Strategies for the Green Economy, (2008, New York: McGraw-Hill). Written by: Joel Makower
Reviewed by: Nic Wetzler, December 2008
Strategies for the Green Economy is an excellent book for corporations and their managers to seriously evaluate or formulate their green strategy. It clearly shows the state of the green economy and why consumers’ well-established and overwhelming green consumption interest has not led to commensurate sales of green oriented products. Excellent market segmentation analysis of the population on green attitudes is presented from many sources, including an in-depth analysis in the Appendix. Several explicit strategies are presented along with examples and trends which will further shape the growing green economy. The book focuses mainly on top-line green corporate actions – product sales, waste reduction, energy efficiency, environmental impact of the value chain, effective green marketing – but does not address the bottom-line of sustainability – what are the benchmarks for a sustainable Earth, and which companies are doing their share.
The current state of the green economy is “dysfunctional,” so says Joel Makower. Consumers are extremely skeptical of green claims, because many have proven flimsy at best. A 2007 TerraChoice study of 1,018 products making 1,753 claims found that all claims save one “are either demonstrably false, or that risk misleading intended audiences.” Consumers see most green claims as cynical marketing, nothing more. Further, no one knows what “green” means. There are no established ratings for consumer products, like LEED for buildings, nor is there any third party verification of any current claims. Many customers associate green products with environmentalists and the attendant lifestyle, which consumers are not comfortable identifying or associating with. Companies are reluctant to promote their green accomplishments, because often they are scolded for not doing enough, rather than being recognized for what they have done.
The first strategy proposed for cutting through the fog is digging deeper, much deeper, into the market research data for consumers’ green attitudes and behaviors. Here is some of the data compiled by Makower and presented in the book: Four in ten Americans and sixty-four percent of consumers worldwide are willing to pay extra for a product that is perceived to be better for the environment, and consumers expect to double their spending on green products and services within one year. However: Seven in ten Americans and sixty-four percent of Canadians do not believe company claims that a product is green or better for the environment. Only 1 in four consumers feel highly knowledgeable about environmental issues, only 22 percent feel they can make a difference, and less than 4 percent could name coal as the number 1 source of electricity. Green concern is real, but green consumer behavior is lagging considerably.
To highlight the difference, Makower presents a case study in consumer research performed by SmartPower regarding clean energy. People overwhelmingly support it, but implementation is not catching on. Why? To dig in deep, SmartPower told the participants that fossil fuel has died, write the obituary. “In obituary after obituary, what kept coming through was that fossil fuel has kept this country warm and strong and that there was nothing to take its place. Ant that solar and wind were not ready for prime time,” says Brian Keane, SmartPower President. While clean energy is being marketed on its environmental benefits, consumers were already convinced, and wanted it to succeed for other reasons too, including national and economic security. However, they weren’t buying because they thought it wasn’t yet ready or proven. None of their neighbors had it and it wasn’t on TV. It was more expensive, and changed the way they got their electricity. It was considered an environmental product for environmentalists, not a group that many wanted to be associated with. Understanding the beliefs that drove consumer behavior, SmartPower found that one message tested better than all others: Letting consumers know that enough clean energy was already in use to meet all of Chicago’s electricity needs.
The book presents numerous market categorizations based on consumer green interest. This is the most useful part of the book, especially with the understanding of why there is such a wide gap between consumer green interest and consumer green action. For anyone looking for green market research, I would highly recommend reading chapter 8, which presents at least six different market segmentations of consumers’ green behaviors and attitudes with some discussion, and also the appendix, which presents in depth market research including what type of messages might best resonate with each group.
Many of the strategies presented seem to be common sense, and moreover, established practice in main stream consumer marketing. However, since green marketing developed first as a mission pursued by activists, it is important to transform the messages so that consumers will actually act on them. For instance, according to Ted Leavitt, Harvard marketing professor, “People don’t want a quarter inch drill, they want a quarter inch hole. People don’t want heating fuel or coolant; people want cold beer and hot showers.” In green marketing parallels, selling the environmental benefits is like selling the drill. The important point is to make it clear to the consumer “what’s in it for me?”
Another strategy is to craft your message – eco-facts and enviro-benefits – with “context.” It seems green marketers got carried away with all the green interest, and figured, “If I label it, they will buy.” Unfortunately, the hucksters and opportunists who seized on the promise of higher price with green claims, poisoned the waters, and now like any competitive market with jaded consumers; only a compelling story will sell the product.
The book contains many excellent examples of companies deftly navigating the rapids on the river of green product marketing and corporate messaging, or hitting the rocks. From GM with their plug-in electric Volt, to GE with their Ecomagination campaign, from Levis trying to buy 2% organic cotton, to Coke’s handling of their Polar Bear animated characters in the wake of drowning polar bears due to global warming, it occurs to me that these companies are doing much better than before. However, before they were doing a lot of nothing or their current results are drops in the bucket compared to their overall operations. GE Ecomagination revenues are around 10% of sales, and GM is projected to lose money on each Volt sold. Still, getting companies to honestly deliver the green products that consumers say they want is definitely a step in the right direction. Ultimately, it is up to the consumers to vote with their dollars to push companies’ green offerings, and support legislation that raises the bar for all.
Strategies for the Green Economy presents a few key forces which will help to positively shape and accelerate the green economy. There is growing influence from entrepreneurs, many from the Silicon Valley boom, and they are pouring money into companies, clean-tech venture capital funds, and starting their own companies to capitalize on the new green opportunities. There is a potential move towards a “Small-Mart” economy, where stores will feature locally sourced goods, even though the companies may be large corporations themselves. Energy is so pervasive in our economy, that the move toward clean and distributed energy, offers the opportunity for almost any company to get involved in some aspect of the value chain, including production, installation, engineering, materials, and service.
The bottom-line issues of environmental impact and climate change are touched in the book, albeit in less detail. The work of Robert Socolow and Stephen Pacala from Princeton is presented. Theirs is the 15 wedges to achieve 550ppm of carbon dioxide by 2054, and choosing any 7 will get the job done. There is a good chapter titled The Selling of Climate Change, which applies some of the techniques from the book to promote the awareness of climate change. Particularly interesting is chapter 36, The Elephant in the (Well-Appointed) Living Room, in which Makower contemplates “the third rail” of green marketing: Reducing or limiting consumption may be necessary to stave-off climate change.
Considering the book is geared towards corporate officers and managers, it does very well laying out the green market landscape, and providing methods for success and examples of major corporations grappling with these issues. The market research is excellent, and is a good source for anyone that has anywhere from zero to moderate green marketing experience, at least. Upon reflection, I am encouraged that agents of influence and power at major multi-national corporations might read this book for its green market strategies and become exposed more thoughtfully to the broad implications of our consumer activity on the Earth and its health.