Earlier last month, Home Depot introduced a new “Eco Options” label meant to identify certain products as the environmentally responsible choice. Timberland, producer of footwear and apparel, has introduced a label that resembles the nutrition panel on U.S. food products — except it displays information on products’ environmental impact. What’s the strategy behind eco-labeling? An insightful BusinessWeek article by Reena Jana offers an explanation:
Each of these companies [Home Depot, Timberland, are looking to tap the growing numbers of socially responsible consumers. They have realized the power that the nearly five-year-old, USDA organic label wields among customers (products bearing the “organic” label represented a healthy $14.6 billion in total annual U.S. sales in 2005, the latest figures available from industry group Organic Trade Assn., up 17% from the year before). They want in—and without any governmental mandate on how best to disclose the chemical, carbon-neutral, or other characteristics that communicate earth-friendliness. Unlike manufacturers of foods that bear official labels, they’re choosing to do it themselves.
But the prospect of attracting a horde of environmentally-minded customers has limited potential, and industry consultants warn companies not to rely too heavily on the branding strategy:
Marty Neumeier, founder and president of Neutron, a San Francisco-based firm specializing in brand collaboration, also cautions that the most effective eco-label can’t fix a larger branding or marketing problem. He cites Home Depot as an example. “I get the sense that they’re trying to use [the Eco Options icon] as a brand differentiator and as a distraction from a much bigger problem—a confusing customer experience. They may fail on both counts,” says Neumeier. “As a differentiator, the eco-label concept isn’t ownable in the long term, and adding one more ‘feature’ to an already confusing environment may not improve the customer experience.”
In other words, eco-labeling probably shouldn’t form the core of any branding strategy. But when there’s a clear difference in a product’s environmental performance, eco-labeling can be a valuable differentiator.
Each of these companies [Home Depot, Timberland, are looking to tap the growing numbers of socially responsible consumers. They have realized the power that the nearly five-year-old, USDA organic label wields among customers (products bearing the “organic” label represented a healthy $14.6 billion in total annual U.S. sales in 2005, the latest figures available from industry group Organic Trade Assn., up 17% from the year before). They want in—and without any governmental mandate on how best to disclose the chemical, carbon-neutral, or other characteristics that communicate earth-friendliness. Unlike manufacturers of foods that bear official labels, they’re choosing to do it themselves.
But the prospect of attracting a horde of environmentally-minded customers has limited potential, and industry consultants warn companies not to rely too heavily on the branding strategy:
Marty Neumeier, founder and president of Neutron, a San Francisco-based firm specializing in brand collaboration, also cautions that the most effective eco-label can’t fix a larger branding or marketing problem. He cites Home Depot as an example. “I get the sense that they’re trying to use [the Eco Options icon] as a brand differentiator and as a distraction from a much bigger problem—a confusing customer experience. They may fail on both counts,” says Neumeier. “As a differentiator, the eco-label concept isn’t ownable in the long term, and adding one more ‘feature’ to an already confusing environment may not improve the customer experience.”
In other words, eco-labeling probably shouldn’t form the core of any branding strategy. But when there’s a clear difference in a product’s environmental performance, eco-labeling can be a valuable differentiator.