People seem more aware of environmental issues these days. From the success of Earth Day and Al Gore’s Nobel Peace Prize to the current war on bottled water, everything “green” has been getting great press.

Companies are waking up to the fact that going green can also be an effective competitive advantage. Walmart is now hawking green products, venture capital investments in green technology have tripled since 2001, and Frank McKinney is building a $25 million dollar eco-mansion.

Going green can also work for small business brands (for example, in my neck of the woods, my favorite steakhouse is going green and will only serve organic beef. They got themselves a new logo and have changed their trade dress colors to several shades of green).

Before jumping into the green bandwagon, though, there are some things that you may want to consider:

Should a small business brand adopt a green branding strategy?

Going green for the sake of being different is not enough. Aside from differentiating yourself, going green has to be relevant to your target customers. It has to mean something to them.

Is being green relevant to my target customer?

Environmentally-conscious consumers are not a homogeneous group. According to J. Ottoman, author of the Green Marketing Book, traditional demographics are not enough to determine the intent to purchase green products. What really entices green purchases are consumers’ feelings of being able to act on these issues, or empowerment. In other words, if consumers believe that they can make a difference, they will be more inclined to buy green products.

According to The Green Marketing Book, the most receptive audience for green products are those consumers who have contributed to or are members of environmental groups. Research also suggests that women in the 30-44 bracket also constitute an environmentally conscious group. The Green Marketing Book also identifies five different consumer groups, depending on how well do they react to environmental products. You may want to compare your target audience with all of these groups to gauge how effective it could be to use “green” as a marketing angle.

Can I market green products to the masses?

The majority of consumers today are not yet prepared to pay a premium or to sacrifice product performance to buy green products.

For example, the current campaign against bottled water has a strong chance of being successful because customers aren’t really giving up much: bottled water is expensive and it can be easily replaced by tap water, which is free and just as good. However, making consumers pay a premium for a green car when you can buy a more powerful and better looking one for less money is not a slam dunk. People that are not really committed to the environment will ask “what’s in it for me” before paying a premium.

However, if you manage to price your product at par with a non-green alternative, and offer similar or better performance, you may have an opportunity to use the green angle as a competitive advantage, provided that you communicate it well.

How can I communicate the green attributes of my products?

50% of consumers say that they would do more for the environment if they knew more. The good news for small businesses that don’t have resources to fund traditional advertising campaigns is that alternative, non-paid media like blogs or social networking sites are extremely effective to promote green products. By being active in social media sites, either through your own blog, or through participation in online forums and social bookmarking sites, you can reach an important portion of your target audience.

Where do I go from here?

I recommend that you first read the online version of the Green Marketing Book (it is free and full of valuable insights on every aspect of green marketing that you need to take into account). You can also visit the directory of sustainable bloggers to find eco-friendly blogs, or you can visit hugg.com (their tagline: digg for green), a social bookmarking site devoted exclusively to green news and sites.

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