Environmental Issues in Business 201 1

Environmental Issues in Business 201

Time (Stress) Management

Week 2 Become familiar with topics Week 3 Preliminary literature review Week 4 Topic selection & literature review Week 5 (Tuition free week)

Literature review and early draft stage

Week 6 Advancing manuscript Week 7 Advancing manuscript Week 8 (Tuition free week)

Finalising manuscript

Week 9 Proof-reading and checkingWeek 10 Paper submission due

Lecture 8 Green Marketing

Green Marketing

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At the end of this lecture you will be able to:• explain the role of green marketing in the sustainability

context; • describe differences between green marketing and

conventional marketing approaches;• describe the strengths and weaknesses of green marketing;

and• identify key elements of effective green marketing.

• The marketing paradox– How do marketing and sustainability fit together?

• Schism in the marketing discipline– Genuinely green vs greenwashing– Greener vs sustainable marketing

• The problem of marketing “greenness”– How green can be too green– Consumers as green marketing obstacles

• Designing a green marketing strategy– The dos and don’ts

• Examples– The good, bad and ugly

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Overview

How well does marketing align with the goals of sustainable development?

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The paradox of marketing: Marketing is the driving force behind

unsustainable, (un-)economic growth and individual lifestyles

Contributes to over-consumption Complicit in the promotion of

unsustainable/unethical values and behaviours

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How Responsible is Marketing?

The ‘more is better maxim’ of marketing seems to violate sustainability principles and arguably undermines efforts to mainstream more ethical and ecologically sensitive consumer behaviour

But can also be used as a tool for social change:

Altering consumption patterns for society’s long-term best interests

Educate and raise awareness

Change values, life-styles and consumer choice

Help challenge the status quo

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Marketing: A Tool for Change?

Promotion of products or services by employing environmental claims either about their attributes or about the systems, policies and processes of the firms that manufacture or sell them

(Prakash 2002: 285)

Channelling of consumer demand towards environmentally less problematic areas of consumption

(Hockerts 2003) Environmental Issues in Business

201 8

Green Marketing

Product attributes

Value-addition processes

Management systems

Associated Causes

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Target Areas for Green Marketing

Source: Prakash (2002)

Green marketing can help:

◦ Aid reduction of impacts

◦ Provide alternative product choices

◦ Promote ‘better’ practices in industry

◦ Raise awareness

◦ Educate consumersEnvironmental Issues in Business

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How Sustainable is Green Marketing?

Green marketing is being criticised for:

◦ not reducing levels of consumption

◦ being sales orientated

◦ underpinning and being underpinned by profit motive

◦ building façade of environmental improvement

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Limitations of Green Marketing

• Sustainability transition may require:– Promotion of ‘less being more’– Reductions in aggregate levels of consumption– Acceptance of having to take a step back– Social transformation towards more sustainable

values

¾ of the world population have not even started to consume the way we do though

India, China and Brazil have begun to do so.

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Sustainable Marketing?(Social or critical marketing)

Source: Peattie & Crane (2005)

• Can we promote what will be perceived as:– deprivation– anti-development– moralistic– fatalistic– pessimistic– a step backwards?

• Social and critical marketers believe that we have no option but to try (ultimate challenge)

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Is ‘Less’ Sexy and Does it Sell?

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“The American lifestyle is not negotiable”

What are the Chances for Sustainable Marketing?

Former US President George Bush (1992)

In the UK, in 2012, £ 2.4 billion were spent on unwanted Christmas presents, while Australians spend $750 million annually on dud Christmas presents (SMH 29.12.2011)

Americans spend about $35 billion a year on weight-loss products (http://www.cbsnews.com)

We spent more money each year on professional de-cluttering services (Nelson et al. 2007)

There is a global rise in freecycling (Nelson et al. 2007)\

In other words, there is scope for consuming less

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At the same time:

Being genuine ◦ If companies don’t walk their talk, consumers won’t believe

them◦ Companies need to verify and substantiate their claims to

prevent scepticism and cynicism

Measuring & understanding the true extent of consumer demand for green products◦ Green arguments alone (moral suasion) are insufficient to sway

consumer behaviour◦ Danger of over-emphasising greenness of products whilst

ignoring consumer demands (marketing myopia)

Sources: Levitt (1960), Ottman, Stafford and Hartman (2006) Environmental Issues in Business 201 16

Key Issues in Green Marketing

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Lack of GenuinenessIn 2007, 99% of environmental product claims committed at least one of the seven sins of greenwashing; by 2010, this

percentage had fallen substantially and the number

of genuinely green products on offer rose significantly

Source: Terrachoice (2009, 2010)

Sin of the hidden trade-off ◦ e.g. made from 100% paper

Sin of no proof◦ e.g. This product is ‘green’

Sin of vagueness◦ e.g. environmentally friendly

Sin of irrelevance◦ e.g. CFC free hairspray

Sin of lesser of two evils◦ e.g. fair trade tobacco

Sin of worshipping false labels◦ e.g. inauthentic labelling

Sin of fibbing◦ E.g. Outright lying and deceit

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7 Sins of Greenwahsing

Source: Terrachoice (2009)

• Greenwashing Index – Public rating system for greenwashed advertising

• CHOICE Australia– Reporting system which registers consumer complaints

• NGO registers– E.g. Greenpeace, Sierra Club

• Government regulation– UK government devised industry code for authentic

green advertising

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Greenwash Safeguards

Numbness◦ People are too busy and simply do

not have (make) time or don’t want to know

◦ Reluctance to change lifestyles◦ Green issues are too big to handle

What can I do about melting ice caps??

Apathy◦ Green labels have a bad name

because of perceptions of poor performance and ideological slant

◦ Dislike of ‘green’ labels◦ Scepticism about industry's green

claimsEnvironmental Issues in Business

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Understanding the Consumer

Akrasia◦ Inconsistency in consumer

demand. Consumption choices often do not reflect personal values.

Self-righteousness – self-deception◦ I recycle and therefore I am

green

Financial constraints◦ We may like to buy organic but

simply cannot afford to do so because of large price premiums

◦ Reluctance to pay more – fear of price gauging

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Understanding the Consumer

KPMG (2000): 75% of respondents had bought products on the basis of social or environmental

issues during the previous year

NSW Chamber of Commerce (2001): 73% people would buy green ceteris paribus 49% would switch to greener brands 60% of all consumer purchases are made with some awareness of environmental

impacts

GreenPortfolio UK Survey (2006) 50% of the companies surveyed believe that customers are prepared to pay more

for environmentally friendly products

Bonini & Oppenheim (2008) 87% of consumers state that they are concerned about the environmental and

social impacts of the products they buy Yet, only 33% of consumers say they are ready to buy green products or have

already done so

Brooks et al (2009) 69% of US consumers are likely to buy environmentally friendly products if priced

within their budget

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Do People Want to Buy Green?

• True blue greens (9%)– Strong values matched by action

Green target group• Greenback greens (6%)

– Strong values but politically inactive

• Sprouts (31%)– Believe in environmental causes in theory but not in practice

• Grousers (19%)– Uneducated about environmental issues and cynical about their ability to

drive change

• Basic browns (33%)– Caught up with day-to- day concerns and do not care about environmental

and social issues.Environmental Issues in Business

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Only a Small Percentage of Consumers Responds to Greenness

Source: Ginsberg & Bloom (2004) & Brooks et al. (2009)

Adequate pricing◦ Customers must be willing and able to afford premiums

Adequate greenness◦ Price, image & performance may be more important

Product performance◦ Product must be/do more than being green

Credibility of claims◦ Customers need to believe your claim

Instilling a sense of wanting to make a difference ◦ Demonstrate that using your product will make a difference◦ Encourage behavioural change

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Ingredients of Effective Marketing

Source: Prakash (2002), Ottman (2008)

Flop – Earth Light◦ Clumsy, funny-looking bulb ◦ Did not easily fit most lamps ◦ Name confused consumers◦ $15 each versus 75¢ for incandescents

Result: Earth Light could not climb out of a green niche.

Success - Marathon CFL ◦ Super long life◦ Incandescent-looking shape appealed to the convenience-

oriented mainstream◦ Promise of saving $26 in energy costs over its lifetime

lured thrifty consumers ◦ U.S. EPA's ENERGY STAR¨ label to add credibility

◦ Result: Sales in 2001 were up 12% in a flat market.

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Philips: Marketing Flop & Success

Source: Ottman Consulting (2003)

• Green opportunities are emerging

– Growing demand for green and ethical consumer products will continue to fuel green market growth and vice versa.

– Green marketing can be both driver of, and response to, green market growth

– Green marketing helps businesses with company and product differentiation and consumer education

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Conclusion

• Green marketing can foster good social, environmental and economic outcomes

– However, markets still continue to reward unethical behaviour (due to price advantages) in the absence of perfect information and safeguards.

– Doors remain open for unethical ‘green’ marketing, attracting or silencing customers and critics respectively based on fraudulent claims.

– More safeguards are needed to protect ethical players and to identify and punish wrong-doers.

– Critical reflection needed whether sustainability can be achieved without reducing levels of consumption.

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Conclusion

Associated Content (2008) Shell Oil Company Told to Stop Misleading Advertising. Available online at: http://www.associatedcontent.com/article/304531/shell_oil_company_told_to_stop_misleading.html?cat=17

Bonini, S. and J. Oppenheim (2008). Cultivating the Green Consumer. Stanford Social Innovation Review. (Fall), 56-61

Brooks, G., Marohn, D., Regelin, K., & Rincones, D. (2009). Cradle-to-cradle: A new approach for marketing green products to the mass consumer. Evanston: Kellogg Innovation Network.

Centre for Environment Education. (2007). Gram-Nidhi - Eco-enterprises for sustainable livelihoods. 28th June, from www.ceeindia.org/cee/rural.html#GRAMNIDHI

Ginsberg, J. M., and P. N. Bloom. 2004. Choosing the right green marketing strategy. MIT Sloan Management Review 46 (1): 79-84.

GreenPortfolio. (2006). Green relations. The communication viewpoint. London: GP.KPMG and Resnik Communications (2000) Putting your money where your mouth is. Socially Responsible

Investment Research.Levitt, T. (1960) Marketing Myopia. Harvard Business Review 48(July-August), 3-13 Lindsey, N. (2000, 11th August). Cleaning up in Asia. The Australian, p. 38.Ottman, Stafford, and Hartman (2006). How to avoid green marketing myopia: Ways to improve consumer

appeal for Environmentally Preferable Products . Environment Magazine 48(5): 23-36Ottman Consulting (2003). Lessons from the green graveyard. Available at: http://www.greenmarketing.com Nelson, M. R., Rademacher, M. A., & Paek, H.-J. (2007). Downshifting Consumer = Upshifting Citizen? An

Examination of a Local Freecycle Community. The ANNALS of the American Academy of Political and Social Science, 611(1), 141-156.

Peattie, K., & Crane, A. (2005). Green marketing: Legends, myth, farce or prophesy? Qualitative Market Research, 8(4), 357-371.

Prakash, A. (2002). Green marketing, public policy and managerial strategies. Business Strategy and the Environment, 11(5), 285-297.

Terrachoice Green Marketing (2009 and 2010). Sins of greenwashing. Available online: http://terrachoice.com/ Worldwatch Institute (2010). Vital signs 2010. Washington, DC: WWI.

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References