Green as a luxury? Premium pricing and conspicuous consumption - A blog by Peter Korchnak

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Green as a luxury? Premium pricing and conspicuous consumption - A blog by Peter Korchnak

This commentary can be found originally at: Sustainable Marketing Blog by Peter Korchnak. Better triple bottom line.
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Green as a luxury? Premium pricing and conspicuous consumption


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Wednesday, December 16, 2009 - 10:54am


A theme has emerged from my conversations with Portland, Oregon real estate professionals: fearing overspending, home buyers these days are unwilling to pay a premium for green features, and instead decide with their pocketbook based on price and value. In other words, green* is a luxury these days, for homes and I suspect for many other product categories as well. What financial and psychological factors caused green to become luxury? How to fix the situation?

The green of green

That the sales of luxury items should decline in a recession is logical – as disposable income declines, luxury items slide out of reach for many. Tough economic times turn price into a primary decision factor, ushering an era of the frugal consumer.

In her recent Sustainable Brands Boot Camp presentation, Amy Hebard said, “The green premium is dead”. Consumers don’t buy the high price of green products while being informed that sustainable practices reduce costs. The willingness to pay a green premium dropped by half between 2008 and 2009 and high price is the #1 green deal breaker across products.

Recall that under the product evolution model, the nature of competition proceeds from functionality to reliability to convenience to price. It would appear that in the case of Portland home buyers, we’re in the last stage: green features add nothing to the first three aspects of competition, hence price matters most.

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Keywords: Brands | Business | Communication | Consumers | Corporations | Luxury | Peter Korchnak | Sustainability | ethical | marketing