Marketing Green: Think Value, Not Virtue

Think of it as the Darwinian approach to green marketing, where only the most sustainable products survive.

With consumers watching every penny, they are asking tougher questions and wanting more results from the products they do buy. In this environment, it’s not enough for products to wrap themselves in the green banner and tout fuzzy claims about making the world a better place. Simply, it is not enough to merely make consumers feel good, they want to see the results.

Although this may be bad news for some products, it is good news for many environmentally- sensitive ones—as long as they offer a clear value proposition.

“I think consumers are in a mindset of value, and I think that sustainability feeds into that mindset very well,” says Len Sauers, vice president of Global Sustainability at consumer products giant Procter & Gamble .

Being Green By Not Spending

It’s also good news for the environment. All in the name of saving money, consumers are cutting down on energy use in their homes, drinking water from the tap and carrying their leftovers to work for lunch—the very things some advocates for the environment have been preaching for a long time.

Consumers are asking whether they need to spend money to be green, says Marcia Mogelonsky, an analyst at market researcher Mintel.

“Many people are being green by not spending,” adds Mogelonsky, who predicts products with the most dubious claims will suffer sales declines and may fade away.

One example is bamboo flooring, which some companies consider a more environmentally sensitive flooring choice because bamboo trees grow faster than other sources of timber. Others counter than bamboo’s benefits are outweighed by the fact that it is grown thousands of miles away from where it is used, and the carbon impact of its transportation offsets—if not cancels out—the benefits.

Gardening products are selling well as consumers look to save money on food and enjoy their time at home.

Proof of these trends are playing out in the aisles of Home Depot , according to Ron Jarvis, senior vice president of Environmental Innovation at the home improvement products retailer.

Items that have passed the criteria of Home Depot's Eco-Options program are selling “at least five percent” better in the year-to-date period than the same period a year ago, and they are outselling products that aren’t part of the program, he says. Energy efficient products as well as organics and gardening items are among the strongest product categories.

Energy efficient products run the gamut from programmable thermostats to compact fluorescent light bulbs to more efficient appliances. In this category, consumers are doing the math and know that although they may spend more upfront, they will make that money back and then some over the life of the product, Jarvis says.

More Expected From Companies

Over the next 12 to 18 months, consumers are likely to put value ahead of the planet, so to speak, says David Jones, Global Chief Executive of Euro RSCG Worldwide and Havas Worldwide. However, deep down consumers not only want, but also expect companies to behave responsibly, he says.

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Euro RSCG recently conducted a survey that found 82 percent of consumers said they expect businesses to focus on sustainable “green” practices, despite the recession, and most, some 67 percent, say a company’s environmental practices will still influence their purchase decision.

Still, less than half are willing to pay a premium for “green” products, according to the study.

“It needs to come out of the genuine behavior of the companies,” says Jones. “It needs to be at the heart of the business rather than a marketing tactic.”

P&G’s Sauers agrees that most consumers prefer sustainable products but they are not willing to accept any tradeoffs in doing so. Those tradeoffs include paying more or accepting a less effective result than the products they are currently using.

P&G’s approach looks at the entire lifecycle of its products from manufacturing through use and disposal, and it's efforts have yielded results such as a 46-percent reduction in the company's energy consumption and a 52-percent reduction in its carbon dioxide emissions since 2002.

As part of its analysis, P&G saw that one of the biggest areas of consumption related to its products was the heating of hot water for detergent used to clean clothing in washing machines. As a result, the company developed versions of its popular laundry detergents Tide and Ariel, that can be used in cold water.

According to Sauers, for every 100 ounces of Tide Coldwater used, consumers can typically save $10 on their utility bills. But Tide Coldwater isn't priced at a premium to other versions.

Packaging reduction has been another popular trend for consumer products companies, including P&G, whether it’s touted or not. Many companies are making laundry detergent in more concentrated versions in smaller bottles, thus using less material. More broadly, plastic bottles of all kinds are thinner for that reason.  

Cartridge World, a chain of stores that refills printer cartridges, is seeing increased sales as small businesses search for ways to cut costs. The trend means fewer cartridges in landfills.

And companies that can both save consumers money and help the planet really have a message consumers want to hear.

Take Cartridge World, a chain of stores that refills printer cartridges at a savings of up 30 percent over buying a new one. In the past three months, the business has seen its same-store sales rise more than 10 percent.

"What we are seeing are a lot of businesses being drawn to us as they strive to find ways to reduce their costs," says Cartridge World President Steve Yaffa.

And that’s exactly the kind of win-win that sells right now.

© 2009 CNBC.com