GREEN MARKETING

Green or Environmental Marketing can be defined as 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. With the growing
environmental concerns, climate changes and other ecological disasters, it would
be natural to assume that Green Marketing should have been at the forefront of
business; however it is seen that green marketing has failed to take off to the
extent that it should have. Companies worldwide claim that they have developed
greener products but the reality is that the market acceptance of such products
is low and most of the claims have been in terms of advertising promises (Green-
washing) rather than any concrete gains in products and services. This is cause for
concern. Rather than focussing on greening the products, companies have more
focussed on Corporate Social Responsibility and assuaged their collective guilt
about the environment. In this theoretical paper we look at the four Ps of
marketing Product, Price, Place and Promotions and with the help of available
literature we try to understand how these 4-Ps are impacted by the concept of
green marketing specially in the Indian context. Based on the discussion in the
paper we further try to highlight the problems and prospects faced by the
marketers in going green and also by consumers in becoming green. We further
try to synthesise the different strands in to a cohesive point of view which could
help the marketers in making a success of green marketing .
1. Introduction:
Marketing has been traditionally described as the process of planning and
executing the conception, pricing, promotion and distribution of ideas, goods and
services to create exchanges that satisfy individual and organisational objectives
. Even though the definition does not explicitly specify society or environment, a
moments reflection would make it clear that marketing cannot exist without
either society or environment. This implicit belief about the importance of society
and environment led to newer developments in the field of marketing
culminating in the concept of sustainable marketing and green marketing.
The earliest definition of Green Marketing which evolved out of the American
Marketing Associations (AMA) workshop on Ecological Marketing was that
Green Marketing is the study of positive and negative aspects of marketing
activities on pollution, energy depletion and non energy resources . This
definition had three major aspects (a) it defined ecological marketing as a
subset of the domain of marketing (b) It allowed comparison between the
between the positive and the negative aspects and (c) it focussed on a narrow
range of ecological activities. The definition suffered from the limitation that it
did not focus on activities in which harm to the environment and society was
being done due to allied activities of marketing. Another definition defined Green
Marketing as 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. This definition was a much
broader definition of green marketing and allowed considering marketing aspects
which were left out in the earlier definition.
Over the years, the concept of green marketing deviated from its core purpose
and landed up into the domain of promotions where it is being ruthlessly used
to sell products by overstating the extent of environmental activism of an
organisation by overstating a few token gestures . In this paper we examine the
interrelationship of the four Ps of marketing with the ecological and
environmental aspects and provide some suggestions for further development
2. Review of Literature:
The concept of green marketing did not evolve in a linear fashion as other areas
of marketing probably did. The origins of the green marketing movement could
probably be traced to the early 1960s when environmental consciousness began
to catch up in the United States. The publication of the book Silent Spring by
Rachel Carson in 1962 brought the issue of pesticide and environment in the
open and ultimately led to the ban of DDT in 1972. In 1970 the Clean Air Act
was passed not only in the United States but also in other countries of the world
notably Canada, New Zealand and United Kingdom. However the Clean Air Act of
USA for the first time allowed citizens to sue companies and government bodies
for the infringements under the act.
The oil shock of 1970 could be seen as the starting point for the evolution of
green marketing. Fisk was the first to propound the theory of responsible
consumption in which he explored the role of consumers in reducing
consumption. On the theoretical side the conference by AMA in 1975 led to the
development of the concept of Ecological Marketing. The main focuses of
these debates were on oils, automobiles and chemicals and on recycling and fuel-
saving. As the oil shock lost its momentum, the interest in this field also faded. In
1987 the World Commission on Environment and Development published the
now famous Brundtland Report which bought the concept of sustainable
development into the forefront of political and social thinking . Almost as if on
cue, The Chernobyl Radiation Leak in 1986 and the Exxon Valdez Oil Spill in 1989
brought to fore the issues of environmental disasters and the fragility of the
environment to business hazards. As the concern for the environment grew so
did the expectation that unbridled consumerism would come to an end and there
would be more focus on social and environmental aspects of business. The
euphoria surrounding the ecological marketing (or alternatively called
environmental marketing) kind of peaked in 1990s with the introduction of
new green products but did not last long as these products failed to live up to the
expectation of the consumers in the marketplace .
Zaman, Miliutenko and Nagapetan have compared eight selected eco-brands in
the Swedish market and conclude that most of the environmental brands do not
comply with environmental justice and ecosystem services in their label policy
initiatives. What they found was that there was a huge gap between policy and
practices; the survey showed that environment is an important criterion for
consumers while purchasing consumer products but the Eco-label is failing to
communicate to consumers to its expected role. They conclude that in the
current scenario, Green
marketing is in the focus of marketing strategy due to the pressure that comes
from environmental awareness rather than from the companies wish to adhere
to the environmental consciousness.
In another research on choosing packaging material for dairy products and soft
drinks conducted in the Netherlands, the costs impacts and environmental
impacts of both one way packaging and reusable packaging were studied. The
research concluded that even though the cost differences between the PC-
bottles and GT-pack were quite small; the PC bottle had a better environmental
profile than the GT-pack.
Rawat and Sarkar in their unpublished work, studied the packaging practises of
six popular fast food restaurants in Delhi and conducted a packaging assessment
exercises on the basis of 3-R principles Reusability, Reduction and Recyclability.
What they found was that almost all the restaurants used disposable paper or
plastic materials which were difficult to recycle and added to the problem of bio-
degradability. Secondly there was no uniformity between the usage practises
between the restaurants. They concluded that the fast food industry desperately
requires performance guidelines if they have to adhere to the Green Supply
Chain principles.
In another study on corporate social responsibility, the author is of the opinion
that companies have a key role to play in facilitating sustainable consumption
patterns and lifestyles through goods and services they provide and the way they
provide them. In other words, the companies can act as change agents in
changing unsuitable consumption patterns and develop Responsible
Consumerism in the society .
Another offshoot of the entire green marketing campaign is the development of
social marketing in which the tools of commercial marketing are used to
achieve social goals . Peattie and Peattie in their work have argued that the
concept of social marketing focuses on propositions in place of product,
Accessibility instead of place, Social Communication instead of promotions and
Cost of Involvement instead of price. In the same paper, they further give
example of how the state of Florida was able to successfully reduce cigarette
consumption amongst the teenagers by focussing on the messages that went
against the teenage beliefs rather than sermonising about the bad effects of
cigarette smoking .
In another article, Hector R. Lozada criticised the focus on environmentalism and
sustainability and aimed at understanding how ecological and economic concerns
is having significant impacts on
key organisational processes. This paper gave insight regarding how
environmental concerns are spawning alternative approaches to marketing
strategy to deliver value-added and to potentially establish a source of
competitive advantage. He is of the opinion that any approach to green
marketing in the product arena would lead to integration of environmental issues
in all aspects of corporate activities from strategy to customer. Other authors
also come to the same conclusion
With the rise in environmental consciousness, it was found that people were
professing to pay more than the market rate for ecologically sustainable
products. For example, Shrum, McCarty and Lowret found that 82% of the
consumers in USA were willing to pay 5% more for a product that was
environmentally friendly as compared to 49% in the previous year. Similarly
Prothero found that 27% of the adults in UK were willing to pay 25% more for
green products. However, when Tilikidou and Zotos studied the ecological
purchase behaviour of consumers in Greece ; they found that there was a marked
difference between what consumers profess and what consumers actually do.
What they found was that psychographics was a better predictor variable than
demographics in understanding green consumerism.
The concept of Ecological Purchase Behaviour boils down to the avoidance of
ecologically harmful products and purchase of ecologically friendly products. This
raises questions about the traditional four Ps of marketing both for the
organisation and for the buyers. From the organisational point of view the
questions are - Which product to sell in the marketplace? How to price the
product? How to promote the product and How to make the product available in
the marketplace? From the consumers side the questions are similar Which
product to buy? How much more to pay for the product? Where to buy it and
how do I get to know about the product? Recent researches has shown that post-
purchase behaviour specially recycling of products is also playing an
important role in product purchase decisions
In this paper I propose to have a brief look at the four Ps of marketing from both
the viewpoint of consumers as well as the organisations.
3. The Four Ps and The Green Concept: 3.1. The Product
A green product is defined as a product which has been manufactured through
green technology and that caused no environmental hazards. Promotion of green
technology and green products is necessary for conservation of natural resources
and sustainable development. We can define green products by following
measures - Products those are originally grown, Products those are recyclable,
reusable and biodegradable, Products with natural ingredients, Products
containing recycled contents, non-toxic chemical, Products contents under
approved chemical, Products that do not harm or pollute the environment,
Products that will not be tested on animals, Products that have eco-friendly
packaging i.e. reusable, refillable containers etc
In the discussion on green marketing, much emphasis has been placed on
classifying organisations on their basis of green readiness. Organisations have
been classified as Why Me? The Smart Movers and The Enthusiasts . Other
authors have classified organisations in similar lines; however the most popular
has been the ROAST classification Resistance, Observe and Comply,
Accommodate, Seize and Pre-empt and Transcend . But little has been said about
product development.
The question of what to produce is the main question in terms of product. New
products can be broadly classified into six different categories new to the
world, new product line, Addition to existing product line, Improvement in
existing product, repositioning and cost reduction out of which about 10% are
new to the world product. In case of green marketing, most of the times, the
product would have to be new product as most of the organisations already have
existing product lines. This leads to reluctance on the part of the organisation to
undertake a new green product venture. Added to this is the fact that the
development of new to the world product is a costly and risky effort studies
estimate a 40% failure rate for a new product .
The move towards sustainable products and consumption has become a major
concern in many countries and as a result companies are forced to look at the
aspect of redesigning their products for greater ecological compliance. Generally,
this can be achieved by three different routes viz. (a) greening production and
products (b) shifting demand to low-impact consumption categories, and (c)
lowering of material demands . This can be achieved by two differential activities
sustainable consumption (which is consumer and market driven) and sustainable
production (which is production driven). Many a companies have invested in the
sustainable production part by focussing on modernising manufacturing
processes, reducing carbon emission and reducing and recycling waste materials
and parts.
Sustainable consumption involves rethinking how products are conceived and
how needs are met. In other words, it requires that organisations not only
address efficiency getting the same goods and services out of less but also
sufficiency getting the same welfare out of a fewer number of goods and
services . Designing products which are eco-friendly is a major challenge for the
industry. This is because the eco-designed product must meet the basic
requirement of the normal product and must meet the following criterion of the
markets (a) Meet the needs in terms of function, performance, durability,
safety, etc. (b) comply with all regulations and (c) fulfil the needs of the target
market segment . If the eco-friendly product does not meet these basic
requirements, then the product will fail to perform in the marketplace even
though it may be more eco-friendly. Even more important than eco-friendliness
of the product is the profitability of the company. If the product is not profitable
then no company would produce it; no matter how environmentally friendly it is.
As such the research and development wing of the organization has to take on
major challenge. The traditional as well as the eco-friendliness of the product
has to be kept in mind while designing the product. This requires that new green
products will not only have to meet the existing safety and environmental norms
but also the involvement or impact they have on society in particular . In todays
highly competitive environment this would be possible only if the management
of the organisation has strong environmental convictions or if the company can
get substantial benefit out from the market in terms of profits. Environment
friendly products definitely seem to have a positive impact on the image of the
organisation but may not necessarily translate to marketing advantage. This
happens because of the Value Action Gap or in other words the consumers
are environmentally conscious but do not act in the way consistent with the
environmental consciousness .
3.2. The Price
One key aspect of developing greener products is the pricing of these products.
Price is the only element of the marketing mix which produces revenues, all other
elements produce cost. Price also communicates to the marketplace the
companys intended value positioning of a product or a brand . In the simplest of
terms price can be defined as the amount of money needed to purchase a
product or a service. However this concept becomes the concept of costing when
looked upon from an organisational perspective. In other words, organisations
need to price the product so that (a) it recovers the cost incurred in production
and distribution of the product (b) it provides a certain amount of return to the
organisation and (c) it is acceptable to the target market. Most of the times price
and pricing theories are discussed in the literature without focussing on the last
part.
In order to give a green price to a product and to fulfil the above objectives it is
necessary for a firm to look at its entire production process and not the product
itself. This would include activities like waste management, bio-diversity
management, minimisation of the use of depleted resources and preservation of
natural resources. The entire value chain in the organisation would have to be
greened in a bid to produce green product. This would mean that a substantial
amount of cost would be incurred in the initial phases; thereby driving up the
price of the end product. Economically speaking this would mean a major
leftward shift of the cost (and the marginal cost) curve whereby lower quantity of
the product would be sold in the marketplace at much higher price. This acts as a
major deterrent in giving a green price to the product.
The issue becomes complicated when we consider the externalities that would
be generated in greening the product. For example the lowered cost of health
services, generation of future employment activities, and availability of resources
for the future etc. It becomes extremely difficult to figure out the correct cost of
these externalities and to factor them into the cost of production. How do we
measure the environmental soundness of a product which is 100% recyclable
with a product which is made of 100% recyclable material? An assessment model
known as the Life Cycle Cost Benefit Analysis (LCCBA) proposed by Chen
provides some guidelines and is presented in Figure 1 below. The LCCBA takes
into account the type and the amount of pollutants emitted during the mineral
extraction, energy creation, manufacturing process, use life of the product and
disposal of the product. It also considers the type of minerals needed, the
possibility of disaster during life, the geographical characteristics and the benefits
the organisation gain from being labelled green.
However LCCBA suffers from the same drawbacks as any other model of green
pricing namely how to accurately detect the future externalities.
Figure 1: The Life Cycle Cost Benefit Analysis
In effect this means that pricing of green products becomes a major issue. Too
low a price would mean that the organisation is not recovering the cost of
greening whereas too high a price would mean that the product is out-priced out
of the market. Empirical evidences seem to suggest that the current trend is to
overprice green products as compared to their traditional counterparts. A survey
by The Telegraph [33] in UK showed that exorbitant premiums were charged on
health and beauty (220%), household products (76%) and electrical (45%) as
compared to the price of standard goods.
Drozdenko, Jensen and Coelho [34] found that consumers were willing to pay a
premium for green products, although this premium varied by product category
and potential savings resulting from the purchase. They also found that women
were willing to pay more as compared to men primarily in household products,
foods and vegetables. This was ascribed to the different buying roles of men and
women. The study also found that men were more motivated by the potential
savings arising from purchase of green products. It seems that as the potential
payback increased, the willingness to pay premium for green products also
increased. The study also found that people were willing to pay premium for
energy utility products. Demographic and situational factors did not seem to have
significant impact. These findings were consistent with the findings of other
studies in the area [see also 35].
In order to overcome riskiness of new product development and of pricing the
green products, companies have resorted to eco-labelling and green stickers.
They are a form of sustainability measurement directed at consumers, intended
to make it easy to take environmental concerns into account when shopping.
Some labels quantify pollution or energy consumption by way of index scores or
units of measurement; others simply assert compliance with a set of practices or
minimum requirements for sustainability or reduction of harm to the
environment.
The EnerGuide in Canada, The Energy Star label of USA, the EcoLabel of the
European Union, Nordic Swan of the Nordic countries are some of the easily
recognisable eco-labels across the globe. The EnerGuide issued by the
Government of Canada is the official mark associated with the labelling and
rating of energy consumption for appliances, heating and cooling equipments,
vehicles and houses. Similarly the Energy Star label, created in 1992 by the
Government of USA, is used in computer products and peripherals, kitchen
appliances, buildings and other products denotes that the product carrying such a
mark generally use 20-30% less energy than the US federal standards. The
Energy Star Program has been quickly adopted by European Union, Australia,
Japan, New Zealand and Taiwan. The Nordic Swan is the ecolabel for the Nordic
Countries and is a voluntary licensing system in which the participants agree to
follow certain ecological and environmental norms. It now covers more than 67
product groups and is gaining popularity in USA.
Various studies have found different relationships between the advertising
strategies and the reaction of consumers. Aysel Boztepe in his study of Turkish
customers found that green promotion, environment awareness, green price,
green product features affect purchasing for male consumers where as for
female consumers only green promotion affect this. He concludes that
promotional strategies of the firms should differentiate between the genders.
Another study revealed that women were more perceptible to the risks involved
in global warming and other related hazardous wastes when compared to the
males . This tends to suggest that green promotions may impact women more
than men in various countries.
In the Indian context, the number of such certification marks is much less and are
presented in table 2 below.
Figure 2: Statutory Certification Marks in India
Besides the above India has a host of non-statutory marking system which are
promoted by the government of India but which do not have statutory obligation.
The major amongst them are the Silk Mark a certificate issued by
the Silk Mark Organisation of India which certifies that the product is of pure silk;
the Ayush Mark for herbal products issued by the Department of Ayush and the
Darjeeling Tea GI mark.
If we look at these labels we find that in the Indian context, The PUC Certification,
the Indian Organic Mark and Ecomark are the only three certification marks
which have a bearing on the environment, the rest being marks of conformance
to production standards. And out of these two, except for the
PUC certification, the remaining two are voluntary. This reflects the low level of
green awareness amongst the Indian consumers and the Indian Industry.
Although electronic manufacturers especially the foreign companies operating
in India have been offering the Energy Star label on their appliances but this
does not confirm to Indian energy requirements. One would expect that the use
of eco-labels may lead to favourable attitude of the consumers towards the
product; However this may not always be the case . Given such challenges in
promotions, the corporate would have to closely look at designing their
communication process so that they are able to influence the nascent green
markets in the developing countries.
3.4. Place (Distribution)
In terms of ecology much focus has been placed on the distribution channel
either directly or indirectly. The green supply chain management (GSCM)
evolved out of the traditional supply chain management principles which became
popular in the mid 70s. The focus of environmentalism and the growing
consciousness about the ecology lead to the growing popularity of the GSCM.
However, the GSCM does not only incorporate the distribution channels but has
gone a step beyond to encompass other aspects of business notably green
design, green operations, reverse logistics, waste management and green
manufacturing . In the subsequent paragraphs we discuss these briefly
Green Design is aimed at developing more environmentally friendly products and
processes. In the past, environmental effects were ignored during the design
stage for new products and processes. For example, hazardous wastes were
dumped in the most convenient fashion possible, ignoring possible
environmental damage. Waste was common in material production,
manufacturing and distribution. Recognition of these problems led to cleaning up
past pollution and ongoing waste products. The challenge of green design is to
alter conventional design and manufacturing procedures to incorporate
environmental considerations systematically and effectively. Green Operations
can be defined as a sustainable operations system which is closed in nature. In
other words the by-product of operations process for example material, energy
and information is treated and fed back into the system to make the system self
sustainable. Besides these, green operations also need to look at a wide gamut of
stakeholders apart from the traditional customers and financial stakeholders. It
also needs to look at the environment, community, public, suppliers and future
generations . Reverse Logistics can be simply defined as the opposite of
traditional or forward logistics. In other words it is a process in which a
manufacturer accepts previously shipped products
from the point for consumption for possible recycling and re-manufacturing
which leads to reduced cost of making a new product. It has been widely used in
the automobile industry notably by BMW and General Motors to become
competitive in the industry. Collection, sorting and recycling play an important
part in helping achieve reverse logistics. The objective is to reuse material and
parts which can lead to substantial reduction in cost . This also helps the
customers in disposing off their used products. Waste Management refers to the
collection, transportation, processing or disposal, managing and monitoring of
waste materials which are produced by human production activity. The process is
generally undertaken to reduce their effect on the environment. Green
Manufacturing which emanates from ISO 14001, is focussed on prevention of
pollution and focuses on continual improvement in the manufacturing process to
reduce impact on the environment. Much focus in green manufacturing has been
on CO2 and other greenhouse gases emission and reduction. There is a huge
amount of literature available in these areas and reiterating them would be a
waste of time.
Another aspect of distribution which is important but has not received so much
attention in the literature has been the aspect of packaging. Packaging has been
described as the activity of designing and producing the container for the product
. Well designed packaging creates conveniences and acts as a promotional tool
for the product. The key material used for packaging are either plastic (or plastic
derived materials), paper (or wood derived materials) and aluminium (or metals
derived materials). Out of these the dominant are the plastic and wood based
materials which are increasingly becoming infeasible due to growing
environmental concerns. It is estimated that India alone produces 5.6 million tons
per annum of plastic waste; out of which about 48% is recycled by the organised
and unorganised sectors [46]. Similarly we produce approximately 14.6 million
tons of waste paper every year out of which only 26% is recycled. Packaging
creates a huge problem for solid waste disposal and contributes significantly to
the pollution of the environment.
Thus if we examine the greening process of the four traditional Ps of marketing
management we see that there are several challenges which have to be taken in
to account for overall greening. The biggest focus has been on the Distribution
aspects which have encompassed the manufacturing and supply chain processes.
Promotion and Packaging have been receiving some amount of attention;
however there is a lot to be achieved. In the next section we present a possible
road-map for greening of the four 4s of an organisation.
4. A Proposed Roadmap for Greening:
Figure 3: A Proposed Roadmap for Greening 4P's

With the growing concern over ecological issues, it is but necessary for any
production organisation to go green on a voluntary basis. Figure 3 proposes a
roadmap for doing so without taking on substantial investment risks. It is
proposed to start the greening process with the internal production process
which is under the control of the organisation. Subsequently the forward supply
chain and the distribution outlets need to be greened. At the end the backward
supply chain would be proposed to be greened. This is because the backward
supply chain would consist of raw material suppliers who are independent
entities and as such are not willing to commit to going green. Once the
organisation is internally green it can then force the external entities to comply
with its requirements. Thus the internal greening process acts as leverage with
the suppliers. Almost simultaneously, the organisation takes upon itself for
greening the product. This can be done in two ways. Ideate for new products or
brainstorm for greening the existing products. The changes would have to be
production tested and finally the green product is launched in the marketplace.
In the meantime, the promotions strategy goes green and starts to communicate
the greening process to the consumers. This helps in repositioning the
organisation from being a basic manufacturing organisation to a neo-green
organisation. Finally the green price concept should be bought in;
however this is fraught with dangers mentioned above. If the government does
not have a policy of subsidising the green efforts then a part of the price could be
passed on to the consumers.
The threat always remains as to whether the marketplace becomes green or not.
It has been seen that consumers are aware of the ecological aspect of damaging
the environment but are hesitant to purchase green products and services
normally because of the high price differential. One aspect of the promotional
campaign could be the use of media to communicate the benefits of greening
and the reasons for charging of higher prices. Further it could highlight the
savings for the future generations. For example it is well known in the recycling
industry that recycling 1 ton of paper saves 17 mature trees or 26,500 litres of
water or 2 barrels of oil or 4,100 kilowatt hours of electricity - enough energy to
power the average Indian home for about 2 years 1. But at the consumer end,
hardly any consumer would be able to elucidate the benefits of recycling of
paper. Thus there needs to be a concentrated effort on the part of the industries
to communicate the green messages to the consumers. This would help in
reducing some of the resistance which the organisations face in charging higher
prices and making the market more receptive to green alternatives.
5. Summary:
In this paper, we have examined the four Ps of marketing and seen how they are
affected by the process of going green. We have also proposed a road-map for
organisations to go green. The process is not easy and would require substantial
effort from the side of the organisations, but also the government and the
ecologically aware groups. However we would do well to remember that we have
only one planet to live on, and unless we can save the planet we ourselves would
be facing extinction.

1
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