Green Marketing Dynamics - Essay Example

Green Consumer Faculty Table of Contents I. Executive Summary II. Introduction III. Green Consumer IV. Macro environmental Factors i. Current Situation ii. Future Issues V. Opportunities for Marketers VI. Case Analysis-Hewlett Packard VII. Conclusion VIII. Reference I. Executive Summary This paper is developed in order to understand marketing dynamics of the green marketing and consumers. There are various consumer concerns which are impacting the decision making process and buying behaviour of consumers. Organisations need to understand these patterns in order to identify threats and opportunities and develop strategies according to that. There are various macro environmental factors which influence green consumer. These factors can be related to the infrastructure of the company, use and wastage of resources of the company, final product, recycle ness of the product and the work environment it has been providing to its employees. The case study in the paper analyses the Hewlett Packard efforts for the environmental and green marketing has created value for HP, industry and society as a whole. The efforts of HP have been taken well by the stakeholder communities. It has been able to create a sustainable brand value through this. It took initiatives and efforts to gain attention of competitors and policy makers for the environmental friendly concerns. All its efforts have been focused toward its final consumer. The focus of consumers has been toward the environmental and eco-sensitive factors as well along with the product and value a company offers for the price consumer is paying. The number of customers and consumer are increasing who are more aware and concerned about the environment. II. Introduction Green Consumer is a wide term used for the consumer group who has environmental concerns while making their purchase decisions. The environmental concerns have becomes one of the concerns of a section of buyer group who considers the products’ manufacturing processes, biodegradable nature and other environmental concerns in decision making process. The decisions can be in favour or against the purchase decision based on the individual consumer, their environmental concerns and the society. Usually the environmental factors are not the only decisive factors in the decision making process. This paper deals with the marketing dynamics for green consumers. This paper first discusses the green consumers. There are various factors of concerns for a marketer to attract and serve their consumer groups. So far various marketing strategies have been adopted by marketers across various industries to attract consumers, sell products and services and retain consumer groups. Various macroeconomic factors impact these green consumers which marketers can take care in their marketing and product development strategies. Understanding consumer behaviour for this particular issue will help consumers to develop appropriate and effective marketing strategies. Next section deals with the opportunities existing for the marketers to attract this specific segment of consumers. A case analysis of the HEWLETT PACKARD (HP) is included for the better understanding of the concerns of buyers for their decision making process followed by conclusion of the entire report. III. Green Consumer Green consumer are motivated for their purchase decisions by the environmental concerns like energy consumption of the product or production process, global warming issues, pesticide use in the agricultural produces and personal health issues related to product or services and there production process. Barr et. al (2005) state that consumers are likely to purchase in a more sustainable way if they perceive that what they are buying, be that organic food or fairly traded coffee is actually going to impact on the environment and influence future policy. There are various ways a green consumer can be engaged in the product and services of any company. Barr et. al state that personalisation of environmental issues and a trust in the information provided on the environment is also more likely to engage citizens. Consumers give priority to the value any product is offering against the price he pays for the product but apart from that there are various other factors which are significant in the purchase decision of a consumer i.e. trade-offs pertaining to price, health, safety, buying locally and helping the environment, social concerns related to the product or service or company as a whole. There is certain section of consumer who is willing to pay premium for the environmental friendly products and services. The recent controversies on some leading beverages companies like Coke and Pepsi in developing countries for not meeting the Food and Beverages safety standards have impacted their business in a large extent as consumer have stopped buying or sifted to the safer product options. In various parts of world Coke and Pepsi has been banned in the school and college premises. This is due to the concerns of parents, teachers, student groups and activist groups which forced these companies to withdraw their products from these institutes. Demeritt (2005) states in the article “What makes a green consumer?” that “Consumer purchases of green or sustainable products are not just motivated by the products themselves, but by the values they represent. For some consumers, these values do not translate into actual behaviour, while for others; they become a way of life.” As indicated the values presented by the products attract the consumers and decision makers to buy products and services from any manufacturers and service providers. Consumers have preferred disposable and biodegradable products if the products or services offer similar values as original products. IV. Macro environmental Factors There are various macro environmental factors which impacts the decisions of green consumers. The issues which impacts climate, pollution of various type, energy efficiency, resource utilisation like water, land and other resources, global warming and sustainability and others. In products like automobiles, refrigerators, air conditioners and other fuel consuming products consumer decides on the basis of the factors like fuel efficiency and emissions. This is also depended on the consumer groups and the part of world they are living in. A consumer living in the areas like Gulf countries where the prices of oil is cheaper than the counterparts of the world, consumer may be concerned about other issues more than fuel efficiency while in other parts of world one of the major concern among consumers, manufacturers and marketers. One of the concerns among various manufacturers is to develop new products and improve the existing product ranges. The fuel efficient automobiles have been highly successful in the countries like India, China and other developing and developed countries. Below is the table consisting of the factors which lead to evolution of Green consumer. Political Government Policies, regulations and efforts in order to keep the companies operate within the parameters set for the environmental and safety concerns. Role of NGOs Role of political parties and influencers within society Economic Demand of Green products in international market. Employment related concerns like wages and salary, working conditions, exploitation and types of employment. Purchasing power of individual consumer and his willingness to pay extra for the green and environmental friendly products Social Role of pressure groups, dominant religion etc Role organisation or product have played in order to bring change in the society Technological Technologies used in the production process Use of Technology to treat the production waste and recycling Energy efficiency Table 1: Factors that have lead to Evolution of Green Consumers i. Consumer behaviour Consumer behaviour towards the green and environmental friendly products and services has been an issue of debate among the environmentalists, academicians and marketers. Consumer behaviour towards the green marketing products gets influenced by various environmental, sociological and individual factors. The intensity of each factor combined with the intensity of need of any particular product or service are the decisive factor among consumer groups for their purchase decision. As far as the product offers similar values as the original one on the same price every consumer might prefer the same over the original or other product. The decision making gets largely affected by the advertising and promotional activities. The more organisations are able to communicate about the environmental friendly concerns of products and services the more likely is the consumer buy their products. ii. Future Issues As some of the studies indicated that in future the climate and environmental concerns will be one of the important factors of the decision making process of the consumers. This means the manufacturers and service providers need to focus on the products and services which are environmental friendly and can attract the consumers. Not only in the manufacturing and service delivery the companies need to focus on these but also in various business strategies companies will have to perform within the concerns of green consumers. Below is the table which list key challenges: S.N Key Challenges in Future Action 1. Decisions related to Green Green Products Green Process/system/ infrastructure The decision can be based on the consumer surveys and feasibility studies. 2. Evaluating the sacrifice or premium customer would be able do This will be based on the consumer survey. 3. Role of macro environmental factors Understanding the role of these factors will help in strategic decision making 4. Influence of PEST on consumer decision making process Consumer behaviour can be understood and on the basis of that various strategic decisions will be taken like product decisions, marketing strategy decisions, production decisions 5. Communication strategy for the stakeholders The decisions like what kind of information should be disclosed and how it should be communicated are crucial decisions. Table 2: Key Issues in the Future V. Opportunities for Marketers The concerns of Green consumers on one hand can be challenging issues for a company to incorporate in its various business decisions, products and offerings while for other it can help in offering consumer a unique selling offer. It can act as a USP for the companies’ products and services. It can be combined with several other marketing mix options. As cited in the article written by Makower in the article available online Green Marketing: Lessons from the Leaders, the Toyota spokes person states about the consumer behaviour of the consumers for environmental friendly products “Our focus groups and studies confirmed that people want an environmentally friendly product at a fair price, but that they didn’t want any compromises,” says La Roque.” Another study indicated that the Green consumers for a niche segment can be offered products at premium pricing. These consumers will be willing to pay premium for environmental friendly products. These are the group of consumers who are well informed about environmental concerns. The companies will have to provide them adequate information regarding the environmental concerns taken care by the company to them in decision making process. Demeritt (2005) states in the article “What makes a green consumer?” states that “Green product marketers have a choice between targeting the core segment, which is the most likely to embrace a product that adheres to their stringent values of sustainability, or the mid-level segment, which offers a larger group.” Today consumers are more informed and information is available to them on a single click. The availability of information and competition among various organisations to attract various consumer groups has made it challenging for the companies to attract consumer and retain them. Demeritt (2005) states in the article “What makes a green consumer?” that “Targeting the core consumer segment requires that a product and brand meet a high level of authenticity, as these consumers have a keen eye for the real deal. These consumers also have a high regard for grassroots brands that are relevant to their lifestyle.” There are various ways through which a company can utilise green marketing efforts to attract green consumers and other consumers as well. Phillips, (1999 as cited in Prakash: 2002) states that one of the poll report indicates that 87% of U.S. adults are concerned about the condition of the natural environment. This also enhances the importance of marketing communication process of the green attributes of products and the efforts companies are taking in the direction of environmental concerns. There are various strategies which can be adopted by any marketer even in the traditional marketing and communication which can be incorporated with the present day’s technologies to spread the messages. Osterhus, (1997 as cited in Prakash 2002) states that 75% consider themselves to be environmentalists. The cultural icons, cultural issues and societal issues can be included in the strategy development and implementation processes. Prakash (2002) notes that Ottman (1996) states 80% of the respondents believe that protecting the environment will require major changes in current life-styles. Prakash (2002) states that some scholar believes that consumers will be willing to pay premium for the products having green attributes over the traditional products attribute like quality and price. Consumer can be communicated that their decision can make difference in changing life and its quality and help in making world as a better place to live in. Company can also communicate itself as being serious leader for the environmental and technological concerns related to the industry and world. This will be highly challenging to incorporate environmental concerns with the environmental concerns. Companies need to experiment around offering and developing environmental friendly processes and communicate about it with stakeholders. The marketing mix strategies should be comparable to the conventional offers. The main focus on this should be the quality and pricing strategies. Phillips, (1999 as cited in Prakash: 2002) states that 50% of Americans claim to look for environmental labels and to switch brands based on environment-friendliness. This is an indication of the shift in the traditional factors responsible for purchase decision of consumer and also the importance of environmental concerns and innovations. The environmental innovations and concerns should not compromise with the quality and service of product. Even style should be maintained as it is important in the automobile products. The branding strategies of the green products should be as attractive as conventional products. Consumer should be encouraged for their good and green choices. The other stakeholder groups should also be involved in the decision making and difference making processes. This will impose a competition within the industry and even the competitors have to adopt effective strategies. Emphasising on environmental concerns will help in creating environment of making green choices among consumer groups. VI. Case Analysis - Hewlett Packard HP has been one of the companies who have focused on its environmental and safety concerns of its infrastructure and processes. It has engaged suppliers, employees and other stakeholders in its environmental related concerns. It focused on its consumer behaviour and concluded that consumer always show preference to the environmental friendly and eco-sensitive products at the same cost. It took number of initiatives like collecting printer cartridge, return for recyclable envelops and recycling of inkjet. It tried to bring competitors and other players from the industry and turn their focus towards the products and processes they can improve or change. It created a brand image of a good corporate citizen. It brought the value of improving the supply chain management to the customer and shareholders. As cited in OMarah and Karofsky: 2006 AMR Research Report “HP has a longstanding commitment to the principle of Corporate and Global Citizenship. First formally articulated in 1957 well before it was fashionable, this dedication to doing right by the world makes HP an obvious candidate when looking for leadership on broad social issues, from philanthropy to fair labour standards.” PEST Analysis Political Factor HP operates in multinational environment. In such case the policies, regulations and legal aspects differ from country to country. The environmental specifications and political activeness also differ from place to place based on social aspects and consumer behaviour. Hewlett Packard had focused on its engineering processes and tried to find out processes in which energy consumption is least, products has longer service life and are recyclable. HP worked closely with NGOs and government organisations for environmental friendly initiatives. It focused on its relationship with policy makers for providing them insight about the industry and its operations. Economic Factor Various economic factors have impact on the technological product like this. The demand of the product in the national and international markets, purchasing power of individual consumers and other macro and micro economic factor have impact on the decision making process for Hewlett Packard product. Graph 1: 21st Century Corporate Value Proposition (Source: HP) Social Factor The social factors like consumer and societal concerns are important. The social pressures which pressure groups can make on the organisation for its processes, product and various other decisions are important. Technological Factor Technological factors are crucial for the industry leaders like Hewlett Packard. Hewlett Packard has been innovative for finding new ways or processes to make the product environmental friendly and have least impact on the cost consumer will be willing to pay. Graph 2: Benefits of Designing for the Environment (Source: HEWLETT PACKARD) VII. Conclusion In the future environmental concerns will be one of the deciding factors among consumer groups. Focusing on this particular concern marketers can develop effective marketing strategies in order to sustain green consumer groups. Sooner or later organisation has to think about green marketing strategies and the early it will be better. The environmental concerns should be taken care of in each effort of the organisation, its functional units, departments and strategies. The communication process should be such that it incorporates the environmental concerns with the existing messages. The organisations should encourage and appreciate consumers for making green choices. It will be better for organisations to adopt green marketing strategies. The case study-HP reveals the focus of the industry giant and how has it impacted the overall industry and policy makers. The focus of HP has not diverted from its consumer at any point of its strategies or initiatives it took. It tried to gain attention of competitors and policy makers to adopt environmental friendly approach. It created brand value of being good global citizen and also have been able to bring a change in the industry and environment it has been operating in. VIII. Reference Barr, S et. al (2005) Green Consumption or Sustainable Lifestyles? Identifying the Sustainable Consumer, Futures Vol. 37 Iss: 6, Adams Business Media Brassington & Pettit (2003) PRINCIPLES OF MARKETING Financial Times Prentice Hall: Liverpool, 3rd Edition Toyota Prius: A Case in New Product Development Available at: http://www.icmr.icfai.org/casestudies/catalogue/Marketing/MKTG118.htm [Cited 24 October 2006] Makower, Joel GREEN MARKETING: LESSONS FROM THE LEADERS Available at: http://www.worldchanging.com/archives/003502.html [Cited 24 October 2006] Prakash, A. (2002) GREEN MARKETING, PUBLIC POLICY AND MANAGERIAL STRATEGIES, Business Strategy and the Environment, Bus. Strat. Env. 11, 285–297 Available at: http://depts.washington.edu/ampol/publications/online_papers/green-marketing.pdf [Cited 24 October 2006] OMarah, K and Karofsky E, The Value of Green—A Case Study of Hewlett-Packard’s Social and Environmental Responsibility Strategies in the Supply Chain, AMR Research Report Available at: http://h71028.www7.hp.com/enterprise/downloads/The Value of Green_AMR Report on HP Social and Environmental Responsibility_06.2006.pdf [Cited 24 October 2006] Demeritt, L. (2005) What makes a green consumer? Available at: http://www.djc.com/news/en/11170267.html [Cited 24 October 2006] Kirby, A. (2003) Psyching up the green consumer Available at: http://news.bbc.co.uk/2/hi/science/nature/2726847.stm [Cited 24 October 2006] Read More