Mastering segmentation for Sustainability: The best Marketing Playbook for 2025

♻️ Sustainability is a heavily discussed and written-about topic, often with misinformation and overhyped claims. It’s crucial to scrutinize what truly matters through the noise, prioritizing meaningful, actionable efforts to drive genuine environmental and social progress across industries.

The evolution of marketing within sustainability has been shaped by growing public awareness and stricter regulations. However, the journey toward effective sustainability solutions is riddled with two paradoxes:

The first paradox lies in the efforts of some brands to position themselves as ethical and eco-conscious but rely on exaggerated or misleading claims. While these messages aim to resonate with environmentally conscious consumers, they often mask a lack of real commitment, undermining trust and tarnishing the credibility of the sustainability movement.

The second paradox emerges in consumer behaviour. Although many express a strong preference for sustainable options, backed by surveys consistently highlighting that sustainability is a priority for many, their purchasing habits often reveal a different reality. Driven by personal preferences, convenience, or price, consumer frequently choose products that contradict their stated values, created a deviation between intention and action in the marketplace.

These paradoxes have been leading many companies to overestimate the way consumers place on sustainability, flooding the market with eco-friendly products that often fail to resonate, that suggests they are not considering two critical points:

Missing the “Christensen’s Law”

Regarding the Clayton Christensen’s "Jobs to be done" theory, which focuses on the functional, emotional, and social dimensions of consumer needs, people make purchasing decisions based on the specific job they need a product to accomplish: Does this product solve my problem?

When making purchasing decisions, consumers tend to prioritize core product attributes – such as quality, price, and convenience – seeking reliability, affordability, and functionality. Only after these basic criteria are met do they begin to consider secondary features:

Example 1: A consumer buying laundry detergent is primarily focused on getting clean clothes – not the sustainability credentials of the product

Example 2: A consumer purchasing a pair of running shoes primarily evaluates their comfort, durability, and performance. While the fact that the shoes are made from recycled materials might be a plus, it’s unlikely to outweigh the need for a shoe that supports their athletic goals

To market and promote too heavily sustainability aspects without addressing core product attributes can backfire, and isn't enough to drive consumer decisions:

• Reliability matters most: A product must deliver on its promise. If a sustainable laundry detergent doesn’t effectively clean clothes, consumers will turn to less eco-friendly alternatives;
• Affordability remains the key: For many consumers, cost is a decisive factor, especially in times of economic uncertainty. Sustainability must not inflate prices to the point of being unattainable;
• Convenience is critical: Products that integrate sustainability seamlessly into the user’s lifestyle are more likely to succeed. If sustainable options are inconvenient or require behavioural changes, consumers may opt for simpler solutions.

While consumers may care about environmental and social issues, these concerns often take a backseat to the core need for a product or service to address their immediate problems – their personal needs almost always come first, that leads to the next point.

Missing the consumer “hypocrisy and incompetence”

Research highlights a striking phenomenon known as consumer hypocrisy, where consumers outwardly claim to prioritize sustainability but often make decisions that conflict with those values. This disconnect is not necessarily deliberate – it’s often driven by deep-seated habits and the instinct to prioritize personal needs (reason to buy) over global concerns in the moment of purchase (reason to care).

Adding to this is the issue of consumer incompetence, where a lack of knowledge or the inability to adopt sustainable habits further exacerbates the problem. For instance, many consumers might choose a "biodegradable" product without fully understanding its disposal requirements, rendering their good intentions ineffective. Others may avoid purchasing sustainable options due to confusion about certifications regarding "green" claims, which are often perceived inconsistent.

Consumers today have unprecedented access to information, but this doesn’t necessarily mean they are “better informed” – which is a claim also overestimated within marketing narratives. The sheer volume of data available can overwhelm rather than enlighten, making it difficult to discern credible sources from noise.

Despite the availability of knowledge, many consumers remain disengaged, prioritizing convenience and habit over learning about the sustainability or ethical impact of their choices

In other cases, they may lack the motivation to investigate claims or adapt their behaviours, even when the information is readily accessible.

These insights underscore why sustainability alone is insufficient to sway purchasing decisions when consumers perceived to sacrifice quality, affordability or convenience. Ultimately, addressing this gap requires a dual approach:

1. Segmenting consumers based on their approach and interests toward sustainable products, and manage where brands can help them to make informed choices;
2. Ensure that sustainable products deliver equal – or greater – value than conventional alternatives options

Mastering sustainability segmentation – Integrating interests with benefits into the core value proposition

A remarkable work about this topic was done by Frédéric Dalsace and Goutam Challagalla, both professors of marketing and strategy at IMD, shared in an article – “How to market sustainable products” – published recently at Harvard Business Review. I highly recommend the reading of this work, from where I will share some of their insights.

According the authors, the products featuring environmental or social messaging have become increasingly prominent, making up 48% of new launches in the consumer packaged goods sector. However, their overall share in the U.S. consumer goods market remains modest. Based on a report from New York University’s Centre for Sustainable Business, these products accounted for just 17% of the market in 2021(a slight increase from 14% in 2015).

“The misalignment between what companies offer and what consumers want is evident not just in B2C sectors but in B2B ones as well” (Dalsace and Challagalla, 2024)

Based on an extensive three-year research conducted at IMD Business School – which included surveys, interviews, and interactive workshops with over 500 executives from B2B and B2C sectors across multiple countries – Professors Dalsace and Challagalla developed a sustainability marketing guide (SMG) called: “A marketing playbook for sustainable products”, that offers a deeper understanding of how consumers balance the importance of traditional product benefits with social and environmental considerations:

Segmenting consumer interests about sustainability

Considering that not everyone places the same importance on sustainability, the SMG segment consumers in three categories according their interests that will require distinct strategies:

§  🟢 The Greens: The ones that prioritize it highly (the “true believers”, as suggested for a marketing persona)

§  🔵 The Blues: The ones that don’t seek to much for it (the “agnostics”)

§  🔘 The Greys: The ones that remains skeptical (the “disbelievers”)

“The starting point consists in recognizing the fact that three types of consumers coexist when it comes to sustainable products” (Dalsace and Challagalla, 2024)

Segmenting sustainability influence over conventional products

Sustainability influences and affects traditional product benefits in many different ways:

§  Independence: It might not affect performance at all

§  Dissonance: Conflict with it

§  Resonance: Improve it

“Marketers often imagine that sustainability features simply layer additional value on top of an offering’s traditional benefits, but in reality they can interact with product’s primary attributes” (Dalsace and Challagalla, 2024)

To demonstrate this impact, the SMG take in consideration three “sustainable” laundry detergents that compete with a conventional, middle-of-the-pack product that doesn’t promise any environmental or social benefits:

§  Independence:

The first example is a detergent with natural, eco-friendly ingredients, priced slightly higher due to production costs. Its performance do not compromise the detergent’s key attributes – cleaning, stain removal, and gentleness – This represents a case of “independence” since the product delivers the same performance as a traditional detergent (reasons to buy) while offering an added environmental benefit (reasons to care).

§  Dissonance:

The second detergent uses natural ingredients, but they compromise its performance. This creates dissonance: consumers see it as eco-friendly but feel it offers lower effectiveness at a higher price compared to traditional options. While the reasons to care improve, the reasons to buy diminish.

§  Resonance:

With the third detergent, the product’s natural ingredients have unique properties that enhance its cleaning power and gentleness. This is a case of resonance – Consumers’ reasons to buy and reasons to care both increases. Makers of resonant products find synergies between sustainability and performance.

NOTE: Check the entire version of the Marketing Playbook for each product provided by authors

Dynamics in the buyer decision process

Companies marketing products with independent sustainability benefits often compete across industries for the same consumer spending. Many consumers have an unspoken “sustainability budget” allocating only a limited amount to eco-friendly purchases. Businesses that provide stronger sustainability benefits can gain a competitive edge.

At the same time, a phenomenon called sustainability liability shows that labelling a product as “green” can create negative perceptions. For example, consumers may assume eco-friendly drain cleaners are less effective or sustainable shoes are less durable, even when this isn’t true. Over time, these biases may fade as brands play a crucial role in improving sustainability literacy and familiarizing consumers with eco-friendly options.

Also pointed out by the authors, consumer behaviour varies by category. A consumer might be Green in one area, such as choosing clean energy, Blue in another by preferring recycled packaging only if it costs the same, and Gray in others, avoiding sustainable cleaning supplies or materials due to perceived performance issues.

Understanding these dynamics is important for managed the consumer (customer) journey

An integrated approach of behaviours and innovations

Sustainable products cannot all be marketed in the same way. How their social and environmental benefits interact with traditional product benefits will affect which consumer segments they appeal to and the strategies that work best with them.

Marketing segmentation, at its most basic concept, plays a pivotal role in aligning sustainability with consumer needs to bridge the gap between the ‘reason to buy’ and the ‘reason to care”

To successfully market sustainable products, companies need to tailor their messaging and positioning according to the product's performance impact – Independence, Dissonance and Resonance – and the preferences of different consumer segments – Green, Blue, and Grey – What makes this Marketing Playbook a great contribution for future best practices.

By understanding how consumers evaluate these factors, marketing executives can develop product and service strategies that significantly increase their likelihood of success with tangible innovation:

“At the core of successful sustainable offerings lies innovation; there’s no substitute for it...

... Thus the real battle for sustainable products won’t be waged through advertising or public relations stunts; it will happen in research-and-development labs” (Dalsace and Challagalla, 2024)

Wish you all a sustainable and meaningful New Year! 🌟🌍