Q: Nowadays people are interested in “socially responsible” brands and are willing to pay a higher price for them. What kinds of labels are socially responsible, are people willing to pay more for them, and how much more are they willing to pay?
A: The answers you’re looking for are answered in an interesting study from the University of Missouri, in Columbia Missouri. It was published in the Journal of Consumer Marketing in 2011.
BACKGROUND
Two researchers from the University of Missouri were interesting in cotton clothing and “socially responsible” labels. They had a few particular questions:
- Are people willing to pay a premium for “socially responsible” clothing?
- What labels exist and what kinds of premiums are people willing to pay?
- Do demographic characteristics matter?
- What other things matter to people when making clothing-purchasing decisions?
They set up a survey to answer these questions.
EXPERIMENT
The researchers did a phone survey of 500 random Americans to see how their preferences for various aspects of clothing tended to fall into patterns.
They contacted people through random-number dialing.
The survey was introduced by saying that it was a survey about attitudes regarding cotton clothing.
The researchers included three types of “socially responsible” labels to see whether people were willing to pay more for each one. The three types were:
- “Organic” cotton clothing.
- Were people willing to pay more money for cotton clothing that was made from cotton that is grown without various chemicals (pesticides, herbicides, etc.)? How much were they willing to pay?
- “Sustainable” cotton clothing.
- How much are people willing to pay extra for clothing that is made from cotton that is grown in a way that minimizes damage to the environment?
- “US-Grown” cotton clothing.
- How much more are people willing to pay for clothing that was made from cotton grown in the USA as opposed to stuff that is grown overseas?
Respondents were randomly asked about the three types of labels. They were asked:
- “If you were shopping for a long-sleeved, button-down shirt made of 100% cotton for yourself, how much more would you expect to pay for a shirt that was made of _____?”
- The blank was filled in by one of the types of “socially responsible” labels.
Their willingness to pay more was broken down into various price brackets ($0.00 more, $1-3.99 more, $4 to 6 more, etc.).
The respondents were also asked generally about their approach to fashion choices.
The respondents were also asked about their various demographic characteristics. This included age, race, gender, income, marital status, and so forth.
RESULTS
The researchers uncovered some interesting stuff regarding people’s willingness to pay a premium for the various labels.
First, more than half were willing to pay at least a little more for a “socially responsible” label. Therefore, it’s true that people are interested in brands that seem more socially responsible.
Here is the breakdown for each of the labels:
“US Grown” cotton clothing:
57% of all respondents were willing to pay a premium for US-grown cotton, more than any other label.
On average, they were willing to pay $5.19 more for US-grown cotton. This was the lowest of all the labels.
In other words, many people were interested in “made in the USA” cotton apparel, but they weren’t going to pay a huge premium for it.
I would hypothesize that this is because both conservatives and liberals are interested in locally-grown stuff (while probably liberals are more interested in organic and sustainable stuff).
“Organic” cotton clothing:
- 55.1% were willing to pay a premium for organic cotton.
- On average, they were willing to pay the biggest premium for organic – $5.59 more.
“Sustainable” cotton clothing:
- People had a medium interest in sustainable cotton clothing (54.9% were interested in paying more) and they were willing to pay, on average, a medium premium – $5.54 (in actuality, “sustainable” was not significantly different from “organic”).
- Women were more interested in “sustainable” cotton clothing than men.
- What were the MOST important factors in people’s decisions to buy clothing? In order from MOST important to SLIGHTLY important:
- Fit
- Price
- Laundering/care requirements
- Color
- Brand was not indicated as significantly important for the most part.
However, the people who were interested in brands were more likely to be interested in organic cotton.
Here’s a weird finding: people who indicated that they were more interested in the natural or local environment were less likely to pay a premium for socially responsible labels.
Whaa?
The researchers seemed rather perplexed by this. The more a person says that social responsibility is important to them, the less they were willing to pay for a socially responsible piece of clothing.
They hypothesized that people who have strong beliefs about protecting the community or environment are more likely to make those decisions elsewhere – not when buying things.
This means that brands gain a benefit from being “socially responsible,” but they don’t have to target progressive hippies to do so.
DISCUSSION
This shows that not only do clothing brands benefit from “socially responsible” labels, people are also willing to pay more for them.
People are willing to pay the most for organic, followed by sustainable, and finally followed by US-grown.
However, the greatest amount of Americans were interested in US-grown cotton (they just weren’t willing to pay as much for it).
Therefore, anyone selling clothing online may benefit from including these kinds of labels in the products they sell.
HOW TO USE THIS INFORMATION
To maximize premiums, sell “organic” and “sustainable” clothing, and to boost interest and volume, sell “US-grown” clothing.
Men aren’t as interested in “sustainable” (i.e., environmentally friendly) clothing.
Young people are more interested in “organic” clothing.
All people are still most interested in factors like fit and price when buying clothing.
Brand-heavy items are most benefited by the “organic” label.
Reference
Ha-Brookshire, J. E., & Norum, P. S. (2011). Willingness to pay for socially responsible products: Case of cotton apparel. Journal of Consumer Marketing, 28(5), 344-353. Link: https://www.emeraldinsight.com/doi/full/10.1108/07363761111149992
