Green Consumers Pull Back – Now What? Recession Strategies For Eco Businesses
I’ve been carefully watching sales of green products during this current downturn; analyzing the double-whammy impact of inflation and unemployment. While, as I wrote in Worried About The High Cost Of Green Products? Inflation Will Help, the price differential between organic and natural products and their traditional counterparts, may narrow, falling consumer incomes may make that a moot point as consumers trade down.
“Frugality is now replacing frivolity,” wrote David Rosenberg, chief North American economist for Merrill Lynch, who suggests that the consumption patterns of the 1950s could be coming back. “Ozzie and Harriett” is in; “Sex in the City” is out.
Except for deep green consumers.
As this chart shows, LOHAS consumers, that is those most concerned with living a Lifestyle of Health and Sustainability (16% of the population) will continue to shop green and cut back in other areas. Price does not factor into their purchase decision and they are still willing to pay up to 20% more for green products according to Environmental Leader.
Even in times of economic strain, people continue to strive for a feeling of connection by participating and expressing their values through their purchasing behavior. …brands that can support the interest in sustainable consumption and make a positive contribution are appealing to consumers’ current sentiments, particularly in today’s ethical consumerism.
For ecopreneurs in this space, that is good news.
For the many green entrepreneurs targeting more mainstream and aspirational consumers, however the coming downturn is more worrisome. Consumers less committed to the LOHAS lifestyle may cut back on more expensive green and organic purchases.
And so like hundreds of mainstream brands before them, green companies and companies with green product lines now need to focus on building a brand identity that fills the emotional needs of consumers – to feel good about themselves; to feel hip; to feel like they are eating healthy.
In recent years, green brands have benefited by the heightened awareness of green products and marketing has been focused on feature - that is, certifications, manufacturing processes and sourcing. As we move into a new growth stage for green products…and in the midst of a recession, feature based marketing needs to give way to benefit focused marketing.
So what’s a benefit? Or what’s a feature? Or what’s the difference?
Entrepreneur magazine has a nice explanation, Marketing Features Vs. Benefits, but how does it apply to green products?
Benefits can be varied, but derive from features. Here’s an example:
Feature: Organically Grown
This designation is popping up everywhere and has many possible benefits. To transfer this feature into a benefit, marketers should select the most important aspect - “Organically grown without pesticides”
Benefit: More Cancer Fighting Antioxidants
Since research has linked pesticides to reduced amounts of antioxidants, this is an easy one to support.
The key point to remember is that, unlike in the past few years where sales of all green products rose (a rising tide floats all ships), in today’s environment, green companies need to focus on promoting their companies’ and their products’ unique benefits. As the tide goes out, or at least hovers mid shore, it seems to me that those companies with a strong features and benefits statement will prosper at the expense of those that don’t.
Photo Credit: Kevindooley at Flickr Under Creative Commons License
20% more. Yes, I can handle that. And I do. Unfortunately, *most* eco-friendly products that I have found are priced WAY more than just 20%. I just finished back-to-school-shopping for my kids and we had to make some tough decisions. If I had gone with the best deals I could find on environmentally alternatives, I would have spent nearly $400.00 more. That is considerably more that 20% higher. And we cannot afford it.
In our stores organic produce is at least twice the price of non-organic. What I, as a consumer, am seeing is a rough average of 50% to 75% more for green products. Sometimes even higher. We simply do not have the means to “cut back” in other areas, so we just try to do whatever we can that doesn’t cost anything. Every little bit helps.
20% higher?
Not from this consumers experience. What I see in just items which we use personally pegs it closer to 50-75% higher - IF I can find things on sale. My green back to school shopping list went out the door when I didn’t have the extra $400 to buy the green stuff. And that’s just the supplies, there is absolutely NO way we can afford the organic clothing. We have cut back to the bare minimum here and still really can’t afford to be as eco-friendly as we’d like to be.
Great perspective. I agree some of the drop in the difference in price differential is currently just… in theory.
Which, makes it even more necessary for green companies to reassess your marketing strategies.
That is one thing that keeps green products marketable. There is a demand for them but in a recession the demand priorities change to cost-effective green solutions. It is just like diet food. Healthy food is more expensive than junk food. People do want to buy green and eat healthy, but when you lose your job and gas goes up choice goes out the door. If the green companies want to keep or even gain market share in this economy the best thing to do would be to lower prices to that of the cost saving unhealthy ungreen alternatives. Then there is absolutely no reason not to buy green. The masses won’t buy green unless there is a small price differential.
Brian
Brian,
Agreed - the masses won’t buy green unless there is a small price differential …OR a clearly defined superior benefit.
Why does any branded product sell…ever when cheaper store brands are available? That’s really my point with this post…green companies need to go beyond just selling their products as “green” and define what about their product meets a basic need for the consumer that traditional products cannot.
For some organic and natural products that may be feel, taste, comfort, etc. For others that don’t provide a direct physical benefit, the benefit may be emotional - a “feel good” unique benefit.
[...] the talk about benefits vs. features in last week’s post, Green Consumers Pull Back- Now What? Recession Strategies For Eco Businesses, reminded me of an NAHB article on green homes in which William H. Kreager, an architect at Mithun [...]
Thanks for the great post, MC, and for collecting all of these articles and studies.
[...] the talk about benefits vs. features in last week’s post, Green Consumers Pull Back- Now What? Recession Strategies For Eco Businesses, reminded me of an NAHB article on green homes in which William H. Kreager, an architect at Mithun [...]