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by Jacquelyn A. Ottman
In the environmental marketing world, it's no longer enough to be "green." Businesses and products must be "sustainable".
Sustainability is defined as meeting the needs of the present without compromising the needs of future generations. This means balancing the seemingly contradictory tasks of improving standards of living worldwide while cutting down on fossil fuels, cutting out pollution, and conserving natural resources.
To achieve global sustainability, some experts such as those at Germany's Wuppertal Institute believe that we will need to reduce our use of resources by as much as 10 times by 2040! With reductions such as these, consumer products and marketing as we know them won't survive. However, this doesn't necessarily mean lost business. Sustainability actually can be good for business‹so good for business in fact, it prompted Stuart Hart to write in the Harvard Business Review, "Over the next decade or so, sustainable development will constitute one of the biggest opportunities in the history of commerce." (1)
Today, smart businesspeople embrace greening because it can pay off in more efficient processes and products and hence, reduce costs. (I like to say, "An environmentalist is an efficiency expert in a green cloak.") In the future, as it becomes important to use resources as sparingly as possible, the market will shift toward those companies and industries who align their products and services most closely with the needs of their customers (I call this, "Zero Waste equals 100% Customer Satisfaction"). This means companies who eliminate all the bells and whistles customers don't want in the first place (Gateway makes every computer it sells according to individual customer specs). Companies that eliminate the packaging that makes consumers feel guilty to throw away. Companies that cut down on the energy costs that make a product expensive to run. Look for the biggest opportunities to be created in the areas of energy efficiency and renewable resource management, pesticide-free agriculture, information management, alternative transportation, recycling and recovery, and ecotourism.
Forward-looking industrialists now prepare their companies and redesign or invent new products to compete in a sustainable economy. Here are some of the strategies they pursue:
Replace Material Products with "Dematerialized" Services
If you think about it, people don't need products per se. They just need the functional benefits the products provide. Oftentimes, services can do the job better than products, saving a lot of material and energy along the way. According to the United Nations Working Group on Sustainable Product Development, services can take several forms:
1) product extension services such as repair and maintenance.
2) services like car leasing or launderettes that allow some products to be shared. (In the Netherlands, a "greenwheels" service allows consumers to "time share" rather than own or lease cars. Our Atlanta-based client, Interface, has introduced an Evergreen Lease Program, which allows customers to lease carpeting and ancillary maintenance services; used carpeting is taken back for re-use or recycling);
3) intangible services or "de-materialized" products that substitute services for products, for example, electronic voice mail replacing answering machines, and automated bill-paying services. (IBM Chairman, Lou Gerstner who's company already makes a third of its pre-tax profits from services, is out to make electronic information as commonplace as Kleenex.);
4) "result services" designed with the aim of reducing the use of material products, e.g., pedestrian access rather than need for cars, integrated pest management versus pesticides.
New "R's" of Reuse and Remanufacturing
Move over recycling. Businesses are learning how to lay claim to product residual value by adding re-use and remanufacturing to their materials-use arsenal. Grow Biz International has generated a $100 million business selling used equipment through its retail chains that include Play It Again Sports, Once Upon a Child, Computer Renaissance, Music Go Round, and Disc Go Round. Green Disk of Preston, Washington refurbishes diskettes that have been removed from unsold Microsoft packages and selling them to office supply and computer product resellers such as Boise Cascade Office Products and Office Depot. Their whimsical ad tag sums up the quality proposition, "The best diskettes everyone else ever made."
Control Population Growth
The biggest environmental problem may not be air or water pollution but population growth‹too many people fighting for finite resources. Residents in developing countries need access to information on AIDS and birth control. Conventional radios are not always the answer because in these countries, batteries are not always available, and power supply is inconsistent. So, a British businessman invented the "Freeplay" radio, which operates using a clockwork mechanism powered by a carbon steel spring. Running on human power, it takes 25 seconds to wind up, and yields 25 minutes of play. Manufactured in Cape Town, South Africa by 200 disabled workers, the radio has already sold 150,000 units.
Reduce Resource Use
80% of the environmental impacts of washing machines occur during use. Hoover doubled its market share in the environmentally-conscious German market with its "New Wave" horizontal axis washing machine. The fully recyclable washing machine not only reduces water, energy, and detergent consumption, it creates less pollution and waste during production and distribution. Procter and Gamble is now test marketing Dryel, a technology that allows consumers to dry clean products at home. But the most sustainable technology may be the one that prevents clothes from getting dirty at all! Stay posted.
(1) "Strategies for a Sustainable World," by Stuart L. Hart. Harvard Business Review January-February 1997, pp. 67-76.
Developing environmentally sound products that consumers will buy is highly challenging, and the rewards are great. Green products are destined to replace ungreen products on the supermarket shelf, and more and more marketers are finding that environment related product strategies can enhance existing benefits, thus yielding products that last longer, taste better, and, in many instances, cost less the stuff of which increased share, new sales opportunities, and enhanced imagery are made of. Marketers who reap the biggest product-related rewards will take the time now to research and execute strategies that offer the most significant benefits to the environment. Three guidelines can help:
1. Adopt a thorough approach to product greening, access the environmental implications of a product at every phase in its life cycle
2. Take the high road maximize potential return by focusing on cutting edge technologies. Opt for source reduction over recycling whenever possible
3. Incorporate consumers' desires for high quality, affordability, and convenience, as discussed in Chapter Two.
Need for a Thorough Approach Upgrading products and packaging to meet consumers environmental expectations can be tricky. What may appear to be an environmental benefit may actually result in little or no value to the environment. Of course, manufacturers of degradable trash bags learned this lesson the hard way. Sometimes, the presumed "greening" of one attribute can actually heighten environmental impact. CPC, the makers of Mueller's pasta, found that converting to recycled carton material would actually add about 20% to the width of their packaging material. This would at least partially offset savings to the environment considering the added energy needed to ship the new boxes. (1)
For these reasons, and also to prevent a backlash from consumers, environmental groups, regulators and the media and other stakeholders, all of whom may be quick to point out the shortcomings of products and packaging, a thorough approach to "greening" is required, a tool called life cycle inventory can help.
A life cycle inventory is a process that quantifies the use of energy, resources, and emissions to the environment associated with a product throughout its life cycle. It accounts for the environmental impact of raw materials procurement, manufacturing and production, packaging, distribution, in-use characteristics and processing straight through to after-use and disposal.
An LCI of cotton versus disposable diapers, for example, would quantify the amount of pesticides and water used to grow cotton, as well as the water and energy needed for manufacture the diapers and transport them to stores and homes. Finally, it would consider the amount of water and energy used to launder the cloth diapers. An LCI of disposable diapers would take into account the environmental implications of cutting down and processing trees for wood pulp, along with the environmental burdens of extraction and refining of the petroleum required to produce the plastic backsheets. It would quantify the energy used in manufacturing and transportation, as well as how much solid waste was eventually sent to landfills. Exhibit 5.1 highlights the results of a life cycle inventory commissioned by Procter & Gamble comparing the relative environmental impacts of cloth versus paper disposable diapers.
Environmental Burdens: Cloth versus Disposable Diapers
Source: Arthur D. Little Co. , as reprinted in The New York Times July 14, 1990
Initially developed during the energy crisis of the 1970s to help reduce the amount of energy use for developing and distributing products, LCI is extremely useful for:
Comparing energy and resource usage and environmental emissions associated with existing products and their alternatives
Identifying significant areas for improvement in energy use and waste reduction
Evaluating energy and resource usage and environmental emissions associated with proposed changes in manufacturing, or packaging of products. (2)
In the past 20 years, several organizations including Franklin Associates (Prairie Village, KS), the Battelle Institute (Columbus, OH), Arthur D. Little Co., (Cambridge, MA), Scientific Certification Systems (Oakland, California), and the Tellus Institute (Boston, Massachusetts) have performed life cycle inventories for companies in a broad range of industries including paper/paperboard, glass, steel, aluminum and plastic beverage containers and delivery systems, building materials, transportation products, and others.
Caution is advised for using life cycle inventory as a marketing tool. Many life cycle inventories performed to date and leveraged for marketing purposes have been criticized for favoring the sponsor.
For example, the LCI sponsored by Procter & Gamble comparing cloth versus disposable diapers concluded that when energy and water associated with collecting and washing the cloth diapers were accounted for, the total environmental impacts of the cloth were roughly equal to the disposables. This research conflicted with findings from an LCI commissioned by the National Association of Cloth Diaper Services which found cloth to be environmentally superior to paper disposables. (3) Two independent non-profit consumer product testing organizations Green Seal and Scientific Certification Systems are now working with experts in industry, government and academia to make life cycle inventory and other cradle-to-grave approaches legitimate marketing tools.
Monsanto is one company that is using LCI strategically. A. Frances Werner of Monsanto suggests that manufacturers "collect all easily available data about a product's life cycle, then prioritize and focus resources on fixing the problems that become apparent early in the analysis process. While improvements are being made, additional data can be accumulated." (4)
As presently developed, life cycle inventory focuses on the raw material requirements and waste and pollution emissions associated with producting a product. However, many environmental concerns are not addressed by LCI. According to Martin Wolf, a consultant on life-cycle inventory and green product development, LCI must be augmented with a holistic evaluation of a product's environmental impact. Renewable or sustainable resource use, habitat destruction, biodiversity depletion, odors, visual pollution, noise pollution, toxicity, biodegradability and other issues that are of concern to environmentalists and consumers cannot be evaluated by the quantitative approach of LCI and must be considered separately.
Green Product Development Issues According to Wolf, holistically oriented environmental product issues can be grouped into four areas: raw materials acquisition and processing, manufacturing and distribution, product use and packaging and after use and disposal. They incorporate a number of sub-issues, as detailed below.
Take the High Road
Maximize the long-term payout of product development efforts, the most environmentally sound technology, materials, and design possible within the constraints of economics, and consumer acceptance. This has many benefits. It can provide opportunities to pre-empt competition and costly legislation. In the process, it can often lead to rewards in the form of positive publicity and enhanced brand and corporate imagery.
Also, Try to solve the most significant, long term issue associated with your products and packaging. Most often, this will entail pursuing a source reduction strategy. 3M and Procter & Gamble demonstrate the potential of a high road product development strategy:
3M's Safest Stripper paint stripper is formulated with a water base instead of methylene chloride, a suspected carcinogen. It may ultimately boost 3M's market share. The Consumer Product Safety Commission announced in 1990 that all wood furniture strippers containing methylene chloride must now identify the chemical as a carcinogen. With the consumer and regulatory climate as it is, methylene chloride may one day be banned or face surcharges that would favor water-based products.
Meanwhile, the low fume, more pleasant-to-use formula has helped to expand the market for paint strippers by attracting women and first-timers to furniture stripping. Also the product can be used indoors during the winter months and this helped to extend product seasonality. The water-based formula also brings convenience benefits: no skin protection (such as rubber gloves is required, and hands and tools can be cleaned with water rather than a chemical wash. (5)
Borrowing on a concept being utilized in Europe for its Lenor = counterpart, Procter & Gamble's Downy's fabric softener refill consists of a concentrated formula that is designed to be reconstituted with water, poured back into the original plastic jug. This configuration is unique to fabric softeners, yields a hefty (75%) packaging reduction versus its full-strength counterpart. The refill which is also more profitable to make, now accounts for 40 percent of Downy's total $258 million business in just one year. An evolving product, it just may represent the future of the Downy brand. (6)
Strategically, the refill helps P&G to pre-empt legislation. In fact, laws have already been passed in California and Oregon requiring that by 1995 all rigid plastic packaging be either source-reduced, refillable, recyclable at a certain rate, or made from recycled content. With the outlook for plastics recycling uncertain, source reduction will help P&G meet these laws with ease. Meanwhile, other benefits accrue, not to mention a raft of corporate publicity for developing a revolutionary product and package that significantly reduces waste.
Sources
(1) Robert Gillespie(2) Franklin Associates(3) National Association of Cloth Diapers(4) Frances WErner, Monsanto(5) Mike Virgintino, 3M(6) Procter & Gamble
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