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Thursday, 12 November 2015

My detergent product is green, but don't tell anyone

People usually like to flash badges and the like, to let the world know when they enjoy some special status. Presumably, the same should hold true for products. If my product has a certifiably desirable characteristic, one would think that I will want to let consumers know about my blessings. Ah--if only the world of brands were so simple. One of the basic components of a brand is that it is meant to send a message to the consumer, which will hopefully resonate with the consumer and lead to a product preference. It is usually the mark itself, as part of the overall brand, which serves as the short-form means for communicating this message. There are instances, however, where an additional sign, such as the form of a third-party certification, may also be applied to a product -- but where product owner may choose to forego boasting that his product meets the certifiable standard.

The uneasy branding case for the commercial value of certification was recently discussed in an article that appeared in The Economist on 26 September. Entitled “Green wash: Eco-friendly detergents”, the piece described the aspirations of a Chicago-based company, Method, to become, in the words of one of its founders, “the most sustainable and the most socially beneficial company in the world.” In particular, the company produces detergents and soaps that appear to cause no harm to the environment. The bottles used are 100 per cent recycled plastic, while the company website discloses all of the ingredients, which are themselves subject to review by an environmental research company as well as a non-profit organization, Cradle to Cradle, that provides certification.

So how does Method stack up against its competitors? According to the article, major detergent challengers such as Procter & Gamble, SC Johnson and Clorox have so cleaned up their own products that they are apparently, in the main, eligible for the United States EPA (Environmental Protective Agency) seal of approval as well as for eco-labels from several well-regarded certifiers. However, companies of this type tend not to apply for such eco-labels. Not only that, but many do not provide information about how and why their products and the process of their manufacturer are now greener. The suggested upshot is that, while there may not be a significant environmental difference between the products of Method and those of its competitors, consumers may not have any clue that this is the case.

And so the question is why such companies forego providing an eco-label and other information about their products. At least part of the explanation seems connected with the size of the current market for which an eco-label and the like may be competitively advantageous. The article states there is ever-increasing consumer interest in buying a green cleaning product, rising from 20% percent in 2010 to almost 30% in 2014. As for price, in 2014, a survey revealed that nearly 30% of consumers would be prepared to pay up to 20% more for a greener cleaning product. Both Method and the consumer product giants can find support for their respective positions on eco-labels based on these data. Let us start with the consumer product giants. While the trend is in favour of greener products, the data suggest that the majority of consumers remain uninterested about whether the cleaning product is environmentally sound, and even less interested in being willing to pay a premium. In the words of the article:
“… the majority are still more interested in how much they [the cleaning products] cost and how well they work. The soap giants have perfected their advertising messages over decades to concentrate on these factors, and are loth to change a successful formula.”
From such a vantage, there is no commercial place, it would seem, for the eco-label.

As for a company such as Method, the data would appear to offer an attractive (and growing) niche market, where eco-labels are a central part of the branding message. While the article does not explicitly discuss price points, Method may also enjoy a higher price point for its product (this Kat thinks of the organic food shop around the corner, which seem to combine an array of similarly placed niche products-some with eco-labels, at an elevated price point that leaves Mrs. Kat with a dilemma: “Should I or shouldn’t I?”). Still, given the trends set out in the data, this Kat cannot help but speculate what will happen when a majority of consumers will prefer a greener cleaning product. Should this occur, it would seem that the eco-label would no longer be simply “nice to have”, but a prerequisite for all those who wish to compete in this market. How such changes will require the consumer product giants to find a new branding message, on the one hand, and challenge a company such as Method to compete as a mainstream, rather than as a niche player, on the other, are worthy of further consideration.

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