Will consumers choose ethics over Dollars?

This is not a B2B story, but it’s so interesting that I still have to tell it…

Imagine taking everything your brand is built on and gambling with it. If that’s not putting a gun to your (brand’s) head and spinning the revolver’s cylinder to see if you’ll get an empty barrel when you pull the trigger, then I don’t know what is.

Clothing retailer American Apparel is doing just that. A brand built on the positioning of being Made in the USA (hence the name) is taking a gamble that their customers will care less about where their products are made and what that stands for- versus price. As a marketing strategist, I don’t know if I should cringe and cry or give them a standing ovation for bravery.

The Put-Your-Money-Where-Your Mouth-Is Test

To the surprise of many in the industry, after a bankrupt American Apparel was bought out by Canadian company Gildan (who I thought was a tighty-whitey underwear company from Costco) things changed. They gave consumers the choice of purchasing the exact same products for more from a US shop vs. a lower priced (but still ethical) globally made one. It’s so perfect that the choice is almost like many of the price elasticity consumer tests I used to do when I worked at Pepsi.

The Positioning Game

Technically, I love it when a company’s differentiator is built into their positioning and not a new technology or external factors like pricing or some type of certification. When their difference is built into the actual make-up of the company-including their brand name, tagline and entire messaging platform, that’s when it’s harder for competitors to attack. Let me give you an example: recently I’ve met two signage companies who compete in the same market. One competes and wins bids on their Woman-Owned certification and the other on their positioning of “fastest in the hospitality industry”. Guess which one is weaker against competitors? The certified one, of course. Either positioning can be duplicated but only one grows stronger with time and brings actual value to the client.

When a brand’s positioning is in its very DNA, like it is for American Apparel, there’s very little leeway for change. Presumably, consumers have bought into the brand because of it. I mean a price test is one thing. But to test your entire identity with challenging your fan base to walk their talk-that’s a little scary for me.

Remember that Buyers Are Liars

As a former brand manager for large consumer goods companies, I can’t tell you how many times consumers in focus groups and other research would claim that they would pay more to purchase products that were environmental, supported good causes or were ethically somehow superior. The actual sales of those products though? These products almost always tanked. The reason? Due to their lower production volume and special features, they had to be premium priced. And guess who refused to pay for that price difference that they said they would eat up like ice cream? That’s right–the same buyers who told us to launch the darned things. So buyers are definitely liars in most cases where morals are stacked against wallets.

What happens in the real-time test for American Apparel remains to be seen but playing Russian Roulette with your brand is the scariest market test I’ve ever seen.

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