Green Marketing 101

Green Marketing 101

Green Marketing Lessons from the Leaders

by Joel Makower
GreenBiz.com

Tracking the opinion polls on green marketing for nearly two decades has led to several Groundhog Day moments: the same polls revealing pretty much the same optimistic data over and over and over.

For example, there’s the Green Gauge report, published every year since 1991 (except for 2004) that breaks the green consumer market into five segments. The percentages within each have fluctuated over the years, but not by much. The 2005 version reported that on average, consumers are willing to pay 6.0% more for products that cause less pollution -- up from 4.8% in 2003.

Perhaps they are, but not often. Green consumerism may be gaining favor somewhat, as consumers clue in to the connections between such things as energy consumption and global warming, or pesticide use and personal health issues. But it’s still nowhere near the levels that Green Gauge reports.

And yet the polls keep coming. For example, a recent survey by Global Market Insite found that Americans are quick to identify polluting companies as "socially irresponsible" and make their purchasing decisions accordingly. The poll found that 42% of all Americans are willing to spend more for products branded as organic, environmentally friendly, or fair trade.

Last summer, a survey from the U.K.-based Carbon Trust found that “climate change is becoming an increasing risk for companies with strong brand value.” That study -- which assessed the brands of companies in the airline, food, and beverage manufacturing, food retailing, telecommunications, oil and gas, and banking industries -- concluded that “climate change will become a mainstream consumer issue in the next five years.”

Happy Groundhog Day.

It’s not that these opinion polls are flat-out wrong. Countless consumers intend to buy greener products, or from brands and companies that are socially responsible, concerned about climate, or “give back” to the community. And companies -- including some of those with the biggest reputational problems -- throw millions at this hunch, with ad campaigns that paint even Walmart as saviors of society.

But I’m more aligned with U.K. green-marketing strategist Wendy Gordon, who refers to the “30:3 ratio”: As Gordon, who is the author of a 2002 booklet, Brand Green: Mainstream or Forever Niche?, put it in a recent article: "Thirty percent of people claim to be concerned about the environmental and ethical integrity of products and services they purchase and yet only three percent translate this attitude into behaviour.”

One big problem is companies’ lack of understanding about how to address consumers on environmental and social issues. Marketers assume, for example, that “making the world a better place,” or some such sentiment, is enough to sell a company or a product. Yes: Consumers want to know that companies care, and want to see their actions match their claims, and may gravitate toward products and companies that align with their growing concern about the fate of the earth. But that's far from enough. The hole in the ozone layer pales in comparison to the gap between green concern and green consumerism.

So, what does it take? There are success stories out there. Below are three snapshots of companies that have made green marketing work over the years, followed by some brief takeaways.

Electrolux: Efficiency = Green

The Swedish appliance giant doesn’t go out of its way to market its products as environmental, says Karl Edsjö, Project Manager, Electrolux Sustainability Department in Stockholm. The company promotes products’ energy-saving advantages on labels, but that is required in both Europe and the U.S. However, the company does play up its products’ efficiency. “It’s worked very well to educate people about energy, says Edsjö. “If they choose the most efficient product, that’s the most important thing for us.”

Promoting “efficiency” has unwittingly translated into “green” for Electrolux, leading consumers to “assume our products are environmentally friendly,” Edsjö says. That reputation also reduces pressure on Electrolux when new environmental concerns arise. For example, there is growing concern in some European countries over the health and environmental impacts of some flame retardants. “It’s a small concern at the moment, but we’re pretty sure this will be a bigger issue in the future,” says Edsjö. He believes that Electrolux’s reputation for environmental proactivity will make the company immune from consumer activism on this issue. “They know that as soon as there is a solution, we will apply it to all our products.”

“To inform consumers is tricky,” says Edjsö. “We’d like them to be more environmentally aware. We have a principle of both delivering the best technology, but also marketing it well to promote it well.”

But despite its green image and its holistic thinking, even Electrolux can get frustrated by consumers’ less than willingness to embrace some company efforts aimed at aligning environmental sustainability with business success. For example, it piloted an initiative in Sweden in which consumers were given a washing machine (for a small installation fee), then charged on a per-use basis of 10 Swedish kronor (about US$1). One objective was that the consumer didn’t have to worry about the appliance, relying on Electrolux to keep the most efficient machines in operation, thereby minimizing their energy and water needs.

The program was met with a decisive yawn by consumers, who apparently didn’t want to change the way they paid for doing the wash at home. Edsjö believes the experiment may have been doomed by flawed methodology and hopes it will be revived some day. As he puts it: “It’s resting -- but there’s still some big interest.”

Philips: Durability Trumps Green

Netherlands-based Philips’ flagship environmental consumer product are compact fluorescent light bulbs (CFLs), which it has marketed since 1978. For years, energy-saving and longer-lasting CFLs languished in the U.S. market, despite their success in Europe, which experiences much higher energy costs. (The penetration rate for CFLs in Holland, where Philips is based, is around 50%, compared with less than 10% in the U.S.) Among other things, U.S. consumers didn’t care for the quality of CFLs’ light output, and the fact that they didn’t fit many existing lighting fixtures.

Things changed as the bulbs got cheaper, the quality of their light better, and their adaptability into various fixtures increased. Equally important was a key name change that reflected some green-marketing realities: Philips stopped calling the bulb “Earth Light” and changed the name to “Marathon.”

“After sales flattened, we went out and did primary research to find out why and whether we were reaching the hearts and minds of the audience with the name Earth Light,” explains Steve Goldmacher, Director, Corporate Communications for Philips Lighting in the U.S..
 
A HIT or a HABIT? LOHAS Growing Outside US cont.

of Asian LOHAS culture.
Some groups such as the LOHAS Club are giving seminars and lessons on understanding the meaning behind the LOHAS concept emphasizing on the importance of sustainability, and the importance of showing responsibilities in the community. The air of “hippness” of the word is helping people get involved in the party, and for the epicureans they would certainly purchase a Toyota Prius, eat organic meals and practice yoga. Yet historically Japanese tend to latch onto a trend that sweeps the country for a brief time and then disappear as quickly as it came. These trends can last a month, several years or be accepted as long term changes.

So, would LOHAS settle for real in Japan? No one knows. Isozumi Takeshi, one of the top consultant at Funai Consulting Company Ltd. has claimed the year 2006 to be the opening of a new era for LOHAS, and is going to concentrate on marketing for LOHAS consumers. There are more to jump on the LOHAS bandwagon so keep your fingers crossed that Japan is on a track that is heading the right direction.

GREEN MARKETING

In its research, Philips found a great deal of sympathy (50% positive, 25% neutral) for green issues, combined with outright fear (60% positive, 10% neutral). And almost half (45%) appear to be quite sympathetic to green-marketing efforts, requiring additional information about the environmental benefits of the products they buy. Nevertheless, a much lower percentage are willing to change their lifestyles (20%) or pay more (25%).

“It turned out the environment wasn’t their primary need,” says Goldmacher. “Environmental responsibility was the number-four or -five purchase criterion. Number-one is that they wanted the bulb to last longer. The longer a light bulb asked was the most important criteria. Being green is wonderful, but no one wants to pay the extra nickel.”

Seventeen Takeaways

How did these leaders do it? Here are key takeaways:
1. Make environmental messages consistent with the company’s existing voice in themarketplace.
2. Empower consumers to get involved to make a difference.
3. Enlist cultural icons to tell the story.
4. Show that environmental initiatives lead to better-quality products.
5. Be seen as a serious thought leader in the scientific and technology communities.
6. Be ready to experiment publicly, even if it doesn’t always lead to success.
7. Price environmentally preferable products comparable to conventional ones.
8. Link environmental innovations to other benefits, like quality and durability.
9. Consider branding green product lines with names that promote non-environmental benefits.
10.Position individual environmental initiatives as examples of your larger sustainability commitment.
11.Thank customers for making good, green choices, and tell them how they are making a difference.
12.Seek recognition from peers and activist groups and challenge competitors to join in.
13.Whenever possible, emphasize the health connection to sustainability initiatives.
14.Green products shouldn’t be any different from “regular” ones -- in branding, price, use, or performance.
15.Seed innovative new products among celebrities -- actors, musicians, athletes, and other trendsetters -- to give them a “cool” factor.
16.Acknowledge imperfections and talk openly about ambitions and goals.
17.Emphasize the cool technology aspect of environmental innovations whenever possible.

Joel Makower is founder of GreenBiz.com and co-founder of Clean Edge, Inc. You can read his essays on sustainable business and clean technology at www.makower.com.