Green Marketing: Advantages and Disadvantages

Green Marketing: Advantages and Disadvantages ACKNOWLEDGEMENT As I sum up draft of my study, I appreciatively reminisce the contribution of all those people without whose support and help, this study would have never taken its present form. I take this opportunity to express my sincere gratitude towards the pillars of successful completion of Dissertation Report, without whose unflinching assistance co-operation at all times it would rather have been impossible for me to achieve the desired goal. I am greatly indebted to my faculty guide mentor, Mr.Saravana Krishnamurthy, Professor Kohinoor Business School, Khandala for his undying support encouragement throughout the project. Lastly I would like to thank my school, Kohinoor Business School, Khandala for giving me this opportunity to put to practice, the theoretical knowledge that I imparted from the program . Last but not the least I express my thanks to all the respondents who showed a keen interest in my Project, relatives, friends and neighbors to provide me the necessary resources to complete the Project the help provided to me at every step. DEDICATION â€Å"Keep your dreams alive. Understand to achieve anything requires faith and belief in yourself, vision,hard work, determination, and dedication. Remember all things are possible for those who believe.† -Merlin Olsen I dedicate this report to my parents and friends in recognition of their worth and to my teachers who are the guiding force for me and it is their effort and hard work that showed me the path of success and prosperity which would be there for me for the rest of my life. I would like to thank and dedicate this report to everyone who knowingly and unknowingly contributed to the completion of my Summer Internship Project. I hope people find this report useful and the subject matter adds to their knowledge. ABSTRACT In todays business world environmental issues plays an important role in marketing. All most all the governments around the world have concerned about green marketing activities that they have attempted to regulate them. For example, in the United States (US) the Federal Trade Commission and the National Association of Attorneys-General have developed extensive documents examining green marketing. There has been little attempt to academically examine environmental or green marketing. It introduces the terms and concepts of green marketing, briefly discuss why going green is important and also examine some of the reason that organizations are adopting a green marketing philosophy. It also focuses some of the problems with green marketing. It identifies the key to successful green marketing:  § Credibility  § Publicize stories of the companys and employees green initiatives.  § Enter environmental awards programs to profile environmental credentials to customers and stakeholders.  § Never overstate environmental claims or establish unrealistic expectations. It also tells about Why Are Firms Using Green Marketing  § Organizations perceive environmental marketing to be an opportunity that can be used to achieve its objectives  § Organizations believe they have a moral obligation to be more socially responsible  § Governmental bodies are forcing firms to become more responsible  § Competitors environmental activities pressure firms to change their environmental marketing  § activities  § Cost factors associated with waste disposal, or reductions in material usage forces firms to modify their behavior This report stresses upon the effect of green marketing on the consumers. Green marketing isnt just a catchphrase; its a marketing strategy that can help you get more customers and make more money. But only if you do it right. OBJECTIVE: 1)To determine whether Indian consumers are ready for Green Marketing 2) To determine whether Price has effect on purchase of green products 3) To determine whether environment consciousness has effect on purchase of green products 4) To determine whether Availability has effect on the purchase of green products 5) To determine whether Awareness has an effect on Purchase of green products RESEARCH METHDOLOGY Research Methodology is a way to systematically solve the research problem. It may be understood as a science of studying how research is done scientifically. In it we study the various steps that are generally adopted by a researcher in studying his research problem along with the logic behind them. It is necessary for the researcher to know not only the research methods/techniques but also the methodology. Researchers not only need to know how to develop certain indices or tests, how to calculate the mean, the mode, the median or the standard deviation, how to apply particular research techniques, but they also need to know which of these methods or techniques, are relevant and which are not, and what would they mean and indicate and why. Researchers also need to understand the assumptions underlying various techniques and they need to know the criteria by which they can decide that certain techniques and procedures will be applicable to certain problems and others will not. Thus, when we talk of research methodology we not only talk of the research methods but also consider the logic behind the methods we use in the context of our research study and explain why we are using a particular method or technique and why we are not using others. INTRODUCTION According to the American Marketing Association [1],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, * Changes to the production process, * Packaging changes, as well as * 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. The term green marketing [2] 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 Thus green marketing incorporates a broad range of activities, including product modification, changes to the production process, packaging changes, as well as modifying advertising. My definition which encompasses all major components of other definitions is: 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 incorporates much of the traditional components of the marketing definition that is All activities designed to generate and facilitate any exchanges intended to satisfy human needs or wants. 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. The obvious assumption of green marketing is that potential consumers will view a product or services 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 of which harm the environment in the way 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. IMPORTANCE OF GREEN MARKETING Man has limited resources on the earth [3], with which she/he must attempt to provide for the worlds unlimited wants. There is extensive debate as to whether the earth is a resource at mans disposal. In market societies where there is freedom of choice, it has generally been accepted that individuals and organizations have the right to attempt to have their wants satisfied. As firms face limited natural resources, they must develop new or alternative ways of satisfying these unlimited wants. Ultimately green marketing looks at how marketing activities utilize these limited resources, while satisfying consumers wants, both of individuals and industry, as well as achieving the selling organizations objectives. When looking through the literature there are several suggested reasons for firms increased use of Green Marketing. Five possible reasons cited are: †¢ Organizations perceive environmental marketing to be an opportunity that can be used to achieve its objectives †¢ Organizations believe they have a moral obligation to be more socially responsible †¢ Governmental bodies are forcing firms to become more responsible †¢ Competitors environmental activities pressure firms to change their environmental marketing activities †¢ Cost factors associated with waste disposal, or reductions in material usage forces firms to modify their behavior †¢ Opportunities GOALS OF GREEN MARKETING  · Eliminate the concept of waste.  · Reinvent the concept of product.  · Make prices reflect actual and environmental costs.  · Make environmentalism profitable.  · Bringing out product modifications.  · Changing in production processes.  · Packaging changes.  · Modifying advertising. NEED OF GREEN MARKETING: AN ANTHROPOLOGICAL VIEW Issues like Global warming [3] and depletion of ozone umbrella are the main for the healthy survival. Every person rich or poor would be interested in quality life with full of health and vigor and so would the corporate class. Financial gain and economic profit is the main aim of any corporate business. But harm to environment cost by sustain business across the globe is realized now though off late. This sense is building corporate citizenship in the business class. So green marketing by the business class is still in the selfish anthological perspective of long term sustainable business and to please the consumer and obtain the sanction license by the governing body. Industries in Asian countries are catching the need of green marketing from the developed countries but still there is a wide gap between their understanding and implementation. CHALLENGES IN GREEN MARKETING Ø NEED FOR STANDARDIZATION It is found that only 5% of the marketing messages from â€Å"Green† campaigns are entirely true and there is a lack of standardization to authenticate these claims. There is no standardization to authenticate these claims. There is no standardization currently in place to certify a product as organic. Unless some regulatory bodies are involved in providing the certifications there will not be any verifiable means. A standard quality control board needs to be in place for such labeling and licensing. Ø NEW CONCEPT Indian literate and urban consumer is getting more aware about the merits of Green products. But it is still a new concept for the masses. The consumer needs to be educated and made aware of the environmental threats. The new green movements need to reach the masses and that will take a lot of time and effort. By Indias ayurvedic heritage, Indian consumers do appreciate the importance of using natural and herbal beauty products. Indian consumer is exposed to healthy living lifestyles such as yoga and natural food consumption. In those aspects the consumer is already aware and will be inclined to accept the green products. Ø PATIENCE AND PERSEVERANCE The investors and corporate need to view the environment as a major long-term investment opportunity, the marketers need to look at the long-term benefits from this new green movement. It will require a lot of patience and no immediate results. Since it is a new concept and idea, it will have its own acceptance period. Ø AVOIDING GREEN MYOPIA The first rule of green marketing is focusing on customer benefits i.e. the primary reason why consumers buy certain products in the first place. Do this right, and motivate consumers to switch brands or even pay a premium for the greener alternative. It is not going to help if product is developed which is absolutely green in various aspects but does not pass the customer satisfaction criteria. This will lead to green myopia. Also if the green products are priced very high then again it will loose its market acceptability. BENEFITS OF GREEN MARKETING Todays consumers are becoming more and more conscious about the environment and are also becoming socially responsible. Therefore, more companies are responsible to consumers aspirations for environmentally less damaging or neutral products. Many companies want to have an early mover advantage as they have to eventually move towards becoming green. Some of the advantages of green marketing are: †¢It ensures sustained long term growth along with profitability. †¢ It saves money in the long run, though initially the cost is more. †¢ It helps the companies market their products and services keeping the environment aspects in mind. It helps in accessing the new markets and enjoying the competitive advantage. †¢ Most of the employees also feel proud and responsible to be working for an environmentally responsible company. GREEN MARKETING MIX PRODUCT Entrepreneurs [5] wanting to exploit emerging green markets either: Identify customers environmental needs and develop products to address these needs or will develop environmentally responsible products to have less impact than competitors. The increasingly wide variety of products on the market that support sustainable developments are: †¢ Products made from recycled goods, such as Quick N Tuff housing materials made from recycled broccoli boxes. †¢ Products that can be recycled or reused. †¢ Efficient products, which save water, energy or gasoline, save money and reduce environmental impact. †¢ Products with environmentally responsible packaging, McDonalds, for example, changed their packaging from polystyrene clamshells to paper. †¢ Products with green labels, as long as they offer substantiation. †¢ Certified products, which meet or exceed environmentally responsible criteria. †¢ Organic products-many customers are prepared to pay a premium for organic products, which offer promise of quality. Organic butchers, for example, promote the added qualities such as taste and tenderness. †¢ A service that rents or loans products-toy libraries. Whatever the product or service, it is vital to ensure that products meet or exceed the quality expectation of customers and is thoroughly tested. PRICE Pricing is the critical element of the marketing mix. Most customers will only be prepared to pay a premium if there is a perception of additional product value. This value may be improved performance, function, design, visual appeal or taste. Environmental benefits will be often be the deciding factor between products of equal value or quality. Environmentally responsible products, however are often less expensive when product life cycle coast are taken into consideration, for example fuel-efficient vehicles, water efficient printing and non-hazardous products. PLACE The choice of where and when to make products available will have significant impact on the customers you attract. Very few customers go out of their way to buy green products merely for the sake of it. Marketers looking to successfully introduce new green products should position them broadly in the market place so they are not just appealing to a small green niche market. The location must also be consistent with the image you want to project and allow you to project your own image rather than being dominated or compromised by the image of venue. The location must differentiate you from the competitors. This can be achieved by in-store promotions and visually appealing displays or using recycled materials to emphasize the environmental and other benefits. PROMOTION Promoting products and services to target markets include paid advertising, public relations, sales promotions, direct marketing and on-site promotions. Smart green marketers will be able to reinforce environmental credibility by using sustainable marketing and communication tools and practices. For example, many companies in the financial industry are providing electronic statements by email; e-marketing is rapidly replacing more traditional marketing methods and printed materials can be produced using recycled materials and efficient processes such as waterless printing. Retailers, for example are recognizing the value of alliances with other companies, environmental groups and research organizations. When promoting their environmental commitment to reduce the use of plastic bags and promote their green commitment, some retailers sell shopping bags and promote their green commitments. Moving Towards Green Marketing The era of green marketing has begun. It has already been granted wide acceptance by all stakeholders. However, there is a need to lay down the standards and practices, in order to bring in objectivity in the judgment of various national and international agencies. This will not only encourage the activities of green marketing but shall also provide the much needed level playing fields to all. PRESENT TRENDS IN GREEN MARKETING IN INDIA[6] . Ø Organizations Perceive Environmental marketing to be an Opportunity that can be used to achieve its objectives. Firms have realized that consumers prefer products that do not harm the natural environment as also the human health. Firms marketing such green products are preferred over the others not doing so and thus develop a competitive advantage, simultaneously meeting their business objectives. Ø Organizations believe they have a moral obligation to be more socially responsible. This is in keeping with the philosophy of CSR which has been successfully adopted by many business houses to improve their corporate image. Firms in this situation can take two approaches: †¢ Use the fact that they are environmentally responsible as a marketing tool. †¢ Become responsible without prompting this fact. . Ø Governmental Bodies are forcing Firms to Become More Responsible In most cases the government forces the firm to adopt policy which protects the interests of the consumers. It does so in following ways: †¢ Reduce production of harmful goods or by -products †¢ Modify consumer and industrys use and /or consumption of harmful goods; or †¢ Ensure that all types of consumers have the ability to evaluate the environmental composition of goods . Ø Competitors Environmental Activities Pressure Firms to change their Environmental Marketing Activities In order to get even with competitors claim to being environmentally friendly, firms change over to green marketing. Result is green marketing percolates entire industry. . Ø Cost Factors Associated With Waste Disposal or Reductions in Material Usage Forces Firms to Modify their Behavior With cost cutting becoming part of the strategy of the firms it adopts green marketing in relation to these activities. It may pursue these as follows: †¢ A Firm develops a technology for reducing waste and sells it to other firms. †¢ A waste recycling or removal industry develops. LITERATURE REVIEW 1. GOLDEN GOOSE OR WILD GOOSE? THE HUNT FOR THE GREEN CONSUMER This paper tries to provide insight by discarding the socio-demographic and personality-based influences that have been the prime research focus for the last 20 years Instead, it follows the example of other researchers looking at the importance of situational factors relating to the purchase itself. The green purchase perception matrix brings together two of the factors that have most often shown a positive link with green purchase behaviour in academic research perceived consumer effectiveness (PCE) and cost/ benefit trade-offs. The consumer will remain central to the greening of business for two very important reasons. Firstly, the consumption undertaken by private households accounts for a large proportion of the economys environmental impact . Secondly, consumption must also form part of the solution within free market economies in which consumer sovereignty is enshrined, and where the majority of companies profess to have a marketing orientation. However, continuing within the conventional marketing paradigm (and with a hunting mentality of identifying and targeting the green consumer with bait, traps and a little camouflage) is unlikely to create significant progress towards sustainability. Perhaps more importantly companies need to create the right habitat in which green consumption can thrive. Instead of acting as hunters, aggressively trying to benefit from the emergence of green consumers by targeting them, they could act more like gamekeepers who nurture and facilitate growth in the population of green consumers. This can be achieved by boosting consumer confidence and by reducing the level of compromise they must make through openness, the provision of full information and consumer choice, environmentally realistic pricing and the development of innovative clean technology solutions. Reference:- Ken Peattie (2001), Bussiness Strategy Environment, Golden goose or wild goose? The Hunt For the green Consumers, Vol: Bus. Strat. Env. 10, 187-199 2. A CONTENT ANALYSIS OF ENVIRONMENTAL ADVERTISING CLAIMS: A MATRIX METHOD APPROACH This study demonstrates that environmental advertising is not a monolithic phenomenon. Certain types of claims posed among environmental a dare more susceptible to consumer confusion and perceptions of deception. Advertisers would be well advised to pay particular attention to these types claims, particularly in light of the recent FTC directives. In their efforts to jump on the green bandwagon, advertisers should be sensitized to the fact that image claims may be a specific problem area Care should be taken in developing and pretest in environmental ads that rely on such claims and efforts to monitor consumer response to them should made. Ultimately, applying the matrix that we have developed here may help to identify such shortcomings with environmental advertising claims and direct attention to potential remedies. Reference:- Les Carlson, Stephen J Grove Norman Kangum (Sep 1993), Journal of Advertising, A context Analysis of environmental Advertising Claims: A matrix Method Approach, Vol.: XXII, No. 3, 27-38. 3.BUYER CHARACTERISTICS OF THE GREEN CONSUMERS AND THEIR IMPLICATIONS FOR ADVERTISING STRATEGY The study results provide interesting and potentially useful information about the consumer who is interested in buying green. They suggest that particular consumer attitudes are related to the propensity to buy green, but the relations are qualified somewhat by gender and by the nature of the green buying behavior.Making a special effort to buy green is unrelated to impulse buying and brand loyalty. In terms of the communication variables, persons making a special effort to buy green found magazines more interesting than television and indicated they would not buy a brand whose advertising they dislike. As expected, it was found predictor-criterion relationship differences between the two green buying variables. One criterion variable (making a special effort to buy green) taps a general interest in buying green. The other criterion variable (switching brands to buy green, even at the expense of product effectiveness) is more specific and more stringent in terms of greenness in that it provides more constraints and introduces a salient cost. The results indicate that, across genders, the consumer variables do a better job of predicting the variance in the former criterion than that in the latter criterion.. The results show that the green consumer has an interest in new products, is an information seeker, and talks with others about products. Additionally, green consumers consider themselves opinion leaders, and hence may provide word-of-mouth information that other consumers respect. The green consumer is also a careful shopper, not prone to impulse buying, and pays attention to pr ice, so advertisers must consider those issues as well.The results suggest that if companies do succeed in attracting green-oriented consumers, they will have to continue working to keep them. The lack of brand loyalty on the part of green consumers (in comparison with those less green), coupled with their propensity to actively seek information, implies that the green consumer will always be looking for new products. Although the environmental movement has been underway for years, green marketing seems to be a relatively new phenomenon. Marketers are typically not slow to adopt an innovation, but green marketing is in some ways fraught with peril Certainly, marketers are getting mixed signals—from polls, from research results, an d from sales figures. Common sense suggests that the use of green appeals by marketers can be productive. However, recent research on green marketing and the green consumer, indicates that the concepts will not be easy to apply. Green consumers must be treated carefully and, in particular, with respect. They appear to be careful and thoughtful consumers. Treated fairly, they may be receptive; treated poorly, they may not only switch brands, but also take others with them. References:- L J Shrun, John A McCarty Tina M Lowrey (Summer 1995), Journal of advertising, Buyer Characteristics of the green consumers and Their implications for Advertising strategy, Vol: XXIV, no 2, 71-81 4.ROLE OF SOCIO DEMOGRAPHICS IN SEGMENTING AND PROFILING GREEN CONSUMERS; AN EXPLORATORY STUDY OF CONSUMERS IN INDIA Though green consumerism is on the rise, not all the consumers are equally green. To be able to more effectively market green products and ideas,marketers need to segment their market and use differentiated marketing approach for each target segment. Socio-demographic characteristics have been widely used in the past researches as a basis of market segmentation and profiling of green consumers. The present study explores the usefulness of select socio-demographic characteristics in capturing variations present in the environmental consciousness of the consumers in India. Both the univariate and multivariate analyses point to the presence of statistically significant linkages between the socio-demographic characteristics and different environmental consciousness constructs, thus implying potential usefulness of these characteristics in profiling different segments of green consumers an devolving accordingly the green marketing strategies and environmental campaigns as capable of more effectively reaching and influencing the chosen green consumer segments. The study has employed a more elaborate conceptualization of the environmental consciousness construct. Regarding age,. A negative relationship of age with WSE, IISB and IIO signifies a greater tendency among the relatively younger persons (viz., those belonging to the age groups 18-24 years and 24-35 years) to actively search for the environmentally friendly products, gather environment related information and influence others to behave in an environmentally responsible manner. These persons, however, appear less enthusiastic about choosing the least polluting products (ICLPP). This might be due to their lower purchasing power for being mainly either students or unemployed at this stage in their family life cycle. Education level is found to be significantly related with the environmental consciousness in respect to five environmental consciousness measures. A significantly positive relationship of the education level with environmental knowledge (EK), incidence and frequency of conservation behavior (ICB and FCB) and frequency of environmental activism implies greater environmental consciousness among the relatively more educated persons. Because of their higher intellectual orientation, these persons are able to better understand and appreciate green ideas and green claims made by the green marketers. Education level is, however, found to be significantly but negatively related with the respondents willingness to seek environmentally friendly products (WSE). The variable â€Å"typeofschoolattended† emerges as a significant correlate of the environmental consciousness for as many as six constructs. Notwithstanding being less articulate and extrovert, persons with the government school background exhibit a higher level of environmental consciousness in terms of environmental awareness (AEIP) as well as willingness to seek environmentally friendly products (WSE), incidence of seeking information (IISB), conserving resources (ICB) and choosing the least polluting products (ICLPP). The only aspect where they lag behind persons with the private school background is frequency of environmental activism (FEA), probably due to being less extrovert and gregarious than their counterpart. Income also emerges as an important correlate of environmental consciousness. Persons with higher income are also high in their awareness of the environmental regulations (AER),willingness to pay for the environmentally friendly products (WPM), incidence of information seeking behavior (IISB) and choosing the least polluting products (ICLPP). But in terms of their involvement with the activities relating to influencing others (IIO) and conserving the environment (FCB), they turn out to be poor performers. References:- Sanjay k Jain Gurmeet Kaur (2006), Role of Socio Demographics in Segmenting and profiling Green Consumers; An exploratory Study of consumers in India, Vol.: 18 (3), 107-146 5. GREEN MARKETING, AN INDIAN PERSPECTIVE The present paper discusses the emergence of environmentalism in India and examines the response of government agencies, consumers, non- business organizations and corporat