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Seeing an opportunity in Copenhagen fiasco

Seeing an opportunity in Copenhagen fiasco
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First Published: Thu, Feb 11 2010. 11 25 PM IST

Updated: Thu, Feb 11 2010. 11 25 PM IST
The failure of the Copenhagen summit must surely come as a disappointment to many. It would, however, be worse if we were to not see it as the eye-opener that it is.
It is more than obvious now that even rich developed countries are unwilling to put their money where their mouth is when it comes to environmental issues. Clearly, domestic constituencies, be they farmers in the US or wine growers in France, exert a powerful pull that is substantially greater than the subtle influence of greenness.
While efforts at a national level should undoubtedly continue, it is also useful to step back and reassess what companies can do in a world where each country is left to itself and where the ability of nations to come together and solve such a problem is limited by domestic democratic constraints.
Where public policy fails, individual citizens must rise to the occasion. To make future Copenhagens succeed, there needs to be a genuine demand from consumers across the world for green products. It is fair to assume that as consumer demand changes, it will act as the fountainhead for changes in corporate behaviour.
Orange growers, winemakers, power utilities, architects and building companies can only stay in business as long as there are consumers for their products. It is, therefore, up to us as consumers to gradually push for green products. This trend has not really taken off. Several surveys have demonstrated that when customers walk up to the cashier’s till, they rarely think in terms of eco-friendliness. To a large extent, it is because corporations so far have not stepped up to the plate to market green products in a systematic manner.
Various studies show that customers are willing to try out green products. As recently as October, well into the recent recession, a study titled The Green Revolution, undertaken by Grail Research, showed that at least 80% of consumers in the US bought a few green products consciously and these adopters then did not regress to brown products.
However, this positive finding was dampened by the fact that only around 8% of customers take the environmental impact of the product as the primary factor in their purchase. Clearly, if demand for eco-friendly products remains low, it’s because companies have not marketed these products well.
Green products are really no different from other products and deserve the same level of support as any other new product category. First, customers need to be aware of the existence of the product and how it benefits the environment. By and large, the level of awareness has been limited to discussions around fuel-efficient cars and energy-efficient appliances. That virtually every product category can have a green variant is a story that has not been made out particularly cogently.
Even when companies take the trouble to position products well, it remains important that the products truly satisfy the customer and have no significant negatives. It is unreasonable to expect customers to trade off the fundamental attributes of a product at the altar of eco-friendiness. Among the complaints that customers have had about green products is that they tend to be tacky and substandard, perhaps in an effort to keep their costs to acceptable levels.
In many cases, seeking to make a product eco-friendly adds to its cost. Many customers will be turned off by increased costs. But large number of customers appear to be willing to pick up the cost of greenness if they can get some other advantages along with it. A classic example is that of Toyota Motor Corp.’s Prius which has managed to garner over 70% of the market share in its segment, not only because it is eco-friendly, but also because of its distinctive dashboard and its interesting styling. It is simply easier to make people buy green products if the product is special in some way. Customers will not pay for greenness for its own sake, but may do so if it comes with superior features.
Finally, customers find that manufacturers have not made it easy for them to buy green products. In the ordinary course, manufacturers would not expect customers to travel out of their way or find unusual distribution channels to buy a product. The same rationale must hold for eco-friendly products. Green products need to be available at corner stores to gain popularity.
Customers seeking to buy eco-friendly products in India can find the going tough. This is an opportunity for marketeers to combine profit with social responsibility. An increase in demand for green products could induce governments to reassess the political equations which stalled the promise of Copenhagen.
Green marketing could indeed have beneficial long-term effects. One hopes more Indian companies will choose to take up this opportunity.
Govind Sankaranarayanan is CFO, Tata Capital Ltd. He writes every other Friday on issues related to governance. The views expressed here are personal.
Write to him at ruleofthumb@livemint.com
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First Published: Thu, Feb 11 2010. 11 25 PM IST