‘advertising’ as any form of marketing communication carried by the media, usually in return for payment or other valuable consideration.
It includes a broad admonition that advertisers avoid or appropriately qualify general claims of environmental benefit, a position that has been the underpinning of advertising guidance for years. In the UK, the Direct Marketing Association has recently issued a new code of practice that is intended to encourage green marketing. The code states that any environmental claim must be supported with ‘a high level of substantiation’ and be based ‘on the full cycle of the advertised product, unless the marketing communication states otherwise’. The code also promotes the need
Green Marketing Claims and Communication Norms A ‘green’ or ‘environmental’ claim is any type of claim where explicit or implicit reference is made to the environmental or ecological aspects relating to the production, packaging, distribution, use/consumption or disposal of products. Environmental claims can be made in any medium, including packaging, labelling, package inserts, promotional and point-of-sales materials, product literature, radio and television, as well as via digital or electronic media such as e-mail, telephone and the Internet.
A green claim can be a statement or representation about the environmental benefits of a particular product or service. It can relate to a single attribute of the product. Such claims can focus on a product’s chemical content, whether or not the product can be recycled, emissions or impacts on specific media (air, water, land), the type of raw material used in the product and other attributes that affect the environment. A green claim can also communicate information about the environmental impact of a company’s manufacturing practices, as well as the company’s mission and values regarding its impact on the environment.
Such claims may refer to a ‘carbon-neutral’ production process, or a company’s efforts to make its administrative functioning more environmentally ‘sustainable’. Green claims can include pictures, colours and logos as well. As with all types of advertising, green or sustainable claims in advertising must be evaluated in their entirety to assess how the reasonable consumer will interpret the advertising message. Advertisers must be especially cognisant of the potential that linking a single, truthful environmental claim (for example, hat a package is ‘recyclable’) to a broad claim that the product is ‘safe’ for the environment, ‘sustainable’ or the like, will mislead consumers about aspects or attributes of the product that may not be so favourable. The Green Claims Working Group of the International Consumer Protection and Enforcement Network (ICPEN Working Group Green Claim Report, April 2008) has written a reference document to assist agencies who are Asia-Pacific Journal of Management Research and Innovation, 8, 1 (2012): 39–58 Downloaded from pdf. ighwire. org by guest on May 22, 2013 50 for recycled materials, environmental management and an environmental policy. One notable recent development in advertising is the proliferation of ‘green’ claims and growing interest in concepts of ‘environmental sustainability’ and ‘sustainable development’, with commensurate growth in general claims that products or services are ‘eco-friendly’, ‘green’, ‘sustainable’, ‘carbon neutral’ and the like.
Use of the term ‘sustainable’ itself in marketing communications and otherwise may create questions about whether the reference is to environmental ‘sustainability’ or to the broader concept of sustainability linked to the World Commission on Environment and Development’s 1987 report, Our Common Future (United Nation’s UECD Report, 1987), that defined ‘sustainable development’ as ‘development that meets the needs of the present without compromising the ability of future generations to meet their own needs’. Sustainability’ encompasses considerations of economic activity, social values, action by public and private institutions and environmental impacts, but many ‘sustainability’ claims seen in the marketplace focus on the environmental aspects of the product or service. A. N. Sarkar but for businesses, it is often critical. Communication campaigns that highlight an organisation’s commitment to sustainability may therefore be designed to embody and convey an image change. Undertaken as part of a corporate communication approach, they always have a more or less strategic impact on brand image.
Accordingly, it is interesting to consider specific campaigns of this type and the issues they involve for companies or organisations. The arguments used to support a change in brand image can likewise be varied: new activities or new types of commitment, integration of environmental/social measures in production processes, development of a range of green products, etc. Lifestyles of Health and Sustainability (LOHAS) is one such green brand concept to explore new emerging eco-market.
It has a strong focus on environmental sustainability. LOHAS is a new American concept which links lifestyles with health, hygiene and sustainability aspects of the eco-market. It describes an integrated, rapidly growing market for goods and services that appeals to consumers whose sense of environmental and social responsibility influences their purchase decisions. The Natural Marketing Institute (NMI) estimates the US LOHAS consumer market of products and services to be US$209 billion—sold across all consumer segments (Cohen, 2007).
LOHAS is a demographic defining a particular market segment related to sustainable living and ‘green’ ecological initiatives, and is generally composed of a relatively upscale and welleducated population segment. The author Paul H. Ray, who coined the term ‘cultural creatives’, in his book by the same name, explains that ‘What you are seeing is a demand for products of equal quality that are also virtuous’ (Cortese, 2003; Everage, 2002). Researchers have reported a range of sizes of the LOHAS market segment.
For example, Worldwatch Institute reported that the LOHAS market segment in the year 2006 was estimated at $300 billion, approximately 30 per cent of the US consumer market, and a study by the NMI showed that in 2007, 40 million Americans were included within the LOHAS demographics, as illustrated in Figure 3. The consumers attracted to this market represent a sizable group in this country. Approximately 19 per cent of the adults in the US, or 41 million people, are currently considered LOHAS consumers. This is based on surveys of the US adult population estimated at 215 million.
Research shows that one in four adult Americans is a part of this group (nearly 41 million people). These consumers are the future of business and also the future of progressive social, environmental and economic change in this country. But their power as a consumer market remains virtually untapped. The industry that serves these consumers has been identified in a research report by the NMI and given Eco-innovations for Green Branding with Sustainability Focus ‘Environmental sustainability’ is not simply a matter of compliance or risk management. Business is increasingly recognising the many competitive advantages and usiness opportunities to be gained from eco-sustainability and green marketing. Worldwide evidence indicates that people are concerned about the environment and are changing their behaviour accordingly. As a result, there is a growing market for sustainable and socially responsible products and services. The debate over sustainability has ever-increasing business implications. Companies of all sizes are facing the material impact of regulatory requirements, media scrutiny, stakeholder concerns and customer expectations. Businesses have a two-pronged equation to solve when considering how to profitably bring sustainability into the fold.
One entails their internal culture, processes, materials and related supply-side issues. The other is how to outwardly communicate, or brand and market their product. Though, in many ways, the fundamentals of a green campaign are traditional, recent studies of developments in consumer expectations regarding quality, value and trust help cast a light on how ‘green’ can advance a brand (Laws, 2010). Some communication or advertising campaigns have the objective of developing or even transforming an organisation’s brand image. Brand image is at the heart of any organisation’s communication operations and activities,
Asia-Pacific Journal of Management Research and Innovation, 8, 1 (2012): 39–58 Downloaded from pdf. highwire. org by guest on May 22, 2013 Green Branding and Eco-innovations Figure 3. The Distribution of the Different Types of LOHAS NMI’s 2007 US LOHAS CONSUMER SEGMENTATION MODEL (% general population in NMI-defined consumer segments) 51 business. In the Environmental Technology Action Plan (ETAP) of the EU Commission, a key policy initiative for the promotion of eco-innovation, environmental technologies are defined as follows: [A]ll technologies whose use is less environmentally harmful than relevant alternatives.
They include technologies to manage pollution (e. g. air pollution control, waste management); less polluting and less resource-intensive products and services (e. g. fuel cells) and ways to manage resources more efficiently (e. g. water supply, energy-saving technologies). Other more environmentally-sound techniques are processintegrated technologies in all sectors and soil remediation techniques. (European Commission, 2004, p. 2) 19% 17% 26% 19% Source: Cohen (2007). 19% LOHAS NATURALITIES DRIFTERS CONVENTIONALS UNCONCERNED the moniker of LOHAS—a market conservatively estimated at $209 billion in the US, and growing. Cultural creatives’ are the basis of the LOHAS market. The Japanese government recently launched ‘Cool Biz’, a campaign that encouraged offices to allow their workers to remove the tie and adopt light-coloured business suits. This made a great contribution to the environment as offices adjusted their thermostats up to 28 degrees Celsius, subject to the government’s instruction. Eco-innovation to Promote Green Consumerism The environmental agenda has emerged gradually as an important policy issue over the last 45 years. During this period, the environmental agenda and its impact on the economy has changed considerably.
The last 10 to 15 years have seen a marked shift from a pure regulatory approach towards the slow rise of greening as a corporate issue. The greening of markets is now becoming apparent, particularly within the last couple of years, as a consequence of the topical climate debate (Andersen, 2004; Ecotec, 2002; European Commission, 2006; Frondel, Horback & Rennings, 2004; Hitchens, Birnie, McGowan, Triebswetter & Cottica, 1998, Hitchens, Trainor, Clausen, Thankappan & De Marchi, 2002; Malaman, 1996; Organisation for Economic Co-operation and Development [OECD], 2008a, 2008b, 2009; Rand Europe, 2000a, 2000b).
As the environmental agenda has changed, so has the notion of eco-innovation. It has been referred to hitherto as ‘environmental technologies’ or ‘clean technologies’. With a still more preventive and integrated policy approach to environmental issues, the focus has changed from end-of-pipe/clean-up technologies to cleaner production processes, cleaner products to the broader eco-innovation or, quite popular lately, clean-tech People have now recognised that industrialisation has damaged the environment and also influenced their standard of living negatively.
This awareness has made them value real nature highly, to be interested in non-polluted green food and also, to be linked with the natural environment through green forest and fresh air (Kilbourne & Beckmann, 1998). For firms, a new perspective on consumer acceptance and perception to green products represents a great room of opportunities since green marketing is not purely altruistic; it can also generate profits (Grant, 2008). The firm’s challenge is to satisfy the consumers’ ‘green’ demand through proper design, production, sales and recycling of products.
By bringing in innovativeness and promotion of eco-friendly products, firms can differentiate and position themselves from the competitors and establish competitive advantage (Reinhardt, 1998). This enhances corporate image and brand value from the consumers’ perspective (Anderson, 2004, 2008). In brief, green marketing seems to be a source of reputation, competitiveness and financial advantage (Worcester, 1993). One of the key challenges is to relate innovation performance to eco-efficiency gains and to macro-level resource efficiency indicators, which could serve as a reference framework for setting long-term innovation policy targets.
Policy-makers thinking about eco-innovation should reflect on how to use material flow measurements in the context of innovation policy in order to embed ecoinnovation in an overall resource productivity perspective. According to the US EPA, in 2007, the 2008 Prius was the most fuel-efficient car sold in the US, and beginning in 2009, the latest model became the most fuel-efficient automatic car. In the UK, the Department for Transport reported that the latest Prius is the second-least CO2-emitting vehicle on sale in the UK with 89 g/km.
One can observe that innovation in response to environmental regulation can offset initial investment in research and development by helping firms to use inputs better and to create better products (Porter & van der Linde, 1995). To create, exploit and Asia-Pacific Journal of Management Research and Innovation, 8, 1 (2012): 39–58 Downloaded from pdf. highwire. org by guest on May 22, 2013 52 deliver value to the final customers, firms must develop, design and implement the marketing programmes in an integrated perspective where all within the organisation should be involved.
The holistic marketing framework highlights such process, where interactions between customers, suppliers, distributors, company, employees, etc. , and others activities based on mutual benefits, can offer possibilities in creating, maintaining and renewing customer value. To describe the holistic marketing framework and its entire value chain, Figure 4 depicts the three paces of the value chain: the exploration, creation and delivery value procedure.
One can observe that the process is linked one to other to show a redistribution of benefits among different components and players in this value chain. The value exploration is related to cognitive, competency and resource spaces, where companies define their strategy by identifying and understanding the needs of its buyer targets as well as taking into account the competences of themselves and of their collaborators. The value creation is concerned with identifying new customer benefits by getting feedback from them to improve services and products.
The delivering value is related to the management process, which is related to internal resource from the company’s business domain and the management relationship process oriented to company’s customers and to company’s partners. Green marketing strategies and tactics also might require changes in the marketing mix (product, price, place and promotion) and marketers must be conscious about such trends. Firms acquiring, for instance, an ISO 14000 certificate must produce goods with maximum recycled content, designed to have minimal environmental impact.
Figure 4. A Holistic Marketing Framework Customer Focus Core Competencies Collaborative Network A. N. Sarkar While most researchers and policy-makers are well acquainted with the concept of innovation, eco-innovation is a new concept for which a standardised definition does not exist yet. OECD illustrates that eco-innovation differs from generic innovation on two significant characteristics: It is innovation that reflects the concept’s explicit emphasis on a reduction of environmental impact, whether such an effect is intended or not.
Nonetheless, it is not limited to innovation in products, processes, marketing methods and organizational methods, but also includes innovation in social and institutional structures. (OECD, 2009) The UK environmental policy clearly sets out the urgent challenges in meeting the increasing demands of the economy while moving towards a low emission and sustainable environment (Department of Trade and Industry [DTI], 2003). ‘The vast majority of, if not all, economic activity in Britain will have to reduce its carbon impact. This is going to transform whole economy’ (Bureau of Industry and Security [BIS], 2009).
On the way to an environmentally sustainable economic growth, integrating environmental and innovation insights and understanding where the UK stands in terms of its existing capabilities and potential for creating eco-friendly technologies is crucial. Recently, increasing attention has been given to the role of regulation in increasing investments in eco-innovations (Brunnermeier & Cohen, 2003). Regulation is not an undesirable cost-increasing factor but a stimulator of firms’ innovativeness that, in turn, would lead to a first-mover advantage in markets for ecoinnovations (Porter & van der Linde, 1995). Yet, an issue
Value Exploration Cognitive Space Competency Space Resource Space Value Creation Customer Benefits Business Domain Business Partner Value Delivery Source: Kotler, Jain and Maesincee (2002, p. 29). Customer Relationship Management Internal Resource Management Business Partner Management Asia-Pacific Journal of Management Research and Innovation, 8, 1 (2012): 39–58 Downloaded from pdf. highwire. org by guest on May 22, 2013 Green Branding and Eco-innovations that is overlooked in these studies is related to the heterogeneity in firms’ innovation capabilities and their respective strategies for eco-innovation.
New companies wishing to use greener technologies may find it cost prohibitive to do so, especially in the energy and transport sectors where brown technologies and carbon-intensive energy sources dominate. International support must foster and incentivise technology transfer and knowledge sharing across developed and developing countries. Continuing to promote larger global or regional networks of knowledge-sharing platforms, such as United Nations Industrial Development Organization (UNIDO) and United Nations Environment Programme’s (UNEP) National Cleaner Production Centres, could further promote cleaner consumption and production.
Recently, the EU’s Baltic Sea Region Programme (2007–2013) created a project, ‘Sustainable Production through Innovation in Small and Medium-sized Enterprises’, that aims to enhance sustainable production processes in small and mediumsized enterprises (SMEs) by providing a knowledge-sharing platform, tools and funding needed to test and demonstrate eco-innovations (Gray & Talberth, 2011). Green growth is gaining momentum across OECD and non-OECD economies, as a way to pursue economic growth and development while preventing environmental degradation, biodiversity loss and unsustainable natural resource use.
Green growth implies decoupling economic and environmental performances, as well as making investment in the environment as a driver of economic growth (OECD, 2010). This will involve greening traditional sectors and favouring the transition of all economic actors, both producers and consumers, towards sustainable practices. 53 Green Supply Chain Management In 1996, the Manufacture Research Consortium (MRC) of Michigan State University first put forward the definition of green supply chain management (GSCM).
The definition comprehensively considers the environmental influence so as to optimise resource utilisation in the supply chain in manufacture industry. At present, we have no generally accepted definition of green supply chain. The book, The People’s Republic of China National Standard Physical Distribution Terms,6 does not include the definition. Taking into consideration other scholars’ opinions, we define it as follows: GSCM can also be called environmentally conscious supply chain management. GSCM is a kind of modern management model in the whole supply chain management which considers the environmental influence and efficiency.
It should keep in touch with suppliers, manufacturers, sellers and consumers. The detail contents include the following: green designing, green production, green package, green marketing and green recycling. The main flow is as given in Figure 5. There are four steps to implement a green supply chain. The following model is a decision-making framework and it is based upon the best practices of several companies that have successfully initiated and implemented environmental accounting practices. Ideally, companies will customise this approach to best suit their own organisational needs and culture.
The four steps are as follows: (a) identify costs; (b) determine opportunities; (c) calculate benefits; and (d) decide, implement and monitor (Figure 6). Sarkis (1999, 2003) provides a comprehensive view of the state of research in this evolving topic, tracing the work of researchers who have investigated the issues involved Figure 5. The Flow of Green Supply Chain Management Green Designing Green Production Green Package Green Marketing Green Recycling Green Techniques Green Suppliers Green Materials Green Infomation Green Products Green Selling Source: Huang Fengwen and Wu Yuhua (2003).
Recycling Design Unloading Design Model Design Asia-Pacific Journal of Management Research and Innovation, 8, 1 (2012): 39–58 Downloaded from pdf. highwire. org by guest on May 22, 2013 Green Environment Green Ideas Recycling Package Materials Recovery Processing Recycling Waste Disposal 54 Figure 6. Four Basic Steps to Implement a Green Supply Chain Indentify Costs A. N. Sarkar for society. GSCM helps motivation of stakeholder for environment, better image for supplier and producer, feel good and quality of life for customer, and makes industry move on the right track for society.
He also provided examples of companies that have successfully adopted GSCM. Duber-Smith (2005) identified 10 reasons that a company should adopt the green: target marketing, sustainability of resources, lowered costs/increased efficiency, product differentiation and competitive advantage, competitive and supply chain pressures, adapting to regulation and reducing risk, brand reputation, return on investment, employee morale and the ethical imperative. In manufacturing process, the company can apply green by several methods to reduce the energy and resource consumption.
Several papers have provided green practices, such as Duber-Smith (2005). He suggested some practices, including reducing energy consumption, recycle and reuse, using biodegradable and non-toxic materials, minimise harmful emissions and minimise or eliminate waste. A Chinese sugar manufacturer, Guitang Group, could reduce the wastes and improve their financial performance by using waste from the upstream as raw materials for downstream production (Zhu & Cote, 2004).
Apart from design and manufacturing, other departments in an organisation can also be involved with the green. Purchasing could become an important agent for change regarding environmental initiatives in the supply chain (Preuss, 2001). Walton et al. (1998) conducted a qualitative study to explore the primary areas for change to increase purchasing impact on environment. For the largest retailer in the US, Wal-Mart has an interesting story of adopting GSCM to their organisation.
In October 2005, Wal-Mart Chief Executive Officer (CEO) committed the company to three goals: to be supplied 100 per cent by renewable energy, to create zero waste and to sell products that sustain Wal-Mart’s resources and the environment, and Wal-Mart was launching a business sustainability strategy to dramatically reduce the company’s impact on the global environment and become the most competitive and innovative company in the world (Plambeck, 2007). Decide, Implement and Monitor Determine Opportunities
Calculate Benefits Source: Nones, Morques and Evgenio (2004). and the reasons for incorporating these practices, and also the way they have been practised in different organisations. According to him, the supply chain system should include purchasing and in-bound logistics, production, distribution and reverse logistics. He also shows how firms focus on total quality management (TQM), with its emphasis on improving product quality, zero defects, customer satisfaction, training and employee empowerment, etc. and integrate it with environmental management resulting in total quality environmental management (TQEM). This integration to TQEM enables organisations to move towards the source reduction of pollution philosophies and improves environmental performance, marketing advantage and corporate image so that the company moves on to the worldclass status. Different researchers have defined GSCM from different perspectives, driving forces and purposes.
Sarkis (1999) refers to the supply chain as a system which includes purchasing, production, distribution and reverse logistics. A recent definition (Handfield & Nichols, 1999) goes as follows: The supply chain encompasses all activities associated with the flow and transformation of goods from raw materials (extraction) through the end user, as well as associated information flows. Many authors are exploring environmental initiatives within each of the major phases of the supply chain.
Benefits and Implementation of GSCM Some studies have mentioned benefits of adopting GSCM, such as Stevels (2002). He demonstrated the benefits of GSCM in different roles of supply chain, including environment and society, in terms of different categories: material, immaterial and emotion. For material, GSCM helps lower environmental load for environment, lower cost prices for supplier, lower cost for producer, lower cost of ownership for customer and less consumption of resources Conclusion
Green marketing is an emerging concept, which is also fast evolving. ‘Going green’ is a buzz word that is also catching up fast with time and becoming increasingly trendy with the corporate world at large—more prominently, however, with the company products that are being branded as eco-products or eco-friendly products to reach out to those customers who are eco-savvy. But customers’ preferences toward green and/or eco-products are also coming under close scrutiny, as they are seeking validation of such products that are claimed
Asia-Pacific Journal of Management Research and Innovation, 8, 1 (2012): 39–58 Downloaded from pdf. highwire. org by guest on May 22, 2013 Green Branding and Eco-innovations to be eco-products though they are being labelled and marketed as eco-products with premium prices. In other worlds, customers are not prepared to buy or pay premium prices unless the claimed eco-products are properly eco-labelled with registered certification from authorised agencies—a prerequisite for green branding.
Green branding and green marketing opportunities are, and indeed going to have to be, more intimately linked with the overall national and international environmental policy of reduction of GHG emissions, with measurable standards, together with provisions of energy savings to directly respond to environmental sustainability questions in future. Going by the recent trend, therefore, green bio-products (such as fruits, vegetables, fish, organic products and processed foods), automobiles, thermal power plants, green buildings (for example, hospitals, hotels, airports, holiday resorts, etc. , polluting industries (for example, cement, steel, pulp and paper, sugar, leather and tannery, fertilizers, etc. ) are going to be some of the prominent industries that need to undergo rigorous screening process for carbon footprinting and eco-labelling. This would also need more and more planned eco-innovations strategy with sustainability focus across different domain areas and verticals. The article has brought out very clearly as to how green consumerism can be linked to eco-market, and to what extent this can be influenced by cross-cultural differences in consumer behaviour.
The scope of involving green marketing with corporate ethics and CSR for inclusive growth of green markets has been explored. However, for effective promotion and popularisation of quality green products in the market, the governmental regulations prescribing standards for registration of certified green products, before they are marketed for mass consumption, would also need highest attention and intervention by the government for their validation.
Green marketing and advertising, including web marketing, accompanied by sound, integrated as well as highly networked GSCM systems, is going to open up a new frontier of hyper-competitiveness among the market players, globally. But, then, in this endeavour, what is going to have to be most crucial is the validation of the claims for the green/eco-products and the close scrutiny of communication messages to the eco-friendly customers agreeable to pay premium prices, compatible with their modern lifestyles. Notes 1. See ‘What is a Green Consumer? ’, http://wiki. answers. com/Q/What_is_a_%27green%27_consumer (accessed on 27 January 2012). . See ‘PROGETTO F. A. R. E Fiat Auto Recycling’ (http: //www. ninofalasca. it/fare. htm). 55 3. See ‘Changing Perceptions: Marketing Tactics Take on a Green hue’ (http://www. livemint. com/2009/03/02213546/ Changing-perceptions-Marketin. html). 4. ‘Environmentally-Friendly Promotional Products Can Aid Your Organization With “Green” Branding’, http://www. igreen-home. com/environmentally-friendly-promotionalproducts-can-aid-your-organization-with-green-branding/ (accessed 4 February 2011 by The iGreen-Home Team). 5. Sandilands, Catriona. ‘On Green Consumerism: Environmental Privatization and Family Values’ (i. library. yorku. a/ojs/index. php/cws/article/download/… /9498). 6. National Standard of the People’s Republic of China, GB15037-2005, Replacing GB/T 15037-1994 (http://www. puntofocal. gov. ar/1_reunion08/chn197_t. pdf). References American Marketing Association (AMA) (2007). About AMA. Retrieved 1 December 2007, from http://web. archive. org/ web/20071031062407/http://www. marketingpower. com/ content24499. php ——— (2008). About AMA. Retrieved 3 October 2008, from http://www. marketingpower. com/AboutAMA/Pages/default. aspx ——— (2010). About AMA. History of the American Marketing Association. Retrieved 10 October 2010, from http://www. arketingpower. com/AboutAMA/Pages/History. aspx Andersen, M. (2004, 3–4 December). An innovation system approach to eco-innovation: Aligning policy rationales. Paper presented at the conference on ‘The Greening of Policies: Interlinkages and Policy Integration’, Berlin. Andersen, M. M. (2008). Review: System transition processes for realising sustainable consumption and production. In A. Tucker (Ed. ), SCORE book. Back to basics in 1992 (1993). Focus Japan, 20(4), 3. Bakanauskas, A. & Liesionis, V. (2002). Kastu—Vertes kainos nustatymo modelis zaliojo marketingo komplekse. Organizacijo vadyba: Sisteminiai tyrimai, 21–32.
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