Greening Consumption

November 14, 2007

An Interview with Michel Gelobter, Founder and EVP of Cooler

Long-time environmental activist Paul Hawkins once described “green consumerism” as an oxymoron.  Indeed, “green consumption” makes Wikipedia’s “List of Genuine Oxymora”.   The reason: consumption by its very nature has an impact on the environment – to some degree or another – and therefore, is hard to call truly green.


Yet, short of reducing consumption, many consumers, manufacturers and retailers are focusing on greener consumption – a term which implies shifting to products and services that have a lower environmental impact, though in many cases, not specifying by how much.


Today, there are positive signs that demand for greener products is increasing sharply.  In fact, the Natural Marketing Institute reports that the $200+ billion Lifestyles of Health and Sustainability (LOHAS) market is expected to double by 2010 and quadruple by 2015.  

There are many online retailers and content sites that offer green products directly or simply help consumers navigate the market.  They include three primary categories:

Green online retailers: Many online retailers have emerged that are dedicated to serving the green market including Buy Green, Earth Friendly Goods, Eco ChoicesEcoWise, Gaiam, Green Feet, Green Home, Green Shop (UK), Green Shopper, Green Shopping (UK), Green Store, Indigenous, Natural Collection (UK), Nigel’s Eco Store (UK), Rogue Natural Living, Shop Green (PriceGrabber), The Green Office and VivaTerra among others.

General online retailers. Several general merchandisers and portals have embedded a green section into their existing offering, including Amazon and MSN among others.

Green directories: Finally, other online sites have positioned themselves as green directories, product search engines and shopping guides.  Sites include EcoBusinessLink, EcoMall, EcoSeek, Evolvist, Evolve Shopping, Green Deals Daily, Great Green Goods (blog), Green People, Green Providers Directory (UK), Green Shopping Guide (UK), Guide Me Green (UK), Haute*Nature (blog) National Green Pages, Pristine Planet, and TheFindGreen among others.  Perhaps the most comprehensive guide to online eco-friendly shopping is published by thepurplebook

Yet, despite this growth rate, LOHAS spending is still a drop in the budget when it comes to US consumer buying power – estimated at more that $10 trillion in 2007.  As such, the greater challenge is to shift spending on mainstream products to greener ones and do so in a way that also provides the incentive for mainstream manufacturers to reduce the carbon footprint of their products over time.

There are many ways to motivate the purchase of greener products across the purchase funnel.  Here are a few examples:

Make existing products greener.  Product companies have the opportunity to green their products – including sourcing, use and disposal.  Greening a product in the first place, of course, is the best way to reduce its environmental footprint.  Companies are motivated to do so for a variety of reasons including increased consumer demand, pressure from partners across the supply chain and risk to the brand simply by being complacent.

One of the best examples is Wal-Mart.  For example, it has identified $10 billion in potential savings simply by decreasing product packaging.  It has also required its suppliers to reduce the environmental impact of the products that it sells (eg, more concentrated laundry detergent formulas reduce the use of energy for transportation) while expanding the market for others (eg, by selling fluorescent bulbs at lower cost under its own private label). 

Due perhaps, in part, to Wal-Mart’s pressure and lead, Procter & Gamble has responded with a commitment to sell $20 billion worth of greener products over the next five years.  It has also joined the Supply Chain Leadership Coalition, an industry organization that pressures suppliers to publish information on carbon emissions, to help it reduce the impact of its suppliers as well.


Motivate greener choices.  Product companies and retailers can influence behavior by interjecting green as a considered attribute in the purchase decision.  There are several ways to do so including the use of eco-labels, ratings, promotional benefits or green rewards tied to a loyalty program.  Eco-labels and ratings impact consumer purchase decisions by providing relevant environmental information at the point of sale – and indirectly motivate greener product design and manufacturing decisions by making green a differentiating attribute. 


Today, eco-labels are actively being used or under consideration by manufacturers, (eg, HP, Dell), retailer (eg, Wal-Mart, Home Depot) and government regulators.   Moreover, several organizations have taken the lead in developing or aggregating green rating systems including Green Seal, Consumer Report’s Green Choices, the US EPA’s Energy Star and independent Better World Shopper.  Moreover, sites like Alonovo allow users to filter products based on their own green values.


Promotional benefits and rewards can also influence consumer purchase behavior.  Marketing Green explores both of these levers in two previous blog entries. (“Green Labels as Drivers of Consumption and Loyalty Programs”, March 19, 2007; “Testing Green Promotional Benefits to Drive Acquisition”, September 16, 2007).


Offset environment impact.  Today, more and more companies and consumers are turning to carbon offsets (and renewable energy credits or RECs) to mitigate the environmental impact of products manufactured or purchased.  While the offset mechanism may vary – from purchasing allowances on a carbon exchange to investing in renewable energy projects – the effect is similar: offsets reduce the carbon impact of consumption by effectively removing the equivalent amount from the environment elsewhere. 


While carbon offsets are not without controversy, they can be a powerful way to mitigate the impact of consumption.  There are several ways that carbon offsets are purchased today:


First, carbon offsets can be voluntary.  Retailers can provide options to do so – as most airline sites do today, for example – or consumers can purchase them directly from many brokers including Atmosfair (Germany) Better World Club, Carbon Fund, Carbon Leaf (UK), Carbon Zero (Canada), Climate Care, Climate Counter, Climate Friendly, ClimatMundi, CO2 Balance, My Climate, Native Energy, Offset Carbon Company (UK), Offsetters (Canada), Solar Electric Light Fund, Sustainable Travel International, Target Neutral (UK), Terrapass, The Carbon Neutral Company, TreeBanking, and Uniglobe Travel among others. 

Typically, retailers play no more than a passive role in facilitating carbon offset purchases by providing the mechanism to do so on their site.  In many cases, it is no more than an additional option available during the check-out process.  The case of Virgin Atlantic is different, however; in response to low voluntary purchases, Virgin is now actively selling carbon offsets to customers while in-flight.  Sunvil Holidays (UK) goes one step further by putting the burden on the consumer to opt-out of – rather than opt-in to – purchasing a carbon offset by embedding it directly into the cost of its vacation packages. 

Second, carbon offsets can be structured into the transaction itself – treated as a promotional expense, embedded in the purchase price or covered as part of the transaction fee.  Companies as diverse as insurance giant Allstate, UK’s Silver Jet and Fiji Water are making their products carbon natural (or even carbon negative) as a way to differentiate their offering.  In this case the product company is absorbing the cost directly or raising its price to cover the added expense. (Interestingly, Allstate is offering to offset the carbon emissions from the automobiles that it insures).


Alternatively, credit card transaction fees can be used to offset carbon emissions as well.  Recently, issuers including Barclays, GE, MetaBank, Triodos Bank and Wells Fargo have launched green cards while Bank of America and upstart Brighter Planet have announced their intentions to do so.  These cards divert a portion of their fees to mitigate the impact of the products purchased through a donation to a non-profit organization or direct purchase of carbon offsets. 


Such card programs have advantages and disadvantages.  Given their reach, credit cards can green a significant amount of consumer spending simply by providing the incentive to consumers to make their purchases on a card with green benefits.  Yet, to do so, cardholders must trade in personal benefits earned from traditional reward programs (eg, airline miles) for ones that provide more societal benefits.


Alternatively, a promising, new retail model has emerged that divert a portion of revenues earned through affiliate marketing programs to pay to offset the carbon from products purchased.  In doing so, sites such as Cooler and Earth Moment enable consumers to purchase products from traditional retailers while offsetting the carbon impact of these purchase in the process.  Such a model is compelling to consumers as, from their perspective, the cost of the carbon offset is absorbed by the retailer and they can green their purchases while using their existing credit cards. 


While numerous companies are involved in carbon offsetting, Cooler has clearly been one of the most innovative players in the space.  Distributing 8 million products from 400 retailers, Cooler provides consumers with the largest selection of products that can be purchased with an embedded carbon offset.


Recently, I had the opportunity of sitting down with Michel Gelobter, Founder and Executive Vice-President at Cooler.  We discussed the recent launch of his company, its B2B and B2C offerings and the challenges that we all face in greening consumption.  Here are his words:

Marketing Green:  By offsetting the carbon impact of products purchased, Climate Cooler has the potential to change the game in the online retail space.  What was the impetus for starting the company? 

Cooler:  We wanted to find ways to create the momentum in the consumer space for taking action on climate change.  That exploration led to what has now become Cooler.  Cooler is distinguished by being the first site where you can purchase practically anything you can buy on the Internet – except for maybe a plane ticket – in a way that eliminates the global warming impact through the point of sale.   

Our mission as a company is to connect every purchase with a solution for global warming.  We do that with three offerings.  The first is that we use the country’s only product and service carbon calculator that was developed jointly by Carnegie Mellon and Berkeley.   

MG: Does it calculate the entire impact of the product, that is, how it is manufactured, used and disposed of? 

C: It is just to the point of sale: how it is manufactured and transported.  But, the innovative piece is that it adds the retail component which ranges usually from 20-30% of a product’s carbon footprint. 

MG: How about shipping? 

C: Yeah, it includes that too.  But [the environmental impact] tends to be much lower which can be a surprise to our customer base. 

The second piece of this offering is our basket of carbon offsets or pollution prevention and renewable investments that have been unanimously approved by the world’s best environmental organizations.  And finally, we set out to create a basis on which consumers could take action in a way that was trusted and transparent.  And that is what Cooler is about.   

We also give people a way to track their impact and start thinking about carbon budgeting.  We already have the My Impact page which tells [consumers] what they are emitting.  After all, 40% of the average American’s carbon footprint is in consumption of goods and services.  

MG: So do you view part of the value that you bring is educating consumers on their true environmental impact? 

C: In the consumer space, absolutely.   

The bigger piece of the business is really the B2B offering.  Companies started coming to us and saying: “How can I put your works into my gears so when people come to my website – or bricks and mortar store – they can get a carbon neutral product.”

Our B2B offering is called Cooler Compete which is basically a way for companies to know, offset and reduce the global warming impact of the products that they sell.  And the difference is that those companies are going to make a choice about who pays for [the offset].  We think that most of our business customers are going to absorb the costs of carbon neutrality. 

MG: What services are you providing in the B2B space? 

C: First, we are providing the [carbon emission] calculation.  Our calculator is really revolutionary.  We are using a method that is, on average, more accurate [than existing calculators].  It is based on an approach called economic input/output analysis, whereby we calculate the footprint of a product directly through the economy.  Instead of looking at a shoe and saying “where did that leather come from?”, we say “how much of the leather industry did this company use?”.   

Peer-reviewed studies show that this method is, on average, more [inclusive] from an environmental perspective because it includes more of the carbon footprint than [other] analysis. 

The second service is really a reduction service, that is, a list of the top contributors to your carbon impact.  That is usually enough to motivate companies to bench mark against those numbers and reduce their impact.  

Finally, companies buy offsets with us.  We don’t actually make any profit from our offsets – we pass the costs directly through.  But our basket of offsets is very high quality.  

MG: You are ambitious in trying to serve two different audiences with very distinct offerings. 

C: Yes, but the website in some sense can be seen as a technology showcase.  The web site gives [companies] the sense like “Oh, this is what it could look like.”  So that is why the website is really critical.   

MG: In your B2C work, who is the typical customer that you are targeting? 

C: We are partnering with environmental organizations so our early go-to-market strategy is [targeting] the members of our partner organizations.  Now we are trying to move from the environmental group members to more of the LOHAS crowd.  Over time, we will target a broader and broader swath of the American public as more people become conscious of this issue. 

MG: How important is viral to your marketing strategy?

C: Viral would be great.  Right now, we are honing our technology platform to make that more potent.  For example, when you tell a friend, we are able to report back to you how much your friends offset.  We can also have people compete to see who is more carbon neutral.   

MG: How does the B2C business model work?  Is it an affiliate model? 

C: It is.  On average, if we refer someone [to an online retailer that subsequently makes a purchase], we get 6% [of the total sale].  The cost of the [carbon] offset ranges from 0.7 to 1.5% and we keep the rest for the business. 

MG: Are there plans to offset carbon emissions from the use and disposal of the products that you sell? CC: We do not have any plans to address that now. MG: How receptive are consumers today to carbon offsets? 

C:  I think we are easily 10 to 20 years out from having a stable, trustworthy, well-defined commodity market for offsets.  One of the reasons we partnered with the environmental groups is to give consumers assurances that at any moment in time, the best decisions are being made.  

MG: Do you think offsets take on more meaning when the US market moves from a voluntary to a mandated cap and trade system? 

C: No. I think personally that people need to take action now.  Our offsets are additional so they are already above and beyond everything done today.  We follow three criteria that are summarized as follows: real, additional and positive. 

“Real” means that we are taking carbon out of the atmosphere when you buy something.  We are not just meeting the next increment of energy demand with cleaner energy.  We’re actually capturing or reducing an emission somewhere else in the world, hopefully in the United States.   

“Additional” means that this would not have happened where it not for your purchase.   And “positive” means doing more for the world than just helping the climate.  It means helping to create jobs or generate more environmental protection or biodiversity. 

It is going to be a long time before governments are actually cutting emissions by 80%; by 2050, unfortunately.  Until that time and maybe well beyond it, we want to be the place where consumers can know that by acting their doing their part above and beyond what government is doing.  

MG: It is conceivable that your success could provide incentive for others to enter the market and that one day, offsets will simply be a threshold to compete? 

C: Of course, we would love it as a company and a social event if this became a must have.  And we are going to do our best to make sure that happens.  That is one of the reasons why we started the company. 

MG: Will this actually help solve global warming? 

C: I absolutely think it’s a huge part of the solution.  We can not be paralyzed by the fact that shopping and consumption is part of the problem.  We have to go in and fix it.  People have been trading goods for money for a long time and the system’s broken.  And climate change is actually a huge archetype for a wide range of ways to reknit the fabric of shopping with the fabric of community and earth care.

Green Brand Disconnect

October 26, 2007

This week’s cover story in BusinessWeek featured the experience of Auden Schendler, corporate director of environmental affairs at the Aspen Skiing Company (ASC), as he tried to convince his senior management that going green was worth the investment (“Little Green Lies,” October 29, 2007).



From an outsider’s perspective, one might think that ASC would be highly receptive to eco-friendly investment opportunities, as the company has incorporated green as a core brand pillar and a central theme in its marketing communications.  Yet, as Schendler points out, things are not always at they appear; apparently, ASC is not as green as its brand might suggest.

In one example, Schendler points out that in the past, senior management has resisted even modest investments in proven technologies – such as compact florescent light bulbs (CFLs) in hotel rooms – that yield measurable cost savings and a positive ROI.  The rationale: CFLs are not aligned with the brand experience ASC wants for its customers.  As one hotel manager said, “Fluorescent light would suggest a waiting-room ambience, jeopardizing the establishment’s five-star rating.” 

Such a world view, however, does not seem to acknowledge evolving social norms and consumer expectations regarding green.   According to a recent JD Powers Hotel Guest Satisfaction Survey, 75% of hotel guests are willing to participate in environmental programs.  In the luxury hotel category, an even higher percentage of guests are willing to participate: 87% of Baby Boomers, 95% of Gen Xers and 79% Gen Yers.  Based on this consumer data it seems that ASC may be underestimating their guests’ interest in and expectations for green as part of their hotel experience. 

As such, it seems that ASC’s decision not to invest in CFLs may be at odds with current consumer sentiment.  In fact, CFLs have already gone mainstream.  Today, many luxury hotels already use CFLs for lighting.  Their light quality has improved tremendously.  And, retailers are selling them aggressively, despite the fact that incandescent light bulbs are more profitable for them.  In fact, Wal-Mart has sold over 100MM of these bulbs this year alone.  

Moreover, not investing in CFLs seems contrary to ASC’s own brand positioning and communications in the market.  In fact, just weeks before the BusinessWeek article ran, ASC launched a new advertising campaign that, according to the Salt Lake Tribune, used “high-profile skiers and snowboarders to tout the resort operator’s environmental record and urging others to take action, too.”   This campaign is supported by a lightly branded microsite called Save Snow which educates visitors about what ASC is doing and what others can do to reduce climate impact.   

Ironically, the campaign also includes plans to send 40,000 CFLs to its customers.   


So, marketers should take note.  Consumers are increasingly willing to participate in environmental programs at hotels, and especially at luxury ones.  

Hotels should not be afraid to invest in green initaitives including CFLs.  Not only can such programs provide attractive ROIs, but, for companies such as ASC, they can ensure that the consumer experience aligns with their brand positioning in the market.  For ASC, the decision not to purchase CFLs is, at best, inconsistent with its brand.  At worst, the company risks that its marketing efforts are perceived as green washing.

Search Is Paramount in the Emerging Green Category

August 7, 2007

Paid search continues to grow and is now considered by most marketers to be a core component of their online marketing tool kits.  This continued growth is not surprising, however, as it is hard to beat search as a marketing channel for both its efficiency and effectiveness. 

There are several reasons for search’s continued dominance.  Search allows marketers to 1) engage consumers as they actively seek information in market, 2) connect consumers with relevant content based on self-identified interests, 3) pay only when consumers click on a sponsored link, 4) scale spend in the channel (to a point) and 5) enhance the productivity of other channels.  For example, building awareness with a 60-second spot will likely result in more searches being conducted by consumers that turn to the web to find out more information or link to the advertiser’s site. 

To green marketers, search also represents a powerful component of the overall media mix.  In fact, Marketing Green believes that search is even more critical for marketers of green products than for more established products because green is an emerging category that has high consumer interest but is difficult to navigate due to the lack of familiarity and standards.   

Moreover, green search will continue to increase as awareness and interest grows and consumers increasingly turn to the Internet for answers.  Here are few reasons why, as well as recommendations for green marketers on how to maximize the impact of the search channel: 

Consumers have a growing interest in green, but limited familiarity.  Many consumers are curious about the emerging green category but have relatively low understanding of the category or how to navigate it.  As such, consumers are more likely to research product choices before making purchase decisions and turn to online search when they do so. 

For marketers, this means establishing broad presence in paid search across both the general as well as green vertical search engines in order to intercept consumers when they actively seek category-, product- or brand-specific information. 

Consumers today conduct that vast majority of green searches through general search engines such as Google and Yahoo and will likely to continue to do so in the near term. The popularity of green vertical search engines – including Green Maven, Greener, GreenGamma, LiveGreenOrDie, GreenLinkCentral, EcoEarth, EcoSeeker and Earthle among others – is growing nonetheless based on the perception that green vertical search engines return more relevant results than general search.


In addition, green filters are emerging that allow consumers to search with greater precision either as an overlay to existing search engines or as a way to narrow the results based on a set of business rules regarding green.  Palore is one example which enables consumers to identify green merchants when using Google’s search engine.  Below is Palore functionality loaded into Google Maps.  Note the symbols included under each listing – including the carrot which denotes that the restaurant offers organic foods.


In addition, online sites are emerging help locate products and retailers offline.  Evolvist locates products and retailers by geography.  evolvist.gif

Alternatively, Alonovo filters products and retailers based on their relative corporate social responsibility and “greenness”.


Products and brands are proliferating.  Green products are being launched every day across almost every product category.  Product “greenness” is relative, however, which results in a spectrum of products, features, benefits and trade-offs that consumers must weigh before making purchase decisions.   

As product proliferate, so too will our vocabulary that describes them.   

Marketers should, therefore, take advantage of this by greatly expanding and testing the number of keyword and keyword combinations purchased.  Moreover, these lists should align with marketing campaigns and their objectives across the purchase funnel.  For example, an awareness campaign should include both branded, category and product-specific keywords.  Marketers should refresh this list frequently as the entire category is still very much in flux.

Consumers are hungry for relevant content.  Lacking familiarity with green products, consumers turn to credible information sources to learn about products, compare features and validate choices. 

Marketers should respond by providing relevant content on landing pages that link from both paid – and natural – search. This is important for several reasons.  First, consumers are more likely to engage in the content if it is relevant to their search.   

Moreover, content that pays off corresponding keywords searched translates into a better, more relevant consumer experience.  This is important with current algorithm-based search engines, as well as with emerging community-powered and/or customized search engines such as Eurekster Swicki, Rollyo and Yahoo Search Builder.   

In a world where consumers put considerable trust in the opinions of their peers, community-powered search engines will likely become more popular as search results are informed by the collective experience of the community.


This is especially important in an emerging category such as green.  With green products emerging rapidly, relatively low consumer familiarity and few standards, consumers will likely turn to peers to help make informed purchase decisions; community-powered search engines will likely play an important role in facilitating this process in the near future.

Competing on Green Accelerates Pace of Change

June 6, 2007

In today’s hypercompetitive markets, companies in categories such as computers and retail struggle to establish and maintain a competitive advantage.  Given that consumer expectations are evolving, many of these companies are turning to green to differentiate their offerings by being greener than their competitors.  As the basis of competition shifts to the green space, companies seem to be continually upping the ante by trying to outdo each other for being the greenest company in the category.

Interestingly, green competitiveness is having an unintended consequence: green competitive pressure is accelerating the rate of change within these categories.  Industry leaders such as Wal-Mart and Tesco, and Dell and HP – already engaged in intense battles for consumer hearts, minds and share of wallet – are playing tit for tat when it comes to green.

Today, for example, Dell announced that that it plans to become the “greenest technology company on Earth”.   CEO Michael Dell went further stating that Dell would “take the lead in setting an environmental standard for [the] industry…and intend[ed] to maintain that leadership”.

Through such an announcement, Dell is demonstrating more than just responsible corporate citizenship.  With HP recently regaining it leadership position in a market where PCs are increasingly viewed as a commodity, Dell is trying to shift a basis of competition to green.  As this message will likely resonate with its core consumer, HP – already no slouch on green issues (it once invited Greenpeace to its annual shareholders meeting) – will have little choice but to follow suite.  While it is unclear whether it will match Dell’s challenge head-on, HP is certain to raise its commitment to green through announcements during the coming weeks.

The lesson for marketers is clear: as the basis for competition shifts to green, it is likely that companies will vie for leadership on the issue, accelerating change in the category.  Savvy green marketers will either take advantage of being a first mover on green or ready their company to be a fast follower when a competitor inevitably does.

Brewing Direct Mail Backlash

May 8, 2007

This past week HSBC launched its “There’s No Small Change” campaign offering Green Kits full of eco-products and offers to new customers that sign up for a checking account and HSBC’s automatic bill payment option.  Such an offer is a win-win-win: customers receive a high value offer, HSBC acquires new customers that have built-in switching costs via the automatic payment options and the environment is healthier due to reduced paper consumption.

One of the reasons why such an offer may resonate with consumers is the growing acceptance that paper-based communications are not environmentally sound.  Such changing sentiment could foreshadow a backlash by consumers and advocacy groups that may force marketers to rein in all paper-based marketing efforts, including the $56 billion US direct mail industry.

Today, direct marketers rely on DM as a core channel to send targeted information to customers (from an in-house database or purchased from an external list).  What happens then if consumer backlash against the mounds of direct mail received each day results in a national “Do Not Mail” list, eliminating the ability of marketers to send solicitations without permission?  Sound fantastical?  Well, here are a few thoughts to consider:

First, the “Do Not Call” campaign was one of the most successful campaigns in history, resulting in 62 million consumers signing up in the first year alone.  As of September 2006, more than 132 million people were registered on the list.

Second, a “Do Not Mail” registry is gaining traction.  According to the Direct Marketing Association, “Do Not Mail” legislation has been introduced in more than 14 states so far this year that would create state-based registries.  Nine of these initiatives are still active (of which 5 are in Northeastern states where there is also real concern about limited landfill space): 


CT,HI, MI, MO, NJ, NY, RI, VT, WA Active/In Committee
AK, CO, MD, MT, TX Postponed/Withdrawn

Inevitably, such a registry (or the threat of one) will cause marketers to rethink paper-based channels, increasing their reliance on electronic communications (eg, websites, email, e-statements, e-catalogs, desktop widgets).  It is also likely to decrease the footprint of any remaining direct mail efforts (eg, use of post-consumer recycled paper, reduced frequency and size of package).  

Smart green marketers should interpret pending legislation as a call-to-arms and take proactive steps to reduce their addiction to paper-based channels before they have to go cold turkey.

Hybrids Shift into the Mass Market

April 29, 2007

Part II of an Interview with Bruce Ertmann, Corporate Manager of Consumer Generated Media, Toyota  

Shifting a company’s customer base from early adopters to mass market consumers is one of the key challenges facing green marketers.  Few green companies have been able to expand their niche beyond a core set of customers.  One of the primary reasons is that consumers tend to not like paying price premiums for green products.  Another reason is simply that consumers have not traditionally prioritized “green” as a deciding attribute when making purchase decisions. 

Yet, certain green brands like the Toyota Prius seem to be crossing this “chasm” into the mass market.  Though still in the early stages of their adoption, hybrids have already generated broad appeal with mainstream consumers.  Moreover, the stereotype of hybrid owners as treehuggers is far from the truth: in fact, they are high income, mainstream consumers.   

The results from a recent consumer survey by Topline Strategy Group (“Why People Really Buy Hybrids”, 2007) concur.  Topline found that 73% of Prius owners surveyed acted like mass market consumers (ie, they had a financial incentive to purchase the vehicle such as lower sticker price or operating costs than other choices considered) versus 23% of early adopters who paid a premium over alternative choices to purchase the hybrid.  Moreover, for marketers, Prius owners are an attractive target audience: 71% have household incomes over $100,000, with 28% at $200,000 or more.  

While it is uncertain whether this research is statistically significant (n=118), it is at least directionally representative of what Toyota itself is observing in the market.  Recently, I had the opportunity to speak with Bruce Ertmann, Corporate Manager of Consumer Generated Media at Toyota.  We spoke of Toyota’s success in the hybrid market, its target audience and the shift to the mass market consumer.  Here are his words: 

MG: What kind of consumers purchase Prius vehicles? 

BE: When we first launched the Prius, people joked about all of the tree huggers who bought the car.  Yes, we had those diehard owners, passionate people.  But, it truly has become a mainstream vehicle.   

For the longest time, we were undersupplied with the Prius.  [Toyota’s] US president went to bat for us this past summer and was able to get additional production in Japan.  Production came on late last year [followed by a] big sales push in December which most manufacturers have.   

And then in January our Prius sales dropped off significantly.  At the same time, we had all of this new inventory coming into the dealership.  So instead of a six month waiting, list we had inventory at our dealerships – which is frankly normal.  We began to see some of the traditional media ask whether the bloom was off the rose for the Prius and hybrid technology in general. 

But, in February we had a strong sales month.  Just this past weekend, we sold 2,000 Prius vehicles nationwide – a record for us.  So, [March] will be a record sales month. The vehicle continues to be hot and the hybrid technology still seems to be a winner with consumers. 

MG: Are you seeing the same customer shift across all your vehicles? 

BE: Yes, definitely.  We are seeing this with the Camry, our top selling car.  That vehicle as a hybrid version has become very hot.  The demographic is such that the more mainstream Camry buyers interested in a hybrid version found the premium to be tolerable.  

Right now, our belief is that integrating hybrid technology into more of our vehicles is the smart thing to do.   

MG:  How have you evolved your marketing as your audience shifts?  

BE: We have changed our marketing approach to push it towards a more mainstream audience.  We pulled all of our Prius advertising for a while.  While was kind of unique in of itself – and perhaps green-oriented you might say – because we did not have enough vehicles to supply demand.  But we have changed that now.  

We do some different things besides straight advertising.   We have a hybrid synergy tour, for instance, that launched last month.  It really is an educational effort on our part. It is almost like a moving auto show on a semi-truck that exhibits our hybrid technology and how we are trying to integrate it into other vehicles that we are bringing to market.    

We show [consumers] how the technology works.  People like the idea of the regenerative nature, where you are actually recharging the battery when you put on the brakes.  At the same time, there are others who want us to develop a Prius that you can plug-in to the electric grid to recharge the battery.   

From a pricing standpoint, we are trying to offer more in that vehicle for the money.  For instance, we are coming out with different versions of the Prius, a sports version.  We put leather in the car last year and added more features.  People wanted a little bit of a luxury feel to the vehicle which may seem counter to the type of people that we may think buy that vehicle.    

MG: Overall, how would you characterize your target audience?  

BE: We are seeing a broader customer demographic base that we have in the past based on our research.   

People feel it is a smart decision on their part to drive a vehicle with hybrid technology.  They do not think that they are bragging or showing off or becoming a tree hugger.

Engaging Green Consumers through Consumer Generated Content

April 19, 2007

Part I of an Interview with Bruce Ertmann, Corporate Manager of Consumer Generated Media, Toyota 

Most companies find themselves today grappling with how to manage consumer generated content (CGC).  On the one hand, by facilitating CGC creation, companies provide an opportunity for consumers to engage with a brand.  On the other hand, when CGC is created and shared broadly, it has the potential to influence and shape brand perceptions independent of company-sanctioned efforts and direction.  Not surprisingly, corporate executives used to tightly controlling brand messaging tend to be uncomfortable with CGC due to its unpredictable nature.

Yet, companies like Toyota are embracing this challenge and testing the CGC waters across all of their brands and products (whether specifically green or not).   In the process, they are finding that CGC can provide not only an engaging way to interact with consumers, but also an informal channel through which to build relationships with them.  Specifically, Toyota has demonstrated best practices by leveraging CGC to:

Build brand engagement:  Companies are facilitating content creation as a way to drive meaningful brand engagement.  Toyota marketing has done this through, for example, its “Everyone has their reason” campaign that solicits testimonials from hybrid owners about why they purchased their vehicles and invites them to join their community.

Activate influencers: Companies are generating buzz and stimulating viral marketing by activating key influencers – including bloggers and enthusiast site operators. 

For Toyota, this goes beyond seeding information to bloggers, but includes actively engaging them in ways once reserved for traditional media.  This may include inviting bloggers to press events or granting them access to key executives for interviews.  By doing so, Toyota has implicitly recognized non-traditional media as not only a legitimate media outlet, but one that is increasingly in competition with traditional media for share of voice.

Moreover, by engaging enthusiasts, companies empower them to serve as advocates for the brands for which they are passionate.  For Toyota, that has meant that enthusiasts have stepped into a quasi customer service role by explaining difficult issues to consumers seeking information or perhaps even speaking on behalf of the company during a product recall.

Establish a dialogue with consumers: Consumer-to-consumer dialogue is proliferating, driven by the emergence of social networks and chat sites.  More and more, these sites are catering to niche segments, enabled by online platforms such as Ning, KickApps, GoingOn, and PeopleAggregator for social networking and Chatzy and ChatShack for chat.  

Corporations have an opportunity to move beyond push marketing by participating in a dialogue with consumers on such sites, or perhaps even at live events.  Corporations, however, should tread lightly when participating in consumer-driven chat rooms and communities; full transparency is a must when doing so.

Toyota has stepped into this dialogue by participating in online chat sites, communities, and even offline enthusiast-initiated events.  In the process, it has discovered that such conversation creates a two-way communication channel.  This dialogue can be invaluable for things like reaching customers that have had a less than optimal experience through more formal service channels and touch points.

Recently, I had the opportunity to speak with Bruce Ertmann, Corporate Manager of Consumer Generated Media at Toyota, about the role of CGC at the company, specific initiatives in market and impact in the green space.  Here is what he had to say:

MG: Some might think it somewhat strange for an automobile manufacturer to employ a corporate manager of consumer generated media.  As such, please tell me why this media is so important to Toyota and what your role is in facilitating its creation.   

BE: What we have found and heard from respected sources like BuzzMetrics is that consumers are becoming more prolific on the Internet and have started to use the Internet as a communication tool – to get information, share stories and opinions with others, etc. 

Moreover, this communications space has become very, very influential.  Consumers trust other consumers more than anyone else. And as a corporate entity, we felt that to ignore that space would be very foolish.  To jump in as a big corporate entity and just crash the party would not be appropriate either. 

As such, we felt that we needed to embrace what we call the non-traditional media and include it as part of our overall corporate communication plan.  We view this as a complement to what we do in corporate communications today and not in any way a replacement. 

My job has been to introduce that thinking into our business plan, and, in particular, into corporate communications which is where I work.  At the same time, I help educate our senior management as to why it is important to do that.

MG: Senior executives typically resist efforts to encourage consumers to voice their opinion. In particular, executives feel that by doing so they are losing control over their corporate brand identity.  Was that the case at Toyota?  

BE: To some extent there has been that concern.  When something negative comes about with respect to the company – a product issue, for instance, a recall perhaps – we tend to be proactive in making sure that we address it and communicate it directly to those customers that have that particular product. 

But we are also very reluctant – as most companies may be – to publicize it or to share it outside of the need to know.  In other words, there is a belief that a recall has a stigma attached to it.  So from a product’s stand point, there is a bigger concern amongst senior management that we would lose control.

If we are going to participate on blogs and in online dialogues then, it is all important that we be as transparent as we can, and maybe be upfront in sharing some of the things that previously would be a little embarrassing to us. 

The way I view this is almost with reverse logic when in comes to a recall. We should be the ones to control the message to the public because there aren’t any real secrets with respect to the Internet.  Part of my job is to educate senior management as to why doing almost the opposite of what they are accustomed to may be the thing we should do. 

I think I have been able to show where it has been very effective in terms of making these types of recalls go smoother, or perhaps mitigating some of the bash talk by people online that say we are going so fast that our quality is slipping.

MG: In many ways you are creating a channel for the customers to express their opinions, rather than having them find or create their own channels to express them.  When using your channels, consumers may be more polite when expressing their dissatisfaction, because they are communicating directly with you rather than more anonymously to the world at large.  Have you found this to be the case? 

BE: That is correct. What it has helped do is to find those customers who somehow have fallen through the cracks so to speak with respect to an issue or a product.  I have been able to find some of them online and get these people to the right person to resolve their issue.  

We do a lot of product marketing events where we invited traditional media to “ride and drive” weekends. I have been successful in convincing marketing, for instance, to also include non-traditional journalists – bloggers and web operators of online enthusiast sites.  This has actually been pretty successful because [non-traditional journalists] tend to compete, if you will, with the traditional media. 

MG: Absolutely! 

BE: I have been successful in getting our marketing group to now include select bloggers in our events, and have been rewarded with some pretty good blog posts as a result. 

One site we have worked with in the past is  I think there are about 16,000 regular members of that enthusiast site.  And I have been told by BuzzMetrics that there could be five times as many people who access the site just to read the comments. 

MG: Tell me how you have worked with and other hybrid enthusiast sites to engage with consumers. 

When I worked at the customer experience center, we launched the first generation Prius.  We had an issue with EPA mileage ratings of 60 [miles per gallon].  Quite frankly, in the real world you do not get 60 miles per gallon which became a customer satisfaction issue. 

When I found the site, I was impressed with the level of knowledge that some of the regular posters who were diehard Toyota Prius enthusiasts.  And I found that there was quite a lot of discussion about the mileage issue back then. 

But, what I also found was that [the online discussion] was naturally self-regulating.  In other words, someone would make a post about a new Prius: “I am happy about it but I am really concerned about the mileage I am getting.”  Well, one of the experts on the vehicle would post a comment to that, in a professional manner, explaining the real world realities of the EPA tests.  And over time, it helped to communicate – in a much better way than we were able to do – the realities of driving a hybrid vehicle. 

I was impressed by an online consumer driven enthusiast site that basically handled a consumer relations problem that for us was difficult to communicate.

MG: What about in the case of a product recall? 

BE: We had a special service campaign, or recall, on the steering component of the Prius last year. This was perhaps a more serious recall because it was on our Prius which is our only unique hybrid vehicle, and it involved a steering component which is technically a safety-related issue.  As such, we foresaw the potential for considerable concern by vehicle owners.  We also risked having others seize this moment to criticize us and our technology. 

So, I worked with that enthusiast site in this instance.  I started with a special communications to them.  There were people on the site that understand the technology and did a great job of taking what I would post and adding their own commentary to create positive sentiment towards our actions than we might have accomplished before. 

We had a good relationship with that site, in part, because I had the opportunity to meet the owner – oddly enough because I noticed a post of his one day where he was talking about actually getting a Prius.  Many members of the site were almost flabbergasted that here is the guy that started PriusChat but never actually owed one.  But he explained that he had a Toyota and he wanted to get a Prius, but had to put the money aside to do so.  He was actually buying one from a dealership in Chicago so he kinds of made it into an event with this web site and the members were a part of it. 

The event was planned for when he came to Chicago to take delivery of his Prius.  They had a lot of the Chicago members come, but other consumers flew into Chicago to participate in this event as well.  

MG: That is impressive.  Was Toyota involved in planning this event? 

BE: No, but I did make an effort to attend.  I was impressed that these participants in an online site would get together.  So I did show up; it was held at a dealership.   [The site operator] actually lives in Columbia, South Carolina so he flew up there to take delivery of the vehicle. And then he posted online the route they were taking driving back. 

[The day of the event] was hot and muggy. I was in my cargo shorts and polo shirt.  We had name tags.  Mine identified me as TMS USA [Toyota Motor Sales].  It was funny because I was so accustomed to seeing some of the screen names of some of the regulars on this site. To see them in person was very interesting.  There were doctors, there was a lawyer, a homemaker.

Conversely, when they looked at me they said: “You must be kidding.  You are Toyota?”.  I go, “Yea, I’m Bruce.  I am Toyota”.  They were quite impressed that I actually came out for that.


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