Literature review The Concept of Green Marketing

Introduction

A topic that the media, politicians, organisations and general public have been talking about during the past decade is the environmental friendliness or so called “green marketing”. Consumers began to espouse concern for the environment. In fact, through a survey carried out in America, Gutfield (1991) found that eight out of ten consumers were claiming to be environmentalists (cited in Grove, Fisk, Pickett & Kangun, 1996). According to Mainieri and Barnett, 1997, as cited in Juwaheer, 2005, the environment has faced massive destructive changes: diminution of natural resources, damage to the ozone layer, and loss of agricultural land. In the recent years, due to the massive amount of environmental pollution caused by firms in the world, people have become more aware of the environmental issues. Therefore, due to the attention of the society, many organisations have started to accept their environmental responsibility (Chen, 2010). Similarly, Kangun et al., 1991 as cited in Martin & Simintiras, 1995 argued that firms were trying to respond to the rising environmental concern of consumers by selling green products. Consequently, many organisations started to promote themselves as green companies, that is, they began to produce and market goods or services in a way which minimises damage to the environment.

Definition

Customers often link green marketing with terms such as recyclable, refillable, ozone friendly and environmentally friendly ( Polonsky, 1994 and Li, 2008). Whilst these terms are green marketing claims, in general, green marketing is a much broader concept. Green marketing is applicable to consumer goods, industrial goods and as well as services. Theoretically speaking, green marketing is about designing, developing and delivering products that are eco friendly which cause less as possible harm to the environment and its stakeholders (Chitra, 2007).

The American Marketing Association (AMA) has defined green marketing as the marketing of products that are not harmful to the natural environment (Anonymous, 2011).

Similarly, Pride and Ferrell (1993) notified that the term “green marketing” portrays an organisation’s efforts at designing, promoting, pricing and distributing goods that will not cause damage to the environment (cited in Grove et al, 1996).

Later, Polonsky (1994) proposed a definition of green marketing which has a broader focus than those of other investigators and it also includes all main elements of other definitions. His definition is as follows:

“Green or Environmental Marketing consists of all activities designed to generate and facilitate any exchanges intended to satisfy human needs or wants, such that the satisfaction of these needs and wants occurs, with minimal detrimental impact on the natural environment”

This definition embraces all the conventional components of the marketing definition that is “all activities designed to generate and facilitate any exchanges intended to satisfy human needs or wants” (Stanton & Futrell 1987, as cited in Polonsky, 1994). It also makes sure that the interests of both the organisation and the customers are protected, that is, there will be no exchange until both the buyer and seller benefit mutually. Moreover, this definition incorporates the protection of the natural environment, by trying to lessen the negative impact that the exchange can have on the natural environment.

Similarly, Soonthonsmai (2007) cited in Chen & Chai (2010) defined green marketing as the activities undertaken by organisations to deliver goods or services which are not harmful to the natural environment.

History

Although some considerations were given to green marketing in the 1970s, it was actually in the late 1980s that the idea of green marketing came out. All began in Europe in the early 1980’s when some manufactured goods were discovered to be harmful to the natural environment (Li, 2008). Since that, green marketing has gone through three phases (Lee, 2008).

The late 1980s marked the first phase of green marketing, when the concept of “green marketing” was firstly discussed (Lee, 2008). The first phase was termed “Ecological” green marketing. Throughout that stage, all marketing activities were attempting to provide solutions to environmental problems. Marketers began to indulge in different forms of green marketing to satisfy the needs and wants of the consumers. It was thought that people would buy green products and this would in turn increase the organisations’ goodwill. These would help to capture a greater share of the market. Nevertheless, nothing happened as expected. The reason put forward for this repercussion was green washing. Fierman, 1991; Garfield, 1991, cited in Grove et al, 1996 argued that businesses were only showing that they were green but the truth is that, they were doing nothing. Similarly King, 1985, cited in Peattie & Crane, 2005 argued that firms were just adding up environmental claims to their existing products in order to increase sales.

Green marketing entered the second phase when marketers witnessed the backlash (Lee, 2008). The Second phase was termed “Environmental” green marketing. During that phase, the focal point shifted on clean technology, which was about designing new products which would not harm the natural environment.

At the start of mid-1990s, people began to be more aware about the protection and preservation of the natural environment. People were becoming more alert about environmental problems. This marked the third phase (Lee, 2008). The latter was termed “Sustainable” green marketing. As customers were buying products and services that were less detrimental to the natural environment, organisations were forced to change their selling behaviours (Ottman, 1992; Peattie, 1992, 1995; Vandermerwe & Oliff, 1990, as cited in Chen, 2010).

Green Consumers and Green Products/Service

Curlo (1999) as cited in Lee (2009) argued that consumers in the USA and Western Europe had become more concern about the environment in the past decade. This trend has passed to the Asian regions (Gura˘u & Ranchhod, 2005 as cited in Lee, 2009). Thus, almost all consumers in the world are becoming progressively more concerned about the environment. More and more people are demanding green products and services.

Shamdasami et al., (1993) cited in Chen & Chai (2010) defined green product/service as the product/service that will not spoil the environment or deprecate natural resources, and can be recycled or conserved.

Businesses are producing more and more green products and services as they realize these are becoming profitable. However, for many businesses, going green does not mean to save the environment but instead helping to save the business. Hence, businesses must seek information to understand and better serve the green consumer.

Types of Green Consumers

There are different types of green consumers. It is vital to understand some of their common uniqueness to help businesses to observe the market for environmental products and services.

According to Kaprelian (2007) and Frances (2010), there are four types of green consumers namely:

Behavioral Greens

These types of consumers buy only products/services which have positive impact on the natural environment. They do not like products/services that pollute the environment. These consumers incorporate green practices in their every day life (Kaprelian, 2007).

Think Greens

These consumers buy green products or services when they can; however, if their budgets restrict them, they will non buy green products or services (Frances, 2010).

Potential Greens

These types of consumers do not act green but if influenced or encouraged by family and friends, they can act green (Kaprelian, 2007).

True Browns

These consumers ignore environmental issues and may even avoid firms who sell products/services with a heavy environmental focus (Frances, 2010).

Green Consumer Attitude and Buying Behaviour

With the emergence of green marketing, consumers have changed their buying behaviour. They are demanding more green products and services. According to Martin & Simintiras (1995) consumers are converting their environmental concern into green buying behaviour. Chase (1991) as cited in Kim & Chung (2011) argued that environmentally conscious people were changing their buying behaviours for a better environment. Similarly, Chen & Chai (2010) were of the same thought. They argued that people were feeling a moral responsibility to buy green products. However, Pickett-Baker & Ozaki (2008) argued that people who are environmentally conscious do not always behave in an environmental friendly manner.

Straughan et al. (1999) as cited in Hartono (2008) argued that income is linked with the environmental buying behaviour. The reason put forward was that people with high income are able to pay extra sum of money associated with green products. However, Anderson et al. (1974); Antil (1984); Pickett et al. (1993) as cited in Hartono (2008) refuted. On the contrary, they argued that there is not relationship between income and green buying behaviour.

According to Aaker & Bagozzi, 1982 as cited in Straughan & Roberts (1999) and Hartono (2008), there is a linkage between level of education and environmental attitudes and behaviour. The reason put forward is that higher-educated persons understand much better environmental issues, thus, act in environmentally responsible way. However, Samdahl and Robertson (1989) cited in Straughan & Roberts (1999) and Hartono (2008) argued that there was no relationship between between level of education and environmental attitudes and behaviour.

WHY IS GREEN MARKETING IMPORTANT

The importance of green marketing can be found from the basic definition of economics:

Economics is the study of how people use their limited resources to try to satisfy unlimited wants (McTaggart, Findlay & Parkin 1992, 24, cited in Polonsky, 1994).

Resources are limited and human wants are unlimited. Therefore, as organisations have fewer resources, they have to find new ways to satisfy these unlimited wants. The emergence of the concept of green marketing has made it possible for organisations to use the resources in an efficient way and at the same time to minimise waste. There is a rising interest among consumers regarding the protection of the natural environment and they are changing their purchasing behaviour. People want a clean environment to live. Consequently, many firms have to indulge in green marketing to minimise waste and at the same time act in response to the increasing demand of eco-friendly products and services.

Nowadays, we are living in an age of recyclable, non-toxic and environment-friendly goods and services. Green marketing has become a new tool for organisations to satisfy the needs and wants of consumers and earn high profits.

Greening the Organisation

Prakash (2002) argued that there are 3 ways in which organisations can ‘green’ themselves namely value-addition processes, management systems and products.

The value-addition processes can become ‘green’ by redesigning them, changing the technology or introducing a new technology with an intention to reduce negative environmental impact caused all over the stages of production (Prakash, 2002).

Secondly, organisations can also adopt management systems that generate circumstances to reduce negative environmental impacts of the value-addition processes. Furthermore, the organisations must have measurable performance indicators to make sure that the adopted management systems are generating positive results (Prakash, 2002).

The third greening strategy is about products. Building on Charter (1992) as cited in Prakash, (2002), this can take place in the following ways:

Repair – increase the lifetime of a product by repairing.

Recondition – increase the lifetime of a product through renovation.

Remanufacture – produce new products based on the old ones.

Reuse – design a product so that it can be used again and again.

Recycle – reprocess and convert used product into raw material to be used in another or the same product.

Reduce -make use of production technique that uses fewer raw materials and generates less waste, without dropping the level of benefits of the product.

The Green marketing Mix

The decline of precious natural resources have forced marketers to come out with a new marketing mix which preserves the green resources and at the same time, bringing out value added products and services to the consumers. This facet is considered very important due to global warming, ozone depletion, wearing out of natural resources and need for safety and healthy products (Chitra, 2007).

The green marketing mix takes its foundations into the traditional marketing mix itself. According to Bradley (1989), the green marketing mix comprises of 8 elements namely:

Price

Price can be defined as the monetary value place on a good or service that is offered for sale. Goods or services must not be heavily priced; they must be within the range of competitors except when they have an extra value such as better performance, design, and appeal or taste so as people are encouraged to buy green goods or services (Dash, 2010).

Product/Service

Product refers to any commodity offered for sale in order to satisfy a need or want. Green products can be defined as goods that have less detrimental impact on the environment. Moreover, green products must be produced in a way that save resources and generate less harmful by-products (Narayana, 2008). Green products must not only reduce harmful effects on the environment but at the same time be able to satisfy the needs and wants of the consumers.

Package

Packaging can be defined as activities done to protect goods from damage or help to carry the goods away. The packaging of a product must not be harmful to the environment just as the product itself.

Distribution

Distribution is the arrangement done to transfer goods or service from the place of production to point of sale. To carry out green marketing well, organisations must ensure that the distribution channel do not have negative impact on the environment. The distribution channel must bestow a good image of the organisation.

Promotion

Promotion includes all the tools of promotion, such as advertising, web sites, videos and presentations to influence, inform or persuade potential buyers’ purchasing decision. Promotion must have a friendly approach as regards to the use of material, manpower and other resources (Chitra, 2007). Claims must be honest, truthful and not misleading. Organisations must choose mediums which are green. Moreover, the chosen advertising agency must also share a philosophy of green marketing.

People

To become a green company, it is important for the leader to be concerned about the natural environment and environmental problems. Thus, he will spread this concern to the employees. It is essential for employees to have knowledge about eco friendliness in all aspect of production and consumption so that the goal of green marketing is fulfilled (Chitra, 2007). Therefore, employees must be educated on green issues. For instance, employees must be taught simple rules and gestures such to use less paper, communicate electronically etc.

After Sales Service

After sales service refers to the provision of service to customer after a purchase is made. When a problem occurs with a product, that product must be repaired and not replace. However, if the product cannot be repaired, then it can be replaced. The broken product must be sent for recycling so as the materials of the broken product can be used to manufacture another or a new product (Bradley, 1989).

Reasons why organisations are adopting Green marketing

Many companies have indulged in green marketing over the past years. It is interesting to know why organisations have changed their behaviour. According to Polonsky (1994), there are five possible reasons for companies to venture into green marketing.

Opportunity

Nowadays, environmental concern is rising rapidly as an essential topic for consumers because of global warming (Chen, 2010). Both individual and industrial are becoming concerned about the environment. In 1992, Ottman (1993) carried a study of 16 countries in which he found that more than 50% consumers in each country, other than Singapore are concerned about the environment (cited in Polonsky, 1994). Thus, as demands of the customers are changing, organisations are spotting these changes as an opportunity to be exploited. Therefore, it can be presumed that organisations that adopt green initiatives have a competitive advantage over those that are not green. For instance, Tuna manufacturers have brought changes in their fishing techniques due to the increasing number of death of dolphins due to over driftnet fishing (Advertising Age, 1991, cited in Polonsky, 1994).

Social Responsibility

Many organisations think that they have a moral obligation to behave in an environmental friendly manner (Davis, 1992, Freeman & Liedtka, 1991, Keller, 1987, McIntosh, 1990, Shearer, 1990, as cited in Polonsky, 1994). Similarly, Chitra (2007) argued that organisations have to preserve the limited natural resources to meet the needs of the coming generation. Hence, organisations must achieve their profit related aims as well as their environmental objectives. Therefore, organisations must incorporate environmental issues into their corporate culture. Companies can behave in two ways in this situation. First they can use their green initiatives as a marketing tool or second they can become responsible without promoting themselves as green companies (Polonsky, 1994).

An example of a company that adopts both strategies is Body Shop. Body Shop promotes itself as environmentally responsible. This behaviour helps the company to gain competitive advantage. Nevertheless, the firm was established explicitly to sell environmental friendly products. Therefore, Body Shop’s green actions are link with its corporate culture; rather merely remain a competitive tool (Polonsky, 1994).

An example of an organisation that does not promote its green initiatives is Coca-Cola. Coca-Cola indulges itself in various recycling activities and it has also modified its packaging to minimise its environmental impact. However, Coca-Cola has not promoted itself as a green company; thus, many customers do not know that Coca-Cola is a very environmentally committed organisation (Polonsky, 1994).

Governmental pressure

Another reason for firms to venture in green marketing is that governments are forcing them to become more responsible (NAAG, 1990, as cited in Polonsky, 1994).

Governments are in charge to protect customers and the society and this protection has major green marketing implications. There are numerous governmental regulations relating to environmental marketing which are devised to protect customers: reducing production of harmful goods, modifying the consumption of harmful goods and ensuring that all consumers have the ability to assess the environmental composition of good. Furthermore, governments have established policies to control the amount of harmful wastes produced by organisations (Polonsky, 1994).

Competitive pressure

The environmental activities of competitors are forcing organisations to change their environmental marketing activities (NAAG, 1990, as cited in Polonsky, 1994).Very often; companies watch their competitors promoting their environmental behaviours and try to follow this behaviour. In some instances, this competitive pressure has forced an entire industry to alter its operation to reduce its harmful impacts. For example, many manufacturers followed Xerox after the introduction of Xerox’s “Revive 100% Recycled paper” (Polonsky, 1994).

Cost or profit issues

Organisations also indulge in green marketing because of cost or profit related issues (Polonsky, 1994). Sometimes, by reducing harmful wastes, organisations can save money in the long run. Polonsky (1994) added that, organisations need to revise their production processes to minimise waste. Very often, effective and efficient production processes help to reduce waste and also the need for raw materials. Thus, there is double cost savings as both waste and raw material are reduced. Furthermore, organisations can develop new technology to reduce waste and sell them to other organisations (Polonsky, 1994).

Benefits of green marketing

Nowadays, consumers have become more and more conscious about the environment. They have changed their buying behaviour. Therefore, organisations have also started to behave in an environment friendly manner. They want to gain first-mover advantage over their competitors. Some advantages of green marketing are as follows:

There is sustainable long-standing growth together with high profit (Narayana, 2008).

It helps to gain new markets (Dash, 2010).

Employees feel proud and responsible to work in an environmentally responsible organisation (Narayana, 2008).

Organisations can charge high price for products which are environment-friendly (Afuwale, 2008).

It helps to build brand equity and gain customer loyalty (Afuwale, 2008).

It helps to increase product/ service value (Chen, 2010).

Problems with green marketing

Many organisations want to go green and be associated with green products or services to benefit from the advantages of green marketing. However, there are a number of problems that organisations must overcome when going green.

Polonsky (1994) has identified some problems associated with green marketing below:

Organisations must make sure that their actions are not misleading customers or violate any regulation dealing with environmental marketing. Green marketing claims must clearly state environmental benefits (Mishra, 2007).

Moreover, it is extremely difficult to establish policies that will deal with all environmental issues. For instance, procedures developed to manage environmental marketing deal with little set of issues, i.e., the truthfulness of environmental marketing claims (Schlossberg, 1993, as cited in Polonsky, 1994).

Organisations can face the risk that their current environmentally responsible action can have adverse effects in the future. For example, in the aerosol industry, firms switched from CFCs (chlorofluorocarbons) to HFCs (hydrofluorocarbons). However, afterward, it was found that HFCs are also greenhouse gas (Polonsky, 1994). Therefore, with the limited scientific knowledge, it is impossible to know what an organisation is currently doing is good. This is why some companies like Coca-Cola and Walt Disney World do not promote them as green companies although they are socially responsible (Mishra, 2007).

Furthermore, when organisations modify their products due to the increasing consumer concern about the environment, they must contend that customers are not always right about certain things. For instance, McDonald’s substituted its clam shells with plastic coated paper to satisfy customers’ wants for environment friendly packaging. However, through some scientific evidence, researchers showed that polystyrene is not that environmentally friendly that people think (Polonsky, 1994).

Moreover, by reacting to competitors pressures, firms can make same mistake as the leader. For instance, Mobil Corporation followed competition and launched “biodegradable” plastic garbage bags. Although, these bags were biodegradable, the circumstances under which they were disposed did not permit biodegradation to occur. Mobil was sued by some US states for misleading advertising claims (Mishra, 2007). Hence, following blindly competition can have lavish consequences.

What organisations do, they will always produce a certain percentage of waste. However, some organisations to maintain a level of profit do not address the important issue of environmental degradation. They instead concentrate on short term solutions than long term. According to Polonsky (1994), organisations must concentrate on long term solutions such as attempting to minimise waste rather than on short term such as to find “appropriate” uses which will shift the problem around.

However, it should be noted that reviewing the production system is very costly, thus, many organisations do not adopt environment friendly approach.

Lean, Defensive, Shaded and Extreme

Ginsberg and Bloom (2004) constructed a framework to determine which green strategy a firm is using. There are four types of green strategy a firm can use.

Lean Green

These firms try to be good corporate citizens; however, they do not publicize or market their green initiatives. On the other, hand, they want to reduce their cost, environmental impact and improve efficiencies through environmental friendly activities (Ginsberg & Bloom, 2004). This strategy helps to increase productivity while decreasing the environmental impact and the costs associated with productivity. Therefore, this strategy can help to make savings. An example of a lean green company is Coca-Cola.

Defensive Greens

These firms use green marketing as a tool to respond to a catastrophe or to competitors’ actions (Ginsberg & Bloom, 2004). They seek to improve their brand image and diminish damage, recognising that the green market segments are important and money-spinning sector that they cannot afford to lose.

Shaded Greens

These firms invest in long-term environmentally friendly processes that involve a considerable financial and non-financial commitment (Ginsberg & Bloom, 2004). They can differentiate themselves on greenness, but they do not do so because they work in markets in which they can gain more money by stressing on other attributes. Toyota implements this strategy in marketing their Prius.

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Extreme Greens

These firms are contoured by holistic philosophies and values. In these firms, environmental issues and responsibility are fully incorporated into the business and product life-cycle processes (Ginsberg & Bloom, 2004). The Body Shop, Patagonia and Honest Tea are examples of extreme green firms.