Capturing the Green Advantage in Down Times
With the economy nose-diving, analysts have been wondering whether consumers will continue to buy green products, which can cost more and be harder to find.
A recent and very comprehensive report, published this January 09 by The Boston Consulting Group, concludes this question with a resounding Yes: consumers will continue to seek out green products, despite the economy.
The venerable Boston Consulting Group (BCG), a global management consulting firm, that works with mostly large corporations on business strategy supports its conclusion with impressive research. In its "Capturing the Green Advantage Consumer Companies".
The BCG report, based on interviews with 9,000 consumers in North America, Europe, China, and Japan and other research, found that consumers bought more green goods in 2008 than they did in 2007 and that many “consumers greatly value the direct benefits that green products offer, such as superior freshness and taste, the promise of safety and health, and savings on energy costs.”
BSG's direct consumer research concludes that consumers greatly value the direct benefits that green products offer, such as superior freshness and taste, the promise of saftey and health and savings on energy costs. BCG found that more consumers systematically purchased green products in 2008 than 2007. And consumers were willing to pay higher prices for green products deemed to be of high quality.
At core, BSG concludes the green movement is about reducing waste and minimizing our impact on the environment. Companies that translate these goals into a holistic approach to offering highly differentiated green products and lowering the costs across their value chains have garnered higher profit margins and market shares.
While BSG concludes consumers are cutting back on big-ticket items, shoppers are reluctant to cut back on certain green products, such as organic foods.
“In fact, when survey participants were asked in which product categories they were willing to trade up (place a higher priority on), they ranked organic foods 20 on a list of 108 product categories - considerably higher than the ranking of 43 they assigned to the category in a similar survey conducted in 2006,” according to the report, Capturing the Green Advantage for Consumer Companies.
The researchers also found that many green living activities intersect with cost-saving measures that make sense to consumers in tight times, such as using low-energy light bulbs, buying local food, vacationing nearer to home, commuting less and eating less meat.
Green consciousness “represents a huge opportunity for smart companies and the business case for green remains compelling even — and, in many cases, especially - in a tough market,” researchers wrote.
But the advisory report warned that consumers do not want to pay a green premium unless it is warranted.
“Being green is not a license to charge more. In all the countries we surveyed except China, consumers will pay more for green products, but only if they offer added value. They must taste better; be safer or healthier, or help consumers save money…”
Despite the finding about Chinese buyers, one-third of consumers in the other countries said they would be willing to pay 5 to 10 percent more for green products, when they offered direct benefits.
Companies, though, must still work to win over even green-leaning customers, according to the report. “Many consumers, for instance, complain about the “green ghetto” in the supermarket, where a limited assortment of organic products are crowded together in a low-traffic location.”
The consulting firm recommends that businesses practice what it calls the “4 P’s” — green planning, green processes (practicing what they preach internally), green product offerings and green promotion.
The BSG report is just the latest in a string of reports on cause marketing, corporate social responsibility and green consumption. A year ago, I had very little third party data for NatualPathMedia's premise that there is a shift (read NOT TREND) amongst consumer companies towards values-driven (sometimes referred to as Green Marketing).
Even in the midst of our great economic uncertainties we clearly see that not only is green not going away with properous economic times but wears well in these sober days in which both consumers and companies are becoming more conscious of value and waste.
