Nearly every day, I read some article about the importance of “purpose” in the marketing mix. Especially when it comes to younger consumers, what a company stands for matters, and this impacts their purchasing decisions. They are buying on beliefs. But I’m not so sure how this will hold up.
According to research by Edelman, nearly two-thirds of those 14-17 and 62 percent of those 18-26 say that they want to collaborate with brands on addressing issues like racism, climate change, and gender inequality. A stunning 84 percent of teens say they are buying on beliefs. By a 2-to-1 margin, they prefer to have brands “make the world a better place” over brands making them a better person.
Here’s my question. What happens when they’re broke? I don’t think this trend will hold.
To explain my contrarian view, I’ll tell a story about my own weird experience with buying on beliefs versus true consumer behavior.
Buying on beliefs put to the test
Many years ago, I was in the packaging business and led an effort to convert clunky steel food cans to fully-recyclable, easy-open aluminum cans.
In our research, consumers overwhelmingly loved this package. No more messy can openers! We’re doing the right thing for the environment!
Our customer — a huge food company — said this was the most compelling and positive research they had ever seen for a packaging innovation. It was a slam dunk, and they rushed the aluminum can into a testing phase.
We rolled this out to 10 California grocery stores. Colorful ads and in-store displays touted the easy-open end and the environmental superpower of the can.
The package was a little pricier than a steel can, primarily due to the added manufacturing cost of the easy-open end, so the new can was priced two cents above the regular steel can.
Almost nobody would buy it for the two-cent premium.
So we reduced the price to just one penny above the steel can, and still, nobody would buy it.
Consumers were comparing prices and only bought the new can if it was the same price for the same food product.
When we asked them in our research, “would you buy it?” they said “yes,” an answer congruent with their values. But did they buy it? No — an action congruent with their budget and actual buying habits.
The price elasticity of the commodity product was not influenced by the purpose-driven product.
The more expensive package was removed from the market, and the experiment was terminated. The world is still stuck with non-recyclable steel food cans.**
The price elasticity of “purpose”
I recognize that this example is not necessarily an accurate representation of the marketplace today. This was a test on a commodity product among a consumer group that might be less-purpose driven than the youth of today.
But my point is that there is always some price ceiling when it comes to consumer behavior, even if young customers insist they’re buying on beliefs.
Producing a product that is environmentally-friendly or powered by green energy almost always comes with a higher price tag.
That’s why I always look at purpose-driven products and statistics like the Edelman study with skepticism. Sure, people say they’re buying on beliefs … but will they?
Will they buy your higher-priced fair trade eco-product when they’re broke? Will they buy it in a recession? Will they buy an environmentally-friendly package for two cents more when all they need is some corn for dinner tonight?
Here is a perfect example of what I mean. In this example from TikTok a young woman rails against the unfair labor practices of Chinese fashion giant Shein. But then she admits she still buys the clothes because they’re cute and cheap!
Let’s not lose sight of basic human nature and consumer behavior when considering data about purpose-driven consumers.
Yes, people will buy on their beliefs. But we also need to ask, “at what price?”
** Technically, a steel can could be recycled, but it’s probably not economical to do so.
Mark Schaefer is the executive director of Schaefer Marketing Solutions. He is the author of some of the world’s bestselling digital marketing books and is an acclaimed keynote speaker, college educator, and business consultant. The Marketing Companion podcast is among the top business podcasts in the world. Contact Mark to have him speak at your company event or conference soon.
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Illustration created by AI through MidJourney
