ECO-MARKETING AND ECO-LABELLING: DOES IT ENSURE ...

D.Grundey 152 ISSN 1648-4460.
Researching Customer Loyalty in Lithuania
-TRANSFORMATIONS IN -
BUSINESS & ECONOMICS
O Vilnius University, 2002-2009
© Bmo University of Technology, 2002-2009
O University of Latvia, 2002-2009
ECO-MARKETING AND ECO-LABELLING: DOES IT
ENSURE CUSTOMER LOYALTY FOR ECO-PRODUCTS IN
LITHUANIA?
Dainora Grundey
Department of Business Economics and Management
Kaunas Faculty of Humanities
Vilnius University
Muitinės g. 8, LT-44280 Kaimas
Lithuania
E-mail: dainora.Qrundev(d),vukhf.lt
Dainora Grundey, PiiD, Full Professor at the Department of
Business Economics and Management at Kaunas Faculty of
Humanities, Vilnius University (VU KHF), Lithuania. She is the
curator of MBA study programme in Marketing and Trade
Management at VU KHF, Lithuania. Since 2002, she is the founder,
curator and trustee for IGYS (http://igys.vukhf.lt) and, since 2005, she
is the founder and chief co-ordinator of the INYRSS network
(http://inyrss.vukhf.lt). Prof Grundey was Vice-Dean for Scientific
Research & International Relations at VU KHF in the period of 2001-
2008. She received her MA from Vilnius University in 1991, MBA
from the Robert Gordon University, Scotland, in 1994; and her PhD
degree from Vilnius University in Social Sciences (Management and
Administration, 03 S) in 2001; she successfully passed Doctor
Habilitation Procedure in 2007 to become a full professor since 2008.
Prof Grundey is Founding Editor and currently Deputy Editor-in-
Chief at the International Journal of Scholariy Papers
"Transformations in Business & Economics"
(www.transformations.khfvu.lt); she is also Founding Editor and
cun-enfly Editor-in-Chief of/70;?7755 (http.V/ijortiss.vukhf It), Since
2006, she serves on the Editorial Board of the International Journal
on International Trade and Markets (www.inderscicncccom) and in
at least other 8 journals in Poland, Romania, Ukraine and United
Kingdom, She had research fellowships in Norway, Italy, the USA,
France, Germany, Hungary, the Czech Republic, Scotland, Denmark
and Poland, She is the author of over 230 scientific publications,
including monographs, university books, articles and conference
proceedings on marketing, sustainable consumption and sustainable
development of institutions (namely universities), emotional and
green marketing, marketing and consumption ethics, brand
management issues, cross-cultural management and marketing,
customer service and customer behaviour, logistics and supply chain
management.

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Received: April, 2007 ABSTRACT. The article deals with the issues of environmental (eco-)
'L^'^^'^"'"' ^''^^ marketing and ecological labelling to ensure that consumers have access to
2" Revision: July, 2008 ecological products and services and they might adjust their preferences
Accepted: February, 2009 towards environmentally friendly business practices. For business worldwide,
ecological marketing and Its applications in practice have become a
competitive prerogative for modern business performance. A survey in
Lithuania aimed at establishing, whether customers are loyal to ecological
products and whether marketing campaigns and ecological labelling practices
did affect their choice of eco-products.
Introduction
KEYWOHDS. eco-marketing, eco-labelling, eeo-products, government
policy and regulation, customer loyalty, Lithuania.
JEL cLissiTicatiowqU, Q56, M31, M37, M38, P2.
Unfortunately, a majority of people believe that ecological (green) marketing refers
solely to the promotion or advertising of products with environmental characteristics. Terms
like Phosphate Free, Recyclable, Refillable, Ozone Friendly, and Environntentally Friendly
are some of the things .consumers most often associate with green marketing. While these
terms are green marketing claims, in general green marketing is a much broader concept, one
that can be applied to consumer goods, industrial goods and even services. For example,
around the world there are resorts that are beginning to promote themselves as "ecotourist"
facilities, i.e., facilities that "specialize" in experiencing nature or operating in a fashion that
minimizes their environmental impact.
Thus, green marketing incorporates a broad range of activities, including product
modification, changes to the production process, packaging changes, as well as modifying
advertising. Yet defining green marketing is not a simple task. Indeed the terminology used in
this area has varied, it includes: Green Marketing, Environmental Marketing and
Ecological Marketing. While green marketing came into prominence in the late 1980s and
early 1990s, it was first discussed much eadicr. The American Marketing Association (AMA)
held the first workshop on "Ecological Marketing" in 1975. The proceedings of this
workshop resulted in one of the first books on green marketing entitled "Ecological
Marketing". Since that time a number of other books on the topic have been published.
The AMA workshop attempted to bring together academics, practitioners, and public
policy makers to examine marketing's impact on the natural environment. At this workshop
ecological marketing was defined as: the study of the positive and negative aspects of
marketing activities on pollution, energy depletion and non-energy resource depletion.
This early definition has three key components:
1) it is a subset of the overall marketing activity;
2) it examines both the positive and negative activities; and
3) a narrow range of environmental issues arc examined.
While this definition is a useful starting point, to be comprehensive green marketing
needs lo be more broadly defined. Before providing an alternative definition it should be
noted that no one definition or Icrtuinology has been universally accepted. This lack of
consistency is a large part of the problem, for how can an issue be evaluated if all researchers
have a diffcienl perception of what they arc researching. The following definition is much
broader than those of other researchers and it encompasses all major components of other
definitions, My definition is as follows: Green or Environmental Marketing consists of all
activities designed to generate and facililale any exchanges intended to sali^fv human needs
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Researching Customer Loyalty In Lithuania
or wants, such that the satisfaction of these needs and wants occurs, with minimal detrimental
impact on the natural environment.
This definition incorporates much of the traditional components of the marketing
definition that is "All activities designed to generate and facilitate any exchanges intended to
satisfy human needs or wants" (Stanton and Futrell, 1987). Therefore, it ensures that the
interests of the organization and all its consumers are protected, as voluntary exchange will
not take place unless both the buyer and seller mutually benefit (Brauers et al, 2007). The
above definition also includes the protection of the natural environment, by attempting to
minimize the detrimental impact this exchange has on the environment. This second point is
important, for human consumption by its very nature is destructive to the natural environment
in a certain territory (Burinskienė and Rudzkienė, 2009) with incurring costs of production
and consumption of ecological products (Toming, 2007; Jucevičienė et al, 2007). (To be
accurate products making green claims should state they are "less environmentally harmful'
rather than "Environmentally Friendly"). Thus green marketing should look at minimizing
environmental harm, not necessarily eliminating it.
The article deals with the issues of environmental (eco-) marketing and ecological
labelling to ensure that consumers have access to ecological products and services and they
might adjust their preferences towards environmentally friendly business practices. The major
issue is whether customer loyalty could be improved towards ecological products through
adequate marketing actions and ecological labelling. For business worldwide, ecological
marketing and its applications in practice have become a competitive prerogative for modem
business performance.
1. Antecedents of Eco-Theory for IVlarketing
/./ Product as a Key Component of the Marketing-Mix
As known, product policy is one of elements of marketing policy. Product decisions
usually initiate the whole sequence of firm's decisions concerning also other components of
marketing-mix, i.e. promotion (communication), price, and place (distribution). These are socalled
4Ps. According to a basic marketing principle, a (new) product must respond to market
needs. So, a buyer is most important. But in modem marketing, product is treated mainly
as an instmment, one of the four, in a company's influence on a buyer in the market. Strictly
speaking, markeUng considers a product very broadly - as a set of such tools as:
(1) product per se containing both a physical good and/or a service,
(2) packaging (if needed), and
(3) labelling, i.e. mainly a trade mark and a brand, where (2) and (3) arc named a
product's equipment.
A marketing manager in a manufacturing firm has a selection of the following potential
directions of product decisions:
• to maintain an existing product in an unchanged form,
. to modernize a product and its equipment,
to launch a new product into the market, and
to withdraw an existing product from the market.
It happens rather seldom and mainly in small firms that a company produces and sells
only one type (line) of a product. Usually there exists a certain production assortment in the
enterprise, called a product-mix. In such a situation, decisions concerning the assortment
structure belong to product decisions, too.
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Source: IBEB 2000.
Besearchmg Customer Loyalty ¡n Lithuania
• ecodesign
• ecolabel
• consumer information
green mariiet research
Germany Switzerland UK Hungary countries
Figure 1. Product-related activities and innovations in business economics
Therefore, environment-friendly products/processes should be offered in the market.
Technology, being a market product, is also responsible for the present condition of
the natural environment. One can find numerous examples showing both negative and
positive influence of (new) technology on the environment. On the one hand, the present
state of pollution is partly a result of technological innovations introduced in the past
decades. On the other hand, new technology is a tool for the environment protection and
rescue, i.e., a liquidation of damages caused by the past technologies. Therefore,
environment-friendly products/processes should be offered in the market {Figure 1). These
two kinds of the impact will be developed below.
1.2. Ecological Marketing
A classical marketing, being an integrated set of four instruments (4Ps), is a
managerial process in which a firm is an object influencing the market (Kotler, 2001). In
other words, wc may treat marketing as a system of management of the market. An
enterprise is, at the same time, the market participant. Now we should consider the firm as an
element of the environment. This time, the natural enviroimient becomes a cmcial
component of the firm's marketing surroundings.
So, modem marketing must be environment-oriented. It should be understood as an
clement of a system of the environment management.
Such a marketing has received various names: new marketing, ecological marketing,
eco-marketing and even green marketing (McDanicl & Rylandcr, 1993). However, a name is
here minor; the essence is important. A concept of environment-friendly marketing fulfils the
criteria of a Kotlcr's model of societal marketing.
The societal marketing concept holds that the organization's task is to determine the
needs, wants, and interests of target markets and to deliver the desired satisfactions more
effectively and efficiently than competitors in a way that preserves or enhances the
consumer's and the society's well-being. The concept calls upon marketers to balance three
considerations in setting their marketing policies, namely, company profits, consumers want
satisfaction, and public inlcrcst (Kotler, 2001, p.26). Nowadays, a state of the environment is
obviously of public inlcrcst and has a big influence on the society's well-being.
Caslcnow in his "New Marketing" describes a global Ircnd named: the natural
environment, and its consequences for a future marketing (Caslcnow, 1993).
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Symptoms of this trend are as follows:
a care of a clean air, soil and water tanks,
a protection of the nature against the devastation,
a rational turnover and use of natural resources; a stress on the significance of
recycling,
an aspiration for minimization of the use of natural raw materials; a growing interest
in the use of production wastes in producing new products,
a popularization of ecological orientation and of healthy style of life,
an awareness of interdependencies within a chain: environment - hunger -
overpopulation.
The following consequences of this trend can appear for marketing:
• a better knowledge on consumer priorities,
. the natural environment as a criterion in processes of product decisions,
• a firm's orientation towards the environment,
a domination of ecological and energy-saving products,
the natural environment as an integral part of all fields of the firm's activity,
• an impact on assessment criteria of brand-name products.
On the basis of this, an idea of a new (ecological) marketing is being developed (e.g.
Bergen, 1990; Castenow, 1993; Graczyk, 1999). Shortly speaking, modem marketing is such
a way of thinking which should take into consideration, among other things, that:
• firstly, a post-consumption phase is equally important for a product user like a
purchase phase,
• secondly, the natural environment is a kind of public good,
• thirdly, there exist close inter-relations between a marketing orientation and
an environmental orientation.
A model of an 'ecological' marketing-mix should, of course, contain all 4P's:
1. A producer should offer ecological products which not only must not contaminate the
environment but should protect it and even liquidate existing environmental damages,
2. Prices for such products may be a httle higher,
3. A distribution logistics is of crucial importance; here I mean mainly ecological
packaging.
4. A communication with the market should put stress on environmental aspects,
for instance:
• a possessed CP certificate or ISO 14000 may be publicized to improve a firm's
image,
• the fact that a company spends expenditures on the environment protection
should be advertised,
• sponsoring of the natural environment is also very important,
• ecological products will probably require special sales promotions.
The level of greening-strategic, quasi-strategic, or tactical- dictates exactly what
activities should be under-taken {Table I). Strategic greening in one area may or may not be
leveraged effectively in others. A firm could make substantial changes in production
processes but opt not to leverage them by positioning itself as an environmental leader. So
although strategic greening is not necessarily strategically integrated into all marketing
activities, it is nevertheless strategic in the product area.
Alternatively, tactical greening in promotions might involve minimal, if any, greening
of other areas; rather, it might be used simply to exploit a short-term opportunity. A company
might simply choose to sponsor a local environmental program without modifying its other
activities. This may seem to be an "effective" strategy from a broader business perspective,
but not necessarily from a green marketing perspective, especially if the firm is seeking to
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achieve sustainable broader objectives. If consumers are skeptical of its motives, this
opportunistic sponsorship could actually backfire. The publicity generated could even make
consumers more critical of the firm's other, less eco-friendly activities.
Table 1. Ecological/green marketing activities at the three levels (with some business
Targeting Ads mentioning green
features are run in greenfocused
media.
Green
design
Green
positioning
Green
pricing
Green
logistics
Marketing
waste
Green
promotion
Green
alliance
examples)
Tactical greening Quasi-strategic greening Strategic greening
A firm switches from one
raw material supplier to
another with more ecofriendly
processes.
e.g. a mining company runs a
Public Relations (PR)
campaign to highlight its
green aspects and practices.
Cost savingsdue to existing
energy-efficiency features
are highlighted for a product.
A firm changes to a more
concentrated detergent,
which
A firm improves the
efficiency of its
manufacturing process,
which lowers its waste
output.
An oil company runs a PR
campaign to highlight its
green practices in order to
counter an oil spill getting
bad press coverage.
A company funds a
competition (one-off basis)
run by an environmental
group to heighten community
awareness on storm water
quality issues.
A firm develops a green
brand in addition to its other
brands.
Life-cycle analysis is
incorporated into the ecodesign
process to minimize
eco-harm.
e.g. BP (British Petroleum)
AMOCO redesigns its logo
to a sun-based emblem to
reflect its view to a
hydrogen/solar-based future
for the energy industry.
e.g. a water company shifts
its pricing policy from a flat
monthly rate to a per-unitof-water-used
basis.
Packaging minimization is
incorporated as part of a
firm's manufacturing review
process.
e.g. TELSTRA (a phone
company) has internal
processes so that old
telephone directories (waste)
are collected and turned into
cat litter products by other
companies.
A company sets a policy that
realistic product cco-benefits
should always be mentioned
in promotional materials.
A firm launches a new
Strategic Business Unit
(SBU) aimed at the green
market.
e.g FUJI XEROX develops
its Green Wrap paper to be
more eco-friendly from the
ground up.
e.g. the BODY SHOP
pursues environmental and
social change improvements
and encourages its
consumers to do so as well.
A company rents its
products rather than selling;
consumers now pay only for
use of the products.
A reverse logistics system is
put into place by FUJI
XEROX to reprocess and
remanufacture photocopiers.
e.g. A Queensland sugarcane
facility is rebuilt to be
cogeneration-based, using
sugar-cane waste to power
the operation.
As part of its philosophy, the
BODY SHOP co-promotes
one or more social/eco
campaigns each year with
in-shop and promotional
materials.
e.g. SOUTHCORP ( a wine A company invites a
producer) forms a iong-tenii representative of an
alliance with the Australian environmental group to join
Conservation Foundation to
help combat land-salinity
its board of directors.
issues. 1
The overriding implication is tliat the firm needs to ensure that green marketing
activities arc integrated holistically, especially if ihcy are used in positioning or protnotional
activities. That way it docs not overemphasize corporate actions, with unanticipated negative
consequences. However, il is not necessary for the firm lo actively promote all green
marketing activities. This may sccin to be ignoring opporlunilies from a strategic perspective,
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but careful evaluation of overall corporate activities might identify that such opportunities are
illusory-not all of them support the same environmental focus-and may help avoid potential
problems.
Table 1 presents a number of examples to illustrate how tactical, quasi-strategic, and
strategic green marketing activities might be under-taken in each of the functional marketing
areas.
Tactical actions typically involve limited change and limited coordinaUon across
multiple functions. Quasi-strategic actions normally require more substantive changes in
marketing activities, as well as broad-based coordination among several non-marketing
activities.
Strategic greening requires a holistic approach, with all actions of the firm
coordinated to integrate environmental issues across all functional areas (Gmndey, 2008b).
The need for a holistic approach cannot be overemphasized, considering the frequent
problems associated with nonintegrated green marketing. Hefty spent vast sums developing
and marketing "biodegradable" garbage bags (a quasi-strategic action), but although the
claims were technically tme, on closer inspection it was soon discovered that landfdl
conditions would not allow decomposition to occur. The result was an extensive public
backlash against this product and other Hefty products. Several states actually sued Hefty for
misleading advertising. The problem was not that Hefty had "lied," but that it had exaggerated
its claims. It had not considered the ftill impact of engaging in a quasi-strategic activity.
Environmental changes alone, it seems, are not sufficient without effective implementation.
1.3. New 'Ecological' Consumer
D. Castenow has observed the following evolution in a German consumers' approach
to the natural environment in recent years (Castenow, 1993):
• in the 1980s, a consumers' interest in ecological products, being launched into
the German market, was rather moderate: an issue of environment-friendly products and
packagings was important only for 41% of respondents. Now - for 74%);
in mid-80s, 45% of reviewed German consumers seriously treated
public reports conceming a harmfulness of products while now this kind of
information is very important for 64%) of respondents.
On the other hand, in recent years, various Parliamentary acts have been adopted
for the environment protection in numerous HDCs. Thus, producers are being under an
increasing pressure of a more and more restrictive ecological law. This, in turn, extracts a
growing supply of environment-friendly products.
So, an increasing demand and an increasing supply of ecological products meet each
other in the market, and this is a healthy situation. However, a new, ecological buyer is a key
actor on the stage (Grundcy, 2003). Therefore, a consumer education and protection is here so
important. In Poland, unfortunately, the consumer movement is developed very little in
comparison with Westem countries. There is practically only one such an organization, i.e.
The Consumers' Federation, which tries to educate and protect Polish buyers.
In the past, producers used to concentrate their marketing efforts mainly on a phase of
a consumer's purchase. Firms tried to help him/her buy their products. Now, according to
Kotler, a producer should also help the consumer use a purchased good and get rid of i'
afterwards (Kotler, 1999, 2001). This principle fully applies to a manufacturcr/scUcr of
industrial goods. Then he will achieve a market success.
This is consistent exactly with the essence of a desired approach to the new, ecological
consumer. The approach assumes that the producer takes responsibility in all the phases of tlic
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product life cycle (Grundey, 2008a). This is a principle of Extended Producer Responsibility
(EPR) which, for the first time, was implemented in Sweden in 1990.
Tabic 2. Number of eco-Iabcls that respondents spontaneously mention, 2002 (%)
Germany Nor>vav Italy Spain
1 label 48.5 56.1 3.5 18.1
2 labels 29.4 16.8 0.1 4
3 labels 5.4 3.0 0 1.3
4 labels 0.4 0.7 0 0.2
5 labels 0.2 0 0 0.1
Mentioned no labels 16.2 23.4 96.4 76.3
Source: adapted from National Institute for Consumer Research in Norway (2002).
Table 3. Three most spontaneously mentioned environmentally related labels including social labels by
country in absolute numbers, 2002
Most
mentioned
Second
most
mentioned
Third most
mentioned
Germany
Norway
Italy
(1021)
(1000)
(1000)
Blue Angel 578 The Nordic 700 Recycling
Swan
Triangle;
mm
Panda;
Alberto
Green Dot 553 Recycling 199 Energy
(Gruner
Punkt)
symbol
label
Recycling 70 Green Got; 50
Symbol
mm
Randa
Debio;
0
48
47
14
13
Spain
(1004)
Green Dot 194
9
6 Blue Flag 39
AENOR;
DGQA
National Institute for Consumer Research in Norway (2002) conducted an
international survey to investigate how consumers react to environmentally related labelling
of products and services. The respondents were asked to name any environmental labels they
could pontancously think of Each country reported answers for a common group of labels,
and then also in addition various national and regional symbols. Wc have included the
recycling symbols in this overview, event though is it not an cco-labcls. As wc can see, there
arc significant differences between the four countries (Norway, Germany, Italy and Spain),
Tables 2 and 3.
• The Blue Angel and The White Swan is well known among respectively Gcmian and
Norwegian consumers.
• The recycling symbols arc recognised by consumers in Gcmiany, Norway, Spain and
to some degree Italy.
• European consutncrs do not know the EU-flowcr, only 1% mention the flower.
• German and Nonvcgian consumers mention a large number of ceo labels or similar
environmental symbols, while the situation in Spain and Italy is quite different where
more than '4 did not mention any labels at all.
2. Product Management and Green Strategics
Tii-\N.m)i

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A green marketing approach in the product area promotes the integration of
environmental issues into all aspects of the corporation's activities, from strategy formulation,
planning, construction through production and into dealings with consumers. Czinkota and
Ronkainen (1992) propose that "corporations will have to find soluUons to environmental
challenges through marketing strategies, products, and services in order to remain
compeUtive" (p. 39). These include (Czinkota and Ronkainen, 1992):
(1) new technologies for handling waste, sewage and air pollution;
(2) product standardization to ensure environmentally safe products;
(3) providing "tmly" natural products; and,
(4) products oriented toward resource conservation and greater occupant health.
These solutions assure the company of a legitimate role in providing society's needs
as well as the opportunity to achieve industry preeminence (Murray and Montanari, 1986).
They also underscore potential opportunities for the development of products/services. For
example, refurbished office equipment has entered the market with the backing of a powerful
name (Xerox's Eco-series and Renaissance copiers). Although some would look at these
changes as threats and/or added expense, visionaries within business firms are realizing that
there also are real opportunities in environmental developments for those ready to recognize
and capitalize on them.
2.1 The Greening of Product Life Stages
Green marketing forwards the notion that companies should be concerned with what
happens to a product during and after its useful life.
Companies may manifest this concem through experimentation with ways to reassess
and redesign the product life stages. Life cycle reassessment focuses on environmental
considerations in product development and design, including energy and material inputs and
outputs in production, consumption, and disposal of products (Corporate Environmental
Practices, 1994).
We would then manage the life stages of a product in an environment friendly and
eco-efficient manner. Eco-efficiency refers to the proper timing for the use or consumption of
natural (and oftentimes scarce) resources so that nature is afforded an opportunity to renew
itself. The life stages of products would include the description, presented in Table 4.
Table 4. Product lifc-cycIe stages
Stage 1: Development stage. Traditionally characterized as the acquisition of raw materials, component
parts, and subassemblies. The alternative approach advocated here encourages manufacturers 1)
to cheek the environmental programs of suppliers, 2) to require minimal packaging of inputs, and
3) to consider sources of materials that could be easily replenished or that are recyclable.
Stage 2: Production stage. Manufacturing companies are encouraged to reduce emissions, toxicity, and
waste, and to conserve water and energy. Companies are also encouraged to seek and develop
alternative uses for waste products (i.e., waste recovery process), to revise the manufacturing
process(es) to minimize waste generation, to minimize energy use, and/or to attempt to find
alternative sources of energy.
Stage 3: ConsumptionAJsage stage. Minimization of packaging, conservation of energy, and minimization
of waste from product maintenance and service arc strongly urged. Additionally, companies
should promote energy conservation and should provide information on recyclability or reuse of
the package or "dead" product.
Stage 4: The final stage of a product is its disposal, Green marketing introduces the concepts of reuse and
recyclability, in addition to the concept of waste reduction (ef, Coiporale Einironmcnial
Praclices. 1994).
Source: Corporate Environmental Practices, 1994.
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2.2 Design for the Environment
Researching Cusiomer Loyally in Lithuania
Coddington (1993) asserts that Design for tlie Environment (DFE) has emerged as a
philosophy of integrating environmental considerations into the design process of both
product and packaging. There are two basic tenets: (1) the firm engaged in DFE must
internalize environmental considerafions and constraints, and (2) the firm must evaluate
environmental issues systemically, in conjunction with associated manufacturing, economic,
regulatory, social, and polifical factors (Allenby, 1991). Additional considerations inherent in
DFE as applied to product and package design are designing for disposal, designing for
nondisposal (recycling), designing for pollufion prevenfion, and designing for resource
conservation. DFE strongly encourages the development of ideas that would incorporate
waste reduction into producfion processes, recycling of products and/or packaging, that would
make products compostable, or that would help facilitate changes in the process of design
while adding more benefits than costs to the organization.
2.3 Total Quality Management (TQM) for the Environment
Friedman (1992) advocates that Total Quality Management (TQM), an increasingly
popular concept related to the management of both the product and the producfion processes,
needs to integrate environmental management issues. Commitment to quality now refers not
only to the traditional production concept, but to environmental quality as well. Currenfiy, our
concern is with the total yield of the producfion and product markefing processes, including
waste and pollufion.
Recycling. Regulatory pressures may account for some of the most creative ideas that
have been brought to market. For example, batteries of all kinds contain hazardous heavy
metals such as silver, mercury, nickel, cadmium and lead that can threaten underground water
supplies. The potential for increased regulatory pressures always faces these manufacturers,
including legal requirements to reformulate products or setting up collection programs for the
"dead" product. In 1990, Eveready reformulated their batteries to reduce mercury content,
meeting regulatory standards two years ahead of schedule and stealing an edge on competitors
through trade advertising (Ottman, 1994). In 1991 Sanyo introduced rechargeable batteries
packed in a container that doubled as a mail-back pack for recycling. When consumers return
the batteries, they receive a $3 coupon good on their next purchase. This acdon came as a
result of focus groups in which they found that consumers consistently told the company that
it should recycle, and that their efforts would be rewarded (Gmndey, 2003).
Waste Reduction, Pollution Prevention. In addition to the concept of cco-cfficicncy
mentioned previously, manufacUning for disassembly has also gained momentum as the
recycling of materials and energy and resource conservation arc more plausible thanks to
technological change. Additionally, since all natural and industrial processes generate waste,
and waste becomes pollution when it exceeds the carrying capacity of the environment
(Schmidhciny, 1992), finding ways to prevent pollution before it happens has become critical.
To a large extent, companies arc realizing that pollution is a sign of inefficiency and added
cost, and that waste represents raw materials not sold in final products. Schmidhciny (1992)
contends that the combination of the above with mounting public expectations, increasing
regulatory pressures, and the tightening of competitive conditions may account for the
adoption of the logic of pollution prevention by a significant number of companies
worldwide. For 3M, the Pollution Prevention Pays (3P) program, in place since 1975, is being
hailed for having saved over $500 million by eliminating or reducing capital expenditures and
operational expenses (Frausc & Colchour, 1994). Ofientimcs, an implication itihcrcnl in
pollution reduction progratns is restructuring in the fomi of materials substitution. The search
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for substitutes is acting as a trigger for innovative solutions (e.g., Volkswagen's switch to
water-based paints for their automobiles and IBM's phase out of CFCs in electronic
production. The zero pollution targets (i.e., no emission of pollutants into the ecosystem) set
by many U.S. companies (e.g., Monsanto, General Dynamics) approximates the zero defects
pledge brought about by total quality management. Additionally, regulatory actions like the
45 product disposal bans enacted in 1991 by 12 states have persuaded manufacturers to design
their products for remanufacture, recycling, and repair (Oilman, 1994). New designs that
would allow for easier disassembly and recycling of parts, and minimization or elimination of
non recyclable parts/materials have already entered the market.
2.4 Strategic implications for modern businesses
Implementing a philosophy of sustainability in the practice of marketing would
require businesses to become more sensitive to the efficient use of all resources over a longer
period. In particular, the loss of natural resources may significantly affect a company's
product line and overall production process(es). This change in orientation, from short- to
long-term, would be part of any requisite stmctural changes (e.g., changes in corporate culture
and communication and information systems) (Gmndey and Zaharia, 2008). Perhaps the most
persuasive argument is that waste represents costs to organizations, therefore waste reduction,
reuse of materials, and recyclability are important cost savings activities in the long-run.
Marketers should be encouraged to assess the cost of new laws and regulations, the cost of
endless litigation, and the potential loss of competitive position(s) as integral and critical
components of an ecological approach (Gmndey et al, 2004). Additionally, firms should
thoroughly consider the implications of a potential loss of corporate and product credibility
due to perceptions of inaction (i.e., totally bypassing any environmental initiative) or forced
compliance (i.e., environmental actions are pursued only when mandated by regulations).
Kleiner (1991) asserts that people who try to radically change corporations from
within are often stymied. "Corporate culture and political pressures provide almost
insurmountable resistance against any sudden and even enlightened change" (Frause &
Colehour 1994, p. 110). Frause & Colehour (1994) advocate that perhaps the solution to this
dilemma lies between "saving it all" (limits to growth environmenlalism) and "using it all"
(unbridled capitalism). The issue then becomes on of educating managers along the lines of
cost-benefit on the one hand, and along the lines of social responsibility or the role and
obligafions that organizations have as active participants of the social system within which
they operate.
While a significant number of American consumers could be considered as potentially
"green", marketers arc still cautious in approaching this segment. In 1991, a Wall Street
JoumaL/NBC News survey reported that 46 percent of American consumers bought products
based on the manufacturer's or product's environmental reputation within the last six months
(Frankel, 1992). Likewise, Gallup surveys conclude that more than 75% of American
consumers favour environmenlalism by buying decisions (Kleiner, 1991). More recently,
however, the 1996 Green Gauge Report released by Roper Starch Woddwidc (US) showed
that the percentage of Americans willing to pay more for environmental products has declined
from 1%) in 1986 to 5%. As Oilman & Terry (1998) point out "marketing greener products
will have to entail more than attaching a green label or featuring images of wildlife in media
adverUsemcnts!" In developing value-added on ecological bases, organizational leaders would
have to establish a level of environmental commitment that is most suitable and feasible given
the conditions that the organization faces.
Companies that have adopted some type of environmental accountability have found
some benefits in the adoption of an ecological approach. Some of the activities that have been
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implemented include: (1) building consumer demand for green products (e.g., Rubbermaid's
litterless lunch box); (2) spending revenues to educate buyers (e.g., First Brands'
informational brochures such as "The Good Environment Guide"); and, (3) building new
infrastructure to facilitate recycling (e.g., Kraft-General Foods' recycled plastic for its salad
dressing) and prevent pollution (e.g., 3M's Pollution Prevention Pays program; the first ecomall
in Santa Monica). Being branded a green company can be potentially beneficial to
business organizations. The green image generates a more positive public image which can, in
turn, enhance sales, increase stock prices, and open access to public capital markets (Marshall
& Mayer 1992). A green image may enhance the overall perception of product quality and
when coupled with the environmental benefits inherent in a product and/or its use may
provide the added value that consumers would favor (Ottman & Terry, 1998). However, note
that even seemingly "simple" things have a significant effect on the marketing of certain
products. For example, product managers need to be aware that several states, including
California, New York and Rhode Island, are controlling the use of environmental terms (e.g.,
"recyclable" and "recycled content") in product labels (Marshall & Mayer, 1992). Changes in
regulations will influence marketing decisions and strategies that an organization may pursue.
3. Ecolabels as a Tool for Competitive Environmental Seals of Approval
Most extant environmental labelling programmes are of the 'seal of approval', or
'eco-labeV type. These are certification marks awarded to those products in a particular
category that have met certain predefined criteria. Several arguments have been made in
favour of eco-labels as an aid to consumer purchasing decisions, of which the following seem
the most persuasive (see, inter alia, Cohen, 1991, p. 259; Wynne, 1993, p. 107):
• first, most consumers are apt to invest little time discovering the likely environmental
impact of a product - even if accurate information is provided - so a single
comparable measure might reach a wider audience;
• second, those consumers who are willing to spend time discovering the expected
environmental impact of a product may find themselves attempting to compare
incommensurables such as 'water pollution' and 'recycleability', so such consumers
might prefer to rely on experts to carry out this task for them;
• third, marks certifying environmental information may be misinterpreted by
consumers as being seals of approval, so an actual seal of approval certifying
environmental superiority within a product category might be preferable.
3.1 The Benefits of Ecolabels
Aside from providing the consumer with accurate information concerning the relative
environmental impact of a product, it has been suggested that eco-labels might accomplish a
number of other goals, for instance (Grundey and Zaharia, 2008):
(i) An cco-labcl might improve the sales or image of a labelled product. As an OECD
report on cco-labclling points out: 'This goal is actually a necessity, for if the use
of environmental labels docs not increase sales or improve the product's or
company's public image, then the labeling programme is doomed to ñiilurc. As a
voluntary market-based instrument, environmental labeling will only be effective
if it is accepted and used by manufacturers as a marketing tool. And this will only
occur if consumers accept the objectivity and goals of environmental labels'
(OECD, 1991, p. 12).
(ii) An ccolabelling programme might encourage manufacturers lo account for the
environmental impact of their products. This may be accomplished in one of two
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ways. First, by ensuring that the entire product life-cycle is taken into
consideration in the eco-label criteria, firms supplying companies who are seeking
an eco-label must provide evidence that their own environmental impacts conform
to some standard (for example, by complying with ISO 14000 or by carrying out
an Eco-audit). Second, firms producing products without eco-labels may wish to
compete with firms whose products do bear an eco-label, so they too may wish to
signal their environment-friendlier behaviour to the market by carrying out an Ecoaudit
or complying with ISO 14000.
(iii) Eco-labels might make consumers more aware of environmental issues (OECD,
1991, p. 13).
(iv) Eco-labels might help to protect the environment. As the OECD report notes, 'This
is, after all, the ultimate benefit of labelling programmes' (ibid.).
3.2 The Impact of Eco-labels
According to proponents of eco-labels, the ostensive objective of any eco-labelling
programme is to improve the environment, so, clearly, the key measure of its effectiveness
should be the impact it has on the environment. However, for two reasons, this impact cannot
be estimated directly. First, no single measure of environmental quality can exist. This is
because 'the environment' is a subjective constmct: each individual has his or her own
concept of what the environment is and what would constitute environmental improvement.
Second, if a measure of environmental quality were devised (and, despite the subjective
nature of the environment, many people have attempted to do this), there are so many other
factors affecting the state of the environment (such as changes in the regulatory framework,
autonomous changes in productive processes and autonomous changes in the demand for
particular products) that a simple correlafion between the existence of an eco-label and an
overall improvement in environmental quality would not tell us whether the eco-label had
caused that improvement (Grybaitė and Tvaronavičienė, 2008).
As an alternative, some analysts have suggested or implied that demand for ecolabelled
products is itself a measure of the impact of an eco-label. If environmental quality is
indeed a subjective construct involving many somedmes competing goals, then this clearly is
not so. However, even if one were to use some standard measure of environmental quality (for
example, a weighted combination of variables such as atmospheric concentration of sulphur
dioxide, nitrogen oxides and volatile organic compounds (VOCs), plus measures of the purity
of watercourses such as biological or chemical oxygen demand), the impact of each product
on environmental quality would be contingent on so many factors that it would not be
possible to know which product had the lowest impact (Grundcy, 2003). Indeed, in many
cases, a non-eco-labelled product may exist which has a lower impact on the environment. So,
whilst purchases of products which fulfil the eco-label criteria might result in less harm to the
environment than the purchase of non-ecolabcllcd products, there is no guarantee that this
would be the case.
Moreover, the indirect impact of an cco-labclling programme (stifiing of investment,
reduction in consumer choice) cannot be ignored. Since there is no way of measuring the
impact of an eco-labcl on the environment, the claims made by various individuals and groups
that certain cco-labcls have resulted in large environmental improvements should be taken
with a pinch of sodium chloride. To illustrate this point, wc now consider several such claims.
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5.5 Analysis of Eco-labels in Europe (and Rest of the World)
Researching Customer Loyalty in Lithuania
The objective of this paper is to discuss the advantages and limitations of different
kinds of eco labels in Europe within the framework of ecological modernisation.
Within an integrated product policy (IPP) environmental product informadon is one
important tool (Rubik, 2003a). In the business to consumer dialogue, eco-labels are a central
part of "transmitting environmental information" (Gmndey, 2003). Other consumer oriented
information channels are test reports and test notes from consumer organisations and test
institutions, quantitative product information from producers on the package or information
through internet, personal sales talks and advertising.
Eco-labels include various symbols, schemes, and institutional and legal
arrangements. We can distinguish between mandatory and voluntary labels in the following
way (Rubik, 2003b):
• Mandatory labels like the EU energy label, relevant for household appliances and
mandatory labels for chemical products.
• ISO-type I eco labels, classical third-party labels like the EU-flower, the German Blue
Angel and the Nordic White Swan.
• ISO-type II eco labels, self-classification by industry or retailers.
• ISO-type III eco labels, quanthative environmental product declarafions (EPD).
• Other relevant labels, including social labels and organic
labels.
greendOt • other not relevant labels, including recycling symbols like
Ô
the green dot'.
The mandatory labels arc based upon EU-directives and are valid
for chemical substances and household appliances in Europe.
3.3.1 ISO-type I labels
The main advantage of ISO-type I labels probably is that they use simple symbols; it
is easy to communicate the message to the consumers. In addition they gain credence by
being scientifically based and organised through a third party control regime. Type I-labcls
seem to work very well for consumables, providing information at the point of sales. Such
labels will typically contain summed up informafion, where expert panels esfimate the relative
importance of various impacts (pollufion, energy etc.), presenting the consumer with the result
of a process, but with free public access to criteria. The average consumer just has to relate to
the symbol. This simple presentation of rather complicated matters seems to have a potential
for being met by high levels of trust from consumers.
Typc-1-labcls' main shortcomings might be that they are national or regional, so far
not a success on a European level. Further, they obviously work better for some types of
products than for others, even with a number of national differences.
Blue Angel" in Germany was the first voluntary ISO-type I label
in the wodd, established in 1978. During the 90tics similar cco-labcls were
' The Dual System operates in conjunction with tltc existing municipal solid waste management structure in Gcmiany.
Consumer product manufacturers pay fees to DSD (Duales System Dculsclitand GmbH) to place its trademark "green dot" on
their packages. This symbol is intended to represent a recycling guarantee, for DSD then collects and sorts the packages
consutncrs have discarded and directs Ihcm to rccydcrs. As long as the ordinance's collecting, sorting, and refilling quotas
arc met, retailers do not have lo "take back" primary packages and consumers do not have to pay high mandated deposits on
non-rcnilablc containers. Packaging waste is collected curb-side in DSD bins or in municipal bins placed around
neighbourhoods for glass and paper.
• The world's first cco-labcling progratn, Uluc Angd, was created in 1977 to promote cnvlrontncntally sound products,
rclali\c lo olhcrs in the same grotip categories, litis cco-labcl relics on infoniialion and \olunlary cooperation, as well as on
(lie motivation and the willingness of each individual lo make a conlribvilion towards environmental protection. The criteria
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established in nearly all EU and EFTA countries (Rubik and Scholl, 2002) (Figure 2).
4500
40(Ю
3500
Э0(Ю
2500
20OT
tsoo
1000
500
0
Hurnber of Products fabelled
with the "Blue Angel"
Status: September 1999
ra
Ntffnber oT new Products
n thie course of a year
Expired contracts at the erxf of a year
due to further dovelopmerit of criteria
Updated number of labelled
products on 31.12. of a year
1¿. Ш
1991 1992 1393 1994 1 995 1996 1997 1993 1999*
Source: RAL, Unweltbundesamt; Status: September 1999 • status of 03.09 1999
Figure 2. Number of products labelled with the "Blue Angel" in Germany, 1991-1999
Most of the labels are nationally based and are run by national eco
labelling bodies, with the exception of the White Swan^ established by the
Nordic Council of Ministers and valid for all the Nordic countries (Norway,
Sweden, Denmark, Finland and Iceland). The labels cover both consumables,
durables and services, and the main focus is the environmental impact of the product, in a life
cycle perspective. In most cases the classical eco-labels do not include foodstuffs. There are
usually developed separate national labels for organic food. The criteria are developed in a
multi-stakeholder perspective and the actual label is a positive, well-known symbol.
The EU-flower'' covers goods and services within the European
:'^'\ Economical Area and was established by EU directive in 1992. The EU-flower
has so far not managed to function as an effective environmental product
information scheme in Europe.
for awarding the Blue Angel includes: the efficient use of fossil fuels, alternative products with less of an impact on the
climate, reduction of greenhouse gas emission, and conservation of resources. Once approved, eco-labelcd products are
reviewed every two or three years to reflect slale-of-the-art developments in ecological technology and product design.
Germany's Blue Angel certification for computers is primarily concerned with waste avoidance and reuse potential.
According to the web site, "Pursuance of these aims helps to prevent possible entries of pollutants into the environment,
protect resources and save disposal site space." As a result, their Environmental Label is "awarded to those products which
combine a potential longevity of the system and its components with a recyclable design and the opportunity to reuse and
recycle used products or product components. In addition, the use of environmentally harmful substances shall be avoided
wherever possible." The Basic Criteria apply to components of workstation computers, including workstations consisting of
controller (console), keyboard and monitor. Most products that qualify appear to be of strictly European make and/or model.
' In November 1989, the Nordic Council of Ministers adopted a measure to implement a voluntary, positive co-labeling
scheme in the Nordic countries (Norway, Sweden, Finland, Iceland, and Denmark). The objective of this ecodabcling was to
provide information to consumers to enable them to select products that are the least harmful to the environment. Nordic Colabeling
follows the ISO 14024 standard: "Environmental labels and declarations - Guiding principles". The criteria for colabeling
include requirements for the composition of the product, constmction, materials, chemicals, marking of parts, waste
disposal, recycling, energy consumption, noise level, ergonomics, electromagnetic fields and safety of use. The criteria base
been fixed taking into account the environmental load during the whole life cycle of the product and the principles of the
scheme for recyclable products (DFR - Design for Recycling).
* The EU eco-labeling program was launched throughout the European Community in 1993 to encourage the manufacture of
less environmentally damaging products. The European Union's Eco-labcl, a flower with the EU's star symbol, is awarded to
products that have passed a life cycle analysis. On 26 February 1999 the Commission adopted the criteria for Personal
Computers. These criteria are valid as of 1 March 1999 until March 2002 and producers can apply for llic eco-labcl. The
product group definition is a commercially available stationary computers consisting ofa monitor, system unit, and keyboard.
The criteria focus on: a) energy consumption, b) life-time extension, c) take-back and recycling, d) user instructions.
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1998 1999 2000 2001 2002 2003
Source: complied by the author.
Figure 3. European Eco-Label (the "Flower") statistics, 1998-2003
It has been caleulated that eurrently in Europe we have the following statistics for the
EU-flower eco-label {Figure 3):
. 260 holders as of September 2005
About 2 500 articles split in 23 product groups
A large number of ISO-type II labels are found in the European market established and
mn by the industry or retailers. These self-classifications are often one-dimensional, covering
only certain aspects of the product, like recycled paper products, phosphate free detergents.
ISO type III labels - Environmental Product Declaration (EPD) - are under development in
Europe. Such quantitafive data will, however, be more relevant in a business-to-business
communicafion.
3.3.2 ISO-type II labels
ISO-type II labels really are a type of adverfising. Main problems concerning such
labels are that the message is often unclear, labels often one deal with just dimension (no
chlorine), they are at best semi-scienfifically based, and they rely on self-classificafion. In the
Nordic countries they tend to conflict with the Marketing Control Acts, prohibiting the use of
phrases like "eco friendly" etc. Type II labels will generally have a problemafic relafion to
questions of tmst, and - related to that - to generally non-existent control regimes.
since tenns lil^c "eco", "biological" and similar
designations have been protected by the EC Eco-
Directive, consumers liave been finding food from
organic fanning everywhere. The big supeniiarket
chains in Germany have introduced product ranges like
Füllhorn (Rewc). Grünes Land (Metro), Naturkind
(Tcngclmann/Kaiscrs), Alnalura (dm), all of whicli
definitely come from organic fanning. Other organic
brands are called "Organic from ecological production",
"HioUio" or "Bio Wcrlkost". Organic products from
health food producers bear a green leaf witli the word
"Bio".
Source: complied by the author.
Cooperation between organic fanning organisations and governmental
institutions has created eco-labels which do not solely stand for organic
fanning, but also confinn that these products come from a particular region or
a particular state of Gcnnany. It's this regional delimitation that constitutes the
specific bonus of these labels, since tlie transportation distances involved are
also subject lo restriction. Examples include (from the Icfi) the Test Seal for
ecologically produced food awarded by the Free State of Saxony, the
registered symbol for ecological fanning in confonnily with the EC Eco-
Dircctivc awarded by Thuringia's Ministry for Agriculture, Nature
Conservation and the Environment, and the test seal for local ecological
products awarded by the Bavarian State Ministry for Nutrition, Agriculture
and Forestry.
Figure 4. Examples of ISO-type II labels (examples from Germany)
Potential environmental advantages of Type Il-labcls arc first that for the least
.sophisticated producers or retailers (Figure 4), a Type 11-labcl might be a starting poiiU for a
positive cliaiigo process, coiiccniraling on doing al least something. Second, for leading
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environmental innovators, such labels might highlight their best products, employing
technology that is ahead of competitors and beyond the labelling bodies.
3.3.3 ISO-type III labels
So-called ISO-type III labels provide numerical information, beyond the symbols.
They are also known as Environmental Product Declarations (EPD). So far, they do not seem
very relevant for consumers, who would be hard put to make sense of such quantitative data
(how many tons of CO^ is it reasonable to emit during the production of a hundred tonnes of
cement?). It has been described as an instmment mainly for business-to-business
communication, but for small and medium enterprises the correct interpretation of the
numerical sheets will probably be almost as difficult as for ordinary consumers.
Development of Type III labels is a promising step for business, but for consumers, as
well as for small retailers and producers, the information will have to be translated. For Type
III labelling of bigger and more complex entities (like hotels, airiines and so on), EPDs will
probably be perfect tools.
Recycling label
It means, that the packaging
has been manufactured of
recycled products (eg. waste
paper). In this case the
amount of recycled materials
is 65%.
Source: complied by the author.
Recycling label
This label informs about
the recycling of waste
oil.
Since September 2001, monitored The Biokreis e.V. has set
foods from ecological fanning have itself to foster cooperation
been identified with the between producers,
governmental Bio-Seal in consumers and processors
Germany. The small hexagonal in line with ecological
symbol acts as a standardising principles in a
signpost for eco-producis. The Bio- conveniently sized region.
Seal is awarded against the criteria The top priority is to
laid down in the EC Eco-Directive, preserve rural agriculture
which include a ban on irradiating based on ecological
eco-foods, a ban on genetically fanning. The
modified organisms, a prohibition
on pesticides featuring chemicalsynthetic
agents and on easily
soluble mineral fertilisers.
Requirements include diverse,
extensive crop rotation, free-range
species-friendly animal husbandry,
organisation's other
activities include
certification of producers
and processors,
infomiation provision and
educational initiatives.
and feeding the animals with
ecologically produced fodder,
without any admixture of
antibiotics
enhancers.
and performance
Source: complied by the author.
Recycling label
This label stands for
glass recycling.
The ,.keep tidy"
label.
Figure 5. Examples of recycling labels world-wide
Biopark is a
registered and
protected trademark
for identifying
ecologically
produced food. The
Biopark e.V. was
founded by 16
farmers in
Mecklenburg-
Western Pomerania
in 1991, with the
aim of jointly
marketing
ecological products
with maximised
health value and
purity, and excellent
taste quality under a
single umbrella
brand.
Farmers operating
or changing over
to biologicaldynamic
. and
organic-biological
methods got
together in 1988
to fonn the
Okosiegcl (Eco-
Seal) association.
Figure 6. Examples of organic food labels in Germany
Recycling label
A warning label meaning that a
particular item contains toxic
substances (eg. paints or
batteries) and should not be
thrown out with household trash,
but disposed of properly.
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3.3.4 Other eco-labels and organic food labels
There is a jungle of labels out there: There are a large number of recycling labels
(Figure 5), often without any developed organisation to handle the waste. There are organic
food labels (Figure 6), social and ethical labels (Figure 7), all with some environmental
interest. In this context they are probably most interesting as examples of the kind of
overload, often "do-good-overload" that modem consumers have to deal with. Most
stakeholders call for a simpler system, with a limited number of labels for consumers to relate
to.
We can find labels on cosmetics, which state that a
particular product was not tested on animals.
However, there is no standard label, il is usually
picture of a rabbit. Cosmetics that were not tested
on animals can also carry the letters 'BWC [they
stand for Beauty Without Cruelty], or the words
Not tested on animals or Animal friendly.
Source: complied by the author.
"Dolphin-Safe tuna"
This label means, that
during tuna fishing, no
dolphins or whales are
harmed or seriously
wounded, and that
high seas driftnets
were not used.
This label means, that the
turtle mortality rate caused
by shrimp fishing is being
kept at the lowest possible
level. More information:
In Search of a Policy
Formula for Marine Turtle
Conservation in the South
East Asian and Indian Ocean
Region Turtle Safe Shrimp
Campaign
Figure 7. Examples of social and ethical labels, adopted world-wide
This label is often
mistaken for an ecolabel.
In fact, it has no
ecological value, but is
placed on goods, to
attract the customer
with a green label.
3.3.5 Country-of-origin (COO) labelling in relation to ecological issues
According to Italian companies, being informed of the origin of a machinery is always
an asset. Equal consideration apply to retail consumers, but for industry, this information has
a further considerable relevance to machineries' performances, general efficiency of industrial
plants and safety on the workplace. The origin mark does not "protect" consumers, but it does
"inform" on what they buy. Should a European company deem that it is worthy to produce in
a third country, and trade products under its own label, both consumers and the market would
benefit from a clearly visible origin marking, without substantial effects if the brand is known,
as demonstrates the vast number of glamour trademarks associated with a "made in country
X". The results of a survey carried out in Italy, France, Gemiany and United Kingdom
provided solid confirmation to the assumption that consumers arc interested in origin
marking.
The statement "it provides more information and gives the opportunity to make
conscious choices" was agreed by 78% in Italy, 85% in France, 86% in Germany, 84% in UK.
The statement "it helps to fmd safe products", was agreed by 70% in Italy, 79% in France,
66% in Germany, 78%o in UK. The statement "it helps to detect products imported from
countries that enforce no laws against child labour and for environmental protection" was
agreed by 70% in Italy, 78% in France, 80% in Germany, 79% in UK, Disagreed with the
statement "// does not provide cniy .special benefit" 47% in Italy, 73% in France, 71% in
Germany, 61% in UK. The more direct question "are you interested in knowing the country of
origin of products imported from non-European Union countries ?" was given a positive
answer by 72% in Italy, 87% in France, 83% Germany, 81% in UK,
Tcdde 5 provides a comparison of origin labelling regulations in other countries
compared to tlic provisions in the U.S. Farm Dill. In 2002, the EU required member states to
label all beef at the retail level, including ground beef, with information on the country of
birili, place of fattening and slaughter.
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Canada, Mexico and Japan all have some version of COOL regulation though only
Japan has rules as strict as those in the 2002 Farm Bill. One of the main arguments in favour
of COOL, discussed above, has also been used to justify mandatory labelling of genetically
modified (GM) food in Europe. That is, the consumer has a "right to know" what they are
eating. The U.S. government has strongly opposed mandatory GM {genetically modified)
labelling, and for good reason. In practice, GM labelling has not given EU consumers greater
choice, because food processors in Europe have recombined ingredients away from GM food
to avoid labelling. The same phenomenon has taken place in Japan. This pattem may well
develop with COOL and therefore U.S. consumers will not be given a choice because
imported labelled food will not be made readily available. Instead, the imported commodity
will be processed, re-exported or sold into the restaurant or food service industry, to avoid
COOL.
Tabic 5. Comparison of Country-of-Origin Labelling (COOL) Requirements for Food
US Farm Japan Australia & Canada Mexieo The EU
Bill
New Zealand
Retail
yes yes no Varies -
no yes
COOL* for
Ontario and
fresh
produce?
Quebec only
Comments Florida has About 10 Proposal Provincial Grapes,
had
popular under
decision avocados and
mandatory products consideration
mangoes
COOL since covered
have specific
1980
rules
Retail
yes yes no Yes to pre­ Yes to pre­ yes
COOL* for
packagedpackaged fresh meats?
meat;
meat;
A^oto
A'oto
imported imported
meat
meat
processed in processed in
Canada Mexico
Comments Exception for Full
Proposal "Processed"
Label must
processed traceability under
is determined
indicate
products within consideration by a rule of
country of
domestic
51% value
birth,
beef industry
added
fattening and
(including
labour)
slaughter
Notes: COOL* - counlry-of-origin labelling.
Source: compiled by the author from various USDA Foreign Agricultural Service attaché reports available at
www.fas.usda.gov
Numerous states have meanwhile got together in the Global Ecolabelling
Network (GEN), founded in 1994. The aim of this interest group,
> with a current membership comprising 26 cco-labcl organisations
— • worldwide, is to foster mutual feedback in regard to national cco-labclling
activities, and to develop the cco-labcl programmes of the individual nations
involved to maximally sophisticated efficacy. The GEN currently includes
members from Belgium, Brazil, Canada, China, Croatia, the Czech republic, Denmark,
Germany, Greece, Hong Kong (Special Adminislrativc Region), Hungary, India, Israel, Japan,
Korea, Luxembourg, New Zealand, Norway, Spain, Sweden (SIS), Sweden (SSNC), Sweden
(TCO), Thailand, the United Kingdom, the USA and Zimbabwe.
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4. Analysis of Mini Case Studies in Eco-Marketing and Eco-Labelling: Germany and
Lithuania
4.1 The Impact of the "Blue AngeV'for Paints - a Mini Case Study
One of the first Blue Angel product categories developed was for acrylic and 'highsolid'
paints (these are the kinds of paint used for woodwork and metalvvork). The product
selection criteria for this category limited the proportion of volatile organic compounds
(VOCs) to 10 percent for acrylic paints and 15 percent for high-solid paints. The first acrylic
paint to display a Blue Angel was introduced by Glasiirit in 1982; in 1987 eco-labelled paints
represented approximately 16 percent of the total market for solvent-based paints in (West)
Germany (ENDS, 1989); and by 1995 this figure had risen to just under 25 percent (telephone
interview with Jerry Hodge, director, ICI paints).
In 1990, the German government claimed that the Blue Angel for paints had reduced
VOC emissions by 40,000 tons (OECD, 1991, p. 30). However, the environmental benefits
resulfing from this reducfion should be viewed in light of the following.
First, any benefit (private or public) which has arisen from the shift towards low-VOC
paints did not come without a cost. The paints which have a Blue Angel are more expensive to
produce, which implies that scarce resources have been utilised in the producfion of these
paints that might have been utilized more efficiently elsewhere.
Second, an alternative set of eco-label criteria might have had a similar impact at a
lower cost.
Third, it is possible that low-VOC paints would have come onto the market even
without the eco-label. (Such paints might, for example, have been adverfised simply as 'lowsolvent',
with the puфorted health benefits, rather than the environmental benefits, given
emphasis.)
Fourth, according to a report on eco-labels carried out by Environmental Data
Services (ENDS, 1989, p. 23), 'Acrylic paints which carry the Blue Angel do not perform as
well as more traditional products.' Indeed, the report ascribes the poor sales of eco-labelled
paint in the professional market to this poor performance, noting that 'what counts for the
professional decorator are aspects of product quality such as ease of application, colour and
durability, and "environment-friendliness" ranks low on this Hst of purchasing criteria.' Poor
performance may also lead to a need for more coatings, hence more overall consumption to
accomplish a given task. More use per task may undo any puфortcd environmental benefits
measured on a product weight or volume basis.
Fifth, since no cco-labcl was applied to emulsion paints (which arc by far the largest
sector of the paint market), it is possible that some consumers bought cco-labclled acrylic
paints for use on walls and ceilings because they thought that such paints would have a lower
environmental impact. In fact, emulsion paints typically have much lower concentrations of
VOCs than even the ceo-labcllcd acrylic paints, so such purchasing habits would have been
perverse indeed (ENDS 202, November 1989, p. 26).
Finally, it is possible that some of the demand for low-solvent paint was the result of
concern over the direct health impacts (rafiicr than the environmental impacts) of solventbased
paints. Clcady, any reduction in emissions of VOCs which resulted from the use of
low-VOC paint purchased primarily for its perceived health benefits should not be counted as
a consequence of the cco-labcl, but rather as a byproduct of health-conscious paint purchases.
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4.2 The Impact of the "Blue Angel" for Recycled Paper - a Mini Case Study
A Bhie Angel for recycled paper was introduced in 1981. Since then, the percentage of
recycled material in paper sold on the German market has steadily increased (OECD, 1991, p.
30). However, the size of the market for recycled paper has increased likewise in many other
countries (where the fact that the paper is recycled is typically denoted by a triangle of arrows
together with a statement regarding the percentage of recycled material used). In fact, by
1989, demand for recycled tissue paper was greater in Finland (where market penetration was
25% for kitchen towels and 23% for toilet tissue) and Austria (16% and 14%) than in
Germany (7.2% and 10.2%) according to a survey commissioned by Fort Sterling (ENDS
183, April 1989, p. 25). Moreover, a recent survey of shoppers in Britain, carried out by the
government-funded National Consumer Council, found that 'claims on paper products were ...
praised for their clarity ... Claims such as "100 percent recycled" were felt to be clear and
unambiguous' (NCC, 1996, p. 47). Thus, it seems likely that the Blue Angel for recycled
paper was primarily acting as an expensive substitute for this alternative means of providing
information.
4.3 Eco-Labelling in Lithuania - a Mini Case Study
In 1995, the eco-labelling criteria were considered in Lithuania as a vital part of foodprocessing
and labelling procedure. In 1996, according to the Order of the Ministry of
Environment the new regulation of product environmental labelling was in power.
This Order was amended in 2001, according to which the EU-Flower eco-label was
taken as a basis for eco-labelling in Lithuania. The eco-label can be certified to all products,
except drinks and medications.
w
8.1 Label for Ecological Farming in
Lithuania
Source: complied by the author.
8.2 Label for Certified Ecoproduct
in Lithuania
8.3 National Eco-label for
Lithuania
Figure 8. Eco-labels in Lithuania, 2007
8.4 Label for Ecological
Farming in Lithuania
(adopted EU standard)
The graphical symbol for ecologically-friendly labelling in Lithuania is the "lily under
the roof in green colours {Figure 8.3). The designer of this label is Tadas Kosciuška. The
water lily was chosen to represent its unique sensitivity to the environmental pollution.
Unfortunately, over the past 5 years, we had no opportunity of witnessing the application of
the national eco-label for Lithuania "lily under the roof in practice.
5. Customer Loyalty for Eco-products in Lithuania
5.1 Preconditions for ecological farming in Lithuania
The concept of organic farming and ecological agriculture reached Lithuania after the
country had gained its independence, when co-operation with foreign countries became
possible. At the time Lithuania's first organic agriculture organizations were launched, the
organic movement in other European countries was already well advanced. Now the number
of ecological fanns in Lithuania is constantly increasing {Table 6). In 1993 the first 9
ecological farmers were certified. In 2000, 230 ecological farms with more than 4700 ha that
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amounted to 0.13% of the total farming land, 8 processing and 11 trade enterprises were
certified.
Tabic 6. Development of bio-organic farming in Lithuania in 1993-2000
Year 1993 1994 1995 1996 1997 1998 1999 2000
Number of farms 9 14 36 65 106 144 171 230
Area, ha 148 267 582 1118 1568 4006 3995 4709
Source: data provided by "Ekoagra" 1993-2000.
In 2002, 419 organic operators were certified: these were 393 farms with 8780 ha; 13
processing companies; 5 wild production collection collectors; 7 companies supplying inputs
to organic farms; and one company handling organic products (Jasinskas, 2008). And in 2003,
700 farms were cerfified and certified area totalled to 23 289 ha. So, in comparison with the
year 2002, the "leap" of the certified area is tremendous - it increased by 2.65 times
(Jasinskas, 2008). In 2003, the amount of certified organic processing companies reached 18.
The range of processed organic products has been expanding as well, encompassing certified
food, grain and vegetables processing companies. In 2003, cerfificates were issued to 9
gatherers of wild production, 6 companies supplying inputs manufacturing materials,
permitted to be used on organic farms, and sfill 1 organic production handling company.
In 2001, organic farms were established in every Lithuanian region, but most of them
are in the regions with lower soil quality and worse natural conditions (Jucevičienė et al,
2007). These areas traditionally had extensive agriculture due to nature conditions and,
therefore, the convcrsafion to ecological farming is relatively easy.
3.5
3 •
2.5 •
1.5
2 •
1
0.5
0
• Actual development 1 Anticipated development
2000 2001 2002 2003 2004 2005
Figure 9. Actual and anticipated growth of organic farms in Lithuania (% land area), 2000-2005
The area of certified ecological fiinns land in 2003 was 23,289 ha, which is 0.75 % of
the total area of agricultural land in Lithuania. This relative area of land under organic
production is smaller than in the existing EU countries or even than in other Baltic slates.
Fully organic farms on 2002 conslilulcd 36 % of the organic land area; the remainder is
accounted for by farms in their conversation period. (The conversation period is legally
defined by EC Reg 2092/91 and lasts 2 years. The process of conversation, defined as the
transitional phase from a conventional to a "steady" organic system, usually takes longer)
(Jasinskas, 2008). The average size of the organic farms iti Lithuania has increased every
year: in 2002 the average size of the ecological farm was 22 ha, and in 2003 - 33 ha. This
tendency shows how farmers are becoming more orientated toward organic production,
although organic production is rarely pursued in the whole farm, but in just one part of it. In
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Lithuania, as in most EU countries, organic farms are on average larger than conventional
('non-organic') farms (the average size of with was 12 ha).
As was shown in Table 6, the number of ecological farms is increasing by 20-30%
annually. Lithuanian organic agriculture is considered the most dynamic sector in the
country's agricultural industry. If the certification of land follows the same pattem, as
forecasts in 2002 approved by the Lithuanian Government an "Action Plan for Development
of Organic Agriculture", in 2006 this area will comprise 0.5% of the total agricultural land
{Figure 9). This implies that it probably will not be a main direction in agriculture but an
alternative for individual farmers. From other hand, the goal is to have 1% of the total
agricultural land area turned into ecological farms before 2006.
5.2 National survey results
The EU countries have adopted the practice, the essence of which is, while planning
for the further development of eco-farming, it is of paramount importance to take into account
consumers' expectations: to adhere to strict quality regulations in eco-production; to perform
regular 'good practice' inspecdons; to follow eco-certification standards and involve
consumers into the process were appropriate (Toming, 2007; Jucevičienė et al, 2007;
Gmndey, 2008a, 2008b). Studies in the EU (the Baltic States including), the USA and Canada
demonstrate the following buying trends of eco-products: these products are purchased due to
a) healthier lifestyle; b) better and natural taste of a product; c) fad; d) popularity of the
phenomenon.
As the precondition for eco-production, eco-farming is getdng momentum in
Lithuania and becoming popular within each year either as a part of eco-farming activities or
eco-tourism activities in the rural areas of the country. This survey sets to investigate the
demand .side of eco-production and consumption. The survey was performed by the
Interdisciplinary Research Group of the Centre of Socio-Cultural Research at Kaunas Faculty
of Humanities, Vilnius University, Lithuania, in the period of 2007-2008.
5.2.1 Sample
In order to verify if Lithuanian consumers are aware of ecological branding and
ecological products, the following sample pattem was adopted: 1054 respondents were
surveyed, representing four major cities in the country, namely: a) Kaunas - 56% of all
respondents; b) Vilnius - 24%, c) Klaipėda - 12%; and d) Šiauliai - 8% {Figure 10). The
majority of them were within the age group of 28-45 (73% of the respondents), while the rest
of surveyed people represented the age group of 18-27 (9%), and over 45 years of age (18%).
As it is usually perceived that women are the shopping decision-makers in most cases, the
results of the national survey on ecological products also verified this perception: 88% of all
respondents were females.
12%
56%
24%
• Vilnius
• Kaunas
Q Klaipčda
P Šiauliai
Figure 10. Segmentation of respondents fn Lithuania hy residence (%), 2007
Ti

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5.2.2 Perception of ecological products
5?
Researching Customer Loyalty in Lithuania
During the 2007 National survey in Lithuania, the respondents demonstrated
knowledge and awareness about the category of products, labelled as ecological (71%). Most
of the respondents outline that „an ecological product is the product, during the process of its
growth and processing no artificial chemicals and fertilisers were used; ecological products
are healthier than traditional ones; the ecological farming method doe snot cause any harm
to the environment" (Lithuanian National Survey, 2007).
As the survey findings demonstrate, the respondents associate ecological products
with a) fruits (74%) and b) vegetables (96%), first.
An unexpected resuh was that other agricultural products, such as milk and dairy
products, meat and its products, bread and its varieties are not automatically perceived as
ecological, even though are available on the market with clear eco-labelling.
More than half of the respondents (67%) indicated that they are aware of the
ecological labelling practice in the country and some of them (26%) are specifically looking
for such eco-labelled products in the shopping centre. Amongst the surveyed people, only 6%
(mainly in Vilnius and Kaunas cifies) are permanent eco-product buyers. Vilnius-dwellers
specifically indicated that they have an opportunity of buying such eco-certified products in
the Old Town market, which is becoming very popular not only during specific festivals and
cultural heritage events, but on a daily basis.
5.2.3 Shopping behaviour for ecological products
When developing the questionnaire, the most important issue was, whether ecoproducts
are accessible to the broad public to have their choice and saying. In effect, the
majority of the Lithuanian respondents prefer a shopping centre or a supermarket for ecoproduct
purchasing (45%). Other shopping options were as follows {Figure liy.
a) open market (21 %);
b) own produce (e.g. Lithuanians are still fond of having a small patch of garden
either next to their private house or the so-called collective garden plot, where
they culfivate some crops over the season) (12%);
c) trade fairs (e.g. autumn and spring fairs, organised broadly in Vilnius and
Kaunas) (11%);
d) speciality shops (e.g., ecological food shops) (6%);
c) elsewhere (e.g. travelling to countryside to purchase eco-products first hand or
gather wild berries and mushrooms in the woods, as it is still quite popular) (5%).
open markcl trade fairs speciality shops supcnnatkct/ clscwlicrc own produce
shopping centre
Figure II. ScRmcntalion of respondents In Lithuania by the point of purchase of eco-products (%), 2007
Il has been identified that 18% of the respondents arc cco-brand loyal - they would
seek Ihc same producer (e.g. ecological honey, cco-brcad or cco-potalocs), due to the
acceptable taste, texture, quality and price ratio.
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When asked to specify the groups of eco-products they at least purchased once in the
past 6 months, the respondents in Lithuania produced such a spectrum of replies:
a) eco-vegetables (86%);
b)
c)
d)
e)
f)
eco- fmits (77%);
eco-honey (62%);
eco-berries (45%);
eco-bread and its varieties (33%);
eco subproducts and proccessed foods (19%).
5.2.4 Factors effecting consumers' loyalty towards ecological products
The main factor which motivates Lithuanians to purchase eco-products is a deep
concem about their health status. On the other hand, the respondents expressed their doubts
on several occasions on the authenticity of eco-certification. They specified (16%) that mass
media does make a considerate influence on their opinion about eco-products and their
labelling. There were several occasions on the news, when COOL (country-of-origin
labelling) was breached in Lithuania; foreign country products were labelled as grown or
bread in Lithuania, instead of putting the country of origin - Poland, Latvia, Holland, Estonia
or Russia. Therefore, due to cases of forged COOL, Lithuanian shopping centres and even
open markets are loosing the trust of their valuable customers and their loyalty.
Another factor loyalty, as indicated by the respondents is the price of an eco-product
and its potential to compete with foreign substitutes. Approx. 53% of the respondents are
likely to pay extra 1.5-2 Litas (~ 50 Euro cents) for eco-products as compared to ordinary
products (with preservatives). Only 1.5%i of the respondents were ready to pay more than 2
Litas for eco-products, which is within the allowance of their family/ individual budgets.
The third factor, impacting the level of loyalty for eco-products, mentioned by the
surveyed people, was the eco-marketing actions, namely advertising (Figure 12). Even
though advertising, as indicated in Figure 12, plays the least role in building customers'
loyalty in Lithuania towards eco-products, this issue should not be under-valued.
advertising
infonningandcducating the society
lowcrpriccs forcco-products
increase of persoiuil income
20 40 60 80 100
Figure 12. Factors, which are likely (o increase (he customers' loyalty towards cco-producls (%), 2007
It is possible to assume that eco-products and cco-labclling lack sufficient
adveriising, as this survey proves. The respondents pointed out that they observed eco-product
adverting on TV (53%), in print (newspapers, journals, leaflets and promotion material) (up to
18%), on Internet (3%) and 16% of respondents indicated that they did not come across any
advertising, related to ecological production or consumption in the past 6 months.
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D.Grundey 177 ISSN 1648 - 4460
Conclusions
Researching Customer Loyalty in Lithuania
Implementing a philosophy of sustainability in the practice of marketing would
require businesses to become more sensitive to the efficient use of all resources over a longer
period. Marketers should be encouraged to assess the cost of new laws and regulafions, the
cost of endless lifigafion, and the potential loss of competitive position(s) as integral and
critical components of an ecological approach, which is broadly discussed and substantiated
in this article.
A broad scope of evidence brought to the reader from European and American
countries prove that eco-marketing and eco-labelling is a natural process, which is not only
broadly discussed by the scholars but also is broadly applied in the practice by businesses.
The application of ecological standards in growing crops and raising animals, as well as the
production process might be considerably costly and economically not viable, but consumers'
preferences for safer and ecologically-produced substances arc growing, which leaves modem
business aspiring for a more profitable future.
The adoption of ISO standards in foodstuffs' producfion and farming pracfices is the
code of good practice, which is world-wide acceptable in various business sectors, starting
with food industry and finishing with services, such as hotel and tourism industry, etc. A mini
case of Lithuania also indicates that the country has adopted the eco-labelling policy,
following the EU directives and national inifiatives.
Accoridng to the survey, performed in 2007-2008, the Lithuanian respondents have
summarised that the most influential factors for their loyalty towards eco-products in the
country are:
1) increase of personal income;
2) lower prices for eco-products anf eco-processed foods;
3) informing and educating the society;
4) more advertising.
Lithuanian respondents, as opposed to consumers of the EU countries, the USA and
Canada, did not mention that their purchasing decisions of eco-products could be influenced
by fad, growing popularity and propaganda. The main de-motivators of buying eco-products
in Lithuania are: a) high prices; b) low availability and c) doubts about the authenticity of ecocertification.
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D.Grundey 179 ISSN 1648 - 4460
Besearching Customer Loyaity in Lithuania
EKOLOGINIS MARKETINGAS IR EKOLOGINIS ŽENKLINIMAS: AR TAI UŽTIKRINA KLIENTŲ
LOJALUMĄ EKOLOGINIAMS PRODUKTAMS LIETUVOJE?
SANTRAUKA
Dainora Grundey
Straipsnyje svarstomos ekologinio marketingo ir ekologinio ženklinimo problemos, pateikiant teorinius
šios sąsajos aspektus bei iliustruojant tiriamąjį objektą gausiais praktiniais pavyzdžiais iš Vokietijos, Norvegijos,
Kanados, JAV ir kitų pasaulio šalių.
Ekologinis (dar kitaip vadinamas žaliasis, aplinkai draugiškas it kt.) marketingas bei ekologinis
ženklinimas tampa šiuolaikinio verslo prerogatyva visame pasaulyje, o vartotojai palaipsniui suvokia ekologinių
produktų naudą ir veiksmingumą.
Atlikto tyrimo 2007-2008 metais Lietuvoje metu apklausti 1054 respondentai keturiuose Lietuvos
miestuose - Vilniuje, Kaune, Klaipėdoje ir Šiauliuose. Šiame tyrime buvo siekiama išsiaiškinti kai kuriuos
ekologiškų produktų pirkimo ir vartojimo veiksnius; nustatyti, ar pirkėjai kreipia dėmesį į žemės ūkio produktų
šalies kilmės klausimą, ekologinį prekių ženklinimą bei perdirbtų žemės ūkio produktų sudėtį; išanalizuoti, kokią
įtaką jų pirkimo sprendimams turi ekologiškų produktų reklama ir ar ji pakankama.
Tyrėją taip pat domino klausimas, ar respondentai yra ištikimi pasirinktiems ekologiniams produktams,
ar prekybos centrų ir prekyviečių vykdoma rėmimo veikla padeda ugdyti jų lojalumą ekologiniams žemės ūkio
produktams.
REIKŠMINIAI ŽODŽMI: ekologinis marketingas, ekologinis žymėjimas, ekologiniai produktai, vyriausybės
politika ir reguliavimas, klientų lojalumas, Lietuva.
Tll-tKmniMATIONS IN imiSESS & ECONOMICS, Vol. 8, No 1 (16), 2009