Green Supply, Green Demand

Non Sequitur

<>We continue now with my analysis on the green consumer, because we look after creating a market for green, social conscious products. It is imperative that we understand that, in the demand-supply equation, the most important part is the demand.If you have a town of 300 people and all have two eggs for breakfast, then the demand is 600 eggs daily. If you have then 1,200 hens producing 1,200 eggs each day, there is no way you can accommodate the extra 600 without great effort. Even if you reduce the price by half, people is used to eat two eggs per day and that is it. This is why companies spend so much in marketing, because no matter how big is the supply, if the demand only accomodates some of the products, the rest are not going to be allocated.

Marketing then can be used to push products like Coke or Nike, which are things we really don’t need. Marketing cannot create needs, but it use the ones that we already have to try to sell products that we don’t really need. Marie Sherlock has written an stupendous book, Living simple with Children, denouncing such practices.

But Marketing can also be used to promote social conscious and green products, as I proposed in my last post. But we have to be very careful of not overstate the power of the green consumer. People tend to say whatever in polls and then behave in a different way; we can ask Would you buy a product that protects the environment? and almost everybody will say yes, the same way they will say yes to Would you renounce Satan and his allies? but that doesn’t mean they are ready to come with the extra cash needed to buy a given product.

K. Peattie (2000) proposed that even green consumers are unwilling to pay a premium on products[1]. Elkington and Hailes (1998) divided the green consumers in several ways[2]:

  1. A consumer that may rush away from products with strongly negative socio-environmental impact.
  2. Consumers that only react when a big hazard takes place, like an oil spill or massive extinction.
  3. A vast group that only use the environment as a “tie-break” between brands when all their requirements are met.
  4. “Ultragreen” segment that consistently discriminate in favour of the environment.

According to Peattie, the results of trying to tie any social, economical or demographic factor to green consumers have proved inconclusive. No correlation between sex, age, level of education or other factor used by market analyst has result in finding a key element that discern a green consumer[3]. Drucker even estates that all consumers are green consumers because when faced with a choice of identical products but one is environmentally friendly and the other no, the public will opt for the first one[4].

More studies on consumer behaviour conclude that the consumer concern about the environment must be overstated since there are not changes in the actual consumer behaviour[5]. Studies from academics and market research has shown that high levels of consciousness are not necessarily reflected in changes of purchasing behaviour[6]

There is a limited market for politically motivated purchasers that will be willing to pay a premium. The same is true for organic products or shade-grown coffee. Only a few percentage (that is very variable from country to country but not surpass 5%[7]) will buy a product because they agree on how it’s made or the worker’s labour conditions; the majority of consumers will buy a product on the basis of the price and the quality –how it tastes, how it looks-[8]

So, the smart socialist must find different ways. We will look at them .

If some of you are wondering what happened to the lady that was evicted from the manulife centre, she is now at Bloor and Bay selling Outragous newspaper (a $2 piece of paper that the homeless sell), the only thing a homeless can sell in this city.

[1] Ken Peattie, “Golden Goose or Wild Goose? The Hunt for the Green Consumer”, Business Strategy and the Environment, Cardiff Business School, January 2000, p 193.

[2] Elkington and Hailes, “The Green Consumer Guide”, Victor Gollancz, London, 1988

[3] Ken Peattie, “Golden Goose or Wild Goose? The Hunt for the Green Consumer”, Business Strategy and the Environment, Cardiff Business School, January 2000, pp 189-190

[4] P. Drucker, “The Shame of Marketing”, Marketing Communications, Aug 1960.

[5] Eugene, 1992; Gillespie, 1992, Wong et al, 1996.

[6] Ken Peattie, “Golden Goose or Wild Goose? The Hunt for the Green Consumer”, Business Strategy and the Environment, Cardiff Business School, January 2000, p 191.

[7] Brink Lindsey, “Grounds for Complaint?”, Adam Smith Institute, 2004, p 6.

[8] Ibidem.


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