Two recent news articles remind us that enviornmentally superior products need to be priced right. CNN Money reports that the higher cost of organic products is a primary deterrent to many consumers. Throw in some skepticism and confusion resulting from all the hype, and only 45% of those surveyed think organic is good for them -- down from 54% two years ago. Environmental Leader's report on the National Marketing Institute's consumer trends database states that only 30% of consumers are prepared to pay a 20% premium for more sustainable products.
These are important data points. Other things (including price) being nearly equal, there is little doubt that the more environmentally-friendly products will perform better in the market. But it is going to get increasingly difficult to charge a premium for these products, especially in a period of economic uncertainty and high energy prices -- the latter likely to stay with us for a long time. This brings me back to one of my earlier arguments: Reducing a product's carbon footprint is likely to yield immediate financial returns by way of reduced energy costs and other efficiencies. AND, if the environmental superiority of the product is documented and communicated properly, it might also yield additional returns by way of increased market share. All this even before carbon emissions have been monetized correctly. If done right, the full ROI of improving environmental performance may well justify mainstream pricing for a superior product.