The “environmental marketing movement” is one result of Earth Day 1990. In response to studies indicating that consumers want environmentally friendly products, many firms have introduced “green” products, but the results have been disappointing. Why? To answer this question, we must examine the extent of “greenness” of the consumer market, current business actions, and the present regulatory and economic environments.
The consumer market consists of five groups, classified by their willingness to buy “green” products. The first group, the “true-blue greens” (11 percent of the population), are affluent individuals heavily involved in pro-environment practices. The second group, the “greenback greens” (11 percent), are younger and are the biggest environmental spenders. The third group, the “sprouts” (26 percent), are ambivalent about the environmental movement. Fourth, the “grousers” (24 per- cent) aren’t involved in environmental activities because their friends aren’t. Finally, the “basic browns” (28 percent) don’t believe that individuals can make a difference in improving the environment. With the exception of the true-blue greens and the greenback greens, the market is uninterested in environmental efforts and unwilling to pay over 5 percent extra for green products. Because many of these products have higher prices, lack of consumer response should be expected.
Based on their environmental marketing efforts, businesses can be divided into two groups. First are the Firms that readily label products as biodegradable or environmentally friendly, with only weak evidence to support the claim, in order to extract short-run returns. Publicity surrounding lawsuits based on these doubtful and often deceptive claims has further eroded consumer willingness to buy green products.
The second group of businesses have comprehensive, long-run environmental marketing plans. Even so, they find green marketing difficult. For example, Jack- in-the-Box replaced its foam clamshell packaging with a recyclable paper and foil wrapper. But the wrapper is recyclable only if you can find a recycle location that accepts it.
Because of questionable practices, states have enacted a number of regulations affecting environmental marketing. The sheer volume of regulations can often be overwhelming for a manufacturer. And because regulations vary from state to state, they may also be difficult to meet.
To deal with these problems, various industries have mounted environmental programs: the Responsible Care Program in the chemical industry, the Global Environmental Management Initiative in the petroleum industry, and the Business Charter for Sustainable Development by the International Chamber of Commerce. Although helpful, these programs lack strong enforcement and do not apply to firms outside selected industries.
In July 1992, the FTC issued a set of green guide- lines. These guidelines are voluntary and do not offer precise definitions of environmental terms. Instead, they delineate broad parameters that, if followed, would probably render markets exempt from federal regulatory actions. Examples of the guidelines are:
- An ad touting a package as “50 percent more recycled content than before” could be misleading if the recycled content had Increased from 2 percent to 3 percent.
- An ad calling a trash bag “recyclable” without qualification would be misleading because bags aren’t ordinarily separated from other trash at landfills or incinerators.
- A shampoo advertised as “biodegradable” without qualification would not be deceptive if the marketer has competent and reliable scientific support showing it will decompose in a short time.
The FTC guidelines contain dozens of examples designed to identify allowable as well as deceptive marketing activities. Hence many firms may be encouraged to take advantage of two areas—recyclability and compostability—in making product claims.
Although laudable, the guidelines still fail to deal with several issues. First, they are voluntary and, therefore, not strictly enforceable. Second, they are not binding on states. Many states have already passed a number of environmental regulations that may be at odds with the FTC guidelines. In such cases, firms hope that the state wouid defer to the FTC, But, who knows? With all the problems of green marketing, you might ask “is it worth it?” The answer is yes. Companies that ignore environmental issues invite stiff fines, add to the current lack of confidence in business, and miss out on the substantial long-run rewards that can result for firms that build carefully crafted environmental marketing-platforms now.