In Napakiak, Alaska, there is a collective relocation going on. The 350-people village, which is mainly inhabited by Yupik-Inuit, currently has record temperatures of 17 degrees Celsius. For the Inuit this is tantamount to a heat wave. However, the effects go much further: The permafrost soil continues to thaw and so the fire station, the grocery store and an administration building have to move. And the school is no longer safe either ... The thawing ground releases more methane, which drives the warming further – a vicious circle. Alaska is far away, you might think.
And yet, the debate has long since affected the everyday life of almost everyone in the world. Even the temperate, Central European summer of 2018 was a month-long heat record. Not the first, but never before experienced so closely. In Germany, too, one could see withered fields, burning forests. Greta Thunberg triggers the worldwide movement »Fridays for Future«, politicians encourage her and thus give themselves a poor testimony about previous failures. Climate researchers talk about the 2-degree and the 4-degree scenario and what consequences each would have. McDonald's introduces the veggie burger, Beyond Meat goes public in the USA and records stock price gains of an incredible 167 percent in the first few days. Many investors seem to believe that hamburgers made from peas and beetroot have a great future. Industrial giants such as Bosch, Siemens and, most recently, Daimler, are also making concrete plans as to when they want to produce climate-neutrally. The Allianz goal of investing climate-neutrally by 2050 seems almost grotesquely far in the future. The Future is now ...
So what does all this mean for brand managers? As always, of course, they have to pay close attention to customer needs. And to fulfil them as well as possible. But if the customer behaves in a totally contradictory way and customer needs are subject to tectonic shifts – what to do with the non-rational being of the »customer«? Don't we all feel the turn of an era that is currently taking place worldwide in numerous industries? mobility, energy, nutrition, leisure, housing ... Sustainable business is the dominant theme everywhere. And not as a green part of the corporate strategy, but as its core! Nevertheless, the consumer – so far at least – often does not want to give up anything. This basic attitude was the birth of Efficient Dynamics, Blue Motion, »and the cleanest Diesel ever« – this could be continued endlessly. We continue to fly to the Seychelles. And enjoy American tenderloin or Japanese Kobe beef, because it is probably one of the most delicious things that meat lovers want on their plates.
However, we will probably gradually become witnesses to the tipping point which can be observed in numerous developments. Cars are being bought less and less, but rather shared. E-bike sales figures are rising enormously: the Uber subsidiary Jump, which rents out e-bikes, also has high growth rates, the Airbus A 320 neo is selling like hot cakes because the engines – also thanks to German engineering from Munich – burn considerably less kerosene and are therefore more efficient, but also improve the carbon footprint of the airlines and soothe their own conscience ... But caution is advisable here, too – the latest trends from Sweden already speak of »flight shaming« – social acceptance can change quickly and fundamentally.
So how do we deal with the simultaneous »Keep it going« and »But now completely different and world-friendly« – not only the environment, but also the people have to be protected, see over-tourism and the Inuit in Napakiak, Alaska.
In the event that Kevin Kühnert's theses do not prevail, the laws of the market will therefore continue to apply in order to control supply and demand. The central control instrument in the market is the price. Hermann Simon, the pricing professor, has already introduced generations of students and readers to the art of pricing. He describes the price as the central hinge between supply and demand. No other marketing instrument – as he continues in his book »Preisheiten« – is better suited to controlling sales quickly and effectively. With regard to price, I find two prejudices particularly interesting: Firstly, even commodities such as water – i.e. completely exchangeable goods – can be differentiated in terms of price, thus creating preferences and ultimately increasing corporate profits. The second: it is quite possible to increase sales volume by raising prices. This is the case when consumers assume that a higher-priced product is of better quality than the cheaper product. What is worth its price is in the eye of the beholder. Both findings are not uninteresting for the CO2 discussion and the consumption of resources from one perspective.
When it comes to climate change and CO2 and how to do business in a more climate-friendly way, the question of how to reduce the consumption or emission of CO2 is therefore quickly raised: With a price for CO2! Since this price must apply to all economic players, a CO2 tax quickly brings us to the state, the EU or even a global agreement on pricing CO2. So if CO2 emissions were to be penalized and CO2 savings rewarded in terms of price, then the logic of the CO2 tax would be to steer the behavior of broad consumer strata towards more climate-friendly products and services. However, as long as pork is cheaper than fruit or vegetables, climate-hostile pork is preferred. But there are already good examples of how pricing for undesirable behavior actually works: see plastic bags or tobacco. As a result of the price increase, use by broad consumer groups has been curbed as desired.
Only – the price must be right. That means for CO2: it must be high enough to bring about a change in behavior. This is currently the demand of Joachim Wennig, head of Munich Re, who is calling for a fivefold increase in the current price of CO2 if the goals of the Paris Climate Protection Agreement are not to be missed. Munich Re has been monitoring climate change meticulously for decades as part of its risk analyses – this is understandable, since insurers have to price risks (correctly).
The fact that politicians are now discussing whether a CO2 tax is the right instrument, what the corresponding certificates should cost and whether, for the sake of social justice, tax relief is needed elsewhere, is not an issue here. Of course, there is the danger that this will lead to a new »climate solidarity tax« which will never be abolished again. But the logic of the fact that the price should also reflect the actual consumption of resources cannot be denied. Without a price, consumption is socialized – cause and effect are completely decoupled. I don't want to talk about »planting trees for a crate of beer« – in my opinion that is marketing jingling. No, I mean the introduction of a mechanism that is as uniform and widespread as possible to avoid climate-damaging behavior. High energy consumption, meat consumption and so on would have to become significantly more expensive in order to use the global steering function in the pricing of goods and services. Certainly, compensation mechanisms are needed, for example to relieve commuters who are dependent on cars in another way. In cities, however, for many people less car traffic would probably not be a restriction, but rather a step forward.
To finally come back to the brand managers: In our understanding, the CEO is the brand manager. The task here is to strategically align the company so that products and services can be manufactured in such a way that as little CO2 as possible is generated for production and use, in order to compensate for the climate-related price increase. Digitalization is not the only thing that is fundamentally changing business models or replacing old ones with new ones – climate change also has what it takes to fundamentally transform entire industries. It is not enough to define a socially appropriate purpose or corresponding values, to communicate them and then to essentially continue as before. The issue of sustainability, or better sustainable business practices, must move from the PR department to the responsibility of Corporate Strategy. Examples such as Rügenwalder Mühle, which is increasingly marketing meatless products, are a good example of this. Here the words of author Erich Kästner apply: »There is no good unless you do it!«
In this sense, I think it is a remarkable decision by Volvo to voluntarily limit the maximum speed of its vehicles to 180 km/h. After all, if it is Volvo's »Vision 2020« that by 2020 no more passengers should be killed or have serious accidents in a Volvo, then this voluntary self-limitation is credible proof of good intentions. And as we all know, driving less fast is not only safer, but also saves fuel. This is not only environmentally friendly, but also »world-friendly« in the best sense of the word.
But let's dare to take this idea one step further: In the words of Alfred Herrhausen, the former Chairman and mastermind of Deutsche Bank, »it always gets expensive if you don't think things through to the end.« So in terms of mobility and car manufacturers, the solution would not be »doing things differently« but »doing different things«: not mobility with other cars, but a different kind of mobility. This is the real challenge for CEOs and brand managers!
Author: Christopher Wünsche
Published (in German) by horizont.net, Friday, 14 June 2019
Truffle Bay is an owner-managed, integrated strategic brand consulting and design agency based in Munich. With clarity and creativity we help ambitious companies and entrepreneurs to discover, define, design and bring to life their unique identity – to create strong brands as the compass and catalyst of entrepreneurial change processes as well as attractive and differentiating brand experiences to win and retain customers and employees.
Truffle Bay is a member of bvik – Bundesverband Industrie Kommunikation e.V. Test