What the ‘Green’ Consumer Wants

Has demand for ‘green’ products and services been affected by the downturn? And what factors affect consumer decisions to buy — or not buy — green in the first place?

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The leading question

What do prospective buyers of green products want now, and how should companies deliver it?

Findings
  • The demand for green products and services hasn’t been greatly cut by the recession, but green choices are now more focused on ways to save money.
  • Price is not the main obstacle when buyers consider going green. The biggest impediment is consumers’ lack of awareness of green product alternatives.
  • Many companies are afraid to educate buyers about green options for fear of being called “greenwashers.”

Where is the “green”-goods consumer? Alive and well despite the recession, according to “Capturing the Green Advantage: What Green Consumers Want and How to Deliver It,” the theme of a special exploration thread at MIT Sloan Management Review online, which began running earlier this spring.

The thread was triggered by a 2008 research report coauthored by Catherine Roche, a partner and managing director in the Düsseldorf office of The Boston Consulting Group Inc. Here in this version from the print edition of the Review, we extract highlights from the online thread, including key data from the consumer survey, thoughts from expert commentators and excerpts from a conversation with Roche about what has — and has not — changed since her report was initially made public. Among her main points: (1) price is not the obstacle when consumers consider green purchases, (2) green programs motivate and engage employees, and (3) companies are reluctant to publicize their green (or sustainability) efforts for fear they’ll be accused of “greenwashing.”

For Roche’s entire interview, see “Capturing the Green Advantage”. There you’ll also find other features in the special thread, including a summary and link to the complete research report, an interview with Georges Kern, CEO of the venerable watchmaker IWC International Watch Co. Ag. in Schaffhausen, Switzerland about his company’s green initiatives and a virtual roundtable with comments on the topic by CEOs and experts. For the following interview, Catherine Roche spoke with the Review’s editor-in-chief, Michael S. Hopkins.

AWARENESS AND CHOICE

Many companies believe that higher prices keep consumers from purchasing green products, but BCG’s findings show that price is rarely the main obstacle. In fact, it ranks lower as a barrier to green sales than lack of awareness of green alternatives or lack of choice.

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Your survey was done in July 2008. What is different now compared to when you collected the data?

Initially, companies were shocked by the drop-off in consumer demand. At this point, the leading players are saying: “Before the crisis, green was about health and safety, green was about savings, green was about things that are directly beneficial to you — and it’s still about that. Let’s not lose sight of that.”

We’ve conducted several “pulse check” surveys since [the initial survey], and we know that consumers are still regularly factoring “green” into their shopping behavior. You can be green in a way that won’t affect your style and will still fit into your tightened budgets. Companies that can make that point credibly are going to do very well from this.

What are you saying to companies now that’s different from what you might have been saying a year ago?

We’re saying essentially the same things, but we nuance it differently. There is a strong business case for green. It’s not only about consumer differentiation; it can also save you a lot of money — not two or three years from now, but now. Green is about trying to use our resources more efficiently, stretch them as far as we possibly can and avoid waste. When I talk to companies now, I really emphasize the fact that green need not cost the company or the consumer more. When I said that a year ago, a lot of companies might not have heard me. Now they do.

What other sorts of advantages emerge from adopting a greener product and service strategy?

Willingness to Pay a Green Premium Depends on a Product’s Category and Perceived Benefits

Consumers’ willingness to pay more depends on a product’s category and perceived benefits. For example, willingness is fairly high in the plug-in products category, where the money-saving benefit is also a powerful motivator. But in the disposable products category, consumers are accustomed to green alternatives and have come to expect green attributes as a given. Source: BCG.

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Several companies cite statistics that their employees are prouder to work with them because of major environmental initiatives and commitments — it’s a real HR advantage. It’s more motivating to say “we need to save cost, not only for the good of the company but also for the good of future generations.” A green message galvanizes a lot more internal energy and brings a lot more enthusiasm, bottom up, than you’d get with ordinary cost-saving messages. And employee suggestion programs around green can pull in new ideas that the company would never have come up with otherwise.

You make much in the report about the need for educating consumers about green product choices. How do you imagine that education process will unfold?

Many consumers who would be interested in green products don’t buy them — though surprisingly, price is not one of the obstacles. They either are not aware of the choices they have for purchasing green products, or they are not aware of the benefits of those products. Retailers and manufacturers need to work together on communication in both those areas.

CEOs are wrestling with the question of how much to communicate. They’re afraid of being accused of “greenwashing.” They want to get more credit for what they’re doing, but they’re afraid to talk about it in the media because they’re too worried about backlash.

Standard-setting is a big issue. There are many standards around “green” out there now, and for the most part they don’t mean much. Consumers have told us they want information and guidance, and they’re looking for independent third-party standards to overcome the trust issues. Companies that move early to affect the way those standards are formed could have a huge advantage.

What advice would you have for CEOs so they could get started and make some moves on their own?

It depends on where they are starting from. For companies at the average level of competence around green — maybe they’ve got some stuff going on, an initiative here or there, but it’s not tightly organized — the first thing they need to get a grip on is where they are vis-à-vis their competition and customers.

We’ve found that many companies don’t know what’s happening inside their own companies. Things often begin not at the direction of higher-ups but in bottom-up ways, driven by employees’ good intentions. They start happening over in operations and procurement and logistics, on the marketing side in product development, but there’s nobody standing over it all and figuring out how it adds up to a consistent strategy that will make sense to the consumer.

Companies really need to see how all of these things come together, which issues are worth prioritizing and putting money against and which ones are going to be most important. They need to know where their weaknesses are. And then, after the senior leaders are engaged, talking about their aspirations and getting clear on where they want to go on green, companies can put together a credible pathway to get there.


COMPANY LEADERS DEBATE GREEN

What have company leaders learned so far from their experiences with the green consumer? In a special online roundtable, many of them weighed in. Here are some excerpts from what they said. You can read all the comments in “Capturing the Green Advantage.”

“[Timberland’s boot from recycled material] is a huge success because it’s a cool product, not because it’s a green product. It’s cool and it’s green. … But if it had been a bad product, it wouldn’t have sold.”
— Georges Kern, IWC

“The revelation challenged one of our most valuable assets — our reputation. It also taught us a valuable lesson: It doesn’t pay to be opaque.”
— Jeffrey Hollender, Seventh Generation

“When your company tells its sustainability story, be sincere, be conservative, be fact-based. Don’t hide things. Be completely transparent. Don’t oversell.”
— Francois Ajenstat, Microsoft

“Environmental issues create common ground, connections and networking across divisions … [and] that’s where innovation comes from.”
— Kathrin Winkler, EMC

“We’ve spent more than $20 million on sustainability initiatives that came directly from employee suggestions.”
— William A. Swope, Intel

“You can always come up with a flash-in-the-pan sustainability initiative that takes care of things for a year or two, but initiatives have to be deeply rooted in economics to last.”
— Bob Langert, McDonald’s

“In my opinion, the argument that a company isn’t socially responsible unless it makes environmental investments — even if there is no long-term value for the investment — is just another form of greenwashing.”
— Mitch Jackson, FedEx

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