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Survey confirms customers and employees value green brands
Firms investing in green initiatives are likely to attain competitive advantage through improved customer and employee retention, according to a major new global survey of almost 17,000 people.
The survey from polling organisation Ipsos MORI questioned members of the public across 15 major markets found that over half said they prefer to buy products and services from companies with good environmental reputations, while almost eight out of 10 claim they want to work for "environmentally ethical" organisations.
Rick Snyder, Americas president at video conferencing technology specialist Tandberg, which commissioned the survey, said the results proved that firms that invest in greener business models can gain a competitive advantage.
"It is clear that a company’s green credentials impact employee and customer retention," he said. "And in the long term that can help determine competitive advantage."
The survey also found limited variation in attitudes towards green brands across different economic groups, countries and age groups.
"We expected attitudes to vary a lot, but while there were some differences across different countries, overall support for greener business models was fairly constant across all groups," said Snyder. "It means that customers for green products are everywhere and anywhere."
The report did not assess the extent to which a preference for green suppliers and employers is translating directly into improved retention rates, but Snyder maintained that there was little doubt people's positive attitude towards green brands was informing their purchasing and employment decisions.
"Because the idea of green brands is still relatively new we don’t have quantitive evidence that shows how much financial value you get from green initiatives," he explained. "However, those companies that are running green campaigns are seeing huge engagement from employees and in the coming years they will begin to more clearly see competitive advantage in the form of improved staff and customer retention rates."
Your post interested me because I was surprised that empirical data had been found to support the claim that green businesses often have a competitive advantage to other businesses. I appreciate your coverage of this important topic, and hope you are correct in your findings. However, I am uneasy about a few of the points made in your post.
Ipsos MORI, the polling organization that conducted the survey you speak of asked individuals if they would “prefer to buy products and services from companies with good environmental reputations.” Over half said they would. This seems like a fairly insignificant statistic. I think it would be obvious that when given the choice to disregard the environment or to be environmentally responsible, a majority of people would choose to be environmentally responsible. The real question, I think, should be at what cost is the individual willing to purchase sustainable products. What an individual says he would like to do is different than how he will actually act when placed under economic constraints.
Another issue that will affect the success of a green product is marketing. In my last post on my blog, I addressed some of the unique challenges a business faces in marketing a green product. Advertising a new product or product line can be very expensive for a company. Additionally, green products often have less packaging than regular products, which means green products also have less packaging space to advertise on. Your survey finds that green products are successful, however, this claim can be debated. In my Marketing class at the University of Southern California last week, my professor explained, “empirical results testing this hypothesis [that sustainable firms will eventually outperform less sustainable firms] are mixed, neither suggesting that more responsible firms, on the average, have a clear financial advantage nor a large burden.”
Lastly, you predict that “in the coming years [companies] will begin to more clearly see competitive advantage” sustainable firms have over other companies. While “going green” is certainly an emerging trend and will ultimately profit green businesses, I do not think this advantage will be as drastic as you suggest. These companies will only generate profits from the upper-middle class who can afford and who are willing to choose green products, even at a slightly higher cost. As much as I would like to think that green businesses will triumph over other companies, I do not think the competitive advantage will be significant.
Posted by :Julianne | November 6, 2007 9:45 AM