The global sales of more sustainable goods and services achieved a milestone $1 trillion in 2011. This sales growth train is projected to achieve $10 trillion in annual global revenues as early as 2017. The Shelton Group’s EcoPulse 2012 market research profiles the following three keys to winning sales and customers.
This is a green economic revolution. When I first published this concept in 2008, the buzz was around green. The economic reality is that the growth engine of this green revolution is price competitiveness.
The role that a product’s price competiveness plays in attracting consumers is a key assessment in the Shelton Group’s EcoPulse ‘12 market research. Shelton Group researched the consumer buying influences for everyday household products of light bulbs, mosquito repellent and showerheads. Price was number one for all three. A close second were attributes that tie to the consumer’s pocketbook, like saving energy or product durability. The idea of saving the environment or polar bears as a buying influence fell well short of the consumer’s strong focus upon economics.
The subtitle of EcoPulse ’12 is Overcoming The Sustainability Slump based upon an almost across the board decline in the consumer’s focus upon green product attributes. From an economics perspective, this can be explained by our current slow growth economy with unemployment levels higher than historical norms compared to past economic recoveries. In economics, this is called the Income Effect. When consumers have less income or have less confidence in maintaining their income then the price competitiveness of a product becomes an increasingly important driver in purchase decisions. Tight budgets mean tough choices, and in economics that means a strong shift toward buying based upon product price competitiveness. This doesn’t mean people are not looking for smarter, healthier and greener solutions. This does mean that these solutions need to be price competitive to win a sale.
The speed and scale of revenue growth when more sustainable products do achieve price competitiveness can be stunning. Here are two examples drawn from the energy industry. In Hawaii, when the unsubsidized cost of electricity generated from rooftop solar systems dropped below the utility’s price for electricity, the number of applications for building permits to install rooftop solar systems leaped by over 70 percent.
This year when the price of natural gas in the United States dropped below $3 per mmbtu, its use in producing electricity almost doubled. The result is the dethroning of King Coal with its emissions that are twice that of natural gas fired electricity generation, from its historical perch as the fuel of choice for electricity generation. This shift from coal to natural gas combined with reduced gasoline consumption are the two key factors in the U.S. achieving reduced CO2 emissions to 1992 levels.
Business environmental reputation
The Shelton Group study offers this telling documentation on the importance of your company’s reputation in winning customers:
Roughly half the population considers a company’s environmental reputation as they make product choices.
…a third of the population determines if a product is green based on the company’s environmental reputation. This is an emerging trend. Just two years ago only 23 percent used a company’s eco-reputation as a litmus test for a product’s greenness. Increasingly, Americans are having a hard time believing a product is green if they don’t believe the company is green.Convenient “me” solutions
The Shelton Group also reports that the consumer continues to place a higher buying influence weight upon convenience compared to green. This has resulted in most consumers having taken “easy” green actions like installing an energy efficiency light bulb or buying concentrated detergent that achieves effective cleaning results using cold water. The business opportunity is to offer consumers similarly convenient and economically attractive product solutions that advance the magnitude of positive impacts upon the consumer’s pocketbook, health and environment.
Bill Roth is the Founder of Earth 2017 and a green business coach. His book The Secret Green Sauce profiles business case studies on best practices for making money going green.
Bill Roth is a cleantech business pioneer having led teams that developed the first hydrogen fueled Prius and a utility scale, non-thermal solar power plant. Using his CEO and senior officer experiences, Roth has coached hundreds of CEOs and business owners on how to develop and implement projects that win customers and cut costs while reducing environmental impacts. As a professional economist, Roth has written numerous books including his best selling The Secret Green Sauce (available on Amazon) that profiles proven sustainable best practices in pricing, marketing and operations. His most recent book, The Boomer Generation Diet (available on Amazon) profiles his humorous personal story on how he used sustainable best practices to lose 40 pounds and still enjoy Happy Hour!