Temptation may be high for some companies to pretend that they are doing more to protect the environment than what they are really doing: they lie to appear more environmentally friendly than in reality. This phenomenon, called greenwashing, is condemned in Markstrat world, as the market considers such a company behavior as misleading. Greenwashing may occur in Markstrat in two situations:
Greenwashing may occur when a company uses advertising to communicate in an exaggerated way about the circular aspects of its products. Companies can guide advertising to convey a perceptual message and emphasize, for instance, that a given brand has low carbon footprint. If a company frames an advertising message very far from the real position of the brand physical attribute on a perceptual map (in our example, it means that the brand has actually high carbon footprint, while advertising says it is lower), then communication will fail and there will be no repositioning. If greenwashing is really exaggerated, there could even be a greenwashing backlash, i.e. a regression of the current position further away from the ideal point. This happens when setting up “perceptual objectives” in semantic scales or in Multidimensional Scales - MDS (see section V.8. on “Making Marketing Mix Decisions”).
Greenwashing may also occur when students want to raise circular initiatives (see section III.6. on “Marketing Powerhouse”) while their product is actually bad on environmental (circular) attributes. If a product (brand) is good on circular attributes, the effect of the circular initiative will be greater than for a brand that has poor circular attributes (the effect will be zero if the circular attributes are very bad).
This impact will be bigger though for companies whose products already have a good product eco-score because they are good on circular characteristics (the effect of circular initiatives will be null if circular product attributes are very bad, as this is considered as greenwashing –
In both situations, greenwashing is observed, and the concerned company gets a message (see “messages library” in the “Company Results” of Circular Markstrat) explaining (i) either that advertising was perceived as greenwashing by consumers, resulting in no repositioning of the brand on perceptual maps in terms of sustainability, or even having the brand repositioned further away from the sustainability ideal point. (ii) or that the circular initiatives did not provide as much effect as it could have on your eco-score and on demand.