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

1. Marketing Strategies, Functions, and Benefits of Forest Certification: A Cross-cultural Comparison Toshiaki Owari, Ph.D. (The University of Tokyo, Japan)

2. 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. IUFRO All Division 5 Conference, Taipei (Owari, T.)

3. The Market for Certified Forest Products • … may have a significant impact on business and policy-making (Kraxner et al. 2005) • … is not well understood due to the absence of official trade statistics (Rametsteiner et al. 2003) • Market actors and policy makers are hampered by lack of information (UNECE 2005) IUFRO All Division 5 Conference, Taipei (Owari, T.)

4. 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. IUFRO All Division 5 Conference, Taipei (Owari, T.)

5. Purpose • The purpose of this study was to compare the role of forest certification in marketing between Nordic Europe (Finland and Sweden) and Japan. IUFRO All Division 5 Conference, Taipei (Owari, T.)

6. Status of Forest Certification (August 2007) FSC: Forest Stewardship Council PEFC: Programme for the Endorsement of Forest Certification schemes SGEC: Sustainable Green Ecosystem Council IUFRO All Division 5 Conference, Taipei (Owari, T.)

7. How important is certification for companies? What benefits have they gained from certification? How do companies use certification in marketing? Study Framework • Marketing strategies • Products • Customers • Market area • Competitive advantage • Supplier benefits • Business performance • Customer relations • Public relations • Marketing functions • Communication • Pricing IUFRO All Division 5 Conference, Taipei (Owari, T.)

8. Methods • A nationwide survey with standardized questionnaire scheme was used for each country. • Finland • Personal interviews with 25 wood products companies in Sep-Dec 2004 • All having PEFC CoC, mainly small and medium sized • Sweden • A self-administered electronic survey distributed to 149 companies in Dec 2004 (49 surveys undelivered) • 27 usable responses by Mar 2005 (adj. resp. rate 27%) • 70% having FSC CoC, 48% having PEFC CoC IUFRO All Division 5 Conference, Taipei (Owari, T.)

9. 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 extrapolation method and not considered a problem. IUFRO All Division 5 Conference, Taipei (Owari, T.)

10. Importance of Certification(Finland and Sweden) Not at all important Very important IUFRO All Division 5 Conference, Taipei (Owari, T.)

11. Importance of Certification (Japan) Not at all important Very important IUFRO All Division 5 Conference, Taipei (Owari, T.)

12. Channels Used for Communication (Finland and Sweden) Not used at all Used very often IUFRO All Division 5 Conference, Taipei (Owari, T.)

13. Channels Used for Communication (Japan) Not used at all Used very often IUFRO All Division 5 Conference, Taipei (Owari, T.)

14. Price Premiums(Finland and Sweden) IUFRO All Division 5 Conference, Taipei (Owari, T.)

15. Price Premiums (Japan) IUFRO All Division 5 Conference, Taipei (Owari, T.)

16. Benefits of Certification(Finland and Sweden) Very great benefit No benefit at all IUFRO All Division 5 Conference, Taipei (Owari, T.)

17. Benefits of Certification (Japan) No benefit at all Very great benefit IUFRO All Division 5 Conference, Taipei (Owari, T.)

18. 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 IUFRO All Division 5 Conference, Taipei (Owari, T.)

19. 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. IUFRO All Division 5 Conference, Taipei (Owari, T.)

20. 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. IUFRO All Division 5 Conference, Taipei (Owari, T.)