While some consumers are willing to pay more for environmentally friendly products, companies must consider to whom they market these products and how.
Which consumers are willing to pay more for green products and which market strategies will attract them?
Three-quarters of consumers are undecided as to whether they will pay more for green products. Those consumers willing to pay more are more likely to be female and married, with at least one child living at home. To encourage consumers to pay price premiums, marketers can 1) educate consumers about how green products help the environment, 2) use ad campaigns that show how individuals can make a difference to the environment, and 3) provide feedback to show that individual consumers are making a difference.
While some consumers are willing to pay up to 40 per cent more for environmentally friendly products, companies must be cautious to whom they market these products and how. For example, consumers who claim to recycle and to buy green products are not always those willing to pay premiums. This study helps marketers develop strategies to target those already willing to pay premiums and convince others to do so.
Thirteen per cent of consumers are willing to pay more for green products. These consumers are more likely to be female and married with at least one child living at home, and value security and relationships.
Seventy-three per cent of consumers are undecided about whether they will pay more for green products.
Consumers will not pay more for green products from companies accused of being polluters. Eighty per cent of consumers who are more likely to spend more on green products refuse to buy from companies that do not follow environmental regulation or who misrepresent products as being green.
Implications for Managers
Target consumers already willing to pay premiums on green products and convince others to do so.
Use packaging that highlights social welfare and warm relations as virtues of green consumption.
Tell consumers why they should buy green products. In The Body Shop stores, info cards, window displays and videos inform people about the environmental and social effects of their purchasing decisions. The Body Shop also educates consumers about the company’s natural ingredients, earth-friendly manufacturing and policy of purchasing from developing countries.
Manage reputation by meeting environmental regulation and not misrepresenting products as green.
Persuade consumers that each person can make a difference. Ad campaigns showing people improving the environment are more likely to convince consumers to buy green products.
Provide regular feedback to consumers to show they are making a difference. This reinforces behaviour from green consumers and motivates others to consider the environment when buying.
Implications for Researchers
Future research can identify additional factors that influence green purchasing decisions and willingness to pay price premiums—experiments are preferable to surveys. To determine these factors, research can be expanded to specific industries (e.g. cosmetics), to different types of clientele (e.g. businesses) and to different countries.
This study used data from 907 questionnaires in 17 municipalities from a large North American city. The questionnaires had five parts: eco-literacy, behaviour, environmental attitude, values and demographics.
Laroche, Michel, Bergeron, Jasmin, & Barbaro-Forleo, Guido. (2001). Targeting consumers who are willing to pay more for environmentally friendly products. Journal of Consumer Marketing, 18(6): 503-520.