Creating customer demand for sustainability
Since the 1960s climate scientists have had a strong consensus around the science of climate change and warned us of its disastrous effects. However, transforming this insight into consumer demand for sustainable products has been challenging.
The Harvard Business Review conducted a survey using data from 36 categories and more than 71,000 stock keeping units, which accounted for 40% of consumer packaged goods dollar sales in the US over the five-year period between 2013 and 2018. They found that products that had a sustainability claim on-pack accounted for just 16.6% of the market in 2018. This is up from 14.3% in 2013 but not the sort of pace you’d expect given the size of the crisis.
Now we know the U.S. population has lagged behind on sustainability but according to Eurobarometer only 26% of EU citizens often buy environmentally friendly products, 54% of them sometimes do. So why is this number lagging behind and what are the key factors in making this the norm?
As we’ve seen already, consumer demand for sustainable products isn’t quite where we need it to be, but it certainly is not negligible either. And as a result, we’re now seeing more money going into finding alternatives to the traditional business as usual ways of old.
This of course can take a whole range of different forms from material selection where petrochemical-based materials are being replaced with biomaterials that are becoming price competitive. Examples include Chips Board, a company using potato wastage to create glasses frames and buttons. Or Ananas Anam who uses pineapple leaves as an alternative to leather for handbags and more. There’s also innovation in the packaging of products with the use of mycelium (mushrooms) as a replacement for non-recyclable plastic containers from Magic Mushroom Company.
We’re also seeing this shift from companies in the energy they consume. For example in their EV fleets where they are cheaper over a four year ownership period by 4% than diesel.
And finally because of the increased awareness of sustainability we’re seeing far greater reputational risk for companies whose supply chains are not in line with good environmental standards. Nowhere is this being seen more than in the fashion industry. Whether it's H&M, Boohoo or other fast fashion brands, they have had some PR disasters to deal with and that is undoubtedly bad for business.
How to create demand
Environmental impact is playing an increasing role in consumer decision making but it still falls behind price, quality and convenience. There’s no getting away from it, if sustainable products are going to win this battle they need to be not just sustainable but better or equal to their competitors in other key areas.
If sustainable products are really going to win out they’ll need to provide the same if not better experience as alternatives. A great example of this is the hallowed toothbrush, most toothbrushes are made out of plastic that is not recyclable. The reason it's made of plastic is partly due to the characteristics of the material (the other part is cost, unfortunately), it can be perfectly ergonomically designed with a weight distribution across it and flexibility that just works.
This is tricky for natural materials to mimic, with materials like bamboo having been used instead, however, the lightness of the wood means it does not create the same experience. As a result, such products have struggled to become a credible alternative for the masses.
The sector that has really nailed the experience is again EV’s, in particular Tesla. Ask any Tesla driver and they don’t just drive them because they are environmentally friendly, they drive them because they are just better. Their acceleration is better, they are quieter and the onboard experience, well it’s pretty awesome!
Gotta be in it to win it
For an awfully long time, plant-based alternatives to milk struggled to compete with the more carbon-intensive dairy. For anyone who remembers their location, it wasn’t easy to find, hiding away in the vegan and lactose intolerant section in the supermarket. One of the big reasons for the explosion in sales was a vital move. Today Oat, Soya and a variety of other milk alternatives sit in the fridge alongside cow's milk despite the fact they don’t even need to be refrigerated. Why did they engineer this move? Because you need to be in it to win it. You need to be in the eye line of the consumers that are buying the alternative.
And we’re starting to see a reaction from the traditional agricultural sector to this realisation. Just recently farming lobbyists tried to persuade the EU government that veggie burgers should be banned from being called ‘burgers’. This was overturned does emphasise the importance of playing in the right part of the market.
Fundamentals of Marketing apply
The fundamentals of marketing haven’t changed much this century. It’s still about human behaviour and needs: social status; group identification; the need for security, freedom, connections, recognition, meaning and self-improvement.
To any marketeer, this will be obvious, yet sustainable products are often seen venturing off this well-trodden path. The challenge is turning the collective benefits for our planet into a clear ‘what's in it for me?’ for consumers.
Marketing for a long time has driven consumption promising so much, now more than ever we need these lessons and expertise to be applied to a new type of consumption. That of more sustainable products and services and maybe even a little less actually equalling more.
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