marketing strategies, functions, and benefits of forest certification: a cross-cultural comparison

Marketing Strategies, Functions, and Benefits of Forest Certification: A Cross-cultural Comparison

Toshiaki Owari, Ph.D.

(The University of Tokyo, Japan)

Oct. 30, 2007 IUFRO All Division 5 Conference, Taipei (Owari, T.)

Certified Forests and Products 2007(Kraxner et al., 2007)

The area of certified forests worldwide totalled 294

million hectares, or about 7.6% of the world’s

forests.

The potential roundwood supply from the world’s

certified forests is estimated at approximately 387

million m3.

The number of CoC certificates totalled 8,600, of

which 63.4% were by FSC and 36.6% by PEFC.


The Market for Certified Forest Products

… may have a significant impact on business and p

olicy-making (Kraxner et al. 2005)

… is not well understood due to the absence of offici

al trade statistics (Rametsteiner et al. 2003)

Market actors and policy makers are hampered by l

ack of information (UNECE 2005)


Motivation

We examined the role of forest certification in the Finnish wood products suppliers (Owari et al., 2006).

In a country with different certification schemes in operation, there may be different perceptions within companies about forest certification.

Further research should examine the situation in a number of different countries to reveal similarities and differences among them.


Purpose

The purpose of this study was to compare the role

of forest certification in marketing between Nordic

Europe (Finland and Sweden) and Japan.


Status of Forest Certification

Finland Sweden Japan

Certified forest (ha)

433,752 (FSC) 22,144,082 (PEFC)

11,233,982 (FSC) 7,047,960 (PEFC)

276,492 (FSC)

391,780 (SGEC)

Chain of custody certificates

21 (FSC)

107 (PEFC)

115 (FSC)

68 (PEFC)

490 (FSC)

25 (PEFC)

64 (SGEC)

FSC: Forest Stewardship Council

PEFC: Programme for the Endorsement of Forest Certification schemes

SGEC: Sustainable Green Ecosystem Council

(August 2007)


Study Framework

Marketing strategies• Products• Customers• Market area• Competitive advantage

Marketing functions• Communication• Pricing

Supplier benefits• Business performance• Customer relations• Public relations

How important is certification for companies?

How do companies use certification in marketing?

What benefits have they gained from certification?


Methods

A nationwide survey with standardized questionnaire scheme was used for each country.

Finland Personal interviews with 25 wood products companies in S

ep-Dec 2004 All having PEFC CoC, mainly small and medium sized

Sweden A self-administered electronic survey distributed to 149 co

mpanies in Dec 2004 (49 surveys undelivered) 27 usable responses by Mar 2005 (adj. resp. rate 27%) 70% having FSC CoC, 48% having PEFC CoC


Methods

Japan A mail survey targeted 247 companies with FSC, PEFC, or

SGEC CoC in Oct. 2005

132 usable responses (adj. resp. rate 54%)

93% FSC CoC

52% from paper products, 48% from wood products

Non-response bias was examined using the extrapol

ation method and not considered a problem.


Importance of Certification(Finland and Sweden)

2.0

2.7

3.0

3.2

3.2

3.3

3.6

3.6

3.6

3.9

2.3

3.0

3.0

3.1

3.2

3.4

3.6

3.6

3.7

3.9

1 2 3 4 5

Get a price premium

Differentiate the product

Exploit new markets/countries

Gain new customers

Create competitive advantage

Sell the product in the existing markets

Meet the customer requirements

Avoid losing competitiveness

Keep the market share/position

Communicate company’s sense of responsibility

Mean importance rating

Finland (n=25) Sweden (n=27)

Not at all important

Very important


Importance of Certification (Japan)

2.3 (69)

3.4 (68)

3.5 (68)

3.9 (69)

4.3 (69)

3.8 (69)

3.7 (68)

3.6 (69)

3.9 (69)

3.6 (67)4.0 (61)

3.9 (61)

3.8 (61)

3.6 (62)

3.4 (61)

3.3 (62)

3.2 (61)

2.8 (60)

2.6 (61)

2.4 (61)

1 2 3 4 5

Get a price premium

Keep the market share/position

Sell the product in the existing markets

Avoid losing competitiveness

Meet the customer requirements

Create competitive advantage

Gain new customers

Exploit new markets

Differentiate the product

Communicate company’s sense of responsibility

Mean importance rating (number of samples)

Paper products companies Wood products companies

Not at all important

Very important


Channels Used for Communication (Finland and Sweden)

2.0

1.8

2.4

2.8

2.4

3.8

3.6

2.9

3.7

3.9

1.8

1.9

2.1

2.3

2.5

2.8

2.8

3.0

3.3

3.4

1 2 3 4 5

Trade show and other event

Advertising to consumers

Advertising to industrial customers

Product catalogue

Annual report

Invoice

Company brochure

Environmental report

Internet web site

Personal communication with customers

Mean use rating

Finland n=25（） Sweden n=27（）

Not used at all

Used very often


Channels Used for Communication (Japan)

3.7 (67)

2.3 (66)

2.9 (67)

3.0 (67)

2.5 (67)

2.4 (66)

1.4 (67)

2.2 (67)

1.9 (66)

2.4 (66)

3.4 (54)

3.1 (57)

2.9 (57)

2.8 (57)

2.7 (53)

2.5 (53)

2.3 (55)

2.2 (55)

1.9 (54)

1.4 (50)

1 2 3 4 5

Environmental report

Annual report

Advertising to industrial customers

Advertising to consumers

Invoice

Product catalogue

Internet web site

Company brochure

Trade show and other event

Personal communication with customers

Mean use rating (number of samples)


Not used at all

Used very often


Price Premiums(Finland and Sweden)

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Finlands (n=25) Sweden (n=27)

Per

cent

age

of r

espo

nden

ts

Premiumsnot received

Premiumsreceived


Price Premiums (Japan)

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Total (n=132) Paperproducts

companies(n=69)

Woodproducts

companies(n=63)

Per

cent

age

of r

espo

nden

ts

No answer

Premiumsnot received

Premiumsreceived


Benefits of Certification(Finland and Sweden)

1.7

2.1

2.6

2.9

3.6

3.5

3.7

3.8

1.7

1.9

2.2

2.9

3.0

3.3

3.6

3.6

1 2 3 4 5

Higher profitability

An increase in sales volume

Gaining new customers

Acceptance from environmental groups

Good public reputation

More customer satisfaction

Keeping existing customers

Acceptance from environmentally sensitivecustomers

Mean benefit rating

Finland（n=25） Sweden （n=27）

No benefit at all

Very great benefit


Benefits of Certification (Japan)

3.0 (65)

3.2 (64)

2.2 (63)

3.2 (66)

2.2 (66)

3.1 (66)

2.3 (66)

2.0 (66)

3.2 (59)

3.2 (59)

2.6 (57)

2.6 (60)

2.4 (58)

2.4 (59)

1.9 (59)

1.8 (59)

1 2 3 4 5

Higher profitability

An increase in sales volume

Keeping existing customers

Gaining new customers

More customer satisfaction

Acceptance from environmental groups

Acceptance from environmentally sensitive customers

Good public reputation

Mean benefit rating (number of samples)


No benefit at all

Very great benefit


Summary

Marketing strategies Certification as a reactive measure (Nordic Europe,

Japan-paper) Certification as a proactive measure (Japan-wood)

Marketing functions Communications did not actively use certification A price premium was not possible for most companies

Marketing benefits Certification improved customer/public relations Certification did not improve financial performance


Discussion

Why did the Japanese wood products suppliers have a unique perception? Small forestry and wood industry companies proactively

introduced forest certification as a tool to differentiate themselves in the marketplace.

Is forest certification an effective marketing tool? In contrast to the original premise, forest certification may

compel suppliers, not consumers, to bear the cost of sustainable forest management.


Acknowledgements

I thank Dr. Yoshihide Sawanobori and Mr. Tsutomu Ito for their assistance with data collection.

This study was conducted in part through the 2004-2005 Programme for the Promotion of Basic Measures in Forests and Forestry, sponsored by the Japan Forestry Agency.

This paper was partly supported by the Japan Forestry Agency, and the Ministry of Education, Culture, Sports, Science and Technology, Grant-in-Aid for Young Scientists (B), 18780108, 2007.

marketing strategies, functions, and benefits of forest certification: a cross-cultural comparison

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