Report on Green Marketing

Prepared by: Mainak Saha(07/ECE/10)

Introduction

Green marketing subsumes greening products as well as greening firms. In addition to

manipulating the 4Ps (product, price, place and promotion) of the traditional marketing mix, it
requires a careful understanding of public policy processes (GREEN MARKETING, PUBLIC
POLICY AND MANAGERIAL STRATEGIES-Aseem Prakash -(2002)
(www.greeneconomics.net/GreenMarketing.pdf)). It involves promoting products by employing
claims about their environmental attributes or about firms that manufacture and/or sell them.
Secondarily, it focuses on product and pricing issues. It directly affects the concepts of what
needs to be greened (products, systems or processes), why consumers purchase/do not purchase
green products and how firms should think about information disclosure strategies on
environmental claims.

What is Green Marketing

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 (Commentary on the FTC’s Green Marketing
Guidelines-John Friedman)( http://www.cse-
net.org/library/downloads/Docs/Documents/article.pdf). 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. Green
marketing ties closely with issues of industrial ecology and environmental sustainability such as
extended producers’ liability, life-cycle analysis, material use and resource flows, and eco-
efficiency (GREEN MARKETING, PUBLIC POLICY AND MANAGERIAL STRATEGIES-
Aseem Prakash -(2002) (www.greeneconomics.net/GreenMarketing.pdf)).Thus, the subject of
green marketing is vast, having important implications for business
strategy and public policy.

Evolution of Green Marketing

The green marketing has evolved over a period of time. 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.( GREEN MARKETING: AN OVERVIEW-Dr.
Sandhya Joshi-February 2011)( ijstm.com/papers/sandhya_0205.pdf)

Why Green Marketing?

It is really scary to read these pieces of information as reported in the Times recently: "Air
pollution damage to people, crops and wildlife in US. Total tens of billions of dollars each year".
"More than 12 other studies in the US, Brazil Europe, Mexico, South Korea and Taiwan have
established links between air pollutants and low birth weight premature birth still birth and infant
death". 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. Thus the growing awareness among the consumers all over the world
regarding protection of the environment in which they live, People do want to bequeath a clean
earth to their offspring. Various studies by environmentalists indicate that people are concerned
about the environment and are changing their behavior pattern so as to be less hostile towards it.
Now we see that most of the consumers, both individual and industrial, are becoming more
concerned about environmentfriendly products (GREEN MARKETING IN INDIA:
EMERGING OPPORTUNITIES AND CHALLENGES-Pavan Mishra & Payal Sharma-2010)(
http://www.nitttrbpl.ac.in/journal/volume3/Pavan%20%20Mishra%20and%20Ms.%20Payal%20
Sharma.pdf).

Benefits of Green Marketing

Environmental responsibility has been added to the corporate agenda in the 21st century.
Businesses are held accountable by both the government and society to operate in
environmentally friendly ways. Green marketing is used by companies to communicate a brand's
emphasis on business practices or products that are beneficial for the environment.

Product Opportunities

Growing consumer awareness and interest in preserving and utilizing natural resources has
contributed to an influx in sales and marketing of environmentally friendly and reusable
products. "Organic" has become a key word in marketing. Sales of organic products reached
$26.6 billion in 2009, according to Barbara Haumann in her April 2010 report for the Organic
Trade Association. $24.8 billion was generated from organic food sales and an additional $1.8
billion was realized through non-food organic products
(http://www.organicnewsroom.com/2010/04/us_organic_product_sales_reach_1.html).
Enhanced Environmental Awareness

The Encyclopedia of Business (2nd Edition)

(http://www.referenceforbusiness.com/encyclopedia/Gov-Inc/Green-Marketing.html) pointed out
that a benefit that resonates with industry and consumers alike is the expansion of environmental
awareness. As companies market their green-friendly efforts and products, they simultaneously
encourage the green initiative. This perpetuates the efforts by other companies to operate with
more green responsibility and causes consumers to remain vigilant in holding companies
accountable for their actions.

Premium Prices

Keeping up with environmental expectations can be expensive for a company. Preserving rain
forests, recycling, reducing waste and other green-friendly actions take time, resources and
concerted effort. A benefit of green marketing expansion is that consumers may become more
comfortable and accepting of paying higher premium prices to acquire earth-friendly products or
to support companies that engage in green activities. The Encyclopedia of Business
acknowledges that it is a crucial task of marketers to get customers to take on these premium
prices (http://www.referenceforbusiness.com/encyclopedia/Gov-Inc/Green-Marketing.html).

Supplier Expansion

A challenge faced by early adopters of the environmental movement was the limited supply of
earth-friendly food and non-food products. Companies that initially sold organic foods faced
high prices due to a limited number of organic farmers and suppliers. However, Haumann notes
in her report "farmers' markets, co-ops and CSA (community-supported agriculture) operations
gained a lot of interest as consumers increasingly look for locally and regionally produced
organic foods." Grocery retailers also benefit from stronger local supplies of organic food
products.( http://www.organicnewsroom.com/2010/04/us_organic_product_sales_reach_1.html)

Adoption of Green Marketing

Green marketing has been widely adopted by the firms worldwide and the following are the
possible reasons cited for this wide adoption:

1. Opportunities - As demand changes, many firms see these changes as an opportunity to

exploit and have a competitive advantage over firms marketing nonenvironmentally responsible
alternatives. Some examples of firms who have strived to become more environmentally
responsible, in an attempt to better satisfy their consumer needs are:
• 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.
2. Government Pressure - As with all marketing related activities, governments want to
"protect" consumer and society; this protection has significant green marketing implications.
Government regulations relating to environmental marketing are designed to protect consumers
in several ways,
1. Reduce production of harmful goods or by-products Modify consumer and industry's
use and/orconsumption of harmful goods

2. Ensure that all types of consumers have the ability to evaluate the environmental
composition of goods. Government establish regulations designed to control the amount of
hazardous wastes produced by firms.

3. Competitive Pressure - Another major force in the environmental marketing area has been
firms' desire to maintain their competitive position. In many cases firms observe competitors
promoting their environmental behaviors and attempt to emulate this behavior. In some instances
this competitive pressure has caused an entire industry to modify and thus reduce its detrimental
environmental behavior. For example when one tuna manufacture stopped using driftnets the
others followed suit.

4. 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. There are examples of firms adopting both strategies.

An example of a firm that does not promote its environmental initiative 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.

5. Cost of Profit Issues - Firms may also use green marketing in an attempt to address cost or
profit related issues. Disposing of environmentally harmful byproducts, such as polychlorinated
biphenyl (PCB) contaminated oil 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 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 other cases firms attempt to 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. One Australian
example of this is a firm who produces acidic waste water as a by-product of production and
sells it to a firm involved in neutralizing base materials (GREEN MARKETING IN INDIA:
EMERGING OPPORTUNITIES AND CHALLENGES-Pavan Mishra & Payal Sharma-2010)(
http://www.nitttrbpl.ac.in/journal/volume3/Pavan%20%20Mishra%20and%20Ms.%20Payal%20
Sharma.pdf).

EXAMPLES OF GREEN MARKETING

A) INDIAN CONTEXT

EXAMPLE 1 :Best Green IT Project: State Bank of India: Green IT@SBI

By using eco and power friendly equipment in its 10,000 new ATMs, the banking giant has not
only saved power costs and earned carbon credits, but also set the right example for others to
follow.
SBI is also entered into green service known as “Green Channel Counter”. SBI is providing
many services like; paper less banking, no deposit slip, no withdrawal form, no checks, no
money transactions form all these transaction are done through SBI shopping & ATM cards.
State Bank of India turns to wind energy to reduce emissions: The State Bank of India became
the first Indian bank to harness wind energy through a 15-megawatt wind farm developed by
Suzlon Energy. The wind farm located in Coimbatore uses 10 Suzlon wind turbines, each with a
capacity of 1.5 MW. The wind farm is spread across three states – Tamil Nadu, with 4.5 MW of
wind capacity; Maharashtra, with 9 MW; and Gujarat, with 1.5 MW. The wind project is the first
step in the State Bank of India's green banking program dedicated to the reduction of its carbon
footprint and promotion of energy efficient processes, especially among the bank's clients.

EXAMPLE 2 : Lead Free Paints from Kansai Nerolac

Kansai Nerolac Paints Ltd. has always been committed to the welfare of society and
environment and as a responsible corporate has always taken initiatives in the areas of health,
education, community development and environment preservation.
Kansai Nerolac has worked on removing hazardous heavy metals from their paints. The
hazardous heavy metals like lead, mercury, chromium, arsenic and antimony can have adverse
effects on humans. Lead in paints especially poses danger to human health where it can cause
damage to Central Nervous System, kidney and reproductive system. Children are more prone to
lead poisoning leading to lower intelligence levels and memory loss.

EXAMPLE 3 : Indian Oil's Green Agenda Green Initiatives

• Indian Oil is fully geared to meet the target of reaching EURO-III compliant fuels to all
parts of the country by the year 2010; major cities will upgrade to Euro-IV compliant fuels by
that time.
• Indian Oil has invested about Rs. 7,000 crore so far in green fuel projects at its
refineries; ongoing projects account for a further Rs. 5,000 crore.
 • Motor Spirit Quality Improvement Unit commissioned at Mathura Refinery; similar
units are coming up at three more refineries.
• Diesel quality improvement facilities in place at all seven Indian Oil refineries, several
more green fuel projects are under implementation or on the anvil.
• The R&D Centre of Indian Oil is engaged in the formulations of eco-friendly
biodegradable lube formulations.
• The Centre has been certified under ISO-14000:1996 for environment management
systems.

GREEN FUEL ALTERNATIVES

In the country's pursuit of alternative sources of energy, Indian Oil is focusing on CNG
(compressed natural gas), Auto gas (LPG), ethanol blended petrol, bio-diesel, and Hydrogen
energy.

EXAMPLE 4 : India's 1st Green Stadium

The Thyagaraja Stadium stands tall in the quiet residential colony behind the Capital's famous
INA Market. It was jointly dedicated by Union Sports Minister MS Gill and Chief Minister
Sheila Dikshit on Friday. Journal of Engineering, Science and Management Education Dikshit
said that the stadium is going to be the first green stadium in India, which has taken a series of
steps to ensure energy conservation and this stadium has been constructed as per the green
building concept with eco friendly materials.

EXAMPLE 5: Eco-friendly Rickshaws before CWG

Chief minister Shiela Dikshit launched on Tuesday a batteryoperated rickshaw, “E-rick”,

sponsored by a cellular services provider, to promote eco-friendly transportation in the city ahead
of the Commonwealth Games.

EXAMPLE 6 : Wipro Green It.

Wipro can do for you in your quest for a sustainable tomorrow - reduce costs, reduce your
carbon footprints and become more efficient - all while saving the environment.

Wipro's Green Machines (In India Only)

Wipro Infotech was India's first company to launch environment friendly computer peripherals.
For the Indian market, Wipro has launched a new range of desktops and laptops called Wipro
Greenware. These products are RoHS (Restriction of Hazardous Substances) compliant thus
reducing e-waste in the environment.

EXAMPLE 7 : Agartala to be India's first Green City

Tripura Sunday announced plans to make all public and private vehicles in Agartala run on
compressed natural gas (CNG) by 2013, thus making the capital “India's first green city”.
Tripura Natural Gas Co Ltd (TNGCL), a joint venture of the Gas Authority of India Ltd (GAIL)
and the Tripura and Assam governments, has undertaken a project to supply CNG to all private
and government vehicles.CNG will also be available to those now using electricity, petrol and
diesel to run various machineries. TNGCL chairman Pabitra Kar told reporters. He said: “The
company will soon provide PNG connections to 10,000 new domestic consumers in the city and
outskirts. Agartala will be the first city in India within the next three years to become a green
city.

EXAMPLE 8 : Going Green: Tata's new mantra

The ideal global benchmark though is 1.5. Tata Motors is setting up an eco-friendly showroom
using natural building material for its flooring and energy efficient lights. Tata Motors said the
project is at a preliminary stage. The Indian Hotels Company, which runs the Taj chain, is in the
process of creating eco rooms which will have energyefficient mini bars, organic bed linen and
napkins made from recycled paper. But there won't be any carpets since chemicals are used to
clean those. And when it comes to illumination, the rooms will have CFLs or LEDs. About 5%
of the total rooms at a Taj hotel would sport a chic eco-room design. One of the most interesting
innovations has come in the form of a biogas-based power plant at Taj Green Cove in Kovalam,
which uses the waste generated at the hotel to meet its cooking requirements. Another eco-
friendly consumer product that is in the works is Indica EV, an electric car that will run on
polymer lithium ion batteries. Tata Motors plans to introduce the Indica EV in select European
markets this year. (GREEN MARKETING IN INDIA: EMERGING OPPORTUNITIES AND
CHALLENGES-Pavan Mishra & Payal Sharma-2010)(
http://www.nitttrbpl.ac.in/journal/volume3/Pavan%20%20Mishra%20and%20Ms.%20Payal%20
Sharma.pdf).

B) GLOBAL SCENARIO:

Philips Light's "Marathon"

Philips Lighting's first shot at marketing a standalone compact fluorescent light (CFL) bulb was
Earth Light, at $15 each versus 75 cents for incandescent bulbs. The product had difficulty
climbing out of its deep green niche. The company re-launched the product as "Marathon,"
underscoring its new "super long life" positioning and promise of saving $26 in energy costs
over its five-year lifetime. Finally, with the U.S. EPA's Energy Star label to add credibility as
well as new sensitivity to rising utility costs and electricity shortages, sales climbed 12 percent in
an otherwise flat market (Philips Marathon® Energy Saver Dimmable)(
http://www.nam.lighting.philips.com/us/ecatalog/cfl/pdf/p-7016.pdf).

Car sharing services

Car-sharing services address the longer-term solutions to consumer needs for better fuel savings
and fewer traffic tie-ups and parking nightmares, to complement the environmental benefit of
more open space and reduction of greenhouse gases. They may be thought of as a "time-sharing"
system for cars. Consumers who drive less than 7,500 miles a year and do not need a car for
work can save thousands of dollars annually by joining one of the many services springing up,
including Zip Car (East Coast), I-GO Car (Chicago), Flex Car (Washington State), and Hour Car
(Twin Cities) (WORLDWIDE CARSHARING GROWTH: AN INTERNATIONAL
COMPARISON-Susan A. Shaheen and Adam P. Cohen)( http://www.carsharing.net/library/UCD-
ITS-RR-06-22.pdf).

Electronics Sector

The consumer electronics sector provides room for using green marketing to attract new
customers. One example of this is HP’s promise to cut its global energy use 20 percent by the
year 2010. To accomplish this reduction below 2005 levels, The Hewlett-Packard Company
announced plans to deliver energy-efficient products and services and institute energy-efficient
operating practices in its facilities worldwide
(http://www.hp.com/hpinfo/newsroom/press/2007/070328a.html).

Disadvantages of Green Marketing

Green marketing involves companies positioning their products as environmentally friendly or

energy efficient. Many different brands in a wide range of industries use green marketing as a
way of standing out from among a crowded field of competitors, but green marketing can also
cause problems for companies that rely on it at the expense of other forms of promotion.

Certification

To market your products as "green" you may need to go through an expensive and lengthy
process of getting environmental certifications. These certifications, which governments,
industry associations, trade associations and consumer advocacy groups all distribute, require
products to meet certain standards for energy use, efficiency or recyclability. Meeting these
standards may be difficult, especially while keeping prices low. However, without an official
certification, customers have no way of gauging the truth behind your "green" claims (GREEN
MARKETING, PUBLIC POLICY AND MANAGERIAL STRATEGIES-Aseem Prakash -
(2002) (www.greeneconomics.net/GreenMarketing.pdf))

Increased Scrutiny

If your company's marketing makes claims about its green products or an overall commitment to
environmental sensitivity, it may open you up to enhanced scrutiny from consumers and
environmental protection groups. Analysts may examine everything from how much energy your
manufacturing processes use to where you acquire raw materials and how much packaging you
use to ship your products to market. Making environmental claims might only be wise once
you've instituted a green policy that reaches every level of production and operations.(Avoiding
Green Marketing Myopia-Jacquelyn A. Ottman, Edwin R. Stafford and Cathy L. Hartman-
2006)( http://www.greenmarketing.com/files/Stafford-MyopiaJune06.pdf)
Customer Reactions
Green marketing must satisfy two objectives: improved environmental quality and customer
satisfaction. Misjudging either or overemphasizing the former at the expense of the latter can be
termed “green marketing myopia.” In 1960, Harvard business professor Theodore Levitt
introduced the concept of “marketing myopia” in a now-famous and influential article in the
Harvard Business Review. In it, he characterized the common pitfall of companies’ tunnel vision,
which focused on “managing products” (that is, product features, functions, and efficient
production) instead of “meeting customers’ needs” (that is, adapting to consumer expectations
and anticipation of future desires). Levitt warned that a corporate preoccupation on products
rather than consumer needs was doomed to failure because consumers select products and new
innovations that offer benefits they desire. Research indicates that many green products have
failed because of green marketing myopia—marketers’ myopic focus on their products’
“greenness” over the broader expectations of consumers or other market players (such as
regulators or activists) .(Avoiding Green Marketing Myopia-Jacquelyn A. Ottman, Edwin R.
Stafford and Cathy L. Hartman-2006)( http://www.greenmarketing.com/files/Stafford-
MyopiaJune06.pdf)

Conclusion

Green marketing subsumes greening products as well as greening firms. Though normative
concerns impact consumers’ and firms’ decision making, economic aspects of green marketing
should not be neglected. Managers need to identify what ought to be greened: systems, processes
or products? Consumer apathy to green products is due to many factors, including inadequate
information about levels of greenness, lack of credibility of firms’ claims and the tendency to
free ride. It also seems that green products that offer direct excludable benefits to consumers
(such as pharmaceuticals with minimum side effect and nutritious and natural foods) would have
higher acceptability. Consumer apathy may also be attributed to the belief that individual actions
alone cannot impact the macro picture, and collective endeavors are impeded by free riding. To
tackle these market-related problems, perhaps initiatives in the nonmarket environment may bear
fruit. To curb free riding and to reassure consumers that their actions will have macro impact,
some green marketers favor policies/regulations that lead to collective sacrifices. This leads to
another set of challenges, because environmental issues are often highly contested in terms of
their etiologies and solutions. Many such disputes are attributable to ideological and economic
factors. To some, collective sacrifices signify intrusive big government and side-stepping
individual responsibility. Economic considerations are even more complex. There is a rich
literature in public policy on how the distribution of benefits and costs impacts policy processes
and what types of political strategy are appropriate in different contexts. Actors may favor the
status quo if the proposed collective sacrifice imposes costs on them. If the benefits are diffused,
policy supporters could have difficulties in mobilizing winning coalitions. On the other hand,
with concentrated benefits and diffused costs, mobilizing winning coalitions to support collective
sacrifices is easier. When both benefits and costs are concentrated or diffused, the outcomes are
difficult to predict. As this discussion suggests, the tasks of green marketers who favor collective
sacrifices as vehicles for achieving their objectives are complicated by the politics of the
nonmarket environment. Information provision about greenness is a key component of green
marketing. Clearly, firms should not advertise products’ environmental benefits unless such
claims can be credibly substantiated. Negative press reports on false or exaggerated claims often
lead to decreased sales. Firms can also form strategic alliances, including product endorsements
and corporate sponsorships from environmental groups that provide credibility to their
environmental claims. Further, firms willing to provide clear, comprehensive and credible
information must ensure that consumers have low-cost access to it. Again, governmental policies
and stakeholder initiatives can be important in reducing consumers’ search, information or
transaction costs. Regulators can publish it (for example in the Federal Register), disseminate it
to the media by press releases and post it on the Internet (see the citations on FTC and EPA
websites). Stakeholders can also use the media as well as use their organization-specific vehicles
such as newsletters. Finally, if managers believe that consumers view greenness as a motivating
variable, they should invest in conveying information through advertising, direct mailing, brand
labels, in-store displays and pamphlets. Our understanding of green marketing is still in its
infancy, perhaps due to the multidisciplinary nature of the enterprise. Marketing scholars focus
on a host of business strategy and public policy issues, including eco-labels and market
segmentation, and the role of structural factors and economic incentives in influencing consumer
behavior. For environmental economists, green marketing signifies a broader trend in the
evolution of environmental policies that focus on information disclosure. Institutional theory,
stakeholder theory and the corporate social performance perspective view green marketing as a
subset of corporate policies designed to gain external legitimacy. These have developed in
response to the expectations of a broad spectrum of stakeholders, both internal and external.
Political economists focus on collective action dilemmas inherent in green marketing at the
consumer and producer levels.