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Green as a Status Symbol: Why Increased Prices May Increase Sales

Presidio Economics | Friday May 13th, 2011 | 4 Comments

This post is part of a blogging series by economics students at the Presidio Graduate School’s MBA program. You can follow along here.

By: Lindsey Kauffman

A commonly heard, and personally experienced, critique of the sustainability movement is the relatively high cost of green products compared to traditional products. I can spend .99 cents on a bottle of shampoo that cleans my hair but has 25 ingredients listed on the back, most of which I have trouble pronouncing let alone knowing what they actually are or what effects they will have on my health. Or, I can purchase a bottle of green shampoo made from significantly fewer and easier to identify ingredients, but it will cost me ten times as much. The significantly higher price of green products inhibits my, and other consumers, ability to purchase them, but more importantly it creates a divide between consumers that are able to purchase green goods and those that are not. The sentiments associated with this divide are often carried over into the sustainability movement as a whole giving it an exclusionary, or even elitist, vibe. It seems the simple answer would be to find a way to make green products cheaper.

With that in mind, I began doing some research into the higher prices associated with green products, expecting to find reasons such as higher quality ingredients, organic ingredients, certification fees, fair wages, carbon off-setting etc. Not surprisingly, I did find all of these reasons, but I also came across a September 2009 National Post article titled “Consumers attracted to status of “green” products more than benefits, research suggests.” The gist of the article, and one of the conclusions of the research, is that consumers are willing to purchase green products, even those seen as inferior to traditional products in quality, at a higher price, but not when the price is lowered.

Why? Because of the social status associated with the sacrifice of paying a higher product for the good of the environment. The research indicates that this status motive declines when the price of the green product is lowered because the element of sacrifice no longer applies. These results are not only interesting, they also provide some very valuable insight into consumer behavior that could, in theory, be used to promote the sustainability movement and increase demand for green goods.

In general, I do not care what a person’s motives are for making sustainable choices, as long as they make them. Any improvement is an improvement no matter the reason for it. However, pricing green goods in a way that encourages their purchase because of the status associated with them will inevitably exclude certain demographics, furthering the exclusionary tendencies seen by some in the sustainability movement. Environmental concerns, although undeniably important, only represent one third of the sustainability movement. A focus on the other two thirds, social and economic concerns, is equally as important to achieve true sustainability. While a higher price on green goods may indeed have environmental benefits, the implications of ignoring social equity and inclusiveness issues on the larger sustainability movement need to be considered.


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  • Jose Torres

    I read your article and even clicked on the “research”. If the price of green products was raised, how much would (or could) sales increase? Are there certain categories this would work best in or is this across the board.

    Does not seem much homework went into presenting this story. Please provide more detail this is an interesting subject.

    • Lindsey

      The research, which can be viewed here: http://www.carlsonschool.umn.edu/assets/140554.pdf, wasn’t designed to give specific pricing strategies for specific products or to measure the outcome raising prices would have on sales for specific products. It was designed to see how activating status motives impacts people’s purchasing decisions between more luxurious non-green goods and less luxurious green goods. The authors give a few practical implications of this research, a main one being that activating status motives can be an effective way to increase pro-environmental behavior (in this research the behavior is purchasing green goods), but that this status motive isn’t effective if the price of the good is low since that eliminates the signal of wealth/sacrifice. This insight is useful for marketers and others trying to increase sales of green goods, but is not intended to lay out a specific pricing strategy for any specific product.

      The research was not focused on specific categories of products, other than ensuring that the products used were available in both traditional forms (which were described to the study participants as being significantly more luxurious than the alternative option) and green forms. They used cars, dishwashers, back-packs, and household cleaning products, which are pretty different product types. Accurately determining the increase/decrease in sales of green goods caused by higher/lower pricing would require a different type of research than is presented here.

      I hope that helps!

  • http://www.facebook.com/people/Wendy-Wild-Best/707841341 Wendy Wild-Best

    The phenomenom of a Prius or the altruistic generosity of a Ted Turner has little relevance to supporting a theory that consumers will buy more green products if they cost more.

    Who sells more head to head: Clorox Green Works or Seventh Generation? (and which product costs LESS)

    And in perspective, hybrid cars collectively achieve close to a 2% US market share – led by Prius.

    We are in a recession and every dollar counts. Do you truly believe if you were a consumer marketer you would raise prices right now with the expectation that it will increase your sales? (I do not think so)

    I appreciate feedback on these points.

    • Lindsey

      The research was designed to “examine how activating status motives influences product choices when people are choosing between relatively luxurious nongreen products that primarily serve the self versus less luxurious green products that can benefit society”. While you would expect traditional status motives to encourage people to buy the more luxurious product, according to this research, altruistic status motives can be activated in certain situations and encourage consumers to buy green products over traditional non-green products even if they are more luxurious. The study looks into issues like price and public purchases versus private purchases and how they affect the activation of altruistic status motives, which is the tie in with Ted Turner and Prius sales.

      I do not think the intent of the research was to recommend a specific pricing strategy to marketers or to tell everyone selling green products to raise their prices. The intent was to give additional insight into actual consumer behavior. This insight could be used in a variety of ways by a range of people with an array of different motives. Some suggested uses are listed by the authors in their research implications.

      Based on the results of this study, I would say that raising the prices of certain products marketed to certain demographics could result in higher sales if altruistic status motives are effectively activated. However, if I were a consumer marketer, which I am not, I would not base my pricing strategy on the results of one study, especially one that was not focused on my specific product or target demographic. Additionally, as I stated, I personally have an issue with efforts to sell more green products that would create a further divide within the sustainability movement because of differences in income.