Is green marketing here to stay?

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green_small.jpgADOTAS — To answer this question there are several factors to consider. First, we must look through the consumer lens to evaluate the marketplace, consumer motivation and accessibility. Additionally, we need to understand how those factors impact the key players responsible for developing, distributing and promoting the products that fill the marketplace: manufacturers, brands and marketers. So, let’s take it one step at a time…

THE MARKETPLACE

Although there is a slight discrepancy as to the definition of “green” or “sustainable,” The Green Marketplace is defined by the Natural Marketing Institute as “organic, natural or have an environmentally friendly benefit.” So, simply stated, “Green Marketing” is the positioning of a product or service within that marketplace. Therefore, in order to answer the above question, we first need to understand the dynamics of The Green Marketplace. NMI organizes the consumer base into five categories. Within those categories, half of consumers are aware of eco-friendly choices, but budget is forefront in their minds for making decisions.

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MOTIVATION

Driving the green marketplace there are factors to consider including: the psychological or social dynamics around “green” – this dynamic directly impacts the brand-consumer relationship and drives motivation. There is no question that “green” is mainstream. Beyond the immediate savings from purchasing conventional products and services, there has been a public shift toward choosing a lifestyle with a lesser environmental impact. The consumer choice is seen as stronger or more honorable. This motivation fuels the marketplace.

According to the NBC “Green is Universal” poll, 60% of consumers will buy eco-friendly products even if they cost more. Sixty-two percent say, “I am buying more environmentally responsible products than I did a year ago,” while 73% believe that “green” is good for the economy. Further, 85% of respondents say that companies have a social responsibility to protect the environment while 19% say they have boycotted a company/product in the past year because it had policies and practices that were not environmentally responsible. (Source, Adage 4/20/09)

However, cost is one of the largest motivational factors for consumers. In fact, “petroleum is cheap once again, having plummeted from US$147 a barrel in July to US$47 as of mid-March – greatly reducing the incentive for fuel efficiency. Across the United States and Canada, meanwhile, four million people have been thrown out of work by the recession. Investors have seen close to 25% of their life savings go down the tubes. Housing prices have crashed.” (Source, Financial Post, 4/6/09). This dramatically changes the motivational dynamic, pinning cost against social consciousness. However, as accessibility of green products increase, cost will inevitably decrease.

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This will have a direct impact on consumer motivation allowing social responsibility to become the driving motivation factor.

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ACCESSIBILITY

Having looked at the motivations that drive the marketplace — in order to truly evaluate the longevity of the market, we now need to look at how accessible the products and services within the marketplace are. In fact, accessibility tends to be the biggest hurdle for Millenials (13-25) to engage within the green marketplace:

That said, packaged-goods products on the market with claims to be environmentally friendly are expected to triple 2008’s numbers. As seen by the Datamonitor graph below, Eco-friendly product launches in 2008 were more than double that of 2007. Such data demonstrates the consumer demand for sustainable products despite needing to budget during the recession. According to a study conducted by the Opinion Research Corporation, 82% of consumers continue to buy green products during recession. Additionally, the Natural Marketing Institute (NMI) expects the green marketplace will reach $420 billion by 2010. Neilson reports, half of all consumers want to buy green products, but end up buying conventional products.

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KEY PLAYERS

To truly access the long term viability of “green marketing” we must fully understand how these dynamics (marketplace, motivation and accessibility) directly impact the key players. These players include: manufacturers, brands, and marketers.

Marketers embrace “green” as it provides improved branding opportunities, by giving products differentiation as a point of engagement with consumers. Manufacturers and brands feels an increasing “social pressure” to go green. However, it is very hard to quantify the advantage. A study conducted by the Aberdeen Group shows the top five challenges marketers and brand face in developing green products.

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Research study by the Aberdeen Group

A perfect example of a major player (previous polluters) now showing their green side is Wal-Mart. “Wal-Mart’s marketing campaign is just the tip of the iceberg. Behind the scenes, a top-to-bottom review of its operations – including the efficiency of its buildings, trucking fleet and logistical systems – has resulted in hundreds of millions in savings, offering a crucial bottom-line incentive for shareholders. The company’s obsession with cutting costs even influences its suppliers, as Wal-Mart’s 70,000 vendors are required to “green” their products in order to gain access to shelves at over 7,500 outlets.” Source, Financial Post, 4/6/09.

So, to answer the question directly… As the marketplace floods with new products and services, increased accessibility will drive costs down. As cost becomes less of an issue, social responsibility will drive consumer motivation and increase demand. This demand creates a vested interest for the key players to make “green” work.

Which means — YES — Green marketing is here to stay.

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