CCES News For You

July 4, 2010

Happy and Safe 4th everyone!

I have written a lot about the pure business reason for having a robust “green” program at your company, including putting your products in an environmentally positive light. Does that really do any good in terms of actual sales? Are Americans willing to pay more to “help the planet?”

Surveys and research in recent years show mixed results. But an interesting study recently published in the Journal of Personality and Social Psychology by V. Griskevicius, et al., U. of Minnesota examined this phenomenon. Why do people buy environmentally friendly products when they are more expensive than conventional products? According to these authors, status is a greater pull than knowing one has done good for the Earth. Customers buy less-luxurious and more-costly “green” products primarily when they know other people can notice.

The researchers conducted experiments involving more than 400 participants to explore the roles that price, quality, and social reputation play in determining why customers choose non-green versus environmentally friendly products. In one experiment, the authors found that people who were asked to imagine they were shopping alone online at home and were told to think about their reputation among their peers were more likely to choose luxurious, non-green products. But when those same individuals were asked what they would buy when shopping in public at stores, their preference for green products increased significantly; the authors believe that this was because others would witness them making the purchase. This was especially true when green products cost more. The researchers found that despite a higher price tag people wanted to show off they were willing to be seen with a product noted for being good for the environment. When deciding between two equally priced vehicles, one a car loaded with features and the other an environmentally friendly car, 55% chose the green car when reminded of its reputation versus only 37% in the control group, who were told to disregard reputation.

For companies looking to corner the market on green items, the study argues that the key is to link green products to status, especially for pricier goods. Companies should also, whenever possible, ensure that their products are sold and used in public spaces. Customers are looking to enhance their reputation when they buy green products.