Green Marketing: Opportunities & Challenges

 

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

  1. Organizations perceive environmental marketing to be an opportunity that can be used to achieve its objectives
  2. Organizations believe they have a moral obligation to be more socially responsible
  3. Governmental bodies are forcing firms to become more responsible
  4. Competitors’ environmental activities pressure firms to change their environmental marketing activities
  5. Cost factors associated with waste disposal, or reductions in material usage forces firms to modify their behavior

(A) Opportunities-

It appears that all types of consumers, both individual and industrial are becoming more concerned and aware about the natural environment.

Nowadays, firms marketing goods with environmental characteristics  have realized a competitive advantage over firms marketing non-environmentally responsible alternatives. There are numerous example of firms who have strived to become more environmentally responsible, in an attempt to better satisfy their consumer needs.

  • McDonald’s replaced its clam shell packaging with waxed paper because of increased consumer concern relating to polystyrene production and Ozone depletion
  • Tuna manufacturers modified their fishing techniques because of the increased concern over driftnet fishing, and the resulting death of dolphins
  • Xerox introduced a “high quality” recycled photocopier paper in an attempt to satisfy the demands of firms for less environmentally harmful products.

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

Many firms are beginning to realize that they are members of the wider community and therefore must behave in an environmentally responsible fashion. This translates into firms that believe they must achieve environmental objectives as well as profit related objectives. This results in environmental issues being integrated into the firm’s corporate culture. Firms in this situation can take two perspectives: 1) they can use the fact that they are environmentally responsible as a marketing tool; or 2) they can become responsible without promoting this fact.

There are examples of firms adopting both strategies. Organizations like the Body Shop heavily promote the fact that they are environmentally responsible. While this behavior is a competitive advantage, the firm was established specifically to offer consumers environmentally responsible alternatives to conventional cosmetic products. This philosophy directly ties itself to the overall corporate culture, rather than simply being a competitive tool.

An example of a firm that does not promote its environmental initiatives is Coca-Cola. They have invested large sums of money in various recycling activities, as well as having modified their packaging to minimize its environmental impact. While being concerned about the environment, Coke has not used this concern as a marketing tool. Thus many consumers may not realize that Coke is a very environmentally committed organization. Another firm who is very environmentally responsible but does not promote this fact, at least outside the organization, is Walt Disney World (WDW). WDW has an extensive waste management program and infrastructure in place, yet these facilities are not highlighted in their general tourist promotional activities.

Governmental regulations relating to environmental marketing are designed to protect consumers in several ways: 1) reduce production of harmful goods or by-products; 2) modify consumer and industry’s use and/or consumption of harmful goods; or 3) ensure that all types of consumers have the ability to evaluate the environmental composition of goods.

These governmental regulations are designed to control the amount of hazardous wastes produced by firms. Many by-products of production are controlled through the issuing of various environmental licenses, thus modifying organizational behavior. In some cases governments try to “induce” final consumers to become more responsible. For example, some governments have introduced voluntary curb-side recycling programs, making it easier for consumers to act responsibly. In other cases governments tax individuals who act in an irresponsible fashion. For example in Australia there is a higher gas tax associated with leaded petrol.

One of the recent publicized environmental regulations undertaken by governments has been the establishment of guidelines designed to “control” green marketing claims. These regulations include the Australian Trade Practices Commission’s (TPC) “Environmental Claims in Marketing – A Guideline, the US Federal Trade Commission’s (FTC) “Guides for the Use of Environmental Marketing Claims” and the regulations suggested by the National Association of Attorneys-General. All these regulations were designed to ensure appropriate information to consumers so that they could evaluate firm’s environmental claims.

Thus, governmental attempts to protect consumers from false or misleading claims  theoretically provide consumers with the ability to make more informed decisions.

Another major force in the environmental marketing area has been a firm’s desire to maintain its competitive position. In many cases, firms observe competitors promoting their environmental behaviors and attempt to emulate this behavior. It is only in some instances that this competitive pressure causes an entire industry to modify and thus reduce its detrimental environmental behavior. For example, it could be argued that Xerox’s “Revive 100% Recycled paper” was introduced a few years ago in an attempt to address the introduction of recycled photocopier paper by other manufacturers. In another example when one tuna manufacture stopped using driftnets, the others followed suit.

Certain firms use green marketing to address cost/profit related issues. Disposing of environmentally harmful by-products, such as polychlorinated biphenyl (PCB) contaminated oil are becoming increasingly costly and in some cases difficult. Therefore, when attempting to minimize waste, firms are often forced to re-examine their production processes. In these cases, they often develop more effective production processes that not only reduce waste, but reduce the need for some raw materials. This serves as a double cost savings, since both waste and raw material are reduced.

In many other cases, it has been found that firms find end-of-pipe solutions, instead of minimizing waste. In these situations firms try to find markets or uses for their waste materials, where one firm’s waste becomes another firm’s input of production.