Green marketing Essay

Abstract

This essay focuses on theoretical developments in sustainable management in green marketing strategies and environmental sustainability. It gives a brief background information on the origin and development of sustainability performance among companies.

The literature review part presents the market segmentation in green marketing strategies, products positioning and target markets. Communication strategies also form part of this essay together with customers’ attitude toward green products.

The discussion section highlights value oriented portfolio management, customer needs management, reporting and controlling processes regarding product lifecycle, customers’ relationships management, communication channels, customers segments and value propositions in green marketing strategies.

Introduction

Background information (importance)

Factors such as globalization, rapid developments in IT, products innovations and evolving market requirements control companies’ decisions on productions.

Further, marketing conditions such as environmental policies, ever increasing costs of energy and raw material, growing global population and intensive use of limited resources influence the conditions of contemporary companies in production of goods and services.

Sustainable developments focus on how companies can meet the demands of today’s consumer without interfering with the future generations. The concept of green solutions emanates from the ecological changes and processes that have occurred in the economy and society. Sustainable economy requires innovative products and processes in value chains and networks linked to the natural environment.

Sustainable development follows the value chain from the product manufacturer to customer and proceeds up to the final stage of disposal of products and handling of materials in the processes of lifecycles. Decisions regarding the planning and design of products and processes form part of the integrated value chain in sustainable development.

This implies that technical, economic and ecological perspectives must be incorporated into one approach. This is an over view of how firms are meeting consumers’ demand for green products, and incorporate them into their marketing strategies for the final benefit of the consumer and future generation.

According to Peattie, green marketing is a holistic management process responsible for identifying, anticipating and satisfying the needs of customers and society in a profitable and environmentally sustainable way.

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Purpose

This essay looks at the theoretical perspectives in green marketing strategies from the company points of view as well as the consumers’ reactions to green products.

Scope

This research covers green marketing strategy as a strategic sustainability performance of a value chain in product lifecycle. It looks at marketing segmentations, target market, positioning, developing product niche and creating value propositions. At the same time, the essay presents communication strategies and consumers’ attitude towards green products.

Literature review

A growing number of consumers, employers, investors, communities and non-governmental organisations (NGOs) are giving a new meaning to what constitute a sustainable business conduct and are demanding such conducts from companies. These constituents are collectively developing a new class of sustainability performance indicators.

Businesses are realising that sustainability performance is a source of differentiation that helps to create successful corporate or destroy them. Therefore, companies’ green marketing strategies have become a fundamental factor for success.

The past decades, environmental advocates, politicians, and legal experts forced executives to adopt ethical business practices. Internal values and principles of firms reflecting management commitment to better society were also factor influencing sustainability development (Forest, 1999).

Since 1995, a market-driven logic of sustainability emerged based on meeting the expectations of stakeholders’ interests, performance and demands. Since then, there has been a five-logic approach of sustainability development.

These have been the compelling force for the mainstream transformation from short-term profit focus to management of all stakeholders in the value chain a product lifecycle. Any modern business can only ignore these logics for its own peril. These logics include,

  1. Scientific such as evidence of human activities on global climate.
  2. Regulatory e.g. the Clean Air Act in the US.
  3. Political e.g. the Green Party Agenda in Europe.
  4. Moral based on value and principles.
  5. Market focusing on the interests of stakeholders value implications.

An organisation, which ignores incorporating its green agenda in its marketing strategy, does not have the interests of its stakeholders. This is because by creating social and environmental values, sustainability marketing strives to create and increase consumers’ values.

The idea of sustainability marketing focuses on consumers’ needs and wants. Companies try to develop sustainable products to provide solutions to modern customers through products value, prices, distributions, and promotion to the target groups (Royne, Levy and Martinez, 2011).

Marketing segmentation is an essential element in a classical approach to marketing. Companies select certain target groups and position their green products for sustainable marketing activities. Marketing strategies focus on geographical, demographic, behavioural and demographic characteristics of consumers.

Companies can adopt a socio-ecological approach to segmented target market. Socio-ecological approach to sustainability marketing further differentiates marketers as those with a high level of socio-ecological awareness, and they are willing to adopt environmental friendly products. These consumers take into account social and ecological features of products before deciding to buy any products.

Marketers have challenges because of the relatively small numbers of this group of consumers. The second socio-ecological segmentation of sustainable products to consumers has a high level of socio-ecological awareness. This consumer is willing to pay for a high added value in eco friendly products, but will not compromise on the quality of the product. These consumers were the first to embrace green products

Finally, the third segments of socio-ecological consumers are not particularly interested in eco friendly products because they do not see the added value in green products. This consumer is not ready to comprise with regard to price and product performance.

The challenge to sustainable marketing is that this is the largest group of consumers in relation to other categories of consumers. The target approaches of green marketing strategies uses the generic Porter strategies of focus, differentiation and cost (Frank-Martin, Belz and Birte, Schmidt-Riediger, 2010).

Green marketing strategy can concentrate on a selected niche of customer. This is focus strategy. Focus strategy accounts for consumer group, geographical region or product segment. On the other hand, differentiation strategy looks at a competitive advantage from creating, and marketing a product with a particular selling proposition.

For instance, Bulmers Limited of the United Kingdom has created a value chain of sustainability whereby its brand/culture embeds a culture and mindset of sustainability to drive innovative, change and brand identity.

Finally, strategic sustainability differentiation targets the socio-ecological niche whereby the overall goal is to achieve overall cost leadership. Companies try to adopt cost-saving measures and exploit advantages of economies of scales.

Low costs strategies take into account the eco-efficiency, low wastes and manufacture of safe and efficient products to use. This means that the company must command a large market share so as to create cost advantages (Daily, 2000).

Communication strategy is important for products with special environmental features or technological improvements. Firms which produce environmental performance and technology leadership should also let their consumers know the features of their products through communication and marketing.

The communication and marketing challenge is to translate the LCA (Life Cycle Assessment) results into a communication that respective target group will understand. For instance, economical and environmental optimizations are often in line, particular in fuel consumption. In the automobile industry, communication strategy must differentiate between private and fleet customers as two different target groups.

Private customer main concern is fuel consumption and emission levels in terms of costs. Private customer does not reflect on the total cost of ownership (TCO), as opposed to fleet customer. Companies can amortise a high TCO over a life time. However, private customers are not willing to pay for additional environmental features. In contrast, fleet customer will consider TCO on his calculation.

Fleet customer is willing to pay for environmental friendly technologies. Fleet customer will also consider a company’s rating with regard to sustainability ranking. Volkswagen developed environmental commendation to communicate its environmental friendly features in its new vehicles and technology that highlights ecological progress, as opposed to the previous models (Herrmann, 2011).

Consumers’ knowledge about eco friendly products evolves in two ways. Firms’ communication strategies should aim at informing customers about the general impact of the product on the environment. Consumers must also rely on their knowledge about the products’ effects on the environment. Consumer’s knowledge plays a crucial role in influencing his or her purchase behaviour.

The customer’s knowledge about the product will shape his or her attitude towards a given product. This knowledge is useful to marketers since they will be able to articulate their target market products needs and incorporate them in their marketing strategies (Reed, 2001).

The concept of green products has led to the emergence of greenwash environmentalists. Consumers face challenges particularly in selections of genuine products. There are abundant information and products that are claiming to be environmental consciousness. In this context, consumers would like to make rational choices in relations to buying green products.

Thus, environmental conscious companies must furnish them with adequate information so as to enable them make rational choices. Therefore, organisations, which engage in consumer education about their products, are increasing consumers’ perceived knowledge on eco friendly awareness.

Laroche and company refer to this concept as ecoliteracy. Ecoliteracy measures the consumers’ ability to identify or define several products ecological symbols, concepts and behaviours.

Interpersonal influence exists among consumers. Individual behaviour has effects on others choices. Social cognitive theory posits that the process of interpersonal influence occurs both between the environmental and personal characteristics of individuals. Therefore, the social influence and physical structures within the environment influence people’s expectations, beliefs and cognitive competencies.

People’s perceptions of their physical environment depend on their age, race, sex, size and physical attractiveness. Social influence of families, peers and associates have influence on others perceptions of their surroundings, through modelling, persuasion and instructions. Family and peers have a strong influence on people’s decisions to purchase eco friendly products.

Occasionally, opinion leaders influence people’s decisions to purchase products and their attitudes toward such products. Marketing strategies must exploit the roles of interpersonal relation and its influences on people with regard to purchasing green products (Laszlo, 2003).

Scholars focus on two values in eco friendly products’ studies. These are collectivism and individualism values. Individualism represents loose ties in cultures. The individual only looks after self or immediate family but with no other responsibilities. Therefore, the focus is personal satisfaction rather than on other things. This consumer has low concern for the environment.

Therefore, he has no regard for eco friendly products. Conversely, collectivism focuses on welfares of others and cares about the group well-being. This group of consumers tends to be environmental friendly. Therefore, green marketing strategies must look for methods of appealing and changing people whose values are individualistic (Cheah, Isaac and Phau, Ian, 2011).

Consumers buy either necessity or luxury products. Luxury products are premium, complex to purchase and consumes both time and money than necessity products. Necessity products are common and have less hedonistic values attached to them. Necessity products have relatively low decision-making process with regard to their environmental effects.

Consumers who purchase luxury products tend to consider their effects on the environment. Therefore, their attitudes to products tend to be environmental focused. Individuals’ financial status and personal desires affect their attitudes towards products.

Discussion

Value oriented portfolio management in green marketing strategies becomes difficult due to the increasing complexity of products without appropriate and efficient data, which creates a lack of business transparency and synergies in the value chain of sustainability development and performance. Strategic alignment and value focused product portfolio management promote an effective product lifecycle management.

Therefore, companies should focus on clearly defined product for effective portfolio management. Managing the portfolio enables marketers to position their products without any overlap and in accordance with the market demands.

Value oriented portfolio management ensures prioritisation of product investment i.e. with regard to environmental and sustainable development. Marketing strategies benefit from the increased transparency of the product range and comprehensibility of the customer.

Customer needs management in green marketing strategies requires integration of customer relationship management (CRM) and product lifecycle management (PLM). This ensures that there is a collaborative product design. Marketing studies show that customers expect products not to have negative impacts on their environment.

In response to customers purchase decisions, companies should include environmental performance in consideration. Customer needs management will ensure that products designs and contents match customers’ requirements in terms of environmental needs. This also enables companies to engage in mass production of customised products.

Green marketing strategies involve reporting and controlling processes regarding product lifecycle. Different division of the firm must create a standard of product foundation, which serves to lay the foundation of controlling instruments. Some organisations have environmental key performance indicators.

This serves the staff with all the critical success factors that help the staff and management to make right decisions at the right time. Companies, which focus on management reporting and controlling processes, create effective lifecycle value management. Environmental indicators help the companies’ leadership with environmental design goals which probably increase their sales through improved environmental performance.

Value propositions consist of elements of products and service organisations offer to their specific customer segment. Focus on the environment has created an increased level of re-manufacturing and re-use of products. The players in the industry have identified value propositions to offer to their existing and new customer segments.

Recycling industries have created value adding services identifying, separating, renovating and quality assuring components and support the design of new products. Recycling companies create value propositions by providing stable flow of materials at low costs.

Actors in the field see this as green, sustainable products. However, some companies find it hard to market because the market is not ready for re-use products, green products consume less energy, and have environmental friendly materials are new findings to them. Some segments of consumers consider such materials and products as less valuable and third rate.

Customer segment element represents the different groups of organisations or individuals that organisations strive to reach and serve. These segments represent the buyers and manufacturers of recycled products or products from recycled components. Both recycling and manufacturing companies see challenges in their existing and potential customer segments.

Manufacturing companies think that their customers perceive re-manufactured and re-used components as low quality products. Others believe that remanufactured products can have a higher level of quality due to manual inspections and adjustments.

Recycling companies see challenges in knowing customers’ demand and stability in demand prices. Recycling companies have various ranges of customers with varied needs such as components buyers, renovators, spare parts buyers and some manufacturing industries.

Customer relationships focus on the relationships an organisation establishes with its customer segments. For instance, in the case of increasing re-manufacturing and re-use of components, manufacturing companies turn into customers for the recycling companies. Companies develop close relationships e.g. in situations where a company is responsible for collecting used products for the manufacturing company.

This is an opportunity and risk which recycling industries foresee as the growing responsibility of being a component supplier. Manufacturing companies do not expect their relationships with recycling companies to change. Therefore, a one-time transaction must develop into long-term relationships.

Another essential element in green marketing strategy is the channel. Channel views at how organisations communicate with and reach their customer segments in order to deliver a value proposition. Companies may experience logistic challenges particular in getting back the products to customers.

This is because there are high costs involving many intermediaries. Companies need to establish new customer channels in order to reach and serve new customers so as to provide them with the value adding services. Channels of marketing strategies must differentiate the target market in order to create value awareness of the green products. Therefore, access to reliable green products establishes a niche for green products companies.

Conclusions

Green marketing strategies involve the lifecycle of a product. This is from the manufacturer to the final person handling the product components as refuse. Therefore, green marketing strategies require integrated approaches involving consultations of all stakeholders. Any modern firm ignoring green agenda in development of its products and services is doing so at its own peril.

Green marketing strategies incorporate all the marketing elements and communication mix in marketing strategies. Firms have realised the value of implementing green strategies in their overall performance management. In fact, some companies have developed Environment Key Performances Indicators to drive their products lifecycles.

Future green solutions will have full benefits and solutions to address the global challenges by providing products, services and processes that consider the local capabilities and constraints to achieve an economically, socially and environmentally sustainable society in a global perspective.

Marketing strategies should communicate these advantages to the market in order to position and create a niche for green products. However, there are green products companies which admit that they do not know how to exploit communication tools to their advantages.

Companies that depend on natural resources such as Lafarge tend to believe that technology can stretch the limit of performance of sustainability marketing. They also recognise that long-term gains cannot be changed with short-term profit benefits. They believe that green marketing strategies are the steps in solving global problems for sustainability performance.

References

Cheah, I. and Phau, I., 2011. The influence of ecoliteracy, interpersonal influence and value orientation. Attitudes towards environmentally friendly products , pp. 425-472.

Daily, G., 2000. The New Economy of Nature. Washington, DC: Island Press.

Forest, R., 1999. Down to Earth: Applying Business Principles to Environmental Management. Cambridge, Mass: Havard Business Press.

Frank-Martin, B. and Birte, S., 2010. Business Strategy and the Environment. Marketing Strategies in the Age of Sustainable Development: Evidence from the Food Industry, pp. 401–416.

Herrmann, C., 2011. Glocalized Solutions for Sustainability in Manufacturing. London: Springer.

Laszlo, C., 2003. The Sustainable Company. London : Island Press.

Reed, D., 2001. Stalking the Elusive Business Case for Corporate Sustainability. Washington, DC: World Resources Institute.

Royne, M., Levy, M. and Martinez, J., 2011. The Public Health Implications of Consumers’ Environmental Concern and Their Willingness to Pay for an Eco-Friendly Product. Bits, Briefs and Applications, pp. 329-345.