Following the path of the Research Note on Purpose-driven Businesses issued last month, the Center for Responsible Business & Leadership has published this week our Research Note #4 titled Purpose-driven Consumption. We aim to understand whether there is something special about a different sort of Consumption, led by the appeal of purpose-driven products and services sold by more purposeful companies.
Consumers of the twenty first century are looking for companies, brands as well as products, that inspire them to do good. As active stakeholders, consumers are prioritizing sustainable consumption decisions so that Purpose becomes a more integral part of their lives (Accenture, 2018).
As more and more consumers wish to be part of the solution to current sustainability challenges, they are shifting their consumption spending to where their hearts are. Since 2014, sustainably minded shoppers have grown the sustainability product categories by 20% with a compound average growth rate (CAGR) four times greater than conventional products. In 2021, sales expectations for sustainable FMCG goods in the US are expected to reach $150 billion, an increase of $14 billion to $22 billion (Nielsen, 2018). In fact, an increasing number of consumers today no longer wish to feel detached from the market dynamics but instead engage with it by investing their money and voting with their purchases for the greater good. These are what we call purpose-driven consumers - consumers that are driven by companies and associated brands that are contributing positively to a sustainable world and conscious capitalism. These are the customers who are attracted to companies that have a purpose-centric mission and are designed to inspire a call to action through the brands they endorse – purpose-driven brands. Purpose-driven brands are thus the face validity of a purpose-driven company, a reflection of its actions and image such as Unilever or Tesla are.
This trend is changing the way consumers relate with companies and brands, shifting to a dialogue that is more collaborative in nature.
Much of this is triggered by key trends in consumption. At a time when different generational cohorts co-habit in the workplace and around the marketplace, meeting customers’ expectations is key to meet companies’ competitiveness. Therefore, understanding these differences and aligning common points between generations’ preferences can open the dialogue between business and consumers that aim for a greater Purpose.
A 2020 study conducted by researchers at Católica-Lisbon School of Business and Economics explored consumers’ responses to a wide range of social and environmental topics, such as which type of product and service categories consumers attribute most value when seeking sustainability. They were also asked about their perceptions concerning Purpose-driven business and consumption, as well as generational differences in sustainable shopping behavior. Responses were mapped according to what consumers actually buy and the reasons they give for their purchase decisions. Key findings are listed in the Research Note.
We believe Purpose-driven consumption is among the biggest trends of our time and is touching every generation. This type of consumption can be better described in a virtuous circle proposed in the Research Note: it focuses on sustainable products and services that trigger an emotional bond with customers and inform their buying-decision – that then, if there is consistent Company coherence, leads to a long-lasting loyalty.
Companies and brands should, therefore, pay attention to this change and bring purpose to the core of what they do and to the products and services they sell, so that an open dialogue with their customers is established. Building the dialogue between purpose-driven brands and consumers has never been so crucial and is here to stay!
Have a great and impactful week!
Vera Herédia Colaço
Assistant Professor (Adjunct) and Researcher
Católica-Lisbon School of Business and Economics
This article refers to edition #65 of the "Have a Great and Impactful Week" Newsletter.
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