Green Marketing Strategies Proposed by Cronin et al. 1 Green Innovation

25 Closed-loop supply chain CLSC constitutes the combination of forward supply chain FSC activities and reverse supply chain RSC activities , with the potential to improve the environmental performance of industrial operations to new standards, and to maximize profit and competitive advantages. Talbot et al., 2007. FSC entails the flow from new product development, environmental product design, product research and development, and development of responsible manufacturing, which pertains to total quality management, just-in-time manufacturing, and lean manufacturing Talbot et al., 2007. RSC deals with product returns, such as manufacturing, distribution, and customer returns Talbot et al., 2007 to the selling company, while the cycle will end when the company recovers the products maximum possible value Cronin et al., 2010. The integration between FSC and RSC can create a cradle-to-cradle life cycle for goods manufactures, sold, and returned and reused, as opposed to cradle-to-grave flow Cronin et al., 2010. Cradle-to-grave C2G is a full life cycle assessment from manufacture –known as cradle- to use phase and disposal phase, called grave Wikipedia.org, 2011. It is seen as traditional notion, known as end-of-pipe solutions. On the contrary, cradle-to-cradle has similar approach with cradle-to-grave , while the end-of-life disposal stage for a product is a recycling process. It is utilized to minimize the environmental impact of products by exercising sustainable production, operation, and disposal practices, as well manifesting social responsibility into product development Wikipedia.org. CLSC activities provide benefit in improving the environmental performance of industrial operations and increasing firms competitiveness and product differentiation Talbot et al., 2007. Furthermore, it should be managed to achieve 26 maximum profit, comply with regulatory standards, and provide excellent customer service to customers and suppliers altogether Cronin et al., 2010. 3 Green Alliances The last important point in incorporating green marketing strategies is forming partnership. Past researches discussed the imperatives of eco- or green alliance in formulating green strategies Mendleson and Polonsky 1995; Hartman, 1997; Crane, 1998; Hartman and Stafford, 1998; Stafford et al., 2000; Polonsky, 2001; Ählström and Sjöström, 2005. Stafford et al. 2000 emphasize alliance with environmental non-governmental organizations NGOs, which can result in operational efficiencies, new technologies and marketable green products. They also identify stakeholder characteristics and partnership outcomes. The same idea was also proposed by Hartman 1997, Hartman and Stafford 1998, and Polonsky 2001, which corroborates the significance of incorporating alliance with environmental group to achieve competitive advantage and integrating corporate environmental responsibilities in market goals. 4. Why Do Companies Need Green Marketing Strategy? – The Greenwashing Risk The environmental or green claims of some companies have got many critiques by some scholars Chatterjee, 2009: 367; King, 1985; Mohr, et al., 1998; Peattie and Crane, 2005: 360 and by special interest groups SIGs. Once companies did not practice the claim in day-to-day operations, these groups are the front liners 27 which may accuse them and subsequently shock their brand equity. Some companies have experienced the shortcomings of accusation demonstrated by these groups, such as Nike vs Kasky case, GE’s poisoning of Hudson River with PCBs, Exxon Valdez spill, the relatively fresh BP’s spill on Gulf of Mexico, and the likes. The cost of accusation has led their brand equity weakened and stock price plummeted. By then, the SIGs’ pressure keeps some of them silent in promoting green campaign publicly. Due to the growing concern of market research exploring green or environmental consciousness in two decades ago has pulled some companies to practice “me too” effect of green buzzwords. Some of the researches Peattie and Crane, 2005: 358; Chatterjee, 2009: 367 indicate consumers are willing to pay more for green or eco-conscious products, making the existing companies turned their attention to create more environmentally friendly products, promote them with eco- label or colored green in shelf tag, and then charge consumer with premium price. Research conducted by the Natural Marketing Institute NMI estimates the market size of the environmentally friendly or green products to reach 420 billion by 2010 Bonini and Oppenheim, 2008 in Chatterjee, 2009: 367. Jeff Immelt, CEO of General Electric even predicted GEs Ecomagination efforts will lead GE to sales target of US20 billion in 2010 SourceWatch.org, 2008. There is always short-term orientation benefited from environmentally friendly or socially responsible movement. Thus, the profit-driven companies which seek to target new eco-conscious market sometimes fail to make appropriate environmental claim or to promote green vague green promotions. Thus, this leads them to greenwashing risk –a relatively sensitive threat for firms’ value. 28 “Greenwashing is the misuse of the principles of environmental marketing and means that consumers cannot trust the content of advertisements” Kärnä et al., 2001. It can injure a brand reputation and then enforces companies to carefully publicize their green efforts. Nike, Adidas, Puma, Coca-Cola, Starbucks, and McDonald’s are the proponents of silent green advertising, keeping them away from greenwashing risk. Their brand is too valuable rather than simply offsetting the cost of being accused by SIGs. Therefore, formulating appropriate green marketing strategy appears as a wiser idea in achieving corporate objectives, as well as tackling possible reputational risks Louisot and Rayner, 2010 in the future. It is imperative to determine appropriate green marketing strategy that does not mislead and confuse consumers. King 1985 in Peattie and Crane, 2005: 359 identifies four marketing failures -sales orientation, compartmentalism, finance orientation, and conservatism, while Peattie and Crane 2005 indicate five greenwashing practices, such as green spinning, green selling, green harvesting, enviropreneur marketing, and compliance marketing. This section will further discuss greenwashing which may answer question why strategy is necessary in executing green marketing ideas.

a. King’s 1985 Four Marketing Failures

1 Sales Orientation King asserted that thrust marketing is too highly sales-based oriented. Peattie and Crane 2005: 360 add the environmental issues are employed by firms for additional dimension without any effort to analyze or modify the underlying product itself and its environmental impacts. 29 2 Compartmentalism Furthermore, marketing department marketing represented a lack of integration between marketing and other business functions Peattie and Crane, 2005: 360. Moreover, the scholars stipulate that by utilizing green marketing buzzword, many companies are willing to address consumers demand, but their effort is limited to establishment of marketing department, production department, or other separate functions, making them stuck in developing holistic green marketing concept. 3 Finance Orientation Peattie and Crane 2005: 360 then stress that Kings idea of accountants marketing was characterized by an enjoyment with short-run profitability and constrained concern for long-run brand building. They further criticize that companies are eager to add environmental dimension in marketing when it has involved short-run cost savings, but weakened in sustainable investment. 4 Conservatism In addition to Kings critique in terms of formula marketing, he indicated that much marketing activity had stressed control, risk aversion, and the use od tried- and-tested recipes for success rather than emphasizing innovation and imagination Peattie and Crane, 2995: 360. Green marketing is also viewed as formula that do not contribute to significant change, otherwise little improvements to existing products and process -such as simplifying packaging or product size rather than changing the core products or production processes. 30

b. Five Greenwashing Practices Peattie and Crane, 2005: 360

1 Green Spinning “Green spinning is an inward-looking, reactive approach placed in the public relations function” Simula et al., 2009. This notion contends that companies tend to leverage reputation instead of market- and customer- orientation. Peattie and Crane 2005: 360 further add that companies often went on a PR offensive, using glossy brochures, lobbying, and countless press releases in order to persuade the skeptical public of their environmental credentials. It is indicated by the establishment of special environmental marketing functions, such as more emphasis on public relations. Peattie and Crane further assume that compartmentalization of green marketing functions for leveraging reputation- and risk- management cannot contribute a significant change on entire value chain activities. The scholars perceive that green spinners are categorized as conservatism and they -green spinners- do not respond various stakeholders interests, otherwise making the classic marketing error of looking inward when many of the answers they sought were to be found by looking outside of the organization Peattie and Crane, 2005: 361. Finally, Peattie and Crane 2005: 361 conclude that green spinning was always going to fail because unless they are involved and consulted, contemporary consumers and pressure groups are unlikely to be fully convinced by the protestations of commercial enterprises.