Have the automobile companies; Honda and Renault achieved to deliver their environmental message to their customers?
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Högskolan i Halmstad
Sektionen för Ekonomi och Teknik (SET)
Europaekonom programmet (EUE)
Have the automobile companies;
Honda and Renault achieved to
deliver their environmental message
to their customers?
Halmstad, Augusti 2009
Kandidatuppsats i företagsekonomi
15 högskolepoäng
Författare: Tanja Ometlic 870426
Caroline Smith 850411
Adela Svajda 870726
Handledare: Richard Grönevall
1. ABSTRACT Environment friendly, so called green marketing has become a discussed subject and companies are constantly trying to find the best ways to reach the customers with their green message. A trademark is considered to be able to work as a source of information and risk reducer for customers, which can be a step towards green communication. Customers are becoming more demanding and they have started to pay more attention to the environment. What is important with trademarks is how customers perceive them, what the image of the trademark is. The aim of this study is to find out and compare how two multinational car manufacturers, Honda and Renault, have used their strategic trademark in order to create a “green” image. By green image meaning so called goods that are being perceived as environmental friendly by the customers. The research study took place in Worcester and Birmingham in England, during the spring 2009. A questionnaire was designed in order to find out how people perceive these two trademarks and how aware they are of the “environmental contribution” that is being made by these companies. The question we wanted to find a respond to where “Have the automobile companies Honda and Renault achieved to deliver their environmental message to their customers?” The results from this illustrates that both companies need to increase their communication with the customers, and that attributes like price and quality are more important than “environmental responsibility”. This study is based on only Honda and Renault and has not taken the rest of the automobile industry into consideration.
TABLE OF CONTENTS PAGE
1. Abstract
Contents Page 2
2. Introduction 4
2.1 Key words 6
3. Methodology 8
3.1 Documentary research 9
3.2 Semi structured interviews 9
3.3 Questionnaires 11
3.3.1 The construction of the questionnaires 12
3.4 Selection of respondents 13
3.5 Limitations 13
3.6 Generalizability 14
3.7 Validity and Reliability 15
4. Literature review 17
4.1 Increased revenues and cost reduction 17
4.1.1 Corporate social responsibility (CSR) 19
4.2 The “Win-Win” hypothesis 20
4.3 Greenwashing 21
4.4 Eco-labelling 23
4.5 Generic strategies – the matrix approach 25
4.5.1 Eco-efficiency 26
4.5.2 Beyond compliance leadership 26
4.5.3 Eco-branding 26
4.5.4 Environmental cost leadership 27
5. Honda and Renault 28
5.1 Honda 28
5.1.1 Environmentally friendly automobiles 29
5.2 Renault 31
5.2.1 Environmentally friendly automobiles 32
5.3 Comparison between Honda and Renault 32
6. Results of the Survey 34
Table A 35
Table B 36
Table C 36
Table D 37
Table E 38
Table F1 and F2 38
Table G 39
7. Discussion 40
7.1 The” Win-Win” hypothesis 40
7.2 Greenwashing and Eco-labeling 42
7.3 Strategic approach 43
7.4 Sustainability 46
7.5 Analysis of the questionnaire 46
7.5.1 Renault 47
7.5.2 Honda 48
8. Conclusion 50
9. Further Research 52
10. Reference list 53
10.1 Books 53
10.2 Journals 54
10.3 Electronic resources 56
Appendix 1 58
Appendix 2 59
2. INTRODUCTION
A subject that has been significantly discussed during the past decade by the media,
politicians, by business and industry and the general public is the environmental
friendliness or so called “green marketing”. Much has been brought up about the
environment and the damaging effects produced by everyday activities. Saha and Darton
(2005) are arguing that improving environmental performance, until recently has been a
question of legislative compliance and occasional reactions to external events and
pressures. Nowadays, company decision-makers are increasingly communicating “green”
features about their products and services, expressing green improvements. Some authors
disagree on whether companies are using the “green” term only in an attempt to gain
competitive advantage or if companies really have started to change their ways.
As it is claimed that consumers have become more discerning and place greater
expectations on corporate behavior, the notion of social responsibility has become a key
consideration in all organizational activities. Social responsibility has become an
important aspect of marketing decision-making because companies do not just have a
duty towards shareholders but must act in the best interest of society. It has become to be
an important issue for the organization, where the companies have to take the
environmental questions into consideration, which means the responsibility towards the
environment. However, some authors are arguing that green marketing is nothing more
than a public relation exercise, others are pointing out that it is vital for companies to
incorporate environmental concerns into their strategies if they are going to have a chance
to compete in the market.
In addition, some authors are arguing that customers are becoming more demanding, and
that they have started to pay more attention to the environment. In response to the rising
problems regarding the environment, companies are changing their strategies and
reaching out to their customers by communicating a green message. However, a problem
that has been discussed is that some companies could have communication problems with
their customers in order to deliver their green message out to them. This has been one of
the major motivations to study if the automobiles Honda and Renault achieved to deliver
their green message to their customers, which lead to our question; “Have the automobile
companies Honda and Renault achieved to deliver their environmental message to their
customers?” They are trying to show the world their responsibility towards the
environment by producing automobiles that are less harmful to the environment. It could
be argued that when companies are becoming more environmentally aware and are
starting to take actions towards greener goals, they want to show it to the consumers and
their social responsibility becomes an important part of their marketing decision making.
The aim of this study is to discover if the customers are informed about the green
message that Honda and Renault want to deliver to them. This study is based on different
theories about the “green marketing”, the advantages firms might receive by
incorporation eco-performance into their strategies and their potential to improve
attitudes towards the brand. The environmental friendly strategy of Honda and Renault
will be discussed, which will be based on different theories for example Orsato’s
framework. A questionnaire has been designed in order to understand the customers’
view of the companies’ environmental message. This will be analyzed in the discussion
which will present the findings and finally a conclusion where we present an answer to
the question.
2.1 Key Words
This study presents some key words that are important to explain, which might help the
reader to get a better understanding. Some definitions that this study adapts are the
following:
-Corporate Social Responsibility (CSR)
"A concept whereby companies integrate social and environmental concerns in their
business operations and in their interaction with their stakeholders on a voluntary basis"
(European Commission, 2009). In this study we also call this social responsibility.
-Eco-labelling
This could be argued to be the contrast of Greenwashing, which means that eco-labelling
provide the customer with increased trust and makes the green message less confused,
with the use of authorized symbols, to make it easier for consumers to recognize eco-
labelled products (Charter and Polonsky, 1999 and Basu et. al, 2003).
-Environmental friendliness
This is another word for “Green Marketing” which is about the process of selling
products and services that are based on environmental benefits for each company (Kotler,
2008).
-Greenwashing
This term explain situations where companies adapt green advertising without
environmental emphasis in their strategies (Ahonen, et. Al 2001). This can confuse
customers about the green message in the companies’ advertisement.
-ISO 14001
ISO is short for “International Organization for Standardization” and the ISO 14001 is
one specific standardisation within this organisation. To be able to achieve ISO
qualifications on a product certain characteristics of a product such as quality,
environmental friendliness, safety, reliability, efficiency and interchangeability needs to
be fulfilled (ISO, 2009).
-Sustainability
It means meeting the needs of the present without compromising the ability of future
generations to meet their own needs (Peattie and Charter, 2003).
3. Methodology
According to the research of this study the main focus is on the two chosen companies
Honda and Renault. The aim is to see how the customers understand their goals within
the “green marketing” strategies of these two automobile companies. Jacobsen et. al.
(2002) present different strategies that could be implementing through a research study.
This study is based on the deductive research (Saunders, et al 2007). It means that the
research started with the collection of different theories about green marketing and the
automobile industries, which became limited into different specific theories (see literature
review, chapter 4). Further it limited our study into two automobile companies; Honda
and Renault. The specific question, “Have the automobile companies Honda and Renault
achieved to deliver their environmental message to their customers?” which is the title of
this work, was created in order to see if customers understand the green message of
Honda and Renault. At the end of the study the result is analyzed and confirmed.
An alternative research method is the inductive research (Jacobsen, 2002). The inductive
is the opposite of the deductive research, which means that the aim is to start with an
observation of a specific subject that leads into a theory, which is present at the end as the
result. Nevertheless, Jacobsen (2002) has been arguing that when the researcher wants to
answer different questions the deductive approach might be the most suitable. However,
there is some negative critic about the deductive approach which is that when the
researcher collects the valid data for the study, it is a risk that some relevant data could be
ignored (Jacobsen, 2002). It might not be possible to create a research without
weaknesses, but Saunders (2002) has been arguing that it is important to consider them
through the research.
In addition it could be argued that there are two main methods to adapt during a research
study which are the quantitative and qualitative methods. These can help to resolve the
research problems and it can be suggested that the choice of method is based on the
researcher and research problem.
Suanders et.al. (2007) refer that a qualitative method is a subjective approach that consists
of examining and reflecting on perceptions in order to understand the social and human
activities. In addition, the quantitative methods is seen to be an objective approach that
includes collecting and analyzing of data, often in numerical form, and adapting of
statistical tests and analysis (Saunders, et al 2007).
3.1 Documentary Research
Bryman and Bell (2003) argue that documentary research is about the applying of texts
and documents, which can be in form of journals, reports, videos and other research
sources. According to the documentary research, the main advantages with the
documentary research can be suggested to be that those resources could be used to obtain
information.
In addition, it offers the advantage to reach a wider perspective from a number of
different peoples’ attitudes. However, Denscombre (2007) argues that the documentary
research has some limitations, such as that the date can be unreliable. This method, of
collecting data, has been chosen because the documentary sources can provide relevant
information for this research study. It supports a variety of to obtain information such as
journals, documents, files, reports and books. It can be argued that a high number of
documents about the automobile industries can be found which can help to get a
background about Honda and Renault and inform how they try to be environmental
friendly. Furthermore, a high number of documents about the green marketing strategies
are needed in order to understand the subject and apply them into the automobile
industries.
3.2 Semi Structured Interviews
To reach an inside view of the information, the secondary research has been an important
starting point. A high number of researches in the area of green marketing have been
performed from sources such as books, journals and annual reports. However, the use of
the companies’ annual reports, customer literature and environmental data may not fulfill
the need of providing enough information about companies’ strategy goals. The semi-
structured interviews were thought to be used in order to clarify some questions. Bryman
and Bell (2003) argued that the semi-structured interviews are a profitable solution to
address specific areas of interests. It has been argued to be a form of qualitative research,
which also facilitates detailed and descriptive responses, therefore enabling the
companies’ environmental strategies and motivations for those to be explored in depth.
The idea was to interview managers because they have the best knowledge about the
company’s motives and strategies. The reason behind this thought was that, through the
qualitative research approach reach peoples’ views, feelings and experiences. It has been
argued that in order to reach this information, interviews are more suitable, as
questionnaires should be used when uncontroversial facts is aimed to be gathered
(Denscombe, 2007).
The semi-structured interview was chosen because there would be a list of issues that will
be addressed and questions that would be answered during the interview. When the
interview is structured, it means that the researcher has to decide which elements the
focus would be on. Jacobson (2002) has been suggesting that during a structured
interview, the most important facts might be overlooked and that the main goal with the
qualitative research method could be lost. However, it could in addition be argued that an
interview without structure could lead to that the facts will be complex and difficult to
analyze at the end. This is the reason why semi structured interviews has been chosen.
There will be certain aspects in the interview that would be put in focus, but there will in
addition be the possibility to maintain a high grade of openness.
Even that a plan and the questions were designed, unfortunately it was not possible to
perform these interviews with the marketing department as neither Honda or Renault had
the possibility to answer our questions. The argument was that the marketing department
did not have time and resources to answer private questions because they obtain many of
them daily. It was therefore recommended to visit their homepages instead as the
information that was needed could be found there.
It could therefore be summarized that the first idea of this study was to use a combination
of quantitative and qualitative methods. The idea was to create a semi structured
interview with the managers of Honda and Renault, and then create questionnaires for the
customers of Honda and Renault and compare the answers with those from the interview.
However because of the mentioned circumstance, this study became to be based on the
quantitative approach based on the secondary data about the companies and the theory,
and a primary research based on the questionnaires. An alternative could have been to
interview other administration workers at Honda and Renault, but because this study is
based on the “green marketing” strategies, it was considered that the information would
not have been relevant for this study.
3.3 Questionnaires
It has been considered that the most effective way to find out consumers perceptions
according to Honda and Renault brand would be though a quantitative research using
questionnaires. The cause for this is that the questionnaires for the quantitative research
are designed with the purpose of being operational definitions of concepts that would
reflect attitudes, opinions and views. It has been considered that questionnaires are
attempting to measure how intensely people feel about issues (Silverman, 2002). Peoples’
attitudes, beliefs and opinions are important values as it has been assumed that these
attitudes influence behavior.
The result achieved through the questionnaires, will be used in order to see how well the
respondents know of the green image of Honda and Renault. It is important for this study
as it is based on how well Honda and Renault have achieved to deliver their green
message to their customers. The result will be analyzed and discuss with a connection to
different theories from the literature review.
3.3.1 The construction of the Questionnaires
The literature has pointed out that according to methods that have been used to
assembling quantitative data, there might be one type that is dominating: the
questionnaires with given answer alternatives. There are different sorts of answer
alternatives questionnaires that can be used, and this research study decided to mix those
alternatives. Sapsford (1999) argues that binary questions refers to those questions that
can be answered through the “yes” and “no” alternatives. With the aim to find out
peoples’ opinions and attitudes, it could be considered that information can be acquired
by asking for a rating of perception or attitudes.
The literature has however discussed whether or not to include a “middle category” into
the answer alternatives. This category allows people to choose a neutral answer that could
be classified as “do not know”. Jacobsen (2002) argues that three, five or seven answer
alternatives should be applied if the “middle category” would be included. If the “middle
category” is not considered, it could be seen as that the people are forced to have a certain
opinion and choose a specific side, which has been highly recommended by Sapsford
(1999). This research has been using the five answers alternatives, which follow the
argument of Jacobsen that people might feel neutral about some things and by forcing
them to have an opinion might lead to incorrect answers. This might reduce the risk that
they are forced to choose an opinion which at the end of this research could lead to a
wrong conclusion.
Furthermore, a third alternative that has been applied was the “open - ended” questions.
Silverman (2002) has comment that the information that is gathered through those
“openended” may break the object of the qualitative method that is to gather standardize
information. There is no limitation of each person’s answer. It has been argued that this
type of questions should be used in a situation where it is possible to write down a
significant number of answers, rather than choose only one (Denscombre, 2007).
In this study, these questions were chosen of two reasons. Firstly, they were applied at the
end of some questions to provide the person with the possibility of an open category. This
offered the person’s the possibility to fill in their own alternatives if they felt that the one
presented did not fit for them. Secondly, some answers needed to be more specified,
which was connected into questions where the respondents were asked to justify a
judgment and opinion (See Appendix 1 and 2). According to questions, the study include
different type of questions, which aim was to obtain as honest, truthful and reliable
answers from the people, in order to achieve a high validity and reliability.
3.4 Selection of respondents
The respondents that answered our questionnaires where a mix of men and women of
different ages that where found in Worcester and Birmingham in England where this
study took place. We did not only ask people who where at the Honda and Renault firms
since we thought that those people might have a higher knowledge about the Honda and
Renault automobiles, that is why we as well asked people randomly on the streets and on
trains. When selecting respondents we tried to find people of different ages to get a wider
view on what people knows about the two automobile companies, Honda and Renault
that this study is based on.
3.5 Limitations
It has been discussed that a researcher will find limitations when carrying out an
investigation (Saunders, et al 2007). In this study, few things may be discussed that could
be classified as limitations. Firstly it was time: it may be more interesting to analyze more
companies than two companies to reach more reliable results. However, because of the
short period of time, the focus was set into two companies in order to answer the
question.
Secondly was the limitations found in the methodology part. It was difficult to obtain
primary data, as both Honda and Renault did not have the possibility to answer our
questions. In addition, the consequence was that this was performed only with the
questionnaires and with the use of the secondary data and contrasted in order to avoid
unreliable information. Charter and Polonsky (1999) pointed out that in order to build a
trademark; the organizational culture may be an important feature to consider during a
research study. It has been chosen not to focus on the organizational structure as the study
may get wide according to the time limit for this research study.
A further limitation might be the generalizability, it could be discussed if the 40
questionnaires for each firm were enough to reach generalization. Jacobsen (2002) has
been arguing that it might not be enough, and that this approach can lead to that relevant
data could be gathered but that the chance to generalize is small. However, it could be
specified that the findings in this study should not be generalized to other companies, as
the focus has been on two specific companies, Honda and Renault at a specific time. The
fact that the research only focus on these two firms could be an argument to that the
generalization is small in this study.
3.6 Generalizability
Silverman (2002) argues that in a quantitative research the concern is usually whether the
findings can be generalized beyond the confines of the particular context in which the
research was conducted. Furthermore it has been argued that an important thing is when it
comes to whether or not the answers from few people might be generalized to the whole
population, which is how one can create a representative sample (Silverman, 2002). In
order to achieve a sample that is as representative as possible, the “probability sampling”
was applied. This highly eliminates bias from the selection of a sample by using a process
of random selections.
Jacobsen (2002) argues that if a researchers goal is to find out what people think about a
particular firm, a huge error would be too mainly ask persons that go and buy products in
that particular firm. There is a chance that these people will have a more positive opinion
about that particular firm. In order to achieve a more generalized conclusion, it might be
important to ask people that are not present at the place. To follow this argument, it was
decided to hand out questionnaires until it was collected 40 regarding Honda and 40
regarding Renault that where complete. Those questionnaires were handed out to people
that could be found inside those firms and even randomly to people on the street, trains
and to people of different ages. In an attempt to obtain a generalizable picture of Honda
and Renault the information was gathering from persons that visits those two firms and
from the people that may prefer other trademarks in the automobile industry.
3.7 Validity and Reliability
It has been considered that the main issue with the measurement of validity has to do with
whether a measure of a concept really measures that concept. It has been argued that the
researcher should minimize the personal influence on the objective that has been studied
(Sapsford, 1999). It could be seen as an objective that is being studied, and that this
reality cannot be disturbed by the researcher. The researcher should avoid that the results
of the research would be influenced by the researcher.
Furthermore, Denscombre (2007) has pointed out that a research cannot be completely
free from a “research effect”, which means that the researcher will have some influence
on the results. All forms of investigation mean that some form of personal contact will
occur. Personal contact with research objects is preferred according to Jacobsen (2002).
Jacobsen (2002) points out that nearness is preferred over distance. In this research study,
there was a research design chosen where personal contact was not possible to avoid,
which mean that it could be argued whether or not the answers were influenced by the
researcher.
It has been considered that if a researcher makes an investigation through questionnaires,
it is preferred to make it face-to-face than to send them by e-mail or post (Saunders, et al,
2007). These authors are basing their arguments on the fact that there will be some degree
of “research effect” in every study, even if the researcher is not in contact with the
research objects. The distance can lead to a large gap between the researcher and the
research object which in addition can lead to that the researcher loose the change to go
deeper into the individual’s perceptions and interpretations. It can be argued by some
academics that the close relationship with the persons that were given the questions may
have influenced their answers. However, Jacobsen (2002) considers that as long as the
researcher is into the relation with carefulness and without expressing its own opinions,
this way is to be preferred, as it can influence the individuals with the opportunity to ask
questions if there is something that they do not understand. In addition, Jacobsen (2002)
pointed out that personal contact can lead to more honest answers, and that the researcher
will know who is answering the questions. According to this arguments it could be
suggests that the validity of this research study is high. There were some people that were
interested in the research subject and wanted to know more about it. However, the
researchers tried to hold the answers neutral so the “research effect” would be minimized,
meaning that no personal opinions and feeling were expressed of the subject which may
have been able to lead to different answers.
Sapsfors (1999) has considered that when the validity is high it could influence and result
in high reliability. According to the reliability it could be argued that the measurement
could be influenced by the time. If the same measurements would be performed in the
future, it could be argued that the answers may not be the same. There is a chance that
Honda and Renault in the future change their marketing strategy and their communication
with the customers that can lead to that consumers change their perceptions about the
firms, and their answers could in addition be different.
4. LITERATURE REVIEW
Shrivastva argued in 1994 that even though few studies have empirically verified the
trend, environmental associations seem to have become a generally accepted way of
enhancing brand equity. Thirteen years later May et. al, 2007, still agree with Shrivastva
on the argument that few studies have proven that environmental association really
enhance brand equity but they state that people are showing greater concern towards the
environment then they used to a few years ago. As the concern about environmental
deterioration has increased, much has been published on the advantages of including
environmental information in marketing strategies (May et. al, 2007). For marketing, the
challenge is twofold. In the short term, ecological and social issues have become
significant external influences on companies and the markets within which they operate.
Companies have to react to changing customer needs, new regulations and a new social
trend which reflects increasing concern about the environmental impacts of business. In
the longer term, the pursuit of sustainability will demand fundamental changes to the
management paradigm which underpins marketing and other business functions
(Shrivastava, 1994).
4.1 Increased Revenues and Cost reduction
New forms of corporate behavior and relationships with internal and external
stakeholders have started to emerge. Nowadays companies are finding themselves
responding to controversies caused not by their wrongdoing or negligence but by
society’s changing expectations (May et. al, 2007). Much has been made of the potential
of good eco–performance to generate competitive advantage (Elkington, 1994; Porter and
Van der Linde, 1995). In a wide range of markets companies have used eco-performance
as a basis from which to compete. Porter and Van der Linde (1995), argues that the search
for environmentally superior solutions leads to innovation and the creation of more
efficient and effective technologies. Varadajan (1992) termed this as “enviropreneurial
marketing”, stating that environmental legislation sets new challenges for companies,
which promotes them to be innovative and secure improvements in competitive as well as
environmental performance.
Peattie and Charter (2003) are some of the authors who believe that sustainability is the
keystone of the green marketing philosophy. 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. The conventional wisdom
concerning environmental protection is that it comes at an additional cost imposed on
firms, which may erode their global competitiveness (Ambec and Lanoine, 2008). This
argument is supported by Walley and Whitehead (1994), who argue that it is difficult in
practice to achieve and sustain competitive advantage from good eco-performance. Their
argument is based on the belief that customers are difficult to convince and that the media
have often been more critical of those companies attempting to improve their eco-
performance and capitalize on it, than of the most polluting and wasteful companies.
Despite this, it is clear that poor eco-performance can put a company at a massive
competitive disadvantage. It could be argued that the issue whether it pays to be green is
complex and costly to address.
Friedman (1970), states that environmental concerns divert managers from their main
responsibility, which should be the maximization of profit. This argument has been
challenged by analysts during the last decade who argue that there are many ways that
improving a company’s environmental performance can lead to better economic and
financial performance, and not necessarily to an increase in cost. It could be argued that
the expenses associated whit reducing pollution can be compensated by gains made
elsewhere. To be systematic, both sides of the balance sheet should be viewed: increased
revenues and reduced costs.
Better environmental performance may facilitate access to certain markets. Kotler (2008)
is pointing out that the demand for environmental products is increasing and in order to
be able to compete successfully the companies must provide the customers with what
they are demanding. Peattie and Charter (2003), argue that environmental association can
add value to a product and brand which might lead to customer loyalty. The argument
against this statement is that no strong empirical evidence has been found that customers
are influenced by a company’s “green” image (Ambec and Lanoie, 2008). This statement
is supported by the study of Montoro-Rios et. al (2008), showing that environmental
associations are not very useful when it comes to improving attitudes and purchase
intentions. It is argued in the literature that both governments and private firms have
started to pay more attention to their suppliers’ environmental performance. Peattie and
Charter (2003) point out that greening is forcing many companies to reconsider supplier
relationships since their total environmental impact will be strongly influenced earlier in
the supply chain. Companies are monitoring and trying to improve their suppliers’ eco-
performance. May et. al (2007) discuss a phenomenon called green public purchasing
(GPP). Whit this statement they argue that environmental performance of suppliers have
become a crucial criterion when public administrations choose their suppliers. This might
indicate that firms selling to governments or other businesses can gain better access to
certain markets by improving their environmental performance.
Although good eco-performance in some cases may be associated with investment and
increased costs, analysts are trying to demonstrate that it actually can provide
opportunities for cost advantages. Lankoski (2006), point out that less pollution will lead
to lower liability costs by avoiding potentially costly litigation and fines. Investments
using a more radical, clean technology approach are being shown to be capable of
reducing material and energy inputs, and cutting inefficient pollution and waste (Porter
and Van der Linde, 1995). This argument is supported by his study where it was
investigated 181 waste reduction projects and only one led to a net cost increase.
4.1.1 Corporate social responsibility (CSR)
According to Cheney et. al (2007), corporations need to include the natural environment
as a central consideration in their strategies as they are responsive to multiple
stakeholders, which pressure companies to become greener. This approach is being
referred to as: corporate social responsibility, CSR. Even if some analysts are skeptical to
the whole idea with green marketing and its ability to provide companies with
competitive advantages, others argue that green will be a core requirement for doing
business in the future.
Corporate social responsibility is a form of corporate self-regulation integrated into a
business model. The aim with the CSR policy is that it would be a, self-regulating device
within the firm where they could ensure that they follow the law, ethical standards, and
international norms (Fisher and Lovell, 2006). There are three different reasons for a
company to engage in CSR, one is the unselfish reason, where the firm see itself as
having a responsibility towards the society and its different parts. Another reason is the
ethical, where CSR can be seen as moral act. An additional reason is the strategically
decision to use CSR, where the main interest lays in using it as a tool to achieve success.
According to Porter and Kramer (2006) a firm can achieve some competitive advantages
from using CSR and they should find its own position where they can operate in order to
tactically take advantage of CSR in the best possible way for their own interests of the
firm.
4.2 The win-win hypothesis
A debate has been going on between analysts “whether it pays to be green”. Whilst green
issues have certainly become a political and legal issue, as well as a social concern, the
majority of academics now recognize investment in the environment as a business
opportunity rather than an external threat.
Eco-collaboration between businesses and advocacy groups involved what has become to
be known as win-win environmentalism. In this model, sustainable development is
fostered by greening corporations through market incentives (Livesey, 1999). Waddell
(2000), states that environmentally responsible behaviour improves the company image
and benefits the corporate bottom line through the development of innovative products
and processes that reduce costs, increase productivity, or offer other competitive
advantages in the marketplace. Leopold stated in 1949, that sustainability could be
developed only when humans begin to understand themselves as a part of, rather than
apart from, nature. The literature describes sustainability as a concept where the quality of
human life is improved while the diversity and vitality of the earth is conserved.
According to the “win-win” hypothesis there are extensive opportunities for business to
profit from environmental investments (Orsato, 2006). Reinhardt, (1999) is stating that
environmental policy needs to be based in the economic fundamentals of the business, the
structure of the industry in which the business operates, its position within that structure,
and its organizational capabilities. Many academics agree with this statement, with the
argument that such circumstances might lead to competitive and sustainable advantages.
This positive view of the relationship between business and the environment is called
“win-win” hypothesis, a situation that will favor both public benefits and corporate
profits. (Orsato, 2006).
Walley and Whitehead (1994), on the other hand are skeptical to the idea of “win-win”
situations. They argue that win-win situations are very rare, and although they might
occur the financial return is likely to be negative because of the investment amount for
regulation compliance. Academics like Cox (2004), agree on this statement, explaining
that win-win situations are rare in business. Some relationships or situations appear to be
successful, sometimes because they are sustained over long periods of time. However
Cox (2004) argues that closer examinations may demonstrate that the parties are not
really achieving what would be regarded as winning outcomes.
4.3 Greenwashing
The world is facing enormous environmental problems and challenges. A national
Cone/Roper survey showed that many people are convinced that businesses should play a
major role in confronting these issues (May et. al, 2007). It is obvious that many people
are expecting companies to promote corporate images that reflect their environmental
awareness and involvement. Waddell (2000), points out that more marketers are making
environmental claims about their products. This might be because they recognize that
environmental responsibility is a potential source of marketing advantage. Marketers can
transform this crisis into an opportunity. Some of the literature suggests why firms might
increase their use of green marketing. Polonsky (1994), for example, states that
organizations perceive green marketing to be an opportunity to achieve their objectives,
and they believe they have a moral obligation to be more socially responsible. Ottman
(1993), discusses that firms, that use green marketing must ensure that their activities do
not mislead consumers, and do not break any of the regulations or laws dealing with
environmental marketing.
Peattie and Charter (2003) argue that in order to practice green marketing policies, a
company’s whole structure must be integrated. Companies must give their customers
information on how they are incorporating environmental values into manufacturing
processes, products and the corporate culture.
Literature is implying that customers easily can get skeptical towards a company’s
intentions. Greenwashing is a term that is used to explain situations where companies use
green advertising without environmental emphasis in their strategies (Ahonen et. al,
2001). Greenwashing is the misuse of the principles of environmental marketing and
means that consumers cannot trust the content of advertisements. It makes one suspicious
if companies really are green or if they are just pretending to be. It is important that
companies recognize their responsibility and move towards a more sustainable approach,
but it is also crucial for them to demonstrate a genuine environmental commitment. Saha
and Darnton (2005), point out that many companies would like to see themselves as being
“green”, but the opinion of what is considered to be “green” vary among businesses and
individuals. Academics like Polonsky (1994), and Welford (1995) argue that in order for
a company to use a green advertising approach they have to be aware of all the activities
that green marketing incorporates, like product modification, changes in the production
process and packaging changes. There are many issues that green marketers have to deal
with, in order to be able to incorporate green advertising or promotion into their
strategies. Competitive advantage based on environmental friendliness requires
integrating environmental perspectives into all aspects of marketing planning; especially
marketing strategies but also structures and functions. One method that companies can
use in order to communicate environmental friendliness of a company or product is to
include “eco-labels” in their advertisements.
4.4 Eco-labelling
Even if little scientific literature examine which impact environmental information has on
the formation of new attitudes towards products or brands many companies seem to strive
for competitive advantage by including environmental information in their promotions.
Ginsberg and Bloom, (2004) argue that green marketing has not lived up to the hopes and
dreams of many managers and activists. Their investigation has revealed that customers
would not sacrifice their needs or desires just to be green. When customers have to
choose between product attributes or helping the environment, the environment almost
never wins. Analysts argue that green products have been hurt by the perception that such
products are of lower quality or that they do not deliver on their environmental promises.
The literature implies that customers easily can become skeptical towards a company’s
intentions. Some firms can claim that they are “green” without actually incorporating
environmental concerns into their strategies. Something that is considered as trustworthy
in respect to the environment according to Charter and Polonsky (1999) is eco-labelling
of a product. It is working in the sense that an independent share puts up demands after a
certain criteria for environmental friendliness that the product has to fulfill. This can
provide the customer with increased trust and make the message less confusing.
Environmental marking has become standard in green marketing and green trademarks.
Kotler (2008) is discussing the importance of environmental marking when it comes to
green marketing. Kotler (2008) points out that environmental marking has become one of
the most legitimated types of information for an environmentally adjusted product, and
that environmental marking is viewed as one of the most important tools in order to
inspire purchase and consumption of green products.
Charter and Polonsky (1999) are stating that many companies nowadays are trying to
improve their brands by associating themselves with green images. Montoro-Rios et. al
(2008) agree with Charter and Polonsky (1999) on this statement and are also pointing
out that much has been published lately on the advantages of including environmental
information in marketing strategies. Kotler (2008) is discussing that the demand for
environmental products is increasing and in order to be able to compete successfully on
the market a company must give customers what they are demanding. Ginsberg and
Bloom (2004) on the other hand do not agree with this statement. They believe that even
though public opinions often declare that customers would prefer green products over less
green products this is not completely true. Customers almost never choose environment in
front of other concerns like product attributes and price. Ginsberg and Bloom (2004) also
argues that many people perceive green product as being of lower quality and that they
are not delivering the environmental promise. Not many customers are ready to sacrifice
their needs in order to become green.
Basu et. al (2003) are some of the academics who believe that eco-labeling can provide a
market-based solution to the under consumption of eco-friendly products. Many
proponents argue that certification for eco-labels necessarily will improve firm-level
operations and thereby improve global ecosystem health (Swallow et. al, 2000). Eco-
labelling seems to have become a popular way to provide information to customers about
a product which is characterized by improved environmental performance and efficiency
compared with similar products. Results have showed that the awareness of national eco-
labels has increased drastically, and surveys in developing countries have showed that
customers are willing to pay higher prices for environmentally friendly products (Basu et.
al, 2003). Ginsberg and Bloom (2004) discuss that customers are willing to pay a
premium for organic food, but that customers in general are unlikely to compromise on
traditional product attributes, such as price, quality and performance in order to be green.
It is not easy for companies to learn how to handle the dilemmas associated with green
marketing and there is no single green marketing strategy that is right for every company.
In the absence of eco-labeling, consumers are unable to distinguish products that are
made via eco-unfriendly methods from eco-friendly ones. The primer purpose of eco-
labeling is to help customers make consumption decisions by providing them with
product information (Basu et. al, 2003).
4.5 Generic strategies – the matrix approach
How firms compete and what strategies they choose are important questions for the
economy. The answers to these questions help explain individual firms’ successful and
unsuccessful competitive moves and the causes of better and worse performance. Given
the importance of competition, an important part of the literature has focused on the
identification of the most successful competitive strategies that firms pursue.
Porter’s model is a well known framework within the literature that is used to understand
the broader relationship between green and competitiveness, emphasizing the
opportunities for converting external environmental costs into internal cost savings
(Porter and Van der Linde, 1995).
Figure 1: Generic Competitive Environmental Strategies
(Source: Orsato, 2006)
4.5.1 Eco-efficiency
Porter states that productivity is the key element for companies to gain competitiveness
(Porter, 1990). Porter and Van der Linde (1995), argue in their work that waste consists
of an inefficient use of resources and therefore should companies promote resource
productivity in the form of material savings, increases in process yields, and better
utilization of by-products. By focusing on the environmental impact of organizational
processes, it could present an opportunity to enhance resource efficiency and therefore
reduce costs. Firms that are aiming to reduce the cost and the environmental impact of
organizational processes should focus this strategy.
4.5.2 Beyond Compliance Leadership
Apart from increasing the efficiency of the organizational process, some companies want
customers and the general public to become aware of their efforts. The communication of
a firm’s environmental effort may work as a tool of differentiation and produce some
positive outcomes for the firm. Companies can adopt an Environmental Management
System (EMS), which can help them monitor and improve their environmental impact
(Nash and Ehrenfeld, 1997). By communicating their environmental approach, a
company might enhance their public image and corporate reputation.
4.5.3 Eco-branding
By using this strategy firms are trying to differentiate themselves based on the
environmental attributes of the product. Porter (1985) states that a firm can differentiate
itself by providing something unique that is valuable to buyers beyond simply offering a
low price. Reinhardt (1998), point out that in order for companies to gain competitive
advantage through eco-branding three requisites need to be fulfilled:
- Customers must be willing to pay for the cost of ecological differentiation
-Reliable information about the product’s environmental performance must be available
to the customers
-The differentiation should be difficult to imitate by competitors
By using eco-labeling the company can provide the customers with information and the
message might be more trustworthy.
4.5.4 Environmental Cost Leadership
If “being green” costs more, as some analysts’ state, a differentiation strategy may be the
only way for the company to pay off ecological investments. Orsato (2006) argues that
this is a suitable strategy when customers are willing to pay a price premium for the
environmental friendly product. Even though this approach may lead to success when
niche markets addressed, but it could be asked if this strategy can be used in industries
where companies compete on price?
5. HONDA AND RENAULT
This chapter starts with a short background about what Honda and Renault are, with
information about their history and what kind of products that can be found within those
firms. Further their connection to green marketing. As examples on green marketing the
firms are having, different products will be discussed that are seen to be their steps into
greener marketing.
Both Honda and Renault are part of the automobile industry which is a big market with
approximately 806 million automobiles and trucks in 2007 on the roads around the world,
and the amount of automobiles in the world is growing fast (Plunkett Research Ltd,
2009).
5.1 Honda
Honda is a Japanese vehicle manufacturer which was established in 1946 by Soichiro
Honda, and is one of the leading producers of automobiles in the world and the largest
manufacturer of motorcycles. During the 1950s Honda became one of the leading
motorcycle manufacturers in the world, the year 1967 they began produce automobiles.
Apart from automobiles Honda also makes engines for light business jets as well as
automobile fuel cells which are good for the environment, Honda even manufacturers
ASIMO which is humanoid robots. The revenues of the Honda company was the
financial year of 2008 over 105,384 million US dollars (Datamonitor, 2009).
Honda started as a local company with a global vision, but nowadays the company is a
global actor in the automobile industry with a local vision. The company have about
130 000 employees in over 40 countries around the world nevertheless Honda operates
primarily in the US and Japan, but their headquarters is situated in Tokyo, Japan. They
have four business divisions in the company which are the automobile business,
motorcycle business, financial services and power products and other businesses
(Datamonitor, 2009). However, this study has a focus on only the automobile part of the
Honda Company.
One of the most important foundations in the Honda Company is their philosophy that the
products and way of production shall have the lowest possible effect on the environment.
The official slogan of Honda is ‘The power of dreams’, but it has never been used to sell
the products since Mr Honda is believing that well built product will sell themselves
(World.honda.com, 2009).
The automobile division within the Honda company manufacturers’ passenger cars, multi
wagons, minivans, sports utility vehicle, sports coupe and mini vehicles; they also have
alternative fuel-power vehicles that they offer, such as natural gas, ethanol and fuel cell
vehicles. Shows they think about the environment and are already producing some
environmentally friendlier cars (Honda.co.uk, 2009).
Honda is according to their webpage keen on providing safety to everyone with a high
focus on innovative technology, which they believe is good for the customer relations and
a competitive strength. An aim for Honda is to be an environmental leader in the
automobile industry through environmental technology.
5.1.1 Environmentally friendly automobiles
The mission of Honda according to their webpage is to maintain a global viewpoint and
to offer products of the highest quality at a reasonable price for customers worldwide, and
they want their products to minimize their environmental damage. When Honda
introduced a 4-stroke marine engine to the U.S. in 1973 it can be seen as their first step
into their environmental mission statement, which guides their approach to become to be
the environmental leader. The 4-stroke marine engine was seen to be a cleaner, quieter
and more fuel efficient engine than the former ones when it was introduced on the
market. With this engine it illustrates that Honda is on the path to minimize their
environmental damage and become a greener company.
According to Hondas own webpage they are always thinking ahead, and state that they
have made hybrid automobiles accessible to everyone, while other manufacturers are still
at the prototype stage. They say it is because they have focused on developing low
emission vehicles in environmentally-friendly ways since they started producing cars.
Further what is said on the webpage is that Honda is applying the environmental thinking
to everything they do within the company (Honda.co.uk, 2009). Honda was the first
automobile manufacturer to offer a mass-production hybrid model for the U.S. and
Europe (Honda.com, 2009).
Honda’s major manufacturer plants worldwide already meet the international
environmental management standards ISO 14001, (Simon, 2009), which means they are
covering a host of environmental areas, such as waste disposal, water treatment and
energy use.
The company has a strong market position by being one of the greenest automobile
manufacturers since they have won different prices for it (US News, 2009). On the
greenercars.org (2009) webpage they listed the twelve greenest automobiles year 2009
and Honda had three vehicles on the list, they got number one, three and number nine.
One of their top ranked automobiles was the Honda Civic Hybrid which have been rated
on the “Advanced Technology Partial-Zero-Emission Vehicle” which is the most strict
emission standard achieved by a gasoline-powered vehicle in the U.S.
The year 2006 the Honda Civic Hybrid won the prestigious price ”World Car of the Year
Award ’for Greenest Car’” it was voted winner from a jury containing of 46 international
motor journalists, who voted the Honda Civic Hybrid the eco-car of the year. (Honda.se,
2009) Even the year 2004 Honda received a price for “Greenest Automaker Award” from
the Union of Concerned Scientists. The prices they have won for being environmentally
friendly has put Honda in a good position to be the most environmentally responsible
automaker (Industrial Engineer, 2005).
For the future an opportunity for Honda could be the increasing demand for hybrid and
electric vehicles, which they offer to the market. The increased demand on more
environmentally friendly automobiles is linked with the increased demand on greener
products from customers (world.honda.com, 2009).
5.2 Renault
Renault is one of Europe’s leading automobile manufacturers with its headquarters
situated in Boulogne-Billancourt in France. The Renault Company was founded by the
brothers Louis, Marcel and Fernand Renault, who called the company Renault Freres, the
Renault brothers. They produced their first automobile in 1899, and by the year 1905 the
firm were in mass production. In 1945 the French government nationalized the company
and named it, Renault. Later the French government reduced its shares in the company
and by the year 1981 they had 46% of the shares.
The Renault company develop, design, manufactures and market light passenger vehicles
around the world and they have industrial commercial presence in over 118 countries
(Datamonitor, 2009). The revenues of the Renault company was the financial year of
2007 over 55,764 million US dollars.
Renault is a company that also have shares in other vehicle companies, and since 1999
Renault and Nissan have an alliance together. A strategic management company, Renault-
Nissan was founded to define a common strategy and manage synergies. It was created in
the Netherlands under Dutch law and is jointly and equally owned by Nissan and Renault
(Renault.co.uk, 2009). Renault had in year 2002 44.4% stakes in Nissan and Nissan had
15% in Renault, which is the basis of the strategic alliance between them. The alliance
made Renault Nissan the fifth largest vehicle manufacturer in the world (Renault.com/fr,
2009). Renault has as well stakes and owns the Romanian automaker, automobile Danica.
Moreover Renault has 20% in the Swedish company Volvo AB. In addition, Renault also
had an acquisition with the Korean manufacturer, Samsung Motors which they now own.
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