Environmental Engineering Reference
In-Depth Information
related to the environmental impacts of products) . For example, green
barriers — such as the EU's framework directive on eco-design require-
ments for energy-using products — serve to protect industries in devel-
oped countries from low-cost overseas competition (ChinaDaily.com.cn
2007). The likelihood of lobbying success depends on factors such as
firm size and the extent of cooperation within the industry. Thus, the
SCO approach must be capable of treating the risks of lobbying efforts
being unsuccessful and must be able to arrive at an optimal sequence of
actions (e.g., if lobbying is successful, implement decision A; if unsuc-
cessful, implement decision B). The Mihocko, Inc. business case by Love-
joy and Cummings (1993) involves the incorporation of lobbying into
decision making (although in the context of lobbying against emissions
limits).
3.3
The Green Segment
As early as 1990, a poll by the Roper Center for Public Opinion Research found
that 22 percent of U.S. respondents sought out green products and were will-
ing to pay a premium for them (Organization 1990). In a similar 2008 poll
by Harris Interactive, 47 percent of U.S. respondents indicated that they would
be willing to pay more for environmentally friendly products. Moreover, these
respondents indicated a willingness to spend 17 to 19 percent more for green
products (Newswire 2008). Anecdotal evidence too supports the growing size of
such “green” customer segments. For example, the emerging “Natural Lifestyles”
market segment Lifestyles of Health and Sustainability (LOHAS), which includes
home furnishings, cleaning supplies, energy-efficient lighting, apparel, and phi-
lanthropy, had an estimated U.S. market size of $10.6 billion in 2005. Given
their sheer size, green customer segments cannot be ignored and must instead be
consciously recognized in SCO.
1. The growing presence of such segments necessitates the incorporation of
additional parameters in SCO models. Optimal product line design and
market segmentation decisions should take into account consumer val-
uation of both environmental as well as traditional attributes (such as
functionality). Chen (2001) considers the problem of designing a product
line in which consumers value specific environmental attributes of the
product, such as recyclability. Such a problem differs from the traditional
product line design problem in several ways. Consumer utilities have
to be modeled innovatively, since a segment of customers also receives
intangible benefits from consuming green products. However, environ-
mental attributes of the product could conflict with its traditional quality
attributes (e.g., with diesel engines, greater material thicknesses facilitate
re-surfacing during remanufacturing steps, but at the expense of functional
quality as measured by the power-to-weight ratio).
 
 
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