Conceptual Paper Marketing Final

Green Marketing: Proactive & Innovative Tool of CSR to gain Competitive Excellence

Abstract:

Purpose– In the recent times the business marketplace is moving closer towards being a

comprehensive social experience, the onus falls upon brands to be more defined in terms of what

they stand for, their core values and how they communicate them to their community of

customers. Not only this, stakeholders demand these brands to be more eco-friendly even if they

are higher in price. Thus the businesses operate in ever-changing environment be it economically

or ecologically, the purpose of this paper would be to investigate how green marketing strategies

is being used as an effective tool of corporate social responsibility in order to get economic,

social as well as ecological sustainability.

Design– This conceptual paper has been designed to discuss about the concept of green

marketing strategies, and how it could be used as an effective tool for CSR to gain the

competitive advantage. It also includes that how diffusion of innovation theory can be related to

green marketing in a new way. This paper begins with the literature review of corporate social

responsibility and green marketing strategies and it also adds value to the paper by including the

innovation theory to address the gap in the literature. Then the paper discusses about the various

strategies which a business could employ in order to act to the changes in the external

environment. The businesses can use both reactive as well as proactive approach in order to

addresses the external demands. This paper is then discussing about the degrees of innovation

required while employing the different strategies and also throws light on the diffusion theory

and develops the propositions. Then, a new model is presented on green marketing innovation

strategies and competitive advantage. Next, a conceptual analysis is presented using a diffusion

of innovation characteristics framework to show relationships of the innovation characteristics

with proactive green marketing strategies and competitive advantage.

Findings – This paper has developed a total of six propositions which are developed to reflect

the relationship of green marketing strategies with types of innovations and competitive

advantage. In addition, a conceptual analysis found seven areas of proactive green marketing

strategies related to the diffusion of innovation characteristics. Also this paper has proven that

green marketing strategies can be used as an effective tool for CSR due to the concerns of

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consumers towards the environment. Findings also showed diffusion characteristics are

associated with 11 key benefits of sustainable green marketing competitive advantage.

Research limitations/implications – This paper also discusses about the limitations of this

research. There is still a corner to be filled in this field and lot of research needs to be done. In

addition the paper also includes some of the managerial implications which can be used

effectively. Also, this paper suggests recommendations related to diffusion of innovation

characteristics in future research.

The Source and Methods of Data Collection All research material used has been sourced from

accredited authors. The Central Library UIA Gombak, Internet Public Library and National

Library of Australia were utilized to source the material. Apart from online Libraries various

articles whose references are provided at the end were also reviewed. A total of thirty six

references were used.

Practical implications – This paper has serious implications in the current era as it provides a

diffusion of innovation characteristics framework to test the effectiveness of green marketing

strategies and to help generate competitive advantages in an ecologically-sustainable way. As the

stakeholders are putting pressure on corporations to become more environment friendly, this

paper has provided some details for managers on how organizations can achieve successful

competitive advantage while contributing to environmental sustainability for the common good

of society.

Originality/value – This paper has addressed a gap in the literature on environmental/green

marketing by being the first study to expand the CSR category of instrumental theories to include

diffusion of innovation theory. As the literature review found that there is still a gap in green

marketing concepts thus diffusion of innovation theory needs to be reviewed as it is directly

related to green marketing. Diffusion theory is applicable to green marketing because it includes

new innovations (products, services, processes, etc.). This paper also suggests how diffusion of

innovation theory can be related to proactive green marketing strategies so that the businesses

can increase the rate of adoption of green products, services, and processes to create a

competitive advantage, and at the same time, help move the world toward greater ecological

sustainability.

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Paper type Conceptual paper

Introduction:

Due to the change in overall environment, people all around the globe are concerned about the

environment and future of our planet. This has awakened the industrialized nations to be more

concerned and to pursue environmental or green marketing. This concern has put more pressure

on corporations to be more environments friendly and undertake only those operations which are

safe for the environment. This is where green marketing began to gain impetus among the

stakeholders of the businesses. Here the question arises what is green marketing or how can

marketing become green, According to the American Marketing Association, green marketing is

the marketing of products that are presumed to be environmentally safe. Thus green marketing

incorporates a broad range of activities, including product modification, changes to the

production process, packaging changes, as well as modifying advertising. According to Prakash

(2002), (p. 294). ‘‘Green marketing subsumes greening products as well as greening firms. . .

Managers need to identify what ought to be greened: systems, processes or products?’’

Green marketing refers to any activity taken by the businesses in concern to the environment. It

is a process of selling products and/or services based on their environmental benefits. Such a

product or service may be environmentally friendly in it-self or produced and/or packaged in an

environmentally friendly way.

Corporations undertake such activities in order to gain competitive advantage and also to be

profitable in the long term. Thus obvious assumption of green marketing is that potential

consumers will view a product or service's "greenness" as a benefit and base their buying

decision accordingly. The not-so-obvious assumption of green marketing is that consumers will

be willing to pay more for green products than they would for a less-green comparable

alternative product - an assumption that, in my opinion, has not been proven conclusively.

Lately green marketing has been seen important through the eyes of consumers as many

researchers have shown that customers are even willing to pay more for environment friendly

products. While green marketing is growing greatly as increasing numbers of consumers are

willing to back their environmental consciousnesses with their dollars, it can be dangerous. The

public tends to be skeptical of green claims to begin with and companies can seriously damage

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their brands and their sales if a green claim is discovered to be false or contradicted by a

company's other products or practices. Presenting a product or service as green when it's not is

called green washing.

Green Marketing includes wide range of activities which include: product design, the

manufacturing process, service delivery processes, packaging, construction and renovation of

buildings, recycling, and other areas such as marketing communications. In addition to all this

we could see that there has been a serious advancement in terms of technology like in the area of

marketing communications. With the use of internet, businesses can become more eco friendly

by using services like online marketing, email, e-newsletters, webinars, online communities, etc.)

and mobile marketing (e.g. M-Commerce, M-CRM, SMS, etc.), the companies can promote their

products or services in a more eco friendly way which can be broadcasted to general public in a

prompt and inexpensive manner. (DiFrangia, 2008a; Standing et al., 2007).

The research was conducted in European countries to find the concerns of consumers about

environment and it was found that more than ninety two percent people have changed their

products to address green concerns. Another Research report showed that 84 per cent of the

organizations produce more environmental friendly or socially responsible products or they

produce the products which are energy efficient, recyclable, made with renewable materials or

Fair Trade. The organizations main objectives behind their green marketing strategies are:

product differentiation to create a competitive advantage, to become a global leader, and cost

savings (Greenerdesign.com, 2009).

We could see from the above implications that how green marketing is gaining impetus in

today’s business environment so the main objective of this study will be to determine how

innovative theory can be used to develop green marketing strategies in order to meet the

customer expectations and overall obligations towards the environment. The strategies will not

only help the corporations to become greener but it will also meet there bottom line of becoming

economically, socially as well as ecologically sustainable. At first, the overview of corporate

social responsibility CSR theories relevant to green marketing is provided. Next, a discussion is

included on reactive and proactive green marketing strategies that can be utilized in businesses,

and their relationship to degrees of innovation. Further, a review is provided on diffusion of

innovation theory and its relationship to business research. Also, five propositions are developed,

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and a new conceptual model is presented on green marketing innovation strategies and

competitive advantage. Furthermore, an analysis is presented on the relationship of diffusion of

innovation characteristics to green marketing strategies, and the benefits associated with

competitive advantage for organizations. Limitations and managerial implications are discussed,

and recommendations are provided for future research.

Theoretical background

Corporate Social Responsibility (CSR):

Corporate Social Responsibility or simply CSR came into common use in the late 1960s and

early 1970s after many multinational corporations formed the term stakeholder, meaning those

on whom an organization's activities have an impact. It was used to describe corporate owners

beyond shareholders as a result of an influential book by R. Edward Freeman, Strategic

management: a stakeholder approach in 1984. Corporate social responsibility (CSR, also called

corporate conscience, corporate citizenship, social performance, or sustainable responsible

business) is a form of corporate self-regulation integrated into a business model. CSR policy

functions as a built-in, self-regulating mechanism whereby business monitors and ensures its

active compliance with the spirit of the law, ethical standards, and international norms. The goal

of CSR is to embrace responsibility for the company's actions and encourage a positive impact

through its activities on the environment, consumers, employees, communities, stakeholders and

all other members of the public sphere.

Proponents argue that corporations make more long term profits by operating with a perspective,

while critics argue that CSR distracts from the economic role of businesses. Others argue CSR is

merely window-dressing, or an attempt to pre-empt the role of governments as a watchdog over

powerful multinational corporations.

CSR is titled to aid an organization's mission as well as a guide to what the company stands for

and will uphold to its consumers. Development business ethics is one of the forms of applied

ethics that examines ethical principles and moral or ethical problems that can arise in a business

environment. ISO 26000 is the recognized international standard for CSR. Public sector

organizations (the United Nations for example) adhere to the triple bottom line (TBL). It is

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widely accepted that CSR adheres to similar principles but with no formal act of legislation. The

UN has developed the Principles for Responsible Investment as guidelines for investing entities.

Green marketing is one of the important tools of CSR which can increase both profitability as

well as the competitive advantage for any business. However green marketing must be genuine

and it must reflect the concern of businesses towards their society in particular and overall

environment in general. Green marketing can be a very powerful marketing strategy though

when it's done right. For green marketing to be effective, you have to do three things; be

genuine, educate your customers, and give them the opportunity to participate.

1) Being Genuine

a) By being genuine, it means that you are actually doing it for a cause. Apart from the

profitability concern you must take care for your environment and do exactly what you are

claiming to be doing in your green marketing campaign.

b) Secondly it is not only your green marketing strategies but the rest of your business policies

must reflect your concern for the environment. Both these conditions have to be met for your

business to establish the kind of environmental credentials that will allow a green marketing

campaign to succeed.

2) Educating your customers in order to be effective green marketer you must let your

customers to know about your concern to environment. They must be educated about whatever

you're doing to protect the environment. You must also convey your ideas about green marketing

in a manner that it must reflect why it matters. Otherwise, for a significant portion of your target

market, it's a case of "So what?" and your green marketing campaign goes nowhere.

3) Giving your customers an opportunity to participate it is not only about the top

management to decide about the environmentally friendly actions but you must personalize the

activities, normally through letting the customer take part in positive environmental action.

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Green marketing, CSR theories and innovation theory

Garriga and Mele´ (2004) developed four groups of theories based on CSR, they include:

instrumental theories, political theories, integrative theories, and ethical theories. Garriga and

Mele´ argued that the corporations while adopting the instrumental strategies are basically

achieving competitive advantage by making profits and they also help in social causes such as:

philanthropic investments, cause marketing activities (Varadarajan and Menon, 1988), and using

disruptive innovations to market to the bottom of the economic pyramid (Christensen and

Overdorf, 2000; Prahalad and Hammond, 2002). Garriga and Mele´ (2004) noted that disruptive

innovations could achieve social objectives and create a competitive advantage for companies in

‘‘telecommunications, consumer electronics and energy production and many other industries’’

(p.55). (Energy production is an important area of green innovations.)

Political theories advocate that the corporations are being socially responsible because of their

power and also they are legally obliged to follow some benchmark to environmental marketing

(Menon and Menon, 1997). On the other hand Integrative theories focus on stakeholder

management, related Marketing and Innovation theory to social norms (Osterhus, 1997), green

marketing (Rivera-Camino, 2007), and to the common good (Argandona, 1998). These theories

include those strategies because of the stakeholder’s expectations from the business. Ethical

theories focus on doing the right thing for society, and include universal human rights,

environmental sustainability, and the common good (Garriga and Mele´, 2004). Green marketing

has been related to the common good, the tragedy of the commons dilemma (Shultz and

Holbrook, 1999) and to environmental justice (Oyewole, 2001). The corporations can adopt any

of the strategies to become socially responsible. Each of the groups of theories can be related to

firms’ motivations to pursue green marketing strategies and actions, and all four areas are

important to a social system (Garriga and Mele´, 2004).

From the above literature review, it appears that diffusion of innovation theory on corporate

responsibility theories have been overlooked, which could add a valuable perspective to green

marketing. This paper has extended the CSR category of instrumental theories to include

innovation theory (Rogers, 1962/1983/1995). Though integrative theories have been included

which takes into stakeholder management and the common good however, this paper aligns

diffusion theory more closely with instrumental CSR theories, because green marketing is a

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strategic tool, similar to cause marketing. As we know that green marketing involves new

innovations be it products or services, Diffusion of innovation theory shed light on how to

increase the rate of adoption of green products, services, and processes to help companies create

a competitive advantage, and simultaneously help move the world toward greater ecological

sustainability. Diffusion theory explains that how businesses can use their resources in a desired

manner so that they can innovate freely, this theory also explains on how to use the different

innovative strategies under given circumstances

Green Marketing: Developing Marketing Strategies

As the consumers are becoming more environmental conscious businesses need to consider

environmental consequences into consideration while formulating any marketing strategy. Thus

businesses need to formulate their green marketing strategies in accordance with their business

strategies. Environmental policies have been measured as the secondary plans until 1980’s and

were not considered and incorporated in the overall planning process. But nowadays it has

become an essential part of an organization to be socially responsible as it is considered as a key

indicator of determining the market hold of a company. As a result, such a strategic marketing

process must be designed where green marketing acts as an integral part. Figure 1 depicts a

model for doing this. This can be facilitated through following ten steps:

• Step 1. Develop an environmental corporate policy.

This policy should state the company's mission and objectives with regard to the environment

and should allow for environmental considerations to be integrated into all company decisions.

• Step 2. Build environmental leadership at the top level of the organization.

Doing this should communicate a long-term commitment to environmental action.

• Step 3. Hire or develop environmental advocates on the inside.

These people can concentrate on environmental concerns and provide a consistent environmental

voice for the organization. Some companies may even create an entirely new department

dedicated to environmental planning.

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• Step 4. Educate and train all employees on environmental awareness.

From the boardroom to the mailroom, an environmental consciousness must pervade the

organization.

• Step 5. Maintain active dialog with outside environmental groups and government agencies.

It is essential to stay abreast of outside needs and concerns.

• Step 6. Develop an assertive environmental action program.

This program should be integrated into all parts of the strategic planning process.

• Step 7. Integrate all departments to facilitate flexibility in responding to environmental needs.

Doing this may require building bridges between competing interests in the organization.

• Step 8. Allocate adequate resources to show commitment.

This environmental commitment must be demonstrated by provision of money and personnel to

implement the environmental action program effectively.

• Step 9. Through effective advertising and publicity, communicate to customers what you are

doing.

This communication will not only build customer loyalty toward your organization, but also

encourage customers' co-operation in environmental efforts.

• Step 10. Monitor consumer response with an active marketing research program.

The dynamic nature of environmental needs and demands requires constant monitoring along

with flexibility to adapt.

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Figure 1. Strategic Green Marketing Planning Model

As we could depict the importance of green marketing strategies for overall advantage of the

business. Corporations always have to respond to the changes in the external environment, thus

they need to be proactive to such changes which gives them excellent opportunity to gain

competitive excellence.

P1. Businesses need to develop their marketing strategies while taking in account the importance

of green marketing which will not only fulfill their social obligation but it will make them

profitable in the long run.

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Environmental Concerns

Include in Company’s mission and objectives

Analyze government regulatory trends

Analyze Competitor strategies

Analyze government regulatory trends

Forecast Impact of environmental trends on relevant products and markets

Incorporate into strategic marketing plan

Take an assertive approachModify current products/marketsIntroduce new products/markets

Integrate with all organizational elements

Green Marketing: Reactive vs. Proactive strategies:

Whenever a research on general business strategy is conducted it often reflects a dichotomy

between reactive and proactive strategies (Aragon-Correa, 1998). Whenever a business responds

to any changes; be it external or internal environment, it often uses the reactive strategy.

(Sandberg, 2002; Bennett, 1996). These strategies are often kept in place whenever some unusual

reaction takes place in the external environment, the timing of such strategies is quite important.

On the other hand Proactive strategy is being implemented by the businesses before they are

forced to respond to any changes in the external environment, thus creating new opportunities in

the environment. McDaniel and Rylander (1993) proposed two main approaches to green

marketing: the first is a defensive or reactionary approach, and the second is an assertive,

aggressive strategy. This paper utilizes the term reactive to describe the former approach, and

proactive to refer to the latter. A reactive green marketing strategy (also referred to as a

compliance strategy) follows regulations of environmental management (Miles and Covin,

2000), requires limited resources, has a low level of organizational commitment, low

involvement of top management, and a short-term orientation (Menon et al., 1999).

P2. Reactive green marketing strategies are related to: low organizational ecological

commitment and resource allocation and are more likely to develop continuous innovations.

P3. Reactive green marketing strategies can lead to: short-term benefits (e.g. short-run increases

in sales and profits), risks of green washing criticisms, and lower levels of ecological

sustainability.

Green marketing has failed in the recent times due to so many factors thus it has created a space

for more research to be done so that green marketing can be used as an important tool for

businesses to be profitable as well as environment friendly at the same time. According to Peattie

and Crane (2005), green marketing has failed because of five problems. The first two problems

are related to what is often referred to as ‘‘green washing:’’

Peattie and Crane has described Green spinning as a first problem which is manipulation

of green image via publicity and lobbying from ‘‘dirty’’ industries such as oil, chemicals,

pharmaceuticals, and automotives), and

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The second problem has been termed as ‘‘Green selling’’ where firms do a post-hoc

identification of environmental features in existing products, and then opportunistically

promote them sometimes with misleading or unproven green claims.

Green Marketing has also received lot of criticism by the use of ‘‘Green harvesting’’. It

refers to those firms who pursue short-term cost savings by reducing packaging,

increasing energy efficiency, greening their supply chain, using life-cycle pricing

approaches, (Peattie and Crane, 2005), designing products for disassembly and selling

products at premium prices without perceived added value by customers. Most of these

tactics do not address the issue of long-run sustainability.

We know that businesses reflect their owners, when the owners lack the green vision the

green marketing strategies of firms will not be implemented unless its owners are

interested and willing to make it happen. Some firms even fail in the long-term because

of their production orientation with a lack of accurate marketing research and ineffective

marketing communications to educate customers. Or, perhaps these firms were ahead of

their time, and the true era of green marketing may still emerge in the future.

The fifth problem is termed as compliance marketing by which the firms act according to

certain accepted standards to promote their green credentials. This issue has received lot

of criticism from consumers as they see it as a tactic of businesses to show their concern

about the environment; however they are actually meeting the legal standard.

Reactive green marketing strategies require less resources which are less risky and

inexpensive however on the other hand the proactive green marketing strategy requires

greater resources which can be expensive as well as risky at the same time, it also needs high

organizational commitment including an out stated environmental corporate policy which

reflects high levels of top management and employee involvement, and is more long term in

orientation. Whenever a firm is employing its proactive green marketing strategies it takes

into account its customer needs, the other stakeholders of the company, future potential

customers of the business; not only this firms tends to meet all these expectations in a most

innovative manner, thus creating innovative solutions. Firms always employ those strategies

which will enhance their economical sustainability thus the objective of proactive green

marketing strategy would ideally address what is referred to as the ‘‘triple bottom line’’ of

economic, social, and ecological sustainability. Firms who successfully implement these

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proactive green marketing strategies would always be among the firms who have achieved

what is referred to as ‘‘eco-effectiveness.’’ As Chen et al. (2008) noted, ‘‘Eco-effectiveness

aims beyond merely reducing negative environmental impact by ending ecological

degradation. Seeking an ultimate solution for ecological problems, eco-effectiveness

oftentimes requires a shift of mindset and transformation of business models’’ (p. 188).

P4. Proactive green marketing strategies are related to: high organizational ecological

commitment and resource allocation and will create more dynamically continuous and

discontinuous innovations.

Green marketing strategies and degrees of innovation:

Figure 2. Green marketing strategies and degrees of innovation.

Degree of innovation can range from low to medium to high. This paper also explains about the

extent of innovation in terms of continuum of degree of innovation from reactive to proactive

green marketing strategies. Figure 2 explains about the two green marketing strategies and the

degree of innovation involved among them. We can recognize that the degree of innovation is

high in terms of proactive strategies while it is on the lower side in case of reactive strategies.

According to Robertson (1971), degrees of an innovation (e.g. a product, service, or process) can

range from low to medium to high. A low degree innovation is called a continuous innovation

(also known as a ‘‘me-too product’’) which simply makes small changes (such as color, style,

packaging) to an existing product or service. Continuous innovations may easily be imitated by

the competition and can usually only provide short-term advantages (e.g. short-run increases in

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Reactive Green Marketing Strategies Proactive Green Marketing Strategies

Low Involvement High Involvement

Low Degree Medium Degree High Degree

Continuous Dynamically Discontinuous Innovation Innovation Innovation

profits and revenues). Businesses prefer continuous innovations as they are low in risk and are on

a positive side since they require very little or no change in buying behavior. Continuous

innovations are quick to diffuse in the marketplace and can be easily adopted. They are less risky

in the sense that businesses do not abruptly change the product or replace it by new one however

it is a long time development which takes into account the needs and desires of the consumers. It

also analyses the tastes and preferences as consumers tend to change their perceptions from time

to time. An example of a continuous innovation in green marketing is when a firm introduces a

new ‘‘second generation’’ of an existing product which does not need a totally new

manufacturing process, and is a ‘‘green’’ upgrade that can help save more energy, conserve

natural resources, or eliminate waste for business customers. At the medium level, a product or

product category that is in existence, but that provides a new format which changes customer

behavior (e.g. laptops, mobile phones) is a dynamically continuous innovation. The highest level

is a discontinuous innovation (e.g. the internet, space travel for businessmen) which will change

customer behavior the most, and may take decades to diffuse, unless the diffusion characteristics

are positively directed. If a company proactively introduces a radically different manufacturing

process, product, or service that achieves environmental benefits, then it would be a dynamically

continuous or discontinuous innovation. Ka¨rna¨ et al. (2003) asserted that companies can use

innovations related to environmental sustainability to create advantages that can be larger (i.e.

more proactive strategy) than simply following and complying with government regulation (i.e. a

reactive perspective). However businesses always try to be proactive rather than reactive as their

actions are almost neglected by the consumers, for example when a government regulation forces

a company to follow a certain standard and the business uses its reactive strategy, the consumers

feel that the business only became environmental conscious after the legal factors.

P5. Proactive green marketing strategies can lead to: longer-term financial benefits related to

competitive advantage; greater product differentiation and customer brand loyalty; lower costs;

enhanced corporate reputation; higher R&D support; and more ecological sustainability for the

common good.

(Note: P5 is related to the Model in Figure 2 and Table II shown later in the paper.)

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Diffusion of innovation theory research:

Most technological advancements are irregular innovations which require supplier organizations

to be proactive in their strategies. Frambach (1993) declared that technology can be implemented

as a tool to add competitive edge. It is one of the main concerns of this learning to explore how

green marketing strategies of Corporate Social responsibility are related to competitive

advantage in the present world where sustainability is the main focus of most companies.

Diffusion of innovation theory has been applied to technological innovations in many researches

done by Robertson and Gatignon (1986) and Frambach (1993). High JSIT technology is used to

formulate various green marketing innovations; therefore, this paper is a subject of investigating

the function of diffusion of innovation to green marketing strategies. Diffusion of innovation

theory (Rogers, 1995) is applicable in different disciplines, from sociology to business. From

1970’s, diffusion theory has been efficiently utilized in marketing products and services to

personal consumers. Technological advancements and innovations has been concentrated as the

main focus by the most organizations which has entitled massive amount of researches to apply

diffusion theory of marketing in the territory of businesses

Studies have looked at the implementation of: technology by US non-profit hospitals, approval

of an ecologically related regulatory alternative by organizational trade centre members

(Apaiwongse, 1991), and building of successful new products with a completely new technology

(Woodside and Biemans, 2005). Furthermore, the recent trend has showed the research among

the businesses to study the adoption of technology related to the internet: online trading

interactions by small organizations (Quaddus and Hofmeyer, 2007), Technologies to improve

securities within the business to business dealing (Carayannis and Turner, 2006), influence of

supplier on buyers’ online purchasing (Deeter-Schmelz et al., 2001), different e-services from

primary generation to multi-channel solutions (Legner, 2008), online reverse auctions for

business amongst suppliers for dissimilar adopter categories (Schoenherr, 2008), regional e-

market places for small and medium enterprises which are government-supported (Gengatharen

and Standing, 2005), and internet markets where business buyers and sellers perform marketing

and logistics activities (Woodside et al., 2004).

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Elements of Diffusion of innovation theory:

Diffusion of innovation theory in a social system includes the following elements: an innovation,

communicating the innovation, over a period of time, towards social system members. Diffusion

theory includes:

The implementation process: It involves an organization’s buying centre to make a

decision whether to adopt or reject an improvement;

Distinctiveness of the adopter: It may involve the size of the organization, its

arrangement or structure, the level of professionalism in it, the corporate culture among

its members, etc;

Knowhow of the innovation i.e. marketing communications;

The environment in which the organization operates e.g. competition; and

The characteristics of the Diffusion of innovation (Frambach, 1993).

This part of the study in this paper primarily focuses on diffusion of innovation characteristics,

such that their relationship with the aspect of green marketing strategies can be outlined.

Previous research included diffusion characteristics related to the adoption of innovations by

personal consumers (Vaccaro and Cohn, 2007; Vaccaro, 2008). The diffusion of innovation has

five characteristics that influence whether an innovation must be implemented or not in a social

system: relative advantage; observability; compatibility; complexity; and trialability

The degree to which a modernization is alleged as being better than the idea it communicates is

called relative advantage. However, in this paper, relative advantage is defined more generally to

exist when an innovation provides better benefits than the existing products offered by that firm

or the competition. More the relative advantage, the quicker the new innovation will be adopted.

The ease by which the benefits by a product and its attributes are visible and can be

communicated represents the obsevability of a new product or service. Therefore, the new

products or services with higher social visibility diffuse more rapidly. Compatibility represents

the degree of the consistency of a new product or service with the existing customer values and

practices or in other words their tradition (i.e. the more the degree of compatibility, the faster the

adoption). Complexity is defined as the degree of difficulty a new product or a service has to use

it or to understand it. It has an indirect relation with the adoption, i.e., the more complexity

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carried by a product, more time the innovation will take to get adopted. Trialability is the ability

of a new product or service to be tested on a limited basis. The greater the trialability, the faster a

new product or service will be adopted and thus has a direct relationship with the adoption.

P6. Proactive green marketing strategies are most effective when they are related to diffusion of

innovation characteristics in the direction that leads to faster rates of diffusion and adoption.

A number of conceptual models have been proposed on the Green marketing and the competitive

advantage which it provides like Menon andMenon, 1997; Bansal and Roth, 2000 and Menon et

al., 1999. However, on the basis of our study and discussion on reactive and proactive strategies,

this paper frames out a diagrammatic representation of a new model of green marketing

innovation strategies and the competitive advantage that it provides. The studies have been done

on the reactive and proactive strategies earlier under the literature of Green Marketing by various

researchers like Peattie and Crane in 2005 and Miles and Covin in 2000, but this paper reflects

the competitive advantage associated with them and is given a tabular shape of green marketing

model. In addition to this, the model reflects the short term results associated with the reactive

strategies and how proactive strategies afford a competitive advantage through long term benefits

which include more sustainable competitive advantage and environmental sustainability.

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A new model of green marketing innovation and competitive advantage:

Analysis and discussion

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Green Marketing Innovation Strategies Competitive Advantage

Reactive Strategies

-Fulfill Environmental Regulations. Decrease resource outlay and lacking organizational commitment towards environment.

-Continuously developing innovative products that are easily initiated.

-Tactical Green Marketing- e.g. price premiums which may not be perceived as worth the cost to customers; misleading advertisement claims.

-Reactive strategies lead to short term increase in the financial performance;

-Involves risk of criticism from media about green washing;

-Sustainability in the environment and competition can be short-term.

Proactive Strategies

-Make regulations the bench-mark and performing activities beyond them; environment should be related to the corporate mission, objectives, policies, organizational structure, and resources; Top management must be involved in the environmental commitments and the inputs must be imported from the external shareholders.-Continuous innovations must be made which are dynamic and thus stretching the boundaries of the product and the organization.

-Use diffusion of innovation characteristics to help design more effective green marketing strategies in the direction of faster diffusion and adoption.

-Proactive strategies lead to Long term increase in financial performance and allows sustainable advantage;

-Enhances the reputation of an organization; Lower costs; Differentiation and brand loyalty; satisfied stakeholders; environmental sustainability for common good.

Diffusion of innovation characteristics and Proactive green marketing strategies:

Marketing research

Must do an in-depth research on sustainability and obtain the necessary information from the stakeholders on products, communications, pricing, and distribution strategies.Diffusion characteristics: relative advantage, observability, compatibility, complexity, trialability.

Production Need to change production processes in order to be greener and environment friendly.Diffusion characteristics: relative advantage, observability, compatibility and trialability.

Product (a) Products must be recyclable, biodegradable, and are based on sustainable development and also extending these product lines. It will be a competitive advantage.Diffusion characteristics: relative advantage, observability, compatibility, complexity, and trialability.(b) Substitute product rentals instead of ownership of physical goods.

Distribution/ markets

(a) Using different ways of distribution like internet.(b) Creating more circular markets werein products are recycled.(c) Using green products to create new markets or market niches.Diffusion characteristics: relative advantage, observability, complexity, and trialability.

Price (a) Long-term costs of ownership must be considered and short term price like energy efficiency should be used rather.(b) Price incentives like coupons should be offered.(c) The prices of the green innovations should be set lower.Diffusion characteristics: relative advantage, observability, and trialability.

Promotion Green values and benefits must be used to promote the new product by using that media of promotion which is environment friendly like internet, and mobile marketing to increase the compatibility between organizational sellers and buyers.Providing sales incentives to customers and rewarding repeat purchases must be used.Education of green policies and strategies should be communicated to various Stakeholders.Diffusion characteristics: related mainly to observability, but also related to compatibility, complexity, and trialability and relative advantage.

Partnerships ‘‘Eco-alliances’’ should be created with stakeholders for inputs, strategies, and implementation.Diffusion characteristics: relative advantage, observability, and compatibility.

Table 1. Relationship between proactive strategies and the diffusion of innovation characteristics

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Table 1 reflects the relationship between the seven explicit areas of proactive green marketing

strategy and the diffusion of innovation characteristics which depicts the acceptance and

adapting the new innovations like products, services, or processes.

Analysis and Discussion:

This table and the following discussion is according to the various researchers such as Robertson

and Gatignon (1986), Gatignon and Robertson (1991), Rogers (1995), Menon andMenon (1997),

Peattie and Crane (2005) and Miles and Covin (2000). The nalysis and discussion of the afore-

mentioned table according to this research is as follows:

1. Marketing research strategies: The studies must be conducted to obtain inputs on the

strategies of the company and its environmental sustainability issues from outside

stakeholders and it must be related with the diffusion characteristics which are: relative

advantage, observability, compatibility, complexity, and trialability. These researches would

help a company to determine the optimum way of reaching its specific target markets and

would also determine the most effective way of communicating the information about the

green efforts taken or to be taken by the organization to its stakeholders. Therefore, the

researches would help them to educate their stakeholders about greening efforts while

identifying their target markets (Ka rna et al., 2003). In addition to this, it could also be used

to identify customers’ needs before designing new products, and to determine optimum price

and distribution strategies that a company needs to decide upon.

2. Production strategies: Changing all production processes and other activities such that they

will be more environmentally sensitive and will affect the following diffusion characteristics:

relative advantage, observability, compatibility, and trialability. Organizations must involve

green innovations to include in the resources of manufacturing where they need to

concentrate on the production process of a product or a service and the way it is consumed so

as to formulate the processes in an environmentally sustainable way. This could be ensured

by associating through suppliers, manufacturers, retailers, and consumers’ compatible green

values foundation for buying organic food, fair trade materials, parts, and products. On the

other hand, to ensure observability, the potential customers, stakeholders and other external

bodies like media must be involved through factory tours that will help the organization to

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obtain the general awareness in the society and promotional efforts could be taken to attain

media coverage about the new green production strategies undertaken by the organization.

3. Product strategies:

The green products must be created which have a diverse set of advantages and are

recyclable, biodegradable, and based on sustainable development. The product lines can

be extended which will be related to the following diffusion characteristics: relative

advantage, observability, compatibility, complexity, and trialability. Such type of

perception should be developed wherein the green innovations are given the higher

preference in terms of value and acceptance to the existing products which is related to

differential advantage and is known as a ‘‘unique selling proposition’’ in advertising.

Once the consumers try the product or service, the degree of technical performance and

the workmanship must be up-to the mark. In addition to this, the new product or service

should be designed in such a way that it is easier to understand or in other words

possesses as low complexity as possible, is also observed simply by the consumers and

the stakeholders as well and should be easier to consume like sample products should be

available for trial basis or should provide some sort of assurance to the customer like

warranty or guarantee. The innovation should also be compatible with customers’ needs

and values that will in turn increase the value of the company in the society.

Companies should create easy-to-try substitute products or services which are cheaper

than ownership of physical goods This is another green marketing strategy wherein

substitute services or product rentals instead of ownership of physical goods can be

introduced; this strategy will be related to: relative advantage, observability, complexity,

and trialability.

4. Distribution or market strategies:

To create more circular markets wherein materials can flow through product take-back

and recycling,

Using different channels of distribution like internet distribution to make the product

easily findable, simpler to comprehend, and readily available so that the new green

product or service could be tried easily, and

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Green technology transfer can be used to create new market places or niches which will

be related to the following diffusion characteristics: relative advantage, observability,

complexity, and trialability.

5. Price strategies: Use of long term costs of ownership should be emphasized rather than

short-term price e.g. energy efficiency. Price incentives such as quantity and frequency

discounts, coupons, and rebates to increase interest can be offered and it can act as a

promotion. Proactive organizations can use prices of the innovative product or service for

organizational customers to gain the competitive advantage by setting it lower than the

competition and this way their trialability will increase. These price strategies will be related

to the following diffusion characteristics: relative advantage, observability, and trialability.

6. Promotion strategies: whatever businesses do in order to become more environmentally

friendly needs to be addressed to its stakeholders. Here promotional strategies play an

important role, because one needs to choose among the various promotional ways be it print

or electronic media - email, e-newsletters, print materials, webinars, and mobile marketing.

Using marketing communication strategies that rely more on environmentally-friendly new

media will be related to the diffusion characteristic mainly of observability, but also to

compatibility, complexity, and trialability, and relative advantage. After the firms have

taken any eco-friendly initiation, it needs to be observable, i.e. it needs to be promoted

among your stake holders. Promotion not only helps in creating credibility among your

stakeholders but it also helps to create awareness and educate them. With the use of new

technology like internet, it is easy to follow up your customers in most inexpensive and less

time consuming manner. Firms can also use e-CRM and other information systems to

support relationship marketing and loyalty/reward programs in the supply chain. In

designing promotional messages for personal selling and other marketing communications,

firms should demonstrate and clearly explain the reasons and benefits of buying and using

the green innovation, describe how the product is compatible with the customers’ green

values, and market needs, and how it offers a differential advantage to the competition.

Firms can also create easy to use websites so as to create communication sources. They can

also create among the society by organizing events in schools and arrange some debates and

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conferences. Further, if the price of the product or service is initially high, promotional

messages might need to emphasize long-term costs associated with ownership and use rather

than short-term price (e.g. energy efficiency).

7. Partnerships/strategic alliances: Other green marketing strategies could be to create

partnerships (e.g. ‘‘eco-alliances’’) with multiple stakeholders with similar ‘‘green values’’

for input, strategy, and implementation will be related mainly to the following diffusion of

innovation characteristics: relative advantage, observability, and compatibility. One way to

make eco-alliance is that a business can work with its suppliers and channel. They could

involve with them in environmental programs, initiate a awareness campaign among the

society or gaining product endorsements and corporate sponsorships from environmental

groups. This will not only fulfill your obligation but it will also enhance your credibility

among stakeholders. (Stafford and Hartman, 1998; Ka¨rna¨ et al., 2003).

Diffusion characteristics and related competitive advantage in proactive green marketing:

This particular section of the research is related to the final half of the previously presented new

model in Figure 2, and the aforementioned benefits of competitive advantage.

As far as our research is concerned there are four major elements that affect the success or failure

of an innovative idea, which are; the innovation, time, communication channel, and a social

system Diffusion is the process by which an organization/individual's innovation is

communicated through specific channels over a period of time among the members of its overall

social system. If we look at table 2, it shows us the relationship of diffusion of innovation

characteristics to the potential benefits that we are most likely to get as a competitive advantage,

resulting from various proactive green marketing strategies.

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8.

As we have already discussed above in our previous sections, in order for us to speed up our

diffusion process and adoption of our green innovation, we need to follow standardized strategies

and related diffusion characteristics, already discussed above. Applying strategies like Changing

production and processes to be more environmentally sensitive( e.g. observability) or even

obtaining feedback/ inputs from stakeholders on ones product, communication channels,

promotion, and distribution strategies(e.g. trialability), compatibility of our green innovation

with environmental values(e.g. compatibility) as well as having an innovation that is very easy to

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Diffusion Characteristics Potential competitive advantages

Observability

Compatibility

Complexity

Trialability

Relative advantage

1. Enhanced corporate reputation

2. More satisfied stakeholders (suppliers, retailers, customers, general public, stockholders, the media, government, etc.)

3. Greater brand differentiation and brand loyalty

1. Enhanced corporate reputation

2. More satisfied stakeholders

3. Greater brand differentiation and brand loyalty

4. Higher business performance

5. Increased revenues & higher profits; long-term profits

6. First-mover advantage

7. Higher market share and ROI

8. Cost savings and market gains due to differential advantage

9. Increased R & D support

10. Fulfill mission of the organization

11. Greater ecological sustainability for the common good

Table 2. Relationship of Diffusion characteristics to the potential competitive advantage

use(e.g. less complexity). All these diffusion characteristics and related diffusion marketing

strategies can give us the following associated competitive advantage over our competitors:

Increased visibility or even less complexity of an organization's message will give it the

following competitive advantage;

Enhanced corporate reputation for the company and also its alliances.

Greater brand differentiation and brand loyalty.

Organization will have more satisfied stakeholders: Suppliers, customers, employees,

volunteers, government agencies, and media.

The company would enjoy cost savings and market gains due to differential advantage.

Greater ecological sustainability for the common good, for the organization itself and its

stakeholders.

Relative advantage tells us to what extent an innovation would be or is productive, efficient, or

provide an advantage to the organization in some other manner upon existing practices. Since the

diffusion characteristic of relative advantage alone is viewed as synonymous with competitive

advantage, but such is not the case as every good idea does not sell itself, some might be

complex to understand, difficult to be accepted easily by the society or even difficult to

implement. That is why it is also proposed that other diffusion characteristic like observability,

compatibility, complexity, and trialability all contribute to the establishment of relative

advantage. The benefits of competitive advantage such as enhanced corporate reputation, more

satisfied stakeholders, and greater brand differentiation and brand loyalty, we can also see them

in the table above which shows benefits related to diffusion characteristics, the above mentioned

benefits also appear in table 2 as the first set of benefits of relative advantage. It is proposed that

these benefits that we get because of certain diffusion characteristics would then lead ultimately

to the other benefits associated directly with relative advantage of longer-term increased

financial performance (e.g. Increased revenues & higher profits; long-term profits, etc.).First, in

general, studies and experiences have concluded that higher environmental performance leads to

higher business performance. Not only this, Successful green marketing can also lead to

increased revenues and profits, higher market share and ROI as these are few of many benefits

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that an organization gets by going green. Studies that have been done on business-green

relationship, have shown that resource-based environmental strategies with top management and

corporate cultural commitment, which are difficult to imitate helped companies achieve long-

term, more sustainable competitive advantage. Environmental programs can enhance operational

efficiencies, develop new technologies, achieve first-mover competitive advantages, and increase

profits. Companies that implement environment favoring strategy report considerable benefit.

Human resource employees see improved morale in all the employees and a stronger public

image that are the top benefits to an organization. Companies can gain first-mover advantage, in

part by helping shape future regulations. Research has also found higher benefits that an

organization gets in terms of cost savings and market gains due to differential advantage. Other

benefits that follow a successful green marketing strategy can be to help the firm generate

increased support for research and development, and overall, will help the firm to reach to its

mission. The ultimate benefit in implementing a green marketing strategy is environmental

sustainability for the common good of society. This particular benefit can be achieved by an

organization by having proactive green marketing strategies that are maximized in effectiveness

in relation to the diffusion of innovation characteristics to produce the other aforementioned

benefits of competitive advantage.

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Limitations, implications, and future research:

This paper was mainly concerned with introducing green marketing as an effective tool of CSR

to gain competitive advantage. However this study was limited to one main aspect of diffusion

theory: diffusion of innovation characteristics. Future research could expand the application of

other elements of diffusion theory. Also, this study generated six key propositions related to

innovation and green marketing strategies. These propositions, along with the new Model, and

the relationships referred to in Tables I and II, can be tested in future research with Business

firms in case studies and empirical research. There are additional tools of CSR other than green

marketing that can be used by a company to gain competitive advantage which can be stated in

future. This research used only the main characteristics of diffusion theory and in future these

characteristics can be determined and used according to the various environmental traits that will

confine the research to smaller groups and will help to develop strategies to be used according to

these targeted groups. This study found seven areas of green marketing strategies related to five

diffusion of innovation characteristics, which can ultimately produce 11 different benefits of

competitive advantage. In future, other aspects of diffusion theory can also be used to uncover

the areas of innovation and the degree of innovation required to increase the participation of a

company towards society so as to ensure the long term benefits and competitive edge provided

by it.

As the green marketing has gained lot of impetus due to the growing concerns for environment,

so it opens a space for further research in this field. Future research can find some other ways or

more green marketing strategies which can not only fulfill the obligations of businesses but also

make them profitable in the long run. One such research can test other diffusion characteristics

suggested by Gatignon and Robertson (1985, 1991), Frambach (1993), and Robertson and

Gatignon (1986), as well as variables such as organisational psychographics (Robertson and

Wind, 1980). Also, research by Wind et al. (1982) found separate diffusion patterns among

different target markets adopting an industrial innovation. Future research might also test for

differences between market segments with diffusion characteristics and green marketing

strategies. Further, research can also test diffusion characteristics with green marketing strategies

targeting personal consumers with variables such as global consumer values, consumer trust of

marketers, and consumer perceived risk of products and services.

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Conclusion:

Businesses in today's world operate in ever-changing environment be it economically or

ecologically. Nowadays, competition with others firms is not the only purpose, it's also about

surviving in the ever changing market, dynamic environment. Businesses nowadays use green

marketing strategies that they use as an effective tool of corporate social responsibility in order

to get economic, social as well as ecological sustainability. The purpose of this research was to

find out major concepts of green marketing strategies, and how they could be used as an

effective tool for CSR to gain the competitive advantage. The strategies will not only help the

corporations to become greener but it will also meet there bottom line of becoming

economically, socially as well as ecologically sustainable. This research primarily focuses on

diffusion of innovation characteristics, such that their relationship with the aspect of green

marketing strategies. Diffusion theory explains; how businesses can use their resources in an

efficient and desired manner so that they can innovate freely, this theory also explains on how to

use the different innovative strategies under given circumstances. In addition, the study

demonstrates the value of applying diffusion of innovation theory in achieving our green

marketing objectives. We classify these strategies into two major categories – reactive and

proactive – which are part of a continuum that can be related to degrees of innovation. Whenever

a business responds to any changes; be it external or internal environment, it often uses the

reactive strategy. On the other hand Proactive strategy is being implemented by the businesses

before they are forced to respond to any changes in the external environment, thus creating new

opportunities in the environment. Further, a unique model was developed of Business green

marketing innovation strategies and competitive advantage. In the research we found that

organizations which prefer and utilize proactive green marketing strategies related to the

diffusion of innovation characteristics rather than being reactive in approach are more likely to

achieve long-term competitive advantage and produce ecological sustainable goods or provide

services. Proactive green marketing strategies that we will opt for in order to fulfill our goal

should effectively increase the rate of adoption of new products, and services, and processes, so

as to achieve competitive advantage, stakeholders’ satisfaction, and also help the world but

making it a better place to live in.

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