Hi, welcome back to week three of become a sustainable business change agent. We began this week by looking at green design, and then we discussed how you could use labels to show people that your products were green or sustainable. We also mentioned take back as a powerful signal that your products were recyclable. In this lecture, I want to expand on how to share the good things that you've been doing, by discussing green marketing. We'll look at what type of information consumers respond to, then shift gears and we're talk about green washing, or fibbing about a product's green attributes. I'll finish up by showing a couple examples of social marketing. There are a lot of different opinions about the effectiveness of green marketing to consumers. What follows is my distilling of this information from six or eight different sources. Green marketing is about the pricing, positioning, and promoting of products based on their sustainability attributes. Marketing has five Ps, so we're adding a sixth and seventh P, planet and people and community to that list. First, the confusion about whether green marketing is effective seems to be limited to marketing to consumers. In business to business marketing, that is when your company is selling to other companies, it's clearly very important, and I'll come back to this a little bit later. Second, the evidence seems to show that relying only on the planet saving aspects of a product isn't enough. You're not going to guilt people into buying your product. There's a small segment of shoppers that respond to that message, but it's really quite small. So labels or advertisement like on this $27 beer mug won't be very effective. You really have to wonder how many of these the companies sold. Here's another example. Hotels often have a card or a hang tag asking guests to reuse their towels. Most people at home don't wash towels every day, but in hotels, they expect fresh towels daily. Now, about 35% of people use their towels more than once at hotels with these hang tags. At home people regularly use towels four or five times or even more often before washing them. So reuse shouldn't be a big deal. Behavioral economists have been looking at issues like this. When the hang tag said 75% of people staying in this room reuse their towels. The reuse rate went up to 44%. So it depends on how we encourage people to behave. Now here's an interesting incentive, the Best Western hotel in Boulder Colorado offers points towards a future stay for reusing towels and skipping housekeeping. Starwood and Marriott also offer this choice. I also read about a few hotels that offer a discount on room rates of about $20 per night if you skip housekeeping, or some that give a $5 coupon towards food or beverages within the hotel. I couldn't find information about how effective these programs were, or how many people took advantage of them, but I did find a few criticisms about them. Housekeepers at a hotel in Toronto think it reduces their hours and the number of housekeepers on the payroll. A person also said that it's much harder to clean a room that hasn't been clean in four or five days than to clean the room everyday. A guest at a Boston hotel said the program isn't green. It has green aspects, but it also means it trash isn't emptied coffee and tea aren't replaced in the room. So it's more of a no service than green. This is one of those systems thinking problems. We need to consider a variety of impacts to get the complete story. Third, some people, another small segment, will read detailed information on packaging, like the nutritional information on this label, before making a purchase. But most of us don't have the time, so we need information that we can digest much more quickly. That means complicated information is not as effective as simpler information. An example in one study of energy saving appliances, said that annual cost savings was more effective than lifetime cost savings. Apparently people can relate to savings over a year. But there's uncertainty about how long the appliance will work, or how long they'll keep it, or what savings two or three or five years in the future really it's worth. But annual savings in dollars can be misleading. The savings depends on how much a person uses. How long lights are on, how much they drive and so on. It's better to either qualify the savings, as in save up to $50 a year with normal use, or this bulb uses 40% less energy than an incandescent bulb. Now here's a nice example, save up to 50%. And it tells you what you have to do to achieve that savings. Then you can start to have fun with these ads. The ship ad says if everyone in Los Angeles washed their laundry in cold water for just one week, the energy savings would be over 11.8 million kilowatt hours, enough to power a cruise ship from Los Angeles to Hawaii. The Empire State Building ad does a similar thing. If everyone in New York City washed their laundry in cold water for just one day, the energy savings would be 5.7 million kilowatt hours, enough to power every light in the Empire State Building for a month. The fourth question about the effectiveness of green marketing is that people want to know why a product will improve their lives or how a product will improve their lives. This could be saving them money, being safer for children, being safer to use. For the most part, people buy what benefits them individually. To quote one source, individual purchases had little to do with the greater good of society and everything to do with the individual preferences. This is especially true if the green product costs more than the alternative. Consumers on average think that green products cost up to 25% more so there have to be some real benefits. If green marketing doesn't work very well, why do it? Well there are a couple of very good reasons. First, you want to establish your company as being active in this arena. Second, companies need to tell consumers how products are getting better. This is almost an educational rule, getting consumers to think about the environmental and the social aspects of the products they buy is part of starting to change how people shop. Earlier I mentioned that sustainability attributes were important in business to business marketing. Some businesses and organizations made a commitment to buy more sustainable products. So they have guidelines for evaluating these products. Businesses have to keep a close eye on expenses, so are very interested in energy saving products and ways to reduce waste and water use. So businesses tend to be very receptive to big parts of the sustainability message. Also, as we've mentioned before, reputation is important. So finding products that are likely to have fewer bad surprises is valuable to business. When you market your green products to businesses, you need to provide the relevant information clearly and honestly. You need to provide any sort of rebates or government incentives, so the consumer can easily compute their net price, the price after incentives. If you decide to use green marketing, beware of two things. First, you can't overstate how good your product is, this is green washing. Greenwashing is making false claims about a product's sustainability attributes or pretending to be green when you aren't. Once you get labeled as a greenwashe,r it can be hard to change people's perceptions, so understate. Second, part of the green marketing package is that the company is trying to be sustainable too. This is the walk the idea. If you're bragging about how green your company's products are, but the company itself is a polluter, it treats the employees or communities poorly, consumers will figure that out. There has to be some correlation or congruence between the company's behavior and the goods they're selling as green. Now here's an example of greenwashing. First, diesel simply can't be clean. And second, we now know VW is cheating on its testing. Is green washing a problem? You bet it is. If companies make false claims, that makes consumers reluctant to buy green products, especially if they cost a little more. As demand for green products goes down, there's less incentive for companies to develop green products, and the whole shift to a more sustainable marketplace slows down. So greenwashing is a big problem. Now, there is some good news hidden in all of this. On their own, companies have been making better and better products. They've been reducing ways to eliminate toxic chemicals, reducing energy use, and improving the recyclability of products. We need to keep encouraging them to do more by buying some of those really good products. Now I want to shift to something that's really fun, social marketing. Social marketing is using marketing tools to change behavior, to help individuals, communities and the environment. Now here are a couple of examples that I think are so clever. The first is part of Denver Water's conservation campaign, trying to get people to use less water. The second is about paper and the rainforest. I think these are wonderfully clever, thanks.
