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Ethical products and services – how much more will your customers pay?

By January 19, 2018March 15th, 2019Advice, Business, Marketing, Mentoring, News, Small Business

Many new small businesses and many established ones like to be able to say they adopt ethical behaviours when developing their services and producing ethical products for sale. Packaging, supply chain, treatment of employees, experimentation on animals – there are so many ways shoppers like to ensure their purchases are guilt-free. However, it seems you will have to work very hard to convince the majority of British consumers that the ethical label is worth paying more for. The intentions are good, but with inflation now at over 3%, it seems many cannot afford to be too choosy.

Research by global professional services firm EY indicates that although nearly 70% of consumers consider themselves ‘ethical’ in their shopping habits, the cost is still the most significant barrier to buying ethical products and services. Despite good intentions, more than half of those questioned could not regularly purchase sustainably and 25% said they simply could not afford ethical products at all.

If you are small food producer, consumers are willing to pay up to 10% more for eggs and milk for example, and consumers will actively seek out British products over imported ones. Many would be prepared to pay more to know the product is made locally. However, there is a real issue with ensuring availability of ethical products – nearly a quarter of all respondents said that nothing was available locally, whether they were willing to pay for it or not.

Younger consumers are more committed to finding out what is behind the branding, so if that is a market you are targetting, your ethical credentials are particularly important.

Martin Armistead, associate partner at EY, said: “Today’s consumers have far more choice and are able to drive more ethical shopping behaviour – particularly within the younger generations, for whom this is an important consideration… ethical credentials [must be] well-communicated to consumers and match up with their brand values.”

When it is already difficult to start and grow a business, ethical values can be difficult to sustain when competitors – many of them larger producers and importers – can offer similar goods and services at a lower price. How do you meet this challenge?

We would be interested to know your thoughts, and if you are struggling with questions like this as you work to establish your business, do get in touch with us for some free mentoring advice. A discussion with one of our experienced mentors may be able to help you prioritise and ensure you can trade according to those values you hold most dear.