Theiah insights

Growth > Brand Strength

Evidence shows companies who truly embrace sustainability and social impact benefit from increased brand strength - translating to price premiums of around 20% and more stable revenue flows in crisis (like pandemics!). (1)

But beware - using purpose as a gimmick won’t work. ‘Greenwashing’ or making unsubstantiated claims will significantly damage a brand’s reputation and customer loyalty, leading to lasting sales declines. (2)

Key drivers of increased brand strength include:

Preference and loyalty

  • 1/3 of customers prefer to buy from sustainable brands (3)
  • 73% of consumers are willing to change their buying habits to reduce their impact on the environment (2).
  • For nearly half of consumers, environmentally-friendly is more important than a brand name.(2)

Purchase intent

  • Numerous studies show ‘green’ products and company values significantly positively impact consumers’ evaluation of a company, which translates into higher purchase intent. (4-11)
  • Evidence has shown news coverage regarding environmental and social responsibility was the only type of coverage affecting respondents’ evaluation of a firm and intent to buy. (15)
  • 88% of consumers want brands to help them to live more in a more ethical and environmentally friendly way; but nearly half think companies make it more difficult to live sustainably. (19)

Price and Growth

  • Companies can charge higher price premiums - up to 20% according to some estimates.(1)
  • Revenues from “brands with purpose” could grow 69% faster than other products and services. (17,18).
  • One study found sustainable brands grew at 91% over three year period, compared to 15% average company growth. (17)
  • Consumers perceive a higher level of product performance in products from sustainable companies (12)

Stability in crisis

  • Good behaviour is expected as standard from today’s consumer: including transparency, honesty, and tangible positive global impact from companies(13). Companies meeting this standard show lower share price volatility in downturns. (16)
  • The lucrative emerging middle class has especially high expectations: consumers in emerging economies are more engaged on sustainability and expect companies’ good purpose efforts to benefit them directly. (13)
  • This is especially important NOW: consumers in a post-Recession era are shifting purchasing decisions to brands with integrity, social responsibility, and sustainability at their core. (14)

References:

(1) http://www.emeraldinsight.com/doi/abs/10.1108/17471111011051720

(2)https://www.nielsen.com/au/en/insights/article/2019/finding-success-through-sustainability-aus/

(3) https://www.unilever.com/news/press-releases/2017/report-shows-a-third-of-consumers-prefer-sustainable-brands.html

(4)http://www.flr-journal.org/index.php/mse/article/view/j.mse.1913035X20100402.002

(5) https://onlinelibrary.wiley.com/doi/abs/10.1111/ijcs.12125

(6) https://onlinelibrary.wiley.com/doi/abs/10.1002/hfm.20556

(7) https://www.sciencedirect.com/science/article/abs/pii/S0921800916302282

(8) https://www.emerald.com/insight/content/doi/10.1108/JFMM-07-2014-0057/full/html

(9) https://link.springer.com/article/10.1007/s10551-011-0908-8

(10) https://www.sciencedirect.com/science/article/abs/pii/S0959652616313658

(11) http://link.springer.com/article/10.1007/s10551-011-0908-8

(12) http://www.chernev.com/research/articles/DoingWellByDoingGood_2015.pdf

(13) https://www.accenture.com/us-en/insight-un-global-compact-consumer-study-marketing-mattering

(14 )http://www.thelabyr.com.ar/web/wp-content/themes/thelab/pdfs/Y&R_Publications/SPEND_SHIFT.pd

(15)http://dx.doi.org/10.1057/crr.2009.28

(16) http://scholar.harvard.edu/hiscox/publications/buying-green-field-experimental-tests-consumer-support-environmentalism

(17) https://static1.squarespace.com/static/56d7ac2507eaa050095be14e/t/56f383bd1330ba9e3547c93e/1458799583958/FINAL-TCB-Sustainable-Products-July-20151.pdf

(18) https://www.unilever.com/news/press-releases/2019/unilevers-purpose-led-brands-outperform.html

(19) https://www.forbes.com/sites/solitairetownsend/2018/11/21/consumers-want-you-to-help-them-make-a-difference/?sh=1e8f35436954

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