The awareness and evolution of environmental sustainability has provided numerous opportunities for organizations to market new products and services (or re-label and claim existing products as such) that are identified as eco-friendly.
The fact is that many of these products are making false advertising claims as a means to increase market share and improve profit margin. A study conducted by Terra Choice in 2010 found that 95% of consumer products analyzed make false advertising claims to some degree.
So how then can organizations ensure that premiums being paid for environmentally sustainable goods and services are sound investments which will meet sustainability goals and improve profit margins?
There are three fundamental means of ensuring competitive pricing despite the claims made by marketing:
Costs versus benefits.
Applying a cost versus benefit analysis will identify if the premium price or investment outweighs the benefits a product or service will provide for your organization.
Proof is in the pudding.
Request that suppliers provide documented proof to support eco-friendly claims. Proof should be in the form of measurement, certification, or test results from a certified or recognized third party.
Ask for references.
Request that the supplier provide references from other organizations that have purchased or implemented the materials or services. Make contact with these organizations and request information on the results they achieved.
It doesn’t take a study to recognize the exponential growth of products and services claiming to be environmentally superior alternatives. It is however, prudent business practice to ensure that a premium price invested for such will deliver the benefits claimed and result in support of the organization’s sustainability goals and objectives.
© Shawn Casemore 2011. All rights reserved.