| 1. | Awareness - people don't even know that green products exist.
JG: Like the paint store owners who say they won't sell a products like paint stripper made from orange peel because the customers do not ask for it. Of course they don't ask for it if they don't know it exists.
LC: This is a problem he faces with investors who ask "if the demand is so high, why is penetration so low? Good examples of products that did not exist but became huge because someone figured out a way to tap into the demand - cell phones, Mrs. Fields Cookies, Viagara and computers all prove that products with not penetration can still have huge demand.
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| 2. | Availability - Green products are hard to find. Distribution channels are bad, suppliers are scattered all over the country, etc. |
| 3. | Price - Sometimes prices for these products are perceived as more expensive and sometimes they are more expensive because (for both legitimate and illegitimate reasons): |
| a. | There is a legitimate premium that has to be charged for higher quality ingredients. |
| b. | Economies of sale don't exist. |
| c. | Price gauging - people know they can get more for these kinds of products |
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JG: Refuting these three reasons:
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| a. Recycled paper is easier and less expensive to make than virgin paper. |
| b. Price gouging - he doesn't think so but would be willing to come back to it. |
| c. Economies of scale - Paper companies ALL make a lot of paper. |
| John thinks the real problem is that there is a disconnect between supply and demand. (SS agrees) Even though companies making recycled paper make a lot - they do not have the demand that there is for virgin paper and therefore have to charge more. |
| Because it is more expensive, the demand is lower - creating a vicious cycle. If people were to demand it, the price would go down. John has appealed to schools to take responsibility to do this kind of buying. They could help bring the price down |
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MM: The government mandate for green procurement (Environmentally Preferrable Purchasing - Executive Order # 13101) should help this problem as well. Getting the government to buy some of this stuff it should help break that cycle.
SS: In the consumer market there is a disconnect is among the entire chain (manufacturer, retailer and the general public). No one wants to take the gamble
JG: Big manufacturers don't work to develop the market and small manufacturers often can't. Unless we show them that there is a market there - the big manufacturers aren't interested. They are negotiating with one company that makes 100% post-consumer recycled paper products and they won't even put it on the label.
SS: They see being environmental as a disadvantage. There are those consumers who tried environmental products when they first came out and they didn't work and they don't want to take a chance again. We have to overcome all of these pre-dispositions.
LC: We should, at some point, focus more closely on how we beat the price issue. Performance parity - the snake oil side of selling green. (address with the advisory board - make sure our products work)
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| 4. | Trust - people don't necessarily believe that products are truly green. There is no trusted source. In America we have emotionally loyalty to brands. |
| 5. | Marketing - green products have been marketed with a "cloying, guilt-inducing downer". |
