Lest you think riding the green wave is a sure thing, consider for a moment the challenges being faced by hybrid manufacturers. According to an article in Business Week, “hybrids are losing traction because they cost more than their conventional siblings.” The opening paragraph tells most of the story:
Given all the buzz about hybrids, not to mention the greening of the citizenry, you’d think they would be easy to sell. They’re not. After growing nicely through much of 2006, hybrid sales began to slow early this year. The gasoline-electric vehicles now make up 1.8% of all vehicle sales, says Edmunds.com, down from a peak of 2.1% in October.
This puts car manufacturers in an interesting predicament. The world is saying “be more green” yet American consumers, at least, aren’t willing to pay much of a premium for a greener car. Unless gas prices rise a lot, this behavior isn’t likely to change much. According to Business Week:
The fuel savings are simply too puny to offset the hybrid premium. With gas at $2.50 a gallon, it would take 10 years to recoup the extra $3,000 cost of the Accord hybrid.
Of course, all this could change if suddenly millions of us (instead of thousands) started buying hybrids. Economies of scale would take hold and prices would drop, narrowing or perhaps even overcoming the gap. Until then, Americans are stuck with a nasty OR; greener OR cheaper. Not surprisingly, cheaper is winning and is likely to do so until hybrid prices drop and/or fuel prices rise over $3 per gallon. In this case, Marketing for Good has its limitations and one of those is basic economics–green does not mean gold unless the value proposition is equal or superior to other options. Put another way, product enhancements of any kind, green or otherwise, must create added value for the consumer to care.