? Social and Economic Costs of Environmental Sustainability Green Marketing: Is it Worth It? Table of Contents Table of Contents2 Introduction3 Social Costs3 Economic Costs4 Social Benefits7 Economic Benefits8 Conclusion9 References11 Appendix12 Robert Willson Reflection12 Jordan Lebel Reflection13 Varun Dhir Reflection14 Bryan Sheldon Kiernan Reflection15 Kevin Moffat Reflection 16 Introduction It is impossible to ignore the scientific evidence that outlines the serious effects of climate change.
The majority of the affects are coming from products humans use day in and day out. This knowledge that we have in regards to climate change clearly exposes a lot of business opportunities. Green marketing can be used by many different organizations and applied to many different products. But before an organization can try to sell green products or services, they must ensure that the target audience is a strong believer in climate change mitigation. It is very important that the consumer has been educated on the effects of climate change and is willing to adapt.
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The consumer may not want to pay a premium for the environmentally friendly product, so it is important that the organizations outline the social and economic benefits of using the product. This will than allow the consumer to begin the buying process by seeking environmentally friendly products and services. This report will first outline the social costs of environmental sustainability; this will include topics from convenience to lack of acknowledgement. It will then outline the economic costs, followed by social and economic benefits.
The concluding remarks will outline whether or not green marketing is worth it overall. Social Costs There are numerous barriers to environmental support especially when dealing with the social aspects. Consumers must believe in global warming before they can start to support it. Green related products remain a niche market and consumers are not willing to pay a premium unless their firm believers in climate change. To trust and adapt to global warming is the first barrier consumers must overcome before considering the purchase of green products. Lin (2001, p. 24) expresses that our planet is suffering a harmful change; it’s not a question of believing it anymore, but taking the initiative to start helping the cause with green product acquisitions. Convenience is another significant barrier as majority of people are not willing to go out of their way to acquire green products. Retailers must acknowledge that the demand for green merchandise has considerably risen and stocking these products should remain without a question. Hence, the interest in consumers doesn’t sell products as Mintel (1995) identified a significant gap between concern and actual purchasing.
After all the convenience may only help the availability rather than increasing sales. Once a consumer has become a believer of climate change, gone out of their way to help the cause, and purchased green products must now become educated on them to ensure the products their buying are in fact ‘Green’. Many companies have caught onto the new trend of green and have come out with green themes added to promotional campaigns to take advantage of any environmental concerns of consumers. Consumers can no longer trust product companies for credible information.
Smith (2007, p. 191) states that consumers are increasingly skeptical about green marketing claims. We must identify a 3rd party approval to ensure the product is actually legitimate. Consumers purchasing green products often feel a lack of credit and acknowledgement. If their paying a premium they want to be recognized that they’re doing so. If others are not purchasing green products we feel it’s almost ineffective if we are. Being granted with a personal benefit would make us feel more satisfied. Economic Costs
In this day and age, with the economic problems we are facing on a global scale many people would argue that it doesn’t make any sense to invest further money into making our world a greener one. Many people and companies are already so far into debt they are finding it hard to justify investing money into environmentally sustainable products and technology. It can’t be argued however that consumers are becoming more aware now than ever that change is necessary, and they realize that they themselves can play a part.
Our goal as marketers is to persuade them to make these changes now and show how it can have a profound effect on our future. There are many costs associated with being environmentally sustainable and it takes proper planning for companies to be successful in doing so. Some costs that a company may face are Research and development into environmentally sustainable products. At a time when companies may be cutting their R and D budgets in order to save money it would be beneficial for them to invest more money into this sector to benefit them in the long run Ekins (2000, pg. 1). This is particularly evident in the automotive industry. Hybrid cars are now being seen rolling out of every production plant of every automotive company, all over the world. And for the few companies that aren’t doing so; well, they may as well shut their doors. Even if a consumer doesn’t have the intention of buying a hybrid car at this stage in their life, they want to be a part of a company that is it least playing a part in helping the environment.
The costs of producing these hybrid cars will be outweighed by consumer confidence and long-term relationships with the brand making the company sustainable. Another industry that is facing a great deal of heat is that of agriculture. Many consumers are demanding organic produce and this poses a problem to farmers because it costs a great deal more for them to grow and harvest organically. Yes, there may be some consumers that are willing to pay the extra money for organic produce; and there may even be a way for some farmers, if they’re smart to make a profit off that.
But, for the most part the average consumer is now demanding organic produce at comparable prices to what they are currently paying says Foster and Latacz-Lohmann (1997). Farmers would be wise to invest now into organic practices because it is clearly the way of the future, and if they can be ahead of the curve they will be in a great position when the general standard for produce is organic a few years down the road. One final industry worth mentioning is energy.
Many companies that sell energy may offer some alternative forms of energy to their consumers, but these generally only account for a very small percentage of their total energy productions as shown by Thomas and Dresselhaus (2001 pg. 2). These companies would be sensible to continue to invest heavily into alternative forms of energy because as we’ve seen it is not only necessary to protect our environment, but also can be very profitable in the long term when many different taxes and levies are being charges towards companies that are not helping the environment.
Not to mention the benefits they receive from the government for doing so; especially here in Australia. Even though it may seem extremely silly to invest into environmentally sustainable practices when your company is currently in rough shape, it is shown that consumers will respect these practices, along with the companies stakeholders, and in the future there is no doubt that the companies will become sustainable and profitable. Social Benefits Green marketing is important in today’s world.
Different companies and countries to save the world from global warming and natural disasters have put different standards and strategies forward. Green marketing has grown throughout recent times and its importance is shown through its awareness among people and concerns between them. Some of the social benefits of environmental sustainability associated in green marketing include: Protecting natural resources: Green marketing has encouraged industries to recycle and minimize their waste. This helps to protect the environment from unwanted waste and pollution.
This helps to keep the environment clean and encourages industries to use natural resources to their best ability. ( Prakash, 2002) improves community involvement and awareness of environmental issues. Pollution prevention: Emphasizing on pollution and protection measure is a major strategy and concern of all countries and they have led different regulations for the company to follow in regards to save the environment. It’s developing to be a greater advantage for the global environment. (http://www. epa. qld. gov. u) According to the polls report held in the United States, 87% of adults are anxious about the natural environment (Phillips, 1999), and 80% of adults considered protecting the environment will need key changes in the current life styles (Ottman, 1996), and the rest 75% considered themselves to be environmentalists (Osterhus, 1997). Looking at these figures we can state the growing importance of environmental protection among people. (Prakash, 2002) Resource conservation: Green marketing has helped a lot in conserving natural resources by recycling.
This has helped to conserve natural resources for the adverse conditions when they face natural hazards. According to the study 33% of adults consider environmental records of the companies to choose a product, and after looking at this figure we can show the people’s concern towards natural resources and its protection (Ottman, 1996). Encouragement of employees for energy conservation in their household: green marketing has motivated and increased the awareness among people about protecting the environment.
It has motivated employees to conserve energy not only at their work places at their house as well. Eg: solar energy set up in most of the household. This can be a big cost in the beginning but can help in future cost saving (Prakash, 2002). Cutting cost for consumer in long term as well as direct cost for the companies: the consumer can benefit through green marketing which offers non executable benefits lowering down the direct private costs which in turn benefits the end users by the premium pricing strategy and a cleaner environment without directly paying for it.
Economic Benefits As each day goes on, more and more corporations seem to be jumping on the “green band wagon”. Joining this fast growing trend does not come cheap. There are quite a few economic costs that follow along with it. Corporations are willing to invest their hard earned money and time into creating an environmentally sustainable image, because they know that in the long run the economic benefits will out weigh the costs. Economic benefits are quantifiable in terms of money, such as revenue, net cash flow and net income.
Each industry today has a different strategy from one another in hopes to someday see these benefits. Take the automotive industry for an example; you’ll see more and more manufacturers adding the hybrid model car to their production line. Although the costs that go into manufacturing the hybrid cars will be slightly more than those of the average automobile made, these manufacturers know that the consumer will be willing to purchase the hybrid model. The same patterns occur in the farming industry. Farmers are receiving an increase in demand to produce organic goods as each year progresses.
The materials and equipment that are used to produce the organic foods are more expensive, implementing a higher economic cost to the farmers. The foods are then transferred down to the grocery stores; the grocery stores then raise the selling price, which then increases their economic cost for the consumers who then purchase the organic goods. One of the biggest environmentally friendly trends that’s occurring in Australia today, are the use of solar power systems. More and more household owners are investing in having these solar powered systems nstalled on their properties. Like the other industries, it is a larger economic cost up front to install the system, but later on down the road the solar power will not only help the environment, but will also eventually pay for itself and save the consumer money on their energy bill. When looking at all three of these industries as a whole, one must ask “are the economic benefits that come out of producing environmental sustainability worth it in the green marketing sense? ” After all the economic costs that have gone into producing the products, it is worth it.
In all of these cases, the economic benefits eventually outweigh the economic costs that were put into production. Conclusion Outlining the social and economic costs involved in adapting to climate change and environmental sustainability are important in deciding if green marketing is worth it. These costs can include education on climate change itself, other costs may include convenience of acquiring green products; it may be difficult to always locate certain products. However, the decision cannot simply be made on just identifying social costs, the social benefits are also important in deciding if green marketing is worth it.
Additionally, economic benefits in relation to environmental sustainability are one of the main reasons why green marketing is worth it. Consumers can invest in solar powered energy to run homes, which will save them a lot of money in the long run. Investing in an electric car will save the consumer money on petrol. Many different outlets can be applied to environmental sustainability and it is up the organizations to start applying the idea of “Green Marketing” to persuade the consumer to purchase environmentally friendly products and services. References
Dresselhaur, M. S. , Thomas, I. L. , 2001, ‘Alternative energy technologies’ Nature vol. 414, pp. 2 Ekins, P. 2000, Economic growth and environmental sustainability: the prospects for green growth, Routledge Lin, Y, 200, Global Warming and it’s astro-causes. Kybermetes, Vol 40 no. 4, pg 411-433 Mintel, J 1995, The Second Green Consumer Report, London. Ottman, J 1996, ‘Green consumers not consumed by ecoanxiety’, Marketing News. 30:13. Prakash, A 2002, ‘ Green Marketing, Public Policy And Managerial Strategies’ Business Strategy and the Environment. 11: 285-297
Queensland Government: Environmental Protection Agency,’ “Green Marketing”: The competitive advantage of sustainability’. Viewed on 15th April, retrieved from < http://www. epa. qld. gov. au/publications/p01860aa. pdf/Green_marketing_the_competitive_advantage_of_sustainability. pdf> Smith, A, 2007, Making the case for competitive advantage of corporate responsibility. Business strategy series, vol 8 no. 3, pg 186-195. Uwe, Latacz-Lohmann, Carolyn, Foster, 1997, ‘From “niche” to “mainstream” ??? Strategies for marketing organic food in Germany and the UK’, British food journal, vol. 37 no. 8, pp. 275-282