Perspectives | Sustainability Strategy in Action
SUSTAINABILITY IS A COMPETITIVE DIFFERENTIATOR
Sustainability is becoming both a requirement and an opportunity for leading organizations around the world. Organizations are taking advantage of this shift to differentiate themselves, strengthen positions in existing markets, and gain access to new markets. At PP&A, we are actively supporting leaders from various sectors to develop sustainability-focused product and market strategies.
As a result of some of our recent efforts, we are sharing some of the key learnings from our work as follows:
Conducting voice of customer studies focusing on the demand for sustainable products/services
Defining customer value propositions and willingness to pay for sustainability
Assessing value chains and sizing markets for sustainable product markets
Developing go-to-market strategies and business cases for sustainable products
WINNING WITH SUSTAINABLE PRODUCTS
Developing winning market strategies for sustainability-focused products is not an easy feat. The lessons below focus on key elements to consider when developing strategies ranging from understanding and pricing value propositions to using sustainable products to disrupt the status quo.
Learning 1: Value Propositions for Sustainable Products Differ
What is considered sustainable to one customer; may not be considered sustainable for another. Examples could be perceptions around the use of post-industrial recycled content (PIR) versus post-consumer recycled content (PCR). Another factor in the equation can be the amount of sustainable material included in a product. The question is, at what percentage of sustainable content does a customer consider a product to be sustainable? The answer may or may not be products made from 100% sustainable content, but it is essential to understand the customer sustainability requirement and highlight or build these capabilities accordingly.
Learning 2: Customer Segmentation for Sustainability is Unique
Customer segmentation is by no means a new topic for organizations looking to understand the drivers of customer behaviors and their customers' characteristics. Sustainability, however, adds a whole new dimension to this equation. To account for these differences, organizations must revisit their current views of customer groups. In most cases, only specific sub-segments within existing customer groups will find relevance in sustainable products in short- to mid-term. However, this can quickly change as regulations shift and other corporate sustainability initiatives take hold throughout a value chain. The good news is that sustainable products may create access to new customer segments previously untapped.
Learning 3: Price Premiums for Sustainability Exist
Sustainable products must be grounded with solid economic foundations for enduring success. This foundation relies on the customer's willingness to pay. Sustainable products are often seen as premium products in the market, which can command a price premium in some cases. A product's positioning in a value chain and the proximity to the end-use customer can play a significant role in determining what type of price uplift may be possible and who is in the end-customer-facing role to position the product.
Learning 4: Sustainable Products Disrupt the Status Quo
Sustainable products and services can be coupled with significant enhancements over traditional products in the market. For a sustainable product provider, this can create access to new markets previously not under consideration. However, breaking into these markets can prove challenging when traditional products are deeply entrenched in the market, and hidden costs for customers to switch may exist.
HOW WE HELP IN SUSTAINABILITY
PP&A is actively supporting organizations in developing sustainability-focused products and market strategies. This includes helping organizations find answers and address the following questions and others they may encounter on their journey.
Who are the customers for sustainable products, and what do they value
Are customers willing to pay more for sustainability, and if so, how much
How big is the market for sustainable products, and how fast will the market grow
How to effectively position sustainable products in the market
Are there attractive technologies to acquire or companies to partner with
We look forward to hearing about your own questions around sustainability and how to better position products that lead with it.
PP&A is an international strategy consultancy focused on helping leaders achieve growth, improve performance, and simplify complexity. We use analytics, research, and strategic know-how to provide insights and solutions for leaders looking to advance their objectives. To learn more about PP&A and explore how we may help advance one of your professional efforts, don't hesitate to reach out and contact us below.
MEET THE AUTHOR
Chris Peoples | Managing Partner at PP&A
Chris is the Managing Partner at PP&A and has consulted for leading organizations worldwide for over ten years. As a seasoned organizational strategist and an avid technologist, he specializes in helping world-class organizations access new markets, grow existing businesses, and improve operating performance.
Phone: +1 610-427-1032