Marketing Eco-Friendly Products

An important development driving companies to consider and embrace corporate social responsibility (“CSR”) initiatives is the potential for stronger engagement with customers, an increasing number of which are seeking out products and services that address stakeholder needs, such as health focus or environmental responsibility or societal consequences.  CEO surveys indicate that company leaders are acknowledging that cost, convenience and flexibility, the traditional criteria that customers applied when selecting products and services, will soon be joined by believing that the vendor is committed to addressing wider stakeholder needs.  While the connection between customer engagement and CSR is growing in the US, it is even more important in other areas of the world such as Japan, India and the European countries.  Overall, a 2015 survey by Nielson found that 66% of global consumers say they’re willing to pay more for sustainable brands—up 55% from 2014.  The trend will only get stronger in years to come given that Millennials around the world are willing to pay extra for sustainable offerings, or switch brands to one associated with a cause; expect companies to have a real public commitment to good corporate citizenship (i.e., “authentic”, not just “lip service”); and are prepared to take to social media to praise or criticize the CSR efforts of particular companies.  Millennials also enjoy storytelling and opportunities to participation, which means that companies need to do a good job of spreading the work about their sustainability activities and create ways in which customers can actively engage in the causes that the company is supporting.
This article is adapted from material in Stakeholder Engagement: A Guide for Sustainable Entrepreneurs, which is prepared and distributed by the Sustainable Entrepreneurship Project and can be downloaded here.
Specific guidance for companies on engaging with customers can be found in the results of a 2015 global survey by The Nielson Company that identified the following top sustainability drivers among consumers willing to pay more for sustainable products:

• Products from a brand that the consumer trusts
• Products known for their health/wellness benefits
• Products from fresh, natural, organic ingredients
• Products from a brand known as being environmentally friendly
• Products from a brand known for its social value
• Products with environmentally friendly packaging
• Products from a brand with a commitment to the community
• Customer saw a TV ad about the social/environmental good of the brand

In early 2017, Unilever released the results of a study that found that a third of consumers were actually choosing to buy from brands they believed were doing social or environmental good, and a growing number of companies are publicly committing to sustainable sourcing guidelines to improve environmental and human rights management within their supply chains.  However, all of this comes with important caveats and additional challenges and responsibilities for companies.  For example, studies by McKinsey & Company found that customers will pay a most premium for sustainability, but that their enthusiasm generally wanes if the premium gets much above 5% of the “normal” price.  In addition, “green” products must meet the same performance standards as a “non-green” alternative.  Research conducted by Gopaldas suggests that companies also need to understand the emotions that drive consumers to engage in make responsible choices when selecting the products they buy, which she classified as “contempt”, “concern” and “joy/celebration”.  Specifically, Gopaldas found that consumers purchase green products out of contempt toward companies and governments that they consider responsible for environmental pollution and for the exploitation of labor; out of concern for the victims of consumerism, such as workers, animals and ecosystems; and out of a sense of joy and celebration for making responsible choices and being part of collective action to make a positive impact for sustainability.  In other words, consumers want to fulfill certain emotional needs when engaging and doing business with companies offering sustainable products and services.
In order to be successful in reaching and converting customers who will pay more for environmentally friendly products, companies need to make some important changes in the marketing and overall customer engagement strategies.  Here are some tips on how to get started, based on recommendations from several experts on marketing eco-friendly products and businesses:

• Use packaging that highlights social welfare and warm relations as virtues of green consumption.  Green consumers want to feel connected to the brands they purchase from and are emotionally drawn to feelings of contributing to the solution of a particular environmental or social problem.
• Tell consumers why they should buy green products, which can be done through information cards, window displays and videos that educate consumer about the environmental and social effects of their purchasing decisions.  Companies should also educate customers about how products are created including information on the company’s natural ingredients, earth-friendly manufacturing processes and policies regarding purchasing of inputs from developing countries and overseeing the environmental and social responsibility of suppliers.
• Manage reputation by complying with environmental and social regulations and not misrepresenting products as being green.  Trust is essential for successfully marketing green products and one mistake, such as a public announcement of problems in the supply chain, can undo all the work done by the company and permanently tarnish the company’s brand.  Surveys show that consumers quickly develop contempt for companies that have been found to engage in activities that harm the environment or demonstrate disrespect for human or animal rights.
• Persuade consumers that each person can make a difference.  Ad campaigns showing people improving the environment are more likely to convince consumers to buy green products, and surveys indicate that consumers enjoy feeling that their purchases are helping to address an environmental or social issue and that they are collaborating with others of the same mind.
• Provide regular feedback to consumers to show they are making a difference.  This reinforces behavior from green consumers and motivates others to consider the environment when buying.  Companies should post information on their websites and ask customers to provide e-mail or other contact information so that the company can send them personalized updates; however, when implementing this strategy the company needs to focus on informing customers as opposed to simply bombarding them with sales pitches.
• Rather than touting products as “eco-friendly”, companies should identify a specific “selling point” that should be a central focus of all of their marketing messages and, of course, be based on practices during the commercialization process.  For example, companies might use phrases such as “low-energy solution”, “non-toxic ingredients”, “low waste (or emissions)” or “recycled materials”.  Educational tools prepared for the products should provide consumers with the information necessary to verify these claims.  A strong and verifiable selling point lets customers know exactly what the company stands for.
• Companies should make use of a variety of logos and insignias for their marketing and company branding that represent being “green”.  Logos and insignias used with the permission of trusted independent bodies (e.g., Energy Star Rating logo) provide credibility and should be included on the company’s website, advertising, marketing materials, signage, business cards, packaging and vehicle graphics.
• Make sure that everything about your company, not just the features of the particular product or service, demonstrates a deep commitment to environmental and social responsibility.  For example, print marketing materials, business cards and product instructions on recycled paper; promote local vendors and encourage customers to shop for the company’s products in their own neighborhoods so that purchasing the products also helps the business community in which the customer lives; deliver products using fuel-efficient vehicles and establish campaigns that provide for a portion of the premium charged for green products to be donated to assist a local environmental cause.

Companies should look beyond considering customers as sources of revenue to interactively engaging with them as partners in improving the company’s products and finding new ways to improve the company’s green profile and increase the impact of its efforts.  Companies should seek out customer’s opinions and ideas on new products, set up meetings with customers in their own neighborhoods to try new products and hear what they have to say about the brand and, most importantly, continuously tell customers how much they appreciate their business.  Another approach for attracting interest and support among customers is taking on a special social mission or cause, such as what Ben & Jerry’s Ice Cream did when it launched its initiative relating to Campaign Finance Reform; however, this type of strategy can be quite risky and alienate customers who enjoy the green aspects of the products but don’t necessarily agree with the specific cause or want the businesses they work with to get too partisan.  Moreover, taking on a broader social cause is time-consuming and requires collection and analysis of extensive amounts of data and resources to become and remain an effective advocate of the cause.
Sources for the recommendations above included L. Rakowski, “Attract Customers by Showing They Make a Difference”, Network for Business Sustainability (September 26, 2017) and D. Seltzer, Green Marketing Ideas to Promote Eco-Friendly Businesses (Small Business Marketing Tools).
This article is adapted from material in Stakeholder Engagement: A Guide for Sustainable Entrepreneurs, which is prepared and distributed by the Sustainable Entrepreneurship Project and can be downloaded here.
Alan Gutterman is the Founding Director of the Sustainable Entrepreneurship Project, which engages in and promotes research, education and training activities relating to entrepreneurial ventures launched with the aspiration to create sustainable enterprises that achieve significant growth in scale and value creation through the development of innovative products or services which form the basis for a successful international business.  Visit the Project’s Library of Resources for Sustainable Entrepreneurs to download handbooks, guides, articles and other materials relating to sustainable entrepreneurship and keep up with the Project’s activities by following Alan on LinkedIn, Twitter and Facebook.