How Central Should E&SR Be To Your Product Strategy? Ask Your Customers

 [posted by Sally M. Cohen]

Last week, we published an important new report about Environmentally & Socially Responsible (E&SR) product strategy, which introduced a framework for parsing different approaches to E&SR consumer products. The Centricity Model Of E&SR Consumer Product Strategy identifies four levels of product strategy, based on how central a role E&SR plays. The approaches range from Level 1, the most explicit -- a flagship "green" product -- to a very implicit Level 4 approach in which consumers may not even recognize a product's socially responsible features.

 

We see examples of companies approaching E&SR consumer product strategy at each level of the Centricity Model in the market today. What's more, we see companies simultaneously operating at multiple levels by launching flagship products that loudly tout E&SR features while quietly making all products in their portfolios more environmentally responsible.

The model invites self-reflection -- How central is E&SR to my consumer product strategy today? And, more importantly, self-evaluation -- How central should E&SR be to my products tomorrow and beyond?

The answer to this longer-term question should come from an important source: your customers. Are your customers die-hard environmentalists or are they more mainstream consumers who are equally concerned with the health of the planet as they are with the health of their families? How important is it to your customers that the E&SR products that they buy send a message to other consumers through distinctive design or branding? Are your customers actually seeking out a "greener" dishwasher, or are they simply more focused on cutting their household water and energy bills?

Crafting a winning E&SR consumer product strategy means closely aligning your approach to E&SR -- product, positioning, and messaging -- with your customers' needs. The best way to do that -- and to find the answers to the questions above -- is to talk with your customers. If you're not sure what to say, Forrester can help.

For more information, Forrester clients can see the report, "Environmental And Social Responsibility In Consumer Product Strategies."

E&SR Product Strategy: Competitive Management Or Market Leadership?

[posted by Sally M. Cohen]

Today, a delicious report in the Financial Times caught my eye. It noted that Mars, Inc., the candy company, is moving to certify as sustainably produced the cocoa used in production of candy bars such as Snickers, Mars Bars, and Twix. The aim is to achieve certification globally, for all of Mars' cocoa supply, by 2020. Even after only reading the headline of the article, I couldn't help but think of another announcement -- only one month ago -- from competing confectioner Cadbury, that they were seeking Fairtrade certification for their best-selling Dairy Milk bar (and hot chocolate) by Summer 2009 in the UK and Ireland. (The Cabdury announcement is also noted at the end of the FT article.)

Similarly, Clorox launched its line of GreenWorks environmentally-responsible, natural household cleaning products back in January 2008. In the very same month, SC Johnson announced that they would be adding their Greenlist label to Windex packaging. [Note: Though SC Johnson's Greenlist process had been around since 2001, they only began adding a logo to product packaging in 2008.]

And, in November 2007, Bank of America partnered with Brighter Planet to launch a line of co-branded financial services products, which help fund renewable energy projects in the US. Just months before, Wells Fargo rolled out an option to customers enrolled in their rewards program that allowed for the redemption of points in exchange for renewable energy certificates.

All of these examples demonstrate that these companies are tuned in to a growing consumer demand for enviromentally and socially responsible (E&SR) products. They recognize that creating E&SR candy bars, household cleaners, or credit cards can help them tap a market of compassionate consumers, whose purchase decisions will be swayed by E&SR product attributes, and who may even drive incremental revenue by selecting a slightly pricier -- but greener or more responsibly made -- product.

But these anecdotes also highlight an important reason to build E&SR into your products beyond that your customers demand it -- because the competition is doing it. Recently, we asked 72 Consumer Product Strategy professionals what business drivers motivate them to build E&SR into their product strategy. Only 7% cited competitive management -- encouraging the competition to step up their E&SR efforts -- but 61% said "market leadership" -- leading the way in defining market rules for E&SR. So, Cabdury, SC Johnson, and Wells Fargo, which one is it, really?

I would argue that it doesn't much matter -- market leadership and competitive management often go hand in hand, and the urgency they create for E&SR innovation and product strategy in the highly competitive consumer marketplace is good for consumers. And, ultimately, I think that you can craft a winning E&SR product strategy regardless of whether you're managing your competitors or leading the market, so long as you're responding to your customers' E&SR needs.

What do you think? Are you engaged in E&SR consumer products competitive management? Do you view your company as an E&SR consumer products market leader? Does it even matter, as long as your customers are satisfied?

To learn more about how and why other companies are building E&SR into their consumer products -- and to check out our new Centricity Model Of E&SR Consumer Product Strategy -- Forrester clients can go here.

Make Your E&SR Product Strategy More Transparent To Consumers

 [posted by Sally M. Cohen]

The recent Gadgetology Green Study conducted by Retrevo – a site that bills itself as “the first matchmaking service for people and electronics” – found that consumers are confused about companies’ green claims and about what actually constitutes a “green” product. That’s really not all that surprising considering the amount of information – messaging claims, labels, various terms related to environmental and social responsibility (E&SR) – flooding the market today. Even more standardized labeling schemes like the EPA’s EnergyStar and WaterSense, FairTrade certification from Fairtrade Labelling Organizations International, or even the USDA’s Certified Organic symbol may be recognizable to consumers, but many still don’t know how products achieve these labels. (See Mark Bittman’s recent New York Times article for more about confusion around organic food and food production.)

 

But is exposing the details about your E&SR products (and corporate sustainability and social responsibility policies) really that important? I would argue yes, for two major reasons: 1) We know that consumers take E&SR into account when making purchase decisions, and, providing important information can help sway consumers’ purchases. And, while some consumers may simply look for a known label or a broad messaging claim, 2) you want to avoid seeming insincere about E&SR (the dreaded “Greenwashing”); details can give weight to your E&SR story. Ultimately, if you don’t put the information out there in front of the consumers who want it, they will be able to find it elsewhere, thanks to Web sites like GoodGuide.com and Sierra Club Green Home which arm consumers with detailed information about the products they buy and the companies that make them.

 

There are a number of ways to be make your E&SR product strategy (and corporate strategy) more transparent to your customers. One way is to publish an annual corporate sustainability or responsibility reports (as Nokia, Lenovo, and many other E&SR-focused companies do), but this information is often much more accessible to shareholders and industry analysts than it is to mainstream consumers. Another way to increase transparency with customers – as well as capitalize on consumers’ current interest in E&SR – is to surface your E&SR product strategy much closer to the product itself. One such example is Apple:

 

 

Environment pages for Apple’s MacBooks, Mac mini, and Mac Pro link to Environment Status Reports which allow consumers to explore product-specific including greenhouse gas emissions, materials composition, and packaging information for each individual product.

 

Another great example comes from Timberland:

 

 

For more than 2 years, their “nutritional label” summarizes the climate impact, resource consumption, and chemical components for each pair of shoes – directly on the shoebox.

 

Other companies are following suit: HP’s Eco Highlights labels, and Continental Clothing’s carbon footprint information on their garments’ care labels … How are you increasing transparency to customers about your E&SR product strategy?

Will Consumers Buy Green & Socially Responsible Products...In A Recession?

[Posted by Sally Cohen]

Last week I published a report -- Making The Case For Environmentally And Socially Responsible Consumer Products -- which brought to light some interesting data on how consumers feel about purchasing "green" and responsibly made (E&SR) products. Here is a highlight:

The good news for product strategists: A small, committed group of consumers are willing to pay a premium for E&SR products; for the rest, E&SR features or considerations help to differentiate your product during the purchase decision-making process.

Since this report went up on the Forrester site, I've had a number of discussions about what these data might look like if we collected them today, in the midst of an ugly recession. And no wonder, since many of us perceive "environmentally-friendly" or "fair trade" products to be more expensive than their conventional counterparts. And in many cases this, of course, is true: CFLs often cost a bit more than conventional bulbs, and a 2009 Ford Escape Hybrid's MSRP is more than $9k above the conventional model's asking price.

We must face the facts of this economic downturn: As my colleague Paul Jackson has shown, consumers' cut-backs in the downturn will effect their spending on technology -- this includes E&SR devices, appliances, and household goods. Consumers will defer replacement of installed devices, and if they are planning to buy new technology, many will forgo any premium associated with "green" or "social responsibility." 

But the reality is that -- even in the recession -- consumers' reactions to the premiums they might pay for E&SR products differ. Just yesterday HP officially started selling its Enviro batteries, made by Boston-Power. These Li-Ion batteries have a three-year life and can charge to 80% in only 30 minutes (40% in 10). They've been awarded the Chinese CEC Ecolabel and the Nordic Ecolabel. They also cost $149.99. While this price tag has raised a few eyebrows in the blogosphere, others think the $20-30 premium is less-than-expected for a battery with all of these features.

So will mainstream consumers buy your E&SR products in the downturn? At price parity, yes. At a premium, I think it depends on two main factors:

1) Does your product's E&SR features provide benefits in line with consumers' current desire to save, save, save (e.g., energy-efficient technology, automatic shut-off, or longer time to replacement)?

2) More importantly, are you effectively messaging your product's E&SR features that are helping consumers save?

Stay tuned over the next couple of months for research answering these questions. In the meanwhile, I'd love to hear what you're doing to sell E&SR products in the recession.