As sustainability credentials become the norm, companies seek to develop the capabilities to grow through a differentiated sustainability identity, innovative production systems and new value-driven consumption models.
Responsible consumers perceive the virtues of sustainable products, according to Deloitte, as advocacy, altruism, spiritual alignment and in some cases, self-fulfilment. A pre-owned Chanel 1997 bag can be as sought-after as Gabriela Hearst’s constantly waitlisted Nina bag. This makes sustainable brands replaceable in terms of value in the eyes of consumers.
Differentiation is essential for sustainable brands to stand out in the marketplace and increase their market share. A brand with robust social and environmental values can make itself a part of consumers’ initial consideration by aligning its sustainability values (the social and emotional benefits of products) and the intrinsic value of products (the functional benefits).
The initial consideration set consists of the few brands a consumer immediately thinks about when they’re looking to buy something. Brand selection happens usually at initial consideration. If a brand makes it into initial consideration, its products are twice as likely to be purchased than brands that are considered later in the decision journey.
With an ever-growing supply of sustainable products, this trend will continue to rise. To win in sustainable markets, brands need to do these three things:
- Establish a differentiated sustainability identity and the ability to communicate it
Having a differentiated sustainability identity and the ability to communicate it means understanding a brand’s purpose in the context of social, environmental and economic development. For instance, if a brand’s purpose is rooted in the domain of environmental development (like Stella McCartney’s focus on circularity, brought into action through research on regenerative materials), it has to decide the extent of its identity’s appeal. Is the goal to encourage better consumption patterns? Is it meant to improve supply chains at an industry-wide level? Is it meant to encourage philanthropic contributions to research? Or is it meant to be an internal giving initiative? Under a single brand purpose, either approach will shape a brand’s sustainability identity in different ways.
Further, identifying a brand’s social archetype will help position its purpose and guide its every action, from design, through supply chain management, to marketing and communications. Broadly speaking, there are three sustainable brand archetypes, each presents potential opportunities and risks:
Activist brands take the lead on a movement, often by changing fundamental aspects of their operations as a call to action. For instance, Gucci’s decision to go seasonless in 2020 sought to address a fundamental condition of the fashion industry: the cycle of seasons, which drives the production rhythm of most fashion brands. This initiative was later echoed by St. Laurent and Giorgio Armani.
Advocate brands act as campaigners, drawing attention to causes and encouraging consumers, competitors and policymakers to listen and take action. For example, Vivienne Westwood leverages its platform to advocate in favour of climate action initiatives, alongside organisations working to raise awareness on the impacts of overconsumption.
Educator brands cater to the values of consumers typically motivated by research and innovation. Educator brands invest in product development solutions as their main course of action, eventually making their findings available to the industry at large. Tesla and Stella McCartney are prime examples of educator brands. Both brands invest heavily in research, knowledge-sharing and transparency initiatives. Both are well-positioned as leading brands in their industry.
Isolated initiatives such as sustainable collections, waste-reduction programs (rental, recycling, repair, resell and refill) and philanthropic donations don’t make up an identity archetype per se, although they are typically implemented as part of the activist, advocate or educator archetypes. The sum of these sustainability identity decisions captures what a brand’s purpose is, who it speaks to, and how. It also sets a brand on a specific differentiation journey.
2. Define the consumption model you want to promote
The consumption model of a brand determines how its value proposition is delivered to consumers in due time and how this value is turned into profit (through products, services, experiences, collaborations, loyalty programs and community offerings). The factors that shape a sustainable brand’s consumption model include resource strategy, revenue model, consumer effort, and objectives to decrease or increase consumption levels.
3. Design an innovation roadmap that cuts through all aspects of the supply chain
An innovation roadmap needs to cut through all aspects of the supply chain, including a brand’s consumption model sets out the growth trajectory of a sustainable brand. To chart innovation priorities, there must be clarity on the extent to which a brand aspires to have an impact on social, environmental or economic development outcomes. Supply chain innovation and consumption-model innovation are in direct correlation with brand growth.
Consumers are prepared to pay a premium for what sustainable brands have to offer. In order to grow, sustainable brands need to continuously redefine the premium by innovating in their production and consumption models. The idea is to grow the market in value, not in volume. For instance, developing experiential consumption offerings (like Selfridge’s rental and resell services), or designing loyalty programs (like luxury retailer LuisaViaRoma’s LVR Privilege loyalty program).
This article was originally published on Entrepreneur.com. Available here.