Insights

Tracking Tactics: Sustainability Practices That Lead to Sales
Article

Tracking Tactics: Sustainability Practices That Lead to Sales

There’s mounting evidence that supports the notion that a commitment to corporate sustainability practices is a basic cost of entry for companies that hope to succeed in the marketplace. In just two years, we’ve seen significant increases in the number of consumers who say that they want products from sustainable companies, and they are willing to spend more to get them. As concerns about the environment and corporate sustainability continue to build momentum around the world, understanding the connection between sentiment and purchasing actions has never been more important. Have companies risen to meet consumer expectations?

One way to assess the situation is to measure a company’s “demonstrated commitment,” to sustainability practices by using one or several of the following marketing tactics within its overall consumer brand messaging strategy:

  • Claim Only: A brand directly indicates a connection to sustainability on a product’s label or packaging.
  • Marketing Only: A brand uses web sites, news coverage, and other messaging vehicles to promote positive social and/or environmental impact in the local or global community.
  • Claim + Marketing: A brand uses a product claim and also integrates sustainability into its marketing promotion.

While not all brands offer sustainable products, marketing social and environmental impact initiatives is the predominant strategy used to reach consumers. In 2014, 65% of total sales measured globally were from brands that used a marketing-only tactic, which produced a 4.3% growth in sales.

Overall, the study finds that using a traditional marketing tactic is a driver of sales growth for brands communicating sustainability. On-pack communication is helpful, but it requires marketing muscle to reinforce the messaging and ensure that the message reaches the relevant consumers. In fact, Nielsen’s Global Corporate Sustainability online survey shows that TV ads highlighting a company’s commitment to positive social and/or environmental impact are influential in the path to purchase for 34% of global respondents. Brands that actively reinforce societal commitment must amplify and socialize their message using multiple sources and distribution channels.

“While marketing good deeds is critical and expected by consumers, authenticity and credibility are essential,” Says Carol Gstalder, SVP, Reputation & Public Relations Solutions, Nielsen. “Using multiple communication methods is important—i.e., third-party validation (news coverage), annual reports, affiliation with a respected non-profit or civic organization, employee volunteerism, advertising, or reporting actual work in the community on a web site.”

LOOKING THROUGH A CATEGORY LENS

Sustainable claims are more prevalent among consumable brands in the study than those that are non-consumable.

Brands that use a claim + marketing sustainability approach—including baby food (85%), coffee (78%), snacks (60%) and tea (61%)—comprise the majority of sales measured in these categories, respectively.

In contrast, many home-goods categories primarily use a marketing-only sustainability approach. Brands using this strategy—such as household cleaners (86%), laundry detergent (82%), paper towels (91%) and bath tissues (69%)—account for the majority of sales measured in their categories.

The heavier use of claims for consumable goods may indicate that customers consider sustainability a higher priority when buying products they personally consume versus those used around the house. This presents an opportunity for consumable products that focus solely on marketing to add claims to their overall strategy for increasing growth.

However, it’s worth noting that in some non-consumable categories, use of claims can correlate with higher sales growth. When we looked at the laundry detergent category, brands that use marketing-only tactics show a negative value sales growth of 0.1%. By contrast, brands that use a claim tactic (either alone or with marketing) show higher growth (9.6% among claim only and 5.3% among claim + marketing brands). The data shows similar trends among paper towels and bath tissue.

Other findings from the recent report include:

  • Trust is an important purchase driver, as 62% of global respondents say they’re influenced to buy when a product is made by a brand/company they trust.
  • The percentage of sales that came from brands using both a product-claim tactic and a sustainability-marketing promotion is much higher in developed markets than in developing countries.
  • Two-out-of-three Millennial respondents are willing to pay more for sustainable offerings, up from approximately half in 2014.
  • When it comes to sales intent, commitment to the environment has the power to sway product purchase for 45% of consumers surveyed. Commitment to social value (43%) and the consumer’s community (41%) are also important purchase drivers.

For more detail and insight, download Nielsen’s Global Corporate Sustainability Report.

About the Nielsen Global Survey

The Nielsen Global Survey of Corporate Social Responsibility and Sustainability was conducted Feb. 23 – March 13, 2015, and polled more than 30,000 online consumers in 60 countries throughout Asia-Pacific, Europe, Latin America, the Middle East/Africa and North America. The sample includes Internet users who agreed to participate in this survey and has quotas based on age and sex for each country. It is weighted to be representative of Internet consumers by country. Because the sample is based on those who agreed to participate, no estimates of theoretical sampling error can be calculated. However, a probability sample of equivalent size would have a margin of error of ±0.6% at the global level. This Nielsen survey is based only on the behavior of respondents with online access. Internet penetration rates vary by country. Nielsen uses a minimum reporting standard of 60% Internet penetration or an online population of 10 million for survey inclusion. The Nielsen Global Survey, which includes the Global Consumer Confidence Index, was established in 2005.

About the RETAIL SALES ANALYSIS

The findings from the retail sales information included in this report are collected from stores using electronic point-of-sale technology and/or teams of local field auditors. The data represents a cross-section of 1,319 brands among 13 categories (both consumable and non-consumable categories) across and average of 13 countries* for the 12-month period ending December 2014. On average, the brands measured in this study represent 73% of 2014 value sales (USD) in each country-category analyzed (private label brands were not included). Stores within Nielsen’s worldwide retail network include grocery, convenience and discount retailers, who, through various cooperation arrangements, share their sales data with Nielsen.