Marketing Sustainability: Why Being Eco-Conscious May Not Lead to Sales Success
January 12, 2021
When you go shopping, how much does sustainability play into the choices you make? As people grow more aware of environmental, social and economic issues facing various parts of the world, eco-friendly products are increasingly being offered to consumers. But that doesn’t necessarily mean that these companies or products do well in sales or are ultimately successful, according to the paper, “Does Sustainability Sell?: The Impact of Sustainability Claims on the Success of National Brands’ New Product Introductions,” by Jenny van Doorn, professor in services marketing, Hans Risselada, assistant professor, and Peter C. Verhoef, dean of the Faculty of Economics and Business, all at the University of Groningen in the Netherlands.
Marketing Science Institute Executive Director Barbara Kahn, who is also a marketing professor at The Wharton School of the University of Pennsylvania, recently spoke with van Doorn and Risselada about their findings.
An edited transcript of the conversation follows.
Barbara Kahn: What got you interested in this subject?
Hans Risselada: First of all, a lot of national brands are introducing new products with all kinds of claims, and some of them have what we label “sustainability claims.” And we know from other research that new products have a hard time with becoming successful. I was wondering whether these sustainability claims could maybe make some of these innovations more successful in the stores. At the same time, there’s also research showing that sustainable products actually have a hard time for different reasons. I thought there was a potential contradiction in the literature, and therefore I thought it was interesting to study that in more depth.
Kahn: Jenny — what about you? What got you interested, and what kinds of products did you look at in this research?
van Doorn: We look at organic and fair-trade products. In previous papers, playing around with some sales data on organic and fair-trade products, what always struck me is that people say that it’s good to buy them and that we should all buy them. But if you look at the actual market shares, it’s really low, and it’s really only appealing to a small segment. So that made us wonder what happens with newly introduced products. Is it maybe a different way? And do these products fare better than the already existing products on the market?
Kahn: That really is surprising because of all the media about consumer interest in organic and fair-trade products. And you said you’ve looked at other surveys on this. Has it changed over time, because it seems to me that sustainability is getting more and more important.
van Doorn: Not really, actually. We haven’t seen it changing. We also collected some data very recently, like two years ago or something — pre-COVID, but still rather recently. And it’s still there. So, you see an increase, and people are always applauding that increase, but it’s on a very, very low level. I don’t really see it spiking up really significantly. In Europe, you have some countries where sustainability is more mainstream, but that’s more when you go to the Northern countries like Denmark and Scandinavia, and also Germany. But the mainstream is still non-organic, non-fair trade, although everybody is talking about it.
Kahn: It’s really complicated. I thought it was particularly relevant in Europe, even more so than in the United States. That’s particularly surprising.
van Doorn: I don’t think market shares in the United States are so much lower than in Europe.
Kahn: Going back to what you were saying about new products — what you were saying is you saw a contradiction. But the idea would be that sustainability could differentiate that item from other, more conventional products and increase sales. But, in fact, your research didn’t find that to be the case. Can you explain that a little bit more?
Risselada: It could indeed be sort of a differentiating factor. You have this claim on a product, which people can easily observe in the store. As we just discussed, a lot of people say that they value sustainability. You could argue that this differentiating element would help support these new products in being successful. On the other hand, we don’t find it in the data. There are a lot of papers on the quality perceptions that consumers have of sustainable products. They might fear that a lot of the efforts that companies put into developing these new products go into the sustainability element, and not necessarily into quality per se. And that’s actually what we find. We find that the sales numbers for these new product introductions are actually lower for products that make the sustainability claim than products without [such claims].
Kahn: You mention in your paper that you see it like a zero sum. People somehow think that if you put all this work into sustainability, it’s going to affect the quality effort.
Kahn: Did you actually test that theory, or is that just something you’re thinking might be the way people think?
Risselada: With the data that we currently have, we could not specifically test that theory, so we do not have data on consumers’ perceptions on the quality per se. We have some other recent research that actually shows that this still is the case. So, the perceptions of consumers seem to be that the quality of these sustainable products is lower, and sustainability basically comes at the cost of quality. That’s at least the perception of the consumer. Taken together with the things that we find based on our extensive data, this completes the picture.
Kahn: Though you might think, if that’s the case — that people see it as somewhat of a zero-sum kind of proposition — that marketers could do something in their advertising or in their branding to counter that perception. Did you give any thought to that idea? Like what would be the remedy for that problem?
van Doorn: There is a silver lining here, and I’m happy that I am the person who can put the silver lining forward. If you, as a company, have a specific CSR strategy, and you have a reputation for being a CSR company — think of Ben & Jerry’s, but also in Europe think of Unilever — that puts down a very explicit pledge to CSR and sustainability, then it’s not that negative. It can even become positive if you introduce sustainable products.
I think what the consumers don’t like is if you just put a product out [without that stated commitment]…. It needs to be part of an integrated company strategy, and then it doesn’t backfire negatively on you.
Kahn: That makes total sense to me. When I teach things like this in my course, one of the things that I talk about, which I think is consistent with what you’re saying, is that it has to do with authenticity.
van Doorn: It should be authentic. It should be an authentic company strategy…. It should be part of the company DNA, and then you can be successful also with new sustainable products.
Kahn: And you have data that shows that it’s positive under those circumstances?
van Doorn: If you have a high reputation with CSR, it benefits the sales of new sustainable products. And I think that’s good news for the companies that have it in their DNA.
Kahn: That begs the question: How deep in your DNA does it have to be? You could imagine situations where it might be hard to prove that commitment to consumers, even if the brand is being authentic about it.
Risselada: It also relates back to the previous point that we discussed, on the zero-sum perception that consumers have. If you have a company that is authentic but is also consistently producing … in a sustainable way, then consumers don’t need to fear that there was a one-time investment required that would go from quality to sustainability. If the whole production chain has been sustainable already for a while and has been shown to be sustainable already for a while, it could very well be that consumers no longer perceive this to be a one-time move of money and effort from quality to sustainability. That could also be part of the explanation.
Kahn: What about price? How does price interact in all of this?
van Doorn: We looked at price and price promotions. The price promotions don’t really help. They are more or less counterproductive because they are less strong, where the sustainable products are compared to their non-sustainable counterparts.
Kahn: When you say a “price promotion,” that would be like a discount?
van Doorn: A discount, yes. A discount has a less strong effect for sustainable products, and that’s probably due to sustainability being more of an ongoing commitment that you have or that you don’t have. What works, however, to make these products more attractive is lowering the regular price, the daily price.
Kahn: So, if the price is lower, then that’s better? You’re not seeing a high price signaling effect or anything like that?
van Doorn: We were thinking that would be the case, but we didn’t find it.
Kahn: Did you look at how innovative a product is, how that would interact with these things? If it’s a really innovative new product, is there a different effect here?
Risselada: Yes, so that is indeed the case. We actually found that innovativeness does support the new product introductions…. We had expert ratings in our data that show clearly that innovation indeed also supports the sales of sustainable products.
Kahn: And Jenny, we talked in the beginning about Europe versus the U.S. Can you tell us a little bit about the data that you used on all of this — what you were looking at exactly?
van Doorn: These are actually only Dutch data, and basically what we looked at is in many product categories, how are the sales going of the regular product or of new products that are introduced without any sustainability claim, and new products that are introduced with a fair trade or with an organic trade claim. And we supplemented that data with consumer data, where we measure … reputation, among many other things, and also expert ratings on, for instance, innovation.
Kahn: Do you have any reason to believe that these effects wouldn’t generalize to other cultures and other data sets?
van Doorn: No, not really, given that previous research has been done with U.S. data, and we find very similar effects, even if we look at new products, and they looked at established products. We don’t have any reason to believe that it’s going to be very different, to be honest. But of course, that’s also something to look at in future research. What would interest me, actually, is to look into countries where sustainability is a larger part of the market. So again, going back to the more Northern countries — Scandinavia — what would be the effect there?
Kahn: To me, it’s particularly surprising that you’re finding this effect in Europe. Maybe it’s just my stereotype, but I was under the impression that sustainability is a particularly important aspect of marketing in Europe.
van Doorn: Well, it is, but there are also surprisingly many differences between the European countries when you, for instance, look at market shares. The more you go north, the higher the market shares for sustainable products become. As you go more to the south, it’s lower.
Kahn: You’re looking at consumer packaged goods here. How do you think this would generalize to other categories, like apparel? Have you given any thought to different product categories?
Risselada: I would say that these effects are broader than consumer packaged goods, that they would apply to a broader set of products, for sure. You could follow the same reasoning that there are a lot of products where sustainability is used like a claim on a product. It could be on the tag, for example, if you’re talking about clothing or shoes or other products — bags, for example. They use these same claims. And they probably have the same signal. And consumers may have the same worries of a product deeming it needs to be sustainable, but maybe of lower quality.
I think the things that we find here, and the importance of having a consistent or as you called it, Barbara, an “authentic” brand and company, I think these factors are as important for other products as they are for the packaged goods that we studied here.
van Doorn: It would be interesting to also look, for instance, at apparel because their first quality is also different things. I can imagine that if you have sustainable apparel, it’s also about being hip, being fashionable, and that may be difficult to reconcile with sustainability. But given that the theory is more or less solid and also has been shown in different papers for different product categories, it should be generalizable, as well.
Kahn: One of the things that you’re talking about in that world, the notion of “hip” or something like that is almost a demographic kind of thing. So, the other thing to talk about — what I talk about in my class when I talk about this — is also that the sustainability claims are more likely to be effective for certain segments than for others.
For example, when I talk about the Colin Kaepernick campaign for Nike, which is more of a political campaign, one of the reasons we say that campaign works is because their target segment cares about these issues more than other people.
van Doorn: A very stable factor is always biospheric values that we measured. So, people with high biospheric values, it’s almost very obvious, but those are people that are more likely to purchase sustainable [products]. Also, income, education — those are all demographics that play a really big role.
When I started venturing in this world of sustainability, I also realized it’s very much a question of the segment you want to target. For some segments, you can reach them, and there are just segments that are almost impossible to reach with a sustainable positioning because they have competing priorities in life.