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VOLUME NO. 5 (2015), ISSUE NO. 08 (AUGUST) ISSN 2231-5756 A Monthly Double-Blind Peer Reviewed (Refereed/Juried) Open Access International e-Journal - Included in the International Serial Directories http://ijrcm.org.in/ Page 39 ASST. PROFESSOR UNITED INSTITUTE OF MANAGEMENT GREATER NOIDA |
SEGMENTATION STUDIES FOR GREEN MARKETING AND THEIR LIMITATIONS
ABSTRACT
Sustainable business practices emerge as a definitive market
differentiator given the large market gains accruing to such companies. There
is steady increase in the public's interest in, and willingness to act on
sustainability, both as citizens and as consumers. Green products and campaigns
can be an effective marketing tool when attracting customers; however,
different segments of green consumers may react differently to these products
and messages. The present article explores the results of various researches
done on different variables of segmentation and their implications for green
marketing. Segmentation approaches on the basis of demographic, socioeconomic
as well geographic variables have proved to be futile. Psychographic
segmentation seems to be more appropriate and has been recommended by many in
academics, but, it only delivers part of the truth.
KEYWORDS
demographic, green-marketing, psychographic, segmentation,
socioeconomic.
INTRODUCTION
Market segmentation is grouping
of potential customers with similar needs or characteristics who are likely to
exhibit similar purchase behaviour. Market segmentation is a marketing strategy
which involves dividing a broad target market into subsets of consumers,
businesses, or countries who areperceived to have, common needs, interests, and
priorities, and then designing and implementing strategies to target them.
Market Segmentation is the key to making better marketing decisions, building
better marketing strategy and competitive advantage. Market segmentation
strategies are generally used to identify and further define the target
customers, and provide supporting data for marketing plan elements such as
positioning to achieve certain marketing plan objectives. Businesses may
develop product differentiation
strategies, or an undifferentiated approach, involving specific products or
product lines depending on the specific demand and attributes of the target
segment. Market segmentation is the most powerful tool available for generating
strategic marketing advantage.
As green markets continue to
exist in a somewhat infantile state of development further research is needed
to see if there is an existence of clearly defined green consumer segments.
Green products and campaigns can be an effective marketing tool when attracting
customers; however, different segments of green consumers may react differently
to these products and messages. Improving the understanding of green consumer
segments and developing their profiles becomes increasingly important in
effective targeting. For many companies the segmentation process has even
become a vital part in creating a sound marketing strategy when positioning
their products (Peter and Olson, 2004).
LITERATURE REVIEW
But some researchers argue that
we are wasting our time even discussing green consumers because being green is
not a fixed characteristic of a consumer. The same consumer may choose a green
product in one situation but not another. Further it has been found that
language can be a very effective means to reach people already persuaded of a
subject’s importance, but can actually decrease compliance among those people for
whom the importance is not clear. This makes targeting these consumers an often
frightful task as green buying behavior hinges on more than the characteristics
of the consumer (Rex & Baumann, 2006).
The language we use in messaging
is frequently assertive, reflecting that assumption. But that may not be the
most effective way to get our target audience to take action. In the January
2012 edition of the Journal of Marketing, Ann Kronrod, Amir Grinstein, and Luc
Wathieu say that it depends entirely on the target audience. Their research-
“Go Green! Should Environmental Messages Be So Assertive”, shows that
imperative language can be a very effective means to reach people already
persuaded of a subject’s importance, but can actually decrease compliance among
those people for whom the importance is not clear.
This is particularly interesting
given that this same team reports that in an examination of real slogans from
http://www.ThinkSlogans.com, environmental slogans were nearly three times more
often assertive than a random mix of slogans for consumer goods (57% vs. 19%).
Examples used of such imperative messaging included Greenpeace’s “Stop the
catastrophe” and Denver Water’s “Use only what you need.”
According to Kronrod et al, “The
drawbacks in assertive phrasing have been extensively documented by researchers
in communications, consumer behavior, and psycholinguistics. The overwhelming
evidence accumulated thus far is that assertiveness interacts with consumers’
drive for freedom in a counter persuasive manner.” Nobody wants to be told what
to do unless they already intend to do it. This brings us to the flip side of
these findings. For an audience that is already committed to the importance of
an issue, softer language can be irritating, as the message is perceived to be
out of line with the urgency felt.
STATEMENT OF PROBLEM
In other words, communication in
environmental and social justice messaging can do more harm than good,
depending on who is on the receiving end. It is critical to align language to
the perception of the particular segment in order to be effective. Thus, in
order to have effective messages or otherwise we need to have a deeper
understanding of green-market segments.
OBJECTIVES
In past decades, attempts of
learning more about green consumers were done via various methods of market
segmentation. The following are the main
objectives of the study:
a. To investigate the different
green market segments available.
b. To understand how effective
the previous attempts at segmenting the green consumers have been
FINDINGS AND DISCUSSIONS
DEMOGRAPHIC SEGMENTATION
There are number of studies made
in the past to research on the demographic characteristic toward buying green
energy. Fuches & Arentsen (2002) have made a good client analysis based on
demographic of the general customers segments which may have potential to buy
green electricity. They have divided these target groups in to four main
groups. The study of consumers’ demographic helps the investors to understand
the market trend and consumer behavior based on age, gender, income and
education which could affect the consumer decision to buy green electricity
(Robert, 1999). Jain & Kaur (2006) studied behaviour of the demographic
attributes of 206 Indian green customers, based on age, gender, education, type
of school studied, occupation and income. Parker et al. (2003) studied
demographic characteristics of Canadian green consumers based on age, gender,
income and education, in the scenario of restructured electricity market.
Diamantopoulos et al. (2003) studied the demographic of British consumers to
study their green behaviour. The demographic characteristics they used for the
study were gender, marital status, age, number of children, educational level
and social class. Mainieri et al. (1997) studied the influence of environmental
concerns on the behaviour of American consumers’ by studying their demographic
characteristics. The above mentioned researchers studied the impacts of
demographic characteristics in awareness and knowledge of environment
protection, that how this knowledge can influence the purchasing decisions of
green consumers.
AGE: The variable ‘age’ has especially been discussed extensively
(e.g. D’Souza et al., 2006; Jain and Kaur, 2006; Roberts, 1996; Samdahl and
Robertson, 1989). Yet it remains questionable how relevant this variable is
when trying to distinguish regular consumers from green consumers (do Paco et
al., 2009).
There are number of theories that
support the argument that younger are more concern towards green energy,
especially those who are grown up in environment where green energy was a
salient feature are more conscious to this issue (Robert, 1999). Younger people
are more interested to pay more for green electricity as compare to older.
Older age 55-65 years, are willing to pay less amount $3.33 (per month) for
green energy, similarly older than 65 years can pay less amount $6.79 for green
energy Zarnikau (2003). Jain & Kaur (2006) found that the audiences
belonging to age group of 18-35 years are more aware of environment protection
and friendliness. Similarly Parker et al. (2003) reveals that the consumers of
young ages play a vital role in choice of green products while purchasing and
the people of young age are enthusiastic and willing to change their existing
electricity supplier with a supplier who provides green energy. On the other
hand Diamantopoulos et al. (2003) and Mainieri et al. (2010) states that age
plays no significant role in awareness of environmental issues and in consumers’
choice of green products.
While some academics such as
Kinnear et al. (1974) and McEvoy (1972) argue that there is no significant
association between age and environmental behavior, others have found a
significant negative correlation (Van
Liere and Dunlap, 1981; Zimmer et al., 1994) as well as a confirmed positive
relationship between the two items (Diamantopoulos et al., 2003; Roberts, 1996;
Samdahl and Robertson, 1989). Despite these mixed results, the overall tendency
according to Straughan and Roberts (1999, p.559) has been that “younger
individuals are likely to be more sensitive to environmental issues”.
GENDER: The variable ‘sex’ has also been thoroughly investigated.
Theoretically, it has been argued that women are supposed to be more
environmentally concerned than men, as they consider the effect of their
actions on others more cautiously (Eagly, 1987). In practice, the findings have
been equivocal once again. A number of studies found no significant association
between gender and participation in environmental action or consciousness (e.g.
Arbuthnot, 1977; Samdahl and Robertson, 1989). However, other researchers such
as Diamantopoulos et al. (2003), Roberts (1996) and Van Liere and Dunlap (1981)
could confirm the theoretical contemplations by Eagly. In turn, Mainieri et al.
(1997) found that on the one hand women are more ecologically conscious with
regard to purchasing environmentally friendly products and being active in
recycling. On the other hand there was no significant difference between the
two sexes with respect to participation in environmental activism. While in
general results tend to favor women as the more environmentally conscious
gender, findings are not completely conclusive.
SOCIOECONOMIC SEGMENTATION
Two additional variables that
have also been carefully explored are ‘education’ and ‘income’, which fall
under the category of socioeconomics.
EDUCATION: It is normally thought to be positively linked to
environmental awareness and concern. This means the higher the educational
level of an individual, the more likely he/she is to display a sense of
responsibility for the environment. Granzin and Olson (1991) found e.g. that
education was positively associated with environmental action (walking instead
of driving) but these results could not be confirmed by Mainieri et al. (1997).
Taking a holistic view, most of the studies that examined the relationship
between level of education and environmental action or concern found a positive
link between the pair (Roberts, 1996; Van Liere and Dunlap, 1981; Zimmer et
al.). Yet, Samdhal and Robertson (1989) discovered a negative association
between education and environmental attitudes, while Kinnear et al. (1974)
found no considerable correlation. Although the study results of the link
between education and environmental aspects have been more consistent than
those of the aforementioned demographic variables, “a definitive relationship
between the two variables has not been established” (Straughan and Roberts,
1999, p.561).
INCOME: The other socioeconomic variable ‘income’ was also heavily
inspected. In most cases, researchers believe that income is positively related
to environmental sensitivity, as people with higher incomes are able to afford
the higher costs that are usually associated with ecologically friendly
products and services. Several studies have confirmed this hypothesis (Kinnear
et al., 1974; McEvoy, 1972; Zimmer et al., 1994). Though, other researchers
found a negative relationship between income and environmental behavior or
concern (Roberts, 1996; Samdahl and Robertson, 1989) and e.g. Van Liere and
Dunlap (1981) have found no significant effect at all. In addition to that,
Roberts (1996) also theorizes that earlier research results which have shown a
positive link between income and environmental concern may not be up-to-date
anymore, as there has been enormous growth in environmental awareness across
all income levels, which is also in line with the aforesaid argument by the
author of this paper that ‘green’ has become mainstream.
GEOGRAPHIC SEGMENTATION
Another type of segmentation
approach that academics have also considered in the past is geographic
segmentation. Several studies investigated if the variable ‘place of residence’
was connected to environmental attitudes and behavior. For these studies, results
have been fairly consistent as most researchers found that there was a positive
correlation between the two items (McEvoy, 1972; Samdahl and Robertson, 1989;
Van Liere and Dunlap, 1981; Zimmer et al., 1994). The findings suggested that
consumers living in urban areas were more likely to hold positive attitudes
towards environmental matters. Only a study by Hounshell and Liggett (1973)
found no connection between place of residence and ecological concern.
Theoretically though, it could be argued that people living in rural areas
might feel a closer connection with the environment and hence might also be
likely to be more concerned with environmental issues. Another alternative,
which would be in line with the reasoning in this study, might be that no considerable
differences concerning place of residence among green and non-green consumers
will be found anymore, as ecological awareness and concern have affected the
wide masses regardless of geographical habitation. Hitherto it can be noted
that demographic as well as socioeconomic and geographic segmentation have not
delivered conclusive results. Neither of the approaches provided a convincing
characteristical summary of the green consumer. Especially the effectiveness of
demographic and socioeconomic variables has been questioned by many researchers
(e.g. Ottman, 2009; Shrum et al., 1995; Straughan and Roberts, 1999). So the
aforementioned profile of the ‘typical green consumer’ cannot be verified.
PSYCHOGRAPHIC SEGMENTATION
The inconclusive results of the
preceding segmentation approaches have led several academics to believe that
psychographic segmentation is a moreappropriate tool to define the green
consumer market (e.g. Ottman, 2009; Straughan and Roberts, 1999). Ottman (2009,
p.3) maintains for instance that “the green consumer is really a psychographic
rather than a demographic”. This means that consumers are segmented according
to their lifestyle, values and personality (Belch and Belch, 2003).
POLITICAL ORIENTATION: One factor that has been examined is
‘political orientation’. It was generally assumed that consumers with liberal
political beliefs are more likely to exhibit environmental attitudes and
behaviors than conservative consumers (e.g. Van Liere and Dunlap, 1980). This
assumption was confirmed by Roberts (1996, p.226), who found that “liberals are
more prone to act in an ecologically conscious manner”. While this assumption
probably still holds today, as is evident in such liberal political parties
like Bündnis 90/Die Grünen, also more conservative parties like e.g. the CDU in
Germany, nowadays promote the protection of the environment as essential
elements in their political programs (CDU, 2009). This again constitutes
another substantiation of the widespread green development among consumers.
ALTRUISM: Another variable that is supposed to influence
ecologically conscious consumer behavior (ECCB) is ‘altruism’. Stern et al.
(1993) introduced the concept of social- and biospheric altruism versus egoism.
Social-altruism constitutes the need to ensure the well-being of others, while
biospheric altruism is the regard for all non-human aspects of the environment.
Although all three constructs had a significant influence on the ‘willingness
to take political action’, they showed no predictive power concerning
‘willingness to pay higher gasoline taxes’. The factor altruism has also been
further explored by Straughan and Roberts (1999, p.568) who discovered that
altruism was one of the strongest predictor variables in their model. Hence,
they conclude that companies must not fail to communicate the “link between
their environmental strategies and beneficial outcomes”, while at the same time
sufficiently displaying how others benefit as a consequence.
PERCIEVED CONSUMER EFFECTIVENESS
In addition, ‘perceived consumer
effectiveness’ (PCE) has also been examined by a number of researchers (Berger
and Corbin, 1992; Kinnear et al., 1974; Roberts, 1996; Straughan and Roberts,
1999; Weiner and Doescher, 1991). According to Straughan and Roberts (1999,
p.562) PCE is “the premise that consumers’ attitudes and responses to
environmental appeals are a function of their belief that individuals can positively influence the
outcome to such problems”. The construct of PCE is also closely related to the
concept of the ‘locus of control’. According to do Paco et al. (2009, p.20),
the locus of control “describes the extent to which the individual perceives
that a reward or improvement depends on his behavior”. Generally, it has been
established that PCE does have a significant positive influence on ECCB.
Especially, Roberts (1996) and Straughan and Roberts (1999) have observed that
PCE was in both their studies the strongest predictor variable. They also note
that this has important implications for marketers who must ensure that
consumers will be informed on how they are contributing in preserving the
environment by buying green. PCE as well as the locus of control, illustrate a
situation in which the consumer is motivated by the conviction that he/she can
make a difference by engaging in environmentally friendly behavior.
THE NATURAL MARKETING INSTITUTE’S SEGMENTATION
NMI, a leading business
consultant and marketing research firm, has also been segmenting green
consumers since the 1990s. NMI tracks more than 100 different driving forces of
consumer behavior and divides them into five categories.
The “LOHAS” (Lifestyles of Health
and Sustainability) group (16%) is very progressive on environment and society
issues. This group constantly looks for ways to
do more and is not affected by premium pricing.
The “Naturalites” (25%) use many
natural products for personal health and well-being. They are interested in
doing more to protect the environment but concentrate on their health first.
The “Conventionals” (23%) are
interested in supporting environmental issues to the extent that results can be
measured. They want a cost effective way to take care of the issues that will
sustain.
The “Drifters” (23%) are not
overly concerned about the environment. The “Drifters” admit there are issues
but feel there is plenty of time to handle the problems. Although they do not
make many green purchases, they do like to maintain a socially acceptable
image. Therefore, if this group happens to be involved in green purchasing it
may be for social acceptance.
The “Unconcerned” (14%) are the
least involved in environmental issues. They are not interested in knowing
about green products and make purchases primarily based on price, value,
quality, and convenience.
THE ROPER ORGANISATION’S GREEN GAUGE STUDY
This study conducted for 1993
described five categories of green consumers. Three of these categories
describe environmentally active consumer segments and the other two describe
inactive segments. All of these segments defined differ in terms of behaviors,
attitudes and demographics.
The “true-blue greens” are the
most environmentally aware and show high levels of behavioral change in their
purchase, consumption and disposal patterns.
The “green-back greens” are also inherently
committed to making green decisions, but are not quite as far along as the
true-blue greens.
The “sprout” segments have acknowledged
the need for change and are just beginning to adjust their behaviors.
The “grousers” believe it is the
companies’ responsibility to make environmentally responsible decisions.
And finally, the “basic browns”
don’t think that they can make a difference or they just do not care (Iyer
1993).
The Roper report examines the
stewardship potential of aiming environmental education programs more
effectively at sizable and highly influential target segments of U.S. community
leaders. The largest of these segments ((20%) of adults) are Roper
Environmental Information Seekers. Some 35% of this segment is likely to
perform pro-environmental behaviors, compared to 23% of the general public.
Another, smaller segment (10%) called the Roper True Blue Greens is a significant
segment that “walks” the environmental “talk.” As would be expected, this
segment shows high levels of pro-environmental behaviors. Importantly, this
segment has a nearly one-half overlap with the Influential Americans segment
(also 10%). But they may have even more in common when it comes to environmental
education and stewardship. This indicates that Influential Americans (i.e.,
those with the financial prowess to make a difference) could possibly be
associated with those same segments that are environmentally active (Coyle,
2004).
HARTMAN GROUP’S STUDY
There are also other green
consumer segmentations published by the Hartman Group, which is a Seattle-based
market research firm who has been tracking green consumer behavior since the
1980s. The Hartman Report on Sustainability categorizes five different green
consumer groups.
The “Radical Engagement” group
(36%) feels that our future will fall apart if we do not band together and
radically change our behaviors.
The “Sustained Optimism” (27%)
believes rationale intelligence can be used to sustain a promising future.
The “Divine Faith” (20%) feels
God will take care of all of our needs.
The “Cynical Pessimism” (9%)
thinks we cannot save ourselves, much less the planet.
And the “Pragmatic Acceptance”
(8%) feel they have no control over environmental issues therefore they are not
inclined to be concerned about environmental problems (The Hartman Group,
2007).
OTTMAN J. SUBSEGMENTS (2009)
According to Jacquelyn Ottman
president, J. Ottman Consulting, a green marketing consultancy there are four
green sub segments “Resource Conservers”, “Health Fanatics”, “Animal Lovers”
and “Outdoor Enthusiasts” Ottman, J. (2009).
Resource Conservers hate waste.
Spot them wearing classically styled clothing, toting cloth shopping bags and
sipping from reusable water bottles. Avid recyclers of milk jugs and Tide
bottles, they drop off old electronics at Best Buy. Ever watchful of saving
their “drops” and “watts,” they install low-flow showerheads and compact
fluorescent bulbs branded with EPA’s Energy Star labels. Shunning over-packaged
products, they only turn on the lights when they have to, and they plug their
appliances into power strips for easy shut-off when they leave for work.
Health Fanatics worry about
overexposure to the sun, fear pesticide residues on produce, and fret over
contaminants in children’s toys. They apply sunscreen, scout out natural-food
stores for the latest in organic foods, buy only natural cosmetics and pet
care, and have switched out the toxic cleaning products for the non-toxic ones
under the sink. They look for products marked with the “USDA Organic” seal of
approval or EPA’s Design for Environment logo.
Animal Lovers are likely to be
vegetarian or vegan, belong to People for the Ethical Treatment of Animals
(PETA), and boycott tuna and products with real fur. They seek out synthetic
handbags and faux fur jackets, and favor the faux-meat options at restaurants.
They perk up to news stories featuring animals in need, from manatees and polar
bears to strays in their neighborhood, and are likely to volunteer at the local
animal shelter. Out of concern for marine life, they eschew plastic bags.
Outdoor Enthusiasts spend their
free time camping, rock climbing, skiing, and hiking. They vacation in national
parks and plan their next adventure using tips from Outdoors Magazine. they
seek to minimize the impact of their recreational activities. When shopping,
they look for FSC (sustainably harvested) labels on their products, are also
likely to purchase outdoor gear made from recycled materials
RECOMMENDATIONS AND SUGGESTIONS
We find that, traditional
segmentation approaches such as demographic, socioeconomic as well geographic
segmentation are not ideal in characterizing the green consumer market. Some
research finds little to no connection between demographic characteristics and
environmental behaviors and attitudes. Although income, age, education etc.,
work well to target consumers in some markets, green consumer targeting seems
to be quite different (Shrum, McCarty, & Lowrey, 1995). So, profiling
according to variables such as ‘age’ or ‘income’, despite their popularity among
marketers, should not be first choice when trying to understand and learn more
about the green consumer market.
However, some studies find
psychographic variables to have more differentiating power (Levin, 1990).
Though going green is resonating with many consumers the intensity level of
these reactions is driven by differing variables, in particular, lifestyle.
According to the findings of Natural Marketing Research Institute, the Roper
Organization’s Green Gauge Study and the studies by Hartman Group, psychographic
segmentation seems to be more appropriate given that these studies have
delivered results with a higher explanatory power. Consequently, it has been
recommended by academics such as Straughan and Roberts (1999) that future
research should preferably focus on extending results in the psychographic
segmentation field. However, defining the green consumer in terms of psychographic
segmentation also appears to be naïve and seems to deliver only part of the
truth.
CONCLUSIONS
Thus, it can be summarized that
the above segmentation attempts have delivered very mixed and inconclusive
results. Other insights into the green consumer nature must also be included,
when analyzing and trying to find an appeal to the ecological conscious
consumer. Green products and campaigns can be an effective marketing tool when
attracting customers; however, different segments of green consumers may react
differently to these products and messages. Untapped theories must be
investigated when it comes to learning more about the ecological consumer.
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