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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 checking
Week 10	Paper submission due

Lecture 8

Green Marketing

Environmental Issues in Business 201

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

Environmental Issues in Business 201

Overview

Lecture 7

Environmental Issues in Business 201

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

Environmental Issues in Business 201

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

Environmental Issues in Business 201

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

Lecture 7

Environmental Issues in Business 201

Sustainable production and consumption.

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

Environmental Issues in Business 201

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

Green Marketing

Product attributes

Value-addition processes

Management systems

Associated Causes

Environmental Issues in Business 201

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 consumers

Environmental Issues in Business 201

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

Environmental Issues in Business 201

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.

Environmental Issues in Business 201

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)

Environmental Issues in Business 201

Is ‘Less’ Sexy and Does it Sell?

Environmental Issues in Business 201

“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

Environmental Issues in Business 201

At the same time:

Lecture 7

Environmental Issues in Business 201

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

Key Issues in Green Marketing

Lecture 7

Environmental Issues in Business 201

Lack of Genuineness

In 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

Environmental Issues in Business 201

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

Environmental Issues in Business 201

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 claims

Environmental Issues in Business 201

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

Environmental Issues in Business 201

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

Environmental Issues in Business 201

Do People Want to Buy Green?

Lecture 7

Environmental Issues in Business 201

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 201

Only a Small Percentage of Consumers Responds to Greenness Source: Ginsberg & Bloom (2004) & Brooks et al. (2009)

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Environmental Issues in Business 201

Based on these figures only 15% of consumer can be marketed to using environmental claims

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

Environmental Issues in Business 201

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.

Environmental Issues in Business 201

Philips: Marketing Flop & Success

Source: Ottman Consulting (2003)

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Environmental Issues in Business 201

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

Environmental Issues in Business 201

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.

Environmental Issues in Business 201

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): 23-36

Ottman 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.

Environmental Issues in Business 201

References

Lecture 7

Environmental Issues in Business 201

Green

Marketing

Green Marketing