Trustainability

Hey everyone,

I think that all the cost and pricing strategies are highly interesting from a producer’s or strategist’s point of view, but I think that sometimes those strategists forget how they influence the customers perception of certain market segments. When green products came to the market they developed different strategies for all kinds of customer segments. They play with the emotions and knowledge of end consumers and apply the strategies that are most likely to result in high revenue for the company. That’s why it became difficult for end consumers to figure out what the price premium stands for. Of course many products communicate the reason for the price premium, but even in that case it is difficult to tell whether it justifies the whole premium. This is something that bothers me when I go through the supermarket and also influences my buying decision slightly towards products that are not marked as sustainable or have no price premium. I think that the marketing practices of sustainable products, combined with the pricing strategies, created a situation where we have a lack of trust in sustainable products because people don’t actually know what they really pay for. Peattie and Crane (2005) have described the methods that led to this state and labeled them as e.g. ‘green selling’ or ‘green harvesting’. This is also the reason why we see this strong trend towards transparency at the moment. Consumers don’t have trust in sustainable products due to their marketing history (to some extent at least) and therefore companies have to introduce new transparency mechanisms in order to restore the trust in sustainable products. This is an important step in justifying price premiums that really result out of more sustainable practices in the production process. Also Prof. Belz agreed that this trend of transparency will become even bigger in the future. Trust is an important factor in customer relationships in general, but I guess even more in sustainability related areas. New transparency mechanisms are one of the keys to help overcome the lack of trust and boost sustainable products. When it comes to pricing strategies I suggest that sustainable products should go more for a cost-based pricing strategy than value-based (if there are no transparency mechanisms at work), as it was the latter that induced the mistrust. Many green products are price competitive and shouldn’t be priced and promoted like luxury products in the market. I believe this could start a new green wave and put the trust back in sustainable products as well as their benefits.

And because you can’t write a proper blog these days without coming up with some new fancy word, let’s call it Trustainability™.

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1 comment
  1. eevaja said:

    Hi!
    Since I had also thought of writing my blog about pricing I will instead make a comment on yours!

    I am a mother of two well-eating boys (besides of having a well-eating husband) which makes me visit the food stores almost daily. Last Saturday I thought that I will try to buy everything as “green” as possible. Well, what happened was no surprise. Just starting from the vedgetables I saw a douple or even triple price difference between the “normal” and the ecological products. The same continued at every department of the store. In the end I had to give up, since the price of my foodbags would have at least doupled from 80 to even 160 e (which was too much to bear for a student mother).

    Coming home from the store I could not helped to think that the ecologically produced food and such necceceries are only available for the higher class to use.Students, lower income families and eldery people can’t really even dream of changing away from the normal cheaper products.

    Well to our relief we can read from the newspapers articles like we read this weekend from Helsingin Sanomat http://www.hs.fi/sunnuntai/Ilmastonmuutoksen+suuret+syylliset/a1365217833717 that the consumers that are not buying green producst are not really guilty ones in the climate change. The guilty ones are some where else refering to millioners donating money for the science to prove that there is no climate change. Thus industries have been able to turn some decision makers to beleive their message. But also the citizens and companies and even governments don’t want to give the attained benefits. Also it is hard to do anything the “pals” dont need to do either, Helsingin Sanomat writes.

    However Peatties and Cranes article (2005) brought in the problems of green washing and marketing very well. The companies want money savings, not spend money on investing in real ecological innovations. They rather want only to do what is the legislation, but promote that in their adds as it was a big accievement. I liked the thought that the actions of the companies have not been either according to the priciples of marketing or green philosophy. Thus they are only making the customers specticle about what they really pay for as you mentioned about the added price. Their behavior and all the actions of “green washing” has also made the whole message of being “green” in advertising suffer a great inflation.

    This inflation came to my mind as I was reading the new wrapping of Fazer chocolate bars (190 gr). Inside the wrapping they have printed (in red) their promise of high quality and high sustainability strandards. This is obviously a part of their sustainability campaign, but does not yet say what changes has really been made and how it is affecting the product life cycle. There is more about Fazers sustaibility program at fazer.fi/cocoa. Must say it just made more suspicius than I was before, even though I am sure they were trying to have an impact of the opposite. This must say is not only Fazer’s fault but like discussed in the article, the consumers have lost the faith in “green marketing”.

    Eeva

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