ESOMAR WORLD RESEARCH ROUNDTABLE
Green markets, green brands
From the UN Climate Change Report to environmental campaigns in the daily press and commercial TV – ecological sustainability is the focus of public interest today. Companies respond with ‘organic-products’, spin-offs, and special advertisements emphasizing sustainability.
To find out whether this is a temporary trend or a real shift in consumer orientation, ESOMAR organised a round table in Berlin where Dr. Dieter Korczak, Director of GP Forschungsgruppe, asked experts such as Dr. Heiner Geißler and under secretary of state of the Environmental Minister Matthias Machnig: Is sustainability a flash in the pan or does it have real potential for green brands?
Emotions count
“There is a real potential”, says market researcher Sven Arn, Managing Director at H, T, P, Concept, “and this is demonstrated by successful brands in cosmetics, for instance.” Enterprises should recognise the opportunities and gains in sustainable products, not just the risks and costs.
The German Otto Group has been offering an ecological product-range for 20 years now. “But we had to learn how to market them properly first”, admits Dr. Johannes Merck, Director of Environmental and Social Policy. For instance, costumers were irritated by advertisements highlighting child-labour-free products, as they assumed of course that production was politically correct. In addition, irrespective of the context, terms like child-labour have a negative connotation and damage the positive experience of the product or purchase.
In marketing terms, it is vital that green products fulfil their purpose well in addition to making customers feel they are doing the right thing. “Market research has taught us that consumers first purchase for their own benefit, and not for the environment”, says Merck.
Sven Arn confirmed this: “Shopping in whole-food stores is not a political statement anymore. Customers do not ask ‘Am I doing the right thing by buying this?’ instead they focus on ‘Will buying this be good for me?’ And they are ready to pay a bit more for such products. But then, of course, they must really be ecologically produced”.
Investing in sustainability
Transparency and accessibility of products and producer are essential for consumers and investors, underlines Melinda Köszegi, Head of Panda Investment.
“Sustainability ratings are becoming more relevant for German investors. Ethical criteria are increasingly taken into account before money is invested. Enterprises respond to these measures.”
Besides fund management for the WWF, Panda advises companies on how to develop and implement sustainability measures and these can include long-term business strategies, ethical and sustainable personnel planning including labour conditions, and ethical and ecological production. “Most enterprises are increasingly fulfilling sustainability criteria,” Köszegi comments. “Knowing about the sustainability of an enterprise leads people to identify with its values.” This applies to products as well as investments.
Intelligent regulations
Ecological production and sustainability may gain influence a consumer’s decisions, but price remains the key parameter. All panellists agreed on this. “Of course nobody pays four times the price for a refrigerator, just because it needs less energy”, says Dr. Gerhard Timm, CEO of the BUND. He is demanding more government regulation and recommends statutory minimum standards to raise prices for environmentally unfriendly products to ensure they are not cheaper than eco-friendly alternatives.
This would lead to more sustainable products in the longer run and would not be a function of PR or advertising. According to Timm, this would enhance consumer confidence whilst resource efficiency regulated through market rules would also support sustainability.
Matthias Machnig agrees with mandatory rules: “We can’t achieve sustainability through voluntary agreements alone – at least not fast enough. Therefore it is essential, to introduce intelligent regulations.”
Dr. Heiner Geißler goes even further: “If multinational companies avoid national regulations, politicians need to impose global regulations. Otherwise they cannot fulfil their mandate or meet constituents’ and consumers’ requirements.” He emphasises visible action, necessary, because scientists have consistently demanded sustainable action for some time and public debate is affected by doubts and sustainability is often presented as a luxury which is not easily affordable. “But a healthy economy in a healthy environment is not a contradiction in terms,” Geißler says, “it is about a balance between economy and ecology”.
Machnig also sees this as the future challenge: “The expected greatest economic growth since industrialisation demands a third industrial revolution regarding true energy- and resource-efficiency.” Maximizing profits and sustainability must stand equally side by side.
Demand Avant-garde
For Dr. Merck, an ambitious framework and subtle political regulation are preconditions for developing current interest in green brands into a real sustainable movement. Societal activities, from NGO campaigns to targeted advertising and PR will also help to establish what he calls a “Demand Avant-garde” setting trends that involve the majority of consumers and businesses will follow by adapting their long-term direction.
Female consumers play a decisive role in this respect as they show more responsibility and involvement in purchasing. That is why the Otto group for instance responded by tailoring their product placement and advertising strategies towards women. Market researcher Arn also sees women as the most promising target group. “They place more emphasis on usefulness, longevity, and social as well as ethical standards.”
Ultimately for green brands to achieve their goal, they must have a perceptible added value, and meet high standards in both quality and sustainability.
“Although trends are hard to foresee and even harder to control”, according to Sven Arn, if brands can achieve these basic conditions, their success will be assured according to trend predictions.