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Towards Sustainability: The Third Age of Green Marketing

Article  in  The Marketing Review · June 2001

DOI: 10.1362/1469347012569869

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The Marketing Review, 2001, 2, 129-146 www.themarketingreview.com

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Integrating concern about the environment into the practice and principles of
marketing is an idea that has been with us since the 1970s. Over time our
understanding of the interaction between the economy and the environment
has developed, and therefore our ideas about what might constitute “green
marketing” have continued to evolve. This article reviews this evolution in
terms of three stages with different implications for marketing: (1) Ecological
marketing, a narrowly focussed initiative which concentrated on reducing our
dependence on particularly damaging products; (2) Environmental marketing,
a more broadly based initiative which aimed to reduce environmental
damage by tapping into green consumer demand and opportunities for
competitive advantage; and (3) Sustainable marketing, a more radical
approach to markets and marketing which seeks to meet the full
environmental costs of production and consumption to create a sustainable
economy.

Keywords: green marketing, environment, sustainability, consumption,

marketing strategy

Introduction

Concern about the social and environmental impacts of commerce can be

traced back over thousands of years. During the last thirty years, this concern
has intensified, and a major debate has sprung up about the relationship
between marketing and the physical environment. Marketing has been cast
as both a major villain for its role in stimulating unsustainable levels of
demand and consumption, and also as a potential saviour through the
application of market mechanisms to tackle social and environmental
problems. The term “Green Marketing” has been used to describe marketing
activities which attempt to reduce the negative social and environmental
impacts of existing products and production systems, and which promote less
damaging products and services. As our understanding of the interaction
between businesses, society and the physical environment has improved, so

1
Professor Ken Peattie, Centre for Business Relationships, Accountability,
Sustainability and Society (BRASS), Cardiff University, Aberconway Building, Colum
Drive, Cardiff, CF10 3EU. Tel: 02920 875699. E-Mail: [email protected]
ISSN 1472-1384/2001/020129 + 17 £4.00/0 ©Westburn Publishers Ltd.
130 Ken Peattie

what we understand to be “green” practices and principles for marketing has

also evolved. This evolution can be broken down into three distinct phases,
each of which have quite different implications for the discipline of marketing,
and its role in determining the future of the planet.

The First Age: “Ecological” Green Marketing

Ecological marketing was defined by Henion and Kinnear (1976) as

“concerned with all marketing activities (a) that have served to help cause
environmental problems and (b) that may serve to provide a remedy for
environmental problems.” Its roots lay in the social and environmental
concern which evolved during the 1960s and early 70s, expressed in books
such as Rachel Carson’s Silent Spring and the Club of Rome’s Limits to
Growth. These books drew attention to the fact that we live in a finite world in
which endless, uncontrolled expansion would eventually exhaust the natural
resources and systems on which we all depend.
The characteristics of this first age of concern were as follows :
• it was narrowly focused on specific “environmental problems” such as
air pollution, depletion of oil reserves, oil spills and the ecological
impacts of synthetic pesticides such as DDT. The emphasis was on
pollution and resource depletion (particularly energy resources) and
on local or national concerns.
• it sought to identify particular products, companies or industries which
were causing, or in a position to help solve, these particular problems.
• it was debated across a relatively narrow “front line” of industries
including automobiles, oil and agro-chemicals.
• it was something of a “minority sport” with relatively few consumers
and companies significantly changing their behaviour.
The main relevance to marketing was the increasing amount of
environmental regulation within the legal environment. For most marketers
the environment remained a challenge for the company’s legal and technical
staff. It had little direct relevance for them, provided that the company’s
engineers and lawyers could ensure that the company complied with
environmental regulations. This was usually achieved by “end-of-pipe”
improvements to production processes or products, to reduce or contain
pollution. Even within “front line” companies, the environment was viewed
mostly as a constraint on marketing, and a source of increased cost. For
example in the automotive industry, the addition of catalytic converters (a
classic “end-of-pipe” solution) was prompted by legislation and added to the
cost of car manufacture.
There were however, some businesses within the first phase who strongly
embraced social and environmental values as central to their business, and
who pioneered particular green markets. These often tended to be
entrepreneurial and value driven, rather than driven by customer needs and
 Towards Sustainability: The Third Age of Green Marketing 131

market pressures in the classical marketing tradition. Many of these

businesses such as Body Shop, Ben and Jerry’s and 3M went on to become
icons of the green business movement.

The Second Age: “Environmental” Green Marketing

Green Marketing’s second age emerged during the latter part of the 1980s.
The potential vulnerability of the environment, and human life within it, was
highlighted by a series of incidents and discoveries. These included the
Bhopal tragedy in 1984, the discovery of the Antarctic hole in the ozone layer
in 1985, Chernobyl in 1986 and the Exxon-Valdez oil spill in 1989. Media
coverage of these and other disasters stoked public concern about the
environment so that it became a mainstream issue. The successful global
consumer boycott of CFC-driven aerosols, organised by environmental
groups, demonstrated that consumers could be mobilized by environmental
causes that they understood and could relate to. By 1990 research data from
J. Walter Thompson suggested that up to 82% of US consumers were willing
to pay a 5% premium for greener products. Voters also lent increasing
support to green political parties, particularly in European elections.
Companies and mainstream political parties both adapted in the light of the
new Zeitgeist and began to work at developing environmental policies and
credentials. At the same time some important and persuasive ideas about the
relationship between business activity and the environment were emerging.
These included:

“Sustainability”
Sustainability was the most profound and significant development in green
thinking. It evolved early in the 1980s, and was then widely disseminated and
promoted through the publication of the UN’s “Brundtland Report” (WCED
1987). A sustainable approach to consumption and production involves
enjoying a material standard of living today, which is not at the expense of
the standard of living of future generations. It therefore involves using natural
resources at a rate at which environmental systems or human activity can
replenish them (or in the case of non-renewable resources, at a rate at which
renewable alternatives can be substituted in). It also means only producing
pollution and waste, at a rate which can be absorbed by environmental
systems without impairing their viability. The concept of sustainability was
significant because:
• it pulled together issues relating to the physical environment, society
and the economy and recognised their interdependence. Previously
these were presented as separate agendas between which interests
were traded off (in particular environmental protection and economic
growth were presented as a choice).
• it was an idea that companies, governments and environmental
groups could all agree about (even if some were concerned about
132 Ken Peattie

sustaining the economy in the long term, while others were more
concerned about sustaining the natural environment). This provided
new opportunities for partnerships and collaborations.
• it took a global perspective, and recognised most “environmental
problems” as symptoms of our unsustainable production and
consumption systems.
• the concept was widely discussed and, at least in principle, adopted
as a strategic aim by the majority of the world’s governments and
major corporations.
Clean Technology
Green marketing’s second age saw a move away from “end-of-pipe”
pollution clean-up, towards “clean technology”. This involved the design of
innovative new products or production systems in which pollution and waste
were eliminated at the design stage.

The “Green Consumer”

The idea that concern about the environment could influence consumer
behaviour developed into the concept of the “Green Consumer”. It became
widely debated following the publication of The Green Consumer Guide
(Elkington and Hailes 1988). This defined Green Consumers in terms of their
tendency to avoid products which:
• endanger the health of consumers or others;
• significantly damage the environment in production, use or disposal;
• consume disproportionately large amounts of resources;
• cause unnecessary waste through over-packaging, excess features
or an unduly short lifespan;
• use materials derived from endangered species or environments;
• involve cruelty to animals;
• adversely affect other countries.
The guide also gave consumers proactive advice about reducing the
environmental impact of their consumption and purchasing activities. It
became an immediate best seller, staying in the UK non-fiction best-seller list
for over nine months. By 1993 at least 44 different practical green consumer
guides were available. The implications for marketers lay in the opportunities
that the existence of green consumers created, for companies to develop
new products and services tailored to their needs. For companies with a poor
environmental performance, a threat was posed by the increase in
information for green consumers, along with the increasing sophistication of
pressure groups and the increasing media coverage devoted to the
environment.

Competitive Advantage
An important difference between the first two ages of green marketing was
the realisation that good socio-environmental performance could form the
 Towards Sustainability: The Third Age of Green Marketing 133

basis of competitive advantage. If a substantial proportion of consumers were

concerned about the environment, and information about environmental
performance of products and companies was becoming available, then
relatively green companies should be able to differentiate themselves from
the competition, and tap into green demand. During the late 1980s there
were many green marketing success stories, and in markets as diverse as
batteries, ice-cream, cars and cameras, companies began to use relative
environmental performance as a basis on which to compete.
A more sophisticated argument for generating competitive advantage
from environmental excellence was put forward by Michael Porter in 1986
and was further developed in an influential Harvard Business Review article
(Porter and van der Linde 1995). This showed, through numerous examples,
how the search for environmentally superior solutions leads to innovation and
the creation of more efficient and effective technologies and ways to use
resources. The logic was that tough environmental legislation (often
vigorously opposed by companies) actually increases innovation and
competitiveness. This reversed the conventional view that responding to
legislation increases costs and reduces competitiveness. This became
known as the “Win-Win” solution, in which companies could improve their
environmental performance and benefit from either consumer demand for
greener products, or from cost saving and efficiency gains.

Eco-performance
If consumers were going to differentiate between competing products and
companies on environmental grounds, then by implication those products
and companies must have different levels of “eco-performance”. This is
different to the first age where concern was for reducing our dependence on
particular categories of products (synthetic pesticides or large “gas guzzling”
cars) or for promoting new categories of products (such as recycled paper or
pollution control equipment). Trying to work out the relative merits of
particular products can be difficult. Some of the questions that need to be
considered include:
• what social and environmental issues are relevant to this product?
• what weights should be attached to particular impacts?
• should “upstream” impacts in the supply chain be considered, and if
so, how far back up the chain?
• should product use and disposal be considered as well as
production?
• what criteria should be used in making assessments? Legal
compliance? Comparisons with competitors? Expectations of
customers and other stakeholders?
Not surprisingly, many companies found themselves subject to criticism (and
sometimes given a Friends of the Earth “Green Con of the Year” Award), if
they tried to promote themselves or their products as “green” on a relatively
one-dimensional basis. The concept of “eco-performance” seeks to
134 Ken Peattie

encapsulate the overall social and environmental impacts of a company, its

products and its production system (Peattie 1995).

Environmental Quality
Finding ways to measure and manage eco-performance was very
challenging for companies, as was getting the various different functions or
divisions of the company to join in the greening effort. A “green” company
could find itself under severe media scrutiny if one subsidiary or production
facility was exposed as a major polluter. A marketer seeking to compete on a
green platform needed to be confident that the company as a whole could
back them up. Understanding eco-performance required companies to view
themselves as physical and social systems and to consider the
environmental and social impacts of their inputs, outputs and processes.
Many manufacturers sought to combine environmental management with
their existing Total Quality Management (TQM) programmes in what became
known as TQEM. This made sense in that the two fields shared an interest in
waste reduction and continuous improvement and both took a total systems
view of producing and marketing products. TQM also emphasised the
development of a supportive corporate wide culture, which was something
environmental marketing and management also needed. This approach was
also in line with Porter and van der Linde’s thinking, which viewed pollution
as symptomatic of inefficiency and stating that “efforts to eliminate pollution
can therefore follow the same basic principles widely used in quality
programs: Use inputs more efficiently, eliminate the need for hazardous, hard
to handle materials, and eliminate unneeded activities.” (p.124) Ultimately,
new international quality standards, the ISO 14000 series, were drafted
relating to the quality of companies’ environmental management systems.

Marketing Implications of the Second Age

The second age of Green Marketing was much more significant for marketers
and marketing. Partly this related to the broadening of the “front line” of
industries in which environmental issues became important. Ecological
marketing mostly focussed on those industries and products with the most
obvious direct impact on the environment (such as oil, mining, agro-
chemicals, cars). Concern about sustainability broadened the environmental
debate to include issues like species loss, the destruction of particular
ecosystems and habitats, and poverty within developing countries.
Environmental marketing embraced all manner of products used in the home
(such as cleaning products, white goods, carpets and paper) along with
services such as tourism and banking. The implications for marketing were
also expanded by the need to view the business as a total physical system.
While ecological marketing focussed on specific physical consequences of
businesses as economic systems, environmental marketing encouraged
marketers to take a physical systems view of businesses. This meant
considering the business not simply as a “value chain” that converts inputs
 Towards Sustainability: The Third Age of Green Marketing 135

into market outputs, but as a system with non-market outputs in the form of
pollution and waste.
Some of the more specific implications of environmental marketing for
marketers included :
• a more global focus. Sustainability prompted consideration of the
environment from a global perspective by confronting global issues
such as global warming, climate change, and ozone layer depletion.
• new market developments. New markets for environmentally
orientated products and services emerged in many industries. Eco-
tourism within tourism, and green/ethical investment funds have each
represented the fastest growing sector of their industries over the last
decade.
• new product introductions. Research by Marketing Intelligence
Services found that in 1991, 13.4% of new American packaged goods
made some form of environmental claim, with the proportion in some
categories, such as household products, rising as high as 44%.
• promotional opportunities. Established products were also able to
promote themselves on the basis of environmental strengths. In the
face of new green detergent products, conventional brands such as
Fairy began to stress their biodegradability.
• an emphasis on the means of production. In many green market
segments, products and companies used the means of production as
a means of differentiation. In food markets examples included free-
range eggs, organic vegetables and rod-and-line caught tuna (and
although there is an argument that organic or free-range products
may also be different in terms of taste, a tuna fish tastes much the
same however it is caught). Although there are parallels with
promoting a product as “hand-made”, in most markets the idea of
consumers being interested in how a product is made, was relatively
novel.
• a spotlight on packaging. A key environmental impact of marketing
relates to packaging, with discarded packaging a major contributor to
waste problems from litter to landfill. This was an area where
marketers found it relatively easy to introduce “win-win” solutions.
Recycled packaging materials could be used or over-packaging
reduced, in a way which didn’t affect core product attributes or
performance, but which typically reduced costs.
• new partnerships. Many companies, often those who had endured
criticism of their eco-performance, formed new partnerships with
former environmental critics in an effort to improve their eco-
performance and image. McDonalds, for example, developed a 42
point environmental action plan in partnership with the US
Environmental Defence Fund.
• a move beyond compliance. Even for companies that were not
interested in competing on an environmental basis, it had become
136 Ken Peattie

clear that the conventional approach of a “reliance on compliance” is

an increasingly risky strategy. In disposing of the Brent Spar oil
facility, Shell UK were following a course of action which they were
confident was legal, was supported by the government, and which
they felt they could prove was technically and environmentally
optimal. Despite this, they found themselves embroiled in a public
relations disaster in which the public, the media, foreign governments
and even other parts of the Shell organisation were critical of them.
• new information requirements. In the past, questions relating to how
the product was made were not of great interest to marketers,
providing that production schedules, quality and costs were all under
control. Now questions like “How clean is our production system ?”,
“Where do our raw materials come from ?”, and “What happens to our
product at the end of its life ?” had all become potentially significant.
Environmental audits and environmentally-related marketing research
were increasingly needed to fill these information gaps.
The End of the Second Age: Hitting the “Green Wall”

During the second half of the 1990s, it became clear that although the logic
of “win-win” strategies was attractive, generating and sustaining competitive
advantage from good environmental performance was often difficult in
practice (Walley and Whitehead 1994). Products marketed on an
environmental platform often proved vulnerable to competitor tactics such as
discounting, or attacks on the level of technical performance offered, or on
the credibility of their environmental claims. Capitalising on good eco-
performance in search of competitive advantage was also made difficult by
the attitude of the media. Companies such as Body Shop and Canadian
retailer Loblaw, who sought to take a lead in the greening of their respective
industries, found that the media was more inclined to attack them on the
basis of any absolute shortcomings, than to highlight the relatively poor eco-
performance of their more conventional rivals. The “win-win” dream of
producing a new generation of products which were environmentally
superior, cost competitive, and technically as good as (if not better than)
existing products proved difficult to realise for several reasons:

The Green Product Controversy

Competing on the basis of environmental quality can be very difficult,
since what constitutes the “greenest” product in any market is open to
debate. It is not difficult to demonstrate which is the fastest or the safest or
the most inexpensive car on the market. It is much more difficult to define the
greenest. The glass industry claimed glass as a greener packaging material
than plastic because of its naturalness and recyclability, while the plastics
industry claimed the upper hand on the basis of weight and associated fuel
savings in distribution. In the USA services collecting, washing and delivering
cotton “diapers” as an alternative to disposables boomed. This market growth
 Towards Sustainability: The Third Age of Green Marketing 137

then faltered in the face of evidence from Proctor & Gamble that the overall
environmental impact of disposables was actually better once the impacts of
the detergent, energy, water and transport of the washing services had been
considered. Overall, the environmental issues that eco-performance related
to were shown to be complex, controversial and not easily solved by
particular product substitutions.

The Corporate Green Wall

Research conducted by consultants Arthur Anderson probed the
experiences of companies who had taken an early lead in developing
competitive advantage from good environmental performance. This showed
that the initially successful greening programmes of many of these, including
Apple, Warner-Lambert and ABB had run into problems (Shelton 1994). The
common experience was that all went well while environmental improvement
was based around cost-saving projects which saved energy or reduced
waste disposal costs. Once these “low-hanging fruit” had been picked, and
further environmental improvement required more radical changes, the
greening process began to clash with corporate cultures and other corporate
strategies and vested interests. This became known as hitting the “Green
Wall”. For many companies environmental improvement became increasingly
subsumed within existing TQM strategies or corporate citizenship
programmes.

The Green Consumer Mystery

The “Green Consumer” has been a central figure in the development of
the logic of green marketing. Many green marketing strategies depended on
customers being willing to buy greener products at premium prices.
Therefore a lot of effort went into trying to identify and market to these Green
Consumers. This proved to be much more difficult than expected. Early
efforts went into trying to identify and segment green consumers using socio-
demographic factors such as age, sex, income and level of education. When
these produced inconclusive and contradictory results (Wagner 1997), other
factors were examined including level of environmental concern,
environmental knowledge and attitudes such as social concern, perceived
personal relevance and belief in one’s ability to influence things (for a model
which integrates the majority of these, see Dembkowski and Hanmer-Lloyd
1994). The tendency for such studies to be inconclusive and contradictory in
their findings continued.
What was clear was that the level of environmental concern being voiced
by consumers was not being matched by an equal level of change in their
purchasing behaviour. The explanation that many marketers put forward was
one of “social over-reporting” of environmental concern among consumers. It
seemed that the opportunities for environmental marketing were far less than
had been predicted. This was not, however, the only possible explanation.
138 Ken Peattie

An Alternative Explanation – Green Purchases not Green

Consumers

Kardash (1974) characterised all consumers (barring a few who enjoy

contrariness for its own sake) as “Green Consumers” in that, faced with a
choice between two products that are identical apart from different levels of
eco-performance, they would differentiate in favour of the environmentally
superior product. If we accept this idea, then understanding environmental
purchasing behaviour (and often the lack of it), is assisted by looking at the
extent to which green product offerings are not perceived as “equal” to their
conventional competitors. This means that instead of trying to understand
green consumption by understanding the purchaser, we instead try to
understand the purchases.
Figure 1 presents a framework within which different types of potential
green purchase can be positioned. This brings together two key variables
which affect the likelihood of any purchaser (whatever the intensity of their
environmental concern - or “shade” of green) being influenced by
environmentally related issues when considering a purchase: the degree of
compromise involved, and the degree of confidence generated in the
environmental benefits of a particular choice.
Many green purchases involve some form of compromise or trade-off,
including :
• paying a green premium, whether it is imposed by economic necessity
or by marketing strategy;
• accepting a lower level of technical performance in exchange for
improved eco-performance (e.g. green detergents);
• travelling to non-standard distribution outlets.
The importance of such trade-offs has been recognised in some of the
“Lifestyle” segmentations made within the green market, using labels such as
“no-cost ecologists” and “convenient greens” (Wagner 1997). The willingness
to make trade-offs will be determined by a number of factors, including
environmental awareness and concern, product availability and perceived
costs. However a crucial, but often neglected, factor which will determine
whether or not customers will accept any trade-offs is the confidence they
have in the environmental benefits involved. Buyers will need to be confident
that:
• the environmental issue(s) involved are real problems;
• the company’s market offering has improved eco-performance
compared to competitor or previous offerings;
• purchasing the product will make some sort of material difference.
Although a tendency to over-report social and environmental concerns will
undoubtedly explain part of the discrepancy between environmental concern
and purchaser behaviour, a vital but often overlooked factor is the confidence
 Towards Sustainability: The Third Age of Green Marketing 139

that customers have in companies’ green marketing offerings. When Dutch

consumers were posed the question “Whom do you believe about the
environmental compatibility of products?” only 5% described the
manufacturer as “believable” compare to 89% for leading environmental
groups (Einsmann 1992). Mintel’s 1991 UK Green Consumer Survey also
found that 90% of UK consumers were highly sceptical of green promotional
campaigns.

High
Feelgood Purchases. Win-Win Purchases.
Green unit trusts;
Body Shop cosmetics; Cafe Direct coffee;
Degree of Confidence

Organic cotton clothes; Recycled, non chlorine-

bleached paper products;

Why Bother ? Why Not ? Purchases.

Purchases.
Unleaded petrol;
Green cars;
Detergent refills;
Terry (non-disposable)
nappies.
Low

High Low
Degree of Compromise

Figure 1. The Green Purchase Perception Matrix.

Products which present a “win-win” purchase proposition by offering clear

benefits in terms of environmental credentials and requiring little compromise
on the part of the purchaser are unlikely to struggle in the market place.
Similarly purchases offering good technical performance whilst also saving
money, such as detergent refills, will find market acceptance relatively easily,
even if their environmental benefits seem marginal. Products which ask for
considerable compromise, need to instil high levels of confidence among
purchasers about their environmental benefits. Body Shop’s products are
more expensive than most high-street rivals and green “me too” brands but,
despite periodic media attacks, their credibility and customer loyalty have
remained strong. Products which require significant compromises from their
customers and do not make a convincing case in terms of environmental
benefits are unlikely to succeed.
140 Ken Peattie

The value of a framework such as this is that it can cope with individual
consumers being “inconsistent” in their purchase behaviour for green
products according to their knowledge, their specific environmental interests,
how they perceive the credibility and the relative costs and benefits of the
product offering. It also provides a practical agenda for green marketers of
reducing the compromises they require of customers while building consumer
confidence about their market offerings.

“Sustainable” Green Marketing: Towards the Third Age

The development of environmental marketing has undoubtedly had an impact

on marketing practice over the past decade. Some important new green
markets and products have emerged. The debate about the opportunities
and difficulties involved in marketing to green consumers has sometimes
obscured the progress made within business-to-business and organisational
marketing. Large companies such as IBM, McDonalds and BT have used
their purchasing power to insist that their suppliers improve their eco-
performance, and back it up with green audits. Governments have also used
the specifications of tenders to insist that suppliers address environmental
issues. In many industries technologies and production systems have been
improved to create less pollution and conserve resources. However, the short
answer to whether our economies and societies (and the environment on
which they depend) are now significantly more sustainable than they were
fifteen years ago when The Brundtland Report was published, would have to
be “No”.
Although the general principle of sustainability has been widely endorsed
by governments and major companies, agreeing about what it means and
how to achieve it has proved difficult. The underlying principles of
sustainability also provide a significant challenge to the marketing discipline
and our established social and economic systems. These components are :

1. Futurity Marketing seeks to deliver satisfaction to customers and

profitability for investors, which provides the discipline with a fairly
unassailable raison d’être. However, it has previously addressed only
the needs of the current generation of consumers and investors.
Sustainability poses an important challenge to marketing to justify
what makes the needs of the current generation more important than
the needs of the generations to come. Environmental restrictions are
often opposed on the basis of freedom of choice. However, if current
production and consumption systems are unsustainable, then the
choices available to future generations may be severely curtailed.
2. Equity The current social and economic order is difficult to view as
“fair” because the costs and benefits of industrialisation are not
distributed evenly. The populations of the industrialised nations enjoy
average real incomes seven times greater than people in less-
industrialised countries. Industrialised nations account for less than
 Towards Sustainability: The Third Age of Green Marketing 141

20% of the world’s populations, but consume more than half of all
commercially generated electricity, and produce almost half of all
carbon dioxide emissions. Since 99% of future population growth is
forecast to occur in the less industrialised countries, by 2050 the
proportion of the world living in the industrialised world will have fallen
to around 13%. Although it might be tempting to assume that more
consumption, more growth and more trade will help to ease the plight
of the world’s poor, experience suggests that it will not. Since 1965
while industrialised incomes have risen on average 2.4% p.a.,
incomes in less industrialised countries have risen at only 1.6% p.a.,
with Africa effectively poorer now than it was then. Sustainability aims
for a more equitable distribution of these costs and benefits among
nations, sexes and ages.
3. An emphasis on needs Although marketing aims to meet our wants
and needs, the majority of contemporary marketing effort concerns
things we want rather than need. As Durning (1992) points out, four
fifths of the world’s population have no discretionary income, and their
expenditure is entirely concerned with meeting their basic survival
needs. Sustainability aims for a greater emphasis on need rather than
want.

The marketing discipline is beginning to address green marketing, not just in

terms of reducing environmental damage, but in terms of the pursuit of
sustainability. Peattie (1995) defined green marketing as “The holistic
management process responsible for identifying, anticipating and satisfying
the needs of customers and society, in a profitable and sustainable way”,
while Fuller (1999) defines sustainable marketing as “the process of
planning, implementing and controlling the development, pricing, promotion,
and distribution of products in a manner that satisfies the following three
criteria: (1) customer needs are met, (2) organizational goals are attained,
and (3) the process is compatible with eco-systems.”
There are a number of elements of markets and marketing, as they
currently stand, which will have to be changed to allow our products and their
production and consumption to become more sustainable, including:

Product Costs
The economics of marketing is based on neo-classical economics, which
is fundamentally an environmentally-hostile doctrine. The key problem is the
concept of “externalities”, in which some of the costs related to a product
(particularly those relating to socio-environmental impacts) are excluded from
the calculation of costs and therefore prices. Therefore the car industry, and
car purchasers, do not directly pay for the costs associated with air pollution,
global warming, oil depletion or road deaths and injuries. In theory,
governments can raise taxes on consumers and companies to meet these
external costs. However, in an era when tax minimisation dominates election
debates, and when national regulators struggle to contain the lobbying power
142 Ken Peattie

of global companies, this looks increasingly like wishful thinking. Similarly,

raw material costs only reflect the costs of extraction and payments to any
relevant owners. The costs of raw material replacement or associated
environmental impacts are often not met. Therefore the costs of the fishing
industry reflect the costs of fishing, but not the costs of over-fishing. So the
prices of the goods we purchase cover the costs of the financial capital,
human capital and manufactured capital that go into producing and marketing
them. The full costs of the environmental capital are not covered, which
means that the environment effectively provides a subsidy. Environmentally
orientated products often encounter problems because they are perceived as
unrealistically expensive. They are, in fact, competing with products
effectively subsidised by the environment, and therefore unrealistically
cheap.

Emphasising Cost instead of Price

Marketing has tended to focus on the price that a customer pays for a
product or a service, rather than the total cost to the customer. This can be
significant for environmentally related products which are more expensive in
terms of purchase price, but ultimately more economical to use (low-energy
light bulbs being a commonplace example). Developing more sustainable
forms of transport, buildings, and consumer durables will need an emphasis
on the total resource efficiency and costs of a product instead of its purchase
price.

A Better Understanding of the Marketing Environment

Marketing writers and practitioners have continued to try to fit the physical
environment into models of the marketing environment of the PEST type:
viewing the environment as a political pressure, an impact on the economics
of the business, a social trend or a technological challenge. The reality is that
the physical environment underpins the social environment, which in turn
underpins the economic, political and technological environments.

Industry Structures
The conventional view of industry structures is of relatively linear “supply
chains” in which raw materials are extracted, then passed from suppliers onto
manufacturers, whose goods pass through distribution channels to reach
consumers, and are eventually disposed of as waste. More sustainable
economies will require much greater use of “supply loops” in which products
and packaging materials are reused or recycled. This will bring significant
changes to producer/consumer relationships. The simple exchange of money
for goods will need to be replaced by a more dynamic relationship in which
materials are passed between the two parties, and in which customers
become suppliers for materials and parts. Such loops are already being
extensively used by companies such as Xerox, whose use of reclaimed
components has saved the company hundreds of millions of dollars.
 Towards Sustainability: The Third Age of Green Marketing 143

Purchasing versus Consuming

The conventional marketing discipline talks about consumers, consumer
behaviour and consumption. However, a glance at any marketing textbook
reveals that the emphasis is very much on purchasers and purchasing. How
a customer uses or disposes of a product, or what they might do instead of
purchasing (borrowing, mending or making) receives very little attention. The
emphasis is on how to get a customer to make or repeat a purchase. This is
understandable, since this is the point where the money changes hands.
From a marketing perspective, it is worth remembering that the benefits of a
product do not come from owning it (apart from investment products and
those which generate pride in ownership) but from using it. In terms of the
environmental impact of industries, this is largely determined by product use
or disposal. A more sustainable economy will require less ownership of
consumer durables such as cars, tools and more renting and leasing (Belz
1999).

From Products to Services

One way to make the economy more sustainable is to change the mix of
products and services which deliver customer benefits. This could involve
replacing the use of a product with the use of a service, for example using
public transport or car-pooling as an alternative to driving a car to work. It
could also involve increasing the level of after-sales support for consumer
durables to increase product longevity and replacement cycles (Cooper and
Evans 2000).

An Emphasis on Distribution
In markets such as food, environmental impacts are strongly influenced by
the amount of fossil fuel burnt during distribution. The pursuit of sustainability
will require the re-localisation of many supply systems and a move away from
global distribution chains. New information technology (such as computerised
machine tools) is reducing the “costs of variation” and the importance of
economies of scale in manufacture. This will make “micro-factory” production
and distribution systems cost competitive. Long term visions of a more
sustainable economy often involve the use of high-tech, energy-efficient
micro-factories, with even global companies competing as a network of
localised suppliers.

Moving Beyond the Niche

There have been many individual green marketing success stories. Most
usually these involve a company developing an environmentally superior
product, marketed to the most environmentally concerned consumers. Since
such a product will usually try to meet some of the socio-environmental costs
treated as externalities by competitors, it will be more expensive. The
committed green consumers will be willing to pay a “green premium” allowing
the product to succeed. However, there is a danger that once the needs of
these consumers are met, the market pressure on the rest of the industry to
144 Ken Peattie

change is much diluted. This leads to environmental improvements being

concentrated in a green market segment, rather than being spread
throughout the industry as a whole. The existence of such segments and
products to serve them produces a reassuring situation of consumer choice
and apparent progress, but the contribution to sustainability is likely to be
marginal. Making markets more sustainable will require further
mainstreaming of environmental improvements (Belz 1999).

Re-evaluating the “Win-Win” Argument

The idea that eco-performance can be used as the basis of competitive
advantage has been important for getting mainstream marketers interested in
green marketing issues. However, in reality generating and sustaining
competitive advantage has proved a challenge. Also, competitiveness places
the emphasis on individual companies, but many key environmental
problems will only be solved by action across an entire industry. Examples of
this are already emerging, with the “Big Three” carmakers in the USA joining
forces to developed greener car technologies and leading Japanese and
American electronic companies sharing information on ways to reduce the
use of CFCs as solvents, rather than seeking to gain competitive advantage
from any improvements made.

Conclusion

Over the last ten years the environmental impact resulting from the
production and marketing activities of many companies and industries have
been significantly improved. However, this does not make them sustainable,
and ultimately any improvement that does not lead to eventual sustainability
risks becoming a futile gesture. Just as improving the finances of a loss-
making business is futile unless it eventually leads to profitability, any
business that does not become sustainable will ultimately cease to exist. The
timeframes may be very different, but the basic principle is the same. It is
possible to expand a business very quickly by selling at a loss, or even by
consistently failing to pay your suppliers. Neither strategy can ultimately be a
recipe for business success. Contemporary businesses are effectively failing
to pay a key supplier (the environment) in their failure to meet full
environmental costs. Eventually, someone will have to pay those bills.
The next step for green marketing, involving a move from environmental
marketing to sustainable marketing, will be a monumental one, both in terms
of its difficulty and its importance. It means moving from evolutionary
changes which reduce environmental damage, towards radical changes in
the way we live, produce, market and consume. Most of the environmental
problems that gave rise to green marketing are worsening. Social concern
about the future of the environment, and the impact of continuing economic
growth and globalisation remain intense. These should both provide pressure
for change. Counter-balancing this are the vested interests among today’s
stakeholders who are likely to oppose such radical changes, and whose
 Towards Sustainability: The Third Age of Green Marketing 145

benefits would accrue to future stakeholders. Progress is therefore likely to

be slow, and will require a combination of legislation, taxation, consumer
action, innovation and corporate leadership to happen at all.
There is little hope for the further greening of marketing unless consumers
understand the issues involved and are convinced by the green market
offerings that companies develop. It is perhaps telling that in a major piece of
research examining perceptions of “quality of life”, published eight years after
the Brundtland Report, the first conclusion drawn was that “People generally
are unfamiliar with the idea of ‘sustainability’ in its environmental sense. But
once they understand it, they appear to identify positively with its values and
priorities.” (MacNaghten et al. 1995). That sentence encapsulates the
opportunity and the challenge involved in making marketing more
sustainable.

References

Belz, F. M. (1999), “Eco-Marketing 2005: Performance Sales instead of

Product Sales.” In Greener Marketing (2nd Edition), Charter, M. and
Polonsky, M. J. (Eds.) Greenleaf, Sheffield
Cooper, T. and Evans, E. (2000), Products to Services, Friends of the Earth
and Sheffield Hallam University
Dembkowski, S. and Hanmer-Lloyd, S. (1994), “The Environmental-Value-
Attitude-System Model: A Framework to Guide the Understanding of
Environmentally Conscious Consumer Behaviour”, Journal of Marketing
Management, Vol. 10 (7), pp. 593-603
Durning, A.T. (1992), How Much is Enough ? Earthscan, London
Einsmann, H. (1992), “The Environment: an Entrepreneurial Approach”, Long
Range Planning, 25, (4), pp. 22-24
Elikington, J. and Hailes J. (1988), The Green Consumer Guide, Victor
Gollancz, London
Fuller, D. A. (2000), Sustainable Marketing: Managerial-Ecological Issues,
Sage, Thousand Oaks, California
Henion, K.E. and Kinnear, T.C. (1976), Ecological Marketing, American
Marketing Association, Chicago
Kardash, W. J. (1974) “Corporate Responsibility and the Quality of Life:
Developing the Ecologically Concerned Consumer”, in Ecological
Marketing (Eds. Henion, K.E. and Kinner), AMA, Chicago
MacNaghten, P. et al. (1995), Public Perceptions and Sustainability in
Lancashire: Indicators, Institutions, Participation, Lancashire County
Council and Lancaster University Centre for the Study of Environmental
Change.
Peattie, K. (1995), Environmental Marketing Management: Meeting the
Green Challenge, Pitman, London
Porter, M. E. and van der Linde, C. (1995), “Green and Competitive: Ending
the Stalemate”, Harvard Business Review, 73 (5), pp. 120-133
Shelton, R.D. (1994), Hitting the Green Wall: Why Corporate Programs Get
 146 Ken Peattie

Stalled, Corporate Environmental Strategy, 2 ( 2), pp. 5-11

Walley, N. and Whitehead, B. (1994), “It’s Not Easy Being Green”, Harvard
Business Review, 72 (3), pp. 46-52
Wagner, S. A. (1997), Understanding Green Consumer Behaviour,
Routledge, London
WCED (1987), Our Common Future, UN World Commission on Environment
and Development.

Further Reading

Charter, M. and Polonsky, M. J. (Eds.) (1999,) Greener Marketing (2nd

Edition), Greenleaf, Sheffield
Fuller, D. A. (2000), Sustainable Marketing: Managerial-Ecological Issues,
Sage, Thousand Oaks, California
Peattie, K. (1995), Environmental Marketing Management: Meeting the
Green Challenge, Pitman, London
Porter, M. E. and van der Linde, C. (1995), “Green and Competitive: Ending
the Stalemate”, Harvard Business Review, 73 (5), pp. 120-133

About the Author

Ken Peattie is a Professor of Marketing and Strategy within Cardiff Business

School, which he joined in 1986. Before concentrating on an academic
career, he worked for an American paper multinational in marketing, and in
the UK electronics industry as a strategic planner. In 2001 he took up a post
as full time Director of the ESRC Research Centre for Business
Relationships, Accountability, Sustainability and Society (BRASS) at Cardiff
University. His main research interest is in the impact of environmental
concern on marketing and corporate strategies. He is the author of two
books, and numerous book chapters and articles on the subject.

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