Published - 2023/08/17
How powerful is Sustainability? Decoding Consumer Behaviour through Data Insights - White paper
We know that consumers are driven by emotion. Their behaviour can be complex with numerous factors influencing purchasing decisions. A business that understands what and how the consumer thinks is more likely to meet their needs. This is especially true when it comes to sustainability. Consumers say they are increasingly concerned about the environment and yet we often hear from businesses that they struggle to generate demand for environmentally-friendly products.
In the intricate dance of consumer behaviour, various psychological factors play pivotal roles. They often interweave, shaping consumer purchasing decisions and engagement patterns. By delving into the mechanics of these psychological elements, businesses can better cater to their consumers' needs and market their solutions more effectively.
We know that emotion significantly influences consumer behaviour. But where does sustainability fit into this complex equation? Do consumers genuinely care about the environmental implications of their purchases? And how valuable are these environmental claims as unique selling propositions (USPs) for businesses?
Countless studies suggest that consumers are indeed concerned about sustainability, and they say they are willing to choose sustainable products over non-sustainable alternatives.
However, given that consumer-based survey results are prone to Response Bias, is this willingness reflected in behaviour?
The Dynamics of Sustainable Consumer Behavior
Studies of sustainable consumer behaviour, a sub-discipline of consumer behaviour, explore how and why consumers incorporate sustainability priorities into their consumption patterns. They suggest that consumption values – defined as functional, social, emotional, epistemic (psychological/known), and conditional - significantly influence sustainable consumption behaviour.
Moreover, environmental concern is believed to mediate the relationship between consumption values and sustainable consumption behaviour. In other words, the more concern a consumer shows for the environment, the more likely they are to change their buying decisions.
Environmental concern is not only influenced by a person’s level of environmental knowledge and environmental risk perception, but emotional values (the perceived worth that customers attach to a product or service on how it makes them feel) and social values (adhering to socially accepted values and perceived benefits to society) were also shown to significantly impact environmental concern and sustainable consumer behaviour.
Therefore, businesses aiming to focus on sustainability and sustainable products should consider consumers' emotional and social values, in order to shape sustainable consumption behaviour.
But do we see sustainable consumer behavior reflected in actual consumer spending?
The Business Impact of Sustainable Practices
A study by McKinsey and NielsenIQ found that consumers are increasingly spending on products that claim to be environmentally and socially responsible. The consumer packaged goods (CPG) sector, encompassing everyday items like food, beverages, cosmetics, and cleaning products, is a significant part of this trend.
Despite consumers expressing a willingness to pay more for sustainable products, many companies say it can be difficult to generate sufficient demand for these products. The study sought to understand this discrepancy by examining actual consumer spending behaviour rather than self-reported intentions.
Researchers found that products making environmental, social, and governance (ESG) related claims saw an average of 28% cumulative growth over the past five years, compared to 20% for products without such claims. However, not all ESG claims were equally effective. Less common claims, such as "vegan" or "carbon zero," were associated with higher growth, suggesting that marketing language can serve as a point of differentiation.
They also found that products with multiple ESG claims grew about twice as fast as products with only one claim. This suggests that consumers may perceive multiple claims as indicative of a brand's genuine commitment to ESG principles.
As a result, the report claims companies should ensure their ESG claims support an overall ESG strategy with a meaningful environmental and social impact. They should also consider incorporating ESG-related benefits across multiple categories and products, and invest in both existing brands and innovative new products.
The study emphasizes the importance of understanding the specific ESG dynamics of each category and brand, and the potential benefits of addressing multiple ESG concerns in product design. However, it also warns against "greenwashing," or making misleading claims about a product's environmental or social merits, which can erode consumer trust and potentially undermine regulatory efforts.
So, where do you start when seeking to understand how your business is performing, what your customers want, and how your end-consumer perceives you?
The answer is simple: Data.
The Power of Data in Sustainable Business Strategy
Before making strategically-important decisions about the direction of your business, you need the right data. This is where Opticom steps in.
As stated at the start, consumer behaviour is complex and it’s not always obvious why purchasing doesn’t match stated intention, especially where sustainability is concerned. We can help you understand what your market thinks and determine how important your sustainability efforts are as a USP. In short, we help you listen to your customers. Really listen.
Is it worth the effort? We think it is. Because the journey towards sustainability is not just a trend, but a necessity. It's a path that requires understanding, commitment, and strategic planning.
With the right data and insights, businesses can align their strategies with their consumers' values and expectations, paving the way for a sustainable and profitable future.
Download the White paper here