GREEN is GOOD for Business

Green used to be “Nice-to-do.”
Ten years ago, the common belief among retail marketers was that programs which benefited the community or the environment were merely supplemental to their business strategy – something to make them appear favorable in the eyes of their consumers. These projects were shuffled off to the corporate communications or investor relations groups within the company. They were handled as Public Relations efforts to make the corporation “look good.”

Due to this lack of focus, the majority of retailers did not have strategies that dealt with these issues. It was not integrated into the overall marketing plan.

However, there are a few exceptions. Some industry leaders got it right long ago. Target has donated 5% of its income to communities since 1946 and has since added several more programs to its corporate responsibility efforts. Bath & Body Works does not test any of its products on animals and received a 2007 PETA Prodigy Award for the Best Animal-Friendly Retailer. The Starbucks Foundation, which was started in 1997, has provided more than $22 million to support education and youth leadership in local communities, and social investments in countries where Starbucks buys coffee, tea and cocoa.

These companies have figured out how to take their beliefs and leverage them with their customers to drive differentiation and meaningful business growth. Despite these success stories, most other retailers did not build programs around this area.

So, what has changed?
Two crucial things have changed: the business environment and the consumer.

The business environment has become much more competitive and there is very little differentiation among retailers. This is true across the entire space, not just in individual categories.

These new consumers are also not seeing meaningful innovation among retailer companies. Retailers are operating in the same way, providing similar products in similar environments and at the same prices. With the internet as the foremost shopping space, consumers can instantly move from one retail space to another and shop at any time of the day or night.

At the same time, the consumer universe has evolved. The new generation of consumers – “The Millennials” – has grown up in an environment that is very different from their predecessors’.

They are the first generation in 50 years to grow up in what I call the paradigm of scarcity, rather than the environment of optimism enjoyed by the past few generations. This sense of scarcity is making them sensitive to what mankind consumes and what will be left behind for them and their children.

Millennial consumers are constantly reminded that the world will run out of oil in the next 70 years and that we will have no social security or Medicare when they will have need for it.

Millennials are also witnessing the U.S. move from a high-growth economy to a more mature, slow-growth economy. This is reducing their confidence in brands and the roles they play in their lives. They are also watching the country’s role evolve on the global stage from undisputed leader to something, perhaps, a bit less?

They’re making their purchasing decisions in a very different way. They are now picking brands that are consistent with their values in addition to providing them with value.

Some leading business men get it:
Sir Richard Branson, CEO and founder of Virgin Group, recently told Outside Magazine, “We aren’t doing this as a charity. We want to prove you can make money at it.”

Jeffery Immelt, CEO of GE, revealed that, “Ecomagination is not meant to revamp the brand at all; it’s about good business sense. It’s not an advertising ploy or marketing gimmick, GE wants to do this because it is right, but also we plan to make money while we do so.”

Paul Myners, Chairman of Marks & Spencer, remarked, “Put simply corporate social responsibility helps us to attract shoppers to our stores, recruit and retain the best people, form better partnerships with our suppliers and create greater value for our shareholders.”

Doing good is good for business.
Every brand needs to address this reality – the old ways of thinking about conscientious consumerism need to be reconsidered.

The truth needs to be faced – doing good is critical, yes, but if done right it can be great for business as well.

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Categories: marketing

2 replies

  1. Hi Zain-
    I really enjoyed this post. The environment is something that I really care about as a consumer.
    However, I wonder – how do you feel about “green-washing?” If every brand is jumping on the green bandwagon, won’t that create even less differentiation among brands?
    Do you think the consumer will be weary of their claims?
    How should marketers counteract this?

  2. Hi Amy, thanks for your comments and questions. Yes, you are right. Greenwashing is becoming more pervasive every day, especially as a lot of companies are jumping on this trend without developing thoughtful programs. This is the reason why consumers are tiring of empty claims. Smart marketers, like Tesco in Europe and Kohl’s in the US are taking tangible actions to leverage green.

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