Green as a Status Symbol: Why Increased Prices May Increase Sales

This post is part of a blogging series by economics students at the Presidio Graduate School's MBA program. You can follow along here.

By: Lindsey Kauffman

A commonly heard, and personally experienced, critique of the sustainability movement is the relatively high cost of green products compared to traditional products. I can spend .99 cents on a bottle of shampoo that cleans my hair but has 25 ingredients listed on the back, most of which I have trouble pronouncing let alone knowing what they actually are or what effects they will have on my health. Or, I can purchase a bottle of green shampoo made from significantly fewer and easier to identify ingredients, but it will cost me ten times as much. The significantly higher price of green products inhibits my, and other consumers, ability to purchase them, but more importantly it creates a divide between consumers that are able to purchase green goods and those that are not. The sentiments associated with this divide are often carried over into the sustainability movement as a whole giving it an exclusionary, or even elitist, vibe. It seems the simple answer would be to find a way to make green products cheaper.
With that in mind, I began doing some research into the higher prices associated with green products, expecting to find reasons such as higher quality ingredients, organic ingredients, certification fees, fair wages, carbon off-setting etc. Not surprisingly, I did find all of these reasons, but I also came across a September 2009 National Post article titled “Consumers attracted to status of “green” products more than benefits, research suggests.” The gist of the article, and one of the conclusions of the research, is that consumers are willing to purchase green products, even those seen as inferior to traditional products in quality, at a higher price, but not when the price is lowered.

Why? Because of the social status associated with the sacrifice of paying a higher product for the good of the environment. The research indicates that this status motive declines when the price of the green product is lowered because the element of sacrifice no longer applies. These results are not only interesting, they also provide some very valuable insight into consumer behavior that could, in theory, be used to promote the sustainability movement and increase demand for green goods.

In general, I do not care what a person's motives are for making sustainable choices, as long as they make them. Any improvement is an improvement no matter the reason for it. However, pricing green goods in a way that encourages their purchase because of the status associated with them will inevitably exclude certain demographics, furthering the exclusionary tendencies seen by some in the sustainability movement. Environmental concerns, although undeniably important, only represent one third of the sustainability movement. A focus on the other two thirds, social and economic concerns, is equally as important to achieve true sustainability. While a higher price on green goods may indeed have environmental benefits, the implications of ignoring social equity and inclusiveness issues on the larger sustainability movement need to be considered.