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Green marketing is going mainstream. From grocery stores to car companies to sporting goods manufactures, Madison Avenue is trying to turn Main Street into eco-loving consumers. Some companies like are succeeding, while others like are receiving sharp criticism of their “green” methods.

In this paper, we will explore the rise of green marketing over the past decade and how companies are using social conscience to tap into consumers spending habits. We will learn:

  • What green marketing is;
  • When green marketing started to get popular with consumers and companies;
  • Why are some companies going green;
  • What are some of the positive developments that have come out of green marketing;
  • How consumers and the Federal Trade Commission becoming skeptical of “green” companies and what the future of marketing green companies and products looks like.

What is green marketing?
According to the American Marketing Association (AMA), green marketing is the marketing of products that are presumed to be environmentally safe, good for the environment or are more sustainable [1]. Green marketing incorporates product modification, changes to the production process, packing changes, as well as modifying advertising to reflect the environment qualities of the product. Defining green marketing is not an easy task, because there are several meanings of what consumers and businesses think is green. For example, green marketing may fall under the umbrella of varying social, environmental and sustainable efforts.

Are consumers really buying it?
Although the first workshop titled “Ecological Marketing” was held by the AMA in 1975, green marketing didn't’t come into prominence until the 1990s [1]. Green marketing isn't yet on the forefront of most consumers minds mainly because many don't understand how truly green or eco-friendly most "green" products are; however tighter regulations and more understanding in the past few years has improved consumers awareness in light of growing global concerns about climate change. This concern has led more companies to advertise a commitment to reduce their climate impacts, and the effect this is having on their products and services. According to the survey, “Green Consumer Values Survey” conducted by the Yale Center for Consumer Insights at the Yale School of Management and the Center for Business and the Environment at Yale, 60 percent of consumers say environmentally-friendly products are more desirable, but only 24 percent can name a green product by brand name[2]. Also, consumers are not always consistent about which environmental improvements to products will have the most impact versus which ones will make them want to buy. This information proves that consumers understanding of green products has a long way to go.

Perhaps the biggest factor in green marketing is the knowledge that the economy is the top issue for U.S. consumers and the environment is No. 3 behind energy; according to the 2008 ImagePower Green Brands survey conducted by several U.S. agencies [3]. So for right now, consumers are willing to talk the talk, but not necessarily walk the walk when it comes to the environment: A TNS survey found just 26 percent of American are “actively seeking environvonmentally- friendly products [4].” Most respondents prefer to take baby steps towards environmental efforts, like changing a light bulb rather than their entire lifestyles.

Who does it well?
There are several companies that have tried its hand at marketing “green” to consumers, some more successful than others. According to the market research firm, Outlaw, its 2008 Favorite Green Brands Index, the companies Whole Foods, Trader Joe’s, Toyota, Honda, and Google received top ratings[5]. These brands also made the list of the 2008 ImagePower Green Brands survey shown below[3]:

Top 10 greenest brands
1.  Whole Foods
2.  Burt’s Bees
3.  Trader Joe’s
4.  Tom’s of Maine
5.  Toyota
6.  Seventh Generation
7.  General Electric
8.  Honda
9.  Whirlpool
10. Aveda

Profiles in green

Toyota
One example of a company embracing green marketing is Toyota. The main reason the car maker has made the list of one of the top greenest brand is simple: the Toyota Prius. The hybrid car introduced in 2000 remains one of Toyota’s top sellers and the epitome of a “green” car in consumers’ minds. Although the Prius was not the first hybrid introduced into the car market, Toyota has a 75 percent share of the hybrid segment, according to Ad Age magazine [6]. This is due to several smart marketing decisions made by the company.

First, Toyota built its marketing share over time, targeting three groups of consumers all at once: early adapters of the technology, “deep green” consumers who were wowed by the 55 mpg and low emissions and industry insiders with its unique design, quiet interior and gas sipping tank.

Jacquelyn Ottman, author of “Green Marketing: Opportunity for Innovation” says that the Prius doubled as a moving billboard for the new hybrid technology. “Such deft design and marketing” she said, “underscores why ‘makes a statement about me’ is the No. 1 reason Prius owners buy their cars according to CNW Marketing Research [7].” In fact many consumers buy the Prius due this “conspicuous conservation” — letting other people know that they care about the environment through their choice of vehicle [8]. Driving a hybrid Honda Civic doesn't’t give this same effect for the buyers, because the standard gas-only Civic looks the same as the hybrid version where as the Prius looks like nothing else on the road. It is instantly recognizable – perhaps this is why the Toyota Prius is one of the most successful “green” products worldwide selling more than one million since its inception. The company plans to sell one million more hybrids by the early 2010 [9].

One way Toyota is planning on achieving its sales goal is the launch of its “Why Not” campaign. The campaign incorporates TV spots, print and online ads intended to reflect the strength of Toyota’s reputation as a maker of hybrid gas/ electric vehicles extending their environmental message from the Prius to its larger brand [10]. In the TV ad, a Prius is shown to be created from natural elements with the use of time-lapse photography. The car slowly succumbs to natural forces and its elements returning to the soil. The voiceover says: “Can a car company grow in harmony with the environment? Why not?”

A micro-site has been developed to showcase its advertising campaign message: www.toyota.com/whynot. It includes sections that boast Toyota’s innovations in building the “ultimate eco-car,” greening the workplace and a video on hybrid technology. Toyota also talks about community efforts and shows its eco-driven advertising centered on its “Why Not” message. The company has become a sponsor of the television program Nature on PBS [10].

Whole Foods
Whole Foods is on the top of list of the greenest brands because sustainability, organic foods and green action are at the core of Whole Foods brand identity. The Environment Protection Agency (EPA) recognized the company in 2004 and 2005 with the Green Power Leadership Award for making green power purchasing a company-wide practice. Currently, Whole Foods Markets is purchasing or generating 100 percent of its total national power load from green power sources, according the EPA [11].

One look at their website, www.wholefoodsmarket.com gives readers a sense of what Whole Foods wants to project as their company mission: “Whole Foods, Whole People, Whole Planet.” The site includes links to a variety green initiatives including its Whole Foods Foundation, that provides grants to microfinance institutions in Latin America, Africa and Asia to help plant seeds of prosperity through micro lending programs to help contribute to the eradication of global poverty; its green action program that aims to offset 100 percent of energy use with wind energy credits and green building and its section on sustainability section.

To market its brand to consumers and grow into bigger and more profitable company, Whole Foods Markets has partnered with Farm Aid to sponsor its 2008 festival and pop star Sheryl Crow and the Natural Resources Defense Council to design a holiday shopping bag made from 80 percent post-consumer recycled plastic bottles for its stores [12]. Marketing online to environmental consumers consists of its new YouTube spot called “Whole Earth Generation” (click here to view) which teaches users how to save money by using bio fuel. The video encourages users to present their own videos on protecting the environment [13].

General Electric
A company that made the list at No. 7 on the ImagePower Green Brands survey is General Electric or GE. This century-old manufacturing company may not have started as a “green” company, (topping many environmentalist most-hated lists for legally dumping 1.3 million pounds of polychlorinated biphenyls into the Hudson River for decades, among other sins) but they are trying to change their image, while still serving their bottom line [14]. GE’s big push for the “green” marketing share came in 2005 when new CEO Jeffrey Immelt pushed the “Ecomagination” multimillion-dollar campaign into the public conscience [15]. The aim of Ecomagination is to take this energy-heavy industry and streamline it for the future. Immelt held a press conference in 2005 and pledged to double revenue from green machines from $10 billion in 2004 to $20 billion in 2010 and double spending on green-related research to $1.5 billion a year by 2010 [16]. GE said it would focus on even more solar and wind power, as well as other environmental technologies such as diesel-electric locomotives, lower emissions aircrafts, efficient light and water purification [14].

GE touted its new green-friendly campaign across every avenue of its marketing arm. TV, online and print ads were rolled out in great numbers [17]. The micro site, http://ge.ecomagination.com/site was created to showcase GE’s commitments. One of the ads included a dancing elephant in the jungle to “Singin’ in the Rain” with the tagline: “technology that’s in step with nature” and a beautiful model working in a coal mine with the message: “Harnessing the power of coal is looking more beautiful everyday.” Viewers loved GE new campaign. In a poll consumers surveyed for Ad Track, USA TODAY's weekly poll on ad likability and effectiveness GE ads came out on top. “The GE ads were the most-liked by consumers of all campaigns tested by Ad Track this year,” said a 2005 USA Today article. “Of those familiar with the GE ads, 49 percent gave them the top rating, saying they like the ads ‘a lot.’ The score is more than double the Ad Track average of 21 percent,” said the newspaper [17].

Can you measure results?
Feedback like that from USA TODAY’s Ad Track is good, but do these corporations see any actual revenue from their green efforts? In May 2008, GE claimed that its sales have doubled form environmentally friendly products to $12 billion in the span of two years and that they company is on track to meet its target of $20 billion in green sales by the year 2010. The sales figure includes its wind turbines, water purification systems and energy-efficient appliances [18]. The company is also cashing in on emerging markets need to go green. In China, GE appears to making some headway. The country is the largest emitter of greenhouse gases and is slowly adopting some of Ecomagination products to curb this pollution. According to a 2007 Fortune article, GE’s CEO of GE China predicted at they are looking at 15 percent growth in the foreseeable future selling its jet engines and wine turbines. To get the word out about its company, GE was a recent global sponsor of the Olympic Games in Beijing [19].

Other than counting the number of Prius sold or wind turbines produced, it’s hard to tell if a company’s green marketing campaign is working or if the economy is simply shifting to more cost and social-conscience products. The American Association of Advertising says there are no hard numbers to prove that company’s green campaigns are working – just anecdotal evidence that customers are starting to care about green.  Despite these stories, companies and non-profits need to see results. The Pew Center on Global Climate Changes stopped advertising a couple years ago because it could not get measurements on its ads [20]. Like any other campaign, it’s all about the bottom line.

What makes a good green product?
So what does it take to make a good product that results in money and is green? First of all, says Ottman, target your product to the mainstream consumer, not a deep green one. Everyone is an environmentalist at heart, so tout the green qualities as a secondary reason to buy your product.

Don’t market your product as simply a good sustainable green product, it need to be a quality purchase with a good design. For example, Ottman uses Nike’s Considered line, Method’s teardrop-shaped dishwashing soap and Apple’s iPhone as good design at work [7].

It also helps if your product has the endorsement of a trusted name. Products with an Energy Star logo, USDA Organic or Forest Stewardship Council will help your green product credibility [7].

Most of all, know your customer. If you want to sell and manufacturer a certain type of green product, your customers need to know why they should buy it. Is there any issue that your product solves or addresses? What is the need in the marketplace for it? Consumer will not pay a premium or pay at all if they don’t know why they should. Messages like "energy-efficiency saves money" or "solar power is convenient frame" your environment statements as desired consumer value [8].

According the Environmental Leader website, products succeed when marketers adopt the three Cs: consumer value positioning, calibration of consumer knowledge and credibility of product claims [21].  

Critics
Despite the great work and corporate responsibility these companies are projecting to the marketplace, many environmentalists, customers and even the government is skeptical of their green efforts. According to a study by Market Research Group Ipsos Reid, 70 percent of Americans consider the green designation basically a “marketing ploy.”

The term “greenwashing” is used to describe the practice of some companies to misled consumers into thinking they are receiving environmental benefits of a product or service [22]. Greenwashing isn’t a household term right now with the general public, but with watchdog groups, blog postings and environmental awareness on the rise, companies need to be authentic in its green pursues and marketing behavior or they risk a huge backlash.

For example, those companies, like British Petroleum (BP) that tout their social and ethic responsibilities by advertising their use of bio fuels need to be aware that you can’t open a newspaper these days without learning that production of bio fuels are a huge factor in rising food costs and increased hunger in third world nations. The president of the World Food program, Robert Zoellick came out this year and said rising food prices are contributing riots in Haiti and starvation in Africa. In the past two years, the price of corn in the United States has more than doubled, driven partly by demand for alternative fuels such as ethanol [23]. Whole Foods also promotes the use of bio fuels on its website [12].
Furthermore, companies like Toyota and GE, who are often praise by consumers for its green reputations, have been often criticized. Toyota for siding with Detroit in opposition to tougher new gas-mileage laws, along with building the Tundra which gets 14 mpg and GE for emitting more pollution than a small country with its locomotives and power plants.

The government regulates
The Federal Trade Commission and the Environmental Protection Agency have gotten in on the act of regulating deceptive green advertising claims [24]. The commission has brought 37 cases involving environmental marketing claims between 1990 and 2000, but none after the Green Guide’ guidelines since 2000, mainly because the FTC feels that companies need to absorb the Guide’s “teachings” said FTC commissioner J. Thomas Rosch. The other reason is that other alternatives to the FTC exist including self regulation and private enforcement. The National Advertising Division (NAD) of the Council of Better Business Bureaus, the investigative arm of the U.S. Advertising industry’s self regulatory process says that it has reported 30 decisions against environmental marketing claims. Compliance with the NAD is not mandatory, but they report that they have high compliance rates [25].

The FTC’s newest version of the Green Guide, released this fall, has several tips for advertisers to ensure their claims don’t misled consumers.

  • Evaluate the potential environmental benefits of products and operations. In other words, accurately describe the environmental benefits of your product, packaging and manufacturing.
  • Seek certification from third parties. Obtaining a certification from a reputable third-party like the Greenhouse Gas Registry or Green Seal spares the company from establishing their own standards.
  • Substantiate and document any environmental claims. Advertisers need to obtain and keep the technical data they need to substantiate any environmental claims, especially in California where they have adopted such requirements. Doing so can save a company from embarrassing or negative coverage that counteracts companies claims in the press or court.
  • Make precise claims. The broader the claims, the harder it is for companies to substantiate, so it best to make them as specific as possible. For example, saying your product is carbon neutral is very hard to substantiate. Try a more specific claim that your consumers can quantify.
  • Ensure that representations concerning the environmental impacts and benefits of the company’s products and operating practices are consistent. Make sure that every area of your marketing campaign (blogs, ads, product placements, sponsorships etc.) is in compliance with the rules of the Green Guide. Carefully review all avenues of marketing for red flags.

Basically the FTC will take the same approach to evaluating green claims as any other marketing claim/trade practice [24].

What is the future of green marketing?
More and more companies see green marketing as a growth industry. In the S&P 100 index of large firms, more than 40 companies issue a “corporate sustainability” report, giving the details of their company’s environmental and social performance [15]. Of course, the reason behind creating these reports or even entire sustainability departments, like the ones at WalMart or Protector and Gamble, is to serve the company’s bottom line.

The recent changes in environmental regulations keep getting stricter, forcing companies to adapt their products and services. Immelt and GE have admitted as much. “In its essence (Ecomagination),” Immelt told Forbes magazine in 2005, “it’s a way to sell more products and services [14].”

They are all about cashing in on cleaning up the planet. New regulations in Europe, California, Texas, etc. have set new requirements on renewable energy and environmental guidelines. The state of New York aims to generate 25 percent of the state’s energy from renewable by 2013. More than 160 mayors have pledged to curb greenhouse gases in accordance with the Kyoto Protocol. And the government’s environmental laws are likely to get stricter with the next administration. That’s why GE and others see eco-friendly products as a growth business, especially overseas [15].

But while it is great that many company’s recognize the changing landscape of the world’s environment and challenges that come with that, many are not equipped to find an effective way to address the issue. A recent survey by the Economist Intelligence Unit found that environmental risk management by companies is done in an ad hoc fashion, they don’t know who/ what department should be responsible for it [26]. The survey also found that many executives are feeling pressure from their stakeholders and regulators to institute green practices.

So institute they will – not only because the stakeholder, government and consumers are calling for more green companies, but because it’s an opportunity earn a profit and take companies in a new direction. And in this time of economic strife, it’s good to go green.

In the future consumers should be on the lookout for more eco-conscience marketing campaigns and green products that touch on both the eco-lover hearts and cost conscience customer’s wallets.

Sources:

1. Wikipedia
http://en.wikipedia.org/wiki/Green_marketing

2. MarketWatch, Yale Conference to Examine What Consumers Value in “Green” Business (Sept. 26, 2008)
http://www.marketwatch.com/news/story/yale-conference-examine-consumers-value/story.aspx?guid=%7B5DB96547-FE46-41DE-88D8-50D3227BAA23%7D&dist=hppr

3. BrandWeek, Survey: Environment No. 3 Issue for U.S. Consumers (June 3, 2008)
http://www.brandweek.com/bw/news/recent_display.jsp?vnu_content_id=1003811333

4. AdWeek, Deflating a Myth, (May 12, 2008)
http://www.adweek.com/aw/content_display/news/strategy/e3i5e732e045deaaba3ef1cd271cfd0d102

5. Environmental Leaders, Whole Foods, Trader Joe’s, Toyota Tapped By ‘Trendsetters’ As Greenest Brands (July 31, 2008)
http://www.environmentalleader.com/2008/07/31/whole-foods-trader-joes-toyota-tapped-by-trendsetters-as-greenest-brands/

6. Advertising Age, Toyota Turns a Niche Into Anti-Waste Zealotry, June 8, 2007
http://adage.com/eco-marketing/article?article_id=117131

7. Advertising Age, Jacquelyn Ottman; Marketers, Follow That Prius (May 28, 2008)
http://www.greenmarketing.com/files/articles/Jacquelyn%20Ottman-Marketers%20Follow%20That%20Prius.pdf

8. Sustainable Life Media, The 5 Smile Rules of Green Marketing
http://www.sustainablelifemedia.com/content/feature/brands/06112007

9. Toyota.com
http://www.toyota.com/about/news/product/2008/05/15-1-prius.html

10. Media Post Publications, Toyota’s New Corporate Campaign Asks ‘Why Not?’
http://www.mediapost.com/publications/index.cfm?fuseaction=Articles.showArticleHomePage&art_aid=70467

11. EPA, Partner Profile- Whole Foods Market
www.epa.gov/greenpower/partners/partners/wholefoodsmarket.htm

12. Whole Foods, www.wholefoods.com

13. San Francisco Chronicle, Companies tout their social consciences online (August 17, 2008)
http://sanfranciscochronicle.info/cgi-bin/article.cgi?f=/c/a/2008/08/17/BU961253IE.DTL

14. Forbes.com, GE Turns Green, (Aug. 15, 2005)
http://www.forbes.com/forbes/2005/0815/080.html

15. Time Magazine, GE’s Green Awakening (July 7, 2005)
http://www.time.com/time/magazine/article/0,9171,1079496,00.html?imw=Y

16. MSNBC, Green Electric? GE unveils eco-strategy (May 10, 2005)
http://www.msnbc.msn.com/id/7791657/

17. USAToday, Being Eco-friendly can pay economically, (Aug. 14, 2005)
www.usatoday.com/money/advertising/adtrack/2005-08-14-ge_x.htm

18. Environmental Leader, GE Green Sales Double, (May 24, 2007)
www.environmentalleader.com/2007/05/24/ge-green-sales-double/

19. CNN.Money.com, China buys GE’s ‘green’ push (Oct. 25, 2007)
http://money.cnn.com/2007/10/24/magazines/fortune/ge_china.fortune/index.htm

20. New York Times, Now Looking Green is Looking Good (December 28, 2006)
http://www.nytimes.com/2006/12/28/business/media/28adco.html

21. Environmental Leader, Successful Green Marketing Focuses on Consumer Needs (June 20, 2007)
http://www.environmentalleader.com/2007/06/20/successful-green-marketing-focuses-on-consumer-needs/

22. The Free Dictionary,
http://209.161.37.11/dictionary/greenwashing

23. National Public Radio, April 12, 2008
http://www.npr.org/templates/story/story.php?storyId=89583839

24. Federal Trade Commission, www.ftc.gov

25. MediaPost, New 'Green' Ad Claim Regulations Coming Next Year, Oct. 20, 2008
http://www.mediapost.com/publications/?fa=Articles.showArticleHomePage&art_aid=93003

26. BrandWeek, Survey: No One’s in Charge of Green Practices (June 17, 2008)
http://www.brandweek.com/bw/content_display/esearch/e3i9d8ccb98f5cb5751e3535a2d95815692