Tag Archives: green

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Gallons per One Hundred Thousand Miles

Gallons per One Hundred Thousand Miles

Back in 2008, I blogged about Fuqua professor Rick Larrick’s research on flipping the way we talk about fuel efficiency from the familiar “miles per gallon” to “gallons used per 100 miles driven” and later that year I followed up with a post on some of the traction that idea had gained and the GPM calculator they had posted online (still up and running now).

“Giving the gas cost over the lifetime of the vehicle seems to give people a better understanding of its fuel efficiency,” Larrick said. “The current metrics used don’t help people to understand the true value of a fuel-efficient vehicle.”  -from the latest research

Last week I got a Fuqua email update that featured Larrick’s latest work on GPM, including the info that in 2013 the EPA had added “gallons per 100 miles driven” to its fuel economy labels. Larrick’s latest work shows that this label may soon warrant an update – apparently consumers prefer a fuel-efficient vehicle when they are shown the statistic of gallons per 100,000 miles driven, even when the expected cost savings in fuel efficiency does not make up for the higher cost of the fuel efficient vehicle.

“Consumers place a lot more weight on fuel efficiency when this information is given to them in terms of gas cost over 100,000 miles,” Camilleri said. “The amazing thing is that this greater weight persists even when the efficient vehicle doesn’t necessarily pay for itself in savings, which makes sense for the consumer who also cares about the environment.” 

I always find it fascinating when a change in language is able to impact cultural values and individual behavior, and the idea that this is so powerful that environmentalism could trump cost in a purchase decision is remarkable. However, I’m also a bit skeptical, as survey answers are not always a reliable indicator of actual consumer behavior. Still, even if this only works for cases when fuel efficiency is also cost efficient, this is a great way to make an impact by simply changing the language we use.

GPM Calculator

In June, I blogged about Fuqua professors Rick Larrick and Jack Soll and their push to improve fuel efficiency and consumer behavior by simply changing the measurement from MPG to GPM.  Today, Duke Research Advantage blogged that this work was featured in the New York Times Magazine’s “Year in Ideas” issue.  They’ve also launched a new GPM calculator to find your current GPM, compare cars, or see the GPM for all 2009 cars.  More information about this research, including an interactive fuel-efficiency quiz and a video of Larrick and Soll discussing their work is available at mpgillusion.com.

Better fuel efficiency through better labels – gpm vs mpg

We all know how important language is in persuading people to think certain ways, and that certain words and phrases in common use are politicized rhetoric (think pro-life and pro-choice).  However, I never thought of “miles per gallon” as one of those potentially misleading phrases.  Until I read this in a Fuqua Alumni email:

For example, most people ranked an improvement from 34 to 50 mpg as saving more gas over 10,000 miles than an improvement from 18 to 28 mpg, even though the latter saves twice as much gas. (Going from 34 to 50 mpg saves 94 gallons; but from 18 to 28 mpg saves 198 gallons).

These mistaken impressions were corrected, however, when participants were presented with fuel efficiency expressed in gallons used per 100 miles rather than mpg. Viewed this way, 18 mpg becomes 5.5 gallons per 100 miles, and 28 mpg is 3.6 gallons per 100 miles — an $8 difference today.

“The reality that few people appreciate is that improving fuel efficiency from 10 to 20 mpg is actually a more significant savings than improving from 25 to 50 mpg for the same distance of driving,” Larrick said. (See table.)

See the full article here, including a video link.

Going Negative with Green Messaging

Struggling for years with a decreasing market share and tumbling stock price, Nortel is going negative with a campaign against Cisco.  This Wall Street Journal article details their PR blitz utilizing bloggers, YouTube, anti-Cisco websites, and trade show demonstrations.  The message?  Use Nortel to avoid “the Cisco energy tax.”

Nortel is countering with the argument that Cisco’s technology, as successful as it has been in the marketplace, is an energy hog. In its ads, Nortel claims that Cisco’s data networks “are costing you 100% too much.” At trade shows, Nortel staff attach wattage meters to comparable Nortel and Cisco gear in an effort to show that Nortel’s gear is much more energy-efficient. The company posted a film of the demo on YouTube.

Energy prices are finally rising to a point where being energy-efficient is not just something to make a consumer feel good, but something that affects purchasing decisions by price-sensitive customers.  That Nortel is taking this message to large corporate customers is evidence that at least some people in corporate purchasing departments are concerned with cutting costs by conserving energy.

In a previous post, I talked about the strategy of going negative with marketing, and why it’s rarely done.  This is one of those cases where a very small company with much to gain and little to lose takes on the market leader with a campaign aimed at gaining some awareness and hoping to steal just a bit of the leader’s market share.  Or, as pointed out in the WSJ article, survive and keep their current customers as their competition makes persuasive presentations to switch.  It’s not unusual for a smaller company to paint the larger one as evil, and it’s not that unusual to use an environmental rationale to make that argument.  What might be unusual is that with the price of energy rising so quickly, customers might listen.

And frankly, Cisco’s response that “there are no industry standards to measure “green”; and Cisco’s gear meets the environmental requirements of the product-testing company Miercom” falls a bit flat with me.  Not a counter-argument about green manufacturing or building initiatives, but a lack of industry standards? No pledge for improved performance or details of why the additional energy usage creates a superior product?  This lack of rebuttal leaves me thinking Cisco either isn’t taking Nortel seriously or isn’t taking energy efficiency seriously -  either case may not be a big mistake now, but could be a huge mistake in the future.

Solar Panel adoption in CA

This blog post reports that “Southern California Edison plans to install 250 megawatts’ worth of solar panels on commercial rooftops, generating enough electricity to power 162,000 homes.”  Great post/article that goes into the long and short-term business implications of this decision, including a potential short-term price hike as demand spikes before an eventual price fall as economies of scale ramp up, and potential faster adoption of thin-film solar panels, which use far less silicon than traditional panels.

This report coming on the day that we’re hosting a screening of the documentary Kilowatt Ours with a Q&A session from director Jeff Barrie seems like some sort of good omen, or at least a pleasant coincidence.

Virgin biofuel flight planned

The New York Times reported today that Virgin Atlantic will conduct a test of one of its Boeing 747s using biofuels. The most interesting thing to me is that there seems to have been a lot of thought put into both the sustainability and the business aspects (even though this first step is actually a blend of 20% biofuel and 80% conventional jet fuel).

Sustainability: Virgin spokesman Paul Charles is quoted as saying the company rejected fuels derived from crops like palm oil because of the land that would be needed to cultivate such crops, and that the biofuel production would not compete with food or freshwater resources.

Business: This joint project between Virgin, Boeing, and GE Aviation splits the costs of innovation among several companies, and had smart business requirements. For example, the test plane will use one of GE Aviation’s CF6 engines as a “drop-in solution,” meaning the use of biofuel requires no modification, and will not affect the engine’s performance or range.

I recently read a New Yorker article about Branson and his work with Al Gore to create the Virgin Earth Challenge with its $25 million prize.  I’m impressed that he’s so intent on solutions that are market-driven, commercial, and don’t require major lifestyle changes, as I believe that these are the ones that are truly scalable.  An excellent article that shows that for Branson, business is very personal.  I just wonder whether he’ll consider himself eligible to win his own prize?