“I’ve got the power” by the Consumer

Starting a new year, same topic but a different subtopic. Today, I will like to talk a little bit about a very important (the most?) shareholder of every company: the consumer (note that “consumer” refers to goods’ consumers and also services’ customers). Each and every one of us acts like a consumer at some point. Keep in mind that every other shareholder of a company is also a consumer (of that company or of another one). So, what can we do towards sustainability from our “consumer” position?

First, we must realize that we are very powerful. Obviously, the power of the consumer varies with the industry we are talking about (recall Porter’s five forces), but, in general terms, the consumers are the ones that decide which companies will survive and which ones won’t. So, in an ideal world, we can choose to consume from sustainable companies and that will solve the problem. But, of course, this is completely utopic since consumers would need a lot of information in order to make the right choice (long term policies of the company, environmental care, developing plans) which is difficult to access or demands more time than what consumers are willing to spend. Therefore, there should be a way to motivate consumers to choose “sustainable products” when faced with a decision. (In the next post I will talk about how “Recycle Bank” faced this problem).

We learned in microeconomics courses that perfectly rational consumers (an idealized model) make decisions based on price and satisfaction. In the short term, it is probable that prices from sustainable companies may be a little higher due to research costs, environmentally friendly product and processes and commitment to human resources. So, in order to get consumers to pick “sustainable products”, the satisfaction of choosing them must be increased as well. In some developed countries, consumers are starting to evaluate some things at the decision moment (if it has biodegradable packaging or the condition of the workers in the factories in Asia) that were unthinkable 20 years before. This is a good start but these consumers are not representative of the mean “Consumer”. Therefore, efforts must be made in thinking about how to get the “Average Joe Consumer” to pick the sustainable offer.