Firms under pressure as consumers now want both purpose and price

Rhys Ryan, Chief Executive Officer at Porter Novelli Australia

Businesses face the weight of enormous expectations in 2023, as cash-strapped Aussies demand cheaper goods and services – and more pay – while maintaining ESG expectations. This year’s Purpose Premium survey showed Aussies were worried about the cost of living, prioritising “rational” benefits over “Purpose”-based elements of corporate reputation.

What were consumer expectations on purpose?

However, consumers remain deeply concerned about climate action, and following years of building frustration (which detonated in this year’s Federal election result), our expectations of brands and corporations as employees, investors and consumers have remained high.

When it comes to purchase decisions, the Price-Purpose pendulum swung back from 2021, with 47% of consumers saying they were loyal to price over “Purpose” (41% in 2021).

However, at the same time, 88% still agreed that firms’ actions must align to their Purpose, 74% would only work for a firm that has a positive impact, and 51% reported they had divested from investments that did not align with their values. The annual study conducted by Porter Novelli and leading market research agency Quantum Market Research, which analyses Purpose and reputation in the minds of consumers, employees and investors.

The study showed a rise in scepticism, with 43% agreeing brands are often pretending to be something they’re not, versus 37% in 2021. This was common amongst young Aussies, with 91% of 18 to 24-year-olds reporting they researched brands before purchasing its products.

How are rising consumer demands affecting businesses?

Porter Novelli CEO Rhys Ryan said this ratcheting up of expectations from consumers at a time of rampant inflation presented an enormous challenge for Aussie businesses. “Aussies are saying to businesses, ‘charge me less, pay me more, but invest more in ESG and sustainability’, at a time when many businesses already have their backs to the wall with out-of-control supply chain costs and a lack of access to talent and skills,” Mr Ryan commented.

“There has been a decade of performative purpose by firms saying they want to do the right thing. Now they are stuck in a real bind, as trust in brands is low, people want more, for less, and they still have the same high expectations on Purpose. Business leaders need to meet these expectations while appeasing their major stakeholders, which is a real challenge.”

Imogen Randell, Chief Executive Officer at Quantum Market Research

Quantum Market Research Chief Executive Officer Imogen Randell said the research showed Australians have become more demanding of what they expect from firms in demonstrating real action. “As Australians observe more and more goals and targets, but little in form of tangible action, they are increasingly sceptical of brands that don’t provide full transparency across their supply chains, ESG policies, or investment partners,” Ms Randell commented.

“It is easy for Aussies to find out what a business stands for, while in the supermarket aisle, so ‘performative Purpose’ is unstuck, as any whiff of greenwashing is quickly called out.”

“Consumers are tired of being told they need to make better purchase decisions. They want organisations to take the lead. This year, 62 per cent of respondents said agreed that brands know what they should be doing and want them to act on it. They don’t want to be ‘engaged in dialogue’ about it, they just want businesses to get on with it,” Mr Ryan further added.

“There is no silver bullet in pleasing consumers and stakeholders. But being clear about your Purpose, and remaining real about your progress when it comes to responsible behaviour is vital. We don’t expect every business to change the world, but we do want progress in the right direction. In 2023, when it comes to sustainability and responsible business, progress is proxy for ‘achievement’. No more targets, no more goals, it’s time for demonstrable action.”

This year’s results, and the results of previous Purpose Premium studies, are available here.