Identifying the gap between Consumers’ perceptions and Marketers’ objectives in Buying and Marketing of Green Products Paru Taneja 4620|BBS 3M
<ul><li>The last decade has witnessed a dramatic increase in environmental consciousness worldwide. </li></ul><ul><li>The increase in environmental consciousness has had a profound effect on consumer behavior, with the green product market expanding at a remarkable rate. </li></ul><ul><li>With this the work of marketers becomes more complex as they need to target the “greener” segments differently. </li></ul><ul><li>The study is undertaken to find relevant insights about an “ecologically conscious” Indian consumer. </li></ul><ul><li>The study also segments the sample size into various shades of green for ease of understanding their psyche . </li></ul>Rationale of the Study
<ul><li>The main objectives of the study were the following </li></ul><ul><li>To study the consumer perceptions about green products. </li></ul><ul><li>To segment the consumers into various shades of “Green”. </li></ul><ul><li>To understand the buying motives in purchase of green products in “Greener” Segments </li></ul><ul><li>Relevance of being “Green” to the marketer. </li></ul>Study Objectives
Implications for the Companies This report highlights 4 important insights that will help companies succeed in ‘Green Revolution’ If you are not playing in the green space, you are competing against it. Either fold it into your strategy or have a clear competitive advantage over green competition Know your customer. Different ‘shades’ of green consumers mean different demographics, behaviors, and segmentation plans Being green is not enough. Consumers expect companies to have green products that are superior or at least on par with conventional products Companies’ green initiatives do influence consumer purchasing behavior. Hence it is important to build the trust else you get boycotted Green is here to stay All Green consumers are not created equal Being Green ≠ Success Green Consumers Are Listening…But You Are Not Being Heard
Research Methodology Research Design : Descriptive Sampling Technique : Judgmental sampling Sample size : 150 Area : Delhi and NCR Time period : January 2010 to March 2010 (Approx 98 days) Data collection method : 1. Personally Administered Survey 2. Focus Group Discussion and Personal direct interviews of consumers 3. Personal direct interviews of marketers and other channel members from the industry. 4. Secondary Research
Perceptions about Green Products Consumers think of green products as those that minimize the negative impact on the environment (e.g., energy-efficient, recyclable, natural or organic) A certain percentage of respondents also consider a product green if it is marketed by a socially responsible company. This fact could be exclusive of all other factors denoting that brand or image of a company carries weight in the minds of consumers while they make purchase of green product.
Intensity of Green Behavior Based on the extent of green product purchases, the vast majority of green consumers fall into two categories, ‘light green’ and ‘dark green’ Green is mainstream (62% of consumers currently purchase some green products), and sticky (only 4% of consumers who bought green products at one point in time have stopped buying them) but not yet very deep (only 15% of consumers buy green products for the majority of their purchases). Non Considers : I understand what green products are but have never thought of buying them Green Considers : I have thought of buying green products but have never actually bought them Former Green Considers :I used to buy green products earlier, but have not bought them recently Light Green : Some of the products I currently buy are green Dark Green : Most of the products I currently buy are green. And I buy only green products
Non Green Consumers Consumers who never bought green products are deterred from purchasing them because they are perceived to be too expensive and unavailable. The consumers fail to see a valid reason in switching from non green to green products at the cost of personal convenience and satisfaction. They do not perceive ‘Going Green’ to be a trend that will wear away with time still do not see any personal benefit in switching from non green to green products.
Light Green vs. Dark Green Consumers Dark green’ consumers care more about what is in products (e.g., made with natural, organic ,or recyclable material ) than ‘light green’ consumers This revelation into a green consumer’s preferential attributes for products forms an important implication for marketing communication. The communication can be modified according to the particular segment’s preference for product characteristics. Light Green Associations (n=76) Dark Green Associations (n=23)
Green Consumers’ Demographic profile ‘ Dark green’ consumers are likely to be older, more educated and affluent than ‘light green’ consumers. Green consumerism is shown by majority women. Light Green (n=76) Dark Green (n=23) Educational Background Occupation More Educated More Independent
Light Green Dark Green Income distribution Age More Affluent Older Women Gender Women
Reasons for Purchasing Green Although both consumer segments have similar motivations for buying green products, ‘light green’ consumers make their buying decision on cost factors and personal satisfaction, while ‘dark green’ consumers buy because of the product’s benefits to their family. Light Green (n=76) Dark Green (n=23) A marketer hence needs to convey the benefits of personal as well as societal nature in a green product.
Relevance of reference groups Light Green (n=76) Dark Green (n=23) Dark green consumers are self reliant and depend on their own judgment whereas light green consumers turn to friends and family for reference. Thus, the role of reference groups becomes clear and it is concluded that consumers are dependent on their own judgment derived from various information sources. (primarily product labels and print media)
Light Green (n=76) Dark Green (n=23) Information Sources for Green products. Product labels and print media are the primary sources of information about green products and companies for consumers
Greenness determinants for Companies Light Green (n=76) Dark Green (n=23) Dark green consumers believe a firm to be green if it offers only green products rather than just communicating environmental issues
Relevance of Greenness of Companies Light Green (n=76) Dark Green (n=23) Green consumers consider ‘Greenness’ of firms as an important factor in determining purchase.
The Marketer’s view point Survey of marketers gives important insights into understanding their ways and objectives of presenting themselves as green. <ul><li>Most respondents were involved with socially responsible projects and communicated their social initiatives explicitly. </li></ul><ul><li>Majority communicated about environmental issues and concerns while promoting specific merchandise for the same. </li></ul><ul><li>The respondents believed that the way they promoted themselves, (the quality and variety of merchandise they keep) sets them apart from other producers of conventional products. </li></ul><ul><li>It helps them be the ‘Trend Setter’ for the society. Such trends are followed by their loyal customers. </li></ul>
Key Findings Green is here to stay All Green consumers are not created equal Being Green ≠ Success Green Consumers Are Listening…But You Are Not Being Heard 66% of respondents have bought green products and nearly all of them will not revert their course. However, only 15% of consumers choose to buy green products for the majority of their purchases (the ‘dark green’ Consumers) Price is the major barrier for replacing high involvement products with greener versions . Dark green and light green consumers vary in their commitment levels of purchase. Price-few will pay extra for greener products Convenience – only minimal inconvenience will be tolerated by consumers of green products Availability – few customers will go out of their way to purchase green products While green benefits are important factors in green consumers’ decision process, a product being green does not provide them the ‘green light’ to purchase – the product needs to be superior or at least on par with its conventional counterpart to be considered. Green consumers patronize manufacturers and retailers they trust and boycott the wares of suspected polluters. The top of mind recall were the firms those who explicitly communicate their concern towards the environment and provide consumers with truly green products.
Recommendations for firms <ul><li>Marketing Communication </li></ul><ul><li>Be green because you can be, not because you want to be </li></ul><ul><li>Understand that many consumers are already tapping into their greenness whether </li></ul><ul><li>they realize it or not (what can your brand do to help) </li></ul><ul><li>Offer green innovation in categories where it is not expected but will be appreciated </li></ul><ul><li>Don’t apologize for lack of a green past. Rather, focus on a green future </li></ul><ul><li>Instead of focusing on a green niche, focus on green behaviors that everyone can aspire to . </li></ul><ul><li>Encourage “Word of spouse” marketing. </li></ul><ul><li>Purchase Process </li></ul><ul><li>Shorten their buying cycle for big ticket items. </li></ul><ul><li>Pricing Strategies </li></ul><ul><li>Premium can’t be charged in the long run. </li></ul><ul><li>Demonstrate Cost/benefit analysis in long term for big ticket items. </li></ul>
Some effective examples “ Make up your mind, not just your face.” — The Body Shop Symbolism 4. “ Long life for hard-to-reach places.” — General Electric’s CFL Flood Lights Convenience 5. “ Performance and luxury fueled by innovative technology.” — Lexus RX400h Hybrid Sports Utility Vehicle Bundling 6. “ Fueled by light so it runs forever. It’s unstoppable. Just like the people who wear it.” — Citizen Eco-Drive Sport Watch Performance 3. “ 20 years of refusing to farm with toxic pesticides. Stubborn, perhaps. Healthy, most definitely.” — Earthbound Farm Organic Health and Safety 2. “ mpg” - Toyota Prius Efficiency and Cost Effectiveness 1. Message and business/product Value Proposition
Limitations <ul><li>A convenience sample was used for the data collection which makes the results not readily generalizable. Although great effort was put in to get a sample which includes people from different demographics </li></ul><ul><li>This study was conducted only in Delhi and NCR. So it is difficult to determine whether it can be extended to a larger population outside this region </li></ul><ul><li>This study is not product specific. This study was conducted only to understand the perceptions of consumers about green products as a whole. </li></ul><ul><li>Personal bias of respondents while answering the questions may have skewed the results slightly. Although an effort has been made to verify the results through all sorts of qualitative and quantitative data. </li></ul>
Learning <ul><li>The study helped me to think pro-actively on a topic of interest. </li></ul><ul><li>Talking to people and understanding their perceptions was an enriching experience. </li></ul><ul><li>The purchasing pattern of Indian consumers aligned with that of their global counterparts thus I have been able to map this phenomena in global context. </li></ul>