Social Responsibility & Survival

Monday's Wall Street Journal reported on studies of consumers' willingness to pay premiums of products that are produced in socially responsible ways.

THE UPSIDE - Studies suggest that consumers will pay a 17% premium (versus control) for coffee produced with respect for employee diversity, product safety, human rights and the environment. These studies were conducted by the University of Western Ontario.

This willingness to pay a premium is similar to the results of a 2004 study conducted by the Animal Ag. Alliance that reported consumers would pay a premium for meat labeled "humanely raised". 31 percent of respondents indicated a willingness to pay a 5% premium. One person in 10 would pay a 20% premium. FYI. This study did not define "humanely raised". Respondents simply reacted to labeling.

THE DOWNSIDE - The Western Ontario study resoundingly addressed the downside.

Coffee associated with unethical production standards sold at a 40% discount versus coffee associated with ethical production standards.

No-one in business can ignore the implications. Ethical production standards have some pricing upside.

Unethical standards have huge, potentially catastrophic, risks.

IMAGINE ... that you wake up tomorrow with huge product safety crisis. If you have a solid history of high ethics and you manage the situation well, your brand or company will get a second chance.

If the product safety issue can be traced to unethical practices, your brand or company is done. DONE.