“Ethical consumers” – Why CP companies need to act fast

We are fast becoming a world of consumers who like choice and options – and truth be told, we are spoiled by it. We are a generation of consumers who go onto Amazon to buy something as simple as a toilet brush. This drives us to review ten different versions, read all the reviews, and come away with the knowledge that “Tom from the United Kingdom” did not think the bristles were sturdy enough.

Amidst so much choice, it has become increasingly difficult to predict consumer behavior, and this can be a real challenge for Consumer Products (CP) companies today. However, one thing that consumers are now leaning towards is the “eco” option. Our generation of shoppers is now being called the generation of “ethical consumers.” So, what does this term mean and what impact does it have for CP companies today?

A “Corporate Social Responsibility” or “Sustainability” team within a large CP organization has always been around; it is not a new concept by any means. However, one thing that is significantly increasing among CP companies today is the importance of this function.

The number of consumers who are now conscious about their consumption, and who seek out purchasing choices that make a positive impact on the world, is on the rise. It is this consciousness that has labelled us as “ethical consumers.” The latest figures from the UK Ethical Market Research report show that in 2017, nearly £80bn was spent on goods that were deemed as “ethical spending” in the United Kingdom alone.

With a growing number of consumers caring about where their products come from, CP companies need to be on the forefront of this upward trend if they want to maintain their sales revenue growth. So how can CP companies change their operations and go-to-market strategies to make them more eco-friendly?

CP companies are currently focusing on three key areas:

1. Energy sources
2. Profit distribution
3. Manufacturing materials.

Energy sources

The energy and power that fuel the operations of a CP company have primarily been from unsustainable sources. CP companies are now recognizing that in order to maintain longevity, they need to consider where the energy (that is allowing them to serve their consumers in the first place) is coming from.

ABI is a great example of a company that has communicated a huge visionary sustainability goal by stating that they will “source all electricity needs through renewable sources by 2025.”¹ While this will involve a hefty investment, it is a positive step that will put them ahead of other companies that are also serious about achieving a low carbon economy.

Profit distribution

Large CP organizations have always collaborated with local or global projects or initiatives within the sustainability or social responsibility space. However, the visibility of this to a consumer has typically been limited. As a result, CP companies are now making it transparent to consumers that the profits of their purchase directly support an initiative that is important to the company.

Unilever did exactly this in their launch of a plant-based organic snack brand, “Growing Roots.” They recognized that one of the key issues preventing the growth of urban farms in the US was funding, and so they showcased to consumers that 50% of the profits for this brand will go to US urban farms.²

Manufacturing materials

While it is important to focus on the supply chain and profit distribution, a significant part of improving sustainability within CPs will need to come from reviewing the raw materials.

Adidas is an example of a company that has decided to focus its sustainability efforts here. The company has confidently stated to their consumers that, by 2024, they plan to use only recycled polyester in all Adidas shoes and clothing.³ Adidas is the second largest sportswear brand in the world, and the embracement of solely recycled materials sets a strong example for other sportswear companies to follow.

It is very positive to see CP companies moving in the right direction and supporting the right causes, but they still need to remain profitable. This is where incorporating their sustainable initiatives into their marketing strategies is key. By doing so, they will experience a range of benefits such as:

1. Win-win marketing – By focusing on the values that matter to the consumer, CP companies will naturally increase the value of the company. Through emotive marketing, consumers find themselves leaning towards choosing their product over another.
2. Brand reputation – CP companies want their brand to stand out among the competition. Through marketing their initiatives effectively, consumers will believe that the company cares about them, and this will transcend into how people feel about the brand.
3. Retention and recruitment – Integrating ethics into their ways of working and showing the positive results will only attract and retain talent in terms of employees, suppliers, and customers.

Overall, it is clear that CP companies need to focus their efforts towards their “ethical consumers,” to differentiate themselves from their evolving competition. With the potential introduction of “eco-watches,” consumers may soon be tracking their carbon footprints on their wearables and becoming even more aware of the effects of their purchasing decisions.

CP companies need to think carefully about how they integrate socially responsible or sustainable initiatives into their operations and marketing. Setting ambitious goals and commitments is a great strategy, but they also need to meet them and do so in a profitable way. Likewise, if they don’t do anything, they may start to lose that brand loyalty they originally had from their consumers.

See our Capgemini website on how we are developing sustainable client offerings here: https://www.capgemini.com/corporate-responsibility/developing-sustainability-client-offerings/