Gaining Competitive Advantage by Ecological Differentiation

Abstract

Environment has an increasing effect on company activities around the world. Environmental awareness has increased among consumers and that has effects on other interest groups as well. Public policies and regulations European wide are forcing companies to evaluate their activities more attentively. Eco-audit schemes and eco-labeling are voluntary programs which focus on improvement of companies environmental performance. Manufacturing processes are estimated more than before, as well as the need to use reusable and environmental friendly materials in production and packaging is noticed.

The purpose of this study is to analyze competitive advantage that could be achieved by ecological differentiation. The study concentrates especially on analyzing environmental differentiation in product development and communication strategies. Environmental differentiation gives opportunities to create competitive advantage to the companies. Environmental product development is one of the important part in developing a sustainable and successful business strategy. At the research and development stage the company has the best possibilities to minimize the negative environmental effects of the product. The focus of environmental communication strategy is to support the chosen product strategy; to produce the environmental advantages of a product to the knowledge of different interest groups. In environmentally oriented company the environmental issues are important part of the product and image advertising as well as sales promotion and public relations.

The study can be regarded as a descriptive analytical work. It consists of both desk and field research. The theoretical framework is developed by using domestic and international literature and articles out of professional journals. The field research is carried out by interviews.

In the empirical part of the study the case company operates on construction industry in German market. This study concentrates on describing environmental value chain of the company by focusing on product development and communication strategies. Importance of environmental features of a industrial product in decision making is analyzed by interviewing different stakeholders, like architects and constructors.

According to the research result environmental features are seen as value adding component but not as main trigger in decision making. Most important features when making buying decision were purchasing cost and technical quality.