Marketing “green”

Be prepared and opportunity will come

By Ksenia Agapova, RuGBC marketing directorSustainability is an emerging dimension of the building market. Market players adopt green approach in different ways: developers increase green building awareness in order to engage with their customer groups, consultants, engineers, architects and subcontractors create departments, which add extra services to their offerings, some firms focus solely on green products and services and material suppliers start to promote green potential of their products.

Marketing green is one of the most effective ways to attract attention, while combined with other smart tools of customer relationship management can become a foundation of a business success. This article targeted both to those companies who already serve green industry and to those who only start looking at advantages of green business.

Why believe in green marketing

Green marketing has potential to become one of the most profitable and successful in a long term perspective. Limited nature of natural recourses, increased rates of consumption and environmental pollution accelerates green ideas adaptation worldwide both in business and between consumers. The green market growth outpaces all predictions in developed countries and there are no reasons why this trend won`t come to Russia. Russian customers and building end-users become aware of available green technologies and methods, while market for green materials and services grows. In Russia within 1 year after crisis slowdown around 40 projects claimed green credentials (due to Green Building Award nominations) and more continue to appear. Leaders of the industry were first to accept green credentials, they include such brands as Bayer, Philips, Siemens, Boon Edam, Arup, Bovis Lend Lease, Aecom, etс.

For those who believe that green building will never reach the mainstream adoption there is an example of an Apple Computer to illustrate how firms manage to mainstream innovations with regularity. When the iPod was introduced, many thought it was overpriced, with a limited market (similar obstacles often claimed for green building). At the end of 2006, Apple had sold more than 70 million iPods. Why did it work? Most would say – design. Marketing professionals would answer – understanding the customer. When green buildings begin to incorporate great design as well as sustainability features, when architects and engineers begin to understand the multiple and varied business-case benefits that appeal to different project and client types, then green buildings will be able to “cross the chasm” into mainstream acceptability and utilization.

Why it takes time

The green building market is similar to technological innovation market. Due to classical marketing theory innovations take time to get into the marketplace. Usually the time for more than 90 percent of the market players to adopt an innovation is 15–25 years (i.e., a generation). Innovations are being adopted in case if they are commercially viable, that is why so called “costeffectiveness barrier” exist to sort innovations which improve current production methods. The costs of learning new methods, the economic risk of investing capital in new things and the business risk have to be offset by income innovations bring.

The process of innovation penetrating the market described as follows. A group of pioneers with strong technical expertise and a tolerance for risk tries something new. When the size of this group reaches about 2.5 percent of the total potential market, then a group of early adopters begins to find out about what the innovators are doing, observes successful field trials and begins to incorporate the innovation into their own work. This group of early adopters has less tolerance for risk, but is attracted to the benefits of the innovation. When the size of the group adopting the innovation reaches about 16% of the potential market, then a new group, the early majority, begins the process of “mainstreaming”. Finally, at about 50% potential market size, a group of late adopters joins the process. Near the end of the adoption process, a large group of laggards reluctantly adopts the innovation, and some people, of course, never adopt.

If we turn to the Russian green building market we can observe the rapid development of the first stage – pioneers adoption – with the first two green buildings being certified in 2010. The market is expected to achieve critical mass of 2,5% in 2011-2012 when major Olympic projects would be realized (with 10 buildings BREEAM certified) and preparation for other massive sportive events (with similar green credentials) would approach. Market recovery and search for differentiation between property players would catalyze green building popularization.

Finding your way

For companies seeking to benefit from green marketing it is important to define the stage on which they wish to approach the developing trend. Flexible medium-size risk-takers might prefer to become early adopters, while large size, inert organizations would feel themselves more comfortable being mainstream users. Both early adopters and mainstream users must take into account all risks of going green. Associated risks might include failure to achieve cost efficiency, technological risks and slow rates of market development. In order to mitigate the last one – risks of markets to be too slow to pick up the trend proactive approach in marketing strategy must be preach by those ones who would like to form pool of an early adopters.

Where do we find money?

Low market awareness and the complex nature make process of green modernization even more challenging. A number of green building myths create serious obstacles for market penetration. Higher construction costs is the most popular green building myth. Due to Turner Construction Company survey, conducted between top-managers perceived cost premium would be 14-20%, where in reality it rarely exceeds 8%.

It is important to show your clients ways to finance green building improvements to reduce or eliminate the “first-cost penalty”, using utility savings, marketing budget relocations and green building premium to maximize financial credentials. Green construction costs represent 0-8% of total construction costs surplus for certification usually represents not more than 50 -70 000 USD. If we apply holistic approach to project budgets – ways are easily found to offset these expenditures.

For example, marketing budgets for landmark projects consist of a significant marketing spent on outdoors and mass media. When investing in green instead of outdoors and media, developers would improve their projects – and the projects would speak for itself!

Practice what you preach

Architects and other professionals should practice telling the green building story in engaging ways so clients can appreciate that a green certification is not an architectural whim or some existential fad, but an essential element of creating a high-performance building and a quality assurance method for the end-product. Green service companies should consider developing their own proprietary tools for measuring the costs and benefits of sustainability for their clients, as part of a branding approach.

Those firms who want to be seen as truly green should encourage implementation of green thinking into all devisions of their organizations – management, administration, operations. As being green has intangible nature it is very important to communicate green messages through tangible elements of your client encounter. Analyzing the client encounters and making them green will help firms to get to the point. For example, insisting on conference call instead of meeting, using FSC or recycled paper for stationary, using energy meters in your office and e-versions of promotion materials seen as simple ways to align your activity with green agenda. A holistic approach would include implementing green office programmes and use of green suppliers while implementing enterprise environmental management systems, like ISO 14000.

Reduce lighting bills through enlightenment

If green building is to enter the mainstream, it must begin to take note of the problems of marketing new technology to the early majority. That is why the role of education is essential for green marketing efforts. The early adopters must develop their own strategy to increase green building awareness. Knowledge sharing and learning together with their clients can become a foundation for successful and long-term collaboration. Presentations and seminars, articles and events should become the main tools to attract and retain clients. Each firm must develop own arguments for green building on a solid basis of foreign and local case studies. Numbers and performance measures of results from international experience are widely published to aid learning.

Advantage of educational approach will help early adopters to leverage on client`s loyalty and better relationships. At the same time educational marketing would require additional resources. Numerous industry associations, exhibitions and conferences, as well as dedicated press developed recently would aid companies to spread the word about their products.

Search for enthusiasts

Green building stands for closer cooperation between all parties of the construction process. Development of new market for green requires a lot of resources and action, and would be solved more effective if you find supporters. Innovations spread fastest through the work of a relatively few people who have well developed social networks; when they are “sticky” in terms of the emotional effect of memory and metaphor; and when they are disseminated within a powerful context (almost a tribal setting) among people who know, trust and like each other. Green building will spread most rapidly when knowledge about this approach is spread by well-connected individuals; through people who widely and openly share their knowledge with others through publishing and speaking (i.e., experts whose judgment is acknowledged and trusted) and through “opinion leaders” who have the ability to tell compelling stories to others about the benefits of sustainable design.

In conclusion worth to mention that marketing green is essentially positive as it appeals to one of the most important human needs – feeling of being generous and doing something good. In research, conducted by the MacGrow-Hill Construction “doing a good thing” was mentioned by the majority of respondents as the main reason to adopt green strategies in their projects. Be positive and share your buzz with others!