GREEN MARKETING OPPORTUNITIES & CHALLENGES

BY

Miss. P. PIRAKATHEESWARI, Lecturer in Commerce,

Sri Sarada College for Women (Autonomous), Salem 16.

"Progress is possible, No one can stop it, but obstacle is there, we have to face it."

- Amartya Sen

Introduction

Yes, green marketing is a golden goose. As per Mr. J. Polonsky, green marketing can be defined as, "All activities designed to generate and facilitate any exchange intended to satisfy human needs or wants such that satisfying of these needs and wants occur with minimal detrimental input on the national environment."

Green marketing involves developing and promoting products and services that satisfy customers want and need for Quality, Performance, Affordable Pricing and Convenience without having a detrimental input on the environment.

Meaning

Green marketing refers to the process of selling products and/or services based on their environmental benefits. Such a product or service may be environmentally friendly in it or produced and/or packaged in an environmentally friendly way.

The obvious assumption of green marketing is that potential consumers will view a product or service's "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.

While green marketing is growing greatly as increasing numbers of consumers are willing to back their environmental consciousnesses with their dollars, it can be dangerous. The public tends to be skeptical of green claims to begin with and companies can seriously damage their brands and their sales if a green claim is discovered to be false or contradicted by a company's other products or practices. Presenting a product or service as green when it's not is called green washing.

Definition

According to the American Marketing Association, green marketing is the marketing of products that are presumed to be environmentally safe. 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 where several meanings intersect and contradict each other; an example of this will be the existence of varying social, environmental and retail definitions attached to this term. Other similar terms used are Environmental Marketing and Ecological Marketing.

The legal implications of marketing claims call for caution. Misleading or overstated claims can lead to regulatory or civil challenges. In the USA, the Federal Trade Commission provides some guidance on environmental marketing claims.

Three keys to successful green marketing

Show potential customers that you follow green business practices and you could reap more green on your bottom line. Green Marketing isn't just a catchphrase; it's a marketing strategy that can help you get more customers and make more money. But only if you do it right. Ads by Google

For green marketing to be effective, you have to do three things; be genuine, educate your customers, and give them the opportunity to participate.

1) Being genuine means that a) that you are actually doing what you claim to be doing in your green marketing campaign and b) that the rest of your business policies are consistent with whatever you are doing that's environmentally friendly. Both these conditions have to be met for your business to establish the kind of environmental credentials that will allow a green marketing campaign to succeed.

2) Educating your customers isn't just a matter of letting people know you're doing whatever you're doing to protect the environment, but also a matter of letting them know why it matters. Otherwise, for a significant portion of your target market, it's a case of "So what?" and your green marketing campaign goes nowhere.

3) Giving your customers an opportunity to participate means personalizing the benefits of your environmentally friendly actions, normally through letting the customer take part in positive environmental action.

Evolution of Green Marketing

The green marketing has evolved over a period of time. According to Peattie (2001), the evolution of green marketing has three phases. First phase was termed as "Ecological" green marketing, and during this period all marketing activities were concerned to help environment problems and provide remedies for environmental problems. Second phase was "Environmental" green marketing and the focus shifted on clean technology that involved designing of innovative new products, which take care of pollution and waste issues. Third phase was "Sustainable" green marketing. It came into prominence in the late 1990s and early 2000.

Why Green Marketing?

As resources are limited and human wants are unlimited, it is important for the marketers to utilize the resources efficiently without waste as well as to achieve the organization's objective. So green marketing is inevitable.

There is growing interest among the consumers all over the world regarding protection of environment. Worldwide evidence indicates people are concerned about the environment and are changing their behavior. As a result of this, green marketing has emerged which speaks for growing market for sustainable and socially responsible products and services.

Benefits of Green Marketing

Companies that develop new and improved products and services with environment inputs in mind give themselves access to new markets, increase their profit sustainability, and enjoy a competitive advantage over the companies which are not concerned for the environment.

Adoption of Green Marketing

There are basically five reasons for which a marketer should go for the adoption of green marketing. They are -

* Opportunities or competitive advantage * Corporate social responsibilities (CSR) * Government pressure * Competitive pressure * Cost or profit issues

Green Marketing Mix

Every company has its own favorite marketing mix. Some have 4 P's and some have 7 P's of marketing mix. The 4 P's of green marketing are that of a conventional marketing but the challenge before marketers is to use 4 P's in an innovative manner.

Product

The ecological objectives in planning products are to reduce resource consumption and pollution and to increase conservation of scarce resources (Keller man, 1978).

Price

Price is a critical and important factor of green marketing mix. Most consumers will only be prepared to pay additional value if there is a perception of extra product value. This value may be improved performance, function, design, visual

appeal, or taste. Green marketing should take all these facts into consideration while charging a premium price.

Promotion

There are three types of green advertising: -

Ads that address a relationship between a product/service and the biophysical environment

Those that promote a green lifestyle by highlighting a product or service

Ads that present a corporate image of environmental responsibility

Place

The choice of where and when to make a product available will have significant impact on the customers. Very few customers will go out of their way to buy green products.

Strategies

The marketing strategies for green marketing include: -

* Marketing Audit (including internal and external situation analysis) * Develop a marketing plan outlining strategies with regard to 4 P's * Implement marketing strategies * Plan results evaluation

Challenges Ahead

Green products require renewable and recyclable material, which is costly

Requires a technology, which requires huge investment in R & D

Water treatment technology, which is too costly

Majority of the people are not aware of green products and their uses

Majority of the consumers are not willing to pay a premium for green products

Some Cases

McDonald's restaurant's napkins, bags are made of recycled paper.

 Coca-Cola pumped syrup directly from tank instead of plastic which saved 68 million pound/year.

Badarpur Thermal Power station of NTPC in Delhi is devising ways to utilize coal-ash that has been a major source of air and water pollution.

Barauni refinery of IOC is taken steps for restricting air and water pollutants.

Conclusion

Green marketing should not neglect the economic aspect of marketing. Marketers need to understand the implications of green marketing. If you think customers are not concerned about environmental issues or will not pay a premium for products that are more eco-responsible, think again. You must find an opportunity to enhance you product's performance and strengthen your customer's loyalty and command a higher price. Green marketing is still in its infancy and a lot of research is to be done on green marketing to fully explore its potential.

References:

1. Chopra, S. Lakshmi (2007), "Turning Over a New Leaf", Indian Management, Vol-64, April-2007

2. Ottman, J.A. et al, "Avoiding Green Marketing Myopia", Environment, Vol-48, June-2006 3. www.greenmarketing.net/stratergic.html 4. www.epa.qld.gov.au/sustainable_ industries

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onventional marketing is out. Green marketing and what is increasingly being called "sustainable branding" is in. According to the new rules of green marketing, effectively addressing the needs of consumers with a heightened environmental and social consciousness cannot be achieved with the same assumptions and formulae that guided consumer marketing since the post-war era. Times have changed. A new paradigm has emerged, requiring new strategies with a holistic point of view and eco-innovative product and service offering.

New Game, New Rules

Historically, marketers developed products that met consumers' needs at affordable prices and then communicated the benefits of their brands in a memorable way. Paid media campaigns characterized by ads with catchy slogans were de rigueur. Green or "sustainable" marketing and branding is more complex. It addresses consumers' new heightened expectations for businesses to operate and requires two strategies:

1. Develop products that balance consumers' needs for quality, performance, affordability, and convenience with the lowest impact possible on the environment, and with due concern for social considerations, e.g., labor, community.

2. Create demand for the resulting brands through credible, values-laden communications that offer practical benefits while empowering and engaging consumers in meaningful ways about important environmental and social issues. These communications represent value to consumers for what they provide functionally and what they represent, and often positively reinforce the manufacturer's track record for sustainability as well.

The new rules being laid down by today's eco-conscious consumers cannot be addressed with conventional marketing strategies and tactics. Brand builders in the 21st century are accountable to tough new standards. Sustainability represents deep psychological and sociological shifts -- not to mention seismically important issues -- as did one of its predecessors, feminism, which forced marketers to develop more convenient products in step with two-income lifestyles and to portray women with a new respect.

Beware "Greenwash"

Meeting the challenges of today's level of green consumerism presents its own mandates for corporate processes, branding practices, product quality, price, and promotion. To realize that the rules of the game have changed in a big way, one need only recall the unsavory backlash that is now occurring over what is perceived by environmentalists, regulators, and the press as inconsistent and often misleading eco-labels and messages.

The resulting deluge of skepticism, confusion, and regulatory nightmares that spurious green claims -- dubbed "greenwash" -- are spawning in the marketplace proves that environmental marketing involves more than tweaking one or two product attributes and dressing up packages with meaningless and often misleading claims. Too many marketers are learning the hard way that leveraging environment-related opportunities and addressing sustainability-related challenges requires a total commitment to greening one's products and communications.

Green marketing done according to the new rules also affects how a corporation manages its business and brands and interacts with all of its stakeholders who may be affected by its environmental and social practices.

The seven strategies for green marketing success

Under the new rules, the currency of sustainable branding is innovation, flexibility, and heart. I have formulated seven strategies which I believe can help businesses address these deep-seated and lasting changes in consumer

sensibility. Reflecting our learning from working with sustainability leaders over the past 20-plus years, they can be summarized as follows:

1. Understand the deeply held environmental and social beliefs and values of your consumers and other stakeholders and develop a long-term plan to align with them.

2. Create new products and services that balance consumers' desires for quality, convenience, and affordability with minimal adverse environmental and social impacts over the life of the product.

3. Develop brands that offer practical benefits while empowering and engaging consumers in meaningful ways about the important issues that affect their lives.

4. Establish credibility for your efforts by communicating your corporate commitment and striving for complete transparency.

5. Be proactive. Go beyond what is expected from stakeholders. Proactively commit to doing your share to solve emerging environmental and social problems -- and discover competitive advantage in the process.

6. Think holistically. Underscore community with users and with the broad array of corporate environmental and societal stakeholders.

7. Don't quit. Promote responsible product use and disposal practices. Continuously strive for "zero" impact.

3 Next Generation Marketing: An Indian Perspective

Faculty Contributor: Nagasimha Balakrishna Kanagal, Associate Professor Student Contributors: Manish Kumar Urele and Suman Verma The changing profile of the Indian customer has made it imperative for the marketer to change the way he communicates with the customer. The next generation Indian customers are educated, smart, equipped with technology and well informed through various media channels available now. On one hand, while rural markets have shown a tremendous growth Internet advertising has become the fastest-growing segment of total ad spending; rising at a rate of 20%1 in the first half of 2008. This article provides an integrated marketing view on the efficient use of next generation tactics such as blue ocean strategy, green marketing, permission marketing, buzz marketing, social marketing, ambush marketing etc. for the marketer to optimally utilize these favorable trends and reap the maximum benefits in terms of revenue growth and value creation to the customers.

India has been an attractive destination for marketers because of its growth potential as an emerging market. The average Gross Domestic Production (GDP) growth rate2 of India is 8.37% which indicates that future consumption will increase. The affluence level of the average Indian household has increased significantly. The per capita income has doubled from the 2002 - 2003 level of Rs. 18885 to Rs. 380843. Education level has reached to 79.9% in 2009 from a meager 34% in 19714. As shown in Exhibit 1, the research findings of McKinsey Global Institute indicate that the Indian consumer market is expected to quadruple by 2025, making it the fifth largest consumer market in world5. Exhibit 1: Growth in Indian consumer market

With the saturation of urban market, a shift towards the rural market is evident and high growth is expected in rural consumption. As the market is expanding, the customer is becoming rich, educated & tech-savvy with an increasing concern for society and environment. There are several implications for Indian marketers from this trend. Next-Generation Marketing Strategies

In the view of the changing profile of Indian customers, marketers have been experimenting and utilizing different strategies to communicate and influence the new Indian customer. A number of techniques have been used to tap into wallets of the next generation customer some of which are:

Social Marketing: Social marketing is a process for influencing human behaviour on a large scale, using marketing principles for the purpose of societal benefit rather than for commercial profit.

Viral and Buzz marketing: Any strategy that encourages individuals to pass on marketing message to others, creating the potential for rapid multiplication to explode the message to thousands, to millions. Buzz marketing is a viral marketing technique that attempts to make each encounter with a consumer appears to be a unique, spontaneous personal exchange of information.

Mobile marketing: Mobile Marketing is a set of practices that enables organizations to communicate and engage with their audience in an interactive and relevant manner through any mobile device or network.

Blue ocean strategy: A blue ocean is created when a company achieves value innovation that creates value simultaneously for both the buyer and the company. The innovation (in product, service, or delivery) must create value for the market, while eliminating features or services that are less valued by future market.

Green Marketing: Green marketing is the marketing of products that are presumed to be environmentally safe so that the customers value the product.

Ambush marketing: Ambush marketing is as undeniably effective as it is damaging, attracting consumers at the expense of competitors, all the while undermining an events integrity and, most importantly, its ability to attract future sponsors.

Permission marketing: Permission marketing is an approach to selling goods and services in which a customer explicitly agrees in advance to receive marketing information.

However, the perception of these marketing strategies is not the same for the marketer and the customer. An analysis of the strategies adopted by the various marketers was done to understand this difference. Marketers Perspective

With the changes in lifestyle there is increased pressure on the marketer to grab the attention of the customer. Increasing emphasis is laid on interactive social media tools such as radio channels, text messages and e-mails as well as social networking sites such as Orkut, Facebook, Twitter and company blogs. These media platforms enable the customers to discuss about the issues, likes-dislikes and recommendations.

Increasingly Indian consumers are also aware and concerned about the efforts companies make towards the conservation of environment and community development. The concept of Societal Marketing and Green marketing although decades old, is being increasingly used in recent times. In face, companies have started leveraging on these concepts to entice the aware customers. The Jaago re campaign of Tata Tea, launched to create awareness about the voting right of Indian citizen, was very successful. ITCs camapign of donating Re. 1 towards the education of poor students on every purchase of notebooks is an example of new tactics used by the modern marketer.

A study of bajaj and Hero Honda in the 2-wheeler segment presents the similar story. In the wake of the competition provided by Hero Honda, Bajaj has completely transformed its image of being a traditional family scooter to a younger generation bike with marketing techniques like Bajaj pulsar stuntmania which has been possible through the use of next generation marketing techniques such as gaming, virals, green marketing, buzz and rural marketing. Similarly Hero

Honda has utilized these techniques consistently to remain a market leader in the category.

Thus our marketer is entirely focussed on integrating the current technologies with the marketing program in the form of emails, text messages, internet blogs, networking sites etc. However the attitude of customers towards these strategies is a bit different from the marketers viewpoint. Customer Perspective

The customers perspective about these strategies has been collected and analysed through a survey about their preferences regarding various new generation marketing strategies. A distribution of consumer preferences for marketing strategies utilised in Fast Moving Consumer Goods (FMCG) and Durables segment was obtained as shown in Exhibit 2. Exhibit 2: Consumer preference to various advertizing techniques in FMCG For a typical Indian customer the new technological means are still way into the future and they are not able/willing to access them.

The survey findings revelaed that in FMCG category the customers value offers/discounts in the marketing efforts of the company as their highest priority. Consumers gave a clear distinction in terms of choosing three offerings of the marketers. A typical consumer rates discount offers, advertisements and the environmental benefit of a product over the other features. Mobile text messages and e-mails proved to score the lowest among all the offerings by marketers. For a typical Indian customer the new technological means are still way into the future and they are not able/willing to access them. As the executive of a leading car manufacturing company states the customers are not very tech-savvy, and

specially the buyers of luxury products are elderly persons who are very particular about the look and feel of the product.

In the durable products section customers are more likely to prefer advertisements as shown from Exhibit 3. It is because the customers are mainly from the high end segment and less price sensitive. Mobile text messages still have the lowest preference in the mindset of the customers as far as marketing is concerned. Exhibit 3: Consumer preference to various advertizing techniques in Durables

From the qualitative analysis it is shown that the customers are slightly inclined towards the traditional methods such as advertising and communications using billboards.There is a need to educate people about the advancements in marketing techniques so that they may adapt to the more convenient and effective strategies which are coming in place in the 21st century. FMCG and Durables Marketing

Based on the above analysis and by mapping the marketers perspective to the consumers preferences certain trends can be seen. Visual and Interactive Ads on Mobile

Although Indian customer has become technologically advanced owing to changing demographics, as per the analysis he is still more affected by the traditional methods of marketing. Hence, communicating the same message to the customers on a new technological platform will enhance its acceptability. Customers need more visual and interactive platforms of marketing. Hence,

marketers may send innovative multi-media messages (MMS) exhibiting the TV commercials to exploit the high mobile proliferation among the customers. Focus on Green Marketing

As the customer has become more educated and affluent, the awareness regarding harmful effects of pollution and chemicals has increased. Therefore, the companies need to develop and emphasize their environmental friendly products in durables such as cars and hygienically safe products in FMCG such as eatables and soaps to tap potential customers. Rejuvenating Customer Relationship Marketing (CRM)

In the changing trend of marketing innovations, customers should be involved in the marketing phase to capture a greater hold over the market. Some of these changes could be:

1. Testimonials by customers: In products like Pureit the testimonials from customers are utilized that exhibit that they are satisfied from the product. These strategies should be used and improved to involve customers in the marketing of products. 2. Inviting suggestions for added features: For FMCG products such as Kurkure inviting recipes from customers for preparing delicacies provides them incentives to spread Word-of-Mouth about these products.

Focus on Rural Masses

Given the fact that rural market is booming, marketers need to evolve and pursue rural marketing. It is desirable to provide the products in different SKUs so that their price comes in the range of the rural markets affordability. Demonstrations about the product through workshops or camp based activities should be done for the less educated rural customer. Marketers can use innovative financial schemes to increase their reach to the rural customer particularly in the Durables product category. Conclusion

The income of a typical Indian customer has risen and so has their preference for tech-savvy products. Yet, customers are still connected to the traditional ways of marketing. They have become more aware and have shown an inclination towards environment-friendly products. CRM has emerged as an important tool for marketers and it should be renovated by involving customers in the marketing phase through testimonials. Rural markets offer potential and need to be tapped by innovative strategies. Thus, though India has changed but traditional marketing strategies on new technology platforms can aid the marketer in reaching the new customer. Keywords

Green Marketing, Mobile Marketing, CRM, FMCG, Marketing Contributors

Nagasimha Balakrishna Kanagal is an Associate Professor in the Marketing area at IIM Bangalore. He holds a B.E Degree from Bangalore University and PGDM from IIM Ahmadabad. He has also done his MA, MS and PhD from University of Texas at Dallas. He can be reached at kanagal@iimb.ernet.in.

Manish Kumar Urele (PGP 2009-11) holds a Bachelor's Degree in Electrical Engineering from National Institute of Technology, Bhopal. He can be reached at manish.urele09@iimb.ernet.in.

Suman Verma (PGP 2009-11) holds a Bachelor's Degree in Electronics & Communication Engineering from National Institute of Technology, Jaipur. She can be reached at suman.verma09@iimb.ernet.in. References

1. Jessica E Vascellaro, Sep 4, 2008, Gap Widens in Online Advertizing, The Wall Street Journal, Asia Edition 2. TradingEconomics.com Market watch, 2010, India GDP growth Rate, May 05, http://www.tradingeconomics.com/Economics/GDPGrowth.aspx?Symbol=INR, Last accessed on September 24, 2010 3. Press Trust of India (PTI) News, 2009, Indias per capita income doubles in 7 years to Rs38,08, Feb 09, http://www.livemint.com/2009/02/09150714/India8217s-per-capita-incom.html, Last accessed on September 24, 2010 4. Adlakha, Arjun, 1997, International Brief, Population Trends: India, April 1997, http://www.census.gov/ipc/prod/ib-9701.pdf, Last Accessed on September 24, 2010 5. McKinsey Global Institute, 2005, The Bird of Gold: The Rise of Indias Consumer Market, http://www.mckinsey.com/mgi/publications/india_consumer_market/slideshow/ main.asp, Last accessed on September 24, 2010