The Three Keys to Marketing Sustainable Brands
Customers want to support sustainable brands. Nielsen research found that 55 percent of online consumers are willing to pay more for products from companies committed to positive social and economic impact. Accenture found that 62 percent of customers want brands to take a stand on issues like sustainability. And yet, sustainable brands fail every day.
In this post, we’re going to examine the reasons behind these failures, and identify three keys to successfully marketing your green product.
Key 1: Sustainability is Not a Value Proposition
Our team has worked with sustainable brands in a number of categories, from manufacturing certification, to waste removal, to consumer products and renewable energy. Time and again, these green marketers’ value propositions tend to lead with the environmental or social improvements that their product can make, rather than how it solves a customer need better than competing offerings. And this is where they lose traction in the market.
Sustainability on its own is not a value proposition.
When launching and marketing sustainable brands, it’s critical to understand that sustainability itself is not a value proposition. Your market will continue to make purchase decisions according to its needs and pain points just like it always has. Absent any external pressure like regulation or larger economic factors, sustainability is rarely at the forefront of a market’s purchase criteria. This fact is especially true when working in publicly companies: quarterly shareholder profit is a much more powerful driver than long-term sustainability.
How to Build a Value Proposition for Sustainable Brands
Let’s return to Nike Considered. Do you buy running shoes based on their materials, or based on their comfort, fit and look? I’d wager it’s the latter, and there’s a strong argument to be made that by making sustainable manufacturing and sourcing the centerpiece of its Considered marketing campaign, Nike muddled its own value proposition.
Most value propositions focus on concepts in one of the categories below:
You’ll notice that sustainability isn’t on that list. Your job as a sustainable marketer is to deliver a value proposition that meets your audience’s need in the areas above in a sustainable way, not try to convince them that they need a sustainable solution that doesn’t meet these needs (like Nike Considered).
To do so, invest in market research. Market research is the best way to build a successful value proposition for a sustainable brand. Ideally, you want to have statistically significant quantitative data backed by detailed qualitative data to provide psychographic color to the data. Your goal is to surface your audience’s pain points and purchase criteria in order to confirm that a sustainable product can meet these needs. In other words, understand how to best sell your product first, and then weave in sustainability.
What is a Value Proposition?
Your target audience’s need, how you solve that need, and why that customer should buy it from you as opposed to anyone else.
Key 2: Customers Won’t Pay More for Sustainable Products
A few years ago I had an enlightening conversation with a paper manufacturer who was trying to convince a major international food franchise to use recycled paper in its cups. The cost worked out to a fraction of a cent increase per cup, which when you’re moving millions of cups a day adds up quickly. Even though both parties agreed it was the right thing to do, the deal fell through because it would have increased the customer’s costs. Unfortunately, this pattern is far from unique.
Did you know that the Prius, the world’s most successful hybrid vehicle, was a flop on its initial launch? The company found that its initial target audience – true environmentalists looking to use less gas, were also the kind of people who rarely buy new cars. When it went looking for another market, its research showed that wider audiences balked at the car’s high cost for its size.
Thankfully, Toyota’s corporate leadership worked out an arrangement to cut dealer margins, which allowed the car to be sold under a $20,000 price point and still be (slightly) profitable. And 20 years later, Toyota has a hit.
The message here is simple: price is a more powerful decision factor than sustainability
How to Build Your Sustainable Product’s Price Strategy
Most sustainable products sell at a price premium compared to less environmentally friendly competitors due to higher production costs, which is a tough hurdle to overcome when trying to gain share. However, successful companies have a number of strategic approaches that have worked to launch their green brands:
- Position Your Product as a Cost Savings: Remember our value proposition discussion above. It’s very common for sustainable products to have a higher upfront cost, but lower operating/ownership costs over time. If this is the case for your product, you’ll want to emphasize your competitor’s higher operating costs at every opportunity. We recently worked with an environmentally friendly waste removal company whose market research found that it would be able to cut its customers’ waste and hauling costs with every sale. That’s a powerful customer incentive that allowed the company to set a higher initial price point.
- Add Services to Increase Perceived Value: In cases where you can’t compete on price, you can always add service offerings to increase the customer’s perceived value. Regular maintenance and monitoring, no-charge support, or reduced-price service plans added on top of your core product are all factors that can sway a customer to your side. You may even want to consider a “luxury” positioning where you push your price higher, with service and quality to match those expectations (think about Tesla beginning its offerings with the luxury roadster).
- Begin as a Loss-Leader: In situations where you have a longer-term play or are trying to gain share, you may want to begin your offering as a loss leader to get your foot in the door. This strategy will only work if you are able to recoup costs and margins through up- or cross-sells, so it’s important to keep a close eye on your sale projections, but it has been proven effective.
- Use Regulation or Incentives to Generate Price Parity: Hybrid vehicles are a good case study here. A number of states offer purchase rebates for hybrid or electric vehicles that lower the initial purchase price into the range of a gasoline-powered car. In the current environmentally conscious environment, a little lobbying may go a long way. Of course, you also have the ability to offer direct rebates and incentives in situations where regulatory relief may be out of reach.
Key 3: There is No “Sustainability Demographic”
Let’s return to the consumer data we began this blog with. It’s very tempting to work up a target audience persona of “environmental advocates” and talk yourself into the fact that these people exist in the real world. But as we’ve shown above, every individual makes purchase decisions based on a variety of factors, and finding your target audience will still require testing and measuring outcomes.
Several years ago, we worked with a residential solar power installation company that had done some fascinating research in order to identify which neighborhoods had the best likelihood to purchase solar. After analyzing a number of different factors, from income levels to political affiliation, to type of car purchased, the company found that the most accurate indicator of someone’s purchase affinity for a solar system was whether those individuals lived in neighborhoods where someone had already installed solar panels.
Conventional wisdom would say to target solar power sales on college campuses or neighborhoods that had shown high propensity to vote for the Green Party, but in reality, it came down to good old keeping up with the Joneses. And this is an important lesson for marketers promoting sustainable brands: environmentally conscious psychographic profiles don’t represent real customers.
How to Identify Your Sustainable Product’s Target Audience
Let’s return to your value proposition. You have a product or service that improves the world, but how does it help the people who might pay you for it? Your best step at this stage is to gather a small group of likely customers and conduct interviews and focus groups with them to evaluate if the need you see fits with their own description of their needs.
At this stage, the nuance in the qualitative feedback is important. You’re not looking to force your audience into a pre-defined bucket, you’re looking for help identifying what buckets exist. Good questions to ask would include:
- What are the greatest challenges you’re experiencing in this category?
- How important is solving this challenge compared to your other priorities? Why?
- Who makes the purchasing decisions in your business/household?
- Where do you go for information on [your product/service]?
- In the past year, how much did you spend on [your product/service]?
- Who do you think [your product/service] would benefit?
There are thousands of questions and data points you can use to narrow your target audience, but those above should help start you on a path to identifying whether the individuals you’re speaking with are truly ready for a sustainable brand.
I hope that this post helps you understand the three keys to marketing sustainable products. Please contact Young Marketing Consulting if you’d like to discuss marketing strategy for sustainable brands.