The Credit Crunch Bites us in the Ethics

Over recent years, brands have been quick to move into the ‘ethical space’ and offer greener alternatives for consumers who want to buy a product they perceive as being more ethical than the norm. This could be fair-trade coffee, organic chocolate, renewable energy, an ethical investment policy or perhaps a mobile phone made from recycled materials. The catch with most of these moral choices is that they tend to come with a higher price tag.

In March 2008 GfK NOP conducted a UK-wide survey looking at this ethical branding issue. At the time of this survey it was found that 24% of UK consumers agreed that they would pay a 5%-10% premium for an ethical technology product over a conventional one of the same quality - a significant number of people for what might be deemed a niche product. So was it time for the recycled/low-energy/fair-trade mobile phone and MP3 player to go mainstream?

Perhaps not; a common question asked is what sort of consumer is likely to pay a premium for these ethical products, and would they still be willing to do so when times get tough.

Well, times are certainly getting tough now, so GfK NOP have conducted a follow-up survey to find out what impact the current economic environment has had on purchase intention of ethical brands. Over the last 12 months, our GfK NOP Consumer Confidence tracker has shown a steady downward trend as the UK shopper has got less positive about both the economy in general and their own personal situation. So it is not surprising to note that the percentage of UK consumers agreeing that they would pay a 5%-10% premium for an ethical technology product has now fallen to 17% - a fall of almost 1/3.

However, at the same time, it appears that we are more aware of companies offering these types of products and services, driven by an increase in advertising and promotion by manufacturers of their green credentials… Awareness is higher, it just that we’re not yet willing to pay more for them.

This poses an interesting question: if we, the consumers, are forced to restrict our ethical purchases to the demands of leaner wallets, will the manufactures investigate ways to produce greener products without the premium?