By Edmund L. Andrews
This post originally appeared on the Institute for Business & Social Impact Blog.
When it comes to products that are “good” – healthier, safer for the environment, or produced by companies that treat workers fairly – what consumers say they want is often very different from what they buy.
In surveys, as many as 75% of respondents say they want sustainable products, and most of those people say they are willing to pay slightly more money for them. Yet such products only make up between 1% and 3% of the market.
Do people simply exaggerate how much they care about health and sustainability? Do they lack accurate information? If they do have solid information, how does it affect their buying decisions?
The encouraging part: If a consumer is actively looking for information about a product’s health impact, a favorable rating on that issue can make him or her more likely to buy it on the spot.
The sobering part: If consumers aren’t looking for that kind of information, and simply run across it, they are not likely to change their buying decisions.
The uncomfortable part: Consumers generally don’t care about a product’s social or environmental impact. In fact, a high “green” rating can often make consumers less likely to buy a product.
The study, funded in part by the Sustainable Products & Solutions Program at the Berkeley-Haas Center for Responsible Business, is based on an analysis of more than 40,000 purchasing decisions by people who had looked at look at sustainability ratings for products onGoodGuide.com.
GoodGuide, which O’Rourke himself co-founded in 2007, provides meticulous ratings on more than 250,000 products – from shampoo and cosmetics to appliances and cars. The ratings cover health, environmental safety and responsible business practices. They are prepared by a staff that includes chemists, toxicologists, nutritionists, and sociologists. When consumers see products they want, they can click a “Buy Now” button and purchase them.
O’Rourke started GoodGuide largely as a research project – a “natural experiment” to study how ordinary consumers respond to information about health and sustainability when they are in the midst of shopping.
“The idea was to get beyond what mainstream research was telling us,” he says. “Environmental and health advocates need to draw on the lessons of behavioral psychology. They can’t just hope that telling consumers how bad something is will actually change their decision.”
O’Rourke co-authored the new paper with Abraham Ringer, a graduate student at Berkeley’s Department of Environmental Science.
O’Rourke says the new findings do not mean that sustainable products are doomed to fail.
The findings clearly show that “green” marketing claims can backfire, which O’Rourke suspects reflects a belief that “green” products won’t perform as well and or taste as good.
But O’Rourke and Ringer note that environmental sustainability can confer social cache on certain products. The most famous example is the so-called “Prius effect,’’ named after Toyota’s wildly popular hybrid cars. The new study found more homely examples, such green dish-washing liquids and hand soaps. Many people, O’Rourke notes, conspicuously leave their green dish-washing liquid out where others will see it.
The difference is largely between purchases that are purely functional and those that have a social dimension.
“Decisions around products that ‘just have to work,’” write O’Rourke and Ringer, “are very resistant to influence by sustainability information.” It is a different case, however, for products that are tied to status or consumed in public.
The study also shows that consumers react very differently to health information about different products. Women between the ages of 25 and 35, for example, are heavily influenced by health ratings for baby shampoo – but much less by ratings for hair dyes. In general, health scores had considerably more influence on purchases of sun care, skin care and baby care products than than on deodorant and make-up.
The key, O’Rourke suggests, is to be smarter about what consumers want and about how to frame the issues.
“We have to take the attitudes of mainstream consumers very seriously,” he says. “In the market, we are often overwhelmed by choices and constrained by time. In that setting, people fall back on their default settings – what they already know or what is cheapest. The more we understand their attitudes, the more we can help them follow their own stated values.”