Download Green Marketing Strategy Fosters Construction Companies Developing in Sustain

Green Marketing Strategy Fosters Construction Companies
Developing in Sustain
LUO Fuzhou1, REN Rui2
School of Management, Xi’an University of Architecture & Technology, P.R.Chian, 710055
Abstract: The sustainable development is the inevitable trend which the construction enterprise
develops. The green marketing and sustainable development of construction enterprise are integrated
together. In this paper, the function of green marketing in sustainable development is researched, and
positive externality of green marketing is analyzed. In the end, the marketing strategy is put forward for
sustainable development of construction enterprise.
Keywords: Sustainable development; Construction enterprise; Green marketing; Externality.
1 Introduction
With the global environmental degradation growing, the environmental problem has become the
main issue which restricts enterprise's development and threatens its sustainable development. The
traditional concept of development can not clearly meet modern requirements for the development of
enterprise, and so a new concept of development, named sustainable development is put forward.
Sustainable development was first proposed in the memorandums of "Our Common Future", "the Rio
de Janeiro Manifesto" and "the 21stcentury Agendas". From that on, the sustainable development
prevailed to the whole world. Sustainable development emphasizes: not only to meet the needs of the
contemporary people, but have no harm to the needs of descendant person [1]. Its basic content is that a
person is requested properly to deal with the resources and environment issues in the economic activities
in order to achieve the sustainable development of society in the process of economic development.
Achieving social sustainable development is in fact to achieve the sustainable development of enterprise
which is the main body of social economy activities.
Many studies have done from different view of the sustainable development. According to the
achievements, "green" development concept has been put forward and introduced into enterprise's
marketing activities by the most of the scholars. Further viewpoint has proposed that the green
marketing promotes enterprise sustainable development. But all these studies confined to the enterprise
which products generally production, and overlooked the sustainable development of construction
enterprise.
Construction marketing is different from others and has its own characteristics. Which include special
trading objective which is always unique, unified activities of production and transaction, the special
prices, the long duration of transaction which is often divided into several stages, etc [2]. These features
have determined the distinctive characteristics of the production and management for the marketing
management of construction enterprise and others. With the growing of global sustainable development,
it becomes more urgent to study on construction firm’s sustainable development.
Based on the large number of researches, green marketing of construction enterprise is researched in
this paper in order to achieve the green marketing of construction enterprise and to promote the
sustainable development of construction enterprise.
2 The role green marketing plays in sustainable development of construction
enterprise
So far as sustainable development has been put forward in western, many countries have adopted
sustainable development model of economic development and formulate economic policies for the
long-term economic development. In response to the national policy and construction firms’ long-term
development, then marketing activities have to be linked to the development of the natural, social
environment in order to promote a reasonable cycle of environmental development and green marketing.
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2.1 To gain a competitive advantage through branding
More and more people are aware of healthy living environment on whether there was damage, and are
calling for green living environment. Then, for construction enterprise, those who can construct products
to meet the requirements of environmental protection, will be successful in the fierce competition will
be able to establish a new green brand, and gain powerful competitive advantage.
2.2 Setting a good corporate image
A good corporate image are an intangible asset which will help enterprises gain customers and market.
In the implementation of green marketing process, as the use of green building materials and new
technologies to reduce environmental pollution, the costs will increase. But in the long run, the
environmentally concerned enterprise will be able to obtain the goodwill of the people and be conducive
to the public image of business and the key to open the green market at domestic and abroad and even
bring huge social and economic benefits for enterprise.
3 Analysis on the implementation status and reasons
3.1 The implementation status
In recent years, the basic policy frame was proposed by our government for the green marketing and
the sustainable developmental strategy to protect environment. With green marketing gradually become
an international mainstream, more and more construction enterprises start to implement.
Environmentally building materials are used and construction equipment and technologies are improved
to reduce dust and noise pollution; green energy is used to reduce the consumption of traditional energy
by many firms. However, there are still many problems in the implementation: green marketing concept
hasn’t been yet established in many enterprises, the concept of environmental costs is not acceptable to
the majority of enterprises; green consumption has not formed in consumers; adequate number of
policies and measures has not made to support the development of green marketing by government. The
radical reason to these problems is the positive externality of green marketing.
MSB
MC
P
P*
P1
MR
MER
Q
O
Q1
Q*
Figure 1: Externality of green production and the market equilibrium
3.2 Analysis on the reasons
Because there is externality of green marketing, economic activities of construction enterprise have
brought the whole community resources and the environment harmonious and sustainable development
and the healthy development of the whole human society. However, construction enterprise has not been
able to receive compensation [3]. According to "rational person" hypothesis, "Hitchhike" will be
widespread, resulting in lower effective allocation of resources, market failure and making it difficult to
start green marketing for construction enterprise. Analysis on externality will be in two ways: externality
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of green production and green consumption.
3.2.1 Externality of green production
Construction is the key to the entire project and green marketing. In the entire construction process,
advanced equipment, materials are needed in order to reduce to energy consumption, the noise, the dust
and other deleterious substances to the human survival environment. These measures made by
construction enterprise have brought some environmental and social benefits; moreover, construction
enterprise's private cost obviously increased because of the use of advanced equipment. However,
additional expenditures of Construction enterprise do not receive any compensation which makes
externality of Green production becomes more serious.
As shown in Figure 1, assuming the green production is carried on by construction enterprise, its
marginal is MR, marginal cost is MC, and at the same time marginal social benefit is MSB brought by
green production. Because of Externality, marginal social benefit (MSB) is greater than the marginal
revenue (MR) of enterprise; the difference is MEB (marginal external benefit). To achieve private
revenue maximum, equilibrium output of green production made by enterprise is Q1 (an intersection
point of MR and MC); its price is P1. From the view of sustainable development, equilibrium output of
green production made by enterprise is Q* (an intersection point of MC and MSB); its price is P*. We
can see from figure 1, P1< P*, Q1< Q*. In other words, in spontaneous market mechanism, regardless of
the output or price, green production level of construction enterprise is lower than the most superior
level which the society requests. Pareto optimum has not been achieved so it has seriously restricted the
sustainable development of construction enterprise.
P
MSB
MC
P
MEB
MR
Q
O
Q1
Q*
Figure 2: Externality of green consumption and the market equilibrium
3.2.2 Externality of green consumption
Green consumption is that buyers purchase green products, which increases the benefits of the entire
social and environment. Meanwhile, the price of green products is higher than ordinary products; the
cost of buyers is bound to increase. However, this part of increased expenditure was not compensated by
the society and others. "Hitchhike" will be widespread also, leading to the quantity of green product
made by the entire social not able to achieve the social effective level, and there is a typical externality.
In figure 2 assuming the green consumption is conducting, its marginal is MR, marginal cost is MC,
and at the same time marginal social benefit is MSB brought by green consumption. Because of
externality, marginal social benefit (MSB) is greater than the marginal revenue (MR); the difference is
MEB (marginal external benefit). To achieve private revenue maximum, equilibrium consumption
quantity of green production made by enterprise is Q1 (an intersection point of MR and MC); from the
view of sustainable development, equilibrium consumption quantity of the whole community is Q* (an
intersection point of MC and MSB). Obviously, we can see that Q1 is less that Q*(Q1< Q*). In other
words, in spontaneous market mechanism, the resources of whole community are not an effective
allocation, which hinder the sustainable development.
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4 Marketing strategy of green marketing
4.1 Economic principles of elimination of externality
The above shows if construction enterprise wants to start green marketing and achieve sustainable
development, it must first eliminate externality.
Figure 3 shows us how to eliminate externality of the green marketing. Because of externality, in
spontaneous mechanism, equilibrium output of enterprise is far below the optimal equilibrium output of
community. To achieve sustainable development of construction enterprise, the equilibrium output Q1 of
enterprise should be equal to the output Q* of the social. That is, to achieve sustainable development, we
must make Q1 = Q*. From the figure, so long as the marginal cost MC reduces to MC1, it can be realized
of externality internalization so that the resource distribution of the whole society will reach Pareto
optimal state.
4.2 Marketing strategies
While the construction enterprise implements green marketing and makes the marketing strategy, it
should be considered both eliminating influence of externality and the particular characteristics of the
construction products.
Construction marketing is the whole process marketing of production, of which the marketing
activities include environmental analysis, market demand forecasts, tendering and signing contracts, and
construction, delivery and services. Therefore, the green marketing of construction enterprise should run
through the whole process of marketing. Therefore, the authors propose in this paper some specific
measures.
P
MSB
MC
P
MC1
MER
MR
Q
O
Q1
Q*
Figure 3: Principle of eliminate externality of green marketing
4.2.1 Green Public Relations strategy
For construction enterprise, the green concept can be communicated more widely and enjoys popular
support; some PR activities can be implemented also, such as green sponsored activities, charitable
activities for publicizing the green image.
When the green consumption and environmental awareness formed, the function of environmental
protection of the products will become the evaluation indexes of private utility. When they consume
some green product, their appraisal on this product’s utility will improve. Assume that the environmental
protection function of this product happens to be MEB for the utility value-added that consumers bring,
and then Demand curve of consumer can correspondingly rise to MSB (its MEB and MC) too. The
externality will just disappear at this moment, and realizing the internalization of the externality will be
favorable to the sustainable development of enterprise.
4.2.2 Green pricing strategy
The green ideas could be introduced through bidding stage and making the green prices. The ultimate
price is determined by the Bid Price because of the uniqueness of the construction products. Introducing
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the green idea from the early stage of bidding will be helpful to make the green price of the construction
products.
According to the principles of "compensation for the use of the environment" and "polluter pays",
bidding will be included in environmental cost form a green costs charged to the green products prices.
The cost of the construction enterprise will be reduced to MC1 from MC. At this moment, the
equilibrium output of the green products made by construction enterprise is Q* (an intersection point of
MC1 and MR), which happen to equal to the social optimum equilibrium output. The outside income of
green marketing turns into the inside that enterprise is benefited. Thereby eliminating the externality and
the resource distribution of the whole society will reach Pareto optimal state. Lower costs and the
reasonable green price can promote the sustainable development of the construction enterprise
effectively.
4.2.3 Green product strategy
Green idea will be incorporated in the whole construction course and produce green products, which
emphasize that resources and energy must be utilizing effectively and the ecological environment be
protected. Construction is the most critical part of the whole production. During construction, the new
technologies are used so that the utilization rate of resources will be raised, and demand for natural
resources, energy consumption is significantly reduced, waste emissions to the environment pollution is
reduced, too, especially the dust and noise pollution. The new green materials will be used so that
pollution of construction products will be reduced. Thereby the environmental pollution is reduced and
the damage to human health, the pollution of the entire production process would be reduced too. The
cost will be charged to the green products prices.
4.2.4 Green certification strategy
It is of great significance to gain green certification for the construction enterprise that operates with
green marketing. By green certification, the image of construction products will be improved and the
market is opened up further and shared for construction enterprise. Because of differentiation of
construction product, competitive edge will be gained in the market and corporate image will be
enhanced and the trust and favor of consumers will be winning.
5 Conclusions
In a word, construction enterprise that implements green marketing strategy plays an important
economic functions and social significance. Green marketing for constriction enterprise will adapt to the
demands of global sustainable development strategy, promote the rational allocation of resources and
improve the efficiency and use of resource allocation so that enterprises may become a green enterprise,
and is beneficial to the share and expand of the market. Promoting cultural development and the
development of the emerging green civilization would optimize activities and build new image of
enterprise. All of these are beneficial for a society to achieve the goal of sustainable development, also
for the sustainable development of enterprises and opened up a broad road.
But as a new marketing concept, its spread and popularize still needs a process. It is not enough to
rely only on the construction enterprise; as long as green marketing is understood by consumers, they
can accept and trust it. Therefore, consumers, construction enterprises and the governments should
participate together to promoting and facilitating the green marketing for construction enterprises.
References
[1] Mao Hongzhang, Tang Xiong Green marketing: Guarantee of modern enterprise's sustainable development [J]
Enterprise Reform and Development 2005(10)
[2] Gao Yonghong, Xia Yanwang
The Thinking Of Marketing Culture about Construction Enterprise[J]
Building 2001(6)
[3] Huang Xi Externality analysis and countermeasures of green marketing [J] Journal of commercial university
of Harbin 2006(1)
[4] Huang Yajun, Yu Yihong
Microeconomics [M]
Higher Education Press
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