Green Marketing and the Background of This Phenomenon - Report Example

You work as a marketing consultant and have been commissioned to write a report that argues the case for and against marketing products and services in a green (environmentally friendly) way.” Contents page Introduction- describe and definition of green/environment marketing The background in which it is being applied. Why the marketing environment is important Main body of report-Advantages and disadvantages of green marketing- key environmental issues Relevant theories, concepts, models and frameworks Live examples to understand the implementation and success of green marketing. Understanding and analysing buyer behaviours. Potential green/environmental strategies for segmentation, targeting and positioning Conclusions- discovery Marketing mix recommendations that account for segmentation, targeting and positioning Executive summary This report studies green marketing/environmental marketing and the background of this phenomenon, how it gained popularity, what are its advantages and disadvantages and its success. It looks into what green marketing is based on studies, statistics and various theories on environmental friendly products. The role of the marketing environment and its effect are discussed. Examples are given for support. The behaviour of buyers is observed. Segmentation, targeting and positioning will be discussed and relevant theories shall be presented to accommodate green market in marketing. The conclusion highlights the lack of reliable policies and a marketing mix is proposed. Introduction- green/environment marketing The marketing field is slowly diversifying with the introduction of the new environment marketing or more popularly known as green marketing. Consumers and producers are becoming more sensitive to the environment and are thus creating more ‘environmental friendly’ products. Businesses are now modifying themselves to accommodate this new phenomenon. Environmental management systems and waste minimization are now being paid more attention to. Journals such as Business Strategy and the Environment and Greener Management International and other reports are being created to support a more ‘green environment’. Marketing itself is undergoing a new process of evolution. Yet what is green marketing? No standard definition exists that explains this new trend. The background in which it is being applied. The American Marketing Association (AMA), in their first workshop on ‘ecological marketing’ held in 1975, defined ecological marketing (which has now evolved into green marketing) as the study of the positive and negative aspects of marketing activities on pollution, energy depletion and non-energy resource depletion.1 This definition is highly sub-divisional and examines both the process of marketing and the environment as interdependent variables and examines their joint effort and its positive and negative consequences upon society in general. However today, this definition proposed, may be deemed inadequate or insufficient. Whilst green marketing may be the age old ecological marketing which was first discussed in 1975, over the years this process has undergone noticeable changes. The general lack of consistency in a standard definition of green marketing has led to ambiguity in research. Researchers are unsure of what all may or may not be inclusive in the subject they are researching on. Many individuals and firms have offered their own personal definitions to simplify ‘green marketing’. Most proposed definitions of green marketing integrate the standard definition of marketing which is All activities designed to generate and facilitate any exchanges intended to satisfy human needs or wants. This standard definition of marketing keeps in mind the basic purpose of marketing, to maintain and/or initiate a buyer seller relationship that is mutually beneficial to both parties. Because of this lack of a uniformed definition for green marketing, people wrongly believe that the term is restricted to goods that are recyclable, ozone friendly, refillable etc. These terms, though active terms of green marketing, fail to highlight the bigger picture that green marketing can also be applied to industrial and consumer goods and services. An excellent example of this would be resorts that promote themselves as ‘ecotourist’ with facilities that makes its customers experience nature etc. 2 Why the marketing environment is so important: The Marketing environment is among the many variables that has direct or indirect influence on a strategy. An organisations operating environment can be described as the micro-environment that deals directly or indirectly with clients. Macro-environment is more affected by external forces. Political, Economical, Social and Technological (PEST) forces while internal forces which is the internal environment that the organisation has direct control over.3 It is based on the five M’s of men, money, machinery, materials and money. Managing internal change is called internal marketing. The external forces are however comparatively more difficult than internal. Political factors are based on the direct decisions made by the government. This comes in the form of policy/ legislation and is of grave consequence to an organisation. The government’s decision in wage levels, health and safety measure effect all. In the economics sector, businesses are affected by interest rates and fiscal policies. Buyer’s behaviour is determined by this. Social factors shape up individuals cognition. It imbibes the values held and ultimately plays major role in the individual’s buying behaviour. Organisations also need to keep up to date with the latest trends and likes of a particular society they are targeting. Technological factors play a crucial role in an organisation. An organisation needs to keep up to date with technology. A computer chip is changed every six months. If an organisation is not updated it can fall prey to lagging, oblivion and finally extinction. Why the marketing environment is important Green marketing or environment marketing is being applied by renowned and reputable organisations. Organisations such as The Body Shop, which were always environmentally active, established a pattern of providing alternatives to the available cosmetic products. This resulted in the creation of a new line of cosmetics that paved the way for competitors to follow. In a study conducted in 1992 of sixteen countries, it was discovered that more than 50% of consumers in each country, indicated they were concerned about the environment. Whilst in another study conducted in 1994 in Australia found that 84.6% believed all individuals had a responsibility to be sensitive to the environment. 80% of the subjects claimed they had modified their behaviour, including their purchasing behaviour, for environmental reasons. The popularity of environment friendly products amongst the consumers, led to many organisations following in this trend. Generally there are five reasons cited as to why organisations would turn to Green Marketing which are: 1. Organizations perceive environmental marketing to be an opportunity that can be used to achieve its objectives 2. Organizations believe they have a moral obligation to be more socially responsible 3. Governmental bodies are forcing firms to become more responsible 4. Competitors environmental activities pressure firms to change their environmental marketing activities 5. Cost factors associated with waste disposal, or reductions in material usage forces firms to modify their behaviour Live examples to understand the implementation and success of green marketing. One or more of these stated factors is the reason an organisation chooses to go green. Since consumers were showing a preference for ‘environment friendly’ products, organisations decided to cater to their needs. McDonalds is known to have changed its Clam shell packaging with waxed paper due to consumer concern over polystyrene production and Ozone depletion. In 1991, tuna manufacturers had to modify their usual fishing techniques as they were leading to the death of dolphins. Even Xerox was not detached from this environment friendly phenomenon and had to create a ‘high quality’ recycled photocopier paper to satisfy its client firms who were now demanding less environment harmful products. In the case of green marketing the government intervened and to protect consumers and society, came out with regulations to: 1) Reduce production of harmful goods or by-products 2) Modify consumer and industrys use and/or consumption of harmful goods 3) Ensure that all types of consumers have the ability to evaluate the environmental composition of goods. The government has played such an imperative role in implementing these reforms that the productions of many by-products are controlled through issuing various environmental licenses. At other times, the government tries to induce its customers to be more socially responsible. Main body of report-Advantages and disadvantages of green marketing- key environmental issues If one were to investigate the importance of green market and try and discover why it is important, one would arrive at the simple conclusion that green market is the preservation of our limited natural resources. Individuals and organisations are showing an obvious preference for green market so as to be more considerate of the environment. Companies are now realising the social role they have to play. They are now seeing themselves as part of a greater community. Firms have found a way of adhering to this new trend of becoming environmental friendly yet keeping their objective of making profit in mind. Thus making organisations operate in such a manner, 1) They can use the fact that they are environmentally responsible as a marketing tool Or 2) They can become responsible without promoting this fact. Not every firm promotes the fact that it is environment friendly. Companies such as Coca-Cola have invested a large share of money into recycling and have modified their package to protect the environment. This is a double edged case where Coca-cola has shown their obvious concern for the environment yet has not used this as a marketing tool. This may be a reason many are unaware that Coke is a highly environmentally conscious organisation. Another case is of Walt Disney World (WDW). WDW has a waste management programme that is extensive and an infrastructure in place. However this is never drawn attention to hence not known. A reason for firms not highlighting their conscious attitude towards the environment would be that if firms were to draw attention to the fact that they are socially responsible, they face the risk of being declared negligent or harmful to the environment as with the changes and improvements in research and technology constantly in the shift. WDW and Coca-Cola are protecting themselves against any repercussion they might have to face if they are following the wrong course. An excellent example of such a case would be the aerosol industry which had to switch to Chlorofluorocarbons and then to Hydrofluorocarbons, only to later discover that hydrofluorocarbons are a greenhouse gas. Few firms have now turned to Dimethyl ether as a substitute. However this may also be damaging to the ozone layer. This is the result of limited experiments and scientific knowledge about green marketing. Understanding and analysing buyer behaviour When we analyse the role of consumers buying behaviour it is obvious the decision is based on four major factors. Cultural, social, personal and psychological. These factors shape up the individuals taste and preference. This is where marketers meet a challenge. They may not be able to meet everyone’s individual tastes but have to appeal to wide mass audience. Marketers then use a variety of mix strategies to appeal to their audience. The five stages that a consumer goes through when undergoing his/her final decision to purchase is that of problem recognition, information search, evaluation of alternatives, purchase decision and post purchase behaviour. After making a careful and concise study of these factors, one has an idea of the buyer’s buying behaviour. Marketers also need to be aware of these factors individually. They need to be aware of the consumers’ culture, its subcultures and social classes. Besides these reference groups, lifestyles, occupation, stratification by location etc all play a vital role in the buyers’ decisions. Besides these variables some other factors come into count. The role of the initiator and influencer can be grave. Besides these, the buyer/s behaviour in terms of their routine/ frequency, limitation in purchasing, lack of willingness to experiment with new products, extensive - if the buyer buys one or more expensive product but shops infrequently etc should also be counted. Consumers are often hesitant with new and unfamiliar products. They are passing through the phase of deciding whether or not that particular product/service should be adopted. The ‘adoption process’ consists of consumers passing through five decisive stages: awareness, interest, evaluation, trial and adoption. Organisations buying behaviour is dissimilar to the consumers. Organisations are affected by environmental, organisational, interpersonal and individual factors. These individuals have their own set of behaviours and tend to influence others through interpersonal contact. In the environmental factors side, economic conditions is considered, the state of technological change is monitored, political and social factors are kept in mind and competitive developments play a major role in the company’s decision. Besides these an organisations policies, objectives, procedures etc are essential factors considered when making a decision. Interpersonal factors suggest authority (of concerned personnel), status and persuasiveness. An organisation undergoes much more scrutiny when purchasing a new product and are more apprehensive then individuals. Potential green/environmental strategies for segmentation, targeting and positioning In Marketing, segmentation, targeting & positioning, play a key role. Segmentation is the division of market or population into various subgroups with similarities. For example a group of people living in a particular area, demographic differences, geographic differences, psychographic differences are segmented today.4 Segmenting an industrial product market is more specialised. It includes: Type of application/end Geographical Benefits sought Closely related to the above Type of customer e.g. banks or insurance companies Product/technology Customer size (amount) Usage rate / frequency Loyalty of customer Purchasing procedures Situational factors (commercial) Personal characteristics Whilst targeting, is more specialised in terms of how specific segments should be approached. 5 Positioning concentrates on conveying the product value to buyers. However of recent positioning has dropped to the point of being a simple document that simply tricks the customer into buying the product. The best positioning focuses on how the product will solve specific customer problems. The result of positioning is one can observe how a product is received and perceived and a suitable marketing mix can then onwards be designed. Conclusions- discovery At present green marketing/ environment marketing has no strategies for the conventional process of segmenting, targeting and positioning. This is due to the fact that green marketing is a relatively new phenomenon with not set rules therefore the process is constantly updated, shifted, revised and new rules are created. One can use the traditional way marketing works with segmentation, targeting and position and merge newer reforms into this. To assess green markets success in the market it needs to be made available more leniently, even across developing countries and needs to be specifically tested in certain demography’s and geographical locations. Marketing mix consists of a mixture of the product offerings, amalgamated to attract the target audience an organisation aims to draw the attention of. This marketing mix consist of the product, price (value), promotion (means of promoting the product), and place (promotion) having the product available and offered to the target audience. These are the four P’s of marketing. In order for green marketing or environmental marketing to gain popularity in a vastly non-ozone friendly industry it needs to follow the four P’s of marketing to gain global awareness. Marketing mix recommendations that account for segmentation, targeting and positioning Marketing mix is the mixture of all four of these factors to achieve the desired result. It is also known as the 4 P’s of marketing. It can also be explained as choices over products attributes, its distribution strategy, followed by the communication strategy and the pricing strategy a company offers its targeted markets.6 The marketing mix or rather the four P’s of marketing and segmentation, targeting and positioning work closely, entwined. For green marketing to be a globally responsive phenomenon, it needs to use the marketing mix to operate segmentation, dividing itself up in subgroups, stratifying people, targeting a fixed audience most likely to be responsive, perhaps a city/country health conscious and positioning ozone friendly products in localities where they shall be most appreciated. Also individuals should be targeted more over organisation, which are, as mentioned more apprehensive towards new products. Also governments need to come out with more uniformed, more serious reforms which if, broken, shall be punishable by penalty of a heavy fine. Research conducted in the field of environment marketing, needs to be extensive and experimental. Organisations that declared themselves to be socially responsible should understand the transitional phase green marketing in undergoing. Universities etc need to implement details about green marketing into their curriculum. Countries that are remote need to be made aware of their natural resource and taught the proper implementations of these. Above all green market is a profitable theory which needs to be realised by governments of other countries. Organisations such as The Body Shop have shown to their competitors that ozone-friendly products are in demand and appreciated by the public. However the publics of developing countries do not have this option and must be given so. 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