GREEN MARKETING: OPPORTUNITY FOR INNOVATION

Chapter 10: Two Companies That Do Everything Right

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Table of Contents Featured Cases Table of Exhibits

The strategies for reaping the opportunities of environmental consumerism are numerous and far-reaching. They not only represent a shift in communications strategy, but a thorough approach to product development together with the ability to forge constructive coalitions with a wide array of corporate environmental stakeholders. Taken together, these strategies reinforce each other so as to shape a complete and credible response to consumers' environmental concerns. Using them in concert provides marketers with the best chance to reap the many rewards of being green.

There is much to learn from companies who are pioneering these strategies and enjoying the benefits. It is these companies and their strategies that we turn to in this chapter. While many companies both large and small fit into this category–two have been chosen to be profiled in depth: Tom's of Maine and Patagonia.

Consumer loyalty to these companies and their offerings proves that environmental strategies can form the basis of an enduring business and provide leverage in the face of formidable competition. They superbly demonstrate how green marketing strategies can create jobs, build insurmountable brand loyalties, and return hefty profits all the while contributing to an environmentally sustainable society.

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CASE STUDY: Tom's of Maine: Where Corporate Social Responsibility Is a Way of Life?

In 1970, the husband-and-wife team of Tom and Kate Chappell co-founded their Kennebunk, Maine, natural personal-care products firm with a mission: to create products that were more healthful to use, and to produce those products in synergy with their community and environment. One of the most successful small corporations in America today, Tom’s of Maine is living proof that it is in fact possible to integrate personal values with managing for all traditional goals of business–making money, expanding market share, increasing profits and building customer loyalty.

The makers of the fast-growing Tom's of Maine line of toothpaste, deodorant, soap, and mouthwash founded their company on the notion that humans, animals, and all other forms of nature deserve dignity and respect. Their commitment to social responsibility is not taken lightly. According to Nancy Rosenzweig, the firm's director of corporate communications, "You have to be intentional about walking your talk. It influences every aspect of the way we do business, from how we listen to and respond to our consumers, how we treat our employees (flexible work schedules and job sharing are commonplace), to how we interact with the community, how we deal with our trading partners, how we deal with the environment, and, ultimately, how we share our profits." It is also never ending. Adds Rosenzweig, "You may never achieve perfection but you must always be working toward narrowing the gap between your mission and your actions."

A Thorough Approach to Product Development. Accordingly, the firm makes its products with the highest quality natural ingredients without additives, preservatives, artificial flavors, or fragrances. Packaging is also responsible. Tom's of Maine toothpaste, for example, comes in a recyclable aluminum tube inserted in a box made from 100 percent recycled cardboard and printed with soy-based inks.

Unique in the marketing world, Tom's of Maine lists all ingredients on product labels together with the specific purpose and source of each ingredient (see Exhibit 10.1). Regis Park, assistant manager of communications, on why the company provides so much detailed information: "We share more up front information with consumers than anyone else. We assume they are intelligent and discriminating, and that they want to make informed choices.".

To reinforce its commitment to consumers, Tom and Kate Chappell's signatures appear on every product label and the company answers each consumer letter personally. Says Rosenzweig, "When you have a dialogue between two real people there is a heightened sense of understanding and responsibility. Just as in a personal friendship, when we don't do something right, we say we're sorry and work to correct it."

Family and Community Orientation. The parents of five children themselves, Tom and Kate Chappell demonstrate a strong commitment to family-oriented policies. Tom’s of Maine offers its employees a one-month maternity or paternity leave, partial child-care reimbursement for employees earning less than $32,000 annually, flexible work schedules, and a child care referral service. Acknowledging the business benefits of such policies, Tom Chappell notes, "Show your employees respect and concern, demonstrate that you care about the quality of their lives, and you'll get loyalty and hard work in return." These family-friendly policies has earned Tom’s of Maine a coveted spot on Working Mother magazine’s annual list of 100 Best Companies for Working Parents.

The company takes its responsibility to the community seriously as well, donating 10 percent of pre-tax profits to charitable causes. This represents one of the highest percentage donations of any corporation in America. Much of that money supports environmental concerns such as recycling and conservation. In 1991, with financial support and the loan-out of an employee who affectionately became known as "The Trash Lady," the company helped the town of Kennebunk start its first recycling program. It is now engaged in a 15-year long relationship with Community Partners, Inc., a facility for the mentally and physically challenged, providing job opportunities for several of the group's clients. In addition, the employees can donate 5 percent of their paid work time to community service activities. Regis Park ends each day by calling an elderly shut-in man in Wells, Maine, as part of a Tender Loving Callers program in her community.

Competitive Advantage. At Tom's of Maine, a little respect for the consumer and a policy of openness is paying off. Their offerings command a 20 to 50 percent premium, depending on the product and market, and in 1995, the company' sales were $20 million, up over 25 percent since 1991. Moreover, what started as a profitable niche opportunity is now finding its way into the mainstream. The full line of Tom's of Maine brand natural personal care products is now distributed in 7,000 health foods stores throughout the United Sates, Canada, and England, as well as 20,000 food and drug outlets on the east and west coasts.

Admittedly, Tom's of Maine's environmental and social strategies are not based purely on altruism. Rosenzweig concedes, "The environmental and social responsibility policies are a barrier to competitive advances. Even a competitor with much greater resources cannot just replicate our formula and expect to take our market share. Our corporate practices add a richness and depth to our product appeal that creates an unusually strong brand loyalty." Indeed, Patti Murphy, Consumer Relations Coordinator, reports that the company receives more than 75 letters a week from consumers. She notes the one theme that dominates the consumer mail is an appreciation for Tom’s of Maine’s values.

Tom’s of Maine’s pioneering policies, which are detailed at greater length in Tom Chappell’s book, Soul of a Business, have not gone unnoticed by other corporate environmental stakeholders. In 1992, the company received the prestigious Corporate Conscience Award for Charitable Contributions from the Council on Economic Priorities. In 1993, the Chappell's were presented with the New England Environmental Leadership Award and the Governor’s Award for Business Excellence.

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Case Study: Patagonia: A Deep-Seated Commitment to Environmentalism

At Patagonia, Inc., headquartered in Ventura, California, catering to Alpine and other outdoor enthusiasts means much more than just designing and selling the highest-quality outerwear. It means making a deep commitment to pressing environmental and social concerns as well. By developing an environmentally conscious corporate culture and supporting the environmental causes and groups its customers care most about, Patagonia has hit upon a winning business formula that sets it apart from all other outerwear marketers, and stands as a shining example for all environmentally minded businesses. Their "doing well by doing good" strategy is paying off in stellar sales and fiercely loyal customers.

Patagonia’s reputation for innovative social and environmental responsibility extends back to the company's roots. Founder Yvon Chouinard started Patagonia in the late 1960s as a sister to the Chouinard Equipment Company, purveyors of hardware for alpine climbing and other outdoor activities. When Chouinard realized that climbing equipment adversely affected the pristine wilderness setting in which it was used, he decided to make his equipment environmentally responsible, offering an innovative alternative to the bolts that were traditionally used.

Although the Chouinard Equipment Company has since been sold, the environmentally responsible tradition lives on at Patagonia. The company takes environmental issues into consideration in all aspects of its business, from the materials in its clothing to the construction details in its retail stores, to supporting various environmental causes of concern to its customers.

Edible Landscaping. Patagonia’s commitment starts with an internal assessment that helps the company understand and prioritize opportunities to minimize environmental impact. Everything from the wood and lighting in Patagonia's retail stores to the food in the corporate cafeteria has been scrutinized for possible environmental harm. The company now maintains an extensive recycling program, composts its food waste, uses low-flow toilets, and participates in the U.S. Environmental Protection Agency’s voluntary Green Lights energy-efficient lighting program. Even the grounds around company headquarters feature edible landscaping–banana trees.

Outerwear with Minimal Environmental Impact. Patagonia works closely with suppliers to minimize the environmental impact of its clothes. In 1993, Patagonia was one of the first customers for Wellman's EcoSpun fiber, which they incorporated into fleece jackets and pants redubbed Synchilla PCR (for post-consumer recycled). Anxious to help build the market for this innovative material, Patagonia spread the word on "PCR Synchilla" within the industry and, today, the use of recycled materials in various types of fabrics is widespread, helping to keep costs low for all.

To help cut down on the pollution of soil, air and water associated with cotton farming, which is chemically intensive despite its benign image, Patagonia uses only organically grown cotton effective with the spring 1996 line. So as to not let the relative expense of organic cotton stand in its way, Patagonia chose to "split the difference" with consumers, reducing its margin while asking them to accept a $2-10 price increase on each garment. To help enlist their support for the more sustainable alternative, Patagonia educated their consumers about the environmental imperative of growing cotton organically. Educational efforts included extensive customer communications including an essay in the Spring 1996 catalogue by Yvon Chouinard, and an interactive display in its Ventura headquarters (see Chapter 6).

As part of its attempts to reduce the environmental impact of its products, Patagonia simply makes fewer of them. Supporting the company’s corporate goal to be a model sustainable enterprise, in 1993, the company decided to limit its product line to 280 styles. In Chouinard’s words, this decision stems from the desire "to avoid cluttering the world with a lot of things people can’t use." High quality, durable products don’t have to be replaced often and when out-grown can be passed along for further use. He dubs the idea of capping the size of the company, "Natural Growth," because it mimics a principle of nature–if something gets too big for the community, it will die. Likewise, if the size of the company gets out of control, it can outgrow its consumer support.

Support for Environmental Groups and Causes. Patagonia reinforces its strong ties to consumers by supporting environmental groups and causes that they care most about. Each year Patagonia pledges 1 percent of its sales or 10 percent of pre-tax profits, whichever is greater, to groups actively working in such areas as biodiversity, old-growth forests, environmentally preferable methods of resource extraction, alternative energy, water and social activism and environmental education. Referring to this commitment as an "Earth Tax," Patagonia donates primarily to the smaller environmental groups and organizations working on local environmental protection initiatives who may have difficulty receiving funds from other sources. As an example, Patagonia supported the "Friends of the Ventura River" group to clean up an unofficial bird sanctuary bordering the Ventura River near the corporate headquarters. Among its commitments, Patagonia is a founding member of the Conservation Alliance, an organization of like-minded companies seeking to give back to the outdoors.

Contrary to the more conservative sentiments of many a mass marketer, Patagonia is not afraid to support controversial groups and causes such as Planned Parenthood (the company views population growth as a critical environmental problem), or the now defunct Earth First! group. While acknowledging that such efforts will offend some would-be customers, Patagonia believes its most loyal patrons support the same causes, or will at least respect the company for taking a stand.

Through April 1997, Patagonia contributed more than $8 million to hundreds of organizations including the Access Fund, the Surfrider Foundation, and the Earth Conservation Corps.

Communicating with Customers. Patagonia communicates environmental messages to its consumers through essays in its seasonal catalogues, in-store communiqués, and paid advertising. Ads placed in select outdoor-oriented magazines inform customers of product developments as well as emerging environmental issues and Patagonia’s activities. In addition, the company publishes an annual "Green Report" detailing progress against all key environment-related goals.

Business Success-Public Recognition. Patagonia’s commitment to quality and pioneering environmental and social practices add up to more than just business success. In little more than a decade, Patagonia has amassed $150 million in annual sales throughout the U.S., Japan, and Europe. In addition, the company has won numerous awards, including the American Marketing Association’s 1995 special Edison Award for Corporate Environmental Achievement, a listing in The Nation’s Top 100 Companies, and a nine-year stint on Working Mother magazine’s 100 Best Companies for Working Parents. Yvon Chouinard was also invited to participate in President Clinton’s Corporate Responsibility Roundtable held at the White House in 1996.

While sales and accolades are important at Patagonia, it is clear the company manages with an eye on a double bottom line, measured by a strong corporate culture, and recognition as a force for social and environmental change. Their success provides a lesson to other businesses looking to garner profits while furthering environmental and social priorities.

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