It may be the most difficult sell ever for marketers. As the world slides into recession and consumers cut their spending, the British Government wants brands to ensure that they don’t compromise on long-term business sustainability (see interview with Lord Hunt, below). The message is that environmental and social responsibility is not a luxury, it’s a necessity.
But can brands really convince people to care about such issues more than the final tally on their supermarket receipt? Just 28% of UK respondents are prepared to pay a premium for green products and services, according to the recent Minding the Eco Gap report from Gyro International.
Retailers are already seeing the consequences of this shift in priorities on their bottom lines. An insider at Tesco reveals to Marketing Week that people are being turned off by the perceived premium nature of sustainable products: “With local produce, there’s a shift as people are buying less artisan and niche products. Customers are also buying less organic and Fairtrade items as people want to buy at the right price. We have adapted our strategy to reflect that.”
If local produce is sensibly priced, then shoppers are still willing to consider it, the source adds, but they will trade “down” to the Tesco Finest range if this appears to be the next best alternative.
Richard Glasson, chief executive of Gyro International, adds that companies can’t get away with using sustainable production credentials as a means to hike up prices. He says: “Certain brands make a virtue of green credentials and there’s a price to be paid for that. There’s a cynicism about this price tag when times are tough.”
While people may be unwilling to splash the cash on expensive options, companies cannot afford to skimp on their sustainable programmes behind the scenes. BT may be preparing to pull out of its £250m plan to build wind farms, but Marks & Spencer signed a multimillion pound agreement last week with npower to fulfil its commitment to be carbon neutral by 2012.
Andrew Smith, head of public affairs at PepsiCo, argues that it’s not a choice between offering a sustainable product or an affordable one – both values are important.
He says: “You’ve got to make sure it’s not either/or. You have to deliver value in whatever form that takes, whether that’s lower prices or value packs, while delivering your underlying sustainability programme.”
PepsiCo boasts that its mass-market crisp brand Walkers is the first product to have retained its carbon reduction label, issued by The Carbon Trust. The company claims to have saved £400,000 by streamlining the production process so it hasn’t needed to pass on any costs to the customer.
Saving both money and the planet is the ideal message that marketers can pass on to customers, says Leonie Smith, director of agency Wanda. She stresses that brands need to do a better job of linking sustainability with price savings.
Smith cites supermarket Asda’s ad campaigns, which push the message that responsible actions lead to price cuts, as going in the right direction.
“It’s the first time that someone has done above-the-line advertising about how environmental claims relate to price,” she says. “It’s very important to make the distinction between the two, like Asda has done.”
M&S seems to be following a similar strategy, with a marketing drive announced last week called the “Plan A Way To Save”. This aims to provide consumers with tips on how to cut costs by being more environmentally efficient. It claims that consumers could cut £1,000 a year from their spending by living more sustainably.
This isn’t just a marketing issue. From an overall business point of view, saving money while addressing the issue of sustainability should be an appealing prospect for companies worried about their own revenues and shareholders.
Diana Verde Nieto, chief executive at Clownfish, a sustainability and communications consultancy, says that the recession is an opportunity for businesses to move from a high carbon to a low carbon economy, but warns: “Consumers should not pay a premium for this.”
Verde Nieto adds that even marketers who choose to focus largely on price should keep working on sustainable issues in the background to be used more visibly when the market picks up.
Sarah Hamburger, director at insight agency Spring Research, agrees that while price may be the most important factor for now, businesses must keep a multilayered offer available: “At the moment, people need to trust brands more than ever. The conscience shopper wants at least two functions from their purchases and won’t put up with brands that don’t offer them that.”
It’s clear that investing in green is not going to appeal if it puts customers’ bank balances in the red. But those marketers that can sell the positive values of being good to the planet and society without the alienating premium sheen and price tag will achieve what the British Government desires – sustainability linked with savings in consumer minds.
Lord Hunt tells Marketing Week why being sustainable is not a cost issue
The Government is taking a tough line on sustainability, demanding that retailers and brands take action now before it’s too late.
Lord Hunt, deputy leader of the House of Lords and minister for sustainable development and energy innovations, tells Marketing Week that a recession is no excuse to shy away from tackling environmental and social issues.
He argues: “Is climate change an optional extra? No, because climate change is happening and we have to do everything to try and prevent its worst effects.”
Despite the British high street being on the front line of the economic crisis as customers cut their spending, Hunt claims that retailers cannot treat sustainability as a luxury.
He adds that dodgy “greenwashing” claims from brands must be stamped out if companies are to gain the public’s trust. “Wishy-washy things like ‘this product is eco-proved’, which doesn’t mean anything to anyone; this is what we’ve got to get a grip on,” he asserts.
Hunt believes that misleading eco-marketing messages are turning customers off sustainability altogether: “The evidence is that customers are confused and that’s ridiculous.”
The Government is tackling this problem with a review of “green labelling” among brands. Hunt says that retailers must co-operate with his plans to help build trust with consumers at a time when they are watching well-known high street names fall into the hands of administrators.
“Collectively, we’ve got to sort this out. People want to have confidence in the retail sector,” he says. “One of the ways of doing so is by the integrity of what’s on the label. Then customers can clearly see what they are buying.”
Hunt points to an initiative called The Clothing Roadmap – under wraps until its official launch at London Fashion Week, which starts on Friday (February 20) – as another example of how businesses and the Government can collaborate successfully. The initiative aims to promote good practice in the clothing industry and set out future action for both corporate and governmental bodies.
But while this may be a popular move in establishment circles, the man on the street is likely to be thinking more about saving cash in the short term, rather than long-term goals that will benefit society.
Hunt is unwilling to back down on the importance of talking about sustainability, even when times are tough. “I don’t think that we should pull back from talking about green issues,” he says.
But he does admit that it is up to the Government to make it clear that caring about the future can also result in economic benefits: “I do think we could do much more to emphasise that actually being sustainable can also, in many cases, have financial advantages.”
Hunt sums up his future challenge with a catchphrase that he is keen to make the mantra of UK businesses: “The message I would like to get across, more than anything else, is that a low carbon economy doesn’t mean a low growth economy.”