Who Will Pay?
According to estimates in the Nutrition Business Journal last year, the natural food and beverage products industry grew 8.9 percent in 2015, adding $14.7 billion in sales. Though a fraction of the conventional market, pro-environmental offerings are outpacing other sectors. Small wonder that 82 percent of companies plan to increase their environmental marketing spending.
Will this money be well spent? Conventional wisdom says “yes.”
“People will tell you what they believe all day long, but their behavior changes when they have to spend money.”
Nelson Barber and his co-researchers put this to the test. They discovered that marketing these products is complicated. Consumers, despite their strong pro-environment beliefs, may not always be willing to pay.
“Messages promoting environmental behavior play on normative beliefs,” Barber said. “For example, consumers should purchase and be willing to pay more for locally produced or environmentally friendly products. Yet in several of our studies measuring willingness-to-pay intentions and behavior, we found that while those holding stronger normative beliefs indicate greater intentions to pay more for local or organic products, their actual behavior said something different.”
As he puts it, “People will tell you what they believe all day long, but their behavior changes when they have to spend money.”
Barber arrived at this finding by holding an experimental wine auction that included a blind tasting followed by two steps during which participants learned more about the wines, including whether it was organically produced. At each step, participants stated how much they would pay. Then a random drawing from one of the steps determined the price the winner pays. Using intentions and normative beliefs survey data collected weeks earlier, Barber found that people who actually have lower intention of buying organic wine are more predictable.
“The gap between what they say and actually do was smaller regardless of normative behavior,” Barber said. “The large gap for those with higher stated intention of buying organic wine, when controlling for normative behavior, nearly disappeared.”
Barber’s research on which consumers should be targeted for environmental products is gaining traction in academic circles. Rather than predicting behavior and relying on high-intention consumers to develop product strategies, as academic research has done, Barber suggests “looking at low-intention people, whose actual behavior is closer to reality, and those with higher intention.”