Advertising Age writes this morning that Wal-Mart’s “heralded sustainability initiative, labeled a ‘win-win-win’ for the companies, the environment and consumers, is turning into less of a victory lap than expected for brand marketers. For example, the push could cost Procter & Gamble Co. $200 million alone by one estimate.
“The reason: Wal-Mart's initiative pressures marketers to invest substantially upfront to reduce packaging and energy use. The savings in shipping costs and packaging materials that could offset that, however, aren't going mainly to marketers' bottom lines. Those savings instead appear to be going toward giving better prices to Wal-Mart and its customers.”
In other words, manufacturers take a bigger hit because while they may share the operational day-to-day savings that come when packaging and energy costs are reduced, they are the ones making the investment in the technologies that make these things possible.
“The reason: Wal-Mart's initiative pressures marketers to invest substantially upfront to reduce packaging and energy use. The savings in shipping costs and packaging materials that could offset that, however, aren't going mainly to marketers' bottom lines. Those savings instead appear to be going toward giving better prices to Wal-Mart and its customers.”
In other words, manufacturers take a bigger hit because while they may share the operational day-to-day savings that come when packaging and energy costs are reduced, they are the ones making the investment in the technologies that make these things possible.
- KC's View:
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I’ve made the switch at home to concentrated laundry detergent that is said to be energy-efficient, and I have to admit that I did so because of the environmental impact, not because I thought it would be cheaper. At some point, I think, a lot of people may be willing to spend a little bit more in order to be environmentally conscious; it isn’t like one person can have an impact, but it has to start somewhere.
By the way, there was some discussion here on MNB last week about a study suggesting that an awful lot of Americans believe that when companies market their sustainability or environmental agendas, it is mostly a “marketing gimmick.” No matter who is seeing the financial advantages from sustainability programs, marketers have to work assiduously to avoid this sort of cynicism on the part of consumers.
Which may be difficult, considering that they may be reading stories like this one, which ran in California’s The Daily Breeze:
“Well, what do you know? It turns out the Schwarzenegger administration’s purchase of some 1,300 flex-fuel vehicles really was a ‘green’ policy after all. That's ‘green’ as in the color of money.
“Although the fleet can run on ethanol, it doesn't. Until this month, there has only been one ethanol fueling station in all of California, and it's down in San Diego, far away from where most of the cars reside in Sacramento.
“And even that station has never once fueled a state car.
“The flex-fuel vehicles run on the same unleaded fuel as most every other car does, including the cars they replaced, ostensibly as part of an effort to clean up the environment.
“When this story first broke in July, we chalked it up to political cynicism: The governor's staff authorized the $17 million purchase to bolster their eco bona-fides, even though the actual benefit to the environment was nil. But now it seems the motivations were even more duplicitous than that.
“In an apparent violation of state law, internal documents show that California officials agreed to buy the ‘flex-fuel’ vehicles from General Motors a full month before any bid was ever issued…” And the story goes on, suggesting that perhaps the governor’s long-term relationship with General Motors was more important than the environment.
Cynicism is hard to avoid in the face of such stories.
