Green Product that Could be Offered in the Market - Essay Example

Green Product or Service Wal-Mart is well known for its every day lowest prices products. It manages to provide these low costs because of its well optimized supply chain management. However, Wal-Mart has also come to be known for its initiatives in sustainability. The company started this initiative in 2005 as Lee Scott, the CEO, believed that “being a good steward of the environment and being profitable are not mutually exclusive. They are one and the same”. (greenhrm.org) Thus, the company recognized the importance of going green on sustainability much before the others in the business. As per their report, “ASDA Bootle is the first zero waste to landfill store in the UK, diverting 95% of the waste from landfills” (walmartstores.com). The company has announced that it will cut 20 million metric tons of green house gas emissions from its supply chain by the end of 2015 (Rosenbloom 2010). This is an ambitious plan where the company will have to relook at its entire value chain before understanding the areas of maximum emissions. The company is well known for its relationship building strategy with its suppliers. It has made it mandatory for its suppliers to look at the products that have maximum carbon embedded in them, which are milk, meat, bread and clothing. The suppliers are looking at processes starting with the raw materials to the recycling process. Not only this, the company has ambitious plans regarding other processes (Heying and Sanzero 2009). Some of them are: Increasing fuel efficiency in its truck fleet by 25% over three years and doubling it in 10 years (Laszlo 2008) Purchase refrigeration trucks that can continue cooling without keeping the ignition on. This is estimated to save around $75million in fuel costs and save 400,000 tons of carbon-dioxide pollution. (Murthy and Sangle). Reduce energy use in stores by 30% in next 7 years. By 2011 the company will only carry sea foods that are certified by the Marine Stewardship Council, a group dedicated to preventing the depletion of ocean life from overfishing. (newswire.ca). The company has given five year verbal commitment to buy only organically grown cotton from farmers. Reducing solid waste from US stores by 25% over the next three years (Laszlo 2008). These are but a few of the initiatives the company is taking towards evolving sustainable strategies. The company goes by the following sustainability equation (Wilhelm 2009): Sustainability Initiatives + Marketing = Enhanced Brand Value The company actually made concrete efforts in sending out a message to the public that it is genuinely interested in setting and achieving bold goals as seen from the following table (Wilhelm 2009): Financial Brand Sustainability Sold more than 100 million CFLs in less than 1 year. Achieved 15% improvement in building efficiency, saving thousands in reduced energy costs annually (greentechnolog.com 2007) The company moved from one that was a target of all environmental groups to the one which was admired for its work in saving the environment. By becoming the single largest purchaser of organic cotton, the company changed the way textile industry works. It also started influencing around 60,000 suppliers to reduce the environmental impact and improve efficiencies. Thus, we can see that the company is serious about its sustainable strategies though there have been some criticism from environmentalists who say that all these are gimmicks. Looking at the core areas where the company has come under fire from environmentalists is the pollution caused by the massive buildings and parking lots of the stores. The major problems are created by the way the company operates and the size of its operations. The company builds massive superstores which work 24 hours a day. With such operations the company uses 96,500 British thermal units of energy per day which is almost three times the average use by a residential home in the US each year (walmartwatch.com). This is almost double the rate of its competitors’ consumption as they work only 12-14 hours a day. Besides this, they also have much lesser number of stores as compared to Wal-Mart. As per the company’s estimates, it was responsible for 15.3 million metric tons of CO2 emission in 2005 which is equivalent to emission by a country like Chile (walmartwatch.com). With all its planning to reduce CO2 emission, the company will be able to reduce 2.5 million metric tons of emission by 2013. With the rate at which it is growing its stores and the electricity consumption of these new stores, the company will actually add 28 million metric tonnes of new emissions within the same period. Its parking lots, which are three times the size of the stores, are responsible for water pollution. A 2005 report by the Institute for local Self Reliance estimated at the time that the stores and parking lots covered 75,000 acres of land. These parking lots contribute to “non-point source water pollution” which is the leading cause of water pollution in the US (walmartwatch.com). Looking at the above statistics, a web-based delivery service can be provided by the store which will help in reducing the requirement of trips to the store. This will be a 24 hour delivery service. As per the world’s internet penetration rates in 2009, North America has the highest penetration rate of 76.2% (internetworldstats.com). That means that majority of the customers of Wal-Mart are connected through the net. The customer will be required to log into the website of the store which will have availability status of all the products in that region on a real time basis. The website will also have all information regarding promotions and discounts which the customer can avail sitting at his/her home. The delivery of products will have a turnaround time based on the distance of the location from the nearest store. This simple procedure of ordering through the net will save the visits to the store and hence save on the pollution and carbon emission from the vehicles. Besides this, the company can save on transportation costs by working on the delivery logistics. All the orders from same or close-by region or locality can be clubbed together into one delivery truck and save on the transportation costs. Thus, the company can save on investment into huge stores and the corresponding parking space and energy requirement. The 4Rs of the marketing strategy can be directed in the following way (Polonsky and Mintu-Wimsatt 1997): Redirection: Consumer value positioning -The customers will need to be shown the financial advantages as well as convenience of the service. For example, if the customer needs to travel an average distance of around 10 miles up and down to shop at a Wal-Mart store, he will have a substantial saving by not traveling the distance of 20miles and just ordering through the net by looking at the products at the store’s website. Besides this, the customer can just sit at home or office and order for the goods. The basic 5 benefits of any green product are cost effectiveness and efficiency, health and safety, performance, symbolism and status and convenience (Ottman, Stafford and Hartman 2006). These need to be bundled to provide the right consumer value positioning. The main consumer value advantages are cost effectiveness and efficiency, health and safety as there will be less carbon emission owing to reduction in vehicle movements and convenience. Calibration of consumer knowledge - This will be done by adequate advertising regarding the savings through e-mailing and mass-media. The walk-in customers of the store can be given incentives like extra discounts or consumable products on switching over to net purchasing, as these are the main target of most advertising. Credibility of product claim – This can be done by citing actual data on time and monetary saving for the consumer on account of not travelling to the stores. Actual data of the distance of the store from the various locations and the petrol usage for travel can be shown to the customers through advertising. These statistics can be displayed at the stores as the walk-in customers are the main targets. Reorientation: This can be done by the adequate marketing mix through 4P optimization. Green product promotion basically focuses on three areas – address a relationship between a product/service and the biophysical environment, promote a green lifestyle and present a corporate image of environmental responsibility (Dash). The extra pricing of the service can be justified by the overall saving and convenience to the customer. The service should first be introduced in the US market only as this market has the maximum internet usage penetration. This can be followed by other countries based on the success of the strategy. The web-purchasing will be a differentiating factor as compared to the other stores which should be used to target new clients. The incentive schemes attached with web-purchasing for the clients can be used as a market penetration strategy. Reorganization: The company will need to reorganize its stock keeping activity. With lesser walk-in customers, the need for huge stores will be eliminated and more inventory keeping space will be required. Similarly, the staffing requirements will differ. There will be change in logistics as the products can travel directly from the warehouses to the customer location rather than the stores. Reconsumption: There are no reconsumption implications in this service as it is only a web based service. We do not generate any waste at the end of its life-cycle as it will be modified based on the situation when the service becomes redundant due to changes in technology. References Dash, SK, Green Marketing: Opportunities & Challenges, viewed on May 20, 2010 http://www.coolavenues.com/know/mktg/sanjit-green-marketing-1.php greenhrm.org, Wal-Marts sustainability strategy, viewed on May 20, 2010 http://www.greenhrm.org/greentools/greencases.html greentechnolog.com 2007, Walmart Mercury Reduction Move in CF LightBulbs, viewed on May 20, 2010 http://greentechnolog.com/2007/05/walmart_mercury_reduction_move_in_cf_lightbulbs.html Heying, A and Sanzero, WA 2009, A case study of Wal-Mart’s “Green” Supply Chain Management, viewed on May 20, 2010 http://www.apicsterragrande.org/Wal-Mart%20Sustainability.pdf internetworldstats.com, Internet usage Statisitcs, viewed on May 20, 2010 http://www.internetworldstats.com/stats.htm Laszlo, C 2008, Sustainable value: how the worlds leading companies are doing well by doing good, Stanford University Press. msnbc.com 2005, Is Wal-Mart going green? viewed on May 20, 2010 http://www.msnbc.msn.com/id/9815727/ Murthy, S and Sangle, S, Greening Supply Chain for a Better Environmental Management, viewed on May 20, 2010 https://www.regonline.com/custImages/279225/ShankarM.Final%20Presentation-%20Final-08-01-2010pdf. newswire.ca, Walmart Canada announces sustainable seafood policy, viewed on May 20, 2010 http://www.newswire.ca/en/releases/archive/April2010/13/c9519.html Ottman, A., Staffor, ER and Hartman, CL 2006, Green Marketing Myopia, Heldref Publications, viewed on May 20, 2010 http://www.greenmarketing.com/files/articles/Stafford-MyopiaJune06.pdf Polonsky, MJ and Mintu-Wimsatt, AT 1997, Environmental Marketing: Strategies, Practice, Theory, and Research, Routledge. Rosenbloom, S 2010, Wal-Mart Unveils Plan to Make Supply Chain Greener, viewed on May 20, 2010 http://www.nytimes.com/2010/02/26/business/energy-environment/26walmart.html walmartstores.com, Wal-Mart 2009 Annual Report-Letter from Mike Duke, viewed on May 20, 2010 http://walmartstores.com/sites/AnnualReport/2009/letter.html walmartwatch.com, Is Wal-Mart Really a Green Company? viewed on May 20, 2010 http://walmartwatch.com/img/blog/environmental_fact_sheet.pdf Wilhelm, K 2009, Return on Sustainability, Dog Ear Publishing. Read More