An Analysis of Product Brands and the Environmental Market

ABSTRACT

In addition to voluntary demand stemming from increasing concerns about environmental issues, political activity, such as the Law on Promoting Green Purchasing, has enlarged the "green market", or the market for environmentally friendly products. Since many companies have begun to supply green products aggressively, the act of supplying green products itself has lost its effect in differentiating between companies. Thus, if a company wishes to establish its competitive advantage in the green market, it is required to choose a strategy that will create additional demand by means of "branding" the environmental value of its green products.

Among the construction and manufacturing industries that are listed in the first section of the Tokyo Stock Exchange (TSE), 30 percent have already begun supplying green products. These companies correspond to 61 percent of companies that disclose information with regard to environmental activities. The pulp and paper industry, as well as those manufacturing industries classified as "other", show high green product supply ratios. Many non-listed companies also supply green products.

It is necessary to form a consensus between suppliers and customers regarding environmental value in order to evaluate the value of green products appropriately. However, it seems that customers do not always receive sufficient environmental information from companies; indeed, the indirect benefits to users are especially likely to be neglected. With regard to evaluation from a third party, there exists the concern that the relationship between the "eco-mark" and the Law on Promoting Green Purchasing could breed a double standard. Therefore, clarification of each evaluation concept is required to protect customers from possible confusion.

Products that become costly as a result of adjustments for environmental friendliness should therefore apply the "branding" strategy for the products' environmental value. Currently, 11 percent of the manufacturing and construction companies that are listed in the first section of the TSE-or 36 percent of companies supplying green products in this section-have begun testing "green branding". Green-branding companies tend to be evaluated as more environmentally friendly than others, and this indicates that the strategy of branding could contribute to establishing strong reputations as green brand companies.

Introduction

Conclusion