Green products involve, in many cases, higher ingredient costs than those of mainstream products.
(A)
They’d rather put money and time into known, profitable, high-volume products that serve populous customer segments than into risky, less-profitable, low-volume products that may serve current noncustomers. Given that choice, these companies may choose to leave the green segment of the market to small niche competitors.
(B)
Even if the green product succeeds, it may cannibalize the company’s higher-profit mainstream offerings. Given such downsides, companies serving mainstream consumers with successful mainstream products face what seems like an obvious investment decision.
(C)
Furthermore, the restrictive ingredient lists and design criteria that are typical of such products may make green products inferior to mainstream products on core performance dimensions (e.g., less effective cleansers). In turn, the higher costs and lower performance of some products attract only a small portion of the customer base, leading to lower economies of scale in procurement, manufacturing, and distribution.
* segment: 조각 ** cannibalize: 잡아먹다 *** procurement: 조달