Saving the Rain Forest One Glass of Orange Juice at a Time

INSERT DESCRIPTIONPhoto: Malkav

I was drinking Tropicana orange juice this morning. The company has a clever marketing campaign. If you go to its website and type in the code on the Tropicana carton, Tropicana will set aside 100 square feet of rain forest to preserve on your behalf.

What’s clever about this?

“Whenever a company can give away something worth 11 cents that people think is worth $5, they are doing something right.”

I think corporations do not exploit the opportunities to bundle consumption of their products with contributions to charity as much as they probably should. I have no quantitative evidence on this; it is just a hunch. Typically, though, these sorts of corporate offers come in the form of “We will donate 3 percent of profits to X.” The share of profits is usually small, which doesn’t make the corporation seem generous.

The beauty of the rain forest offer is that 100 square feet seems like a lot. Once you think about it, it isn’t really much at all, but it sounds big. And if you are used to thinking about prices of land in cities, 100 square feet could be expensive.

By my rough calculations, where I live it would cost about $130 to buy 100 square feet of land you could build on. Land is cheap in the Amazon, however. Some online sites say that for $100, they will set aside an acre of land in the Amazon for you.

So probably, the true cost to Tropicana of an acre of Amazon land is half of that, or $50. Given the number of square feet in an acre, I calculate that the land my daughter saved in the Amazon this morning was worth about 11 cents. When I asked my daughter how much she thought the land was worth, she said $20. When I asked my wife, she guessed $5. Whenever a company can give away something worth 11 cents that people think is worth $5, they are doing something right.

The most remarkable thing of all is that even after we figured out that the rain forest we saved would only cost 11 cents, we still felt good about the fact that there was this little patch of land as big as the room we were eating breakfast in that we had saved.


deriuqer

So, unless if you don't type the code Tropicana destroys 100 sq feet of rain forest, you still have an incentive to free-ride...Good.

I guess from this perspective a more effective campaign would be: any time you don't buy our juice, we kill a panda.

econobiker

A square 10' x 10'= 100 sq.ft. Pretty expensive in NYC but almost worthless in most of the country...

Go to the juice website and type in the code while you are viewing their advertising... Good deal for them all the way around.

Jonathan

Are you sure that as an economist you want to be promoting companies to deceive their customers into buying products?

My understanding is that one of the assumptions of a free market is that there is free and fast flow of true information, so that customers can make properly informed choices.

It is only when customers have all the (correct) facts that markets will properly optimize outcomes.

Richard Weitkunat

At least Tropicana uses only Florida oranges. Otherwise they'd be clearing 100x as much land to grow more oranges.

Rachel Eden

In the UK this sort of promotion is relatively common. However this is a clever twist as don't forget most people won't actually do it so you get the halo effect as people drink their orange juice with a far reduced cost to the usual 'buy these nappies and we'll immunise a child'. Say 1/10 consumers actually get round to it that's about $0.01c per carton!

Kevin

I'm always cynical about the "every time you do X, we do Y" campaigns. Usually the company involved has some predetermined limit they'll go up to. To me, this just means that the company has decided they're willing to do N units of "Y" for the PR value, and to get the maximum PR value possible they give us the illusion that we're the ones making it happen.

charles

lol....any time you don't buy our juice, we kill a panda.....made me cry.

Uthor

"Are you sure that as an economist you want to be promoting companies to deceive their customers into buying products?"

How is Tropicana deceiving anyone?

SkepMod

@ Jonathan, your free-market utopia exists only in your mind. In reality, 99.9% of the market works on information asymmetry.

Dr. Levitt: The company just gave your daughter $20 worth of feeling-good-about-her-choices, and your wife $5. Not bad for a marketing campaign. As for being an environmental campaign - it isn't much of one, but it is still better than nothing.

Jonathan

Uthor:
"Whenever a company can give away something worth 11 cents that people think is worth $5, they are doing something right."

Maybe 'misleading' is a better phrase. Or something. Steven implies that Tropicana know that people think this is worth more than it is, and are using that fact, providing perception of value rather than real value.

A free market can not maximize consumer value if consumers are unable to judge value correctly. I assume Steven wants to see a market that efficiently maximizes value, and so would NOT be happy about tropicanas approach.

Kyle

In Canada for every Tropicana carton we just get 10 Aeroplan miles (25 for juice blends). http://www.breakfastcentral.ca/ Perhaps the difference in strategy is that Americans do not have monolithic national customer reward brands? Or is it Canadians care little about the rain forest?

Interesting...

mfw13

I'm curious...has anybody actually checked to see how Tropicana goes about actually doing what they say they are going to do? Are they actually buying land in the Amazon, or are they just giving $$$ to someone else who says they are going to?

One of the reasons that pledges such as these may have little impact on consumer behavior is the doubt consumers have about whether or not the corporation will actually follow through.

In this economy, I am pretty much brand-neutral and buying whatever is on sale. Without looking, I don't even know which brand of OJ is in our fridge right now....but it was on sale when I bought it yesterday, and the other brands weren't.

King Politics

Lots of corps do good charitable and philanthropic work, but I'm not sure how much attention they want. Would it also bring inquiring eyes to other practices they're not so proud of? As in, the amount of water used to create their product, or the emissions required to transport their products. Probably a wash.

http://kingpolitics.blogspot.com/

Pete

@ #10:

Value here is subjective anyway - Tropicana is just telling you what they'll do, its up to you to determine what value you place on it. The value to the consumer isn't necessarily Tropicana's cost to provide it, so they're not misleading anyone. If you think of the carton of orange juice and the 100 acres of rainforest as a product bundle, they're not misleading you by not disclosing the cost of their ingredients, so why should they need to disclose the cost of the rainforest saving? You're being given accurate information about what product you are (potentially) buying and can make a value judgement from there if its worth your money.

Jonathan

@#14:
Good point.

JRH

@#4:

That isn't true anymore. Tropicana *used* to be Florida-only, but nowadays they've cheapened it and use the same crappy Brazilian and Californian oranges as everyone else (and the flavor noticeably suffers).

kh

@#16:

Actually, I doubt Tropicana use California oranges. In general the oranges you eat are California oranges, and the oranges you drink are Florida oranges. This is because California oranges are of higher quality (and more expensive).

Jeffrey Martin

Aren't these oranges actually grown in Brazil?

It could be that #1 is correct - they're probably going to clear the forest anyway to grow more oranges - if you don't enter the code....

http://www.boston.com/bostonglobe/ideas/articles/2009/02/22/qa_with_alissa_hamilton/?page=full

Caliphilosopher

"Whenever a company can give away something worth 11 cents that people think is worth $5, they are doing something right."

So, does it then follow that if companies can give away something that is worth 10 cents that people think is worth $5, then they're doing something even better?

Also, what's the notion of "right" you're using? I think you're equivocating the word "right" with "profitable", which is a shame.

João Pereira

Maybe, just maybe, they want some advertise for their products. :))))

João Pereira
www.planetalima.com
http://blogplanetalima.blogspot.com/