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75 Green Businesses » Makower

Posts Tagged ‘Makower’

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).