WSJ conducted a series of experiments in which three groups of consumers were shown the same products, but one group was told the products were made using high ethical standards while the other was told that low standards had been used. The control group got no information regarding the products.
In short:
Regardless of their expectations, consumers were willing to pay more for ethical goods than unethical ones, or ones about which they had no information. Likewise, negative information had a much bigger bearing on consumer response than positive information. People punished unethical goods with a bigger discount …than they rewarded ethical ones with premiums…The Policy Innovations article notes that ethical products tend to experience smaller losses during an economic downturn than most goods because of ethical consumers’ commitment to concerns other than price.
People with high expectations doled out bigger rewards and punishments than those with low expectations.
WSJ suggests that ethical consumers should be targeted regardless of the state of the economy:
Companies should segment their market and make a particular effort to reach out to buyers with high ethical standards, because those are the customers who can deliver the biggest potential profits on ethically produced goods.
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3 comments:
In my humble opinion as an ethic/fair products buyer, the WSJ seems to forget that buyers of such products, being not too stupid, often look at the activity of the company as a whole and not a particular product or segment of activity of the said company. I wouldn't buy ethic-labeled cocoa distributed by Nestle for instance... And as buyers of ethical products have a certain awareness of the market, I believe they won't go for products from companies which use the trend only to maximize profits. Part of the rules of ethical/fair is that the producers get fair production conditions but that the buyer also gets a fair price. These kind of products and markets are often run by associations or cooperatives in which efficiency is a rule but where profit maximization relatively to the paying-potential of buyers is secondary.
Thats at least how I perceive it as a consumer of these products. Of course we're probably going to see a mass-market trend of so called ethical products from big companies (think Nestle or Unilever, ahahaha), but come on, fair trade labels are only going tighten the rules and potential buyers interested in the ethical approach to consumption also respond to new market rules, where corporate profit maximization has little place.
The anonymous poster makes a very good point. The WSJ article says the lessons are "clear" for companies: they should segment their markets to reach out to those who will pay more for ethical products. I am guessing that market segmentation is one way that companies could manage expectations since people with "high expectations doled out bigger rewards and punishments" than those without. But as the anonymous poster says, the market segmentation recommendation may underestimate consumers, who are getting more sophisticated. My question is: Is the WSJ keeping its sophistication up since the News Corp takeover?
The anonymous poster makes a very good point. The WSJ article says the lessons are "clear" for companies: they should segment their markets to reach out to those who will pay more for ethical products. I am guessing that market segmentation is one way that companies could manage expectations since people with "high expectations doled out bigger rewards and punishments" than those without. But as the anonymous poster says, the market segmentation recommendation may underestimate consumers, who are getting more sophisticated. My question is: Is the WSJ keeping its sophistication up since the News Corp takeover?
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