Go Green

‘I'll go out for a breath of fresh air' is an often-heard phrase. But do we realize that this has become irrelevant in today's world, because the quality of air in our cities is anything but fresh. The moment you step out of the house and are on the road you can actually see the air getting polluted; a cloud of smoke from the exhaust of a bus, smoke billowing from a factory chimney, and speeding cars causing dust to rise off the roads.

Air pollution is aggravated because of four developments: increasing traffic, growing cities, rapid economic development, and industrialization. Air pollution is nothing new. The Industrial Revolution in Europe in the 19th century saw the beginning of air pollution as we know it today, which has gradually become a global problem. Ever since the discovery of fire, less-than-desirable substances have been vented into the air. But regardless of the efforts by governments, air pollution continues to be a serious local and world-wide problem.

Although environmental issues influence all human activities, few academic disciplines have integrated green issues into their literature. This is especially true of marketing. As society becomes more concerned with the natural environment, businesses have begun to modify their behaviour in an attempt to address society's "new" concerns. Some businesses have been quick to accept concepts like environmental management systems and waste minimization, and have integrated environmental issues into all organizational activities.

Terms like "Green Marketing" and "Environmental Marketing” appear frequently in the press. Many governments around the world have become so concerned about green marketing activities that they have attempted to regulate them.

WHAT EXACTLY IS GREEN MARKETING

According to 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.

A definition which encompasses all major components of other definitions is:

"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."

WHY IS GREEN MARKETING IMPORTANT

The question of “Why Green Marketing?” has increased in importance and is 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.

Mankind has limited resources on the earth, with which he/she must attempt to provide for the worlds' unlimited wants. In market societies with "freedom of choice", consumers have the right to attempt to have their wants satisfied. With limited natural resources, firms must develop new/alternative ways of satisfying these unlimited wants. Green marketing looks at how marketing activities utilize these limited resources, while satisfying consumers wants.

BENEFITS OF GREEN MARKETING

Green marketing offers business bottom-line incentives and top-line growth possibilities. While modification of business/production processes may involve start-up costs, it will save money in the long term. Companies that develop new and improved products and services with environmental impacts in mind give themselves access to new markets, substantially increase profits and enjoy competitive advantages.

WHY ARE FIRMS USING GREEN MARKETING?

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

    Ø  An opportunity to achieve objectives

    Ø  A moral obligation to be more socially responsible

    Ø  Governmental pressure foR the firms

    Ø  Competitors' environmental activities

   Ø  Cost factors associated with waste disposal, or reductions in material usage

OPPORTUNITIES

In a recent study, more than 50% of consumers indicated they were concerned about the environment. Another study found that 84.6% of the sample believed all individuals had a responsibility for the environment. A further 80% of this sample indicated that they had modified their purchasing behaviour, due to environmental reasons. As demands change, many firms see these changes as an opportunity to be exploited.

Firms marketing goods with environmental characteristics will have a competitive advantage over firms marketing non-environmentally responsible alternatives. This is not to imply that all firms who have undertaken environmental marketing activities actually improve their behaviour. In some cases firms have misled consumers in an attempt to gain market share.

SOCIAL RESPONSIBILITY

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.

Fund managers and corporate developers too, are taking into account the environmental viability of the company they invest in. Venture Capitalists are investing in green business because they believe it's a growth opportunity.

GOVERNMENTAL PRESSURE

Governmental regulations relating to environmental marketing are designed to protect consumers and society by reducing production/use/consumption of harmful goods or by-products by consumer/industry.

Many by-products of production are controlled through the issue of various environmental licenses, thus modifying organizational behaviour. In some cases governments try to "induce" final consumers to become more responsible.

Investment analysts are starting to see the environmental awareness of managers as a barometer of the  long term success of their companies. Green policies, they say, tend to indicate hands on management, high consumer confidence and good corporate governance.

COMPETITIVE PRESSURE

Another major force in the environmental marketing area has been firms' desire to maintain their competitive position. In some instances this competitive pressure has caused an entire industry to modify and thus reduce its detrimental environmental behaviour.

COST OR PROFIT ISSUES

Firms may also use green marketing to address cost/profit related issues. Disposing of environmentally harmful by-products are becoming increasingly costly and in some cases difficult. Therefore firms that can reduce harmful wastes may incur substantial cost savings. When attempting to minimize waste, firms 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.

GREEN MARKETING DOES LEAD TO SUCCESS

Green marketing is not only a theoretical concept. A lot of firms are using this concept to consolidate their market positions. A few examples are Tesco, Goldman Sachs, GE, Suzlon Energy.

SOME PROBLEMS WITH 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/industry, and do not breach any of the regulations/laws dealing with environmental marketing. Green marketing claims must –

• Clearly state environmental benefits
• Explain environmental characteristics
• Explain how benefits are achieved
• Ensure comparative differences are justified
• Ensure negative factors are taken into consideration
• Only use meaningful terms and pictures

When firms attempt to become socially responsible, they may face the risk that the environmentally responsible action of today may be found to be harmful in the future. 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.

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. If governments want to modify consumer behaviour they need to establish a different set of regulations. Reacting to competitive pressures can cause all "followers" to make the same mistake as the "leader."

The push to reduce costs or increase profits may not force firms to address the important issue of environmental degradation. End-of-pipe solutions may not actually reduce the waste but rather shift it around. While this may be beneficial, it does not necessarily address the larger environmental problem.

CONCLUSION

Green marketing covers more than a firm's marketing claims. While firms must bear much of the responsibility for environmental degradation, ultimately it is consumers who demand goods, and thus create environmental problems.

Ultimately green marketing requires that consumers want a cleaner environment and are willing to "pay" for it, possibly through higher priced goods, modified individual lifestyles, or even governmental intervention. Until this occurs it will be difficult for firms alone to lead the green marketing revolution.

Having said this, it must not be forgotten that the industrial buyer also has the ability to pressure suppliers to modify their activities. Thus an environmental committed organization may not only produce goods that have reduced their detrimental impact on the environment, but also be able to pressure their suppliers to behave in a more environmentally "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.