Have the automobile companies; Honda and Renault achieved to deliver their environmental message to their customers?

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Högskolan i Halmstad
    Sektionen för Ekonomi och Teknik (SET)
    Europaekonom programmet (EUE)

       Have the automobile companies;
        Honda and Renault achieved to
      deliver their environmental message
               to their customers?

    Halmstad, Augusti 2009
    Kandidatuppsats i företagsekonomi
    15 högskolepoäng

    Författare:      Tanja Ometlic 870426
                     Caroline Smith 850411
                     Adela Svajda 870726

    Handledare:      Richard Grönevall
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1. ABSTRACT

Environment friendly, so called green marketing has become a discussed subject and
companies are constantly trying to find the best ways to reach the customers with their
green message. A trademark is considered to be able to work as a source of information
and risk reducer for customers, which can be a step towards green communication.
Customers are becoming more demanding and they have started to pay more attention to
the environment. What is important with trademarks is how customers perceive them,
what the image of the trademark is. The aim of this study is to find out and compare how
two multinational car manufacturers, Honda and Renault, have used their strategic
trademark in order to create a “green” image. By green image meaning so called goods
that are being perceived as environmental friendly by the customers. The research study
took place in Worcester and Birmingham in England, during the spring 2009. A
questionnaire was designed in order to find out how people perceive these two trademarks
and how aware they are of the “environmental contribution” that is being made by these
companies. The question we wanted to find a respond to where “Have the automobile
companies Honda and Renault achieved to deliver their environmental message to their
customers?” The results from this illustrates that both companies need to increase their
communication with the customers, and that attributes like price and quality are more
important than “environmental responsibility”. This study is based on only Honda and
Renault and has not taken the rest of the automobile industry into consideration.
TABLE OF CONTENTS                                PAGE
    1. Abstract

    Contents Page                                     2

    2.      Introduction                              4
    2.1     Key words                                 6

    3.      Methodology                               8
    3.1     Documentary research                      9
    3.2     Semi structured interviews                9
    3.3     Questionnaires                            11
    3.3.1   The construction of the questionnaires    12
    3.4     Selection of respondents                  13
    3.5     Limitations                               13
    3.6     Generalizability                          14
    3.7     Validity and Reliability                  15

    4.      Literature review                         17
    4.1   Increased revenues and cost reduction       17
    4.1.1 Corporate social responsibility (CSR)       19
    4.2   The “Win-Win” hypothesis                    20
    4.3   Greenwashing                                21
    4.4   Eco-labelling                               23
    4.5   Generic strategies – the matrix approach    25
    4.5.1 Eco-efficiency                              26
    4.5.2 Beyond compliance leadership                26
    4.5.3 Eco-branding                                26
    4.5.4 Environmental cost leadership               27

    5.      Honda and Renault                         28
    5.1   Honda                                       28
    5.1.1 Environmentally friendly automobiles        29
    5.2   Renault                                     31
    5.2.1 Environmentally friendly automobiles        32
    5.3   Comparison between Honda and Renault        32

    6.      Results of the Survey                     34
            Table A                                   35
            Table B                                   36
            Table C                                   36
            Table D                                   37

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Table E                            38
           Table F1 and F2                    38
           Table G                            39

    7.     Discussion                         40
    7.1   The” Win-Win” hypothesis            40
    7.2   Greenwashing and Eco-labeling       42
    7.3   Strategic approach                  43
    7.4   Sustainability                      46
    7.5   Analysis of the questionnaire       46
    7.5.1 Renault                             47
    7.5.2 Honda                               48

    8.     Conclusion                         50

    9.     Further Research                   52

    10.    Reference list                     53
    10.1   Books                              53
    10.2   Journals                           54
    10.3   Electronic resources               56

    Appendix 1                                58

    Appendix 2                                59

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2. INTRODUCTION

    A subject that has been significantly discussed during the past decade by the media,
    politicians, by business and industry and the general public is the environmental
    friendliness or so called “green marketing”. Much has been brought up about the
    environment and the damaging effects produced by everyday activities. Saha and Darton
    (2005) are arguing that improving environmental performance, until recently has been a
    question of legislative compliance and occasional reactions to external events and
    pressures. Nowadays, company decision-makers are increasingly communicating “green”
    features about their products and services, expressing green improvements. Some authors
    disagree on whether companies are using the “green” term only in an attempt to gain
    competitive advantage or if companies really have started to change their ways.

    As it is claimed that consumers have become more discerning and place greater
    expectations on corporate behavior, the notion of social responsibility has become a key
    consideration in all organizational activities. Social responsibility has become an
    important aspect of marketing decision-making because companies do not just have a
    duty towards shareholders but must act in the best interest of society. It has become to be
    an important issue for the organization, where the companies have to take the
    environmental questions into consideration, which means the responsibility towards the
    environment. However, some authors are arguing that green marketing is nothing more
    than a public relation exercise, others are pointing out that it is vital for companies to
    incorporate environmental concerns into their strategies if they are going to have a chance
    to compete in the market.

    In addition, some authors are arguing that customers are becoming more demanding, and
    that they have started to pay more attention to the environment. In response to the rising
    problems regarding the environment, companies are changing their strategies and
    reaching out to their customers by communicating a green message. However, a problem
    that has been discussed is that some companies could have communication problems with

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their customers in order to deliver their green message out to them. This has been one of
    the major motivations to study if the automobiles Honda and Renault achieved to deliver
    their green message to their customers, which lead to our question; “Have the automobile
    companies Honda and Renault achieved to deliver their environmental message to their
    customers?” They are trying to show the world their responsibility towards the
    environment by producing automobiles that are less harmful to the environment. It could
    be argued that when companies are becoming more environmentally aware and are
    starting to take actions towards greener goals, they want to show it to the consumers and
    their social responsibility becomes an important part of their marketing decision making.

    The aim of this study is to discover if the customers are informed about the green
    message that Honda and Renault want to deliver to them. This study is based on different
    theories about the “green marketing”, the advantages firms might receive by
    incorporation eco-performance into their strategies and their potential to improve
    attitudes towards the brand. The environmental friendly strategy of Honda and Renault
    will be discussed, which will be based on different theories for example Orsato’s
    framework. A questionnaire has been designed in order to understand the customers’
    view of the companies’ environmental message. This will be analyzed in the discussion
    which will present the findings and finally a conclusion where we present an answer to
    the question.

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2.1 Key Words
    This study presents some key words that are important to explain, which might help the
    reader to get a better understanding. Some definitions that this study adapts are the
    following:

    -Corporate Social Responsibility (CSR)
    "A concept whereby companies integrate social and environmental concerns in their
    business operations and in their interaction with their stakeholders on a voluntary basis"
    (European Commission, 2009). In this study we also call this social responsibility.

    -Eco-labelling
    This could be argued to be the contrast of Greenwashing, which means that eco-labelling
    provide the customer with increased trust and makes the green message less confused,
    with the use of authorized symbols, to make it easier for consumers to recognize eco-
    labelled products (Charter and Polonsky, 1999 and Basu et. al, 2003).

    -Environmental friendliness
    This is another word for “Green Marketing” which is about the process of selling
    products and services that are based on environmental benefits for each company (Kotler,
    2008).

    -Greenwashing
    This term explain situations where companies adapt green advertising without
    environmental emphasis in their strategies (Ahonen, et. Al 2001). This can confuse
    customers about the green message in the companies’ advertisement.

    -ISO 14001
    ISO is short for “International Organization for Standardization” and the ISO 14001 is
    one specific standardisation within this organisation. To be able to achieve ISO

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qualifications on a product certain characteristics of a product such as quality,
    environmental friendliness, safety, reliability, efficiency and interchangeability needs to
    be fulfilled (ISO, 2009).

    -Sustainability
    It means meeting the needs of the present without compromising the ability of future
    generations to meet their own needs (Peattie and Charter, 2003).

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3. Methodology
    According to the research of this study the main focus is on the two chosen companies
    Honda and Renault. The aim is to see how the customers understand their goals within
    the “green marketing” strategies of these two automobile companies. Jacobsen et. al.
    (2002) present different strategies that could be implementing through a research study.
    This study is based on the deductive research (Saunders, et al 2007). It means that the
    research started with the collection of different theories about green marketing and the
    automobile industries, which became limited into different specific theories (see literature
    review, chapter 4). Further it limited our study into two automobile companies; Honda
    and Renault. The specific question, “Have the automobile companies Honda and Renault
    achieved to deliver their environmental message to their customers?” which is the title of
    this work, was created in order to see if customers understand the green message of
    Honda and Renault. At the end of the study the result is analyzed and confirmed.

    An alternative research method is the inductive research (Jacobsen, 2002). The inductive
    is the opposite of the deductive research, which means that the aim is to start with an
    observation of a specific subject that leads into a theory, which is present at the end as the
    result. Nevertheless, Jacobsen (2002) has been arguing that when the researcher wants to
    answer different questions the deductive approach might be the most suitable. However,
    there is some negative critic about the deductive approach which is that when the
    researcher collects the valid data for the study, it is a risk that some relevant data could be
    ignored (Jacobsen, 2002). It might not be possible to create a research without
    weaknesses, but Saunders (2002) has been arguing that it is important to consider them
    through the research.

    In addition it could be argued that there are two main methods to adapt during a research
    study which are the quantitative and qualitative methods. These can help to resolve the
    research problems and it can be suggested that the choice of method is based on the
    researcher and research problem.

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Suanders et.al. (2007) refer that a qualitative method is a subjective approach that consists
    of examining and reflecting on perceptions in order to understand the social and human
    activities. In addition, the quantitative methods is seen to be an objective approach that
    includes collecting and analyzing of data, often in numerical form, and adapting of
    statistical tests and analysis (Saunders, et al 2007).

    3.1 Documentary Research
    Bryman and Bell (2003) argue that documentary research is about the applying of texts
    and documents, which can be in form of journals, reports, videos and other research
    sources. According to the documentary research, the main advantages with the
    documentary research can be suggested to be that those resources could be used to obtain
    information.

    In addition, it offers the advantage to reach a wider perspective from a number of
    different peoples’ attitudes. However, Denscombre (2007) argues that the documentary
    research has some limitations, such as that the date can be unreliable. This method, of
    collecting data, has been chosen because the documentary sources can provide relevant
    information for this research study. It supports a variety of to obtain information such as
    journals, documents, files, reports and books. It can be argued that a high number of
    documents about the automobile industries can be found which can help to get a
    background about Honda and Renault and inform how they try to be environmental
    friendly. Furthermore, a high number of documents about the green marketing strategies
    are needed in order to understand the subject and apply them into the automobile
    industries.

    3.2 Semi Structured Interviews
    To reach an inside view of the information, the secondary research has been an important
    starting point. A high number of researches in the area of green marketing have been
    performed from sources such as books, journals and annual reports. However, the use of
    the companies’ annual reports, customer literature and environmental data may not fulfill
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the need of providing enough information about companies’ strategy goals. The semi-
    structured interviews were thought to be used in order to clarify some questions. Bryman
    and Bell (2003) argued that the semi-structured interviews are a profitable solution to
    address specific areas of interests. It has been argued to be a form of qualitative research,
    which also facilitates detailed and descriptive responses, therefore enabling the
    companies’ environmental strategies and motivations for those to be explored in depth.

    The idea was to interview managers because they have the best knowledge about the
    company’s motives and strategies. The reason behind this thought was that, through the
    qualitative research approach reach peoples’ views, feelings and experiences. It has been
    argued that in order to reach this information, interviews are more suitable, as
    questionnaires should be used when uncontroversial facts is aimed to be gathered
    (Denscombe, 2007).

    The semi-structured interview was chosen because there would be a list of issues that will
    be addressed and questions that would be answered during the interview. When the
    interview is structured, it means that the researcher has to decide which elements the
    focus would be on. Jacobson (2002) has been suggesting that during a structured
    interview, the most important facts might be overlooked and that the main goal with the
    qualitative research method could be lost. However, it could in addition be argued that an
    interview without structure could lead to that the facts will be complex and difficult to
    analyze at the end. This is the reason why semi structured interviews has been chosen.
    There will be certain aspects in the interview that would be put in focus, but there will in
    addition be the possibility to maintain a high grade of openness.

    Even that a plan and the questions were designed, unfortunately it was not possible to
    perform these interviews with the marketing department as neither Honda or Renault had
    the possibility to answer our questions. The argument was that the marketing department
    did not have time and resources to answer private questions because they obtain many of

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them daily. It was therefore recommended to visit their homepages instead as the
    information that was needed could be found there.

    It could therefore be summarized that the first idea of this study was to use a combination
    of quantitative and qualitative methods. The idea was to create a semi structured
    interview with the managers of Honda and Renault, and then create questionnaires for the
    customers of Honda and Renault and compare the answers with those from the interview.
    However because of the mentioned circumstance, this study became to be based on the
    quantitative approach based on the secondary data about the companies and the theory,
    and a primary research based on the questionnaires. An alternative could have been to
    interview other administration workers at Honda and Renault, but because this study is
    based on the “green marketing” strategies, it was considered that the information would
    not have been relevant for this study.

    3.3 Questionnaires
    It has been considered that the most effective way to find out consumers perceptions
    according to Honda and Renault brand would be though a quantitative research using
    questionnaires. The cause for this is that the questionnaires for the quantitative research
    are designed with the purpose of being operational definitions of concepts that would
    reflect attitudes, opinions and views. It has been considered that questionnaires are
    attempting to measure how intensely people feel about issues (Silverman, 2002). Peoples’
    attitudes, beliefs and opinions are important values as it has been assumed that these
    attitudes influence behavior.

    The result achieved through the questionnaires, will be used in order to see how well the
    respondents know of the green image of Honda and Renault. It is important for this study
    as it is based on how well Honda and Renault have achieved to deliver their green
    message to their customers. The result will be analyzed and discuss with a connection to
    different theories from the literature review.

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3.3.1 The construction of the Questionnaires
    The literature has pointed out that according to methods that have been used to
    assembling quantitative data, there might be one type that is dominating: the
    questionnaires with given answer alternatives. There are different sorts of answer
    alternatives questionnaires that can be used, and this research study decided to mix those
    alternatives. Sapsford (1999) argues that binary questions refers to those questions that
    can be answered through the “yes” and “no” alternatives. With the aim to find out
    peoples’ opinions and attitudes, it could be considered that information can be acquired
    by asking for a rating of perception or attitudes.

    The literature has however discussed whether or not to include a “middle category” into
    the answer alternatives. This category allows people to choose a neutral answer that could
    be classified as “do not know”. Jacobsen (2002) argues that three, five or seven answer
    alternatives should be applied if the “middle category” would be included. If the “middle
    category” is not considered, it could be seen as that the people are forced to have a certain
    opinion and choose a specific side, which has been highly recommended by Sapsford
    (1999). This research has been using the five answers alternatives, which follow the
    argument of Jacobsen that people might feel neutral about some things and by forcing
    them to have an opinion might lead to incorrect answers. This might reduce the risk that
    they are forced to choose an opinion which at the end of this research could lead to a
    wrong conclusion.

    Furthermore, a third alternative that has been applied was the “open - ended” questions.
    Silverman (2002) has comment that the information that is gathered through those
    “openended” may break the object of the qualitative method that is to gather standardize
    information. There is no limitation of each person’s answer. It has been argued that this
    type of questions should be used in a situation where it is possible to write down a
    significant number of answers, rather than choose only one (Denscombre, 2007).

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In this study, these questions were chosen of two reasons. Firstly, they were applied at the
    end of some questions to provide the person with the possibility of an open category. This
    offered the person’s the possibility to fill in their own alternatives if they felt that the one
    presented did not fit for them. Secondly, some answers needed to be more specified,
    which was connected into questions where the respondents were asked to justify a
    judgment and opinion (See Appendix 1 and 2). According to questions, the study include
    different type of questions, which aim was to obtain as honest, truthful and reliable
    answers from the people, in order to achieve a high validity and reliability.

    3.4 Selection of respondents
    The respondents that answered our questionnaires where a mix of men and women of
    different ages that where found in Worcester and Birmingham in England where this
    study took place. We did not only ask people who where at the Honda and Renault firms
    since we thought that those people might have a higher knowledge about the Honda and
    Renault automobiles, that is why we as well asked people randomly on the streets and on
    trains. When selecting respondents we tried to find people of different ages to get a wider
    view on what people knows about the two automobile companies, Honda and Renault
    that this study is based on.

    3.5 Limitations
    It has been discussed that a researcher will find limitations when carrying out an
    investigation (Saunders, et al 2007). In this study, few things may be discussed that could
    be classified as limitations. Firstly it was time: it may be more interesting to analyze more
    companies than two companies to reach more reliable results. However, because of the
    short period of time, the focus was set into two companies in order to answer the
    question.

    Secondly was the limitations found in the methodology part. It was difficult to obtain
    primary data, as both Honda and Renault did not have the possibility to answer our
    questions. In addition, the consequence was that this was performed only with the

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questionnaires and with the use of the secondary data and contrasted in order to avoid
    unreliable information. Charter and Polonsky (1999) pointed out that in order to build a
    trademark; the organizational culture may be an important feature to consider during a
    research study. It has been chosen not to focus on the organizational structure as the study
    may get wide according to the time limit for this research study.

    A further limitation might be the generalizability, it could be discussed if the 40
    questionnaires for each firm were enough to reach generalization. Jacobsen (2002) has
    been arguing that it might not be enough, and that this approach can lead to that relevant
    data could be gathered but that the chance to generalize is small. However, it could be
    specified that the findings in this study should not be generalized to other companies, as
    the focus has been on two specific companies, Honda and Renault at a specific time. The
    fact that the research only focus on these two firms could be an argument to that the
    generalization is small in this study.

    3.6 Generalizability
    Silverman (2002) argues that in a quantitative research the concern is usually whether the
    findings can be generalized beyond the confines of the particular context in which the
    research was conducted. Furthermore it has been argued that an important thing is when it
    comes to whether or not the answers from few people might be generalized to the whole
    population, which is how one can create a representative sample (Silverman, 2002). In
    order to achieve a sample that is as representative as possible, the “probability sampling”
    was applied. This highly eliminates bias from the selection of a sample by using a process
    of random selections.

    Jacobsen (2002) argues that if a researchers goal is to find out what people think about a
    particular firm, a huge error would be too mainly ask persons that go and buy products in
    that particular firm. There is a chance that these people will have a more positive opinion
    about that particular firm. In order to achieve a more generalized conclusion, it might be
    important to ask people that are not present at the place. To follow this argument, it was

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decided to hand out questionnaires until it was collected 40 regarding Honda and 40
    regarding Renault that where complete. Those questionnaires were handed out to people
    that could be found inside those firms and even randomly to people on the street, trains
    and to people of different ages. In an attempt to obtain a generalizable picture of Honda
    and Renault the information was gathering from persons that visits those two firms and
    from the people that may prefer other trademarks in the automobile industry.

    3.7 Validity and Reliability
    It has been considered that the main issue with the measurement of validity has to do with
    whether a measure of a concept really measures that concept. It has been argued that the
    researcher should minimize the personal influence on the objective that has been studied
    (Sapsford, 1999). It could be seen as an objective that is being studied, and that this
    reality cannot be disturbed by the researcher. The researcher should avoid that the results
    of the research would be influenced by the researcher.

    Furthermore, Denscombre (2007) has pointed out that a research cannot be completely
    free from a “research effect”, which means that the researcher will have some influence
    on the results. All forms of investigation mean that some form of personal contact will
    occur. Personal contact with research objects is preferred according to Jacobsen (2002).
    Jacobsen (2002) points out that nearness is preferred over distance. In this research study,
    there was a research design chosen where personal contact was not possible to avoid,
    which mean that it could be argued whether or not the answers were influenced by the
    researcher.

    It has been considered that if a researcher makes an investigation through questionnaires,
    it is preferred to make it face-to-face than to send them by e-mail or post (Saunders, et al,
    2007). These authors are basing their arguments on the fact that there will be some degree
    of “research effect” in every study, even if the researcher is not in contact with the
    research objects. The distance can lead to a large gap between the researcher and the
    research object which in addition can lead to that the researcher loose the change to go

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deeper into the individual’s perceptions and interpretations. It can be argued by some
    academics that the close relationship with the persons that were given the questions may
    have influenced their answers. However, Jacobsen (2002) considers that as long as the
    researcher is into the relation with carefulness and without expressing its own opinions,
    this way is to be preferred, as it can influence the individuals with the opportunity to ask
    questions if there is something that they do not understand. In addition, Jacobsen (2002)
    pointed out that personal contact can lead to more honest answers, and that the researcher
    will know who is answering the questions. According to this arguments it could be
    suggests that the validity of this research study is high. There were some people that were
    interested in the research subject and wanted to know more about it. However, the
    researchers tried to hold the answers neutral so the “research effect” would be minimized,
    meaning that no personal opinions and feeling were expressed of the subject which may
    have been able to lead to different answers.

    Sapsfors (1999) has considered that when the validity is high it could influence and result
    in high reliability. According to the reliability it could be argued that the measurement
    could be influenced by the time. If the same measurements would be performed in the
    future, it could be argued that the answers may not be the same. There is a chance that
    Honda and Renault in the future change their marketing strategy and their communication
    with the customers that can lead to that consumers change their perceptions about the
    firms, and their answers could in addition be different.

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4. LITERATURE REVIEW

    Shrivastva argued in 1994 that even though few studies have empirically verified the
    trend, environmental associations seem to have become a generally accepted way of
    enhancing brand equity. Thirteen years later May et. al, 2007, still agree with Shrivastva
    on the argument that few studies have proven that environmental association really
    enhance brand equity but they state that people are showing greater concern towards the
    environment then they used to a few years ago. As the concern about environmental
    deterioration has increased, much has been published on the advantages of including
    environmental information in marketing strategies (May et. al, 2007). For marketing, the
    challenge is twofold. In the short term, ecological and social issues have become
    significant external influences on companies and the markets within which they operate.
    Companies have to react to changing customer needs, new regulations and a new social
    trend which reflects increasing concern about the environmental impacts of business. In
    the longer term, the pursuit of sustainability will demand fundamental changes to the
    management paradigm which underpins marketing and other business functions
    (Shrivastava, 1994).

    4.1 Increased Revenues and Cost reduction
    New forms of corporate behavior and relationships with internal and external
    stakeholders have started to emerge. Nowadays companies are finding themselves
    responding to controversies caused not by their wrongdoing or negligence but by
    society’s changing expectations (May et. al, 2007). Much has been made of the potential
    of good eco–performance to generate competitive advantage (Elkington, 1994; Porter and
    Van der Linde, 1995). In a wide range of markets companies have used eco-performance
    as a basis from which to compete. Porter and Van der Linde (1995), argues that the search
    for environmentally superior solutions leads to innovation and the creation of more
    efficient and effective technologies. Varadajan (1992) termed this as “enviropreneurial
    marketing”, stating that environmental legislation sets new challenges for companies,
    which promotes them to be innovative and secure improvements in competitive as well as
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environmental performance.

    Peattie and Charter (2003) are some of the authors who believe that sustainability is the
    keystone of the green marketing philosophy. A sustainable approach to consumption and
    production involves enjoying a material standard of living today, which is not at the
    expense of the standard of living of future generations. The conventional wisdom
    concerning environmental protection is that it comes at an additional cost imposed on
    firms, which may erode their global competitiveness (Ambec and Lanoine, 2008). This
    argument is supported by Walley and Whitehead (1994), who argue that it is difficult in
    practice to achieve and sustain competitive advantage from good eco-performance. Their
    argument is based on the belief that customers are difficult to convince and that the media
    have often been more critical of those companies attempting to improve their eco-
    performance and capitalize on it, than of the most polluting and wasteful companies.
    Despite this, it is clear that poor eco-performance can put a company at a massive
    competitive disadvantage. It could be argued that the issue whether it pays to be green is
    complex and costly to address.

    Friedman (1970), states that environmental concerns divert managers from their main
    responsibility, which should be the maximization of profit. This argument has been
    challenged by analysts during the last decade who argue that there are many ways that
    improving a company’s environmental performance can lead to better economic and
    financial performance, and not necessarily to an increase in cost. It could be argued that
    the expenses associated whit reducing pollution can be compensated by gains made
    elsewhere. To be systematic, both sides of the balance sheet should be viewed: increased
    revenues and reduced costs.

    Better environmental performance may facilitate access to certain markets. Kotler (2008)
    is pointing out that the demand for environmental products is increasing and in order to
    be able to compete successfully the companies must provide the customers with what
    they are demanding. Peattie and Charter (2003), argue that environmental association can

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add value to a product and brand which might lead to customer loyalty. The argument
    against this statement is that no strong empirical evidence has been found that customers
    are influenced by a company’s “green” image (Ambec and Lanoie, 2008). This statement
    is supported by the study of Montoro-Rios et. al (2008), showing that environmental
    associations are not very useful when it comes to improving attitudes and purchase
    intentions. It is argued in the literature that both governments and private firms have
    started to pay more attention to their suppliers’ environmental performance. Peattie and
    Charter (2003) point out that greening is forcing many companies to reconsider supplier
    relationships since their total environmental impact will be strongly influenced earlier in
    the supply chain. Companies are monitoring and trying to improve their suppliers’ eco-
    performance. May et. al (2007) discuss a phenomenon called green public purchasing
    (GPP). Whit this statement they argue that environmental performance of suppliers have
    become a crucial criterion when public administrations choose their suppliers. This might
    indicate that firms selling to governments or other businesses can gain better access to
    certain markets by improving their environmental performance.

    Although good eco-performance in some cases may be associated with investment and
    increased costs, analysts are trying to demonstrate that it actually can provide
    opportunities for cost advantages. Lankoski (2006), point out that less pollution will lead
    to lower liability costs by avoiding potentially costly litigation and fines. Investments
    using a more radical, clean technology approach are being shown to be capable of
    reducing material and energy inputs, and cutting inefficient pollution and waste (Porter
    and Van der Linde, 1995). This argument is supported by his study where it was
    investigated 181 waste reduction projects and only one led to a net cost increase.

    4.1.1 Corporate social responsibility (CSR)
    According to Cheney et. al (2007), corporations need to include the natural environment
    as a central consideration in their strategies as they are responsive to multiple
    stakeholders, which pressure companies to become greener. This approach is being
    referred to as: corporate social responsibility, CSR. Even if some analysts are skeptical to

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the whole idea with green marketing and its ability to provide companies with
    competitive advantages, others argue that green will be a core requirement for doing
    business in the future.

    Corporate social responsibility is a form of corporate self-regulation integrated into a
    business model. The aim with the CSR policy is that it would be a, self-regulating device
    within the firm where they could ensure that they follow the law, ethical standards, and
    international norms (Fisher and Lovell, 2006). There are three different reasons for a
    company to engage in CSR, one is the unselfish reason, where the firm see itself as
    having a responsibility towards the society and its different parts. Another reason is the
    ethical, where CSR can be seen as moral act. An additional reason is the strategically
    decision to use CSR, where the main interest lays in using it as a tool to achieve success.

    According to Porter and Kramer (2006) a firm can achieve some competitive advantages
    from using CSR and they should find its own position where they can operate in order to
    tactically take advantage of CSR in the best possible way for their own interests of the
    firm.

    4.2 The win-win hypothesis
    A debate has been going on between analysts “whether it pays to be green”. Whilst green
    issues have certainly become a political and legal issue, as well as a social concern, the
    majority of academics now recognize investment in the environment as a business
    opportunity rather than an external threat.

    Eco-collaboration between businesses and advocacy groups involved what has become to
    be known as win-win environmentalism. In this model, sustainable development is
    fostered by greening corporations through market incentives (Livesey, 1999). Waddell
    (2000), states that environmentally responsible behaviour improves the company image
    and benefits the corporate bottom line through the development of innovative products
    and processes that reduce costs, increase productivity, or offer other competitive
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advantages in the marketplace. Leopold stated in 1949, that sustainability could be
    developed only when humans begin to understand themselves as a part of, rather than
    apart from, nature. The literature describes sustainability as a concept where the quality of
    human life is improved while the diversity and vitality of the earth is conserved.

    According to the “win-win” hypothesis there are extensive opportunities for business to
    profit from environmental investments (Orsato, 2006). Reinhardt, (1999) is stating that
    environmental policy needs to be based in the economic fundamentals of the business, the
    structure of the industry in which the business operates, its position within that structure,
    and its organizational capabilities. Many academics agree with this statement, with the
    argument that such circumstances might lead to competitive and sustainable advantages.
    This positive view of the relationship between business and the environment is called
    “win-win” hypothesis, a situation that will favor both public benefits and corporate
    profits. (Orsato, 2006).

    Walley and Whitehead (1994), on the other hand are skeptical to the idea of “win-win”
    situations. They argue that win-win situations are very rare, and although they might
    occur the financial return is likely to be negative because of the investment amount for
    regulation compliance. Academics like Cox (2004), agree on this statement, explaining
    that win-win situations are rare in business. Some relationships or situations appear to be
    successful, sometimes because they are sustained over long periods of time. However
    Cox (2004) argues that closer examinations may demonstrate that the parties are not
    really achieving what would be regarded as winning outcomes.

    4.3 Greenwashing
    The world is facing enormous environmental problems and challenges. A national
    Cone/Roper survey showed that many people are convinced that businesses should play a
    major role in confronting these issues (May et. al, 2007). It is obvious that many people
    are expecting companies to promote corporate images that reflect their environmental
    awareness and involvement. Waddell (2000), points out that more marketers are making

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environmental claims about their products. This might be because they recognize that
    environmental responsibility is a potential source of marketing advantage. Marketers can
    transform this crisis into an opportunity. Some of the literature suggests why firms might
    increase their use of green marketing. Polonsky (1994), for example, states that
    organizations perceive green marketing to be an opportunity to achieve their objectives,
    and they believe they have a moral obligation to be more socially responsible. Ottman
    (1993), discusses that firms, that use green marketing must ensure that their activities do
    not mislead consumers, and do not break any of the regulations or laws dealing with
    environmental marketing.

    Peattie and Charter (2003) argue that in order to practice green marketing policies, a
    company’s whole structure must be integrated. Companies must give their customers
    information on how they are incorporating environmental values into manufacturing
    processes, products and the corporate culture.

    Literature is implying that customers easily can get skeptical towards a company’s
    intentions. Greenwashing is a term that is used to explain situations where companies use
    green advertising without environmental emphasis in their strategies (Ahonen et. al,
    2001). Greenwashing is the misuse of the principles of environmental marketing and
    means that consumers cannot trust the content of advertisements. It makes one suspicious
    if companies really are green or if they are just pretending to be. It is important that
    companies recognize their responsibility and move towards a more sustainable approach,
    but it is also crucial for them to demonstrate a genuine environmental commitment. Saha
    and Darnton (2005), point out that many companies would like to see themselves as being
    “green”, but the opinion of what is considered to be “green” vary among businesses and
    individuals. Academics like Polonsky (1994), and Welford (1995) argue that in order for
    a company to use a green advertising approach they have to be aware of all the activities
    that green marketing incorporates, like product modification, changes in the production
    process and packaging changes. There are many issues that green marketers have to deal
    with, in order to be able to incorporate green advertising or promotion into their

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strategies. Competitive advantage based on environmental friendliness requires
    integrating environmental perspectives into all aspects of marketing planning; especially
    marketing strategies but also structures and functions. One method that companies can
    use in order to communicate environmental friendliness of a company or product is to
    include “eco-labels” in their advertisements.

    4.4 Eco-labelling
    Even if little scientific literature examine which impact environmental information has on
    the formation of new attitudes towards products or brands many companies seem to strive
    for competitive advantage by including environmental information in their promotions.
    Ginsberg and Bloom, (2004) argue that green marketing has not lived up to the hopes and
    dreams of many managers and activists. Their investigation has revealed that customers
    would not sacrifice their needs or desires just to be green. When customers have to
    choose between product attributes or helping the environment, the environment almost
    never wins. Analysts argue that green products have been hurt by the perception that such
    products are of lower quality or that they do not deliver on their environmental promises.

    The literature implies that customers easily can become skeptical towards a company’s
    intentions. Some firms can claim that they are “green” without actually incorporating
    environmental concerns into their strategies. Something that is considered as trustworthy
    in respect to the environment according to Charter and Polonsky (1999) is eco-labelling
    of a product. It is working in the sense that an independent share puts up demands after a
    certain criteria for environmental friendliness that the product has to fulfill. This can
    provide the customer with increased trust and make the message less confusing.
    Environmental marking has become standard in green marketing and green trademarks.
    Kotler (2008) is discussing the importance of environmental marking when it comes to
    green marketing. Kotler (2008) points out that environmental marking has become one of
    the most legitimated types of information for an environmentally adjusted product, and
    that environmental marking is viewed as one of the most important tools in order to
    inspire purchase and consumption of green products.

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Charter and Polonsky (1999) are stating that many companies nowadays are trying to
    improve their brands by associating themselves with green images. Montoro-Rios et. al
    (2008) agree with Charter and Polonsky (1999) on this statement and are also pointing
    out that much has been published lately on the advantages of including environmental
    information in marketing strategies. Kotler (2008) is discussing that the demand for
    environmental products is increasing and in order to be able to compete successfully on
    the market a company must give customers what they are demanding. Ginsberg and
    Bloom (2004) on the other hand do not agree with this statement. They believe that even
    though public opinions often declare that customers would prefer green products over less
    green products this is not completely true. Customers almost never choose environment in
    front of other concerns like product attributes and price. Ginsberg and Bloom (2004) also
    argues that many people perceive green product as being of lower quality and that they
    are not delivering the environmental promise. Not many customers are ready to sacrifice
    their needs in order to become green.

    Basu et. al (2003) are some of the academics who believe that eco-labeling can provide a
    market-based solution to the under consumption of eco-friendly products. Many
    proponents argue that certification for eco-labels necessarily will improve firm-level
    operations and thereby improve global ecosystem health (Swallow et. al, 2000). Eco-
    labelling seems to have become a popular way to provide information to customers about
    a product which is characterized by improved environmental performance and efficiency
    compared with similar products. Results have showed that the awareness of national eco-
    labels has increased drastically, and surveys in developing countries have showed that
    customers are willing to pay higher prices for environmentally friendly products (Basu et.
    al, 2003). Ginsberg and Bloom (2004) discuss that customers are willing to pay a
    premium for organic food, but that customers in general are unlikely to compromise on
    traditional product attributes, such as price, quality and performance in order to be green.
    It is not easy for companies to learn how to handle the dilemmas associated with green
    marketing and there is no single green marketing strategy that is right for every company.

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In the absence of eco-labeling, consumers are unable to distinguish products that are
    made via eco-unfriendly methods from eco-friendly ones. The primer purpose of eco-
    labeling is to help customers make consumption decisions by providing them with
    product information (Basu et. al, 2003).

    4.5 Generic strategies – the matrix approach
    How firms compete and what strategies they choose are important questions for the
    economy. The answers to these questions help explain individual firms’ successful and
    unsuccessful competitive moves and the causes of better and worse performance. Given
    the importance of competition, an important part of the literature has focused on the
    identification of the most successful competitive strategies that firms pursue.

    Porter’s model is a well known framework within the literature that is used to understand
    the broader relationship between green and competitiveness, emphasizing the
    opportunities for converting external environmental costs into internal cost savings
    (Porter and Van der Linde, 1995).

    Figure 1: Generic Competitive Environmental Strategies

                                        (Source: Orsato, 2006)
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4.5.1 Eco-efficiency
    Porter states that productivity is the key element for companies to gain competitiveness
    (Porter, 1990). Porter and Van der Linde (1995), argue in their work that waste consists
    of an inefficient use of resources and therefore should companies promote resource
    productivity in the form of material savings, increases in process yields, and better
    utilization of by-products. By focusing on the environmental impact of organizational
    processes, it could present an opportunity to enhance resource efficiency and therefore
    reduce costs. Firms that are aiming to reduce the cost and the environmental impact of
    organizational processes should focus this strategy.

    4.5.2 Beyond Compliance Leadership
    Apart from increasing the efficiency of the organizational process, some companies want
    customers and the general public to become aware of their efforts. The communication of
    a firm’s environmental effort may work as a tool of differentiation and produce some
    positive outcomes for the firm. Companies can adopt an Environmental Management
    System (EMS), which can help them monitor and improve their environmental impact
    (Nash and Ehrenfeld, 1997). By communicating their environmental approach, a
    company might enhance their public image and corporate reputation.

    4.5.3 Eco-branding
    By using this strategy firms are trying to differentiate themselves based on the
    environmental attributes of the product. Porter (1985) states that a firm can differentiate
    itself by providing something unique that is valuable to buyers beyond simply offering a
    low price. Reinhardt (1998), point out that in order for companies to gain competitive
    advantage through eco-branding three requisites need to be fulfilled:
    - Customers must be willing to pay for the cost of ecological differentiation
    -Reliable information about the product’s environmental performance must be available
    to the customers
    -The differentiation should be difficult to imitate by competitors

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By using eco-labeling the company can provide the customers with information and the
    message might be more trustworthy.

    4.5.4 Environmental Cost Leadership
    If “being green” costs more, as some analysts’ state, a differentiation strategy may be the
    only way for the company to pay off ecological investments. Orsato (2006) argues that
    this is a suitable strategy when customers are willing to pay a price premium for the
    environmental friendly product. Even though this approach may lead to success when
    niche markets addressed, but it could be asked if this strategy can be used in industries
    where companies compete on price?

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5. HONDA AND RENAULT

    This chapter starts with a short background about what Honda and Renault are, with
    information about their history and what kind of products that can be found within those
    firms. Further their connection to green marketing. As examples on green marketing the
    firms are having, different products will be discussed that are seen to be their steps into
    greener marketing.

    Both Honda and Renault are part of the automobile industry which is a big market with
    approximately 806 million automobiles and trucks in 2007 on the roads around the world,
    and the amount of automobiles in the world is growing fast (Plunkett Research Ltd,
    2009).

    5.1 Honda
    Honda is a Japanese vehicle manufacturer which was established in 1946 by Soichiro
    Honda, and is one of the leading producers of automobiles in the world and the largest
    manufacturer of motorcycles. During the 1950s Honda became one of the leading
    motorcycle manufacturers in the world, the year 1967 they began produce automobiles.
    Apart from automobiles Honda also makes engines for light business jets as well as
    automobile fuel cells which are good for the environment, Honda even manufacturers
    ASIMO which is humanoid robots. The revenues of the Honda company was the
    financial year of 2008 over 105,384 million US dollars (Datamonitor, 2009).

    Honda started as a local company with a global vision, but nowadays the company is a
    global actor in the automobile industry with a local vision. The company have about
    130 000 employees in over 40 countries around the world nevertheless Honda operates
    primarily in the US and Japan, but their headquarters is situated in Tokyo, Japan. They
    have four business divisions in the company which are the automobile business,
    motorcycle business, financial services and power products and other businesses
    (Datamonitor, 2009). However, this study has a focus on only the automobile part of the
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Honda Company.

    One of the most important foundations in the Honda Company is their philosophy that the
    products and way of production shall have the lowest possible effect on the environment.
    The official slogan of Honda is ‘The power of dreams’, but it has never been used to sell
    the products since Mr Honda is believing that well built product will sell themselves
    (World.honda.com, 2009).

    The automobile division within the Honda company manufacturers’ passenger cars, multi
    wagons, minivans, sports utility vehicle, sports coupe and mini vehicles; they also have
    alternative fuel-power vehicles that they offer, such as natural gas, ethanol and fuel cell
    vehicles. Shows they think about the environment and are already producing some
    environmentally friendlier cars (Honda.co.uk, 2009).

    Honda is according to their webpage keen on providing safety to everyone with a high
    focus on innovative technology, which they believe is good for the customer relations and
    a competitive strength. An aim for Honda is to be an environmental leader in the
    automobile industry through environmental technology.

    5.1.1 Environmentally friendly automobiles
    The mission of Honda according to their webpage is to maintain a global viewpoint and
    to offer products of the highest quality at a reasonable price for customers worldwide, and
    they want their products to minimize their environmental damage. When Honda
    introduced a 4-stroke marine engine to the U.S. in 1973 it can be seen as their first step
    into their environmental mission statement, which guides their approach to become to be
    the environmental leader. The 4-stroke marine engine was seen to be a cleaner, quieter
    and more fuel efficient engine than the former ones when it was introduced on the
    market. With this engine it illustrates that Honda is on the path to minimize their
    environmental damage and become a greener company.

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According to Hondas own webpage they are always thinking ahead, and state that they
    have made hybrid automobiles accessible to everyone, while other manufacturers are still
    at the prototype stage. They say it is because they have focused on developing low
    emission vehicles in environmentally-friendly ways since they started producing cars.
    Further what is said on the webpage is that Honda is applying the environmental thinking
    to everything they do within the company (Honda.co.uk, 2009). Honda was the first
    automobile manufacturer to offer a mass-production hybrid model for the U.S. and
    Europe (Honda.com, 2009).

    Honda’s major manufacturer plants worldwide already meet the international
    environmental management standards ISO 14001, (Simon, 2009), which means they are
    covering a host of environmental areas, such as waste disposal, water treatment and
    energy use.

    The company has a strong market position by being one of the greenest automobile
    manufacturers since they have won different prices for it (US News, 2009). On the
    greenercars.org (2009) webpage they listed the twelve greenest automobiles year 2009
    and Honda had three vehicles on the list, they got number one, three and number nine.
    One of their top ranked automobiles was the Honda Civic Hybrid which have been rated
    on the “Advanced Technology Partial-Zero-Emission Vehicle” which is the most strict
    emission standard achieved by a gasoline-powered vehicle in the U.S.

    The year 2006 the Honda Civic Hybrid won the prestigious price ”World Car of the Year
    Award ’for Greenest Car’” it was voted winner from a jury containing of 46 international
    motor journalists, who voted the Honda Civic Hybrid the eco-car of the year. (Honda.se,
    2009) Even the year 2004 Honda received a price for “Greenest Automaker Award” from
    the Union of Concerned Scientists. The prices they have won for being environmentally
    friendly has put Honda in a good position to be the most environmentally responsible
    automaker (Industrial Engineer, 2005).

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For the future an opportunity for Honda could be the increasing demand for hybrid and
    electric vehicles, which they offer to the market. The increased demand on more
    environmentally friendly automobiles is linked with the increased demand on greener
    products from customers (world.honda.com, 2009).

    5.2 Renault
    Renault is one of Europe’s leading automobile manufacturers with its headquarters
    situated in Boulogne-Billancourt in France. The Renault Company was founded by the
    brothers Louis, Marcel and Fernand Renault, who called the company Renault Freres, the
    Renault brothers. They produced their first automobile in 1899, and by the year 1905 the
    firm were in mass production. In 1945 the French government nationalized the company
    and named it, Renault. Later the French government reduced its shares in the company
    and by the year 1981 they had 46% of the shares.

    The Renault company develop, design, manufactures and market light passenger vehicles
    around the world and they have industrial commercial presence in over 118 countries
    (Datamonitor, 2009). The revenues of the Renault company was the financial year of
    2007 over 55,764 million US dollars.

    Renault is a company that also have shares in other vehicle companies, and since 1999
    Renault and Nissan have an alliance together. A strategic management company, Renault-
    Nissan was founded to define a common strategy and manage synergies. It was created in
    the Netherlands under Dutch law and is jointly and equally owned by Nissan and Renault
    (Renault.co.uk, 2009). Renault had in year 2002 44.4% stakes in Nissan and Nissan had
    15% in Renault, which is the basis of the strategic alliance between them. The alliance
    made Renault Nissan the fifth largest vehicle manufacturer in the world (Renault.com/fr,
    2009). Renault has as well stakes and owns the Romanian automaker, automobile Danica.
    Moreover Renault has 20% in the Swedish company Volvo AB. In addition, Renault also
    had an acquisition with the Korean manufacturer, Samsung Motors which they now own.

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