Green Image (eco) = Good Business?

Many companies these days spend a lot of money pushing their green image- trying toimprove their reputation, and thus one would presume, improve their profitability.

Here in Japan, this green image is often labeled “eco”
So in Japan we have companies like Eneos (service stations), JT (Japan Tobacco) spending huge amounts of money on TV commercials about planting trees and saving the environment than on their actual products .

To what end though?

Is there a link between good reputation and making money? If we look at the oil and tobacco industry in general, which both have terrible reputations; they still make a lot of money, regardless of their image.

On the other hand we find companies that don’t spend any money on this kind of “eco” promotion are also doing very well; for example Softbank; Amazon; Google; Cost-Co to name a few. But what these companies do is concentrate on their core business, providing great service for the customers – and this in turn is generating a good name and a good reputation.

So as consumers, should we in fact, be more wary of big name companies that seem to be focusing more effort on promoting their reputation instead of their products?
With today’s social media outlets such as twitter and Facebook providing almost instantaneous global word of mouth sources of information, a business that delivers great service and products can very quickly gain a huge market/fan base.

Of course the opposite is also true- those companies that provide poor service, bad products, can have their reputations trashed and stock devalued over-night by a twitter storm or viral video.

So perhaps all business should stop worrying about their “eco” reputations and brand name value- and focus on great service and great products. That’s what we all like as customers.

(This blog is an abridged adaptation of following article from the Economist http://www.economist.com/node/21553033)