by: Danielle A. Pingitore | October 23, 2024
In today’s uncertain world, risk is an ever-present companion for customers and companies. As wallets tighten and consumers become increasingly selective with their spending, businesses face tough decisions.
When sales dip, it’s tempting to start snipping away at budgets. All too often, marketing expenses—including crucial sustainability initiatives—end up on the chopping block, viewed as “nice-to-haves” rather than essentials. But here’s the catch: while prudent cost management is vital, abandoning core missions or disregarding evolving customer needs can seriously impact long-term growth.
So, how do we strike the right balance? The key lies in strategic, thoughtful budget adjustments that align with your customers’ changing expectations. Let’s explore why maintaining your sustainability focus might be more important now than ever.
The Psychology of Purchasing Decisions
In times of inflation and limited buying power, purchasing decisions typically depend on three key factors: disposable income, consumer confidence, and a tightened hold on core values. As inflation depletes buying power, consumer confidence is rapidly declining. Consequently, customers are adjusting their behavior in fundamental and potentially permanent ways.
Consumers are awakening to the reality of substantial debt accumulated in pursuit of “the good life,” often driven by aggressive marketing. In the United States, total household debt reached $17.80 trillion in the second quarter of 2024, an increase of $109 billion from the previous quarter. To align with changing consumer priorities, C-suite executives and marketers must analyze and understand their evolving customer segments and purchasing preferences.
Generally, purchases fall into four categories:
- Expendables: Surplus spending or unjustifiable
- Delayables: Purchases without immediate necessity
- Indulgences: Consumption on the justifiable side
- Essentials: Necessary for survival
As consumers reevaluate their priorities, they typically rearrange their purchasing decisions, moving towards core essentials. Increased price sensitivity also erodes brand loyalty, with consumers seeking cheaper alternatives and moving away from private labels.
To maintain success, companies must focus on retaining loyal customers and ensuring their products are prioritized as essentials. In this environment, brand identity, core values, and effective marketing are more crucial than ever.
The Sustainability Opportunity
As sales become scarce, a significant market or price shift can potentially alienate your loyal customer base. Now is the time to commit to a long-term strategy. The best course of action is to stabilize your brand, reinforce core values, and clearly communicate your value proposition. Remind consumers that your brand is essential and that your products are worth their investment.
An Example Case Study featuring De Beers
De Beers, a diamond jewelry company, exemplified this mindset after initially reducing its marketing budget early in 2008 as its revenue declined. Consumer research revealed that the recession was causing consumers to purchase less while focusing on quality. With this insight, De Beers doubled its marketing spend from the previous year. Their new proposition centered around the message: “Here’s to less,” promoting the idea of “fewer, better things” backed by enduring quality — “a diamond is forever.”
In response, its sales stabilized.
While this case study isn’t solely focused on sustainability, it offers two important lessons for leadership. First, adapting to consumer trends and investing in marketing can be invaluable as we navigate potential recessions. Second, responding to shifting consumer values is critical. De Beers recognized the importance of reduced materialism and a commitment to value in 2008. Today, the emphasis on environmental consciousness is even more vital. Ongoing climate challenges have strengthened the importance of minimalism, sustainability, and mindfulness—qualities that consumers now expect from the brands they view as essential.
Standing Out in a Price-Sensitive Market
As consumer habits shift due to decreased buying power and growing climate concerns, embedding environmental action into your brand’s DNA can powerfully align with evolving consumer needs.
In a compelling case study by Rebecca Henderson, Unilever-owned Lipton differentiated itself in the highly competitive and commoditized tea market by boldly committing to purchase 100% sustainably grown tea—a massive undertaking that required training for over half a million farmers and accepting a significant price increase.
This shift to sustainable farming practices was based on a critical assumption: embracing sustainability would yield economic returns.
- Improved tea quality
- Safer farming practices
- Increased crop yields
- Estimated increase of 10-15% in average farmer income
While Unilever’s costs rose as expected, the marketing department faced the challenge of communicating this new, environmentally conscious position to consumers.
The entire marketing budget was dedicated to promoting the new sustainability position in the United Kingdom, which accounted for about 10% of Unilever’s tea sales. The campaign centered around the slogan: “Do your bit: put the kettle on,” communicating the positive impact of drinking their tea.
The results were impressive:
- 1.8-point increase in market share
- 5% increase in repeat customers
- 6% rise in overall sales
This success demonstrated that the planet and profit can indeed coexist. The shared value strategy effectively reduced risk, increased demand, and established a symbiotic supply chain.
Getting Started on Your Sustainability Journey
Consumer demand for environmentally friendly products and services is on the rise! In the past five years, 85% of consumers have shifted toward sustainable goods, and nearly 10% are willing to pay a premium for these products. Now is the perfect time to differentiate yourself and explore innovative decarbonization solutions.
Are you ready to kickstart / elevate your sustainability journey? Contact Us with questions!
You can also learn more about ClimeCo’s customizable solutions for businesses of all sizes and industries below:
- The EcoCommitted Partner Program, designed for small to midsize businesses, provides a cost-effective way to address carbon emissions, plastic waste, and shipping impacts. This solution includes dedicated customer support. You will also receive badges for display and a marketing kit so your company can demonstrate its environmental commitment.
- For larger companies, ClimeCo Certification Programs offer detailed accounting of business emissions or product lifecycles, enabling them to take targeted actions toward reducing their environmental impact.
- Our user-friendly business emissions calculator can also determine a business’ carbon credit needs based on actual (or estimated) annual operational data. The data for this calculator comes from the EPA and the U.S. Department of Energy.
Works Cited
Federal Reserve Bank of New York – Center for Microeconomic Data
Harvard Business Review – How to Market in a Downturn
Reuters – De Beers sees hope in U.S.
Rebecca Henderson – Reimaging Capitalism in a World on Fire
Wework – What companies are doing to become more sustainable
PWC – Consumers willing to pay 9.7% sustainability premium
About the Author
Danielle A. Pingitore assumes a pivotal role in orchestrating the seamless execution of daily marketing operations, ensuring alignment with the company’s mission and commitment to high-quality brand standards. With a career spanning over 15 years in sales and marketing, Dani brings a wealth of expertise to her multifaceted role.
Her responsibilities encompass the strategic development of marketing initiatives, adept management of intricate digital projects, and establishing key efficiencies and success metrics for the entire team.
Danielle holds a Bachelor of Science in Business Administration with a concentration in Marketing and minors in Advertising and Design from Kutztown University.
