Green Marketing Efficacy in Retail Sector

7/28/2019 Green Marketing Efficacy in Retail Sector

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INTRODUCTION

The term Green Marketing came into prominence in the late 1980s and early 1990s. The

American Marketing Association (AMA) held the first workshop on "Ecological Marketing"

in 1975. The proceedings of this workshop resulted in one of the first books on green

marketing entitled "Ecological Marketing".

The first wave of Green Marketing occurred in the 1980s. Corporate Social Responsibility

(CSR) Reports started with the ice cream seller Ben & Jerry's where the financial report was

supplemented by a greater view on the company's environmental impact. In 1987 a

document prepared by the World Commission on Environment and Development defined

sustainable development as meeting the needs of the present without compromising the

ability of future generations to meet their own need, this became known as the Brundtland

Report and was another step towards widespread thinking on sustainability in everyday

activity. Two tangible milestones for wave 1 of green marketing came in the form of

published books, both of which were called Green Marketing. They were by Ken Peattie

(1992) in the United Kingdom and by Jacquelyn Ottman (1993) in the United States of

America.

In the years after 2000 a second wave of Green marketing emerged. By now CSR and the

Triple Bottom Line (TBL) were widespread. Such publications as a 2005 United Nations

Report, then in 2006 a book by Al Gore and the UK Stern Report brought scientific-

environmental arguments to a wide public in an easy to understand way. This knowledge

assessed the implications of moving to a low-carbon global economy and the potential of

different approaches. This new wave of Green Marketing differed from the first wave in

many respects. It is curious to note that Green Marketing Wave 1 followed an economic

recession, whereas Green Marketing Wave 2 came before the global recessions that come to

be known as the Credit Crunch. This difference may be significant in that it may suggest

that Green Marketing is here to stay. The green marketing concept dictates, amongst other

things, less use, recycling and avoiding waste, just some of the ways society reacts at times

of recession. (see Bradley 2003 for 6 green marketing strategies).


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According to Jacquelyn Ottman, (author of Green Marketing: Opportunity for Innovation)

from an organizational standpoint, environmental considerations should be integrated into

all aspects of marketing new product development and communications and all points in

between. The holistic nature of green also suggests that besides suppliers and retailers newstakeholders be enlisted, including educators, members of the community, regulators, and

NGOs. Environmental issues should be balanced with primary customer needs

The past decade has shown that harnessing consumer power to effect positive environmental

change is far easier said than done. The so-called "green consumer" movements in the U.S.

and other countries have struggled to reach critical mass and to remain in the forefront of

shoppers' minds. While public opinion polls taken since the late 1980s have shown

consistently that a significant percentage of consumers in the U.S. and elsewhere profess a

strong willingness to favor environmentally conscious products and companies, consumers'

efforts to do so in real life have remained sketchy at best. One of green marketing's

challenges is the lack of standards or public consensus about what constitutes "green,"

according to Joel Makower, a writer on green marketing. In essence, there is no definition of

"how good is good enough" when it comes to a product or company making green marketing

claims. This lack of consensus -- by consumers, marketers, activists, regulators, and

influential people -- has slowed the growth of green products, says Makower, because

companies are often reluctant to promote their green attributes, and consumers are often

skeptical about claims.

Despite these challenges, green marketing has continued to gain adherents, particularly in

light of growing global concern about climate change. This concern has led more companies

to advertise their commitment to reduce their climate impacts, and the effect this is having

on their products and services


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What is green Marketing?

Green marketing can be defined as, "All activities designed to generate and facilitate any

exchange intended to satisfy human needs or wants such as satisfying of the needs with

minimal detrimental input on the national environment."Green marketing involves

developing and promoting products and services that satisfy customer's wants and needs for

Quality, Performance, Affordable Pricing and Convenience without having a detrimental

input on the environment.

Unfortunately, a majority of people believe that green marketing refers solely to the

promotion or advertising of products with environmental characteristics. Terms like

Phosphate Free, Recyclable, Refillable, Ozone Friendly, and Environmentally Friendly are

some of the things consumers most often associate with green marketing. While these terms

are green marketing claims, in general green marketing is a much broader concept, one that

can be applied to consumer goods, industrial goods and even services. For example, around

the world there are resorts that are beginning to promote themselves as "ecotourist"

facilities, i.e., facilities that "specialize" in experiencing nature or operating in a fashion that

minimizes their environmental impact

Thus green marketing incorporates a broad range of activities, including product

modification, changes to the production process, packaging changes, as well as modifying

advertising. Yet defining green marketing is not a simple task. Indeed the terminology used

in this area has varied, it includes: Green Marketing, Environmental Marketing and

Ecological Marketing. While green marketing came into prominence in the late 1980s and

early 1990s, it was first discussed much earlier. The American Marketing Association

(AMA) held the first workshop on "Ecological Marketing" in 1975. The proceedings of this

workshop resulted in one of the first books on green marketing entitled "Ecological

Marketing". Since that time a number of other books on the topic have been published.

Green or Environmental Marketing consists of all activities designed to generate and

facilitate any exchanges intended to satisfy human needs or wants, such that the satisfaction

of these needs and wants occurs, with minimal detrimental impact on the natural

environment.


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This definition incorporates much of the traditional components of the marketing definition

that is "All activities designed to generate and facilitate any exchanges intended to satisfy

human needs or wants". Therefore it ensures that the interests of the organization and all its

consumers are protected, as voluntary exchange will not take place unless both the buyerand seller mutually benefit. Green marketing should look at minimizing environmental

harm, not necessarily eliminating it.

What are green products ?

Although no consumer product has a zero impact on the environment, in business, the terms

green product and environmental product are used commonly to describe those that

strive to protect or enhance the natural environment by conserving energy and/or resources

and reducing or eliminating use of toxic agents, pollution, and waste.

Greener, more sustainable products need to dramatically increase the productivity of natural

resources, follow biological/ cyclical production models, encourage dematerialization, and

reinvest in and contribute to the planets natural capital. Escalating energy prices,

concerns over foreign oil dependency, and calls for energy conservation are creating

business opportunities for energy-efficient products, clean energy, and other

environmentally sensitive innovations and products.


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ONE OF THE MOST COMMONLY USED GREEN PRODUCTS THE PHILIPS CFL

Why Green Marketing is Important ?

The question of why green marketing has increased in importance is quite simple and relies

on the basic definition of Economics:

Economics is the study of how people use their limited resources to try to satisfy unlimited

wants.

Thus mankind has limited resources on the earth, with which she/he must attempt to provide

for the worlds' unlimited wants. In market societies where there is "freedom of choice", ithas generally been accepted that individuals and organizations have the right to attempt to

have their wants satisfied. As firms face limited natural resources, they must develop new or

alternative ways of satisfying these unlimited wants. Ultimately green marketing looks at

how marketing activities utilize these limited resources, while satisfying consumers wants,

both of individuals and industry, as well as achieving the selling organization's objectives.

Why are firms using Green Marketing ?


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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; and

5. Cost factors associated with waste disposal, or reductions in material usage forces

firms to modify their behaviour.

Some problems while going green

No matter why a firm uses green marketing there are a number of potential problems that

they must overcome. One of the main problems is that firms using green marketing must

ensure that their activities are not misleading to consumers or industry, and do not breach

any of the regulations or laws dealing with environmental marketing. For example marketers

in the US must ensure their green marketing claims can meet the following set of criteria, in

order to comply with the FTC's guidelines. Green marketing claims must;

Clearly state environmental benefits;

Explain environmental characteristics;

Explain how benefits are achieved;

Ensure comparative differences are justified;


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Ensure negative factors are taken into consideration; and

Another problem firms face is that those who modify their products due to increased

consumer concern must contend with the fact that consumers' perceptions are sometimes not

correct. Take for example the McDonald's case where it has replaced its clam shells with

plastic coated paper. There is ongoing scientific debate which is more environmentally

friendly. Some scientific evidence suggests that when taking a cradle-to-grave approach,

polystyrene is less environmentally harmful. If this is the case McDonald's bowed to

consumer pressure, yet has chosen the more environmentally harmful option.

When firms attempt to become socially responsible, they may face the risk that the

environmentally responsible action of today will be found to be harmful in the future. Takefor example the aerosol industry which has switched from CFCs (chlorofluorocarbons) to

HFCs (hydrofluorocarbons) only to be told HFCs are also a greenhouse gas. Some firms

now use DME (dimethyl ether) as an aerosol propellant, which may also harm the ozone

layer. Given the limited scientific knowledge at any point in time, it may be impossible for a

firm to be certain they have made the correct environmental decision. This may explain why

some firms, like Coca-Cola and Walt Disney World, are becoming socially responsible

without publicizing the point. They may be protecting themselves from potential future

negative backlash; if it is determined they made the wrong decision in the past.

While governmental regulation is designed to give consumers the opportunity to make better

decisions or to motivate them to be more environmentally responsible, there is difficulty in

establishing policies that will address all environmental issues. For example, guidelines

developed to control environmental marketing address only a very narrow set of issues, i.e.,

the truthfulness of environmental marketing claims. If governments want to modify

consumer behavior they need to establish a different set of regulations. Thus governmental

attempts to protect the environment may result in a proliferation of regulations and

guidelines, with no one central controlling body.

Reacting to competitive pressures can cause all "followers" to make the same mistake as the

"leader." A costly example of this was the Mobil Corporation who followed the competition

and introduced "biodegradable" plastic garbage bags. While technically these bags were

biodegradable, the conditions under which they were disposed did not allow biodegradation


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to occur. Mobil was sued by several US states for using misleading advertising claims. Thus

blindly following the competition can have costly ramifications.

The push to reduce costs or increase profits may not force firms to address the important

issue of environmental degradation. Ultimately most waste produced will enter the waste

stream, therefore to be environmentally responsible organizations should attempt to

minimize their waste, rather than find "appropriate" uses for it.

Overview of the different types of eco-labels used to indicate credibility to consumer

The Practices by Retailers in India

The companies are adopting green business practices. The business policy may be modified

for the eco friendly measure. New ways of doing business in all aspects be invented and

practiced. The actual operations of the businesses are basically on the operational level.

They need to be communicated, encouraged to practice and monitored for such practices.

The individual's carbon foot prints and water footprints be measured and accordingly some

compensation system be developed.

Retail is one of the sectors where pricing is a key factor. The consumers response to

discounts and special prices is of great importance. Specifically, Indian markets are veryprice-elastic. This has been proved by success stories such as that of Big Bazaar. In such a
http://en.wikipedia.org/wiki/File:Classification_of_eco_labels.png


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price-sensitive market, operational costs are therefore of prime importance. Green retail is

all about optimum utilization of resources and reduction of operational costs, while reducing

the adverse environmental impacts. A recent survey conducted by a global research firm

compiled around 23,000 consumer responses in 17 countries across five continents. Thestudy paints a unique situation for retailers in developing countriesthat consumers in these

regions are willing to pay marginally more for green products. The recent global survey

highlights the possible cost benefits accruing from green initiatives from which successful

and sustainable business models can be developed for retailers. This is a promising

opportunity for new organized retailers in India who are in their development phase. They

can set up optimized green supply chains, which should help them to enjoy cost benefits and

perhaps offset their later investments that could be costlier. In addition, this would reduce

the impact of their products on the environment. A green infrastructure would also help to

save on operation and maintenance costs. The marginal initial investment required for green

buildings normally has a payback period of two to four years. Apart from operational

savings in the long term, retailers will also get an additional advantage: Their green

corporate image among their consumers. This could help them attract and retain new

consumers and build consumer loyalty. The Bureau of Energy Efficiency in India has

categorized the retail sector as an energy-intensive industry. The government of Indias

national action plan on climate change released on July 30, 2008, aims to boost energy

efficiency and put stricter regulations to reduce the demand for energy. Moving ahead of

these regulations may help new retailers generate substantial benefit accruing from them.

The synergy of environment and economic viability has given rise to new businesses. For

example, Re-feel, has captured a unique market of re-filling cartridges making it economical

and environment friendly at the same time. The move at the right time has helped it to secure

65 retail stores across India. Going forward retailers who adopt sustainable business

practices would sustain themselves in business with higher profitability and greater

consumer loyalty.

PRESENT TRENDS IN GREEN MARKETING IN INDIA

Organizations are Perceive Environmental marketing as an Opportunity to achieve its

objectives. Firms have realized that consumers prefer products that do not harm the natural


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environment as also the human health. Firms marketing such green products are preferred

over the others not doing so and thus develop a competitive

advantage, simultaneously meeting their business objectives. Organizations believe they

have a moral obligation to be more socially responsible. This is in keeping with thephilosophy of CSR which has been successfully adopted by many business houses to

improve their corporate image. Firms in this situation can take two approaches:

Use the fact that they are environmentally responsible as a marketing tool.

Become responsible without prompting this fact. Governmental Bodies are forcing Firms to

Become More Responsible. In most cases the government forces the firm to adopt policy

which protects the interests of the consumers. It does so in following ways:

Reduce production of harmful goods or by products

Modify consumer and industry's use and /or consumption of harmful goods; or

Ensure that all types of consumers have the ability to evaluate the environmental

composition of goods.

Competitors' Environmental Activities Pressure Firms to change their Environmental

Marketing Activities. In order to get even with competitors claim to being environmentally

friendly, firms change over to green marketing. Result is green marketing percolates entire

industry. Cost Factors Associated With Waste Disposal or Reductions in Material Usage

Forces Firms to Modify their Behaviour. With cost cutting becoming part of the strategy of

the firms it adopts green marketing in relation to these activities. It may pursue these as

follows:

A Firm develops a technology for reducing waste and sells it to other firms.

A waste recycling or removal industry develops.

THE FUTURE OF GREEN MARKETING

There are many lessons to be learned to be learned to avoid green marketing myopia, the

short version of all this is that effective green marketing requires applying good marketing

principles to make green products desirable for consumers.

The question that remains, however, is, what is green marketing's future? Business scholars

have viewed it as a

fringe topic, given that environmentalism's acceptance of limits and conservation does not

mesh well with marketing's traditional axioms of give customer what they want and sell


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as much as you can. Evidence indicates that successful green products have avoided green

marketing myopia by

Following three important principles:

CONSUMER VALUE POSITIONING

Design environmental products to perform as well as (or better than) alternatives.

Promote and deliver the consumer desired value of environmental products and target

relevant consumer market segments.

Broaden mainstream appeal by bundling consumer desired value into environmental

products.

CALIBRATION OF CONSUMER KNOWLEDGE

Educate consumers with marketing messages that connect environmental attributes with

desired consumer value.

Frame environmental product attributes as solutions for consumer needs.

Create engaging and educational internet sites about environmental products desired

consumer value.

CREDIBILITY OF PRODUCT CLAIM

Employ environmental product and consumer benefit claims that are specific and

meaningful.

Procure product endorsements or eco-certifications from trustworthy third parties and

educate consumers about the meaning behind those endorsements and eco certifications.

Encourage consumer evangelism via consumers social and internet communication network

with compelling,interesting and entertaining information about environmental products.


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CONCLUSION

Now this is the right time to select Green Marketingglobally. It will come with drastic

change in the world of business if all nations will make strict roles because green marketing

is essential to save world from pollution. From the business point of view because a clever

marketer is one who not only convinces the consumer, but also involves the consumer in


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3. Johri, L.M., Sahasakmontri, K. (1998), "Green marketing of cosmetics and toiletries

in Thailand",Journal of Consumer Marketing, Vol. 15 No.3, pp.265-81

4. McDaniel, S.W., Rylander, D.H. (1993), "Strategic green marketing", Journal of

Consumer Marketing, Vol. 10 No.3, pp.4-10.5. Martin, B., Simitiras, A.C. (1995), "The impact of green product lines on the

environment",Marketing Intelligence & Planning, Vol. 13 No.4, pp.16-23.

Websites:

1. http://www.greenmarketing.com/green_marketing_book

2. http://egj.lib.uidaho.edu/egj02/polon01.html

3. http://www.awea.org/policy/greenprins.html

4. http://www.sustainablemarketing.com/

5. http://www.onpoint-marketing.com/green-marketing.htm

6. http://www.ecomall.com/greenshopping/greencorner.htm

7. http://www.tompaine.com/articles/2006/11/03/bright_green_marketing_challenge.ph

p

8. http://www.plentymag.com/features/2006/11/green_marketing_machine.php

9. http://blog.futurelab.net/2007/02/green_marketing_leverages_soci.html

10. http://www.kidsfirst.org/kidsfirst/html/info/greenm.htm

11. http://marketinggreen.wordpress.com/2007/01/23/green-marketing-through-

behavioral-targeting/

12. http://www.americanchronicle.com/articles/viewArticle.asp?articleID=21141

13. http://www.roncastle.com/green-marketing-ideas.htm

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Green Marketing Efficacy in Retail Sector

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