Conflicted Consumers

This post first appeared at Harvard Business Online.

How green are consumers in the U.S.? On one level, we haven't really changed all that much. Many pundits argue persuasively that without the rapid rise in energy prices, people wouldn't be buying smaller cars. And outside of some specific product markets, such as organic food, few are willing to regularly pay more for green. So it may be true that we're not that green yet, but there's something more important and subtle going on beneath the surface: the rise of the "conflicted consumer." This shift will drive tremendous change in products and draw customers away from some companies while they're not paying attention.

Last year, one item in Harvard Business Review's annual list of breakthrough ideas focused on research about these conflicted consumers, people who have social and ethical concerns about what they buy. Karen Fraser, whose consulting firm publishes the Ethical Reputation Index in the U.K., estimated that around 25% of consumers fit this description. The conflicted are distinct from the small group of diehards who will buy green or not at all. I believe that the true believers who will pay more for green are a small group that may not grow much. But the conflicted group, those looking for products that are environmentally or socially preferable at the same price and quality, is growing fast. And these people will jump ship as soon as there is a better option. Many companies will see their customers disappear and not know what happened.

More recently, some good data from the marketing agency BBMG gave us some more guidance on what this conflict is really about. In their survey of U.S. consumers, they discovered something really interesting about what attributes of products are "very important" to people when they shop. Ranking the attributes, quality and price were #1 and #2. No surprise there. But convenience and other sure-thing attributes had dropped from 3, 4, and 5, to be replaced by three aspects:

- Where was the product made?
- How energy efficient is it?
- What are the health benefits?

These three attributes explain a great deal about the rapid rise of some products, such as organic food. Keep in mind that these results were for all consumers, not the subset BBMG describe as "conscious consumers" (which is close enough to "conflicted" for me).

At the recent Sustainable Brands conference in California, the BBMG founders discussed their findings a bit more, and one thing caught my eye. Their survey showed that 35% of all Americans have avoided a product because of a company's practices. Again, people may not pay more for green products, but they may punish products and companies perceived as not socially or environmentally responsible.

This finding gibes very well with a study the Wall Street Journal reported on a few weeks ago on whether being ethical pays. The study asked people how much they would pay for a pound of coffee (or a T-shirt). Three groups were given very different descriptions, however, which painted a picture of either an ethically produced product (fair trade coffee, 100% organic T-shirt), a normal one, or an unethically produced product (industrial farm, low wages, and so on). The results were fascinating. As the Journal reported, "Consumers were willing to pay a slight premium for the ethically made goods. But they went much further in the other direction: They would buy unethically made products only at a steep discount."

I take this all to mean that conflicted, conscious consumers are a growing group. They still want price and quality - the BBMG study also showed that the most conscious segment wanted price and quality even more than the norm. But they want it all. If you can provide a green product at the same quality, you will win these customers. If you don't, they will pay a lot less for your product. The choice is clear.

Andrew Winston helps companies use environmental thinking to grow and prosper. He is co-author of the best-seller Green to Gold, writes a monthly e-letter Eco-Advantage Strategies, and regularly blogs on green business.

Comments

[Cathexis]

Thus, I can already predict how the majority of Businesses will respond: By adjusting their advertising to appear more ethical while making no real adjustments. After all, they don't have to BE ethical, they just have to be SEEN as ethical.