Consumers willing to pay more for Purposeful Brands
Responsible consumption (RC) brands have now overtaken ‘conventional’ brands in terms of growth rate, according to IRI and Boston Consulting Group’s 2015 European study. The research finds that RC products experienced 8.5% growth in 2013/14, compared to a growth rate of 4.5% for conventional products. Furthermore, it finds RC products are able to command a higher price point, on average 58% (and as much as 113%) more.
Put simply, customers are making the transition from intention to action. For years they’ve been saying they want to shop more responsibly and are prepared to pay more to do so, but now it seems they are putting their money where their mouth is.
The opportunity for brands here is huge. Globescan’s 2016 public radar shows 40% of ‘aspirational consumers’ – the world’s emerging middle class – want to choose brands that “have a clear purpose and act in the best interests of society”. Yet interestingly, 50% cannot name a single brand that reflects a deeper sense of purpose. There is a wide-open space for truly purposeful brands to step into and own.
Those that have already occupied this space, like Toms shoes, Ella’s Kitchen, Tesla and household cleaning brand Method are evidence of this. They have created fantastic products with strong advocates by standing for something meaningful and enrolling customers in their mission.
Risk of becoming irrelevant
This means for 40% of the world’s consumers, if your brand doesn’t have a strong sense of authentic purpose, you run the risk of quickly becoming irrelevant.
Does this mean your brand should be trying to ‘save the world’? This is the question that one of our speakers, James Perry director of ethically-sourced ready-meals company Cook, will be asking this Wednesday (21 September) at the The Marketing Academy’s Purpose Inspire Lecture – it is deliberately provocative and designed to create debate.
On one side you will have the staunch advocates of economist Milton Friedman claiming that brands should do nothing but create wealth for shareholders. On the other you have progressive social capitalists who believe in the power of business to address challenges like climate change or social inequality.
Given the aforementioned Globescan research these two positions may not be that far apart any more. When the market demands brands act in a more purposeful way, or become irrelevant, then the best way to satisfy the growth needs of shareholders is for businesses to become more responsible, pro-active social agents.
In short, brands that behave more purposefully won’t just be ‘saving the world’, but by being more purposeful will end up saving themselves.
Avoid ‘purpose fatigue’
However, this isn’t easy to do. There are so many businesses inauthentically claiming purpose that we’re already suffering from ‘purpose-wash’ and even ‘purpose fatigue’.
“If you are committed to trying to impact the world positively, then you need to be measuring how successful you are in doing this.”
Yes consumers want brands to behave in a more responsible way, but equally they want honesty, transparency and authenticity. Businesses that are found to be greedy, claiming purpose to appear as if they are doing good, will quickly be found out and criticised. Or worse still, ignored.
This is why Toms shoes is one of the most popular brands for younger consumers. It oozes purpose. The entire business model is set up with wider societal interests at heart and clear, immutable values. It’s not just what it does, it’s the very fabric of what it is.
So how does your brand become purposeful? We know many marketing practitioners are struggling to shift to a new way of being, or enrolling senior leaders or the board.
Finding purpose means getting under the skin of the beliefs of the business, the ‘why’ that lies at the heart of your business, that goes beyond a product benefit or some empty emotional claim. It has to be linked to the history of the business, but also be a focal point for the future. It has to be authentic, ownable and most of all inspiring to customers and employees alike.
Finally, brands that claim to be purposeful need to think about what they measure, especially those that are shifting to a purposeful approach. If you are committed to trying to impact the world positively, then you need to be measuring how successful you are in doing this. This needs to be independently verified and transparently reported using frameworks like B Corp. You can usually spot ‘purpose-wash’ in a business when you see an empty, grandstanding mission with no metrics or measures attached.
We think that brands that truly understand their role in the world and seek to make it a positive one are the ones that are winning.
It’s not about business for good – it’s just good business.
This article was first published by Marketing Week: https://www.marketingweek.com/2016/09/19/consumers-are-willing-to-pay-58-more-for-purposeful-brands/