Greenifying businesses – the four Ps and marketing challenges

 Greenifying businesses – the four Ps and marketing challenges

 a discussion paper by Mahmud Yussop 3 March,2016 

Introduction 

Green Marketing has been a growing trend globally especially with the prominence of the environmental issues advanced by many layers and groups in society across the globe. Green marketing is taking shape as one of the key business strategies of the future. This is because of the increasing environmental consciousness which leads consumers to believing that shifting to the more environmental friendly products and services are an effort to help improve the environment. Businesses need to adapt to this unstoppable trend and supply end users or consumers what they demand to capitalise the current market prospects. It is worth noting that Green Marketing is also sometimes referred to as Environmental Marketing, Ecological Marketing and Eco-Marketing. There is no official definition as to what Green Marketing is, but the writer would define it based on three definitions and two perspectives, one coming from the viewpoint of consumers and the other coming from the businesses. According to Bagheri (2014), there are three definitions of Green Marketing depending on how it is perceived. The retailing definition describes it as the marketing of products that are presumed to be environmentally safe. The socially marketing definition claims that it is the development and the marketing of any product or service which are specifically designed in order to mitigate the adverse effects on the physical environment or even to improve its quality. According to Bagheri the environmental definition emphasise on the effort of the organizations to promote, produce, market, package, distribute, and reclaim products in a manner that is ethically sensitive and responsive to “green” and ecological concerns. This paper will discuss the importance of greenifying today's businesses by giving some examples and then will explore on the specifics of implementing the green initiatives with regard to the four Ps of marketing. 

Consumer and Business Perspective Definition 

 The term “Green Marketing” was first discussed in 1975, during an ecological marketing seminar organized by the American Marketing Association (Boztepe, 2012). It refers to the process of marketing and selling products and/or services with their environmental benefits being emphasized and highlighted. The basic assumption of this form of marketing is that the consumers would most likel gauge a product’s effectiveness based on their environmental benefits. They would base their decision on buying products based on how they quantify or qualify those environmental benefits. The second assumption of Green Marketing is that consumers are willing to pay more for the products which are environmental friendly than for their 'less-green' alternatives. This assumption however, has not been proven to be conclusive yet. From the perspective of business, organizations involve green marketing as part of their strategies in order to get the consumers’ trust and build a rapport with the societies and groups advocating for a greener environment. Those companies which have already included green marketing in their business functions make “green” decisions not just on the final product per se, but also in terms of making the entire manufacturing process a lot greener. This includes making the raw materials, processing, packaging, and distribution to be more environmental friendly. 

Green consumerism and products: Some lessons learnt

 According to Arseculeratne (2014), Green Marketing has been tremendously transformed since it was introduced in the 1970s and 80s. Organizations have indeed realized that the significane of this form of marketing is essential in order to gain competitive advantage over their competitors in the industry. One of the things which people need to know and understand in order to fully grasp the concept of Green marketing is that it is in response to the new segment of consumers called green consumers (Abbasi, 2014). These are the group of consumers who are adamant in denouncing products that are hazardous and with high potential risks to the health and safety of people as well as the environment. They often boycott any product or service which creates significant damage to the environment during their production, application, distribution, or even disposal stages. Additionally, these consumers do not endorse products which endanger the survival of wildlife species such as the luxury bags which are made from animal skin or fur. Green Marketing may also be studied as part of an organization’s corporate social responsibility (CSR) . Such organisations practice “business decision making linked to ethical values, compliance with legal requirements, and as well as respect for people, communities as well as the environment” (Karna et.al., 2003). They respect people, communities as well as environment in their quest for profits. There are of course several dimensions of CSRs and many companies have applied many versions of it like charitable contributions, cause-related marketing, and other forms of marketing which include community support, people support, education-related, corporate generosity, social representation of children and women, and of course, addressing environmental-related issued and concerns. A study conducted in 2013 by the Underwriters Laboratories states that 40% of consumers believe that manufactures have not done enough effort in terms of environmentally friendly manufacturing procedures and products (Environmental Leader,2013).

There are several reasons why companies have started shifting to this strategy. Firstly as a business concern, they want to be recognized as socially responsible by tackling socially relevant issues. Since the 2008 global financial crisis, companies have become more transparent in terms of reporting their corporate social responsibilities. Parallel with the need for CSRs, the emergence of the green marketing proves to be essential as it is seen to be a tool for sustainable development as well as for satisfying the needs of the company’s stakeholders. The environment has become a mainstream issue and as previously mentioned, there has always been a continuous and progressive increase in consumer environmental consciousness (Kalafatis et.al., 1999) which has pushed companies to recognize that the environment needs to be a part of their corporate social responsibility programs. A lot of companies, especially the large conglomerates, especially those which are traded locally and in the international market have already recognized that tackling the environmental issues and aligning their corporate social responsibility programs to it is an opportunity to make their contributions to the environment as well as gain the public’s favour through creating green public relations campaigns. According to the 2013 Global CSR RepTrack 100, four companies are tied to the number one spot in terms of CSR reputations – Microsoft, Walt Disney, BMW, and Google. The other firms in the top 10 are Daimler, Sony, Intel, Volkswagen, Apple, and Nestle. Further to this, according to the study, Walt Disney has the best perception for citizenship and about 50% of the consumers surveyed believe that the company supports good causes and protects the environment. Listed below are some specific examples of CSRs which companies have done in order to participate in the Green Marketing trend: 

 1) Coca-Cola has refined their process and pumped syrups directly from the tanks instead of using plastics, which has saved 68 million pounds per year (Chaudhary, 2011) 

 2) Starbucks has created its C.A.F.E practices guidelines which were designed to ensure that the company sources sustainably grown and processed coffee by evaluating the environmental aspects of producing coffee. 

 3) McDonald’s has replaced its clam shell packaging with waxed paper because of increased consumer concerns relating to polystyrene production and Ozone depletion (Chaudhary, 2011) 

 4) CISCO has launched aggressive efforts to reduce greenhouse gas emissions from their operations and suppliers worldwide beginning 2012 (CISCO, http://csr.cisco.com/pages/environment) 

 5) Xerox has introduced high quality recycled photocopier paper in an attempt to satisfy the needs and demands for firms for less environmentally harmful products (Chaudhary, 2011)

 6) Metropolitan Fine Printers has built a successful company based on the triple bottom line of concern for the environment, focus on profitability, as well as community service (Chaudhary, 2011) 

 7) Barauni refinery of IOC has already taken steps for restricting air and water pollutants 

 8) Jollibee Food Corporation, a company based in the Philippines with hundreds of stores in the United States.

Besides the above examples, companies have also “greenified” their services and products. Organizations have started going paperless, with majority of their transactions relying mostly on enterprise asset management systems, management information systems, as well as other different information technology software and programs. The connection between the corporate social responsibility and the green marketing spawns ever since CSRs have been placed alongside the company’s annual financial reports. Organization’s environmental considerations have manifested in different promises, commitments, and proclamations, wherein some have been fulfilled while others have already gone down the drain. Because of the intensified environmental awareness of people, it has become extremely important that companies deal with the different challenges to improve the environment. CSR environmental behaviour and investments have already become essential to the company’s core operations regardless of which industry or market the companies operates on. 

The Four P’s of Marketing 

 In order to fully grasp the concept of Green Marketing, it is essential to understand the Four Ps of Marketing and then relate it with regards to the aforementioned marketing perspectives. The Four P’s are considered as the marketing mix and is a strategy which is commonly used by businesses in order to focus on quality, customer satisfaction, as well as consumer value. The four Ps are as follows: Product, Place, Price, and Promotion. In its simplest form, a product is anything that can be bought and sold . The product can either be a good, service, promotion, place, and even an idea. These may either be tangible or intangible, wherein the goods are physically present while services and/or ideas are intangible. They are part of what is called a product line or a group of related products within a product mix. Place refers to the activities involved in getting the product to reach the consumers. In a nutshell, the place actually is the supply chain or the logistics. There are various different distribution channels which include both direct and indirect channels – the first one is when products go directly from the manufacturer to the end user, while the latter uses intermediaries to get the product to the end user. Examples of these intermediaries are wholesalers, retailers, agents, and even the internet. Generally, the place is part of the 4Ps as this is the way or method to which the products would reach its intended consumers. There are different considerations with regards to Place, which include transportation costs, storage costs, utility costs and other charges in order for the products to be delivered.

Price is the amount of money which is requested or exchanged for a product. Identifying the correct price of goods is highly essential and challenging because there are several things which always need to be considered. The following needs to be considered in pricing:- 

 1) Prices must cover all the costs of manufacturing the product. 

2) It shall integrate the costs of marketing and distributing the product. 

3) It should provide the desired profit of the business 

4) It must meet the expectations of the customer 

Promotion is more commonly known as the marketing or the advertising factor in order to appropriately sell the products to the customers. The main point of promoting the product is to get the company’s message across the buying public. There are generally four types of promotion activities and are outlined below:- 

 1) Advertising – all paid non-personal communication which includes published media, television advertisements, newspaper ads, magazines, radios, cinemas, posters, billboards, tarpaulins and many others. 

2) Personal Selling – more commonly known as the word of mouth. Personal interaction with potential buyers is proven to be effective in immediately gaining the feedback of the customers. It focuses on establishing a rapport with the consumer, but ultimately has the objective of closing the “deal” and making the sale. 

3) Sales Promotion – this method provides incentives to customers or the distribution channels (or places) in order to invite more sales. Perfect examples of this include discount privileges, “buy one get one free” promotions, and many others. 

4) Publicity – this is the company- initiated public relations strategy, wherein they communicate their products by placing information in the media without paying for any advertising fees. 

These four P’s described above are relevant for those who want to apply Green Marketing in order for it to be effective and cost-efficient. The Green Marketing mix is quite similar to conventional marketing although there are some additional challenges that are unique to this trend. Entrepreneurs and businesses who would want to explore green marketing are met with the challenges of identifying customers’ environmental needs and how they would address these requirements. They would also need to develop products which are environmentally responsible and have lesser impacts to nature in order to gain a competitive advantage against their competitors. There are several examples of environmentally friendly products. The following are some lists of the products which help in the mitigation of the negative effects of man’s actions and aid in the improvement of the environment:

1) Hybrid cars and rechargeable cars - These mobile vehicles reduce the carbon emissions to the atmosphere. 

2) Power saving devices which when installed in building and homes help in conserving power consumption and consequently reduce the electric bills 

3) Biodegradable plastic bags which has already replaced the regular ones. These bags disintegrate and are biodegradable and non-hazadous. 

The next aspect of pricing which is a highly critical element in terms of green marketing relates to the consumers' willingness to pay a premium or at a much higher price in order to acquire environmentally friendly products. Consumers in general are willing to pay more if they believe that there is an additional value to the product. In green marketing, the value adding feature is the environmental benefits which will often be the factor which the consumer would decide as to whether they would buy the product or not. Furthermore, aside from the environmental factor, the over-all quality of the product still needs to be considered. The good thing is that environmentally responsible products are often less expensive especially if product life cycle counts are considered and are taken into account (Chaudhary, 2011). The example on hybrid cars is a classic example as to how in the long run some environmental products are less expensive. These hybrid cars consume half electrical power and the other half by fuel. Hybrid cars are considered as environmental friendly because of the fact that they have minimal carbon emissions due to decreased fuel consumption. Yet another uniue challenge of Green Marketing strategy is the monetary value paid by the customer (Arseculeratne, 2013). The costs of producing green products are expensive because it entails numerous items, such as the installation of new technology, training people and new staff, machines, conversion of wastes into useful products, as well as the need to absorb other miscellaneous and external costs. These are the reasons as to why the prices of green products vary and some might be made available at a premium. The actual price vary depending on how complicated the manufacturing process is. Logistics and Supply chain or also known as Place, is also highly critical in terms of Green marketing. The choice of when and where to make a green product available is highly significant in order to attract buyers and consumers because of the fact that most customers do not go out of their way just to buy green products for the sake of buying them (Chaudhary, 2011). The best strategy which the marketing team of green products implements is positioning them broadly in the market place so they are appealing to the broader green niche market; in a nutshell, this means that the green products are placed in strategic locations where they would be easily seen by buyers and consumers. A challenge however, which the company faces is that thA challenge however, which the company faces is that the chosen location must have the consistency with the corporate image as well as an image which is fitting to what they want the product to project. In a sense, the location must give a sense of competitive advantage as well. This is achievable through in-store promotions and visually appealing displays, which in a sense, must also be environmentally friendly. This helps to reassert their commitment as well as emphasizes the environmental and other benefits (Chaudhary, 2011). Green distribution involves selecting channels in order to minimize environmental damages (Arseculeratne, 2013). Some damages to the environment are caused by the transportation of products and hence, some safety precautions must be in place in order to have the controls and mitigate these negative impacts to the environment. To complete the marketing mix, there needs to be the promotion. Marketing efforts would need to reflect the key message of being green. Direct marketing, sales promotions, advertisements, and other strategies need to be aligned with informing the people of what the intention of the company is in its creation of green products. The most used platform in order to project the green outlook of the business is through meaningful public relations and advertisements (Arseculeratne, 2013). The advantage of going green and doing green marketing is that it bridges the gap between the business and the community, and hence establishing a stronger rapport and gaining competitive edge for the company.

Challenges in Green Marketing 

There are several advantages of green marketing. Not only is it advantageous to the environment and to the consumers who would be using them, but as well as to the business that promote the green initiative. Why would companies or organisations join the bandwagon of improving the environment? What benefits would they reap? Firstly, companies in making the process of manufacturing the products greener would help save costs Secondly, there is a significant and positive relationship between environmental awareness and the purchasing behaviour of green products (Boztepe, 2012) The product features of the green products are essential for consumers in order for them to properly decide as to whether they would purchase the items or not. The promotions, logistics, and supply chain of the green products are also part of the green process and hence are helping save the companies costs and also help the environment. Green products, prices, promotions, and distributions provide a positive influence on brand fascination (Abbasi et.al., 2014). Amidst the different advantages of Green marketing, there are several challenges which needs to be addressed. Aside from the ones which have been previously discussed, the following are the identified points which need to be addressed in order to succeed in the business of Green Marketing. The prices of green products tend to vary and consumers, although they are expecting to pay for a premium, still tend to buy based on price. The costs of producing green products are expensive because it entails numerous items, such as the installation of new technology, training people and new staff, machines, conversion of wastes into useful products, as well as the need to absorb other miscellaneous and external costs. Certain studies have concluded that age, gender, marital status, education, and income all have positive moderations (Boztepe, 2012) in terms of consumers’ decision-making process as to whether they would buy green products or not. This is a challenge because of the fact that in order for green products to sell, there needs to be a thorough market research which would place a burden on the company. 

 CONCLUSION 

Green Marketing is a growing trend especially with the prominence of the environmental issues not only in the country but as well as in many developing and emerging economies of the world. The emergence of the green consumers have prompted businesses to respond to these through the provision and creation of green products which would satisfy their needs. Marketing experts need to understand that there are several implications of green marketing and consumers have become more and more concerned environmental issues. Thus, businesses have started implementing green marketing mix to make their processes leaner, less costly, and gain more profit. The emphasis on green product developments is more than just producing and selling products which are environmentally friendly. Rather, it is changing business models and strategies which by “greenifying” the different processes of product creation and the integration of the four P’s in its marketing efforts. By greening their business companies are increasingly committed to making a difference. Companies are faced with many challenges in its green endeavour such as pricing which could result in the “break or make” point for consumers in deciding whether to purchase green products or services. Ultimately, the consumers would decide to buy green products based on its positive impacts to the environment which outweigh the negative impacts of the costs. It is hoped that Green Marketing is not merely a marketing fad or even a bandwagon which would be soon forgotten, but rather a central contribution in the company’s responsibility to the community and environment. 

 

END 

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