When Philips came up with CFL (Compact Fluorescent Lights) “Marathon” in 2000, the product was immediately a hit even though it was charged at a price of $20 against $0.75 for regular incandescent bulbs. While many media reports accredited the eco-friendliness of this product (“Green Marketing”) as the reason behind its success, I believe that the benefits offered by the product in terms of saving power in the long run, capability of lasting for 5 years and the trust in the brand Phillips were the reasons for its success. The article attempts to explain consumer’s behaviour in terms of preference and willingness to pay more for green products.
During my research, I found that consumers behave differently for the products that require different levels of involvement. Before I explain this further, I must introduce the term “Green Marketing”. American Marketing Association defines Green Marketing as the marketing of products that are presumed to be environmentally safe. Green Marketing incorporates a broad range of activities including product modification, changes to the production process, packaging changes as well as modifying advertising. Other terms for green marketing are eco-logical marketing and environmental marketing.
Studies in the US (Cramer, 1991) show that over 90% Americans are concerned about the environmental impact of products they buy. Of these 50% of the respondents are willing to pay premium for eco-friendly goods. Organizations in developed countries have widely adopted Green Marketing practices, while consumer trends show that developing nations such as India and Brazil are not far behind. A study by Jain and Kaur (2004) has shown that though consumers are not fully aware of environmental issues, they are willing to prefer and pay more for products that are certified to be environmentally friendly. So how have organizations exploited this wave of environmental concern amongst consumers?
Often green strategies are de-signed not only for environmental benefits but also for the benefit of the organization. I believe that strategies which benefit the environment as well as the organization may in fact help the cause, since they would be more sustainable when compared to pure philanthropic initiatives, otherwise termed as Corporate Social Responsibility (CSR). The benefits of environmentally friendly strategies for the organization can be broadly classified as:
• Increasing profitability by commanding a higher price for environmentally friendly products
• Differentiating products based on environmentally-friendly attributes
• Increasing market share by developing preference for environment friendly products through advertising
• Building corporate brand image by associating with environment friendly practices and products
Marketers have had mixed results while implementing eco-friendly strategies. While there have been huge successes such as the Toyota Prius and Philps CFL, there have also been innumerable failures that have disappeared into the oblivion.
Green Marketing Myopia
Many marketers get obsessed to develop number of product features rather than meeting customer needs, the condition termed as “Marketing Myopia” by Theodere Levitt(1960). Jacquelyn and Edwin(2006) build on this further to explain “Green Marketing Myopia”. They suggest that Green Marketing must focus on two objectives: improved environmental quality and customer satisfaction. Misjudging or overemphasizing one at the cost of the other can lead to Green Marketing Myopia. Such myopia can occur when products fail to provide credible environmental benefits. Introduced in 1989, pack-ages for Mobil’s Hefty photodegradable trash bags prominently displayed the term “degradable” with the explanation that a special ingredient promoted its decomposition into harmless particles in landfills “activated by exposure to the elements” such as sun and rain. Because most garbage is buried in land-fills, allowing limited exposure to the elements, the claim enraged environmentalists. Ultimately, seven state attorneys general sued Mobil on charges of deceptive advertising and consumer fraud, and the company withdrew the product from the market.
To help marketers maximize the effectiveness of green marketing strategies, we ex-plain below how consumer behaviour theories can be utilized.
Understanding the Consumer Behaviour of Green Marketing
Though there are a lot of esoteric models explaining why or why not does green marketing work for different products and consumers, I found that basic consumer behaviour theories can be easily applied to ex-plain the effectiveness of green marketing in different scenarios.
Before getting into theory, a primary question that arises is how do consumers benefit from purchasing and using environmentally friendly products? Do all people have the same attitude towards the environment?
In the field of green marketing, different studies have classified consumers based on different demographic, psychographic, cultural and personality variables. The most useful classification in the Indian context was found to be based on three parameters: concern for the environment, awareness of environmental issues and environmentally-friendly behaviour (Jain and Kaur, 2004). The key findings of this study show that though Indians lack sufficient knowledge about environmental issues, there is a generally high concern for the environment and most surprisingly, Indian consumers score very high on environmentally friendly behaviour, especially with respect to conservation of resources (saving water, oil, etc.) and purchase decisions (buying greener products).
The most important benefit that individuals seek from environmentally responsible behaviour is the desire to act in an environ-mentally responsible manner. The attitudes that drive this need, resulting in purchase behaviour can be broadly classified as cognitive and emotional. “Environmental consciousness” corresponds to the cognitive dimension of environmental attitudes, and “Environmental Concern” refers to the emotional dispositions as individual indignation about the destruction of nature (Hartmann and Ibanez, 2006). Based on these needs and segmentation, I analyzed how green marketing can be effectively used to influence the purchase behaviour of consumers for different types of products.
Products (and services) can be broadly classified as high and low involvement for analyzing the consumer purchase behaviour. Since the purchase behaviour is totally different for these two types of products, the implications of green marketing can be different for these two types of products, which we bring out in the following sections.
High Involvement Products
Any product that is perceived as ex-pensive, risky or has emotional value attached to it is considered as high involvement product. The benefits sought from high involvement products such as TV, cars, etc. are very different from that of low involvement products such as toothpaste, soap or paper napkins. While customers may purchase a eco-friendly low involvement product for the benefit of environment even if the price is marginally higher, they will not purchase high involvement green product for it just being eco-friendly. They will weigh attributes such as performance, brand, convenience and price against the competing products. If the consumer is required to make trade-off on any of these parameters for environmental benefits, environmental product almost always loses. Many products that require customers to make such trade-offs have failed to establish themselves in the marketplace.
So now the question is, how to make green marketing strategies be perceived as high involvement strategies? – In two ways, first: it helps the companies make favourable image and second it reduces the post purchase dissonance.
As per Fishbein‟s Multiattribute theory (Ajzen and Fishbein, 1980), consumer’s attitude towards a product is the function of consumer’s belief and the evaluation of the product attributes. If a consumer has a preference for certain attributes and if the product pronounces those attributes then there is a high probability that consumer will purchase that product. Thus, consumers having higher preference for green products are more likely to purchase such products over others. How-ever, such customers are less than 2% in number and the mainstream customer won’t buy just by that attribute. But if the product is equal to competing product on all other parameters then consumer may prefer the green product.
Secondly, high involvement products have high probability of creating post purchase dissonance. It could be because of it being expensive than other competing products or because it rates closely with other brands on performance parameters. In such cases, consumers will look for balance in the psychological set by seeking supporting information or by distorting contradictory information. As per cognitive dissonance theory, when a brand does not meet expectations or when a competing brand is found to offer more benefits, the consumers will discount the negative information and rationalize their behaviour/purchase. The product rated higher on eco-friendliness can thus help consumer reduce post purchase dissonance when the product is found to have defects or is weaker than competing brands on certain parameters.
Low Involvement Products
Low involvement products are characterized as not being economically important, and involving low risk for the consumer. The purchase decision process for such products is thus relatively simple as compared to that of high involvement products. In contrast with high involvement products, green marketers can significantly influence the purchase behaviour of consumers for low involvement products through persuasive advertising of environmentally friendly claims regarding their brand.
For typical low involvement purchases like paper and detergents, elaborate evaluation of benefits of product and comparison with other products is usually not done. In the absence of marketing, such products are likely to become commodities, with little differentiation between products. To prevent this from happening, billions of ad dollars are spent by FMCG companies like Unilever and P&G, so that they can increase the involvement of consumers and create a brand preference for their products. A study by US researchers (Schuhwerk and Lefkoff-Hagius, 1995) has shown that advertisements with environmental appeals have significantly more impact on consumers who are less involved in environmental issues (as in case of India) when compared to advertisements with traditional feature appeals (like financial benefits). Once a brand preference is created, it may turn into purchase habits and result in brand loyalty for green products.
In practice however, environmental advertisements have often failed to enthuse customers. Again, researchers have dug out a major cause for such failures to be the lack of veracity of the environmental claims made in advertisements. Consumers are found to be extremely sensitive to the credibility of the claims made by green marketers, and can quickly get suspicious about vague or ambiguous statements. Though governments have laid out strict laws to prevent marketers from making false claims, brands have to ensure that their claims are substantiated and phrased clearly to prevent the loss of credibility.
Based on secondary research, I have found that marketers have to adapt their green marketing strategies depending on the nature of the product. For high involvement products, environmentally friendly attributes may not be sufficient to persuade customers to prefer the product or pay a premium for it. Such products must match or provide additional value when compared with other products on various parameters such as performance, brand, convenience and price. In contrast, green marketing can offer benefits for low involvement products. Claims of environ-mental friendliness of products, if clearly advertised, can cause a shift in consumer preferences.
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