Gen Z consumers are willing to pay more for products matching their “purpose”, according to a new CommBank report

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Source: The Conversation.

More than half of Australian consumers are willing to pay more for a product they believe matches their own ethics and values, according to a new Commonwealth Bank report on brand “purpose” — and the risks facing businesses which undermine their own ethical messaging.

In its new CommBank Consumer Insights report, issued Wednesday, the bank states 53% of surveyed consumers are willing to pay more than usual if the goods and services come from “purpose-led” businesses.

Purpose-led, in this instance, refers to businesses with goals beyond pure growth and profitability. Examples include commitments to a local community, sustainability pledges, a focus on gender equality and LGBTQ+ rights, or the elimination of animal cruelty.

“Today’s consumers expect brands to actively demonstrate their role in society, to support communities and to take meaningful action on issues that matter to them,” the report said.

Younger consumers, especially, said they are more likely to part with their hard-earned cash if those goods and services come from companies aligned with their core beliefs.

A full 71% of gen Z consumers surveyed by the bank said they’d pay over the odds, the report said, suggesting Australian businesses could benefit by integrating a social “purpose” into their brand identity.

The benefits go beyond increased sales, the report said. Shoppers can connect emotionally to companies they align with, CBA claimed, and 39% of respondents said they are “more forgiving” towards purpose-led brands.

But conscious shoppers still have a price. The findings show that having a “strong social purpose” ranks behind value for money, quality, convenience, and customer service as a factor in purchasing decisions, suggesting an inflection point where the heart matters less than the hip pocket.

Authenticity essential for purpose-led brands

Consumers also remain skeptical of the goals touted by many businesses. 55% of respondents said they don’t believe “purpose-led” businesses are genuine in their claims, underlining the need for brand authenticity.

“Unethical behaviour” was the most-cited reason for a negative consumer experiences with a brand, followed by more specific instances of unfair employment practices, online tracking behaviour, and selling products which negatively impact the environment or society at large.

Survey respondents also said a brand’s “purpose” is clearer to recognise if it is tailored to the category they operate within.

For example, 91% of respondents said it was very important for fast food retailers to minimise food waste and promote food security, but just 35% said those businesses should challenge fake news.

Similarly, 86% said the DIY, building supplies, and garden retailing sector should champion fair working practices; only 33% said it should align with the body positivity movement.

Messaging is critical to express brand purpose

Brands which tout their ethical or environmental bona fides should engage with staff and customers to prove their commitment to the cause, the report said.

When asked who they’d most trust to deliver a brand’s ethical messaging, survey respondents said put existing customers in top spot, followed by employees and subject matter experts.

Notably, “paid actors in advertising, and celebrities such as singers and influencers” did not rank as highly, the report said.

Beyond presenting an ethical vibe in its customer outreach, brands can also turn to offerings like B Corp certification to showcase their commitment to the cause.

You can read the full report here.

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