They argue that well-intentioned consumers may be misled into purchases that do not deliver on their environmental promise. As a result, not only has the individual consumer been misled, but the potential environmental benefit of his or her purchase has been squandered. Also, competitive pressure that illegitimate environmental claims generate takes market share away from products that offer legitimate benefits, thereby slowing the penetration of real environmental innovation in the marketplace. Another consequence of greenwashing is its tendency to create cynicism and doubt about all environmental claims. Consumers, especially those who care most about real environmental progress, may be discouraged from believing any marketers or manufacturers; they may give up on the hope that their spending can be put to good use. Their withdrawal from the marketplace may eliminate a significant market-based financial incentive for green product innovation (Terrachoice 2007).

Still, there are legitimate instances of green marketing. TerraChoice explains the mechanism by which green marketing can accomplish the goals of competitive distinction and social responsibility. Green marketing is a convergence between green buyers and sellers, and more and more consumers expect to use their spending as a means of expressing their environmental commitment. When genuine environmental leadership is rewarded in the marketplace with market share, price premiums, public respect and increased visibility, it motivates all products to improve. Genuine environmental leadership uses competition and free enterprise to pull the economy toward sustainability (Ibid).

Yet another study found that many Americans believe products to be better for the environment than they are, based on research by strategy and communications agency Cone. Consumers continue to misunderstand phrases commonly used in environmental marketing and advertising, phrases such as "green" or "environmentally friendly." This misunderstanding results in giving products a greater halo than they may deserve. While 97% of Americans believe that they know what the terms mean, their interpretations are often inaccurate. According to Cone, more than two in five Americans (41%) erroneously believe that these terms mean that a product has a positive impact on the environment. Only 29% understand that the terms more correctly describe products with less environmental impact than previous versions or competing products. Survey results such as these highlight the potential effectiveness of green marketing, even while they point up the downsides (Environmental Leader, 2011).

While some companies may be guilty of attempting to exploit green differentiation from their competitors, others are refreshingly candid about their motives. They acknowledge that such initiatives as their having focused in recent years on global warming is driven by the opportunity for profit. GE Chairman Jeffrey Immelt acknowledged "We believe we can help improve the environment and make money doing it . . . We see that green is green" (Economist's View, 2005).

While many remain skeptical of companies' green marketing as an ethical commitment, green advertising agency owner Park Howell points to Wal-Mart's announcement of their green product labeling program as evidence of some companies' sincerity. In his article, Howell quotes the New York Times as reporting that Wal-Mart is on a mission to determine the social and environmental impact of every item it puts on its shelves. Furthermore, the Times reported that Wal-Mart recruited scholars, suppliers, and environmental groups to help it create an electronic indexing system to help it create its green product labels. Lending credibility to its initiative, Wal-Mart enlisted the aid of the Environmental Defense Fund to work with the giant retailer over the next five years to develop its sustainability index (Howell, 2009).

Howell poses the question what does Wal-Mart's green labeling program mean to the advertiser with product differentiation? He suggests that there could come a time when green and sustainable products will become the status quo. Howell also ponders whether Wal-Mart is the only entity capable of making sustainable consumption a retailing reality. He concludes that the outside scholars and environmental groups helping develop the Wal-Mart initiative think so. He also quotes Harvard Business, which argues that Wal-Mart's unilateral decision to put its purchasing and communication power behind going green shows that "a single company using its unique clout can accelerate public action to reduce greenhouse gases and reverse climate change" (Ibid).

Regarding green product differentiation, there is evidence that it motivates companies to embrace green promotion. According to a survey by research firm Forrester, a large number of companies develop green products to differentiate themselves from the competition. Forrester surveyed 73 consumer product strategy professionals at 17 companies and organizations, including Apple, Dell, Greenpeace, Levi Strauss and Product Red. At the time of the survey, 84% of the consumer product strategy professionals said that their companies have environmentally conscious or socially responsible products either in development or on the market. The survey lumps together a broad range of products in that category, including those that are energy efficient, recyclable, made with renewable materials, Fair Trade, or contain any other features that have a positive impact on the environment or remove features that have a negative impact (GreenerDesign Staff, 2009).

The most commonly cited reason, given by 71%, for companies to develop greener products and services is product differentiation. This number was followed closely by 61% of companies saying they want to be leaders in the world of green products. The third most often-cited reason mentioned by companies, 35%, was cost savings. A majority of the companies surveyed, 71%, are also integrating environmental and social issues during the conception and initial product design phases; the timing is critical since these phases are when most important decisions related to a product's cost are made (Ibid).

As for the question of who within companies is influencing the switch towards green, 58% of companies said that product managers and strategists are leading the movement. Forty-six percent of those surveyed said that CEOs are the ones pushing to develop green products. Smaller percentages cited a range of employees, from other high-level executives to marketing and research departments (Ibid). The survey clearly shows that companies attach significance to green product differentiation.

To sum up, after surveying the literature on green marketing practices and product differentiation, one can conclude that companies use green strategies for both the right and wrong reasons to promote their products and services. There are firms which are socially and environmentally responsible, while others are motivated primarily by profit. When considering a firm's use of green marketing, it is best to apply a healthy dose of skepticism.

Reference List

Economist's View, 2005. Why go Green? Product differentiation or Fox in the Henhouse? [Online] Available at: [Accessed 16 July 2011].

Environmental Leader, 2011. Americans Give Green Marketing Claims Too Much Credit, Study Finds. [Online] (Updated 2011) Available at: [Accessed 16 July 2011].

Green Marketing, 2011. [Online] (Updated 2011) Available at: [Accessed 16 July 2011].

GreenerDesign Staff, 2009. Companies Develop Green Products to Differentiate and Lead: Survey. [Online] Available at: [Accessed 16 July 2011].

Greenwashing, 2011. [Online] (Updated 2011) Available at: [Accessed 16 July 2011].

Howell, P., 2009. What Does Wal-Mart's New Green Product labeling Mean for Marketing and Consumers? [Online] Available at: [Accessed 16 July 2011].

Montague, B., 2009. Green Marketing for a Sustainable Future. [Online] Available at: [Accessed 16 July 2011].

TerraChoice, 2007. The Six Sins of Greenwashing. [Online] Available…