Recently in Partnering for Green and Sustainable Business Strategy Category

THE WAL-MART SUSTAINABILITY SCORECARD

It’s likely that you’ll soon have to comply with your customers’ sustainability initiatives as well as your own. That's the case if you provide products for the Wal-Mart chain of retail outlets.

Wal-Mart has taken a "lifecycle approach" to packaging with objectives covering reduction in waste and renewable energy. Nine weighted parameters of Wal-Mart's sustainability scorecard are measured for their prospective and current vendors.

Wal-Mart has told its buyers that, starting in 2008, they should consider the packaging scores when choosing among various products for its Wal-Mart and Sam's Club stores. Matt Kistler, Vice President - Package and Product Innovations, Sam's Club Wal-Mart

Part of the challenge in rolling out greener products is informing customers about changes that affect their perception of savings. Wal-Mart's April 2008 "Earth Month" promotion is highlighting its greener products and informing customers how making better choices, especially on a large scale, can cause a difference. Wal-Mart is featuring more than 50 products in stores and 500 online, from transitional cotton shirts to mulch made from rubber to Clorox Green Works products.

The majority of Wal-Mart's environmental footprint comes from suppliers. The company has direct control on about 8 percent of its footprint, with the remaining 92 percent coming from its supply chain.

To green its supply chain the company launched a it's "Wal-Mart Packaging Scorecard" in 2007 . By filling in information about products' packaging, suppliers are rated and find out their rank in relation to peers. Kistler said Wal-Mart works with suppliers, telling them what they can do to improve and let them know what other suppliers have done to reduce packaging.

Comparing marketing channels helps farmers determine how to use each channel, as well as which channel can be most profitable for their specific kinds of produce and time commitment.

Comparing Farmers Markets, CSAs and Wholesale Profits

Where's the core of farm produce profits?

While farmers' markets have become increasingly popular with consumers, farmers themselves are beginning to ask how profitable selling at a farmers market actually is.

UC Small Farm Program director Shermain Hardesty is finalizing a case study of three farms that each market their products three ways: farmers markets, wholesale and through a Community Supported Agriculture (CSA) program, in which subscribers regularly receive boxes of food from the farm.

Net Revenue for Farm Produce

Preliminary results of research found that

• Farmers markets generated the lowest net revenue return for all three growers
• Wholesale provided the highest net revenue return.
• The net rate of return for CSA revenues was in the middle.

Farmers markets can also provide an outlet for produce unmarketable to wholesale channels and can support new farmers developing new businesses.

To help growers determine the cost and return of their different marketing options, Hardesty and student researcher Penny Leff offered use of their formulaic spreadsheets to workshop participants and walked them through tabulation of their costs and returns. "We want to show farmers how they can determine their actual marketing costs themselves," Hardesty said.

For more information, contact Shermain Hardesty at (530) 752-7774, sfpdirector@ucdavis.edu.

RESOURCE: UC Agriculture and Natural Resources

Entrepreneurs constantly seek capital for new and existing ventures although they face considerable constraints in obtaining financing. Venture capital from outside investors has been considered an important driver in the startup and growth of entrepreneurial firms. Understanding the specific investment criteria for venture capital funding is of foremost importance, since this may substantially improve these firms’ chances of acquiring funding.

Venture capitalists (VCs) may be willing to fund

a marginal team with better venture potential

In other words, entrepreneurs need not only to assemble an effective team, but also to clearly demonstrate the venture potential of their proposed business. This finding contrasts with most prior studies, which identify the venture team as the key funding criterion.

The Small Business Research Summary Findings include:

• The findings suggest that while a venture team’s composition and ability are a minimum requirement in the consideration of a venture capital investment and a major factor in explaining why a business plan gets rejected, these features are not significant in explaining why a business plan gets funded.

• The study implies that venture potential is a better indicator of business plan funding than venture team quality and that VCs have similar knowledge structures and preferences when it comes to funding and not funding actual business plans.

• The researchers analyzed the relationship between rates of return and factors such as venture team quality and venture potential. The analysis finds that a good venture team has decreasing returns even for funded ventures, but favorable competitive conditions and market potential of a business plan have increasing returns

Venture Capital Investment Decision Making

Download a full copy of this report is available at: US SBA

The research summary can be found at: US SBA

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Knowing your customer is the heart of marketing...but we get intellectually smug or arrogant or caught up in staring at a computer screen... and assume "THEY"  "just want something new."

Not so... even big companies like Ikea learn the hard way. And discarding wrong-sized products is just NOT green!

Green marketing is smart about right-sizing, right-coloring, right-thinking.

Julie Desrosiers, the bedroom-line manager at Ikea of Sweden, visited people's houses in the U.S. and Europe to peek into their closets, learning that "Americans prefer to store most of their clothes folded, and Italians like to hang." The result was a wardrobe that features deeper drawers for U.S. customers.

The American market poses special challenges for Ikea because of the huge differences inside the U.S.

"It's so easy to forget the reality of how people live," says Ikea's U.S. interior design director, Mats Nilsson.

In the spring of 2004, Ikea realized it might not be reaching California's Hispanics. So its designers visited the homes of Hispanic staff. They soon realized they had set up the store's displays all wrong. Large Hispanic families need dining tables and sofas that fit more than two people, the Swedish norm. They prefer bold colors to the more subdued Scandinavian palette and display tons of pictures in elaborate frames. Nilsson warmed up the showrooms' colors, adding more seating and throwing in numerous picture frames.

Ikea is particularly concerned about the U.S. since it's key to expansion -- and since Ikea came close to blowing it. "We got our clocks cleaned in the early 1990s because we really didn't listen to the consumer," says Kanter. Stores weren't big enough to offer the full Ikea experience, and many were in poor locations. Prices were too high. Beds were measured in centimeters, not king, queen, and twin. Sofas weren't deep enough, curtains were too short, and kitchens didn't fit U.S.-size appliances.

"American customers were buying vases to drink from because the glasses were too small," recalls Goran Carstedt, the former head of Ikea North America, who helped engineer a turnaround. Parts of the product line were adapted (no more metric measurements), new and bigger store locations chosen, prices slashed, and service improved. Now U.S. managers are paying close attention to the tiniest details. "Americans want more comfortable sofas, higher-quality textiles, bigger glasses, more spacious entertainment units," says Pernille Spiers-Lopez, head of Ikea North America.

SOURCE: Read the full story about Ikea's business experiences at BusinessWeek.com

"Be the most effective you can be" -- that is the heart of sustainability.

Business still believes it HAS TO GROW. And investors want HIGH growth.  Like invasive species. It's  a governance dilemma to balance growth pressure on one side, and the realization that  environmental  damage caused by high growth is increasing long term environmental risks that can damage the company.

How do you evaluate executives on a corporate teeter-totter of growth and social responsibility?

In recent years / and months -- higher margin products were acceptable to well educated, higher income customers.  Wal-Mart's aggressive and huge impact in the marketplace is changing that equation, slightly.  They are pricing products for the average consumer to give them access to making better choices -- Wal-Mart is working to bring Waste Reduced products to the middle and lower income markets.

At the Eco-nomics conference in March 2008, Lee Scott of Wal-Mart talked about bottled water as a metaphor for balancing staying in business to serve customer demands with the business strategy of reducing costs and creating less of an environmental impact -- to be the most effective you can be, more environmentally effective.

Scott admits that their main motivation is to reduce waste -- which is equivalent to reducing costs.  In the greater scheme of business, reducing waste also reduces stress and strain on the planet that provides the raw materials in the first place.  Facing reality is a good thing. A prudent thing.  A responsible approach to long term risk-management.

Among other steps, Scott said the company is working with its thousands of suppliers to reduce the amount of cardboard and other plastic packaging in its products. The company is also looking into ways to reduce the amount of plastic in bottled water and transportation emissions and fuel use. The impetus for the company in doing all this isn’t just to please environmentalists, he said, but more to save money.

“It really is about how you take cost out, which is waste,” he said.

Waste is a huge problem in the US.  Landfills are growing daily -- and the side effect is the methane they spew into the air.  The largest -- the Number One Export -- out of the Southern California ports is waste materials -- waste paper, waste plastic and waste metal.  We're losing our recycled content to the international market and buying it back in cheaper incarnations. 

Waste is the issue of our decade. And the solution is to reduce waste for numerous reasons:  staying competitive in the global marketplace, increasing product ROI, reducing climate change risks and their growing costs, protecting our customers, families and neighbors from toxic health dangers, compliance with tightening regulations... and ... survival.

SOURCE:  Wall Street Journal

ROI - Return on Investment

ROI is a powerful motivator -- "Return on Investment" is an accepted demonstration of value, but we don't think about how we invest for a return on emotions, or a setting, or a vacation.  We do invest for "well being". And buying  solutions to meet these basic human needs is a key driver for consumer purchasing.

In reading a recent article about merchandising for the outdoor living trend by P. Allen Smith ("Mecrchandising the Outdoor Living Trend", Lawn & Garden Retailer), the basics of "In Lieu Of" marketing struck me as  a very powerful way to help customers realize value.

"While it might seem that the most sensible thing to do is just hold steady and not change anything, experience has taught me that when customers feel they need to do some belt tightening, they often scale back on items such as travel and vacations but still look for economical ways to bring enjoyment and beauty into their lives....

"For half the money that they could spend on gas, lane tickets, food and accommodations -- all of which are temporary enjoyments -- homeowners can create outdoor settings with all the style and comfort of indoor living and gt that 'vacation feeling' for months, not just two weeks. But to help them see the advantage of what you have to offer, they need some encouragement."

ILO - In Lieu Of Investing

For HALF the money a consumer (and family) would spend on gas, plane tickets, food and accommodations, they can create a "vacation feeling" in their own backyard by creating a setting that is "in lieu of" a traveling vacation.

Do you want THIS or THAT?  Which will bring you more value...for a longer period of time, with more intensity, with greater pleasure?

RoS - Return on Setting

With the new majority of the world now being urban dwellers, "setting" has become more important than "gardening" (task oriented).  Outdoor living is one example of a new marketing opportunity:  creation of settings.  Whether we are creating an outdoor spa with a hot tub and water falls, or an executive office that maximizes productivity and prestige -- "setting" is the demonstration of a specific value.  

Hence, Return On Setting.  Ambiance.  Symbols.  The creativity and craft of creating a symbol that creates a mood that results in specific outcomes that provide emotional returns.

RoD - Return on Demonstration

I believe that everyone is "creative".  We can all imagine  solutions to problems.  We all have flights of fancy. What we don't all have is the ability to convert those ideas into demonstrable projects.  The merging of creativity with craft.   That's the power of "Return on Demonstration".

If your retail store can create an "outdoor room" that demonstrates a recipe that results in the desired feelings and situations of pleasure -- i.e., visiting with family and friends  --  you have a powerful marketing tool.  Demonstration is the bridge between creativity and craft -- and the opportunity for retailers to help their customers succeed at achieving their hearts' desires in a tangible way.  That's merchandising!  That's demonstration.

RoE - Return on Emotions

The best way to motivate people is to show them inspiring examples in which they can imagine themselves relaxing, enjoying, connecting, revitalizing themselves, succeeding, enjoying respect, enjoying health and vigor. All those outcomes are heavy on "emotional returns" or pleasure, the most motivating of human emotions. 

Add to those positive emotions the reduction of:  stress, cost, fear, exhaustion, health concerns, etc...and you cover the other half of the human psyche -- fear.

Together, when you offer both POSITIVE and NEGATIVE tools, you demonstrate how you deliver a solution with extra benefits.  Most solutions only demonstrate one side of the emotional equation. But a good marketing proposition provides both sides -- what is wanted, and what is avoided.

RoG -- Return on Green

Green is a confusing concept to most people -- even people involved in green companies.  And that's because we are in a high-innovation phase.  New technologies are being developed daily.  Green affects EVERYTHING -- and who can grasp everything?!  There's water conservation.  And air quality. And green building. And organic food. And recycling trash.  And buying recycled paper.  And...

Return on Green is about demonstrating a "setting" in which the "emotions" are rewarded with a better, simpler  claim to wellness.  Good friends. Family time. Good health. Pleasant visual surroundings. And how YOUR green strategies can deliver those things.  Give them a template, a plan, a list of materials...a recipe for greening their current goal.

RoS - Return on Solution

The marketer's challenge is to craft a creative solution for each customer (or customer group).  How to partner with supporting companies to create a complete setting, a DEMONSTRATION that appeals to the customer.  An alternative, an In Lieu Of proposition that costs half as much, delivers twice as much -- or is measurable in some appealing way.  What you deliver isn't just cost related -- it is also EMOTION related. 

• Simple pleasures.  "Enjoy a nap that gives you hours of additional energy"
  
• Higher energy. "Increase your stamina measurably"
  
• Better complexion. "Clear the zits in 2 days and go to that party embarrassment-free"
  
• Lower energy costs. "Decrease your lighting costs by 75%"
  
• Open spaces. "Remove half the clutter"
  
• Less travel. "Enjoy more weekend time with your family"
  
• More rewarding work...that makes a difference. "Deliver practical results that your customers can want"
  
• Happier children. "Take the stress out of homework and improve concentration by 50%"
  

... you get the picture. Create pictures. Demonstrate "returns." Focus on the RETURNS that people work for. The returns they shop for. Hunt for. Work for. When you infuse green solutions into these demonstrable, real life  settings, you are  fulfilling very human desires with green marketing and green results!