Sustainability sells! Really?
New product failure is a common companion for brand manufacturers. Some of these newcomers are labeled as sustainable which could either add to their appeal or increase the perceived risk amongst consumers in terms of what to expect. Is a sustainable positioning of new products a suitable strategy for national brands to overcome high failure rates of their launches?
The study tested several hypotheses based on monthly sales data of 883 new product introductions in 14 categories by 76 brands in the Dutch FMCG market between 2008 and 2011. Of the 883 new products introduced, 56 (6.6%) were positioned as sustainable (they carried an eco-friendly or fair-trade claim).
- The study showed that at that time sales of fair-trade and eco-friendly new products were lower than sales of their conventional counterparts. Consumers seem to be more cautious because they were less certain what to expect from these launches (see figure).
- However, the reputation of a company in terms of corporate social responsibility makes a big difference. A national brand with strong CSR associations can realize higher sales on new products with a sustainability claim, whereas brands with low CSR perceptions will experience substantially lower sales.
- Additionally, sustainable new products that are perceived as more innovative enjoy higher sales compared to less innovative ones.
- Price promotions do not boost sales of new sustainable products and thus do not stimulate product trial. Instead, purchasing sustainable products is an ongoing commitment for consumers and cutting prices alone is not a sufficient incentive.
Introducing a sustainable new product may help brand manufacturers to build their CSR reputation. However, positioning new products as sustainable is not necessarily a viable strategy against failure, especially for brands that do suffer from a low CSR reputation. Throughout the study period (2008-2011) the negative effect of a sustainability claim did not fade over time. This and lower sales may have changed recently given the rising importance of sustainability for consumers around the globe (as demonstrated by our Who Cares Who Does learnings) but the points on caution, company CSR credentials, innovation and promotion are likely to remain important insights.
Source: van Doorn, J., Risselada, H., & Verhoef, P. C. (2021). Does sustainability sell? The impact of sustainability claims on the success of national brands’ new product introductions. Journal of Business Research, 137, 182-193.