Frame of Reference
The purpose of this frame of reference is to show the available knowledge about green marketing. First, the authors introduce and define green marketing. Second, the authors identify several reasons of why companies should adopt green marketing. Along with this, the authors show different strategies of green marketing available to green compa-nies. Furthermore, the authors show the current knowledge on how to green the market-ing mix.
There are several different definitions of green marketing. McDaniel and Rylander (1993), for example, have coined the term green marketing to describe marketers’ ef-forts to develop strategies targeting the environmental consumer. Polonsky defines green marketing as: “Green or Environmental Marketing consists of all activities de-signed 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 detri-mental impact on the natural environment” (Polonsky, 1994, p. 2).
Prakash (2002) argues that the relationship between the marketing discipline, the public policy process and the natural environment is of great importance. Prakash (2002) also identifies several terms used to describe this relationship, such as, environmental mar-keting (Coddington, 1993) and greener marketing (Charter and Polonsky, 1999). Fur-thermore, Fisk (1974) uses the term ecological marketing to explain this relationship (cited in Prakash, 2002), while Fuller (1999) uses the term sustainable marketing (cited in Prakash, 2002). However, Prakash (2002) terms this relationship as green marketing. Green marketing is linked with the strategy to promote products by using environmental claims either about their characteristics or about the system policies and processes of the companies that manufacture or sell them (Prakash, 2002). The common public opinion about green marketing is that it refers only to the promotion or advertising of products with environmental attributes (Polonsky, 1994). However, Polonsky (1994) claims that green marketing contains a broad range of activities, such as product modification, changes to the production, packaging alterations, as well as modifying advertising. Ac-cording to Menon and Menon (1997), green marketing is also a part of the overall corporate strategy. It requires that companies manipulate the marketing mix, as well as un-derstand public policy processes (Prakash, 2002).
Ottman (2006) claims the first rule of traditional marketing, as well as of green market-ing is to focus on customers’ benefits. Ottman (2006) gathers green marketing into five rules:
- Make the consumers be aware of and concerned about the environmental is-sues that your product addresses.
- Make the consumers feel that by using your product they will make a differ-ence.
- Make the consumers believe your claims.
- Make consumers believe your product will also work well as non-green al-ternatives.
- Make consumers afford any premiums.
Ottman (2006) sums up green marketing by claiming that if a company follows the five rules, it can lead to product improvements that can improve marketability, strengthen overall performance and become a potential source of innovation.
Why go green?
Polonsky (1994) identifies several reasons of why companies should adopt green mar-keting: Social responsibility, opportunities, governmental pressure, cost or profit issues and competitive pressure.
Companies are realizing that they are members of a wider community, and thus have to behave in a way that is friendly for the environment (Polonsky, 1994). This means that companies realize that they must both achieve environmental objectives as well as profit related objectives. This acknowledgement means that companies integrate environmen-tal issues into the companies’ corporate culture. Polonsky (1994) says that there are two perspectives available for companies in this situation:
- Companies can use their environmental consciousness as a marketing tool.
- Companies can be environmentally responsible without promoting this fact.
Many companies desire is to implement both approaches simultaneously. Such compa-nies try to offer environmentally responsible solutions to their customers. Moreover, by marketing this behavior they can create a competitive advantage (Polonsky, 1994).
As people are becoming more concerned for the environment, the benefits of adopting green marketing are increasing (Polonsky, 1994). Companies that have adopted green marketing into their corporate strategy can enjoy sustainable competitive advantage over the companies who are marketing non-environmentally responsible alternatives (Polonsky, 1994). Also, first-movers that adopt green marketing improve their image by reacting to market incentives instead of government regulations (McDaniel and Rylan-der, 1993).
However, green marketing is not always beneficial because companies may use it to mislead their consumers in attempt to gain market share. According to Polonsky (1994), companies have used false claims of the effectiveness of their products, as well as of the accuracy of their behavior. This often leads to companies losing both customers and market share (Polonsky, 1994). Other factors that can negatively affect the market share are that companies that employ green marketing, but are not first-movers, may be seen as imitators. Customers may be skeptical of these latecomers’ true intent (McDaniel and Rylander, 1993).
In all marketing related activities governments try to protect consumers; this is true for green marketing as well. Polonsky (1994) identifies several ways where governments protect the consumers and the society. Governments try to:
- Reduce production of harmful goods or by-products.
- Change consumer and industry’s use and consumption of harmful goods.
- Ensure that all types of customers have the ability to evaluate the environmental composition of goods.
Governments try to establish regulations that control the amount of dangerous waste produced by companies. They also issue various environmental licenses in order to con-trol by-products of production, which modifies organizational behavior (Polonsky,1994). Furthermore, governments try to encourage final consumers to become more en-vironmentally responsible. This triggers companies’ will to become environmentally re-sponsible, as they satisfy their customers better. Moreover, governments publicize envi-ronmental regulations that control green marketing claims. The Environmental Claims in Marketing – A Guideline and the Guides for the Use of Environmental Marketing Claims are examples of these publicly available documents (Polonsky, 1994). These regulations make sure that customers have appropriate information, which enables them to evaluate companies’ environmental claims. In, for example, the USA many States have stricter rules than the publicized environmental guidelines issued by the country. Thus governmental attempts to protect consumers from false and misleading claims provide consumers with the ability to make more informed decisions (Polonsky, 1994).
The activities by a company’s competitors influence the company to modify its strategy. Many companies observe competitors promoting their environmental behaviors and they try to follow suit. As mentioned above, McDaniel and Rylander (1993) identify companies’ competitors as a potential reason for the change in companies’ environmen-tal behavior. Furthermore, McDaniel and Rylander (1993) discuss the effects of being a first-mover or a follower.
Cost or profit issues
Some companies also use green marketing in an attempt to address cost or profit related issues. According to Azzone and Manzini (1994), environmental issues can improve the performance of companies. Green marketing acts both on revenues and costs. A green marketing strategy often leads to higher revenues (Azzone and Manzini, 1994). Howev-er, more limiting environmental standards can increase manufacturing and non-manufacturing costs. On the other hand, when companies focus on improving environ-mental performances it might result in less waste, which in turn lowers costs (Azzone and Manzini, 1994). Polonsky (1994) argues that when trying to reduce waste, compa-nies are often forced to re-examine their production processes. This often leads to better production processes that both reduce waste and reduce the need for raw materials (Po-lonsky, 1994). Also, companies sometimes attempt to find end-of-pipe solutions in-stead of reducing waste. This means that companies try to find other markets where their waste materials can be used as an input of production (Polonsky, 1994). Polonsky (1994) also claims that cost or profit issues may affect companies’ environmental mar-keting activities in the way that industries may be developed. Yurman (1994) identifies two ways in which this can happen (cited in Polonsky, 1994):
- Company develops a technology for reducing waste and sell it to other compa-nies; or
- Waste recycling or removal industry develops.
Green Marketing strategies
Defensive vs. Assertive
McDaniel and Rylander (1993) link the term green marketing to marketers’ attempts to develop strategies targeting environmental consumers. Furthermore, marketers should understand the environmental problems and be able to include these issues into the stra-tegic marketing management process (McDaniel and Rylander, 1993).
McDaniel and Rylander (1993) provide two approaches to green marketing: defensive and assertive. Companies that use the defensive approach do the minimum in order to avoid negative consequences. To avoid penalties these companies meet only the mini-mum environmental regulations imposed by the government. McDaniel and Rylander (1993) believe that most of the companies, which take a defensive approach to green marketing, will not encounter significant increase in market acceptance. Furthermore, these companies are not likely to gain a competitive advantage in this dimension (McDaniel and Rylander, 1993).
The second approach is an assertive approach. Companies that use the assertive ap-proach have the best opportunity for a sustainable competitive advantage in this dimen-sion (McDaniel and Rylander, 1993). Furthermore, this approach often involves having the advantage of being a first mover. Also, the assertive approach responds to market incentives rather than government regulations, meaning that companies exceed what is required by, for example, governments.
McDaniel and Rylander (1993) emphasize the importance of being a first mover. In green marketing the first mover advantage is important because the companies follow-ing the same practices might be considered imitators jumping on the green bandwagon (McDaniel and Rylander, 1993). Furthermore, the first mover advantage requires good strategic marketing in order to create an image of a sincere environmental activist. This creates the basis for sustainable competitive advantage. Other benefits of the assertive approach include that government agencies are less prone to investigate and control the companies who adopt this approach.
Lean, Defensive, Shaded and Extreme.
According to Ginsberg and Bloom (2004), managers of green companies must ask themselves two main questions, with some sub-questions, regarding a green marketing strategy:
- How substantial is the green consumer segment for the company?
- Can the company increase revenues by improving on perceived green-ness?
- Would the business suffer a financial blow if the consumers judged the company to be inadequately green? or;
- Are there plenty of consumers who are indifferent to the issue that the company can serve profitably?
- Can the brand or company be differentiated on the green dimension?
- Does the company have the resources, and understanding of what it means to be green in its industry and internal commitment at the highest management levels to be green?
- Can competitors be beaten on this dimension, or are some so entrenched in the green space that competing with them on environmental issues would be very expensive and frustrating?
The questions help green companies to determine how much they should emphasize their greenness as a differentiating feature in its marketing (Ginsberg and Bloom, 2004). The level of investments in environmentally friendly business practices is, however, not covered by these questions, but rather depends on other factors. In accordance with the answers of the questions above, green companies can choose one of the following strat-egies: Lean green, Defensive green, Shaded green and Extreme green (see Figure 4-1).
2 Rockwool Background
3 Problem Discussion
3.2 Research questions
4 Frame of Reference
4.1 Green Marketing
4.2 Why go green?
4.3 Green Marketing strategies
6 Empirical findings and Analysis
6.1 Why did Rockwool go green?
6.2 Green Marketing Strategy
6.3 Green Marketing Mix
7.1 Reasons to go green
7.2 Green marketing strategies
7.3 Greening the marketing mix
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