Consumers will be willing to pay premium for a direct tangible benefit of a green product, if it reduces exposure to potentially hazardous chemicals at home
When a customer uses a green product he derives two kinds of benefits – a direct tangible benefit (a greater suitability of the ‘natural’ product) and an intangible benefit (of helping the planet). A consumer will surely pay a premium for the first category of benefits, like, say, organic food if it reduces exposure to potentially hazardous chemicals at home.
EASY DOES IT: EASY ON POCKET, EASY TO LOCATE, EASY ON CONSCIENCE
The morphing into a green consumer depends on three Cs actually: cost, convenience, and concern for environment. So Raghvendra Rathore, the designer, has designed a lifestyle software for iPhone, called iCarbon. It helps calculate individual carbon footprint – the total set of greenhouse gas emissions caused directly or indirectly by an individual. It then offers solutions to neutralise your carbon rating. Patrick O. Brown of Stanford University tells you that animal livestock has a greater green-house effect than all the cars, trucks, and planes in the world. So why not turn vegetarian, or, better still, a vegan. Diets are malleable either way. 30 years ago nobody drank high fructose corn syrup. Now it is dominant part of the American diet. As western diets move into China, people there are eating more beef.
As regards cost-or-price-it is almost automatically assumed that green products would be more expensive since their cost of production would be higher. True, but if they are produced through the same processes that are used to make their less environment friendly counterparts. But why can’t we be innovative? Embedding a sustainability mindset upfront into product design and process engineering will yield competitively priced products. If P&G can do it, so can others. Nano has spurred all car makers into thinking about frugal engineering, manufacturing, and running. Wipro has launched a Greenware range of desktops and laptops which are fully compliant as per the Restriction of Hazardous Substances Directive, yet are competitively priced. Titan and Nokia run exchange scheme to take back discarded products – so as to recycle them – and, at the same time, reduce the effective price for the buyer. Alternatively price parameters have to be redefined by de-emphasising the initial high prices, and making customers focus on total cost – of acquisition, usage, maintenance & disposal.
Thus buyers of green buildings are being made to appreciate the fact that the incremental cost of the green options gets paid back in 3-5 years only. Finally, the convenience factor. A crucial point to note is that even if attitudinally consumers are ‘active green’ behaviourally they remain ‘passive green’. Easy accessibility is the key here. Even if the green niche is very small currently, the Future Group has managed to push sales by offering better display and exclusive racks for organic foods and products. Nature’s Basket followed a different route. The shop offered groceries to bring in the footfalls. Then there was a campaign to push her towards organic and such products.
The key takeaway thus is, Generation Y (18-28 age group) is sold on environmental issues. In order to make green marketing certain ground rules must be kept in mind and followed: One, consumer must be aware of, and concerned about issues that your product professes to address. Second, he has to feel that he will make a difference by using a green product. Third, he has to believe your claims. Fourth, the product must perform. Finally, if you’re charging a premium, he must be convinced about its justification.
For more articles, Click on IIPM Article.When a customer uses a green product he derives two kinds of benefits – a direct tangible benefit (a greater suitability of the ‘natural’ product) and an intangible benefit (of helping the planet). A consumer will surely pay a premium for the first category of benefits, like, say, organic food if it reduces exposure to potentially hazardous chemicals at home.
EASY DOES IT: EASY ON POCKET, EASY TO LOCATE, EASY ON CONSCIENCE
The morphing into a green consumer depends on three Cs actually: cost, convenience, and concern for environment. So Raghvendra Rathore, the designer, has designed a lifestyle software for iPhone, called iCarbon. It helps calculate individual carbon footprint – the total set of greenhouse gas emissions caused directly or indirectly by an individual. It then offers solutions to neutralise your carbon rating. Patrick O. Brown of Stanford University tells you that animal livestock has a greater green-house effect than all the cars, trucks, and planes in the world. So why not turn vegetarian, or, better still, a vegan. Diets are malleable either way. 30 years ago nobody drank high fructose corn syrup. Now it is dominant part of the American diet. As western diets move into China, people there are eating more beef.
As regards cost-or-price-it is almost automatically assumed that green products would be more expensive since their cost of production would be higher. True, but if they are produced through the same processes that are used to make their less environment friendly counterparts. But why can’t we be innovative? Embedding a sustainability mindset upfront into product design and process engineering will yield competitively priced products. If P&G can do it, so can others. Nano has spurred all car makers into thinking about frugal engineering, manufacturing, and running. Wipro has launched a Greenware range of desktops and laptops which are fully compliant as per the Restriction of Hazardous Substances Directive, yet are competitively priced. Titan and Nokia run exchange scheme to take back discarded products – so as to recycle them – and, at the same time, reduce the effective price for the buyer. Alternatively price parameters have to be redefined by de-emphasising the initial high prices, and making customers focus on total cost – of acquisition, usage, maintenance & disposal.
Thus buyers of green buildings are being made to appreciate the fact that the incremental cost of the green options gets paid back in 3-5 years only. Finally, the convenience factor. A crucial point to note is that even if attitudinally consumers are ‘active green’ behaviourally they remain ‘passive green’. Easy accessibility is the key here. Even if the green niche is very small currently, the Future Group has managed to push sales by offering better display and exclusive racks for organic foods and products. Nature’s Basket followed a different route. The shop offered groceries to bring in the footfalls. Then there was a campaign to push her towards organic and such products.
The key takeaway thus is, Generation Y (18-28 age group) is sold on environmental issues. In order to make green marketing certain ground rules must be kept in mind and followed: One, consumer must be aware of, and concerned about issues that your product professes to address. Second, he has to feel that he will make a difference by using a green product. Third, he has to believe your claims. Fourth, the product must perform. Finally, if you’re charging a premium, he must be convinced about its justification.
K. K. SRIVASTAVA, Advisor, IIPM Business Press
Source : IIPM Editorial, 2010.
An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).
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