Does it pay to be green?

by | Feb 19, 2010 | 2 comments

A recent post by Small Business Trends hailed that businesses need to do more than claim they are green and environmentally friendly – now they need to show evidence to their customers of just how green. For example, I have seen some small companies participate in this thinking by posting on their website how many carbon credits they had purchased.

But I have to wonder —–

Do we really care? Really?

Here was my response/comment to the post:

Are we sure? I wonder if there is any research to show that customers really care. And do customers on the west coast care more than others?

And how are the challenges to global warming data changing this game?

On my side I find a lot of people who love the “green” stuff – but I also see people turned off by companies who think they are saving the world.

While I am not commenting so much about is global warming true or not (although as a recovering scientist I do have an opinion about the science) — I am just wondering … are we all jumping up and down thinking our customers care without knowing for sure?

For me, green used ot mean you had an upset stomach – something I might relate to a rough ride while deep sea fishing. Back in the ’70’s Kermit claimed it is “not easy being green.”  How we moved from being hard to be green to it is “good to be green” and now it is “a must to be green” I really am puzzled.

But what I notice is all best intentions in the world – people end up buying value. The idea of being green presupposes customers place a high value on a company spending its money on being green.

I am bettering this is not true. What do you think?

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Dale Callahan

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  1. Kevin Hodgkins

    It is all about signaling. As consumers we calculate value as tradeoffs – I value your soda more than I value my dollar. As a producer you value my dollar more than you value your soda. As a consumer I have many choices of soda; all else equal I will purchase the cheapest soda. Add in marketing and my valuation of your product changes vis-a-vis both my money and other similar products.

    Now, what I really think is going around the green is good movement is in response to homogeneous purchaser effects. You don’t see alot of consumer products companies selling how green they are – you just see them segmenting their product lines to ensure penetration in that potential market. You do see large industrial concerns talking about how green they are overall trying to be – and I would bet you can trace some of that back to behavior in response to government purchasing decisions.

  2. Dale

    Good points Kevin – I am sure we do see some outside motives pushing companies to be green – pushing the marketing buttons and getting “qualified” for certain contracts. And if you are an established business – perhaps this can make sense to play the game.

    But what is disturbing is the article about small business – many without established brands. I have met with many who are spending real money being green thinking that this will be what pulls the customer in the door.

    All thinking about segmenting and potential markets aside – it still costs money to do that. My question – does it pay for itself?


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