Chances and Problems of Marketing of Ecological Products

Term Paper 2015 19 Pages

Environmental Sciences


Table of Contents

1. Introduction

2. Overview about "Green Marketing" and "Ecological Products"
2. 1 What is considered "green marketing" and "ecological products"
2. 2 History and development of green marketing
2.3 Actors and influencing factors of green marketing
2.4 The 4 P´s in green marketing

3. Chances and Problems of marketing of ecological products
3.1 Chances for companies
3.2 Problems for companies
3.3 How can problems be mitigated and chances used

4. Case study – Marketing of green buildings
4.1. Theoretical Marketing of green buildings
4.2. Practical Marketing of green buildings – shopping center development in Finland

5. Conclusion


1. Introduction

Recent global developments leaded to big environmental challenges like resource depletion, global warming and environmental degradation and the current population is using already 50 % more resources than the planet earth can provide (Scott; Vigar-Ellis, 2014, p. 643). Hence people become more and more aware of environmental problems and the pressure for companies to act in an environmentally friendly way is increasing (Scott; Vigar-Ellis, 2014, p. 643). Today much more than about 30 years ago, citizens, enterprises and institutions concern about these environmental problems (Papadopoulos et al, 2010, p. 166). Thus ecological products, also called green products are increasingly marketed through green marketing. There are many chances of successfully market green products but many things have to be taken into account and to be analyzed before conducting green marketing.

The aim of this paper is to describe general chances and problems of the marketing of ecological products and how problems can be mitigated. In addition strategies will be highlighted, how to overcome these problems and how to conduct green marketing successfully.

In the first place, in chapter 2, there will be an overview about green marketing and ecological products, the definitions and explanation of the terms green marketing and ecological products and what do they refer to. Following, there will be a short description of the history of green marketing in order give a better understanding from where it emerged. Influencing factors and actors of green marketing as well as the marketing mix will also be discussed in chapter 2.

In chapter 3 it will be pointed out how the general problems can be mitigated and which chances could be used in order to successfully market ecological products.

For Chapter 4, a special case study about green buildings was chosen in order to reflect some general aspects from chapter 2 and 3 to make them more clear with the help of a practical up-to-date case.

Following in chapter 5 there will be a conclusion and discussion about green marketing. Problems will be reflected in this chapter and an outlook will be given about how to conduct green marketing successfully in order to create a win-win situation for all, the companies, the stakeholders and the environment.

2. Overview about "Green Marketing" and "Ecological Products"

2. 1 What is considered "green marketing" and "ecological products"

According to Belz (2003, p. 170) marketing from an ecological point of view is highly ambivalent: On the one hand marketing is commercial and growth-oriented and hence a contributory cause of environmental contamination due to consumption. On the other hand, marketing can contribute to the enhancement of the environmental situation by successfully marketing ecological products and services. But the utilization of these potentials depends essentially on the extent and the kind of green marketing (Belz, 2003, p.170).

A lot of literature exists about „green marketing“ and „green products“ as well as different definitions and usages of these terms. In this paper the definitions of the following will be taken into consideration.

According to Goswami (2013, p. 1) „Green marketing“, also called Environmental Marketing or Ecological Marketing (eco-marketing), is based on a holistic marketing concept, where the production, marketing, consumption and disposal of products and services are performed in an environmentally friendly manner. The growing awareness from both customers and marketers about environmental impacts like global warming, solid waste, which is not biodegradable, pollutants, etc. are centered in this marketing concept. One definition of green marketing is:

"All activities designed to generate and facilitate any exchange intended to satisfy human needs or wants such that satisfying of these needs and wants occur with minimal detrimental input on the national environment." (Goswami, 2013, p. 1).

That means, that the human needs or wants in form of quality, reasonable pricing and performance of products or services need to be satisfied, but with the least disadvantageous impact to the environment (Goswami, 2013, p. 1). The most extensive green marketing or eco-marketing approaches are those, which are integrated and complementary with other functional areas of the company and which are taking into account the whole ecological product lifecycle (Belz, 2003, p.170). Furthermore, according to Belz (2003, p.170), in order to make the customer understand the ecological value added, appropriate information and signals are necessary for green marketing.

About „ecological products“ or also called „green products“ it can be said, according to Goswami (2013, p.3), that these are produced by using green technology and that they are not causing environmental hazards. That means, that these are for example products, which:

- are originally grown
- have only natural ingredients
- are recyclable, reusable, biodegradable
- are not tested on animals
- do not pollute or damage the environment

2. 2 History and development of green marketing

In the 1960s concerns about the health of the earth and its finite resources were rising due to scientific and technological research (Lu et al, 2013, p. 4). In 1975, the first workshop about ecological marketing was held by the American Marketing Association (AMA) (Goswami , 2013, p. 2). Throughout the 1980s, research on environmental problems took place with a focus on political reforms with reference to the usage of natural resources (Lu et al, 2013, p. 4). But it was in the late 1980s that the idea of green marketing really came up (Peattie; Crane, 2005, p. 358). The consumption patterns started to shift towards greener products and the willingness to pay for greener products was rising (Peattie; Crane, 2005, p. 358). Customers became more and more aware of environmental issues and national governments, especially in developed countries, introduced stricter laws and regulations (Peattie; Crane, 2005, p. 358). Hence, the 1990s marked the start of a new consumer trend and stimulated the production of greener products and the need for green marketing (Lu et al, 2013, p. 4).

Regarding companies, there was then also, according to Peattie; Crane (2005, p. 358) a high interest in green marketing and hence major changes and innovations. A survey from 1990 from Vandermerwe and Oliff’s has figured out, that 92 % of Europes multinationals said, that they have changed their products regarding to green issues, and 85 % said, that they have changed their production systems. Also in the United States, introductions of green products of all new household products more than doubled to 11.4 % between 1989 and 1990 and continued growing to 13.4 % in the year 1991 (Peattie; Crane, 2005, p. 358).

But, according to Lu et al (2013, p. 4), despite the huge growth of the market for green products during the 1990s, also deficiencies were experienced. It was figured out, that several companies were falsely advertising „environmentally friendly“ characteristics of products where environmental claims were not proven. As a result of this behavior of companies towards their customers, also called „green-washing“, companies lost the loyalty of long-term customers for profits and sales and additionally customers developed mistrust for environmental efforts (Lu et al, 2013, p. 4).

From the year 2000 onwards, green marketing has got new impulses, for example the implementation of better technologies, stricter governmental regulations and improvements of the worldwide environmental awareness (Rahbar; Wahid, 2011, p. 74).

Now, also with the deeper inspection from different environmental organizations and also the media, green products have experienced a big improvement and found again consumer confidence from the 2000s onwards. Some researchers even consider it as a „comeback“ of green marketing (Lee, 2008, p. 575). But still, skepticism exists and in the past as well as today and in the future it’s important to take into account: if companies operate in an environmentally sustainable way, they will build up competitive advantage (Eerikäinen; Sarasoja, 2013, p. 233).

2.3 Actors and influencing factors of green marketing

According to Belz (2003, pp.170-171) there are company external and company internal influencing factors of green marketing, which determine the kind and extend of green marketing activities.

External factors represent ecologically affected stakeholder groups and the willingness to pay of consumers for ecological products. They have ecological requirements towards companies and are a central and important determinant of green marketing. Examples for ecological claims and stakeholder groups are:

- consequent implementation of environmental regulations (environmental authorities)
- safe and healthy workplace (employees, labor unions)
- ecological criteria for bank lending (banks)
- increasing demand for ecological products (final consumers, retail)
- clear declaration of ecological products (consumers, ecology groups)

It can be supposed, that market stakeholders like final consumers, distributors and competitors are central determining factors for the kind and extend of green marketing.

Another important external influencing factor is the customers’ willingness to pay for ecological products. The customer is ready to pay a higher price for a product, if he can recognize an ecological value added (Belz, 2003, pp.170-171).

Also environmental groups as well as the media are examining the companies’ adherence with ecological principles and hence are creating an increasing pressure and sensibility towards companies and their green marketing (Gurau; Ranchhod, 2005, p. 547).

Internal factors: According to Belz (2003, p. 171) the company size is an important internal factor. Bigger companies, regarding to the number of employees, do have more financial and human resources than smaller companies in order to develop ecological product innovations and to address new ecological challenges.

Also the company branch is an important internal influencing factor. For example the food branch is confronted with a high extend of ecological requirements of market stakeholder towards the company regarding packages and cultivation. In contrast, the machine industry, a representative of capital goods industry, is almost not confronted with ecological requirements of market actors.

Another important company internal factor for the kind and extend of green marketing is the country in which the company operates. Here are on the one hand the national environmental policies and on the other hand the environmental awareness of the population important influencing factors (Belz, 2003, p. 171).

According to Lu et al (2013, p. 5), the so-called "green consumer" is a strong motivation factor for the green industry. As mentioned before, environmental concerns of consumers are motivating them to change their values, lifestyle and hence purchasing green products. But targeting the green consumers can be very challenging for companies because the consumers do not only want green products but also want companies to deal with practices like recycling and energy efficiency. And moreover, consumers do not want to sacrifice quality and do not buy a product only for being environmentally friendly. Still they are expecting a product to include a value added, like for example cost efficiency, safety, convenience or performance. Moreover, green consumers might not trust big companies and advertisers and many consumers believe that products which are claiming ecological attributes do actually not have the green qualities (Lu et al, 2013, p. 5+6).

Hence, trust building is a very important term in connection with the green consumer as a central actor in green marketing. Ecological products are as per Belz (2003, p.170) highly in need of explanations, because ecological features are in most of the cases trust features, which cannot be reviewed by the customers before or after the purchase. Hence he is highly dependent on the information of the producer or third parties. For example eco-labels, which are given by third, independent institutions, are a simple and reliable opportunity to communicate ecological features of a product (Belz, 2003, p.170).

2.4 The 4 P´s in green marketing

As well as in the conventional marketing mix, the 4 P´s, which include product, price, place and promotion, are applied in green marketing (Prakash, 2002, p. 285).

- Product: According to Goswami (2013, p. 2), marketers are identifying the environmental needs of customers and develop products that address these needs or develop environmentally friendly products, which have less impact than those of competitors. These products may be made of recycled materials, may save water, energy or gasoline, reduce environmental impacts, use environmental friendly packaging and green labels (Goswami, 2013, p. 2), which communicate the environmental value added to the customer (Scott; Vigar-Ellis, 2014, p. 643).

- Price: As per Goswami (2013, p. 2), most of the customers are willing to pay a higher price, if the value added can be recognized. Whereas in the conventional marketing mix, these value added may be for example enhanced performance, function, design or taste, in the green marketing mix this value added are environmental benefits. But as mentioned before, customers are not willing to sacrifice a “conventional” value added for an environmental value added. Rather is the environmental benefit often a factor for decision between products of equal value and quality. However, in the long run, ecological products are often cheaper than “normal” products. Examples are fuel-efficient vehicles or water-efficient printers

- Place: The question where and when products are made available for the customers will decide which customers are attracted. It is generally important, that marketers who want to successfully launch new green products, position them rather broadly in the market. In this case, the products are not just attractive for a small green niche market. Furthermore it is important that the selling place is compatible with the companies image and differentiate a company from its competitors (Goswami, 2013, p. 2). An example here is point-of-sale information (Scott; Vigar-Ellis, 2014, p. 643).

- Promotion: According to Goswami (2013, pp. 2-3) promotion includes advertising, public relations, sales promotions, on-site promotions and direct marketing. As per Rahbar; Wahid (2011, p. 76) most organizations are using environmental advertisements through media in order to introduce their green products. The aim of green advertisements is to influence the buying behavior of consumers in order to make them buy products which do not harm the environment (Rahbar; Wahid ,2011, p. 76).

For example retailers are forming alliances with other companies, research organization or environmental groups in order to promote environmental engagement or companies publicize stories of the companies or employees green activities (Goswami ,2013, p. 3).

3. Chances and Problems of marketing of ecological products

There are chances but also problems of the marketing of ecological products for companies. The most important ones will be mentioned here. Subsequently some strategies to overcome the problems and to highlight the chances will be emphasized.

3.1 Chances for companies

First of all it has to be mentioned that the implementation of green marketing in the society is not an easy task in the short run, but it will be definitely profitable in the long run (Kanonuhwa; Chimucheka, 2014, p. 2786).

Competitive advantage: As we have already heard in former sections of this paper, the consumers become more aware and concerned about the natural environment and hence their demands change. Therefore, new markets for environmentally friendly products come up, strengthened by consumers who want to protect the environment (Papadopoulos et al, 2010, p.167). Although there are also many problems with green marketing, the concept gets continuously more supporters, particularly in sectors with concerns about climate change and forest protection (Papadopoulos et al, 2010, p.167). Consequently there is a chance for companies that market products with ecological characteristics in gaining a competitive advantage over their competitors that market product alternatives without ecological characteristics (Polonsky, 1994, p.3).



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chances problems marketing ecological products




Title: Chances and Problems of Marketing of Ecological Products