The VALUE PROPOSITION
Ethical and moral values can resonate with voters. Thankfully, a presidential election only comes around once every four years, so the arduous task of sizing up a politician's values is an infrequent occurrence.
But while elections end, the notion of life values never does. Values permeate every aspect of life, from how we treat other people to the products we buy. And as the latter is becoming more and more prevalent in the consumer packaged goods (CPG) world, retailers are responding to consumers who make value-driven purchases.
Conscience-driven consumers are on the rise, and so is the number of product aspects of concern. Factors such as whether or not a product is organic or GMO-free are at the top of consumers' and marketers' minds these days, but a growing number of consumers are concerned with more.
"Issues related to the values around how a product is raised, grown, manufactured and sold are very important to a majority of consumers," says Scot Case, vice president of sustainability for the Natural Marketing Institute (NMI), Harleysville, Pa.
According to NMI's Lifestyles of Health and Sustainability 2015 Consumer databases, 78 percent of those surveyed said that minimal packaging plays a "very" or "somewhat" important part of their food and beverage purchasing decisions. Environmentally friendly packaging is important to 76 percent of survey respondents, and 75 percent value products from farms that practice sustainable agriculture.
Case describes a pathway of thinking that guides many values-driven consumers.
Natural Marketing Institute
"Concern often follows a trajectory based on categories that are 'in me, on me, or around me,'" he explains. "That is, consumers are impacted most by those products that are consumed, such as food and beverages, followed by those that are on their physical being, such as personal care products or textiles, and then those that are used in their environment, like light bulbs, appliances or home furnishings." Case adds that according to the NMI databases, about 70 percent of consumers are interested in buying more environmentally friendly household products, and about half seek out those products when they shop. Of that half, two-thirds find options that result in a purchase.
"That said," Case continues, "almost half of the general population still indicates they would buy more environmentally friendly products or services if there was more selection available at the stores where they shop." And that, he adds, clearly indicates an unmet need.
Jenna Larson, senior manager of communications for Fair Trade USA, said a recent study conducted by Cone Communications found that more than 80 percent of consumers care as much about fair compensation and safe working conditions as they do about environmental issues.
Many consumers are putting their values into action via their wallets, and the result is influencing retailers' strategies and product offerings. Midwest supermarket chain Hy-Vee, for example, is marketing sustainable seafood to its customers. The retailer landed the No. 3 spot on Greenpeace's annual list of grocers with responsible seafood practices, behind Whole Foods Market and Wegmans.
While values-based products appeal to certain consumers, retailers have to be careful which values they choose. Products with certifications like sustainable, fair trade or recyclable often come at a premium. How can a retailer really know if it's worth it?
"The bar continues to be set higher as consumers are desiring actual proof of a company's green initiatives," agrees NMI's Case. "Not only in how their products and how they're made, but in what they are doing to benefit the planet and the people of the planet, above and beyond the bottom line." But as the bar rises, the number of certifications also seems to increase, causing label fatigue for many consumers. And that isn't necessarily the retailer's responsibility, he says.
"This highlights the need for continual education and public relations on the part of the certifier, and also on the part of the product carrying the certification," Case notes.
According to a 2013 Natural Marketing Institute study, about 55 percent of the U.S. population is aware of the Fair Trade Certified label, and about a third of consumers are more likely to buy a product if it is Fair Trade Certified. One of the Fair Trade label's unique attributes that appeals to many consumers is its guaranteed economic benefit of a fixed premium for farmers, and a requirement for farmer empowerment and democratic participation.
"We also know that while Fair Trade Certified products are largely priced competitively, there is a growing segment of consumers, particularly young people age 18-29, who are willing to pay substantially more for sustainably sourced products," Larson says.
Fair Trade USA
TAKING THE HIGH ROAD
So which consumers want these high-road products? While no single demographic dominates, there are some similarities among value-driven consumers. They tend to "over-index to the general population as being more affluent or more highly educated," Case explains. Fair Trade's Larson adds that historically, the Fair Trade consumer tends to have a family, and has a mean age of about 43.
But, both Case and Larson say, awareness of certified products has become increasingly mainstream.
"Each year, more and more people across a wide range of demographics are embracing sustainable purchasing habits," Larson notes.
While value-driven consumers vary, one particular demographic is certainly helping to fuel the campaign: The ever-important millennial.
According to a 2014 study of 1,300 millennials by Forbes and Elite Daily, 75 percent of those surveyed expect brands to give back to society in some way.
"They are sick and tired of corporate greed, and are still recovering in the aftermath of the financial crisis. Millennials love brands that support their local communities and would rather purchase from them than competitors," states a Forbes article from last January.
A retailer is more than just its product lines. A retailer could have the world's best floor plan, with an exceptional array of values-certified products, but if its actions outside of the aisle don't align with what's on the shelf, its pedigree comes into question. As important as environmentally friendly packaging or fair trade certification are to Brad and Suzy, it is just as important for them to know that the retailer selling those products is being a good corporate citizen.
According to NMI's Case, a majority of consumers indicate they care about socially responsible business across multiple areas, including societal efforts such as promoting racial, ethnic, and cultural inclusiveness; community efforts; and environmental efforts. And while retailers have a variety of media and sources–websites, social media, product packaging, news stories on radio/TV/print–with which to deliver news about these efforts to consumers, many simply aren't taking advantage of them.
"Many brands are not using these options to their best advantage," Case says. "The important thing for companies to remember is that it is necessary to utilize all the options available to them. In today's world, you cannot rely on just one type of information to reach your consumers."
Fair Trade's Larson encourages retailers to promote their practices at point of purchase. In the case of certification labels, for example, retailers can use signage that helps explain the certification and why it matters.
"We've seen very positive results with this in store," Larson says, adding that more than 60 percent of consumers want companies to publicize their social responsibility initiatives more aggressively, according to a 2013 study from Technomic.
"The important takeaway is that this messaging be consistent across and throughout all media used," Case says. "Product, stores, programs, merchandising, corporate initiatives. Companies must be transparent about how they are progressing and changing, and they must engage consumers to help them become greener as well."
Being a good corporate citizen, Case continues, is certainly worthwhile for a retailer, and does provide a return on investment. "Knowing a company is mindful of its impact on the environment and society makes about half of consumers more likely to buy their products repeatedly," he says.
Every day is election day for retailers, and with transparency, attentiveness to their constituents' wants, and good corporate practices, retailers will get the value-driven consumer's vote every time.