Contemporary Issues : The Advantages and Disadvantages of Green Marketing

Executive Summary

This study aims to analyse the advantages and disadvantages of green marketing and to

recommend ways to overcome challenges concerning the current issue in the field of green

marketing.

The research draws attention to the fact that many organizations try to find ways to become

more socially responsible by taking green products and green marketing into measure due to

the increase of global warming and environmental pollution. Concerning the environment,

many companies strive to produce environmentally friendly products by recycling or

sustaining utilizing low-toxicity materials. 

Green customer values and attitude towards the green product such as influencing customer's

buying intention is one of the advantages of green marketing by using Signalling Theory

approach. The signallers provide the knowledge that is probably useful for receivers. Hence,

signalling can bring to advantageous results such as  investment or purchase.  

The advantage of Caroll's pyramid of Corporate Social Responsibility involves the company

to set and establish its consent by the law, ethical and international norms. This approach

helps the organizations build brand equity in consumer's minds. By being socially

responsible, organisations may run the risk of their current environmentally responsible

actions deemed harmful in the future.

Another advantage is the governmental pressure to protect the consumers and the

environment from harmful goods or by-products to ensure that all consumers can assess the

environmental composition of goods. Theory of Reasoned Action developed by Fishbein and

Azjen (1975) to explain consumer behavioural intentions. The government had designed

guidelines for consumers to have adequate information to evaluate an organisation's

environmental claims.

According to the stakeholder theory, “green” consumption and “green washing” are two

disadvantages of green marketing. Some customers are changing their purchasing behaviour

to reduce the impact of their consumption habits due to environmental concerns. Many

companies label their products with environmentally friendly packaging and are certified

environmentally friendly in order to meet customer needs. The properties of an

environmentally friendly product may not correspond to reality. Such products are called

greenwashing.

The concept of "green marketing" involving advertisement and promotion is an essential

aspect to motivate green buying by making a requirement for extra attempts to promote

environmentally friendly products.

Table of Contents

Executive Summary..................................................................................................................1

Introduction..............................................................................................................................3

1.1  Concept of Green Marketing.......................................................................................4

2.0 Literature review.................................................................................................................4

2.1 Advantages of Green marketing...................................................................................4

2.1.1 Green Customer Values and Attitude towards Green Product..................................5

2.1.2. Carroll’s pyramid of Corporate Social Responsibility (CSR)..................................8

2.1.3 Governmental Pressure - The Theory of Reasoned Action....................................12

3.0 Disadvantages of green marketing stakeholder theory...................................................14

3.1 Green consumption......................................................................................................14

3.2 Greenwashing...............................................................................................................15

3.3 Stakeholders Theory....................................................................................................16

4.0 Conclusion........................................................................................................................18

References...............................................................................................................................21
1.0 Introduction

From the early 1990s, a main concern about the ecological impact of the industrial house on

the market appeared on the market. Not only has the relationship between individual,

business, and the natural environment been redefined, but its implications have been

interpreted; Because of this, new assumptions are made or reassured on issues such as

environmentally friendly products, recycling capacity, waste reduction, pollution-associated

costs and price-to-value ratios (Ghoshal, 2011). Pressure from various stakeholders,

government, environmentalists, NGOs, consumers, is situated on businesses, which keeps

them under continuous and strenuous scrutiny in their day-to-day operations (Chung, 2019).

A direct result can be observed in developed and developing countries where the government

implement rules to protect the environment became more stringent; at the same time,

consumers in these countries are expressing freely about their needs for environmentally

friendly products, even though issues remain about their willingness to pay higher premiums

for such products. The green consumer behaviour became a new model for marketing

strategies. The organizations have emerged in order to obtain competitive advantage and

lower cost (Lai and Cheng, 2016). Consequently, the small and medium enterprises business

have taken environmental issues as primary concern (Ajayi, Odusanya & Morton, 2017).

Organizations have been forced to focus on environmental issues in their production. Hence,

many organizations attempt to find ways to be more socially responsible by proceeding with

green products and green marketing with recycled or to be sustained utilizing low-toxicity

materials. 234

  
1.1  Concept of Green Marketing
 

Green marketing became an important aspect, making a requirement for extra

attempts to advance environmental friendly products (Schena, Netti and Russo, 2015)

Advertisement and promotion that involves environmental concerns are very incredible to

encourage green buying. The global warming, environmental pollution, non-biodegradable

solid waste are gotten to know through green marketing. Marketers believe that four Ps must

involve green marketing actions in order to increase the impact of green customer value and

behavior towards green buying (Schena, Netti and Russo, 2015). 193

2.0 Literature review

2.1 Advantages of Green marketing 

2.1.1 Green Customer Values and Attitude towards Green Product.

Signalling Theory examines the distribution of messages from one individual (sender)

to another one (receiver) (Vasconcelos, 2017). Based on current theoretical background,

there are many organizations practicing Signalling Theory to samples within business.

The signallers provide the knowledge that is probably useful for receivers however it is

not accessible to them. Current information has a significant impact in the behavioural

decision-making process. The quality and purpose of information transfer is highly

influenced by information asymmetry (Stiglitz, 2000). The receivers are unsure about the
attributes while the behavioural intention of receivers is concerned by signallers. The

stakeholders as receivers are attempted to send the signals of organizations’ quality by

organizations itself. As a result, signalling might bring to advantageous results, for

instance investment or purchase. Hence, Signalling Theory is a beneficial interpretation

for green marketing and green purchase intention (Hussain et al., 2020).

Based on Spence’s (1973) study, there is an assumption that organizations make

insufficient choices, consequently it is important to determine an observable character

which is signal, that gives the chance to decrease the risk that is attached to the decisions.

This risk is integrated with opportunity cost, a monetary value in order to lead strategic

decision-making choices of managers. Later Karasek and Brayant (2012) defined the

influence of Spence’s theory in such areas as science, psychology and management.

Therefore, taking into account an environmental friendly approach, there must be a

focus on the signals which organizations select to be utilized to introduce the opportunity

costing the green marketing. For instance, advertising and promotion are means of

knowledge and promotion of green products that consumers have been observing for

quite some time in a sceptical way.

However, according to studies, consumers are willing to purchase more green

products and services rather than non-green ones due to the rising interests in

environmental issues (Griskevicius, Tybur and Van den Bergh, 2010; Vurro et al., 2014).

There are studies that examined and proved the relationship between consumers

embraced significance and green purchase intention. Early research on individuals’

significance are the leading principle of judgments as well as actions, which contain

discordant motivation, for example, personal interest against the prosperity of others

(Sweeney, J.C. and Webb, D.A). There are studies that tried to examine the reasons for

certain consumers’ decisions and aimed to discover the relationships between the values,

attitudes, as well as behavioural intentions of consumers (Oskamp et al., 1991).

Organizations take seriously green marketing into account in order to reach

sustainable expansion by supporting a competitive advantage and creating a beneficial

brand image (Robinot and Giannelloni, 2010). The decision making of customers can be

changed by recommendations of other customers (Zhao and Xie). As an example, some

study specifies that content marketing might influence customer’s buying intention in the

context of home appliances. As a result, green marketing strategies such as its advertising

and global world of mouth should be concentrated on the organizations (Ahmad and

Ilkay, 2009). Fong (2005) believed that sufficient advertisement takes crucial part as

attributor towards the relationship amount significance of price and quality as well as

buying purpose of recyclable products. The persuasive advertisement will quicken the

impact of consumer significance and customer attitude on green purchase intention. Word

- of - mouth is an essential aspect for decision making of consumers, and many

organizations have taken the current marketing approach (Cheng, et al, 2015). The

beneficial WOM might bring a great extent of credibility. Thus, organizations with

positive GWOM tend to prosper in composition the beliefs and attitudes of customers

which expand green buying purpose (Keller and Fay., 2012). Some researchers believe

that electronic WOM is a significant aspect as a regulator of communication among

personal norm and green buying purposes (Cheng, et al, 2015).

 The attitude of customers towards green buying can be improved through green

advertising. Haytko and Matulich (2008) claimed that there are various kinds of customer

responses which show the importance of green advertising such as ability to purchase

products with first-class price, reliness in the product quality and belief that it brings little

damage, and loyalty. Some researchers believe that WOM is a significant marketing tool

that prompts transfer of knowledge about brands between customers at a minimal cost.

Based on study, consumers take WOM as the one of the most reliable communication

device rather than advertisements and various typical media (Kotler et al., 2014)

GWOM is a competitive advantage, as based on some studies it provides the

psychological benefits which refers to “the feeling of trust or confidence in the other party

that results in greater peace of mind” (Sweeney and Webb, 2007). Based on the

Signalling Theory and the Symbolic and Conspicuous Consumption Model,

psychological advantages come from self-expressive benefits, which bring significant

influence on green consumer attitude (Aaker, 2002). Individuals are ready to buy eco-

friendly product that provide them self-expressive advantages and self-satisfaction, as the

desire to aid others is provoked by a positive emotional state. Hence, according to

Signalling Theory, the marketer (signaller) sends a message (concerning environmental

issues) to the receiver to stimulate the attitudes and behaviour of consumers in the

direction of green purchasing. In case if the signal is determined, which is reflected by

customers’ attitudes, the customers’ self-expressive advantages might be expanded. As a

result, the impact of attitudes of customers in direction of green goods and services on

green purchasing purposes will be reinforced (Connelly, et al., 2011). According to Van

der Linden (2018), the sense of warm glow can be derived from aiding others which

resulted from empathy-driven motivation. Some research claimed that the warm glow
 accelerates the effect of customer value and attitude on behaviour intention in green

buying. 

Besides, in order to recover mental well-being, people prefer to spend time with

nature more frequently, therefore the psychological benefits can be retrieved from

significant factors such as experiencing nature, specifically in the term of environmental

concerns and green purchasing. Higher awareness of supporting nature can be developed

by individuals who experience nature frequently. This is very crucial as it forms customer

values and attitudes in direction of green products, resulting in pro-environmental

behaviours. The customer value and attitudes can be reinforced as a moderator through

environmental awareness and emotional well-being which can be elicited by experiencing

nature (Mayer et al, 2009)

. 

2.1.2. Carroll’s pyramid of Corporate Social Responsibility (CSR)

Corporate Social Responsibility (CSR) term was formed in the late 1960s and it

involves corporate self-regulations combined into a business model. Organizations regulate

and establish its acquiescence according to the law, ethical and international norms. The

objective of CRS is to include duty for the organization's actions and promote a beneficial

influence through its activities on the customers, workers, stakeholders, environment and so

on. There are studies that claim that organizations are able to ensure long term profits by

functioning with benefits, however some claim that it has an adverse effect on businesses. 

The ethical principles and problems which appear in business environments can be explored

by applied ethics such as development business ethics. . 

 Caroll (2004) argued that “the social responsibility of business encompasses the

economic, legal, ethical, and discretionary (philanthropic) expectations that society has from

organizations at a given point in time”. Caroll (1979) examined each important aspect of CSR

concept and accomplished extensive specification that embracing the entire duties of an

organization that is compelled to meet and satisfy the requirements of stakeholder. So, he

initiated his study and determined four aspects in a pyramid as philanthropic, ethical,

economic and legal dimensions as displayed in figure 1. 

The pyramid is structured from down with the organization's basic strategy which is

economic responsibility, because the primary duty of any company is to have sustainable

growth and competitive advantage. The main duty of the organization is to obtain profit from

its products as well as services. In the same time, the firms’ business activities should be

functioned according to legal framework, following all rules and regulation and rules

imposed by law is the determined legal duties of business organizations (Carroll, 1991; Park,

2019). The ethical responsibility distinguishes from the prior two aspects, the moral practices

which are not imposed by law, but yet are expected by society, that may direct different

social problems. The ethical responsobilities’s importance has been extensively studied,

however it is always difficult to pass assertion on what is and is not moral (Baumgartner,

2014; Zulfiqar et al., 2019). Therefore, ethical duties are more in demand rather than legal

duties from a firm. Ethical responsibility’s concept is more precise than philanthropic

responsibility. This is left to the solution and assertion of organisation by community (Hoque

et al., 2018). The association of these duties are outside of legal and ethical demands, that is

just incentivized by the willingness of the organization (Carroll, 1979, 1991; Sheldon and

Park, 2011). According to Carroll (2008),  CSR directs to “the commitments of business
firms to seek those strategies, to settle on those decisions, or to pursue those lines of activity

that are according to societal values and expectations”. 

 Fig.1 Carroll’s pyramid of CSR. Source (Carroll, 1979, 1991)

Hwang and Lyu (2018) believed that firms must not concentrate on business strategy

only for getting profitable advantage, however, its duties should reach out to the bigger

society. The social duties of organisations were integrated by lehal, philanthropic, ethical

and economical aspects which were expected by the society (Carroll, 1979). 
 In order to gain higher profitability and competitive advantage, the organization uses

tool of CSR as green marketing. Nevertheless, business concerns towards society and

environment must be reflected genuinely through green marketing.

Green marketing was determined as “the way to conceive exchange relationships that

goes beyond the current needs of the consumers, considering at the same time the social

interest in protecting the natural environment” (Seymour, 2016). According to Rahman,

Reynolds and Svaren (2016) green marketing is a tool, that business uses to function in a

manner to reduce waste, be environmentally friends, attempt to improve environmental health

and sustainability of the community. In contrast of traditional marketing which is about

comprehension the profitable exchange relationship, green marketing is about conception of

an firm’s relationship with society, that involves the environmental on the whole. 

CSR is one of the business activities between businesses and society. In order to

receive the high attention of society, it is necessary to behave in a socially responsible way

(SHEN, 2016) Performing CSR through green marketing with serious consideration

voluntarily or because of legal demands, it ensures a unique competitive advantage. As an

example, hotels will obtain great benefit through green marketing as it will help them to

distinguish from various lodging service providers. Numely, green marketing will help hotels

to accomplish greater financial objectives as well as business activities in securing a balance

between development and environmental sustainability. However, in order to be sufficient,

hotels should display their initiatives clearly in order to avoid greenwashing and to obtain full

society’s support. 
2.1.3 Governmental Pressure - The Theory of Reasoned Action

Theory of Reasoned Action (TRA) is developed by Fishbein and Azjen (1975) to describe

consumer behavioural intentions. They assumed that intentions are the prime predictor of

overall human behaviour and that humans are sound-minded in making systematic use of any

accessible information ( Ding and Ng, 2009). The model was originally developed and

correlated with the intention to take rational actions in normal life experiences using birth

control pills. TRA addresses the effects of cognitive components (Guo et al., 2007).

For behaviours that require critical thinking, TRA analyzes informal thinking decisions

(Opperman, 1995). In other words, TRA is implicit in defining psychological or cognitive

processes in order to understand consumer contextual decision making. (Han and Kim, 2010)

The core principle of TRA is to involve individuals in specific behaviours. In this context,

"intention" refers to good deeds or the desire to engage in the behaviour under deliberation

(Han and Kim, 2010; Azzin, 1985). Under this theory, the "intention" of buying green

products is to show that consumers are ready to buy green products or to utilise green options

or alternatives.

The intention is seen as the precursor and best predictor of behaviour (Ajzen, 2002). TRA has

been widely studied in social psychology (Malhotra and McCourt, 2001; Eagly and Chaiken,

1993). The Fishbein and Azjen's design has been tested and validated by various researchers

in a variety of settings, including healthcare, polling, online media, organic food, and alcohol

consumption (Nettmeyer and Bearden, 1992; Lee and Green, 1991). TRA has excellent

foreseeability and is very useful in marketing and consumer behaviour for behavioural

intentions and behaviours (Choo et al., 2004; Lam and Hsu, 2004). In particular, TRA is used
to address objectives in areas with green marketing, for example, these include energy saving,

recycling behaviour (Davis et al. 2002) and environmentally friendly buying behaviour (Ha

and Janda, 2012; Wahid et al., 2011; Sparks and Shepherd, 1992). However, the TRA deals

with completely unregulated control and lacks the capabilities and resources required

(Madden et al., 1992). The omission of certain unnecessary factors (e.g. resources) that

determine human behaviour has challenged the applicability of TRA (Han et al., 2010; Park,

2003). For example, some consumers may rate eco-friendly products as positive but may not

buy them due to low wages or availability of goods.

The interaction between government subsidies and attitude positively influences purchasing

intentions. The intention is seen as the precursor and best predictor of behaviour (Ajzen,

2002). Public subsidies seem to have a positive effect on the purchasing power of organic

products. For businesses, green products are more expensive and less popular, requiring

government subsidies. According to government authorities, stimulating consumption of

green products at an early stage requires government subsidies to change consumer attitudes

towards organic products (Chaudhary, Tripathi, Monga, 2011).

Apart from green marketing and corporate branding, one of the company's strategies is to

encourage the government to increase subsidies (Chaudhary, Tripathi, Monga, 2011). Green

and renewable products still cannot be popularized in the consumer market and the

government is granting subsidies, which taking into account to be one of the main purposes

for enhancing the market for organic products.

2.1.4 Disadvantages of green marketing stakeholder theory 

2.1.5 Green consumption

As mentioned, due to environmental pollution, customers are influenced by defending

and consideration given to the environment, as a result they prefer to purchase

environmentally friendly products (Yadav and Pathak, 2017). Some customers shift their

purchasing behavior to reduce the effect of their consumption habits due to the environmental

issues. Such attitudes as selecting an environment-friendly consumption attitude are termed

as green consumption.

Green customers often concentrate on quality and price and select services, products and

brands that show environmental concern (Braga Junior et al., 2019). In order to satisfy the

green consumption demands, organizations present characteristics of green products that

distinguish them from regular products such as green packaging, certification of being

environmentally friendly. However, characteristics of a green product might not correspond

to reality, such products are termed as greenwashing products. 

2.1.6 Greenwashing 

The term greenwashing was emerged in the 1980 and obtained great acknowledgement by

characterizing the activities of creating offensive and exaggerated claims of sustainability in

an effort to obtain market share (Dahl, 2010).  Eco-bleaching, whitewash, eco-washing are

other synonyms of greenwashing is a model that mislead advertisement in order to facilitate

the goals of products or organizations’ policies and therefore magnificate the products’

benefits (Communicating sustainability for the green economy, 2014). Greenwashing is used

by some organizations in order to control perception of society of their brand. The

information’s exposure is conducted in such a way which increases the perception of

legitimacy. But, there are social and environmental audits that overcomes the absence of

supervisions and verifications (Seele and Gatti, 2017). 

Due to the growing demand for green products and absence of set parameters and

standards to monitor greenwashing activities, its use increases (Dahl, 2010). As a result,

consumer scepticism about green products rises as well, resulting in distrust of the

decision supposed to defend the environment in the producing, distributing and

commercial processes (Braga, 2011). 

In addition, greenwashing is an easier path for many organisations, as the actaual

modification in attitude towards the environment is quite expensive and difficult to

implement (Chen and Chang, 2010). Therefore, greenwashing is positively associated

with customers' confusion on the brands’ advertising and the perceived risks in

purchasing green products, as there is a risk of wrong purchase decisions. In additions, if

greenwashing is practices, it affect the firm negatively as customer will not trust the

product as well as its brand (Chen and Chang, 2010). 

2.1.7 Stakeholders Theory

There are wide stakeholder perspectives (Freeman, ) have been adopted in business

academics in order to evaluate social issues as green marketing (Cronin et al., ).  The

main concept is that management takes into account in their decision making process as

well as profit influence of their solution as well as perception from their decisions by

groups which opinion decision makers consider as important (Polonsky, ___: Prothero et

al., ; Rivera-Camino, :). Stakeholder groups are customers, competitors, governments,

nonprofit organizations, investors. supply chain partners, employees, society, or the

environment itself (Donaldson and Preston,__; Starik). The main aspect of the theory is

that an executive operates as unbiased evaluator, equilibrating the concern of different

stakeholders to reach a fair decision. 

However, decision makers are corporate agents whose primary interest is to meet two

main stakeholder groups such as the boards of directors and stockholders (Hunt and

Auster, ___; Varey ___). Therefore, the decision making process is equilibrated to the

extent in which executive self-interest is secured (Polonsky and Scott, ___). In addition,

there is a tendency of breaking the rules among corporate elites as the rewards are most

likely great and the risks are quite little.  If organizations are ready to decrease their

revenue to decrease environmental pollution, it will lead to a fall in total production

outside of the profitable production circle, existing solely in the sustainable production

circle. 

The extent of willingness of businesses to function outside of it profitable fabrication

range is bounded by firstly, the potential for bankruptcy, secondly, the willingness of

organization to accept lower profits and lastly the ability of executive to forgo profit

based compensation incentives (Berrone and Gomez - Mejia, ___)

Freeman developed the stakeholder theory in order to prevail the polarization among

profit and altruism. He contribute on the dividing the public which might be influenced or

might influence the firm and it aids following the imeediate target of CSR behaviour. 
 Freeman's purpose in developing stakeholder theory was to overcome the polarization

between profits and philanthropy as the opposite explanation of CSR behavior (Freeman,

1983). Their contribution to public disclosure, which may or may not affect the

organization,helps track the immediate goals of CSR behavior. In particular, CSR actions

enhance access to resources needed for survival, such as capital (investors and lenders),

labor (current and future employees), goods or services (suppliers), and income

(consumers). In contrast, Freeman assumes that other companies's strategic planning

takes into account the interests of other groups as well as profits, justifying CSR behavior.

However, including such benefits in the strategic plan will ultimately calculate the

potential impact of these stakeholders on the benefits. Freeman is running away from the

commercial approach that advancing the company for socially responsible behavior is a

tenacious concern for the benefit of the whole. Most importantly, the approach lacks clear

considerations about the cost of action and the competitive environment facing the

organization. The need to be competitive in the market makes it more important to

consumers. The priority load seems to be part of building a competitive strategy and not

important in the literature. 3012

4.0 Conclusion

According to the previous study mentioned above, green marketing is important

because corporate social responsibilities, governmental pressure, green consumption,

customer values and behaviour helps to avoid greenwashing, change the consumer’s

behaviour towards green products and promote a much dynamic strategy to serve the market

by giving environmentally friendly products or services.

According to the previous analysis mentioned above, green marketing is important because

corporate social responsibilities, governmental pressure, green consumption, customer values

and behaviour so that the organisation can obtain profits, a sustainable competitive

advantage, change the consumer’s behaviour towards green products and promote a much

dynamic strategy to serve the market by offering environmentally friendly products or

services.

Although many companies decided to adopt green marketing, they experience

difficulties that actually could have adverse effect rather than beneficial. Green marketing is

mostly expected and easy to implement by automobile, oil and gas, any type of production

manufactures, which directly deal with wastage of resources, environmental pollution and so

on, However, the organizations which provide services, find adopting green marketing

difficult and they risk to practice greenwashing. According to Peattie and Crane (2005) there

are few actions need to be avoided in order to succeed such as green selling, green spinning,

green harvesting, entrepreneur marketing and compliance marketing.

One of the challenges that the green marketing companies is facing is that while

government's laws and regulations are designed to motivate consumers to make better

decisions or make them more environmentally responsible, it is difficult to establish policies

that take into account all environmental issues. For example, the guidelines developed to

monitor environmental marketing approach only a very narrow group of matters, namely the

accuracy of environmental marketing claims [Slosberg 1993]. If governments want to change

consumer behaviour, they will have to fund the rules. Thus, government efforts to protect the

environment may produce rules and guidelines proliferation without a single central

regulating body.
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