Will Prius be the aol of green cars, Tesla the Webvan?

As I have crawled along the jammed-up freeway in Marin, watching hybrid after hybrid fly by me in the car pool lane (a privilege that's just ended), I would never have guessed that cars with green technology still only represent 2% of the U.S. market.

It may take a while for the rest of America to reach the level of green car penetration we have in Marin but the growth rate is impressive (twice as fast as conventional cars). J.D. Power estimates that, in the next five years, the number of hybrid and electric car models will increase fivefold, from 31 today to 159 by 2016.

Such a fast-growing category combined, as it is, with fast-changing technology is full of risk and opportunity. As the field gets more crowded, Prius, the category leader, will try and stay ahead of the pack while new players like Tesla look for a way to break in. Here are the risks and challenges for both brands with doomsday benchmarks added for effect.

Smug1 by Gamma Man (Flickr)

Toyota Prius is the undisputed green car leader with more than half of hybrid sales in the U.S. Prius owes its success to great positioning, choosing a technology that was green enough (but still practical) and a design that was distinctive enough to act as a conspicuous badge for its owners (but not as wacky as, say, the earlier models of the Honda Insight). 

As the current #1, Prius has to fend off the competition and it's planning to do that in classic leader fashion by launching new models to broaden its range and cater to different car buyer segments. It's trying to make sure it doesn't get outflanked. Its first new model will be the family-sized Prius V, then a smaller Prius C and sometime after a non-hybrid plug-in Prius. 

Doomsday benchmark: aol

The worst case scenario for Prius is that it becomes a victim of its own success, too strongly associated with hybrid technology (vs. newer, greener alternatives), too associated with a certain type of early-adopting, holier-than-thou consumer and too associated with a particular period in the evolution of the green car market. aol was forever associated with its CDs offering more and more trial hours and, as Bill Visnick, an analyst with Edmunds Auto Observer, has pointed out  Prius has its own association problems: "The fact is that it's very much known as a weeny sort of a car, and sort of a car for people who are driving too slow in the fast lane." 
 

Photo by NRMAdriversseat (Flickr)

Meanwhile, at the other end of the spectrum both in terms of image and sales is Tesla. Tesla has generated tons of publicity even though it has sold hardly any cars (less than 2,000 worldwide). As Fast Company says, Tesla's Roadster: "Changed the mainstream perception of EVs from clunky golf carts to sleek vehicles that can actually be driven on highways." But now the company has swerved in a new direction. The Roadster is being discontinued and Tesla is going to try and sell cars to the masses. These will be manufactured in Toyota's former NUMMI plant, the size of 88 football fields, and producer of 7.7 million vehicles in its 25-year life.

Doomsday benchmark: Webvan

The worst case scenario for Tesla is that it can't make the leap from hype to mass manufacturer in the one fell swoop now needed. That leap proved too much for Webvan, another company that committed millions to infrastructure before its business was established. Transitioning from a niche to mainstream is difficult enough  without adding in a huge plant that needs to be kept running.

There's no comparison really about the prospects of Prius vs. Tesla--the easy and safe bet is on Prius. It has some real challenges but nothing compared to the level of difficulty of Tesla, where the specter of DeLorean lurks in the perhaps not-too-distant shadows (as others have pointed out).

Sun Chips keeps on trying

I've been a big fan of the work that the Sun Chips brand team to build its green credentials and take advantage of its eco-friendly name. Back in 2009, I commended the team for a series of initiatives it had taken to build the brand's green credentials. These went way beyond a single promotional tie-in or superficial gesture and included taking its Casa Grande manufacturing plant off the grid running it on solar power and recycled water.

But, last year, the brand team's commitment to the environment got them into trouble. They launched a new fully compostable bag which was an awesome idea but had one fatal flaw--the bags were really, really loud: "Noisier than a jetfighter cockpit," as one commentator put it. After a flood of criticism, the brand team took the bag off the market to give them time for a rethink

They promised they'd be back and I'm happy to report that now they are with a bag that reclaims the environmental high ground. The new product is still fully compostable but adds a new adhesive that functions as a noise barrier and dampens the sound to hopefully acceptable levels. They are planning to introduce the new packaging gradually to make sure it's OK from the consumer perspective.

I'm just as guilty as anyone else in having some tweeting or blogging fun at the expense of marketers who've tried but failed with some ad, promotion, design or other initiative. But, in this case, I hope the new bag succeeds in the market and quietens the critics.

Breaking news: Sun Chips committed to its compostable bag

This morning I reported on the apparent demise of Sun Chips ground-breaking 100% compostable packaging because of the incredible noisiness of the bags. It was widely reported that these bags were going to be taken off the market.

I received the following note from Sun Chips in reply:

"Not to worry our 100% compostable bag is not going away. We're committed to renewable packaging solutions and will continue to use 100% compostable packaging on specially-marked Original flavor SunChips® snacks. In the meantime we're busy working on the next-generation bag that addresses consumer feedback, so stay tuned."

Good news!

Six of the Best: The Battles for Earth edition

Photo: Earth by Satoru Kikuchi on Flickr

It was Earth Day on Thursday. Let's celebrate:

1) Top Green Brands Shine On Earth Day: Branding Strategy Insider
It's the 40th anniversary of Earth Day and, year by year, environmental issues have seeped into our consciousness. Brands have responded adding "fuel-efficient," "organic,""energy-efficient," "natural," "green," and "sustainable" to their marketing lexicons but, as Robert Passikoff points out in this post: "Consumers are on to all that. They want brands to walk-the-talk, and "green" has become the cost-of-entry in many categories, making larger and larger contributions to brand engagement and loyalty." Which brands are doing the best? The top-25 Green Brands from this year's Brand Keys Loyalty Engagement Index includes: AMEX, BP, HP and, Microsoft.

2) What does Business Owe the World? HBR
HBR has launched a new debate about the extent to which companies should be held accountable for the "externalities," an economics concept referring to the fact that business activity can lead to negative effects on others. (Pollution is the classic example of an externality.) Chris Meyer & Julia Kirby kicked off the debate by making the case that companies should be held responsible for their externalities. They want companies to take ownership of the impact that they have on the environment and behave more responsibly.

3) Embracing Externalities Is the Road to Hell: Michael Schrage
Next up in the HBR debate was Michael Schrage who jumped in with a fiery critique of the idea of applying the concept of externalities to business. He points out that, once you start going down this externality path, it's difficult to know where to stop. Should successful entrepreneurs be compensating those they put out of business, for example? Schrage thinks that the world would be a poorer, less innovative and more litigious place if we embrace this type of thinking.

You can track the ongoing debate (which already includes a rebuttal to Michael Schrage's post) here.

4) Carbon Footprint Calculator: What's My Carbon Footprint? The Nature Conservancy
So, how much damage are you doing to the earth yourself? The Nature Conservancy can tell you with its carbon footprint calculator. I took the test and found out that I'm doing about half the damage of the average American but twice as much as the average citizen of the world. Hey, that's not fair. Some of those people don't even own cars.

5) Danish eco-hotel offers pedalpower free meal: BBC

The BBC reports that The Crowne Plaza Hotel in Copenhagen is offering free meals to guests who produce electricity as they pedal on an exercise bike attached to a generator. You don't get the meal until you've generated 10 watt hours of electricity (about 15 minutes of cycling). The idea is to get people fit and reduce their carbon footprint. (And to get green-credential-building press, I'm sure.) I wonder what 10 watt hours of electricity is actually worth? If I'm reading this post correctly, it's about 0.015 cents. That's not even worth the head of one of those horrid pickled herrings they eat in Denmark.

6) Organic Batter Blaster

Greatest breakfast invention ever or sign of the imminent downfall of our nation? I found this photograph on Twitter from @ianfitzpatrick. His opinion: "Organic aerosol pancake batter spray. Really? Are we this cognitively bankrupt?" On the other hand, the can is recyclable, its new packaging is BPA-free, there's no mess and, apparently, the pancakes don't taste that bad. It's on sale at Whole Foods so it has given its seal of endorsement. Organic and convenient vs. nasty pancake emissions? A new battle starts as the war continues.

That's it! Back soon with more stories from the world of brand strategy. More thoughts and comments also available on Twitter (@martinjbishop).

As Copenhagen starts, Brazil flies the green flag

Photo: Brasil, meu Brasil brasileiro... by Andrea Fregnani (Flickr)

Maybe it's because their economy is doing better than almost everyone else's this year. Maybe it's because they are worried about the destruction of their Amazon forest. Whatever the reason, Brazilians stand out for their concern about the environment and their commitment to buying green products.

The 2009 ImagePower Green Brands Global Survey shows Brazilians: Most concerned that the environment is "on the wrong track," most concerned about the environment vs. the economy and most intending to spend more on green products next year. The next two countries on the list? In terms of commitment to purchase green products it's China and India. Lagging behind: The UK, Germany and the U.S.

Is this a hopeful sign? We citizens of the developed have such ingrained bad green habits and it's taking us a long time to break them. The survey suggests that perhaps citizens of developing nations will not follow our poor example but will, instead, choose a greener path.

For more information about the study, there's a podcast and pdf available on Landor.com (here).

Source: The ImagePower Green Brands Global Survey is put together by Cohn & Wolfe, Landor Associates, and Penn, Schoen & Berland to survey consumers on their perceptions of the rapidly evolving "green" space. This year's Green Brands Survey is the largest yet: Over 5,000 people in seven countries participated. This year Esty Environmental Partners, a corporate environmental strategy consulting firm, helped develop the survey.

Botted water falling

Photo: Multnomah Falls, Oregon (me)

My very first post on this blog was about how bottled water was coming under attack on issues ranging from environmental to health concerns. At the time, those attacks had not had much impact on sales but I wondered if: "perhaps the thin end of the edge has been successfully applied."

Now, two years later, and helped along by the recession, U.S. sales of bottled water have indeed started to fall. It's a small decline (just over 1% according to Beverage Marketing) but, considering the fact that sales had increased by over 50% in the last five years, it's significant.

Inevitably, the falling demand has triggered a price war. The Wall Street Journal reports that a 24-pack of Pepsi's Aquafina was being sold on promotion at $2.99, about half its normal price. Coca-Cola has been trying to avoid discounting Dasani and has paid the price--its sales are down 26%.

As the price war intensifies, and marketing resources get diverted to support the fight, the risks of commoditization go up. And the more commoditized the category becomes, the less chance there is that sales will pick up again when the economy recovers. The tide may have irrevocably turned.

Prius solar panels: A cool idea not quite baked

Photo: Toyota.com PR

I can imagine excited conversations over the last few months in the halls of the Toyota organization about how much they should or should not say about the solar panels available on the 2010 Prius. Such great potential for headline generation and such a fantastic proof point for the car on the one hand, so far from being fully realized on the other.

If indeed such conversations took place, voices of moderation have won out. As you can see in the official press release, talk about the new moonroof solar panels is relegated to low key inclusion on a list of features. (Even with this soft-pedaling, several stories about the new Prius (like this one) focused on this angle showing its potential news value.)

The problem for Toyota is that it hasn't fully solved the technical challenges that would make this more than a symbolic effort. According to this post, the original intention was to use the panels to charge the battery of the vehicle but this idea was scrapped for now because R&D has not been able to work out how to protect the battery from repeated charging. Instead, the solar panels are only being used to keep the car at ambient temperature while it's not occupied. It's something, but it's not enough of a thing to make a big deal about.

So, kudos to Toyota for resisting the temptation to hype this feature. No doubt the R&D team will figure out the technical challenges and then there'll be another opportunity to make hay when the sun shines.

SunChips green hotness: what it really takes to earn eco-credentials

Earth Day is just around the corner, a can't-miss opportunity for more and more companies to talk about their green credentials. But if everyone is doing it, as Landor's Allen Adamson points out in the WSJ and USA Today, how can anyone stand out from the crowd?

If there's one brand that does deserve to be in the limelight, it must be SunChips which has gone way beyond a single day tie-in. It has made a commitment to the environment the core idea for its brand. Here are some of the things that it has done:

1) Its name: Perhaps someone from the brand can confirm this for me but I believe that the brand name SunChips pre-dates any specific commitment to the environment. So call this a lucky break but the name provides a connection between the brand and its eco-friendly activities that others don't have. It makes its green activities make sense.

2) Its products: Are all (relatively) healthy. So there's no inconsistency between what you're eating and what they are saying about the environment. Healthy inside and out.

2) Its manufacturing process: Back in 2007, I posted that Frito-Lay was planning to create an eco-friendly chip by taking its Casa Grande plant in Arizona off the power grid, running it on renewable fuels and recycled water. And, yes, this is the plant where SunChips are made. SunChips are made by solar energy. It can't get much better than that.

3) Compostable packaging: But now, with the name, product and manufacturing process all in place, the brand team is off to the races. What to green light next? So, for this Earth Day, SunChips has announced that it will rollout compostable packaging. This ad below shows a time lapse of how the 100% biodegradable bag decomposes in 14 weeks. It's a first for the industry:

4) Marketing: They've not forgotten about marketing either. This new ad links to the greeneffect.com which talk about a competition launched in partnership with National Geographic to support the best green ideas.

It's the whole package from manufacturing all the way through to sales and marketing that gives SunChips eco-credentials almost impossible for competitors to match. As a branding guy, I just have to root for SunChips to be successful (even though I don't actually like the chips all that much myself). I sure hope that lots of people buy the new packages. Otherwise, it's going to be one hell of a mess in the stores.

The truthiness and silliness of green-guising

Photo: shikeroku (Flickr)

"Your American Express Corporate cards are turning “greener.” Effective June 4, 2009, American Express is moving to online statement delivery for Corporate cards." Company announcement.

"With about 8,000 guests that visit the hotel each year, hotel managers said, that’s a lot of dirty sheets and towels and a lot of plastic water bottles. Now guests can find a message in their bathroom that gives them the opportunity to reuse their bath towels if they so choose to help the environment. Individual plastic water bottles have been eliminated and guests both in their guest room and in all meeting rooms are provided with filtered water in renewable bottles." Hotel announcement

OK. We know that green is good but we also know that companies are always looking for ways to cut costs. So companies should be careful when they launch initiatives that are definitely in their interest but take away a customer service or add an inconvenience under green-guise.

Even I, as an already paperless and stingy-towel-using guy, get irked by these true but incomplete announcements. What they should do is go on to say is something like: "In launching this initiative, we also estimate that we will save $xx/year which we will use to do something good for you, the customer, like reduce costs, upgrade service etc.

On a related front, with a story you simply wouldn't believe if had been first published today, California is now backpedaling on a plan to ban black cars to reduce emissions. Like California needs this kind of publicity. Apparently, The California Air Resources Board was seriously considering effectively banning black cars on the basis that they take more energy to cool but backed off "after facing global ridicule." Wouldn't they be better to try and find ways to harness the solar power being absorbed by cars rather than prescribing which colors people can buy?

I think that most people have a reasonably high level of goodwill towards green initiatives but that goodwill is not unlimited. Better to work with them than try and beat them into submission.

The Frugal Economy: "Times are hard, you know*"

Is there anyone out there who thinks we're not heading for an all-time doozy of a recession? You don't? Well then, read this. The rest of us will wait. (Time passes.) OK, now we're all back and on the same page, let's talk about the recession will affect consumption.

Specifically, do you think that the recession will lead to a New Age of Frugality and a different attitude to buying? BusinessWeek says that Americans' charge-it culture is getting an overdue reality check and that thrift and penny-pinching are already taking hold. The kind of thing to expect in the future perhaps evidenced in a recent Gizmodo post titled: Zero-Cost Gadget Upgrades For the Next Great Depression which listed the best hacks to "breathe life" into old hardware.

Even better than buying the right thing is buying nothing at all
Tom Fishburne's recent post asks: "How will ethical brands fair when everyone is counting their pennies (particularly brands that command a premium)?" Mrs. Normal thinks she has the answer with the idea of "unshopping" explaining: "There’s no such thing as eco-shopping or ethical shopping. There’s just - not shopping. The catalogues and web sites urging you to buy ‘ethical’ things are still part of the problem – they’re in it to make money like everybody else." Spending more money just to impact the environment a little less may seem quite dated if we head into a new era of austerity.

Financier George Soros approaches the question from a different perspective. He's talking about the end of a 25-year "super-bubble" where, based on too much credit and too little regulation, the U.S. has lived far beyond its means. Soros does not think we should despair, however. He thinks that consumption can be replaced as the motor of the economy with a new motor aimed at combating global warming.

His thoughts: "I think we all have to consume less. We will consume less because we will have to. And rather than being unemployed, let's keep employment up. We'd use it for dealing with global warming. That, I think, is the way that this could work in the right way."

It's certainly a neat idea--adjusting to a new era of less consumption by addressing one of the damaging consequences of over consumption. But, I guess my question is this: Is the doom-laden opinion of late simply an over-reaction triggered by the deluge of calamitous financial news? Are attitudes about consumption really going to change all that much or are people just going to tighten their belts for only as long as they have to?

* Title Quote from Chitty-Chitty Bang Bang when the car nearly gets sold to the mean scrap man on his horse.

Economic blues beat out green concerns

Is concern for the environment a luxury we can't afford at the moment? With economic conditions deteriorating, house prices collapsing and the price of gas and food going through the roof, our priorities have shifted.

Landor's just-published 2008 ImagePower® Green Brands Survey shows that energy and economic issues having taken precedent in these challenging times. That's despite most people thinking that the environment is in worse shape than it was five years ago.

Also changing is what people think is the most pressing environmental concern. In 2007, most consumers were concerned about global warming. This year’s survey shows that energy and resource issues have increased in importance.

The survey also asked people to rank their greenest brands. This year's U.S. top 10:

1. Whole Foods
2. Burt's Bees
3. Trader Joe's
4. Tom's of Maine
5. Toyota
6. Seventh Generation
T7. General Electric
T7. Honda
9. Whirlpool
10. Aveda

Once again, body care and grocery are rated as the “greenest” product categories. Travel and energy were rated as least green.

Links:
1) Environment a Fair-weather Priority for Consumers: Landor.com

Environmentally Friendly Bombs Planned

Happy to see that environmental consciousness has permeated what one might expect to be a holdout industry. Now we have eco-bombs.

Going green (this St. Patricks Day)

On the lookout for green stories this St. Patrick's Day. So far (as of me arriving at SFO for a flight to the city perhaps least associated with green, Detroit):

1) (NPR) The opening of the Green Exchange, a carbon trading exchange in NY. The U.S. is miles behind Europe and trying to catch up.
2) (NPR) The city has banned garbage disposers which has many residents (and Incinerator, the lading manufacturer) up in arms.
3) (WSJ) Lighting is the new, hot green business attracting Private Equity funding.

Update: (after more reading opportunities on my flight):

4) (The Economist) First ad and last ad both "green" (and both from companies speaking at The Economist Marketing Conference). Chevron's Human Energy ad inside the front cover continues that company's dialogue with the public about issues related to the demand for energy. Backpage taken by Dell talking about how to slash energy consumption up to 45% with energy efficient Dell solutions
5) (The Economist) Under the headline: "Hot Air - the revolution that wasn't," The Economist describes Britain's latest budget (which sets tax and economic policy for the year ahead) as failing to live up to its green promises. The problem is that taxes on energy use are a tough sell when fuel costs are already going through the roof.
6) (Time) The #1 idea that is changing the world, according to Time, is the idea of "Common Wealth" - that the need for global solutions and sustainable development will "render passé the very idea of competing nation-states that scramble for markets, power and resources"

Finally, before I go off and have a Guinness to enjoy the real spirit of the day, I couldn't help but notice the line of Hummers given pride of place by Hertz at its rental facility here in Detroit. Still some work to do on the green front, I guess.

Sources:
1) NPR Morning Edition: March 17th
2) Wall Street Journal: March 17th
3) The Economist: March 15th - 21st
4) Time: March 24th

Greener than green

The green table stakes keep getting higher and higher.

Whereas, just a few years ago, a commitment to the environment, a couple of projects and a CSR campaign would have won some green credits, now such limited activity could actually hurt your reputation.

Consumers are interested in green, care about it and are less and less likely to be fooled by companies who paste a green veneer over the same old thing. They will demand more authenticity and a more complete green program that considers all aspects of a company's operations. Programs like Frito Lay's new manufacturing plant in Casa Grande, as an example I wrote about before.

Global warming is hot

A story about a factory in Arizona planning to make some upgrades and modifications - not your typical front page of the New York Times above-the-fold material. But, when the angle is green, all things are possible.

Frito-Lay has announced that is going to create an eco-friendly chip by taking its Casa Grande plant in Arizona off the power grid, running it on renewable fuels and recycled water. It's only one plant and more and less an experiment for PepsiCo but it's a good example of how everyone is starting to get in the game.

The article quotes Andy Walker from the National Renewable Energy Laboratory saying that his phone is now ringing off the hook with companies asking for his help where, only a few years ago, no-one was interested.

Inevitably, toe in the water initiatives like the Casa Grande plant tempt companies to exaggerate their green credentials. But it's important that they don't get ahead of themselves in terms of what they say vs. what they've actually done. Consumers and advocacy groups are in a state of high alert looking for any suspicious and unwarranted green credentialing.

On the other hand, this particular initiative has given the company a huge product brand opportunity because its SunChips products are made in the plant. These will now be made using solar energy, just a perfect connection and one of the still relatively few examples where the way that the product is made is going to help the way it's sold.

Going forward, the stakes in this game are only going to get higher. I expect that natural food companies, for example, will soon find that it's not enough for them to make products that are healthy to eat. They will need to show that they are healthy for the environment as well - all the way through the supply chain.