Recently the Wall Street Journal explored one aspect of this perennial question. Will consumers pay more for products they believe are ethically superior to regular products or even products produced in an unethical fashion? I have known the answer to this question for quite some time. If consumers weren’t willing to pay a premium for products that are ethically produced, Seventh Generation would simply not be in business.
The more difficult questions — “how much” of a premium, exactly what does “ethical” really mean, and must the ethical imperative apply to both the company and the product — were unfortunately beyond the scope of the article’s inquiry. Nevertheless, when the Journal announces that based upon its own analysis, consumers are willing to pay more for ethical products, we should celebrate.
The article reports that consumers will pay 65% more for coffee that is ethically produced than for coffee that is unethically produced. I found that pretty astounding. At Seventh Generation, we try to keep our price premium to 10-20%.
REWARD AND PUNISHMENT What consumers were willing to pay for a pound of coffee based on what they were told about the company’s production standards Ethical standards – $9.71 Unethical standards – $5.89 Control (no information) – $8.31 Source: Remi Trudel and June Cotte, Wall Street Journal
This evolution in consumer consciousness is in part due to the increasing amount of widely disseminated information on what unethical corporate behavior actually looks like.
The mainstreaming of the corporate responsibility movement, which is represented by the increasing frequency of stories like this, is a wonderful thing. But companies that have been practicing corporate responsibility for the past five, ten, or even twenty years must remember three things:
• The bar is being raised on what it will take to stand out as a responsible business
• Scrutiny of responsible behavior is just beginning to increase
• The total lack of widely agreed-upon definitions of “ethical” and “responsible” corporate behavior create an increasingly confusing landscape for consumers
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