With the ever-increasing cost of gasoline, the acclaim of Al Gore’s documentary “An Inconvenient Truth,” and one natural disaster after another blamed on climate change, people have never been more aware of the need for sustainable business practices. The evidence may be seen from department stores to coffee shops: marketers are bowing to the demands of their environmentally conscious clientÃ¨le, and capitalizing on the trend.
What are marketers doing to “go green”? How is it affecting business? What marketplace trends related to sustainability are emerging? At Texas A&M University’s Mays Business School, a number of marketing professors and researchers are asking these questions and watching the news for answers about the eco-friendly bandwagon and its impact on marketers and consumers.
I sat down with three Mays marketing professors to discuss this fascinating area of emergent research. Cheryl Holland Bridges is the director of the Center for Retailing Studies at Mays and has more than 25 years of experience in the retail industry; Kelly Haws and Karen Winterich are assistant professors of marketing with a research focus on consumer behavior. While none of these researchers claims expertise on environmental issues, they all have interesting insight to share based on things they’ve read about or experienced in the marketplace. What follows is a condensed version of our conversation.
MBO: What are you seeing businesses do right now to go green from a marketing perspective or corporately?
Cheryl Holland Bridges: I think the biggest one is Wal-Mart. It’s the king of green right now. They’ve made a huge push for sustainability. They announced at their annual shareholders meeting last year that sustainability was going to be a main focus. Sales were soft in ’07 but at a recent meeting Wal-Mart leaders announced great results, even in this tough economy. They attribute some of that success to their sustainability efforts.
Kelly Haws: People are not necessarily willing to pay a premium for more ethical products or for companies that act more responsibly, but that’s what makes Wal-Mart fascinating. The first thing we associate with Wal-Mart is low prices. They’ve found a business model where you’re seeing green procedures and products combined with low prices.
Current research is showing that consumers think that green products are going to be more expensive and less effective. Those are two barriers to consumer adoption of these products. If you’re able to overcome those barriers, as Wal-Mart is attempting to do, then enormous progress can be achieved that can create a ripple effect across multiple industries.
Cheryl Holland Bridges: Wal-Mart is making big changes such as shrinking packaging and putting less air around products, so each unit takes less space but has the same amount of product. So you have less waste in your packaging, and each truck can haul more goods and use less gas. And they’re using more recyclable materials.
Karen Winterich: I do wonder, though, about Wal-Mart and the packaging if there’s going to initially be backlash when customers see a smaller box. “I’m paying the same price for a smaller box? That’s a rip off!’ I’m sure the box will say it’s got the same amount, but how long will it take for consumers to notice that?
Kelly Haws: Studies demonstrate that if a company needs to cut costs, it is better for them to slightly reduce the quantity than to slightly increase price of a product, because consumers are less likely to notice that change. That’s a very important difference in consumer perception. That plays into what Karen said. If you’ve obviously shrunk the packaging it’s going to set off alarm bells for the consumer.
Karen Winterich: A similar example is laundry detergent, which is now two and three times more concentrated. Some might not understand why it costs the same for less product. It forces a change in consumer behavior and perception.
Cheryl Holland Bridges: Something else Wal-Mart is doing is reducing the amount of packaging around products in shipping in their trucks. That’s something the consumer wouldn’t even see. They’ve figured out how to be more efficient internally.
Karen Winterich: That makes me wonder if companies will start doing that across the board. Like Amazon. You order one book and it comes in this big box with all this packaging. It’s a bookâ€”it could come in an envelope. When will that kind of thinking kick into gear? Polls indicate that people say that they care about the environment, but there’s a lot more talk than action.
Kelly Haws: That’s why what Wal-Mart is doing is so key, because if they can make sustainability changes in such a way that the consumer is not even directly impacted, then that’s when you start to see some real change in the way business is done.
“There’s a lack of basic knowledge about this issue, and a lack of consistency about these titles. There’s a lot about these green issues that consumers don’t understand fully. It’s hard to know what does make a difference.” – Kelly Haws, assistant professor of marketing, Mays Business School
MBO: What role does the age of the consumer play in eco-marketing?
Cheryl Holland Bridges: The Generation Y group [those born from 1980-2001] is very concerned about the environment and social responsibility. That’s something that we’re seeing with our students when they take jobs with retailers. They used to ask questions such as what are the benefits like, how much vacation do they get, when do they get paid. Now one of the top questions is “What is your company doing responsibly?”
Karen Winterich: NBC has a lot of programming for younger to middle-aged audiences, like “The Office” and “30 Rock” where the show, and the advertising during the show, often focuses on going green, almost to the point where it makes fun of it, but also plays it up and gives it attention. It’s not that they’re not hitting green advertising to older consumers, but they’re certainly playing it up in younger consumer markets.
MBO: How much of what companies are doing is because it makes financial sense versus because it is good for the environment?
Cheryl Holland Bridges: I do know it’s profitable for companies. It does help their bottom line. I don’t know if that’s because the consumer gets it, and thinks, “Oh, I’m going to go shop Wal-Mart because they’re doing all these great things.” Kohl’s has a big push in how they cool their buildings and how they use solar lightingâ€¦and if they save energy, they save money.
Karen Winterich: I find it very hard to believe that any company would invest in some sustainability effort that did not break even, if not create a profit.
Kelly Haws: Yes, they still have to make money.
MBO: Which is a more weighty concern for companies: bad press from being seen as environmentally unfriendly, or positive press from doing something good for the environment?
Karen Winterich: The negative information! There’s tons of research that shows as soon as you hear negative information, it affects your decisions, it affects your judgment. A little bit of positive information is quickly outweighed or overlooked compared to the negative. Negative publicity is generally much more harmful than positive press is helpful.
Kelly Haws: As more companies get involved and go green, the positive of saying that you’re going green will become less effective.
Karen Winterich: Because if everyone does it, it will become the norm. The one company that doesn’t, we’re not going to shop there, because they’re not green like everybody else.
MBO: What does it take to change a consumer’s habits? Not only about green issues, but if there’s product A that the consumer has been buying for 20 years, what would motivate them to change to product B?
Kelly Haws: Most of everyday consumer product decision-making is habitual. They continue to do what they’ve been doing. Especially in your scenario, 20 years of buying the same product, why are they going to change? There has to be a compelling reason.
Cheryl Holland Bridges: Innovation, something that’s really earthshaking will force a consumer to change. We change our cell phones because new ones are smaller and they take a picture.
Karen Winterich: When it comes to changing behaviors, I think of those compact light bulbs that say they can save you so much per year. As a consumer you don’t believe that, you can’t see that immediately. It will take you eight years to realize the savings. But as it becomes the norm and the other light bulbs are phased out, then it will be no problem.
Kelly Haws: That’s why companies have to continue to innovate and do the research and development to come up with these things that will be the standards of the future.
MBO: This “save the earth” idea has been around for quite sometime and was a big deal in the 80s, but lately it’s seen a resurgence. What is motivating this movement? Is this a trend or the way of the future?
Kelly Haws: I think it’s a force to be reckoned with. I don’t think it’s a trend. Companies are going to want to integrate these greener and more efficient ways of doing business from now on. Like Wal-Mart with its cost savings through these distribution channel improvementsâ€”to compete, businesses are going to be forced to adopt some of these measures. If we can figure out ways to both be environmentally friendly and be more efficient and save money, who wouldn’t do that?
Cheryl Holland Bridges: There’s so much evidence that global warming is happening. Antarctica is melting. The glaciers are melting. I think most people are more serious about it than they were in the 80s. I was a member of Greenpeace then and I carried the flag, but I wasn’t all that worried. I’m scared now. I think it’s real now.
Kelly Haws: I think our increasingly global perspective has heightened fears about environmental issues. We’ve seen the emergence of China and India as mass industrialized nations having an impact on the planet. That contributes to people’s concern.
“Polls indicate that people say that they care about the environment, but there’s a lot more talk than action.” – Karen Winterich, assistant professor of marketing, Mays Business School
MBO: Most everyone wants to do their part to save the world, but being a green consumer can be confusing. What are challenges to consumers to be eco-friendly?
Cheryl Holland Bridges: I don’t think there are that many products to buy that are really green. Also, price. You go to the grocery store and see organic products, so that’s healthier, that’s greener, but it’s twice as expensive.
Karen Winterich: Lack of trust that a greener product will work the same, so effectiveness is part of it. Confusion about which product to use and if it will really work, or how to use it if it’s different.
Kelly Haws: Besides price and convenience, that lack of understanding and suspicion of effectiveness impacts decisions about buying eco-friendly products.
Karen Winterich: Everyone seems to have a different definition of what’s green. Does that mean it’s organic and doesn’t use chemicals? Or that they use recyclables? People don’t know.
Kelly Haws: There’s a lack of basic knowledge about this issue, and a lack of consistency about these titles. There’s a lot about these green issues that consumers don’t understand fully. It’s hard to know what does make a difference.
MBO: Any closing comments about the topic of green marketing?
Karen Winterich: I think it’s just an issue of consumers not understanding, or not having enough benefits for them to change their behavior, because studies show that most consumers report that they care.
Kelly Haws: I just think overall there’s been enough abuse or loose use of the term “green” that there’s a lot of confusion out there. There are barriers to overcome. Consumers are skeptical. Until we can get cost and convenience as part of the equation, we’re not going to see major changes.
Cheryl Holland Bridges: Based on my conversations with representatives of large corporations, I think it’s companies that have the power to really make the difference. How they package or transport their goods, or light, cool and heat their facilities, those are the things that are going to make a huge difference. I think corporations will make the biggest dent.