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75 Green Businesses » green economy

Posts Tagged ‘green economy’

Opportunities to be Lean and Green: The Shift from Consumer to Conserver Economy

Wednesday, May 13th, 2009

The economy is looking less bleak of late in some ways, but we’re not out of the woods yet, and we might not be leaving them any time soon.  The crisis is shifting the ground beneath our feet, dramatically changing spending patterns.  People are saving their money.  While this may sound like a good thing, it’s creating great hardship for businesses that have come to rely on the old patterns of spending in the consumer economy.  This change reflects an underlying shift away from the consumer economy we have known to an emerging Conserver Economy in which people and businesses save more, waste less, and think of the long term.

 

 

These new spending patterns reflect changes in how people are living, and these changes are likely to be with us for a while.  The NY Times article of May 10 2009 “Shift to Saving May Be Downturn’s Lasting Impact” described this shift in greater detail.  The forces that enabled and egged on consumers to save less and spend more – easy credit and skyrocketing asset values – could be permanently altered by the financial crisis that spun the economy into recession.”

 

 

“Sustained increases in household saving would cause a difficult period of restructuring for the American economy, which has become increasingly driven by consumer spending,” the article goes on to say. 

 

 

While the change in spending is drying up old opportunities, the seismic shift is also creating new opportunities.  With less spending also comes more attention on getting more out of what we do spend, making our resources go farther.  People are figuring out creative new ways to live well while getting more out of less, and this change will be with us for a long time to come.  Businesses that see where the Conserver Economy is headed can adapt to this new reality and get out in front.

 

 

I previously outlined six trends for businesses to join the conserver economy including:

 

 

  • Sharing – Getting more out of goods we buy by sharing them among groups, like ridesharing (PickUpPal).
  • Renting – Getting more value out of money by only leasing what we need, like buying power from solar panels rather than buying the panels (SolarCity).
  • Repairing – Fixing old appliances, watches, and clothes, giving them a new life rather than throwing them away.
  • Reusing – Salvaging building material, selling used cars, thrift shops, and Terracycle.
  • Rebuilding – Retrofitting buildings to be more energy efficient, saving energy, saving money, and fighting climate change (Sustainable Spaces).
  • Rethinking – Hummers and McMansions are out as people rethink what they really need to live well.

 

These trends also happen in large part to be green.  The leaner businesses and consumers get, squeezing more out of their money and resources, the greener they get overall.  The environment may not be the main reason some people are making changes like using energy more efficiently, but the impact is green all the same.  I described some of these opportunities in “75 Green Businesses” last summer before the Conserver Economy had really started to emerge. 

 

 

Rather than hamper the growth of the green economy, the emergence of the conserver economy reinforces the influence of the environment and the importance of making sound economic and environmental decisions for the long run.  Helping the environment and doing the right thing for the long term health of the economy are once again in alignment, and probably more so than ever.

 

 

We aren’t out of the woods yet, but these woods might not be so bad after all if we can keep our heads and chart a new path to success where lean meets green.

 

 

Glenn Croston is the author of “75 Green Businesses” and “Greening Your Business on a Budget” and the founder of Starting Up Green.

Two Green Economies

Saturday, March 7th, 2009

I get confused sometimes when people talk about “the green economy”.  How large is the green economy?  How do you sell to the green economy?  The answers from different people don’t always agree with each other, and I think the reason might be that there is not really one green economy, but two green economies.  Or more.  

 

  

Some people will tell you that the way to sell to the green economy is to emphasize quality above all else, to produce a premium eco-friendly product.  A great product will distinguish itself and attract buyers concerned about the environment, even if it costs more.  And there are examples where this is true.  Stonyfield Farm has built a $300 million business by producing a consistent high-quality organic yogurt that attracted a loyal following, even if the yogurt costs somewhat more. 

 

  

Another message out there though is that price matters.  In fact, not just that cost matters, but that cost is the driving force in most purchasing decisions for the vast majority of people.  Being green alone, providing an environmental benefit, is not enough to make the sale for the majority of people.  Green Works products are selling to the mainstream market for cleaning products, not just because of the environmental benefit, but because they can compete on price with the less eco-friendly products sitting nearby on the same grocery store shelf. 

 

 

Who’s right?  The answer is that they both are, but they aren’t talking about the same markets, or the same “green economy”. 

  

 

The first green economy includes the people who place the environment at the topic of their priority list, and have the money to buy green products even if they cost somewhat more (within reason).  In Joel Makower’s book “Strategies for the Green Economy” there is an insightful afterward by Cara Pike breaking down consumers into useful psychographic groups.  The first green economy corresponds to groups like the “Greenest Americans” in Pike’s analysis, 9% of the market for whom “ecological concern influences their worldview more than any other social value”. 

  

 

The other green economy includes the people who are not opposed to buying green but don’t place it on the top of their list. They won’t usually buy something just because it’s green.  If a product works well and the cost is right, and green on top of this, then being green can seal the deal and make the sale.  This group is more like the “Compassionate Caretakers” in Pike’s analysis in the Makower book.  This market is closer to the mainstream.

  

 

So when you are positioning your product, thinking who the customer is and how to sell it to them, think about which of the green economies you will be a part of.  Your marketing strategy, your product design, and your pricing will follow from there. 

 

 

Glenn Croston is the author of “75 Green Businesses You Can Start to Make Money and Make a Difference“, the expert blogger on green business for Fast Company, and the founder of Starting Up Green (www.StartingUpGreen.com).