BM 6043: ADVANCED STATISTICS

ARTICLE REVIEW
TITLE: GREEN MARKETING STRATEGIES TO ENHANCE FIRMS
PERFORMANCE

NAME

: ANIS SAKINAH BINTI LOKMAN HAKIM

NO. MATRIX

: MB1512053T

LECTURER

: ENCIK ROSLE BIN MOHIDIN

SECTION

: 02

DATE

: 28/12/2015

FACULTY OF BUSINESS, ECONOMICS & ACCOUNTACY

UNIVERSITI MALAYSIA SABAH

Zuhairah Hasan & Noor Azman Ali (2015)

The impact of green marketing strategy on the firms performance in Malaysia
Procedia Social and Behavioural Sciences, 172, 463 470.

The tendency of consumers to spend for a green product and service has
increases nowadays. However, previous literature revealed that some challenge
exists in green marketing such as misleading advertisement, unreal promises,
poorly stated labels and inconstant performance has increase the puzzlement
among customers, which cause a reduction number of green product launched.
This situation is labelled as greenwashing. They also concerned about
sustainability as the businesses must have a responsibility to satisfy the human
needs and wants while preserving nature even to integrate sustainability into the
organization still a challenge. Thus, many industries are adopting green business
strategy to ensure sustainable growth through encompasses the green
characteristic in their business operation while more companies taking this
initiative and it becomes a main agenda and important strategic concerns among
companies. The main purpose of this study is to examine the impact of green
marketing strategy on the firms performance especially on the firm which
certified ISO 14001 Environmental Management System. This study is then
conducted through an analysis on the green innovation and green promotion.
This study also will analyse through structural relationship between the
constructs and focus on the strength of green innovation and green promotion as
a green marketing strategy. The approach they used was literature analysis.

Furthermore, green innovation can be divided into green products and

processes whereas include in the development of new environmental friendly
products and changing process or production method.

It is said that the key

factor of sustainability of the firm is the development of a new product or

services by using all technologies and innovation will provide environmental
benefits. Meanwhile, green product innovation is has generally positive effect on
firm performance and competitive capability. As a result, effective development
of green products is actually assisting the companies to increase their
performance. However, some drawbacks on green marketing practices need
attention from marketers. Marketers must responsible to not misleading to the
consumer for the claims on the green products and services and make sure the
consumers really benefited from the claims. Moreover, the Diffusion of
Innovation Theory is applicable to support the relationship between the green
innovation and firms performance as well as Resource-based view theory is used
to support the firm differentiation from its competitors in the green market
segment. Therefore, green innovation can be considered as unique resources set
by

the

business

that

enable

firm

to

gain

competitive

advantage

and

simultaneously improve firms performance.

Furthermore, green promotion is effective tools to raise products, service,

ideas and organizations efforts to show their initiatives to protect and save the
environment. It also used by the companies to declare their roles as directly
impact with the global issues and parallel with awareness shown by the societies.
Also, green advertising must be able to communicate the relationship between
products or service with the environment, serve as campaign to promote a green
lifestyle and finally can enhance the corporate image of the companies. To avoid
any conflict with customer, it is recommended for environmental labels should be
aware and stay visible in order to influence purchase from the consumer. The
terms used in the advertising such as biodegradable, recyclable and ozone safe
is claimed that cause confusion and unclear meaning of the terms used among

consumers. Thus, a marketer should have a strategy on how to communicate

their products in attractive way when introducing the environmental friendly
product.

The firms performance is reflected from the perceived benefits which

expected from the combination of environmental management in their business
operation and it can be enhance by implementing the ISO 14001 EMS. Among
the perceived benefits were increase good corporate image, reducing waste,
minimising cost, raise customer satisfaction, increase productivity, better
goodwill, and increase market share and profitability. Some literature claimed
that the certification of ISO 14001 has positive impact on firms performance
including perceived economic impact, environmental impact and customer
satisfaction.

There

are

some

variables

that

can

be

used

to

measure

organizational performances which are comprises such customer satisfaction,

employee spirit, exportation growth, profitability, productivity, reduction in
quality cost as well as financial, environmental, economic and marketing
performance. However, in this study, the most commonly dimension used to
measure overall organizational performance is economic performance and
operational performance. Economic performance indicates a firms business
performance comprises of financial return on investment (ROI), internal rate of
return, market share and sales growth while operational performance is used as
an indicator of a firms performance whether the firms use its resources
effectively to achieve objectives such as product quality.

Based on the literature, it was mentioned that there are another green
marketing strategies other than green innovation and green promotion, which is
green marketing mix programs that comprises of product, pricing, distribution

and promotion. In fact, green marketing is a tool to promote green products to

satisfy customers needs and wants and it is revealed that green market program
is beneficial towards the firms performance. The objective of green marketing is
to diminish the impact of natural environment during the process of planning and
implementations of products or services, price, place and promotion and also, to
gain profit and sustain the social responsibility. Through in-depth review, it can
be concluded that the green marketing strategy contributes to the firms
profitability, competitive advantage and urge a greener pattern of usage among
consumers.

In conclusion, it is clear that the performance of green innovation (product

and process) and promotion has positive impact on the firms performance. From
this study, it also can add knowledge to the managers understanding to refine
their marketing strategy. It is recommended that firms should eager to perform
green practice in developing the sustainability agenda in Malaysia and for future
generation.

In this article, they were showed the evidence from some literature that
implementing green marketing strategy will enhance the firms performance due
to the awareness and demand from the consumers. Nevertheless, they only were
focusing on green innovation and green promotion as their marketing strategy. It
cannot be same as research done by Leonidou and Katsikeas (2013) entitled
Greening the marketing mix: do firms do it and does it pay off? When we are
reviewing between these two articles, they were having same aims which is to
know either it is worth or not to invest the green marketing into their business
operation and enhancing the firms performance as well as concerned about the
sustainability.

Even so, second article was defined sustainability as development that

satisfies the necessities of the present without compromising the ability of future
generations to satisfy their own necessities (Lenidou & Katsikeas, 2013). They
give various key issues regarding on sustainability such drivers, management,
the performance outcomes, marketing aspects and consumer aspects of
sustainability. In advance, the second article is appearing to present their
research in more detailed. They were focusing on green marketing mix programs
as their green marketing strategies for two main reasons. First, mostly of the
firms are not likely to abandon their existing market position despite interest on
green issues and implement

their existing marketing strategies through the

development and deployment of green marketing programs. Second, it can be

seen that product market and accounting performance outcomes are more likely
to be associated with the awareness in a firms specific green marketing program
actions than with a firms broader environmental strategy intentions.

On the other hand, the second article shows that their concern also on the
raising numbers of customers that begin changing their preferences into green
product and service. However, managers have remained uncertain that such
investment to implement green marketing makes strategic and financial sense
for their firms. In fact, both managers and policy makers have limited knowledge
about green marketing practices and pushing companies to do some research on
the costs and benefits of greening their marketing mixes. Therefore, instead of
only doing literature analysis, they also develop, test a theoretical model and
make some hypotheses that predicts the role of marketing programs in affecting
firm performance in order to know the impact of slack resources and top
management risk aversion on the deployment of such programs, and the

consideration effects that underpin these relationships. They included the

internal factors such slack resources and top management risk aversion in their
study. Slack resource is defined as level of availability of a resource whereas risk
aversion is a risk when top management attempt to reduce the uncertainty when
exposed to it. Product-market, return on asset (ROA), competitive intensity and
firm size also included as an indicator to measure its effect on the marketing mix
program and firms performance.

Some approaches they used which are research setting, field interviews,
questionnaire measurement and data collection. Their research was based on
U.K. manufacturing for several reasons. There were because of U.K. is one of the
most polluted countries among Europeans, many U.K. firms have recently
engaged in more environmental marketing approaches and also increasing
regulatory pressure causing them to intensify such efforts. They were chose
industry by grouping and varied in terms of the amount pollution produced,
degree of public environmental concern, intensity of environmental regulations
and environmental liability risks. Their main attention for conducting field
interviews is to ensure their research model was based on insight specific of
green marketing programs context and focus to a research model that adds to
existing knowledge. After doing some research and in-depth interviews, they
then drafted a questionnaire by directly approach to the experienced managers
in environmental marketing practices and mail survey targeting several
manufacturers. After that, they collected the data for be able to include needed
control variables in their analyses.

From the structural model results, it is shows that availability of slack

resources has a positive effect on green marketing program components. Top

management risk aversion is positively related to the deployment of green

product, distribution and promotion programs, however not for pricing. This may
be due to green pricing approaches generally resulting in higher prices which
often risks lowering demand.

The results also provide strong evidence of the positive effect of greening
firms marketing programs but show these effects would differ across individual
marketing program components. Specifically, they find that green product and
distribution programs have positive effect on firms product-market performance,
but not for pricing and promotion. Nevertheless, the impact of green product and
green distribution programs only in an indirect financial performance because of
these programs are more effective in differentiating firms value offerings than
green pricing and promotion programs. The absence of a significant effect of
green pricing on product-market performance, this may be due to a combination
of such programs being less visible to customers and likely effect on raising
prices. For green promotion, it might be explained by ease of imitation where the
effectiveness of promotional effort cannot be measured accurately and likely
more difficult to achieve with such programs.

However, this situation reverses for the ROA effects of green marketing
programs. Green pricing and promotion programs seem have positively affected
on ROA instead of green product and distribution programs. As neither green
pricing nor promotion programs are significantly associated with firms productmarket performance, their results suggest that their ROA performance benefit
when either lowering costs or increasing actual prices rather than increasing unit
sales. For green pricing, this may reflect a combination of effects because it
involves both building environmental costs and prices charged benefits and

using pricing tactics to help lower raw material costs by enhancing recycle
efforts. Other than that, green promotion programs may help firms recoup
investments in greening other marketing program components by keeping unit
demand high. The high costs involved in changing product and distribution
practices may be the reason for the absence of significant ROA effects. In sum,
these results reveal a clear pattern in the performance effects of green
marketing mix components and show that each can influence product-market
performance and ROA directly or indirectly.

Besides, customers appear to attribute higher value to green marketing

practices such product and distribution, maybe recognizing that efforts in those
areas can be more difficult and costly. Conversely, green pricing and promotion
strategies have an no effect on firms product-market performance which
suggests that as more firms jump on the green trends, customers and other
stakeholders may be unaffected with green marketing approaches such
promotion and pricing due to easy to implement and copied by competitors.
Nevertheless, a combination of low implementation costs (i.e., promotion) and
higher receipts (i.e., pricing) may make these practices financially beneficial.

After all, the results showed the firms that green their marketing programs
can have positive product-market performance outcomes. When green marketing
program components is linking direct or indirectly with firms ROA, they also
show that more benefit on the revenue than compensate for the costs involved
in such investments. Their study also has provides new insights into slack
resources and top management risk aversion as theoretically important roots of
green marketing programs that have significant affect for managers seeking to
gain top management support for greening their firms marketing programs.

From this study, it is quite completely gives us the results to be refer much in
detail compared to the first one , and yet considering of internal factors that
many of researchers do not explore.