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Green is the new consumer mantra

By Michel Brekelmans and David Xu (China Daily)
Updated: 2009-08-28 17:17

The survey has thrown up an interesting generational trend. New parents appear the most concerned about the environment and show a higher propensity to pay a relatively high premium for green products.

Generation Y are the best potential "green" consumers, although they seem less worried about the environment and exhibit few eco-friendly habits. But they make up their lack of concern with their buying habits and their willingness to pay higher premiums for trendy products.

The survey shows environmental awareness is increasing. But factors such as price and health often play a more important role in influencing consumers' decision.

To be successful, companies have to target specific segments of consumers with their green products and services. Food, personal care and household products are areas in which local firms have employed this strategy successfully, often by combining a "green" message with other key benefits, especially health.

In other categories, companies have to emphasize the benefits of eco-friendly products by comparing them with the other key criterion for consumers: cost. This strategy can be of special importance to makers of home appliances and electrical goods, including energy saving bulbs.

Related readings:  Commentary: China bets big on green future  China paving the way in green energy  China vows green commitments: road to Copenhagen  A green opportunity not only for China

Another interesting result of the survey is that being green is associated with being better for some products and it allows companies to charge a premium for them. That is especially the case with fresh food products such as meat, seafood, fruits, vegetables and dairy products.

Soaps, detergents, disinfectants, floor and toilet cleaners and other home cleaning products, and paper and garbage bags will not make people pay a premium.

Luxury items such as fashion accessories, clothing and footwear are not seen as high-quality stuff when they are projected as green products. But consumers still pay a high premium for them for their brands.

The survey shows a gradual but measurable shift in Chinese consumers' attitude toward the environment. This has started translating into willingness of consumers to change their buying habits and even to pay a slight premium.

This premium may not be high now, but the trend indicates the shape of things to come and will prompt eco-friendly product makers to serve a growing category of consumers to earn higher profits.

Michel Brekelmans is a partner with LEK Consulting based in Shanghai and David Xu is manager of LEK.

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