Wednesday, March 26, 2008

Green Marketing

An idea which has come of age is that of ‘Green Marketing’. This consists of the marketing of products which are environmentally friendly. The scope of this includes not only the communication process which needs to be specially focussed on promoting the product as being environmentally friendly, but also the necessary product and process modification so as to actually make the product ‘Green’. Today, awareness about global warming and eco consciousness is at an all time high. With the massive deforestation of the rain forests and the rapidly eroding greenery in our cities and countryside the eco systems of our neighbourhoods are changing for the worse. Under such circumstances, ‘Green Marketing’ is a way for companies to at least partially follow a ‘blue ocean strategy’.
To quote an example, consider the case of electronic component manufacturers in India who are a part of a global supply chain. They are suppliers to various companies in Europe and America, where it is now illegal to have electronic items which have certain levels of hazardous chemicals. The electronic product manufacturers are governed by directives like RoHS which stands for Restriction of use of certain Hazardous Chemicals. This law which came into effect on 1st July 2006 prohibits any electronic product to be sold in the market which fails to comply with the standards as described in the RoHS directive. In an industry that is dependent on the assembly of components sourced effectively by the diverse supply base, these laws have implications which are far flung. These and other such laws also offer a unique opportunity for companies to gain competitive advantages over others by being the first to organize the supply chain to be able to cope with the requirements. Many Indian electronic component manufacturers, who previously found themselves in a tough position wrung by all the proverbial five forces described by Michael Porter, in the wake of stiff price competition from Chinese manufacturers, have used this opportunity to find themselves a ‘blue ocean’ to regain their market competence.
‘Green Marketing’ is essentially a way to create a point of differentiation for one’s products. Companies which can successfully brand themselves as a ‘Green’ company and at the same time successfully integrate their supply chains to cope with the requirements of producing a ‘Green’ product can gain a sustainable competitive advantage in the market place of the near future. This will require significant investment in research of both product development and supply chain integration and also in effective communication strategy. An example of this would be the investments made by Toyota Corporation in the hybrid cars division.
Unlike many horizon planning strategies which are followed by companies, where the investments in research for the future may not always be passed on to current customers, the scope and scale of investment required for ‘Green’ products may necessitate such a measure. Successful ‘Green’ marketers will be those who will be able to identify the opportunity costs involved and avoid making the current generation of customers bear the costs for those of the future; although it might be in the interest of the current generation of customers in the long run to do so!

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