By Peter Lacy, Accenture
In our research and work with clients around the world, we see the challenges that many companies are facing in this difficult economy. Management must demonstrate their ability to run day-to-day operations better than before, maintaining flawless operations despite the need to tighten belts and deal with suppliers in crisis, customers lacking in confidence and ongoing merger-integration challenges.
In this downturn, consumers don’t have the same spending power, are more price sensitive and they’ve lost trust in companies and brands. They now have a higher propensity than ever to switch.
First, consumers may have lost some spending power, but that doesn’t mean they have lost their consciences. Yes, they are cutting back, but their values and good intentions remain. If they are able to support their values despite the economic pressures, they do.
One of the clearest headline findings from our latest survey of over 11,000 consumers worldwide is that consumers’ level of concern over climate change has remained unaffected by the challenging economic conditions. In fact, 3 out of 4 respondents said that they’ve changed their behavior to a “great extent” or “some extent” over the past 12 months to try and reduce their individual carbon footprints.
However, consumers aren’t prepared or in a position to pay a differentiated price. This is giving rise to the ‘frustrated consumer’.
Second, This is creating an opening for savvy companies. As companies compete for limited consumer spending, the reinforcing ‘sustainability’ message is a differentiator and a positive response to the ‘frustrated consumer’ phenomenon. Increasingly consumers want “embedded” sustainability. Take the following examples:
- P&G has designed its Ariel and Tide washing detergents to work at low temperatures. In 2006, Ariel started the “Turn to 30 degrees” campaign in the UK. The campaign was effective, with an increase in the number of loads washed at 30 °C moving from 2% to 17% following the campaign. This translates into about 60,000 tons of CO2 emissions saved. For consumers, this means about £50 a year saved.
- In 2008, Clorox launched its Green Works line of natural cleaning products and already this new brand has captured 42% of the market. According to Clorox, the consumer market for natural cleaning products has doubled since its launch in 2008.
- General Electric recently announced a 21% increase in revenues from their Ecomagination offerings. With over 80 products and services in the range – they are addressing consumers’ sustainability needs in refrigerators, smart meters for the home, turbines and engines for industries. The 80 products represent a 30% increase from the 2007 portfolio, which GE plans to bring to US$25 billion by 2010.
Conclusion: there is an opportunity to turn this position into real business value. If you can give customers everything they traditionally want, with features like price, quality, availability and sustainability, this is the winning formula.
For an increasing number of consumers, sustainability is a benefit – and lack of it is a cost. Using sustainability as a focal point and differentiator in the economic downturn makes sense.
Peter Lacy is the Accenture Sustainability Practice lead for Europe, Latin America and Africa.
