Green Marketing Strategy of Businesses

Green marketing has been an important academic research topic since it came about (Coddington, 1993; Fuller, 1999; Ottman, 1994). Attention was drawn to the subject in the late 1970’s when the American Marketing Association organized the first ever workshop on ‘Ecological Marketing’ in 1975 which resulted in the first book on the subject, entitled, ‘Ecological Marketing’ by Henion and Kinnear in 1976. The first definition of ‘green marketing’ was according to Henion (1976); â€Å"the implementation of marketing programs directed at the environmentally conscious market segment† (Banerjee, 1999, p. 8). Peattie and Crane (2005) claims that despite the early development, it was only in the late 1980’s that the idea of green marketing actually made an appearance, because of the consumers’ growing interest in green products, increased awareness and willingness to pay for green features. Henion’s (1976) definition of green marketing has evolving and many more definitions of green marketing have arisen throughout the years. One of the latter definitions is Fuller’s (1999, p. ): The process of planning, implementing, and controlling the development, pricing, promotion, and distribution of products in a manner that satisfies the following three criteria: (1) customer needs are met, (2) organizational goals are attained, and (3) the process is compatible with ecosystems. The first indication of consumer interest in green products came through Vandermerwe and Oliff? s (1990) survey. This stated that more than 92% of European multinationals claimed to have changed their products in response to green concerns and 85% claimed to have changed their product systems (Peattie & Crane, 2005). Green product introductions increased by more than double to 11. 4% of all new household products in the USA between 1989 and 1990, and continued to rise to 13. 4% in 1991 (ibid. ). However, this optimistic start to the 1990’s was not sustained (Peattie & Crane, 2005. A report conducted by Mintel in 1995, showed only a very slight increase in green consumers since 1990, and showed a significant gap between concern and actual purchasing (ibid. ). This can be attributed to the fact that consumers do not want to compromise on price, quality or convenience when conducting a ‘green’ purchase (D?  Souza et al. , 2006). The frequency and prominence of green claims was also found to be in decline (Peattie & Crane, 2005). So instead of the â€Å"green revolution† in marketing forecasted for the 1990s, companies became more cautious about launching environmentally-based communications campaigns for fear of being accused of â€Å"greenwashing† (ibid). This is when a company hides the true effect of its products or actions on the environment, by making it seem as though the company is very concerned about the environment (Greenwashing, 2009). One challenge green marketers — old and new — are likely to face as green products and messages become more common is confusion in the marketplace. â€Å"Consumers do not really understand a lot about these issues, and there's a lot of confusion out there,† says Jacquelyn Ottman (founder of J. Ottman Consulting and author of â€Å"Green Marketing: Opportunity for Innovation†). Marketers sometimes take advantage of this confusion, and purposely make false or exaggerated â€Å"green† claims. Critics refer to this practice as â€Å"green washing†. Even though this revolution did not occur as predicted, the interest in the topic has not died down. Grant (2007, pp. 20-24) claims that green marketing is at a tipping point and that what we do next will decide if the topic continues to develop and gain momentum. The popularity of such marketing approach and its effectiveness is hotly debated. Supporters claim that environmental appeals are actually growing in number–the Energy Star label, for example, now appears on 11,000 different companies' models in 38 product categories, from washing machines and light bulbs to skyscrapers and homes. However, despite the growth in the number of green products, green marketing is on the decline as the primary sales pitch for products. On the other hand, Roper’s Green Gauge shows that a high percentage of consumers (42%) feel that environmental products don’t work as well as conventional ones. This is an unfortunate legacy from the 1970’s when showerheads sputtered and natural detergents left clothes dingy. Given the choice, all but the greenest of customers will reach for synthetic detergents over the premium-priced, proverbial â€Å"Happy Planet† any day, including Earth Day. New reports however show a growing trend towards green products.   This provides information regarding the setting of the study and/or general information about preview of the topic. The term Green Marketing came into prominence in the late 1980s and early 1990s. The American Marketing Association (AMA) held the first workshop on â€Å"Ecological Marketing† in 1975. The proceedings of this workshop resulted in one of the first books on green marketing entitled â€Å"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 â€Å"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. 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 holistichttp://en. wikipedia. org/wiki/Holistic nature of green also suggests that besides suppliers and retailers new stakeholders 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 â€Å"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 â€Å"green,† according to Joel Makower, a writer on green marketing. In essence, there is no definition of â€Å"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. This provides the concise description of the issues that need to be addressed. It also provide why these variables are important so it focus on it. The ongoing marketing paradigm, according to Peattie (1999, p. 57), is based on using the earth’s resources and systems in an unsustainable manner. The traditional view on corporate social responsibility, which argues that corporation manager’s and director’s only responsibilities are to the â€Å"owners† of the firm and to maximize profit, started changing in the early nineties to include a responsibility not only to those with a vested interest in the corporation (Klonoski, 1991). Instead a company must consider the effect of its actions on all stakeholders, including nature and animals (ibid. ). Many of the serious environmental issues we face are due to modern development and the pursuit of econoy Peattie, 1999, p. 58). However, making these crucial changes occur requires more than individual change; change on a societal and economic level will be necessary (Grant, 2007, p. 47; Hartmann & Ibanez, 2006). Hence, governments will need to commit to developing forward thinking environmental policies (Peattie, 1999; Grant, 2008). Corporations must integrate greening into their business strategy and invest in the development of it as they would any other aspect of their business (Polonski & Rosenberger, 2001). Finally, the consumers have to actually purchase the environmentally friendly products they, so far, only claim to be interested in (Ginsberg & Bloom, 2004). In the end though, going green needs to make business sense for the corporation and not require a compromise on product attributes for the consumer. Marketers have a tremendous potential to help make this shift happen by pushing organizations to implement some form of a green marketing strategy (Peattie & Crane, 2005; Grant, 2007, p. 32). Marketers have the power to help „sell? new lifestyle ideas (Grant, 2007, p. 1) According to Ottman (1993) green marketing serves two key objectives: 1) To develop products that incorporate consumers? eeds for convenience, affordable pricing and performance while having a minimal impact on the environment. 2) To project an image of high quality, including environmental aspects, both in regards to product attributes and the manufacturer’s track record for environmental compliance. If a paradigm shift from conventional to green marketing occurs, corporations will need to incorporate sustainability into their strategies or risk being left behind (Grant, 2008). It will be important for organizations and marketers to be well-versed on the subject and have a thorough understanding of green marketing and how it can create value. Since the mid-nineties environmental legislation has increased, leading to a higher level of awareness of environmental issues in the business community and many corporations being required to consider these issues in their strategic planning in order to meet stricter environmental standards (Banerjee, 1999, p. 18; Olson, 2008). Regardless of legislation and standards many people are calling for corporations in general to take more responsibility for their actions and the consequences thereof. Green marketing concept is fairly young and as a consequence it has not been extensively explored or research yet (Grant, 2007, p. ; Hartmann & Ibanez, 2006; Baker & Sinkula, 2005). Olson (2008) claims that while many corporations have implemented some form of green initiative, very few have actually established an enterprise-level green strategy. He furthers states that, while it may vary depending on industry and possibly by individual business, early adoption of a formalized and well-articulated green strategy can allow companies the opportunity of a competitive advantage. Considering Olson’s statement, one wonders how corporations, that have indeed incorporated some form of green thinking into the business, have done so and for what reasons. Therefore, the purpose of this study is to gain a deeper understanding of the subject of strategic green marketing by examining how strategic green marketing can be developed and what incentives companies have to do so. In order to fulfill this purpose, four research questions were developed. One objective of a marketing strategy is to optimize the marketing mix in relation to the wants and needs of the target market (Fuller, 1999, p. 330). Data from the targeted business consumers can provide valuable input for the decision making process (ibid. . 320). Fuller (1999, p. 330) further states that mass-undifferentiated marketing will often fail to ensure customer satisfaction and profit and that segmenting the market provides a more realistic market interpretation. The first research question is therefore: RQ1: How do companies segment their market based on business consumers’ green tendencies? Polonsky and Rosenberger (2001, p. 22) claim that â€Å"in true green marketing, environmental issues become an overriding strategic corporate focus rather than simply one strategic action†. When forming a green marketing strategy it is important to realize that, just as in conventional marketing, there is no single strategy that will work for all companies (Ginsberg & Bloom, 2004; Fuller, 1999, p. 330). Instead each company must examine what strategy will work best depending on its own individual objectives, resources, target market, competitive conditions and so on (Polonsky & Rosenberger, 2001). According to Olson (2008), many companies pass up significant benefits because they do not look at green opportunities in a strategic context. This brings us to research question two: RQ2: How do companies choose their green marketing strategy? Implementing a green marketing strategy requires a fundamental, holistic, integrated approach across all functional marketing areas, including the entire marketing mix of targeting, pricing, design, positioning and promotion (Polonsky & Rosenberger, 2001). According to Fuller (1999, p. 109), only companies that are truly committed to environmental concerns and are willing to translate those concerns into action through marketing mix decisions can develop viable green marketing strategies. Due to these facts, research question three was developed: RQ3: How do companies’ choices of green marketing strategy influence their marketing mix? Authors such as Porter and van der Linde (1995) and Elkington (1994) argue that environmentally superior strategies exist, which can create a competitive advantage by stimulating innovation and tapping into consumer concerns. Fuller (1999, p. 39) states that worldwide corporate practices suggest that a competitive advantage can indeed be earned and companies not implementing a green marketing strategy will be viewed as uncompetitive, unresponsive, and out of touch with emerging global markets. However, others argue that greening strategy is difficult to do in practice (Walley & Whitehead, 1994). Managers need strategies that transform environmental investments into sources of competitive advantage by optimizing the economic return on their investments (Orsato, 2006). This lead to the fourth, and final, research question: RQ4: How do companies obtain a competitive advantage through their green marketing? The obvious assumption of green marketing is that potential consumers will view product or service's â€Å"greenness† as a benefit and base their buying decision accordingly. The not-so-obvious assumption of green marketing is that consumers will be willing to pay more for green products than they would for a less-green comparable alternative product – an assumption that, in my opinion, has not been proven conclusively. This green marketing approach is largely used as a gimmick by the gigantic corporate houses in order to make a difference in the consumer’s point of view when it comes to major market decisions. Many firms are beginning to realize that they are members of the wider community and therefore must behave in an environmentally responsible fashion. So green marketing is also a way of looking at how marketing activities can make the best use of these limited resources while meeting corporate objectives. Thus an environmental committed organization may not only produce goods that have reduced their detrimental impact on the environment, they may also be able to pressure their suppliers to behave in a more environmentally â€Å"responsible† fashion. Final consumers and industrial buyers also have the ability to pressure organizations to integrate the environment into their corporate culture and thus ensure all organizations minimize the detrimental environmental impact of their activities. With the human wants escalating heavily, the resources are decreasing. Hence it has become mandatory for the marketers across the globe to use the resources efficiently and not waste them under any circumstances. Worldwide surveys indicate that consumers globally are changing their behavior towards products and services. Green marketing is almost inevitable as the market for socially responsible products is increasing greatly. This provides what the study covers and fix its boundaries. Limitations specify certain constraints in the study which are essential, but which the researcher has no control of. Although the business-to-consumer (B2C) segment is a major contributor to the damage of the global environment and that a significant change in attitude is necessary, this thesis will only focus on the business-to-business (B2B) segment. The study is not limited to one industry but is examining a range of B2B firms with the purpose of gaining a deeper understanding of green marketing strategies in an overall business context. Most research conducted on the topic of green marketing is focused on the B2C market and the author’s consider there to be a significant lack of knowledge available when it comes to the B2B market. Furthermore, the authors? were intrigued by the apparent opportunities available to companies choosing to go green.