Project report on “Green
marketing”
Presented to Prof. joyeeta chattergee By Group1/Section-A Padma Devi (19)
Saurabh Pandey (21) Gaurang Sahlot (79) Isha Vashist (83) Nihareika Sinha (91) Siraj Siddiqui (151)
INTRODUCTION 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,
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changes to the production process,
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packaging changes, as well as
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Modifying advertising.
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. The legal implications of marketing claims call for caution. Misleading or overstated claims can lead to regulatory or civil challenges. In the USA, the Federal Trade Commission provides some guidance on environmental marketing claims. So, in simple terms Green marketing refers to the process of selling products and/or services based on their environmental benefits. Such a product or service may be environmentally friendly in itself or produced and/or packaged in an environmentally friendly way.
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The obvious assumption of green marketing is that potential consumers will view a product or service's "greenness" as a benefit and base their buying decision accordingly. The not-so-obvious assumption of green marketing is that consumers will be willing to pay more for green products than they would for a less-green comparable alternative product - an assumption that has not been proven conclusively, specially the mild effect which it had had on consumers has washed away by the present recession (2008-09) only.
Green marketers though argue that it is a way to use the environmental benefits of a product or service to promote sales. Many consumers will choose products that do not damage the environment over less environmentally friendly products, even if they cost more. With green marketing, advertisers focus on environmental benefits to sell products such as biodegradable diapers, energy-efficient light bulbs, and environmentally safe detergents. People buy billions of dollars worth of goods and services every year—many which harm the environment in how they are harvested, made, or used. Environmentalists support green marketing to encourage people to use environmentally preferable alternatives, and to offer incentives to manufacturers that develop more environmentally beneficial products.
THE BIRTH OF GREEN MARKETING The concept of green marketing has been around at least since the first Earth Day in 1970. But the idea did not catch on until the 1980s, when rising public interest in the environment led to a demand for more green products and services. Manufacturers responded to public interest by labeling hundreds of new products "environmentally friendly"—making claims that products were biodegradable, compostable, energy efficient, or the like.
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The term Green Marketing came into prominence in the late 1980s and early 1990s. The American Marketing Association (AMA) held the first workshop on "Ecological Marketing" in 1975. The proceedings of this workshop resulted in one of the first books on green marketing entitled "Ecological Marketing". The first wave of Green Marketing occurred in the 1980s. Corporate Social Responsibility (CSR) Reports started with the ice cream seller Ben & Jerry's where the financial report was supplemented by a greater view on the company's environmental impact. In 1987 a document prepared by the World Commission on Environment and Development defined sustainable development as meeting "the needs of the present without compromising the ability of future generations to meet their own need", this became known as the Brundtland Report and was another step towards widespread thinking on sustainability in everyday activity.
Two tangible milestones for wave of green marketing came in the form of published books, both of which were called Green Marketing. They were by Ken Peattie (1992) in the United Kingdom and by Jacquelyn Ottman (1993) in the United States of America. In the years after 2000 a second wave of Green marketing emerged. By now CSR and the Triple Bottom Line (TBL) were widespread. Such publications as a 2005 United Nations Report, then in 2006 a book by Al Gore and the UK Stern Report brought scientificenvironmental arguments to a wide public in an easy to understand way.
GREEN WASHING
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In spite of its growing popularity, the green marketing movement faced serious setbacks in the late 1980s because many industries made false claims about their products and services. For instance, the environmental organization Corp Watch , which issues annually a list of the top ten "green washing" companies, included BP Amoco for advertising its "Plug in the Sun" program, in which the company installed solar panels in two hundred gas stations, while continuing to aggressively lobby to drill for oil in the Arctic National Wildlife Refuge. Green marketing can be a very powerful marketing strategy though when it's done right. In a similar kind of case Chad’s green marketing campaign bombed because he made the mistake of packaging his environmentally friendly product in Styrofoam, emitting CFC’s. Without environmental labeling standards, consumers could not tell which products and services were truly beneficial. Consumers ended up paying extra for misrepresented products. The media came up with the term "green washing" to describe cases where organizations misrepresented themselves as environmentally responsible. So, While green marketing was growing greatly as increasing numbers of consumers were willing to back their environmental consciousnesses with their dollars, it can be dangerous. The public tends to be skeptical of green claims to begin with and companies can seriously damage their brands and their sales if a green claim is discovered to be false or contradicted by a company's other products or practices. Thus, in other words presenting a product or service as green when it's not is called green washing. THE LEGAL FACTORS In 1992, the Federal Trade Commission (FTC) stepped in to prevent further deception. The FTC created guidelines for the use of environmental marketing claims such as "recyclable," "biodegradable," "compost-able," and the like. The FTC and the U.S. Environmental Protection Agency defined "environmentally preferable products" as products and services that have a lesser or reduced effect on human health and the environment when compared to other products and services that serve the same purpose. The label "environmentally preferable" considers how raw materials are acquired,
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produced, manufactured, packaged, distributed, reused, operated, maintained, or how the product or service is disposed. Today, special labels help the public identify legitimate environmentally preferable products and services. Several environmental groups evaluate and certify products and services that meet FTC standards—or their own tougher standards. One popular product that has received certification is shade-grown coffee, an alternative to coffee beans that are grown on deforested land in the tropics.
THE NEXT BOOST During the late 1990s, green marketing received a large boost when President Bill Clinton issued executive orders directing federal offices to purchase recycled and environmentally preferable products. Some industries adopted similar policies. Examples of environmentally-beneficial products and services: Paper containing post-consumer wastepaper Cereals sold without excess packaging Shade-grown coffee beans Cleaning supplies that do not harm humans or environment Wood harvested from sustainable forests Energy-efficient light-bulbs Energy-efficient cars Energy from renewable sources of energy such as windmills and solar power 6
THE GREEN DILEMMA The past decade has shown that harnessing consumer power to effect positive environmental change is far easier said than done. The so-called "green consumer" movements in the U.S. and other countries have struggled to reach critical mass and to remain in the forefront of shoppers' minds. While public opinion polls taken since the late 1980s have shown consistently that a significant percentage of consumers in the U.S. and elsewhere profess a strong willingness to favor environmentally conscious products and companies, consumers' efforts to do so in real life have remained sketchy at best. One of green marketing's challenges is the lack of standards or public consensus about what constitutes "green," according to Joel Makower, a writer on green marketing.In essence, there is no definition of "how good is good enough" when it comes to a product or company making green marketing claims. This lack of consensus -- by consumers, marketers, activists, regulators, and influential people -- has slowed the growth of green products, says Makeover, because companies are often reluctant to promote their green attributes, and consumers are often skeptical about claims. Despite these challenges, green marketing has continued to gain adherents, particularly in light of growing global concern about climate change. This concern has led more companies to advertise their commitment to reduce their climate impacts, and the effect this is having on their products and services
ADOPTION OF GREEN MARKETING There are basically five reasons for which a marketer should go for the adoption of green marketing. They are * Opportunities or competitive advantage * Corporate social responsibilities (CSR) 7
* Government pressure * Competitive pressure * Cost or profit issues
GREEN MARKETIN MIX Every company has its own favorite marketing mix. Some have 4 P's and some have 7 P's of marketing mix. The 4 P's of green marketing are that of a conventional marketing but the challenge before marketers is to use 4 P's in an innovative manner. Product The ecological objectives in planning products are to reduce resource consumption and pollution and to increase conservation of scarce resources (Keller man, 1978). Price Price is a critical and important factor of green marketing mix. Most consumers will only be prepared to pay additional value if there is a perception of extra product value. This value may be improved performance, function, design, visual appeal, or taste. Green marketing should take all these facts into consideration while charging a premium price. Promotion
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There are three types of green advertising: * Advertisements that address a relationship between a product/service and the biophysical environment * Those that promote a green lifestyle by highlighting a product or service * Advertisements that present a corporate image of environmental responsibility Place The choice of where and when to make a product available will have significant impact on the customers. Very few customers will go out of their way to buy green products. CHALLENGES AHEAD * Green products require renewable and recyclable material, which is costly * Requires a technology, which requires huge investment in R & D * Water treatment technology, which is too costly * Majority of the people are not aware of green products and their uses * Majority of the consumers are not willing to pay a premium for green products
Popularity and effectiveness ONGOING DEBATE The popularity of such marketing approach and its effectiveness is hotly debated. Supporters claim that environmental appeals are actually growing in number–the Energy Star label, for example, now appears on 11,000 different companies' models in 38 product categories, from washing machines and light bulbs to skyscrapers and homes. The difference is, however, that green—rightfully so—is on the wane as the primary sales pitch for products. On the other hand, Roper’s Green Gauge shows that a high percentage of consumers (42%) feel that environmental products don’t work as well as 9
conventional ones. This is an unfortunate legacy from the 1970s when shower heads sputtered and natural detergents left clothes dingy. Given the choice, all but the greenest of customers will reach for synthetic detergents over the premium-priced, proverbial "Happy Planet" any day, including Earth Day. New reports, however show a growing trend towards green products. CONSUMER’S CONFUSION One challenge green marketers -- old and new -- are likely to face as green products and a message become more common is confusion in the marketplace. "Consumers do not really understand a lot about these issues, and there's a lot of confusion out there," says Jacquelyn Ottman (founder of J. Ottman Consulting and author of "Green Marketing: Opportunity for Innovation.") Marketers sometimes take advantage of this confusion, and purposely make false or exaggerated "green" claims. Critics refer to this practice as "green washing".
STATISTICS
According to market researcher Mintel, about 12% of the U.S. population can be identified as True Greens, consumers who seek out and regularly buy so-called green products. Another 68% can be classified as Light Greens, consumers who buy green sometimes. "What chief marketing officers are always looking for is touch points with consumers, and this is just a big, big, big touch point that's not being served," says Mintel Research Director David Lockwood. "All the corporate executives that we talk to are extremely convinced that being able to make some sort of strong case about the environment is going to work down to their bottom line."
COMPANY’S GREEN INITIATIVES ITC 10
* ITC has been 'Carbon Positive' three years in a row (sequestering/storing twice the amount of CO2 than the Company emits). * 'Water Positive' six years in a row (creating three times more Rainwater Harvesting potential than ITC's net consumption). * Close to 100% solid waste recycling. * All Environment, Health and Safety Management Systems in ITC conform to the best international standards. * ITC's businesses generate livelihoods for over 5 million people. * ITC's globally recognised e-Choupal initiative is the world's largest rural digital infrastructure benefiting over 4 million farming families. * ITC's Social and Farm Forestry initiative has greened over 80,000 hectares creating an estimated 35 million person days of employment among the disadvantaged. * ITC's Watershed Development Initiative brings precious water to nearly 35,000 hectares of drylands and moisture-stressed areas. * ITC's Sustainable Community Development initiatives include women empowerment, supplementary education, integrated animal husbandry programmes.
MARUTI: GREENING THE SUPPLY CHAIN The company has remained ahead of regulatory requirements in pursuit of environment
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protection and energy conservation at its manufacturing facilities, and in development of products that use fewer natural resources and are environment friendly. The company credited the 'Just-in-Time' philosophy adopted and internalized by the employees as the prime reason that helped to excel in this direction. The company has been promoting 3R since its inception. As a result the company has not only been able to recycle 100% of treated waste water but also reduced fresh water consumption. The company has implemented rain water harvesting to recharge the aquifers. Also, recyclable packing for bought out components is being actively promoted. The company has been facilitating implementation of Environment Management System (EMS) at its suppliers' end. Regular training programs are conducted for all the suppliers on EMS. Surveys are conducted to assess the vendors who need more guidance. The systems and the environmental performance of suppliers are audited. The green co-efficient of this system is much better than the conventional system
HCL's ENVIRONMENT MANAGEMENT AND ECOSAFE POLICY In building a system to identify, develop and sustain the maintenance of an environment management system at corporate level we have formulated a program that we proudly refer as HCL's ecosafe. The aim is to encapsulate knowledge, awareness, and key developments on all environmental issues faced by today's world and to incorporate these in HCL's operations assuring our commitment in delivering quality products, solutions and services
The key objective under HCL ecoSafe is targeted at integrating environmental 12
management procedures into its business processes thereby protecting the environment, health, and safety of all its stakeholders. HCL commits to manufacture products that are environment friendly in all respects and are free from hazardous chemicals. HCL ecoSafe focuses on product lifecycle management to ensure that our products right from when they are manufactured, bought by customers, recovered at their end-of-life and recycled after useful life are done in an environmentally responsible manner Key initiatives undertaken through HCL ecoSafe program are:
MORE EXAMPLES * McDonald's restaurant's napkins, bags are made of recycled paper. * Coca-Cola pumped syrup directly from tank instead of plastic which saved 68 million pound/year. * Badarpur Thermal Power station of NTPC in Delhi is devising ways to utilize coal-ash that has been a major source of air and water pollution. * Barauni refinery of IOC is taken steps for restricting air and water pollutants.
THE NEW TRENDS REVEALED BY DELOITTE Shoppers are thinking green, but not always buying that way, according to a new study released by the Grocery Manufacturers Association (GMA) and Deloitte. The study found that while 54 percent of shoppers indicate that environmental sustainability in a factor in their purchasing decisions, they actually bought green products on just 22 percent of their shopping trips. The survey is the basis of the GMA-Deloitte report titled Finding the Green in Today's Shoppers: Sustainability Trends and New Shopper Insights
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and was based on interviews with over 6,400 shoppers.
Now eco packaging is poised to become the next low-hanging fruit of the clean tech world. Investors and entrepreneurs this week at Europe's most important annual clean tech conference reported unprecedented interest in reducing the use of raw materials while finding superior protection for food and other products. Consumers are increasingly putting plastic shopping bags and non-green wrapping items on their naughty list, according to Deloitte's 2008 Annual Holiday Survey. Nearly half of the 13,000 consumers polled said they'd be willing to pay more for green gifts. This was up from 17 percent last year. Consumers perceive themselves as being environmentally responsible. Successful green marketing requires matching a company's brand attributes with its customers' identity as "green." An article suggested examining green marketing from the perspective of the 4 P's of marketing -- product, price, placement and promotion -- plus a 5th P, "prove it."
Americans are quick to identify polluting companies as "socially irresponsible" and make their purchasing decisions accordingly, says a new survey. The poll also found that American consumers between the ages of 18-29 are more likely to spend more on organic, environmentally preferable or fair trade products than other age groups.
The survey, by the research firm Global Market Insite, quizzed more than 15,000 online consumers in the U.S. and 16 other countries about their socially conscious business practices. Americans placed the highest value on corporate community involvement; when asked what factor was the most important in determining if a business is socially responsible, "contributing to the community" (e.g. sponsorship, grants, employee volunteer programs)
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came in highest with 47%. On the other hand, all of the other countries surveyed (India, Canada, Australia, Germany, China, and Japan) selected environmentally preferable practices (recycling, using biodegradable products) as the top factor.
"In the high-tech era where employees are expected to work 24/7, it's significant that Americans rate giving back to the community as their top priority in recognizing socially responsible companies," said Marjorie Thompson, co-author of Brand Spirit: How Cause Related Marketing Builds Brands. "It shows that people want to feel connected to each other and that they are willing to reward businesses who tap into this sense of mutual support and belonging. Companies will need to start thinking of their community programs as core to their businesses and brands, and central to how they market themselves." Not surprising, the U.S., along with other countries such as India and China, which have experienced environmental disasters caused by corporations (e.g. Love Canal, Bhobal, Exxon Valdez) or have had to deal with major polluting issues (e.g. coal plants, manufacturing), believe that damaging the environment is associated with acting socially irresponsible. Other countries, including France (60%), Denmark (52%) and Italy (45%) selected the use of child labor as the main factor in making them think a corporation is socially irresponsible.
Juxtaposing Americans' negative opinions on damaging the environment, the GMIPoll found that only 42% of all Americans are willing to spend more for products branded as organic, environmentally friendly, or fair trade, except for the Y Generation. While only 14% of 18-29 year olds label themselves as socially responsible consumers, half of this age group (50%) responded that they will spend more on these types of products (organic, environmentally friendly or fair trade) compared to their older and wealthier counterparts, with only 37% of 45-64 years olds saying they would spend more on green products.
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Thompson advertisements: "Based on the findings, Generation Y is obviously more environmentally conscious and socially savvy, which is expected given that many are aware of the issues surrounding globalization and trade and how this can negatively affect the environment, labor pool and the local communities."
Surprisingly, a large majority of online consumers in the less developed countries of China and India, 91% and 71% respectively, will pay more for socially responsible products, while almost half (47%) of the U.K. respondents indicated they would spend more for these types of goods.
GREEN HOUSE AS REDUCTION MARKET
The emerging greenhouse gas reduction market can potentially catalyze projects with important local environmental, economic, and quality-of-life benefits. The Kyoto Protocol’s Clean Development Mechanism (CDM), for example, enables trading between industrial and developing nations, providing a framework that can result in capital flows to environmentally beneficial development activities. Although the United States is not participating in the Kyoto Protocol, several US programs enable similar transactions on a voluntary and regulatory basis. While international trade in greenhouse gas reductions holds substantial promise as a source of new funding for sustainable development, this market can be largely inaccessible to many smaller-scale projects, remote communities, and least developed localities. To facilitate participation and broaden the benefits, several barriers must be overcome, including: a lack of market awareness among stakeholders and prospective participants; specialized, somewhat complicated participation rules; and the need for simplified participation mechanisms for small projects, without which transaction costs can overwhelm the financial benefits of participation. If the barriers are adequately
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addressed, greenhouse gas trading can play an important role supporting activities that benefit people’s lives and the environment. One of the most popular trend in the business is emission trade or Emissions trading (or emission trading) which is an administrative approach used to control pollution by providing economic incentives for achieving reductions in the emissions of pollutants. It is also called cap-and-trade .A central authority (usually a governmental body) sets a limit or cap on the amount of a pollutant that can be emitted. Companies or other groups are issued emission permits and are required to hold an equivalent number of allowances (or credits) which represent the right to emit a specific amount. The total amount of allowances and credits cannot exceed the cap, limiting total emissions to that level. Companies that need to increase their emission allowance must buy credits from those who pollute less. The transfer of allowances is referred to as a trade. In effect, the buyer is paying a charge for polluting, while the seller is being rewarded for having reduced emissions by more than was needed. Thus, in theory, those who can reduce emissions most cheaply will do so, achieving the pollution reduction at the lowest cost to society. There are active trading programs in several air pollutants. For greenhouse gases the largest is the European Union Emission Trading Scheme. In the United States there is a national market to reduce acid rain and several regional markets in nitrogen oxides. Markets for other pollutants tend to be smaller and more localized.
GREEN MARKETING CASES Philips Light's CFL 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
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"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. 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 ZipCar (East Coast), Flex Car (Washington State), and Hour Car (Twin Cities). 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. Introduction of CNG in Delhi New Delhi, capital of India, was being polluted at a very fast pace until Supreme Court of India forced a change to alternative fuels. In 2002, a directive was issued to completely adopt CNG in all public transport systems to curb pollution. CONCLUSION Green marketing is still in its infancy and a lot of research is to be done on green marketing to fully explore its potential .Think of a refrigerator for example. While we may have had to be convinced in the 1950s to buy a refrigerator, we would have wanted
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the great white box to have attractive looks till the 1970s, but in today's uncertain world, we might ask ourselves about the impact of the chlorofluorocarbons (CFCs) that our refrigerator is emitting and demand a more environmentally friendly refrigerator. So, if today's successful marketing is about appealing to personal values and delivering consumer empowerment, then surely the time is right to inject sustainable development into the marketing mix to help address some of the gritty issues presently faced by our planet .Green marketing methods may produce highly effective results if used cautiously and with integrity.
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