Impact of Green Marketing on Companies: A Methodological and Thematic Review

 

Nidhi Gopal¹, Palak Bhandari¹, Smita Mehendale²

¹MBA Student, Symbiosis Institute of Management Studies, Symbiosis International University, Pune, Maharashtra, India

²Assistant Professor, Symbiosis Institute of Management Studies, Symbiosis International University, Pune, Maharashtra, India

 

ABSTRACT:

Green Marketing refers to the satisfaction of consumer needs and desires which are aligned with the conservation of environment. With the increased awareness for protection and conservation of environment, research interest in the topic has been on a rise. Within the framework of the research tools, this paper tends to focus on the impact of green marketing on the companies. A systematic literature review methodology has been adopted so as to identify the main themes on the adoption of Green Marketing and its impact on the companies. A total of 22 articles were included for the purpose of the review which majorly covers five research themes – green competitors, financial aspect, green marketing and labour productivity, impact of implementing green operations and use of eco labels. Both thematic and methodological review have been taken into consideration for the purpose of future research suggestions.

 

 

1. INTRODUCTION:

In the early 1950’s the world saw the industrial revolution. This led to a rise in the concept of “Marketing”. The initial phase was the production concept where industries believed in producing more with lower costs believing that this would lead to a greater demand. This concept worked for a while, when the demand was greater than the supply. This concept further evolved to become the product concept where focus was on product quality rather than product quantity.

 

Further, the marketing concept grew to become the selling concept where people were given incentives to purchase, such as discounts etc. With time companies realised the need to study and understand the market and the consumers, market goods that suited the consumer demand, this was the conception of the marketing concept. Today the world is leaning towards sustainability and growth of the society as a whole. The consumers today are better aware of the need for change when it comes to sustainability in terms of societal development and maintenance. Today the consumers can’t be hoodwinked by products just because they are available at large, or because they have heavy discounts, today they demand something more enriching. Hence companies and industries have seen the need to market their products to show how they would benefit the society as a large.

 Green marketing is a subset of societal marketing it involves portraying their products and highlighting as to how they would benefit the ecology and environment in the short and the long run. There is an urgent need to preserve the environment today. With the era of producing solely for making profits making way for a generation of much more self-aware consumers, green marketing is the latest trend adopted by most companies on one side, there is the consumer perspective, their need for “green” eco-friendly products, while on the other side there are the companies who usually have to increase their operating and production expenses to produce such products. This paper aims to study the effect of adopting green marketing on various companies and industries. This paper also studies the financial and the social impact of green marketing on the same.

 

2. SYSTEMATIC LITERATURE REVIEW:

Management literature reviews has always been more elaborate and narrative but at the same reviews in the field of medical have revamped with the help of bringing in more forthrightness methodology. Adhering to the general guidelines of the systematic literature review method, we present the method in the form of following subsections:

 

Scope of the review:

The scope of review can be bifurcated into two criteria with regard to form and content. As far as form is concerned, this review consists of special articles from journals and references from research papers based on this particular topic. Also, in terms of form it excludes any sort of academic chapters as well as non-academic articles. It also excludes personal opinions, short magazine articles and editorials.

 

In terms of content, this review revolves around how green marketing has gained significance in the market. It explains as to how the market has evolved through different phases from production concept to this particular concept of green marketing. It identifies that green marketing basically targets those consumers who are concerned about the environment and how this segment affects their purchasing decision.

 

Identification of Relevant literature:

The process of literature identification was conducted in July 2017 where we first started to search for our topic. We tried combination of various key words like ‘marketing’, ‘market’, ‘societal marketing’, ‘impact of marketing’ and ‘consumers’ in two databases- Scopus and Ebsco. These two databases were selected in consideration to the quality contributions they made in terms of relevance to our topic. We had first decided societal marketing as our research topic. Societal Marketing is that segment which looks at enriching customer lives and benefitting society at large. But with help of EBSCO we limited various aspects of the research like language to English, source types to academic journals and duration of publications from 2001-2017. This is how societal marketing got narrowed down to green marketing. Green Marketing is subset of societal marketing and is the most integral component of marketing concept.

 

The inclusion/exclusion criteria was further refined as we further decided to exclude the articles about the impact of green marketing on consumers. It was decided to focus more on green marketing with regard to the company’s perspective as to how with the emergence of this marketing concept, the companies are becoming aware to control the activities that are detrimental to environment. With the motive of achieving these environmental objectives, the companies can translate it into achieving profit objectives as well.

 

3. METHODOLOGICAL REVIEW:

The methodological review of the paper is a framework of the methods employed for the research of green marketing and its impact on the companies. In order to understand the bearing green marketing has on the companies, data was extracted through various available articles.

 

A well-defined segregation was made between qualitative and quantitative approaches. First method was the qualitative approach wherein data was obtained as interviews and case studies. The second method which was the Quantitative approach involved various surveys and the last method involved the non-empirical research method which included data obtained from the reflective essays and conceptual papers.

 

The method that has been used maximum is Quantitative research methods i.e. mathematically about 68% of the total number of articles reviewed (n=15). This is followed by qualitative research methods that came out to be 22.7% of the total number of articles reviewed (n=5) and non-empirical method which is 9.3 % of the total number of articles reviewed (n=2).

 

Table 1: Methods of research involved with number of articles found under each method

 

As shown in Table1, Quantitative Research Methods and Qualitative Research Methods has been overriding in the articles. The reason being that quantitative research methods are significant in defining the attributes of a large population set. Whereas, there have been other methods which do not provide with such strong capability. Since the area and the topic of research is subjective, quantitative methods are successful in providing with the adequate independence by way of surveys.

 

Since the topic has plenty of literature to explore quantitative research and qualitative research methods are more appropriate and are also recommended with this regard. Had the topic been novel, non-empirical method would have been dominant.

 

4. THEMATIC REVIEW:

 

 

Fig1: Main themes of research on Green Marketing and its impact on companies.

 

The main objective of this literature review is to study how the implementation of “Green Marketing” has affected various organisations. To do this, the literature reviewed followed vastly different themes so as to help study the impact of implementing “Green Marketing” on the various aspects of the organisation. The themes observed were on “the effect of the presence of green competitors”, financial aspect of implementing Green Marketing and how cost effective it is from the organization’s perspective, impact of implementing Green operations, how implementing green innovation affects labour productivity, how effective eco labels are etc.

 

The reason why the literature chosen for review were so varying in the themes they follow is to help understand as many aspects of the impact of green marketing as possible. This will help in studying the impact in a more holistic way.

 

1. Green Competitors:

we considered this theme as the presence of competitors plays an important role in the growth and the development of any company. While there is a growing sense of responsibility in the consumers today with respect to using sustainable products, hence, the presence of green consumables does affect the behaviour of the consumers further leading to change in company performance. Here the presence of options for the consumers may create an additional impact on the companies pressurising them to adopt sustainable operations and marketing not only to reach more consumers but also to create a much better brand for themselves. Of the papers considered we found 15% of them concentrating on the emergence of more “green” companies. These were studied to understand the impact better. The authors also introduce the phenomenon of “green backlash” wherein they say that large service companies often show a decrease in their evaluations when they adopt green strategies as the consumers perceive them to lack credibility. They further elaborate that the opposite is true when companies adopt such strategies in the presence of a competitor which has already adopted green marketing and operations. They believe that the consumers find it easier to believe that the large companies have gone green due to the entry or presence of small or large green competitors. Further study has to be done on this area, to cover more industries and service sectors. (Chun and Giebelhausen, 2012)

 

2. Financial Aspect:

there are a lot of initial costs involved in the implementation of green marketing in any organisation and this theme deals with studying as to how economical it is to adopt such a policy. For instance, changing the operations and the product features to make it more eco-friendly and sustainable will cost an initial capital. This theme was also studied to understand if it was more effective to just adopt green marketing or to change the entire operations to make it more sustainable. This theme deals with the implications this change has. The authors suggest that there exists a positive relationship between green operations and business performance but the authors also emphasise on the fact that there is a need for more research in this area to elaborate on the relationship. The relationship between green marketing and the financial performance of the companies can be broadly classified into three broad categories namely,

- Green product and process development

- Lean and green operations management

- Remanufacturing and closed-loop supply chains It was noted that most of the research that exists on this subject is limited to the manufacturing sector and the services sector. The authors argue that the implementation of green marketing can improve customer loyalty, reduce costs and enhance competitiveness, however most of the research is based on the need of further study rather than focusing on current conclusive results. The authors also introduce the concept of “green operation metrics” to measure the effectiveness of the implementation of green operations (Ngniatedema,2014; Rivera‐Camino, 2007). Of the papers considered 20% focused on the financial aspect.

 

3. Green Marketing and labour productivity:

This theme deals with the relationship between implementation of green marketing and labour productivity, it implies that since there is a growing awareness amongst the general public about being more eco-friendly and sustainable, they prefer to work in organisations that adopt such ethics. This theme studies the changing trends in the behaviour and preferences of the employees and the impact it has on the functioning of the company. This theme explores the effect of Green Marketing on the Human resource functions of the companies. The authors suggest that due to increase in the regulations regarding to the environment more manufacturing firms have decided to opt for green marketing, the shortage of resources has also played a part in the implementation of green marketing in the company strategies. However, they need to study if the implementations of such strategies would have a positive impact on both the customers and themselves. Research on the topic suggests that green product innovation positively influences the firm performance. (Woo et.al, 2014)

 

4. Impact of implementing Green Operations:

To adopt green marketing it is also necessary for a company to evolve its operations to make it more sustainable and “Green”. This change in the entire operations of a company can affect it in many ways the financial aspect being a major area of impact. This theme explores the various ways it impacts the same. The authors emphasise that in the process of adopting green marketing the companies have to integrate the process of developing green products with packaging as well. The authors also stress upon the fact that the absence of a green product strategy, the marketing strategy will have little or no effect on the consumers. However, most of the studies conducted on this subject has been limited to the manufacturing industry and the packaging industry additional research has to be conducted in the service sector (Pujari and Wright, 1996; Nair, 2008)

 

5. Use of Eco Labels:

Eco Labels can be defined as claims that state the environmental features a product or service has. This theme deals with how responsive a consumer base is to the presence of ecolabels I.e.: identity of the product of being environment friendly. Many organisations today have started adopting eco labels that is making the product identify with one ecological cause or the other, this is because according to the studies conducted consumers rely heavily on advertising and marketing of the product to help them choose the product they wish to use. This gives rise to a new trend “Green-washing” (Testa et.al., 2015). The receptiveness of the consumer to this trend is studied in this theme. The authors try to predict the behaviours and the future choices of the consumers by studying factors such as their attitude and knowledge about environmental concerns. The studies also focus on the impact of demographics on the purchasing trend when it comes to green products (Meyer, 2001). However, the studies show that recently the trend of consumers trusting said marketing strategies is gradually decreasing with them questioning the claims made by said companies more. (Thøgersen, 2001) The research on this subject also tries to find out if the buying trends of the consumers are more effected by the use of eco labels or if the purchasing trends solely depends on the general attitudes of the consumers. (Nahid, Rahbar, and Shyan, 2011)

 

5. LIMITATIONS:

There are certain limitations with regard to this review. One of them being the use of key words. The key words used were not as wide and encompassing because our research was limited to impact of green marketing on companies and not consumers. two main limitations to this review. Also, since it involved more of usage of keywords and abstract, some literature which could have been pertinent to this research may have been ignored. The other key words which could have been used are brand equity and green marketing mix.The other limitation was the exclusion of various articles including the academic articles on the basis of certain principles and norms.

 

6. DIRECTIONS FOR FUTURE RESEARCH:

There is a large scope for further research on the topic considered for this literature review ie: Impact of Green Marketing on companies. From the methodological view-point, most of the papers considered followed a qualitative approach rather than empirical (Pujari and Wright,1996), the empirical papers available for review were lesser. Hence, there is a lot of room for research papers that follow an empirical approach and actually quantify the impact that Green Marketing has on companies. The empirical and experimental approach will also help in coming up with better strategies to adopt the same. In the theme involving the presence of competitors, further research can be done on strategies involving green marketing and how to get an edge over the competitors, also how the presence of green competition will affect consumer behaviour. Considering the Financial aspect (Ngniatedema, Li, and Illia , 2014) there is a lot of research to be done on whether or not it is actually feasible to adopt green marketing or green operations, this can be done by researching newer, more efficient, eco-friendly as well as sustainable processes. From the Human Resources standpoint (Woo, 2014)  further research can be done on training and development of the employees to come up with an effective way of making them more environmentally conscious as well as getting them to be more competent in the field. Furthermore, there is a need to study the impact of Green Marketing in different industries (Johri and Sahasakmontri, 1998), keeping distinguishers like Geography, Demographics and various other external variables in mind, so as to make the research more focused and study the impact better. This will also help in deciding where and when adopting Green Marketing would be more feasible. There is also further scope of research from an owner and stake holder’s perspective (Rivera-Camino, 2007). This can be done by increasing the sample size of the stake holders involved to get a wider and more exhaustive understanding of their behaviours and how the current trends change their view point on the same. It can be done using questionnaires and surveys and also involving stake holders from a larger variety of industries. This will help in understanding how the industry impacts their opinions on Green Marketing.

 

7. CONCLUSION:

It is a stimulating and a thought provoking task to perform a literature review in such an emerging area as green marketing. Despite being bounded in terms of its scope, this paper provides beneficial understandings with regard to the impact of green marketing on companies. Through application of the systematic review methodology, we narrowed down our research with the help of 22 articles and segregated them into some themes such as green competitors, financial aspect, green marketing and labour productivity, impact of implementing green operations and use of eco labels. When it comes to methodologies, we found out that there is an increased need to broaden our research with the help of quantitative and non-empirical studies. Moreover, with such uncertainties in the external environment of the companies, our research should include various other methodologies that are capable enough to seize the impact of green marketing on companies with respect to the financial operations as well as many other aspects. (Siminica, Craciun, and Dinu, 2015)In conclusion, with the increased competition among the companies, green marketing becomes a significant marketing function to main the environment sustainability.

 

8. REFERENCES:

1.        Chun, H. H., and Giebelhausen, M. D. (2012). Reversing the green backlash in services: Credible competitors help large companies go green. Journal of Service Management, Vol 23(3), 400-415

2.        Johri, L.M. andSahasakmontri, K. (1998), Green marketing of cosmetics and toiletries in Thailand, Journal of Consumer Marketing, Vol. 15 Issue: 3, pp.265-281

3.        Meyer, A. (2001). What’s In It for the Customers? Successfully Marketing Green Clothes,Business Strategy and the Environment,Vol 10, Issue 5, pp 317–330

4.        Nabsiah Abdul Wahid, Elham Rahbar and Tan Shwu Shyan, (2011). Factors Influencing the Green Purchase Behavior of Penang Environmental Volunteers. International Business Management, 5: 38-49.

5.        Nair, S. R. (2007). An Environmental Marketing System – A Proposed Model Based on Indian Experience, Business Strategy and Environment, Volume 17, Issue 8, pp 467–479

6.        Ngniatedema, T., Li, S. and Illia A. (2014). Understanding the Impact of Green Operations on Organizational Financial Performance: An Industry Perspective, Environmental Quality Management, Vol 24(1), pp 45-59

7.        Pujari, D. and Wright, G. (1996) Developing environmentally conscious product strategies: a qualitative study of selected companies in Germany and Britain, Marketing Intelligence and Planning, Vol. 14 Issue: 1, pp.19-28

8.        Rivera-Camino, J. (2007). Re-Evaluating Green Marketing Strategy: A Stakeholder Perspective,European journal of marketing, Vol. 41, p. 1328-1358

9.        Siminica, M., Craciun, L., and Dinu, A. (2015). The Impact of Corporate Sustainability Strategies on the Financial Performance of Romanian Companies in the Context of Green Marketing, The Amfiteatru Economic journal, Vol. 17, issue 40, 994

10.     Testa, F., Iraldo, F., Vaccari, A., andFerrari, E. (2015), Why Eco-labels can be Effective Marketing ToolsEvidence from a Study on Italian Consumers, Business Strategy and the Environment, Vol 24, pp 252–265.

11.     Thøgersen, J. (2006). Media Attention and the Market for ‘Green’ Consumer Products. Wiley InterScience, Business Strategy and the Environment, Vol 15 pp 145-156

12.     Woo, C., et al. (2014.). Impact of Green Innovation on Labor Productivity and its Determinants: an Analysis of the Korean Manufacturing Industry, Business Strategy and the Environment, Vol 23 PP 567-576

 

 

 

 

 

Received on 20.12.2017          Modified on 08.01.2018

Accepted on 13.02.2018           ©A&V Publications All right reserved