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New Bottom Line Volume 3.21 – The Environmental Management Payoff at Church and Dwight

October 31, 1994

The “greening” of corporate practice has moved thru many phases. In the Earth Day fervor of 1990, many companies focused on “green marketing,” and some were painfully embarrassed in the marketplace when the gap between their “talk-to-do ratio” was found wanting. Increasingly companies are focusing on the substance of their environmental practices, but are often uneasy about how to communicate about them.

But it’s the companies that learn how to integrate environmental quality and communications with intrinsic operations and strategy that will lead the way in the 1990s.

Church & Dwight, the $500 million (annual sales) chemical company, is best known for its Arm & Hammer baking soda products. But it has managed to leverage its key assets, which it sees as its leadership in bicarbonate technology, and the cachet of its brand–through environmental management that is strategically executed and strategically evaluated.

Bryan Thomlison, Church & Dwight director of public affairs and environmental management, spoke recently at the national conference of Business for Social Responsibility in Cambridge, Massachussetts. He painted a picture of a company that has learned how to use its environmental commitments to enhance its reputation, and then use that reputation as competitive advantage in the marketplace.

The extent of the environmentally-motivated consumer marketplace is the subject of endless polls and market research studies. Eighty to ninety percent of user consumers show environmental preferences; perhaps five to 25% of them act on those preferences with their purchases. Some companies respond by dismissing environmentally aware consumers as too small a niche. Thomlison observes, though, that “a product doesn’t have to appeal to everyone. A one percent boost in market share in, say, the laundry detergent category, adds $35 million to the top line. Imagine the value of that one percent for, say, automobiles.” If your company can gain that point efficiently and economically–and in a way that enhances other business assets–then even small niches take on value.

Church & Dwight’s strategy for reaching that niche economically is built around programs called “stakeholder sharing” “When we get an idea, we like to bring in broad array of stakeholders from concept to execution to help guide us through development,” Tomlison says, observing that Church & Dwight gets smarter thinking at less cost, and often converts critics into advocates.

Environmentally-oriented households may represent only ten percent of the 95 million households in the US, but that can be healthy market, if reached effectively. Thomlison asserts that some 3,000 households “set the agenda” for that 9.5 million, and that 100 gatekeepers are the key to influencing the agenda setters. That enables Church & Dwight to focus its communications efforts, rather than throw dollars around in scattershot advertising.

Moreover, since environmentally aware households are commonly “early adopters” whose behavior points to trends that will usually spread to the broader economy, influence gained in that market sector can be rewarded handsomely in years to come.

Church & Dwight is worth studying not only for the coherence of their strategy, but also for the rigor of their evaluation. Thomlison produces extensive data and economic analysis to track and assess the costs and benefits of these environmental initiatives.

One key element is the impact Church & Dwight’s environmental reputation has on the brand itself. Case in point: Church & Dwight has the number three powder laundry detergent in US foodstores (as measured by washloads, not dollars), and the number four toothpaste. Yet the company does no conventional advertising for the detergent, and spends only one-half to one-tenth per market share point as its competitors. “Green consumers don’t buy based on advertising,” Thomlison explains, “They buy more on trust,” offering the graphs that support the case.

Overall, Thomlison’s data suggests that between 5 and 15% of Church & Dwight’s revenues “have a green hue” — as much as $80 million per year in revenues that is “contingent on environmental trust.” Looked at another way, Thomlison asserts that his $1.8 million public affaris budget generates an incremental $18 million per year, a ten to one return compared to the common four to one return from traditional advertising.

This sort of data could even persuade CFOs and Wall Street analysts, not just environmentalists, of the value of corporate environmental initiatives. Be careful, though. Don’t assume your company can follow the same path without substance to its programs. Those gatekeepers and agenda setters have highly developed antennae to detect “greenwashing” and other manipulative marketing approaches.

The watchword in marketing your company’s environmental quality: “Do much. Say little.” Focus attention–and spending–on improving environmental quality and efficiency, not on talking about it.

(c) 1994 Gil Friend. All rights reserved.

New Bottom Line is published periodically by Natural Logic, offering decision support software and strategic consulting that help companies and communities prosper by embedding the laws of nature at the heart of enterprise.

Gil Friend, systems ecologist and business strategist, is President and CEO of Natural Logic, Inc.

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