South Korea and Singapore top the world in willingness to pay for sustainable, inclusive brands

The research was undertaken by Frank Goedertier, Professor of Marketing at Vlerick Business School, alongside Bert Weijters, Professor of Consumer Research and Psychology at Ghent University and Joeri Van den Bergh, Co-founder of Human8 and Adjunct Professor at Vlerick Business School. It examines consumer willingness to pay for sustainable, inclusive brands across various demographics and countries.

The study analysed responses from 24,798 individuals across 20 countries and Hong Kong, focusing on the willingness to pay for two types of brands: brands that aim for sustainability, positive societal contribution, and inclusivity and brands that are positioned as exclusive, on-trend.

“Traditionally, many companies have invested in creating brands that are perceived as ‘exclusive’ or trendy, luxurious, high-status. A core motivation for this is the conviction that such brands trigger a high willingness to pay a premium. We wanted to find out whether positioning a brand around ‘inclusivity’ and a commitment to be sustainable and contribute positively to society could nowadays also trigger such a consumer willingness to pay a premium, especially when targeting new generation Gen Z consumers,” says Professor Goedertier.

The study indicates that Gen Z (those born between 1997 and 2011) is significantly more inclined to pay a premium for brands that aim for sustainability, positive societal contribution, and inclusivity compared to older generations. Interestingly, Gen Z is also observed to be more willing to pay for exclusive, on-trend brands compared to older generations. This indicates a unique consumer profile that values both ethical practices and exclusivity. In contrast, Gen X and Baby Boomers exhibit significantly lower willingness to pay for both brand types.

The researchers also found that women demonstrated a higher willingness to pay for inclusive, sustainable brands but a lower willingness to pay for exclusive, on-trend brands compared to men. This underscores the strong importance of sustainability and ethical business practices for female consumers worldwide, as well as men's stronger preference for exclusivity and trendiness.

“Our findings can help businesses and marketers optimise their brand positioning strategies,” says Professor Goedertier. “We provide research evidence suggesting that positioning a brand around inclusivity and sustainability can be a viable business strategy, especially when the brand’s target group consists of Gen Z customers. Companies can expect Gen Z consumers to be more inclined to pay a premium for sustainable, inclusive brands compared to older, Gen X, and Baby Boomer generations. Interestingly, we observe that Gen Z consumers are equally willing to pay more for sustainable, inclusive brands than they would be for exclusive, on-trend brands. This finding suggests that for companies aiming to attract the GenZ market, adopting strategies that promote inclusivity and sustainability could be as effective as those that focus on exclusivity and trendiness. Our results affirm that the traditional focus on exclusivity alone may not suffice for engaging GenZ consumers, who are also drawn to brands that make a positive impact and promote inclusivity across various demographics.”

The research thus suggests that brands aiming to market to Gen Z should focus on both inclusivity and exclusivity; Gen Z wants to know they are buying into ethical business, whilst also not wanting to sacrifice luxury for doing so. Besides generational and age differences, the research also highlights the importance of gender and country differences. The findings suggest that companies with a large female target audience may especially benefit from emphasising even more sustainability and ethical practices in their branding strategies.

The geographical location of the consumer target group of companies is also demonstrated to be relevant. The research finds that consumers of certain Asian countries (e.g., Singapore and South Korea) are most willing to pay for brands positioned on sustainability and inclusivity. In contrast, consumers of certain European countries (e.g., Belgium, Germany, The Netherlands, Sweden) indicate the lowest willingness to pay for such brands. Consumers of these European countries also express the lowest willingness to pay for exclusive, on-trend brands compared to the rest of the research sample. Consumers of certain other Asian countries (e.g., China and Thailand) express the highest willingness to pay for exclusive, on-trend brands.