Having it all: value and sustainability

In virtually all market sectors, the squeeze on consumers' wallets as a result of today's economic roller-coaster is forcing difficult choices and uncomfortable trade offs. Every penny counts, so being sure to get the best 'value' possible is imperative as consumers come to terms with their options – consume less, demand more for less or make new and different choices altogether.

The term 'good value' has become synonymous with cheap or low cost. But the reality is that the meaning of value has evolved as consumers expect more for their money, basing all decisions on the question 'Is it worth it?' We could all take a leaf out of billionaire Warren Buffett's book; he said 'Price is what you pay. Value is what you get.' Perception is key – a weekly shop from low-cost but no-frills discount store Lidl offers value in an entirely different way to buying this season's limited edition handbag from an exclusive event at Chanel. Value can be communicated in different ways, from low-cost bargains such as the Tesco Value range, product bundles like Boots '3 for 2 Mix and Match' or an end-to-end experience such as Ocado's home delivery service offering.

So, in an era where sustainability is increasingly part of the choice equation, today's cultural context is creating a tension between a sustainable choice and one that offers 'good value'. Consumers are interacting with or disengaging from sustainability issues for different reasons, placing them firmly at opposing ends of the spectrum. At one end are the committed, who see changing their detergent for a more environmentally friendly one as a no-brainer; at the other end are the cynics, who believe that it's either simply all greenwash or are put off by the often premium price tags attached. Even in prosperous times, value comes top in the decision-making criteria for sustainability. In fact, our 2007 research showed that consumers were not willing to go beyond a price premium of 10–15% for sustainable products, and that's likely to be even lower today.

However, we also know that sustainability is seen as a driver of emotional value and, in fact its absence can be seen as a negative. Brands have a chance to gain competitive leadership by creating choices that offer not just sustainability or value, but both. Not only will this boost brand loyalty by displaying a clear appreciation of consumers' needs in tough times, but also reaping much needed financial rewards. To achieve this holy grail, brands need to find that elusive 'sweet spot' where the brand's value proposition and sustainability strategy overlap.

FOUR BRAND MODELS FOR INCORPORATING SUSTAINABILITY

First, brands should decide how they are going to engage in sustainability in a way that fits with their core brand DNA. There are several factors to bear in mind, from the brand's personality to the core proposition, and to what level sustainability should be translated into a consumer dialogue. Added value has developed four sustainable brand models as guidance when communicating sustainability. There's also a fifth model, which relates to brands that have embraced sustainable practices but chose not to do anything in a consumer-facing way. Ultimately we believe that sustainability will be a table stake in doing business, so at some point brands operating the fifth model will need to choose a consumer-facing approach, as outlined below.

The Crusader

Brands like Ecover, American Apparel and the Body Shop, built on strong ethical beliefs with a cause-led approach that demonstrates leadership by raising awareness of an issue. While these brands are authentic because they deliver a constant evolution of the cause, they need to be mindful not to sound too worthy, or too niche, to be irrelevant.

The Harmonist

Brands like Yeo Valley, Patagonia or Innocent, have a set of holistic sustainable ideals, brought to life with strong brand values, tone of voice and guiding principles. Authenticity is inherently part of the brand aura. These brands need to be careful to keep culturally relevant as they grow.

The Changeling

Brands like M&S and GE, which have made a decision to make responsibility a part of their brand DNA: a fundamental repositioning that shows their commitment by pioneering initiatives and showing a willingness to take risks. Authenticity comes through tangible delivery of initiatives, being honest and open about the journey they're on. This is, however, a transition state moving towards a harmonist.

The Selector

Brands like Sainsbury's, HSBC, Tesco – in fact most brands – fall into this model. They have a clear brand positioning and a clear idea of how and when sustainability issues will be incorporated into their core values. Brands demonstrate commitment by targeting specific issues and executing each one well, which in turn drives credibility. The problem, of course, is that these brands are most susceptible to criticism of greenwashing.

CHOOSING THE ISSUES

Having decided on an approach, companies then need to identify which issues they will tackle from the three areas of sustainability options: public health, social and economic fairness or the environment (see Figure 1). This is an opportunity for brands to tackle either a brand or category issue head on, which will resonate most with consumers and gain leadership in the process.

M&S, firmly established as pioneering sustainable initiatives with its 'Plan A because there is no Plan B' campaign was predictably the first retailer to charge 5p for plastic bags, already donating £246,000 to the charity Groundwork. Other examples include Ariel tackling energy efficiency with its 'Turn to 30' campaign and Ren pioneering the concept of 'Clean Bio Active Skincare' to counteract the growing concern over toxins in beauty products.

Once a brand has a clear understanding of how to approach the sustainable journey in a way that's right for its DNA, the challenge of reframing value to incorporate sustainability becomes clearer. Consumers need to be shown how value comes from seeing that 'what goes around comes around'.

In the same way as economies are only now starting to take into account the costs of past irresponsible behaviour, so consumers need to consider the long-term impact of their own individual choices. And of course there is value in avoiding that cost. Encouragingly, there is already evidence of brands stepping up to the challenge of integrating sustainability into their value proposition. Here are some examples:

• A healthier diet will lead to less sickness avoiding expensive medical bills. Brands leveraging the health and quality benefits of organic produce include success stories like Yeo Valley, Dorset Cereals and the extended range of Sainsbury's So Organic.

• Locally sourced produce reduces pollution from transport, supports local businesses and is more convenient. For example, Waitrose proudly sells local products within a 30-mile radius of a branch with its 'Local Food' range. Abel & Cole, the fastest-growing organic home delivery service, not only provides environmentally friendly convenience but also educates its customers about the virtues of seasonal produce.

• Better-quality fashion is more durable than 'disposable' options that rely on cheap labour, thereby eliminating child labour, reducing waste and creating savings in the long run. Primark was famously exposed on BBC's Panorama and could take learnings from American Apparel, which offers sustainable everyday basics at affordable prices.

• Energy-saving appliances reduce carbon emissions and create savings on energy bills. Corporate giant General Electric launched its 'Ecomagination' brand to focus efforts on a production line of products that are as economically advantageous as they are ecologically sound. Aveda creates the perception of value by being the first beauty company to manufacture with 100% wind power. It integrated this message into its value proposition with the launch of its 'Smooth Infusion' range, which states 'Our newest way to smooth hair protects clean air'. Supermarket giant Wal-Mart has firmly aligned sustainability to its value propositions of giving customers the best price with its new tagline 'Save money. Live better' supported by regular product offers that 'Save money. Save energy. Save the environment'.

• Packaging reduction and recycling minimises waste going to landfill and reduces carbon emissions. P&G has stated its corporate intent by embarking on a consumer education programme, 'Future Friendly'. Significant sustainable initiatives are spearheaded by key brands such as Lenor Concentrate, whose advertising campaign claims to 'Save Money. Concentrate' – not just by reducing packaging, but also using less due to the concentrated formula.

• Transparent practices are a form of insurance against danger or corruption and a sense of security about the brand choice. Being 'good' with money remains central to the values of the Cooperative Bank, which has turned away £900m of loans to businesses not in keeping with its ethical policy.

• Virtual working, communicating and shopping reduces carbon emissions, but also saves both time and money. Ocado has built its continued success on this premise by delivering shopping to homes in biodiesel vans and saving an estimated 40 car journeys to the supermarket each day.

• Biodiversity protects natural resources, eliminating impact on the land. Coca-Cola is committed to become water neutral by preserving and protecting fresh water resources worldwide. Unilever has pledged to source 100% of its palm oil from certified sustainable sources by 2015, bringing an end to the destruction of Indonesia's peatland rainforests.

When we don't care about the impact we're having today, there is always payback tomorrow. Brands will benefit by developing a strategy that meets consumers' values in terms of sustainability coupled with their growing need to get the best value in terms of price. The key to success is to create a seamless and relevant fit with the brand DNA so it doesn't feel at odds with the familiar brand promise.

The economy will recover, probably within the next two to three years, but sustainability and the health of our planet is a tougher disease to cure. Companies have a responsibility to provide sustainable choices to help consumers make the right choices that also deliver against their need for value. To quote the UN Environment Programme, 'The only way out of this recession is towards a low-carbon economy.' It's no longer a question of sustainability or value. It's got to be both.

Figure 1: Sustainable Options