As founders or marketeers in the Indian market, we often express frustration that the concept of sustainability is slow to catch on.
It's a common argument that the Indian market's focus on cost-effectiveness hinders the adoption of sustainability practices that typically come with a "green premium." This premium often makes sustainable products less attractive to a broad audience, suggesting a limited scope for scalability in such initiatives.
However, Renewcell one of the fastest-growing Swedish textile recycling companies filed for bankruptcy last month after going through financial crisis. While the reason for a company’s financial break-down is complex, Renewcell’s bankruptcy makes us rethink that the case of sustainability alone not selling is not just an Indian challenge but quite universal. The best explanation of what went wrong with Renewacell is in a Forbes Feb article, find link below.
Understanding Consumer Perspectives
It's crucial to remember that consumers, regardless of their location, prioritize VALUE. This is true whether a business focuses on sustainability or not.
Customers tend to assess brands and products based on three primary criteria both in B2B or B2C scenario:
the job the product does,
the pain points it addresses, and
the gains it offers.
Currently, the higher costs associated with sustainable products don't always align with these criteria, making it challenging for such brands to justify their prices.
The Importance of Brand Building for Sustainable Businesses and Product companies
Sustainable brands must undergo the same rigorous brand-building process as any other business. This involves:
Identifying who your customers are (customer segmentation)
Understanding your customers' behaviors, needs, and pains, and
Figuring out how to provide them with value. (value proposition and pricing strategy, positioning)
Effective positioning keeping the market environment and competition in mind
Proving authenticity by genuinely incorporating sustainability into the company mission.
Customer Segmentation: Tailoring Your Approach
Research* from IMD Business School has identified three distinct customer segments based on attitudes toward sustainability:
Greens or True Believers in sustainability who place a high value on sustainability and actively seek it in their purchasing and may sacrifice performance or economy to get it.
Blues or Agnostics place a moderate value on sustainability and, if they don’t need to sacrifice much (or ideally at all) on price and performance, tend to prefer sustainable offerings over alternatives.
Grays or Disbelievers who don’t care about sustainability and may even view it with skepticism.
Based on the belief system above and the size of the market we need to understand which kind of consumers are we trying to target and hence a tailored approach to become relevant.
This same study also reveals, “Someone may be a green consumer in one category (for example, exclusively purchasing clean energy), blue in another (preferring recycled packaging if there’s no cost difference), and gray in another, avoiding sustainable cleaning products or construction materials on the assumption that they underperform.”
Crafting a Compelling Value Proposition
Now that we are aware of the customer segmentation your value-proposition becomes easier for the segment that you are building. Most businesses think sustainability is just an add-on to traditional offerings. But the same study of IMD business school has also identified a product’s primary attributes can be classified in three ways:
Independence - where the sustainability aspect doesn’t impact traditional benefits
Dissonance - where the sustainability aspect diminishes traditional benefits
Resonance - where the sustainability aspect enhances traditional benefits
The strategy for engaging different customer segments will vary based on this classification. An explanatory matrix published in HBR assists in visualizing how to position a brand based on its unique value proposition.
India’s Sustainability Brand Success Story: Cashify
Cashify serves as a compelling case study of a brand that has successfully navigated the nascent sustainability landscape in India. Initially, it started as ReGlobe which directly appealed to consumers and businesses to take their step towards a green planet. The market wasn't cognizant to the appeal hence the company later pivoted to Cashify, focusing on incentivizing customers to sell their old electronic devices, thereby promoting the circular economy as a secondary output.
This strategic shift from trying to change consumer behavior directly to offering tangible incentives can act as a guide to new brands.
Human behaviour shift is the most difficult task when done at scale hence strategies like the one Cashify used can work well to buy in time in the market. Instead of asking consumers to be sustainable which is a broad aspect, marketeers can take the route of incentivizing a positive behaviour depending on the category they are in.
Beyond Marketing to Innovation
While marketing plays a critical role in promoting sustainable products, we will still iterate what we focused on our last sustainability article. True sustainability is deeply embedded in core business processes, encompassing supply chain management, people & tech management, and organizational culture. To make a sustainable brand, profitable and self sustaining we have to lean on innovation beyond just tweaking marketing messages or increasing media spending.
*To access the HBR article which covered the IMD business school refer:https://hbr.org/2024/03/how-to-market-sustainable-products
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