Customer collaboration is key to sustainability success - photo

Customer collaboration is key to sustainability success.

Jamie Myers, Radius Insights, Radius Global Market Research 2021/10/jamie-myers-bio.jpg

by Jamie Myers

Executive Director

The future is nearly impossible to predict. The exception to this is brands who recognize that sustainable products are the path to profitability and success for years to come.

It’s estimated that shoppers in the U.S. alone spent $150 billion on sustainable products by the end of 2021, or 25 percent of all goods sold.1 New York University’s Center for Sustainable Business analyzed data from 36 product categories, representing about 40% of total CPG sales, and found that:

  • Sustainability-focused products delivered 54.7% of CPG market growth between 2015 and 2019 despite representing only 16.1% share of the category
  • Sustainability-focused brands enjoy a significant price premium of 39.5% vs. their traditional brands
  • Sustainability-focused products continue to grow despite the COVID-19 pandemic.2

 

Sustainable consumer products - photo

It’s estimated that shoppers in the U.S. alone spent $150 billion on sustainable products by the end of 2021, or 25 percent of all goods sold.”

 

A global sustainability study in fall of 20213 revealed that approximately one-third of the population is willing to pay more for sustainable products or services across all categories. Those expressing a willingness to pay more would accept a 25 percent premium, on average. This share is even higher in the US where they are willing to pay, on average, a 37 percent premium.

As demand grows for sustainable products, all categories could soon become crowded with new eco-friendly products and messaging. So how do brands ensure they are developing clear and compelling sustainability benefits that customers will pay a premium for? Determining how to address sustainability in your product offerings, customer experience, and marketing strategy can be complex. But it all starts from the same place: Collaborating with customers in the innovation and development process. It’s the only way to ensure you are meeting expectations and creating lasting value for your brand.

Brand teams face many difficult questions when they are developing a sustainability strategy for their portfolios. Which of the products need new packaging design? Which ones need an ingredient change? How much do customers care about your sourcing strategy? What is the optimal price for a sustainable product or service? To guide brands on their sustainability journey, we start by assessing strategic priorities using our Brand Growth Navigator.  This framework helps determine which issues require customer input and collaboration for further product and service innovation.

 

Alternative energy project - photo

Collaborating with customers in the innovation and development process is the only way to ensure you are meeting expectations and creating lasting value for your brand.”

 

For a utility client with a portfolio of sustainable solutions, one of their strategic challenges was to understand the decision process among hospital decision-makers for how they address their energy needs. An assessment of the energy buying decision was developed using an integrated qualitative and quantitative solution.  It uncovered key areas where our client could gain a unique marketplace advantage and increase sales. One of the breakthrough insights was the need to position their sales team as “consultants” in coaching hospitals on how to best implement sustainability solutions and build consensus internally among hospital leadership teams to guide their related buying decisions.

B2C brands may need to prioritize product optimization or targeting strategy to win the battle at shelf or online. The main focus for B2B brands might be communications or customer experience, as in the case of the energy client mentioned above. Regardless of where you compete and who you target, navigating success for your brand in this fast-growing sustainability landscape requires collaborating with your customers as you develop new innovations and offers.

Want to discuss including customers in your sustainability brand strategy?

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US Chamber of Commerce Foundation

NYU Stern Center for Sustainable Business

BusinessWire