At present, we all realize that products that qualify as “green” are usually priced at a premium compared to “non-green” products. Logic would suggest that these higher-priced, eco-friendly products are most appealing to higher income consumers, but that’s not necessarily so. A recent study by the Atlanta-based strategy firm Miller Zell indicates that income doesn’t always indicate a bias toward green products; in fact, lower-income shoppers are most willing to pay a premium for products carrying a green label. Additionally, women are more likely than men to pay for such items. The study concluded that “offering green products and executing related promotions could potentially create positive dimension of brand or product perception, which impacts frequency and purchase behavior.”
Straight from the Report
“Results indicate that disposable income does not always influence the propensity to spend a premium on green products. Data also revealed that lower-income shoppers are more likely to pay a premium for green at a maximum threshold of 10 cents. Overall, women and Gen Y shoppers are more willing to pay extra to help create an eco-friendly environment.”
RFID Technology Tracks Perishables’ Stress
Researchers at the Syngenta Sensors University Innovation Center at the United Kingdom’s University of Manchester are working on integrating sensors with radio-frequency identification to track stress on perishables in real time, from the farm to retail. The economic motivation is the large amount of waste in the food supply chain that results in hidden costs passed on to consumers. Britain alone throws away almost $30 billion in foodstuffs annually.
Monitoring stress profiles will facilitate real-time inventory management based on shelf life on a box-by-box basis. Reducing overshipping and the amount of unfit produce that reaches shelves decreases transportation fuel, labor, shrink at retail and the amount of waste requiring disposal. Employing scientific data also reduces the “human factor” in making rejection decisions. The first generation of sensor tags will be silicon based and should be ready by the end of 2010. The next-generation technology, which should be finalized by 2015, will use plastic printed technology projected to cost about the same as today’s humble bar code.
Can “best if bought by” labeling based on the conditions endured by plants — and not just a projected finish date and shelf life — be far behind? Could the price a grower receives be impacted positively or negatively by the product’s projected shelf life?
“To Tweet, or Not to Tweet?”
One of the oldest adages in marketing is, “If the customers won’t come to you, you should go to them.” If you subscribe to this belief, then employing social networking must certainly be a part — probably a major one — of any marketer’s strategy in the coming years. Social media services are having a profound effect on how millions of consumers shop, obtain information and interact with one another. This can certainly affect (positively or negatively) how they view products and brands and how they make purchasing decisions. If you’re still not convinced of the value of social networking as a marketing tool, consider the following:
Facebook. More than 10,000 websites use Facebook Connect, a service that lets users log in to affiliated sites using their Facebook account information and share information from those sites with their Facebook friends. Facebook has more than 250 million members.
Twitter. Twitter users spend 66 percent more time on the Internet than their “non-tweeting” counterparts. Forty million members tweet daily.
LinkedIn. More than 12 million small-business professionals are members.
MySpace. More than 1 million small businesses and individuals promote their goods and services on MySpace.
Embracing digital tools to brand products, support customers and cash in on the social-media wave are some of the world’s biggest and best marketers like Ford, Chevron and Levi Strauss. In this digital age, consumers don’t search for products and services; products and services come to their attention via social media. And don’t fall into the trap believing that social networking is only for the under-18 crowd, which has little immediate purchasing power. While this group constitutes a large percentage of users, the fastest-growing demographic on Facebook is those 35 and older, who represent enormous purchasing power. A company or product’s best advocates are often satisfied customers. Companies such as Best Buy are building online communities where customers can freely evaluate and critique goods and services. A Nielsen survey of 25,000 consumers indicates that nine out of 10 consumers trust their peers more than marketers.
Generating sales isn’t the only use for social networking. Providing customer service and obtaining instant feedback are two of the fastest growing uses of social media. Comcast was the first to use Twitter to talk directly with customers. In use for almost a year, its Twitter account, @comcastcares, has more than 28,000 followers. Before, if you wanted customer feedback, you had to rely on third-party focus groups that could take months to establish and cost tens of thousands of dollars just to obtain customer reactions during a two-hour session. Now, with social media, there’s instant, 24/7 feedback from a breathing, living think tank of users.
Twitter, blogs and Facebook can also be a forum for top executives to offer candid views to consumers. Having executives and customers talk directly to each other eliminates the middle man and the possibility of meaningful information getting lost in translation. Consumers want honesty, and they want it quickly. With the potential for big rewards come big risks. The ability to reach out nimbly to millions of consumers who thrive in a 24-hour online environment requires courage, a change in thinking and most certainly an investment. Companies, like the general public, fall into two groups: those who understand and embrace social media and those who don’t understand, are intimidated by and eschew it. Most companies are still tied to a traditional marketing approach that uses TV, radio and print as advertising vehicles. It is atypical, avant-garde companies like Nike and Starbucks that have wholeheartedly embraced social media.
Social media should not be thought of as a messiah; it’s just one of the tools available to savvy marketers. Among men ages 18 to 34, 75 percent say they spend the majority of their time in front of a computer screen — just 18 percent say they park it in front of the TV. Can you afford to ignore millions of potential consumers who are devouring media in new ways? If you haven’t begun to develop a social media plan, you have no choice: It’s too risky not to. If you want to be successful, you must go where your customers are going.
Unusual Economics Call for Unusual Action
During tough economic times, business as usual doesn’t apply. Here’s a summary of advice from CEOs of Fortune 500 companies on stepping up as a leader.
Communication is imperative during difficult times. Communicate frequently and face to face rather than in memos or e-mails. Communicate the good and bad news. When bearing bad news, communicate why it is necessary and how the company and employees can benefit from it in the future. Communication is the most important element in maintaining morale, trust and respect.
Conserve cash as long as it doesn’t negatively impact market share or the customer experience. In tough times, these are some of the easiest areas to cut spending from. But don’t be tempted to undo what you spent years building. It will be more expensive and take longer the second time around.
Resist making acquisitions just because the price is cheap. This includes ALL capital expenditures. Make sure any purchases fit your strategic plan and aren’t just attractive financial opportunities. Major acquisitions should fit the mold of medium- to long-term value creation.
Leading a company through an unusual recession can certainly be challenging but also potentially rewarding, both professionally and personally. Maximizing every sale opportunity, “right-sizing” production and staff, eliminating unneeded costs and maintaining employee morale — all while providing superior customer service, order fulfillment and consumer satisfaction — can be a monumental task for even the most seasoned executive. And accomplishing these goals in the present while positioning your organization for future growth can be a Herculean undertaking. Taking a few cues from other experienced CEOs and managers is not a sign of weakness — it’s a sign of an intelligent manager who understands how to benefit from others’ experiences by modifying their actions to meet his or her organization’s unique needs. Here’s a summary of advice from CEOs of Fortune 500 companies on navigating these challenging times.
Reinvent yourself before you attempt to reinvent your company. If you’re a tenured manager, it is often difficult to objectively look at the business with a fresh pair of eyes. Fire yourself on Friday and arrive Monday as if a search firm put you there as a turnaround leader. Be objective, and don’t be afraid of bold change. A company culture that allows or induces mediocrity can’t foster greatness.
Prepare for a fundamental shift in how and why consumers make purchases. Motivation to spend disposable income is sure to change especially if your product is viewed as luxury, excessive or replaceable with a lower-cost item. Realize that the economy may not grow significantly for years.
Leaders and companies who are on the offensive will have a much better chance of surviving and even prospering in a down economy.