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Consumers Increasingly Skeptical of Green Products? Maybe Not.

Raz Godelnik headshotWords by Raz Godelnik
Data & Technology

About two weeks ago I saw a very disturbing headline on Advertising Age – “As More Marketers Go Green, Fewer Consumers Willing to Pay For It.” The article referred to the latest GfK Green Gauge survey, which found that while green awareness and engagement have gone up among American consumers, their willingness to pay more for green products has gone down.

This conclusion was based on a comparison with the results of the 2008 GfK survey. In 2008, for example, 45 percent of GfK's respondents said they would pay more for apparel made from organic or recycled content. Only 40 percent said so this year. There’s a similar trend in every product catagory, from paper products made of recycled materials (53 percent in 2008, 47 percent in 2012) to food and dairy products with no hormones or antibiotics (57 percent in 2008, 51 percent in 2012).

The main reason for this downward trend, according to GfK, is a growing skepticism among consumers about the real value of green products that are sold at a premium price. “You have this kind of heightened distrust," Diane Crispell, consulting director at GfK told Ad Age. "Consumers have become hypercritical. You see it with green and health claims."

While this wasn’t the only finding of the survey, the survey’s conclusions got most of the attention, and it got me wondering if there is indeed less interest in green purchasing or if, perhaps, consumers are been asked the wrong questions.

The problem with this sort of survey is that it follows consumers’ attitudes rather than their behavior, and as we see time and again there is a large gap between what consumers say and what they do when it comes to green consumption. If you really want to know what happens in the green market it’s better to take a look at empirical data, which shows a totally different picture.

Forty to sixty percent of consumers say they are willing to pay premium for green products, but the actual market share of green products is only around 2-5 percent. It’s true that consumer's reported intentions related to sustainable purchasing are down from 2008, but given the wide gap between reported behavior and actual behavior, it's a big leap to say the market for green products is shrinking.

Take for example organic food, a market where consumers still need to pay a premium. According to the Organic Trade Association 2011 Organic Industry Survey, sales of organic food grew from $23.6 million in 2008 to $26.7 million in 2010. These figures represent a 13.1 percent growth, which is certainly impressive given the deep recession in 2010 and the comparable growth rate for the total food market - only by 2 percent.

Another indication is the growth in the number of farmer's markets – according to the USDA the number of farmers market grew from 4,685 in 2008 to 7,864 in 2012 – a 68 percent growth! Although this figure doesn’t measure sales in these markets, it’s reasonable to assume that growing markets sell more produce and other products consumers buy at a premium.

Nevertheless, it would be wrong to ignore this survey as a whole as there are still some useful findings. First, the recession got consumers to be more cautious about their purchases and therefore they are willing to pay a premium only when the added value they receive is clear and substantial, not just for the planet, but also, mainly, for them. Remember SunRun’s ads on why people put solar panels on their roof, where they say it is first and foremost about the savings? This is how it works these days.

Second, the survey indicates that there’s a shift in consumer behavior. "How Americans are participating in environmental protection is shifting. For a large portion of the population it is much more about what one can do as opposed to what one can buy," said Timothy Kenyon, director of the GfK Roper Green Gauge Report. "They want common sense environmental solutions that help them make sensible changes to their lifestyle while still not significantly impacting them financially." The most obvious indication of this shift is of course the growth in the access economy.

It is also obvious from the study that consumers are increasingly critical in their evaluation of green products and the claims they make. With every product that claims to be green, but especially those priced at a premium, it’s important for companies to engage consumers through an honest and transparent dialogue.

In all, even with the valid points the study makes, I feel it’s about time studies on consumer behavior focus more on empirical data and stop looking just at what consumers say they intend to do. Only this way we can really get an accurate understanding of the changes in the green marketplace.

[Image credit: Gary Cope, Flickr Creative Commons]

Raz Godelnik is the co-founder of Eco-Libris, a green company working to green up the book industry in the digital age. He is an adjunct faculty at the University of Delaware’s Business School, CUNY SPS and the New School, teaching courses in green business, sustainable design and new product development.

Raz Godelnik headshotRaz Godelnik

Raz Godelnik is an Assistant Professor and the Co-Director of the MS in Strategic Design & Management program at Parsons School of Design in New York. Currently, his research projects focus on the impact of the sharing economy on traditional business, the sharing economy and cities’ resilience, the future of design thinking, and the integration of sustainability into Millennials’ lifestyles. Raz is the co-founder of two green startups – Hemper Jeans and Eco-Libris and holds an MBA from Tel Aviv University.

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