The Power of Marketing a Green Business, Part I
|Copyright 2014 by Virgo Publishing.|
|By: Brad Simonis|
|Posted on: 08/02/2009|
Editor’s Note: This is the first of a two-part series examining the marketing of environmentally friendly products and services.
“Consumers in the United States are expected to double their spending on green products and services in the next year to an estimated $500 billion,” according to an annual consumer survey by Landor Associates. With headlines like these, many in the self-storage industry who are in search of anything to win over customers during these difficult economic times can’t help but ask if green marketing offers the competitive advantage, perfect marketing message, or magic bullet they need.
The perfect storm of plummeting new car sales, slowing retail sales, the housing crisis, a nose-diving stock market and a never-ending media blitz on the state of the economy has resulted in dramatic dips in self-storage occupancies. Can green marketing help?
In consumer products and services, green marketing is already a well-established trend. We see more of it every day, from IBM inundating us with TV ads of a meek, environmentally minded employee winning over the tyrannical corporate boss to the ubiquitous lineup of earth-friendly claims plastered on product labels on retailers’ shelves.
So what is green marketing exactly? Does it matter? Do consumers care? Are we missing the boat if we’re not talking green to our customers? And if so, what is the right way to do it?
Our objective in this first article is to look at other industries, from manufacturing to retail, to see what we can learn from those who have been treading this sometimes slippery slope, and hopefully shorten the learning curve as a result.
Defining Green Marketing
Green marketing is a broadly used term that can describe any marketing message that touts a company’s use of ecologically safer products or processes, including recyclable and biodegradable packaging, energy-efficient operations, better pollution controls or anything that lessens a company’s environmental or “carbon” footprint (a measure of the impact human activities have on the environment in terms of the amount of greenhouse gases produced, measured in units of carbon dioxide).
It’s a wide-ranging phrase, which is part of the challenge facing successful green marketing efforts. A bigger challenge may be the lack of standards and oversight. Part of this shortcoming is due to the wide variety of companies and industries making environmental claims. How do we oversee truth in advertising as it relates to organically grown chickens versus recycled building materials? By definition, both are “green” claims, but with two completely different bases.
The Federal Trade Commission began issuing green marketing guidelines in 1992 with its Guides for the Use of Environmental Marketing Claims, commonly known as the Green Guides. These guides are designed to help marketers avoid making environmental claims that are unfair or deceptive. The FTC updated these guidelines in 1996 and again in 1998 and is currently reviewing the Green Guides “to ensure that they are appropriately responsive to changes in the marketplace and in consumer perception of environmental claims,” according to its website.
This review is coming more than a year earlier than previously planned as a direct result of the shear volume of green marketing messages.
In the interim, it appears that consumers are dependent on the producer of a claim to validate it, so ultimately the consumer must make decisions as to the soundness of the claim. This gap between what consumers take a green message to mean and the actual truth behind the claim is known as the “green gap.” Conversely, a company’s false or erroneous claim of a green benefit is known as “greenwashing.”
Companies can often make a claim that is technically true but fails to tell the whole story, which, if known, might change the perceived benefit of the product. For example, if a new recycled product takes more non-renewable resources to produce than the product it replaces, a company’s green marketing claim of using recycled materials is technically true, but the process doesn’t result in a net environmental benefit.
According to the 2008 Green Gap Survey conducted by Cone LLC and The Boston College Center for Corporate Citizenship, nearly half of the U.S. population erroneously believes a product marketed as “green” or “environmentally friendly” has a positive or beneficial impact on the environment. Only 22 percent understand these terms more accurately describe products that have less negative environmental impact than previous versions or competing products.
“Most people agree green solutions are better than less green solutions, but how green?” says Frederic Brunel, associate professor of marketing at Boston University, in an interview with The Boston Globe. “... We need goals and standards.”
Currently, there are many interpretations of green marketing, and every company and industry varies their use of terms and supporting claims. In today’s climate, each company needs to define green marketing for itself, but do so in a manner that makes sense to its customers.
First, though, companies must identify “green” opportunities as they relate to products, packaging, services, operations, processes, manufacturing, building and building materials. Only after a company has taken a thorough inventory of itself and its processes and has made changes that make a difference in its environmental footprint can it begin to market those changes. This is something we will explore in part two of this series.
Do Customers Care?
Before a company jumps head first into developing strategies for its green marketing initiative and the re-engineering that precedes it, perhaps we should first look at whether the efforts will show a return. Just how important is being “green” to your customers? Unfortunately, recent surveys show varying degrees of the importance, effectiveness and return on investment (ROI) for a company’s green marketing efforts, leaving us without a solid conclusion or definitive yes or no answer.
Of course, ROI is a bit of a capitalist’s view on saving the planet. Making your operation green has a lot of returns that won’t show up on the bottom line but may improve branding and customer perception of a particular business or industry. Just how important is green marketing as part of a company’s overall marketing mix, and how important is it in persuading customers to do business with you? Depending on which survey you read, you can build a strong or not-so-strong case as to the effectiveness of green marketing.
Gallup data indicates consumers’ attitudes toward green issues have shifted in the midst of economic hardships. A Gallup survey in January 2000 showed 70 percent of Americans believed the environment should take priority over the economy, but in March 2008 the number of respondents who believed the environment should receive a higher priority fell to 49 percent.
Cone’s Green Gap Survey places the positive impact of a company’s green marketing at 39 percent, reporting that nearly four in 10 Americans preferentially buy products they believe to be “environmentally friendly.”
An Ipsos Reid study conducted last spring came to the opposite conclusion. In that study, four in 10 (44 percent) Americans either “completely agree” (10 percent) or “somewhat agree” (34 percent) that they are not willing to pay more upfront for green-building products, even though they know they’ll be better for the environment and could potentially save them money in the long run.
The same study also revealed that a significant percentage of consumers view the green labeling of a product as little more than a marketing tactic. Ipsos Reid reported that seven in 10 Americans either “strongly agree” (12 percent) or “somewhat agree” (58 percent) that companies that call a product “green” (meaning better for the environment) are doing so just as a marketing tactic.
Men appear more skeptical of green marketing than women. Some 75 percent of men in the Ipsos Reid study believed that labeling a product green is just a marketing tactic, compared to 65 percent of women.
Does this mean a green marketing campaign can have a negative impact on your customers? Not necessarily. Part of the negative turn in the second Gallup survey, for example, may be due to the perception that purchasing environmentally friendly products is more expensive than the alternative. In a bad economy, that could certainly be a factor. The primary danger in presenting a green marketing program, however, is to overstate benefits or be deceptive in messaging, which can truly damage credibility.
Green Marketing Mistakes
A big part of the green marketing challenge is the consistency between a company’s message and the examples it sets in practice (a common problem in all forms of marketing and branding). To claim that you recycle water while a faucet drips in the men’s room is inconsistent with your messaging, for example.
The value of making green claims in chemistry or renewable resources won’t mean much if you are missing much more obvious areas where you could be greener. Are you touting your use of recycled building materials but not offering recycling bins in addition to your trash cans? A consumer with a strong environmental conscience (referred to in marketing circles as a LOHAS, meaning Lifestyles of Health and Sustainability) might take offense at having to throw a glass bottle into your trash can if no recycling bins are offered, then scoff at any green claims you make in your marketing.
“The overwhelming majority of environmental marketing claims in North America are inaccurate, inappropriate or unsubstantiated,” according to a comprehensive survey released by TerraChoice Environmental Marketing. Such pervasive greenwashing, according to TerraChoice, means that “well-intentioned consumers may be misled into purchases that do not deliver on their environmental promise.”
TerraChoice has identified six types of labeling problems that it calls marketing sins. They include claims that have no proof to back up assertions; claims that are so vague their meaning is likely to be misunderstood by consumers; claims that are irrelevant to their respective products; claims that are technically true but distract consumers from a product’s real problems; and claims that misuse or misrepresent certification by an independent authority.
“We are now entering a phase where the consumers have a lot more access to information than they have ever had in the past,” says Scot Case, vice president of TerraChoice, in an interview with Greenbiz.com. “I think the marketing departments haven’t quite realized what strong demand there is for that kind of transparency.”
By conducting an early review of its Green Guides, the Federal Trade Commission (FTC) is clearly backing that position. The FTC hopes to provide more clarity in its guidelines, ensure relevancy and efficacy, and one would assume that the punishment for those failing to heed the new guidelines is sure to get stiffer.
Going forward, green messaging can be a slippery slope for the marketer. The marketing message has to be clear and not subject to interpretation. The FTC looks at all advertising from the consumer’s perspective. In other words, what message does the advertising actually convey to customers? For environmental claims that the Green Guides do not address specifically, the FTC requires substantiation for all reasonable interpretations of an ad. Sometimes it may be necessary to do research to determine how consumers interpret an ad.
To carry weight with consumers, green messaging also needs to be relevant and matter to your customers in relation to what you do as a business. Another way to add credibility to claims is through the use of co-branding. If your message is supported via a marketing piece from a well-known supplier, or even through a local trade association, it may help to validate the message in the minds of consumers.
Most important, there has to be consistency in your message in every phase of customer interaction. Put on your “green” glasses and take a long, hard look at your company from the inside out. What more can you do to lessen your environmental impact? Are you sending any confusing messages to your customers?
The Halo Effect
Done correctly, green marketing should carry some weight with customers and result in some positives. This type of marketing is still considered fairly new by mainstream or mass-market consumers who likely perceive green messaging much differently than so-called LOHAS consumers and are less likely to scrutinize you as closely.
Like all types of marketing, green messaging will have a stronger impact on certain segments of your customers. The data seem to indicate that no more than 40 percent of customers are currently influenced in their purchase decisions by a green marketing message, and many analysts believe the number is substantially less.
That means green marketing isn’t likely to be the silver bullet for building business at your company. Nevertheless, the perception of your brand is likely to improve with mainstream customers, whether your green efforts are large or small. This halo effect can be seen in how the Prius has affected the perception of Toyota as a whole. One solid green effort by Toyota lifted the entire company’s green attributes above the rest of the automotive industry.
This type of halo effect extends to customers whose personal experience with your brand is reinforced simply by feeling like they have made their own small contribution to the environment by choosing your products or services. Some environmentalists and marketing analysts believe that green marketing is merely a way of tapping into people’s desire to feel like they’re saving the earth, but without having to sacrifice their lifestyle. There may be some truth to that.
The bottom line is the positive impact of green marketing on your business should outweigh the negative, but only if you don’t accidentally damage perceptions due to inconsistent practices and halfhearted efforts that are not thought through.
Brad Simonis is a principal with Metro International, a carwash consulting firm and distributor. The company offers expertise in site selection, layout, design, construction, operation and marketing of high-volume carwashes. To reach him, call 866.463.8723; visit www.metro-intl.net.