According to KPMG, customers are increasingly aware of environmental and social responsibility

By: STA Date: 2023. 01. 12. 10:31

The pandemic has forced companies to examine their social responsibility and role – the environmental effects are also driving customers towards more conscious decisions. Systemic changes in consumer behavior were first noticed among those born around the turn of the millennium, but have now spread throughout the world in various demographic groups. Companies today have to prove that their commitments are credible, and this requires an integrated customer and ESG approach. In its Me, my life, my wallet research, KPMG specifically focused on sustainability issues, and its segmentation model is a guideline for companies on how to address individual consumer groups.

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How is the attitude and behavior of customers and consumers evolving? What aspects of corporate behavior are important to them and how do they influence their purchasing habits? Among other things, KPMG asked these questions in its fourth global study. In its research entitled Me, my life, my wallet, the company focused this year on sustainability – environmental and social – issues; he was also curious about how these influence the decisions of consumers. More than 30,000 consumers from 11 countries were involved in the research. However, it should be noted that the research was conducted before inflationary pressures and possible recessions became part of our daily lives.
Concerns about corporate, environmental and social responsibility are coming to the fore worldwide. Companies are under a lot of pressure: they must now manage a sustainability approach as part of their business strategy. Consumers increasingly vote with their wallets – they choose companies whose practices are in line with their values.

Say it or do it?

Based on KPMG’s research, it is clear that more and more value-oriented buyers are appearing. According to 87 percent of the participants in the survey, companies have a responsibility to produce sustainable products. 86 percent of respondents are concerned about the environment, and 64 percent want to know the environmental impact of the product or service they buy.
The question is how to assess how committed the customer base is in this direction, whether they act beyond words, whether they really spend more for more sustainable products. 59 percent of the respondents take steps for sustainability. However, the extent to which people feel these values are different; it all depends to a large extent on emotional disposition, personal beliefs, goals, and depends on other circumstances of the given individual, such as financial opportunities.

The six new customer groups
KPMG classified consumers into six groups based on how concerned they are with sustainability values and how this is reflected in their behavior.

1. Moderates – 26 percent of the population
The members of this group are usually middle-aged, their average age is 51 years, and women are overrepresented among them (58 percent). They are most affected by deteriorating economic conditions. They believe that sustainability is important, but they prefer to take simple, moderate steps to achieve it – 91

percent recycle, 76 percent reuse, and 58 percent spend more on long-life products. Although 79 percent of them are curious about the environmental impact of the products they buy, they still try to strike a balance between sustainability and price. 60 percent of the group indicated that they are willing to spend a little more money on sustainable products and services. Human rights and gender equality are important to them, and they want to make the world a better place, although they don’t necessarily know how.

2. Pragmatists – 21 percent of the total population
For pragmatists, sustainability is someone else’s problem. A low-income, mostly older group with a slight female predominance (55 percent), they are more concerned with solving the issues of everyday life than with sustainability aspects. They recycle, use plastic bags more than once, buy used things – but they do this for economic reasons at least as much as for environmental protection. This group acts sustainably if it does not cause them any difficulties, i.e. prices and convenient solutions make the decision easier. However, they are not willing to change their habits, and they do not pay a premium for sustainable products.

3. Realists – 17 percent
The group of people with higher incomes – mostly Generation Z and millennials, with some male overweight (56 percent). They believe that environmental damage is inherent in economic activity; nevertheless, they consider sustainability important. Half of them strive to learn about the environmental and social values of the product before making a purchase. 71 percent are willing to pay a premium for sustainable products and services. As frequent social media users, their approach to sustainability is as much about social validation as their personal values; only 31 percent claim that sustainability is part of their personal values.

4. Price sensitive – 9 percent
Rather, it is a group of older people with a lower income, mostly men (58 percent). They have little or no consideration of the impact of their choices on the environment. They are not willing to pay more for sustainable goods and services, they are more focused on making a living, for them the price is a decisive factor.

5. Activists – 17 percent
A value-oriented group, 85 percent of its members are willing to spend more money on sustainable products and services; and they are very unlikely to change their behavior. They believe in the power of the individual – 91 percent are convinced that they can make a difference in the world regardless of what everyone else is doing. There is no gap between their principles and their actions. 99 percent agree that we all have a responsibility to reduce our carbon footprint, reuse and recycle what and as much as we can. According to 96 percent, governments should provide more support to businesses and individuals to implement sustainable practices. Before making a purchase, 95 percent of them find out about the practices of the manufacturer or service provider related to environmental protection. 85 percent are willing to spend more on sustainable products. It’s also a socially oriented group – 94 percent are concerned about workers’ rights and poverty, and fear peace.

6. Collectivists – 11 percent
They believe that sustainability is everyone’s problem and that everyone should work to create a livable world. The group includes people with higher incomes and 60 percent of them are men, who are committed to protecting the environment and eliminating social inequalities. 90 percent of them believe that states, companies, and institutions must take steps for sustainability. When choosing brands, 88 percent are aware of the sustainability efforts of the given company. 92 percent are willing to pay more than what is acceptable to them, for sustainable products, 78 percent specifically choose products that do not contain ingredients harmful to the environment, and 76 percent do not buy any goods tested on animals.

They made words

KPMG research shows that the biggest barriers to engaging customers in sustainability programs are cost and lack of understanding or knowledge – the individual doesn’t know how to make a difference. The segmentation model described above helps companies plan marketing programs aimed at individual segments, with which they can address their customers more effectively. Education aimed at changing attitudes can be conducted in a targeted manner on various digital channels and social media platforms.

– Moderate consumers are likely to be willing to take more steps if companies communicate well how they can act sustainably. Companies can make customers aware that environmental protection and social responsibility are important to them – they can do this, for example, with awareness campaigns or by placing it on the product label.

– Pragmatist consumers want companies to reduce their burdens and support them. They need affordable products and something to reward them for their loyalty. Here, companies can, among other things, provide clearer information on the packaging, use recycling symbols, switch to sustainable packaging, offer discounts, and give points for recycling in their loyalty program.

– Since realists are mostly young people, companies can try to increase consumers’ sustainability awareness through social media and customer advocacy. They can launch different campaigns, for example encouraging consumers, filming how they throw the empty PET bottle in the selective collection, or posting with a specific hashtag when they buy an environmentally friendly product.

– For those who are price sensitive, companies can introduce various incentives and discounts to overcome the price limits. Locality plays an important role here, messages must be localized. Companies can use different cultural or regional references to bring sustainability issues closer to consumers and thus make them make a more informed choice.

– Activists are committed supporters and advocates of sustainability efforts and look for companies that help them achieve their goals. In this way, the companies can be reliable allies in the long term. Companies that focus on sustainability, not just on the side, attract and retain these types of customers like a magnet.

– In the case of collectivists, companies can demonstrate the serious results that cooperation can bring if everyone works together for sustainability goals. Campaigns and movements also increase the company’s profile, and it’s easy to join these actions, and even small steps can make a big difference.

ESG and customer focus

Customer expectations are increasing, according to KPMG, we have entered a period of sensitivity to the biggest challenges of our time. “Consumers clearly expect the business to not only participate, but to take a leading role in the transformation. The environmental, social and governance (ESG) approach must be integrated into the organizational operation, but at the same time, the traditional marketing toolbox can also be deployed, so that these are properly displayed in all phases of the customer experience,” explains Erika Halász, KPMG senior manager. “For this, it is necessary to assess the current state, create a framework for measuring sustainability, carry out an ESG-centered rethinking of the product life cycle and customer journeys, understand the needs of the various customer segments, and then involve consumers in achieving the goals and educate them. The process probably won’t be fast, and it may even require a redefinition of the organization, but it will certainly create value in the long run.”

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