Slate.com reports on a new study that essentially asks whether it actually pays for companies to demonstrate social responsibility.
The study, done by a pair of Harvard researchers, Michael Hiscox and Nick Smyth, “set out to discover whether customers prefer to buy from do-gooder companies. In their research at Manhattan's ABC Carpet and Home, they found that shoppers care a lot. When an item was labeled as being produced under ‘fair labor’ practices, sales jumped. And when Hiscox and Smyth raised the prices of ‘fair labor’ products, people bought even more than before. So, at least for ABC Carpet, being nice is good business.”
And here’s what’s really interesting. When the researchers marked up the prices on products designated with these labels, sales went up. The more prices went up, the better sales did – perhaps “because the higher prices made the products' fair-labor claims more credible.”
However, it is critical to the discussion to note that “ABC customers are wealthy, liberal New Yorkers who can afford to pay $15 for a candle or $40 for a single towel. So, what we've really learned is that socially minded rich folk can afford to let conscience dictate their purchasing decisions, whatever the markup. ABC shoppers, however, represent only the tiniest sliver of American consumers, and their buying preferences alone aren't enough to make American businesses kinder, gentler, and cleaner.”
The big question – and one that both Hiscox and Smyth concede remains unanswered – is whether this trend will translate to mainstream retailing experiences: Will Wal-Mart customers pay more for products that are said to be produced in a socially responsible or environmental way?
The study, done by a pair of Harvard researchers, Michael Hiscox and Nick Smyth, “set out to discover whether customers prefer to buy from do-gooder companies. In their research at Manhattan's ABC Carpet and Home, they found that shoppers care a lot. When an item was labeled as being produced under ‘fair labor’ practices, sales jumped. And when Hiscox and Smyth raised the prices of ‘fair labor’ products, people bought even more than before. So, at least for ABC Carpet, being nice is good business.”
And here’s what’s really interesting. When the researchers marked up the prices on products designated with these labels, sales went up. The more prices went up, the better sales did – perhaps “because the higher prices made the products' fair-labor claims more credible.”
However, it is critical to the discussion to note that “ABC customers are wealthy, liberal New Yorkers who can afford to pay $15 for a candle or $40 for a single towel. So, what we've really learned is that socially minded rich folk can afford to let conscience dictate their purchasing decisions, whatever the markup. ABC shoppers, however, represent only the tiniest sliver of American consumers, and their buying preferences alone aren't enough to make American businesses kinder, gentler, and cleaner.”
The big question – and one that both Hiscox and Smyth concede remains unanswered – is whether this trend will translate to mainstream retailing experiences: Will Wal-Mart customers pay more for products that are said to be produced in a socially responsible or environmental way?
- KC's View:
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Remember something that Michael Sansolo reported on about a month ago? He said that during a recent trip to Australia, he found out that about eight percent of Australians were willingly spending more money to sign up for environmentally friendlier energy. The cost for an Australian family opting into this new program ranges from $50 to $400 per year. And I firmly believe that plenty of Americans would make the same kinds of choices.
I also can’t imagine that it is only liberals who use their purchasing power to do the right thing. After all, there are plenty of examples of companies that have positioned themselves as being socially responsible – Ben & Jerry’s, Newman’s Own, and Starbucks immediately come to mind – and they aren’t successful just because liberals consumer their products.
Certainly there are people who are unable to make so-called “right choices” because they simply cannot afford the luxury. But I think that more and more people are conscious of the fragile nature of the world we live in – not just environmentally, but also socially and culturally, as we see issues like terrorism and poverty and hunger all around us. (“All around us” means something different these days, since computers put events that take place thousands of miles away on our front steps…and harder to ignore.) And most want to do the right thing.
