Strategic investment for green product development and green marketing in a supply chain

Abstract

Growing environmental awareness among consumers and corporate environmental responsibility prompt enterprises to pay more attention to green operations. Green practices, such as green product development (GPD) and green marketing strategies, affect the sustainability of a supply chain. This paper considers four scenarios to determine who is more suitable to implement GPD or green marketing in a supply chain consisting of a manufacturer and a retailer regarding products with green attributes. Several findings are derived. First, there is a significant interaction between GPD and green marketing decisions. These two important decisions should be considered simultaneously in a supply chain. Second, when the green marketing cost factor is sufficiently high, the manufacturer, retailer, whole supply chain, environment, and consumers will benefit from the scenario where the manufacturer leads in both GPD and green marketing, which may explain the common practice of the manufacturer conducting both GPD and green marketing. From the retailer's perspective, adopting both GPD and green marketing is always a bad choice. The environmental impact and consumer surplus are also investigated. For improving the environment and enhancing consumer surplus, it is best to enhance consumers' awareness of a product's green degree and enable the consumers to derive more positive utility from green marketing.