Friday, June 10, 2016

Socially responsible for appearance's sake?

If you buy a hybrid car, you may do it out of concern for the environment or to save on gas, but researchers at the University of California, Berkeley, says you may also do it to make yourself look more socially responsible.

This is something called "conspicuous conservation."

But it the cachet may also depend on how many--or really how few--of your peers are buying the same product.

The "value" is higher if you are the only one in your group.

The researchers--note they are in the business school--developed a model linking the R&D decisions of firms to customers' need to "stack up" against their peers and how much they will pay to do it.

This is a better bet for a company in categories where the customers already use the basic product (in this case, they drive) and then innovate on the product.

Some examples of this are palm oil, jeans, and cleaning products. As the media highlighted forests being cut down to get palms, companies started making palm oil-less products. Levi spent years developing jeans that took less water and chemicals to produce. And of course, companies are all over eco-friendly cleaning products.

But I wonder how this tracks with the observation that you need to be an early adopter to get the social rewards of adopting.

Oh, well, you can factor this into business decisions, I guess.

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