Green Marketing and Sustainability Research with LOHAS

A Consumer Perspective on Sustainability:A look at LOHAS Consumers on both sides of the Atlantic

Diane Ray & Gwynne RogersNatural Marketing Institute

2© 2008, Natural Marketing InstituteSource: LOHAS Consumer Trends Database™

OVERVIEW

• Where does sustainability fit in overall trends?• Who are the consumers that care about sustainability?• How are European and U.S. consumers similar and different?• How is sustainability manifesting itself in new product launches?• How do you use this to create & evaluate opportunities in USA &

Europe?


1. The Dual Society 2. Generation Zzzzzz

3. STOP – I Want Off!4. Dr. Me5. The Culture of Sustainability6. Golden Opportunities7. The New Immunity8. Giving is the New Taking

Trends directly related to Sustainability!

NMI’s Top Trends for 2008


• Volunteerism, activism and participation in the non-profit sector are growing rapidly as consumers discover the emotional rewards of giving, rather than taking. To meet the challenge, corporations are engaging in CSR 2.0 in order to maintain brand allegiance, retain their workforce, and manage their stakeholders, among other activities.

• Countertrend: Premiumization, the height of New Luxury, continues to evolve in strong contrast to a more values based, philanthropic culture. At times, premium brands are even co-opting ‘green values.’

Giving is the New Taking

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70% agree:

“I care about social consciousness”

87% care about CHILDREN’S ISSUES such as child abuse

and child labor

83% care about PROTECTING WORKER’S RIGHTS

82% care about SUPPORTING MILITARY TROOPS

66% care about BUILDING A SENSE OF COMMUNITY

WHERE THEY LIVE

81% care about WOMEN’S ISSUES such as equal pay for equal work

(% consumers who completely/somewhat agree..)

The General Population Is Socially Conscious

Source: NMI’s 2007 LOHAS Trends Database™

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30% boycott a brand or company that has practices they don’t like (+5.1%)

21% encourage their elected officials to pass laws to protect the environment (+5.7%)

11% volunteer to clean up parks, trails and neighborhoods (+2.7%)

(Numbers in parentheses indicate % change since 2005)

The General Population reports that they regularly do the following:


Activism Takes Other Forms, And Has Increased Year Over Year


Financial Support of Organizations or Causes Is Important

Did not donate,

37% Donated money,

63%

% of GP donating

Civic-oriented groups (e.g., Salvation Army)

27%

Medical research groups (e.g., American Cancer Society)

23%

Religious-based groups (e.g., Catholic Charities)

21%

Relief agencies (e.g., American Red Cross)

18%

Animal rights groups 15%

Children’s organizations 12%

Wildlife charities 9%

Political parties 8%

Two-thirds of the GP donated money to an organization or cause during the past year

(% consumers who donated money to an organization in the past year)


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And Yet Premium PrevailsExplosion of Green Luxury

I would be more interested in environmentally-friendly

products if they were from premium or specialty brands

(22%)

Countertrend

I do not want to sacrifice anything when buying

environmentally friendly products (38%)

When I want to treat myself, I buy myself

something special (56%)

(% consumers who completely/somewhat agree....)



NEWS FLASH: June 4, 2008

• A strict new environmental law that was fought by soap industry officials may be the best thing that's ever happened to Palmolive's dishwasher detergent.

• By the end of the month, Palmolive Eco liquid detergent will dominate store shelves because it beat all major producers to market with a product that complies with a July 1 restriction sharply limiting the use of phosphates in detergents.

• "They're taking the step to make their product more environmentally friendly," said Rick Eichstaedt, a local attorney active in efforts to improve water quality in the Spokane River. "They should be applauded for doing that."

• Still, the ban, which industry officials say is the strictest in the nation, will eliminate low-cost options and the most popular detergent brands. Gone from Spokane County shelves will be Cascade, Electrasol and Sun Light until those brands come up with products that comply with the law. Distributors say they haven't been given an indication when those products will return.


CHALLENGE

• Since causes, donations, activism and corporate social responsibility all play a role in consumers’ decision to buy or boycott – where are your strengths? Vulnerabilities? Where will your company and your products fit? What space will you carve out for yourself?

• Since both the trend/countertrend are occurring (giving and premiumization) there is a lot of open space within which to align your products/brand. The challenge is to select the right space!


1. The Dual Society 2. Generation Zzzzzz

3. STOP – I Want Off!4. Dr. Me5. The Culture of Sustainability6. Golden Opportunities7. The New Immunity8. Giving is the New Taking

Trends directly related to Sustainability!

NMI’s Top Trends for 2008


• It’s not a matter of whether we will run out of natural resources – it’s a matter of when. Sustainability will become the most significant social movement of our time. It will permeate every aspect of consumers’ lifestyles, business infrastructures, and other societal constituencies.

• Countertrend: Consumers are overwhelmed with many sustainability initiatives, with significant ‘green washing’ fall-out expected as consumers learn to discern its true meaning (and impact).

The Culture of Sustainability


► 60% of Americans state they are becoming increasingly concerned about protecting the environment and the ecological problems in the U.S.

► Almost 50% of Americans state that the U.S. government should spend more time and money on U.S. environmental issues rather than troops in Iraq

► And 43% of Americans state they are actually doing something new with regard to protecting the environment

► 47% of Americans believe they can personally affect global warming

Source: HBI Omnibus, October 2007

Sustainability Takes Root

http://www.msnbc.msn.com/id/6662932�


LOHAS Consumers (as defined) Serve as Market Predictors

New LOHAS Products MainstreamingAwareness

Trial

Adoption

Loyalty

Influence

•Organic pet food•Green dry cleaning•Natural toys•Sustainable Furniture•Carbon offsets•Green banking•Organic clothing•Many others…

NATURALITESLOHAS CONVENTIONALS

DRIFTERS

•Energy-efficient appliances•Organic food/beverages•Air purifiers


CHALLENGE

• How to best connect with LOHAS consumers as they tend to be early adopters AND influencers?

SO…..

Who are the LOHAS consumers really?How can we better understand their

motivations, behavior, influence?


Data Source:NMI’s LOHAS Consumer Trends Database™

• Database is the only consumer research to identify LOHAS consumer attitudes, behavior, and product/service usage patterns across sustainability, corporate social responsibility, environmentalism, social issues, and much more

United States

• Currently 6 years of U.S. data: 2002 – 2007 inclusive

• Annual quantitative research among 2,000+ general population adults

• Nationally projectable to adult 18+ population; margin of error +/- 2%

Europe

• 1st annual European study in 2007 conducted in partnership with Porter Novelli

• Approximately 2,000 households in each in the following countries: Belgium, France, Germany, Italy, the Netherlands, Portugal, Spain, UK

• Nationally projectable to adult 18+ population in each country; margin of error +/- 2%


Cultural Differences Affect Consumer Research Data

• In a cross-cultural survey, respondents can not be compared directly:– Construct – whether concepts have the

same meaning in different countries (e.g., brand loyalty, opinion leadership)– Functional - whether a given concept or behavior serves the same role or

function in different countries– Metric – how respondents use rating scales; driven by response style:

• Social Desirability - tendency for respondents to give answers that are socially desirable or acceptable

• Extreme Response Style - tendency for respondents to use only the extreme response categories of a scale

• Acquiescence - respondents tending to agree with whatever is presented to them

– Linguistic - the development of equivalent language in the survey

Source: Bloomerce


Impact on European LOHAS Survey

• Portuguese, Spanish, and Italian responses are generally high across the board

• Dutch, German, and UK responses are generally muted

• Consequently, cross-country comparisons need to be made with some caution, and with an understanding of the cultural biases that respondents bring with them to the survey– There is not a quantitative way to adjust for cultural differences in

the 8 countries surveyed


Environmental stewards

Health motivatedGood intentions;

trend-oriented

Cautious actors

NATURALITES 19%

CONVENTIONALS 19%

DRIFTERS 25%

LOHAS 19%

(% of U.S. general population adults…)

UNCONCERNED 17%

Not on radar

Introduction to the LOHAS Segments(Lifestyles of Health and Sustainability)


The LOHAS Consumer

A trend predictor

Personal health + planetary health

Values driven

Price insensitive

High influence on others

Highest green buyers

Information junkies

Eco-lifestyle

CSR seekers (and boycotters)

LOHAS 19%

40 million consumers (US)


NATURALITES

NATURALITES 19%

40 million consumers (US)Driven by personal health and

wellness

High purchase of eco-consumables

Healthy lifestyle

Want to do more for the environment

Credible CSR affects loyalty

Attractive target for many


DRIFTERS

Attitudinally predisposed to green, but behaviors not deeply-rooted

Driven more by trends

Limited sense of eco-immediacy

Price sensitive

More likely to be eco-concerned, but only if it affects them

Lower green buyers, but like to be “seen” in Whole Foods

DRIFTERS 25%

45 million consumers (US)


CONVENTIONALS

Rooted in practicality

“Municipal” behaviors, including recycling and energy conservation

Driven more by cost savings, rather than environment

Eco-benefits are secondary

CONVENTIONALS 19%

40 million consumers(US)


European LOHAS Segment Sizes Compared to US

19%

19%24%

19%22%

17%18%

18%

18% 25%

U.S.Europe

UNCONCERNEDSCONVENTIONALSDRIFTERSNATURALITESLOHAS

FranceHighest NATURL’S – 27%

Low LOHAS– 15%

Belgium• Highest LOHAS – 24%

PortugalHigh LOHAS – 21%

SpainHigh LOHAS – 20%

UKLow LOHAS – 15%

(% of population…)


Correlation Variations in LOHAS Segment Membership Across Countries

U.K.•Willingness to pay 20% more for products which are made in an environmentally-friendly and sustainable way•Importance of personal care being earth-friendly

France•I will choose those products and services that are environmentally friendly •Importance of foods/beverages organically grown

Germany•I try to teach family and friends about the benefits of purchasing environmentally-friendly products •Importance of personal care products being earth-friendly

Italy•I will choose those products and services that are environmentally friendly •I try to teach family and friends about the benefits of purchasing environmentally-friendly products

Spain•I would like to learn about how I can become more involved in protecting the environment•I try to teach family and friends about the benefits of purchasing environmentally-friendly products


Attitude Axis

Action Axis

Largest Cross-Continental Differences are Evident in NATURALITES and CONVENTIONALS

Opposed or Uncaring

PassionateConcern

Committed Advocacy

Inaction

U.S. TotalEurope TotalLOHASNATURALITESDRIFTERSCONVENTIONALSUNCONCERNEDS

Presenter

Presentation Notes

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Major Differences Between the U.S. and Europe

Twice as likely

U.S. Europe

25% more likely

35% more likely

36% more likely

Willing to pay 20% more for eco-friendly products

Motivated to buy products with certificate/seal indicating product is

environmentally-friendly

Recycle paper products

Influence friends/family

25% more likely

Buy “green” products(average across numerous

categories)

Aside from making money, it is most important for companies to be sensitive

to their environmental impact

25% more likely

Presenter

Presentation Notes

Aspirational nature of wanting to be the person who is committed EU further along – belief that I shouldn’t HAVE TO


Similarities Between US and Europe

58% Environmental-friendliness of companies - increases purchase likelihood 58%

51% Interest in learning more about how to protect the environment 55%

52% Interest in government funding for energy efficient products 54%

34% Purchase compact fluorescent light bulbs 34%

13%Belief that, after profitability, it is most important for companies to support the communities in which they

work15%

U.S. Europe


Within Europe, Individual Country Populations are also Dynamic

Italy• The most willing to spend 20% more for green products• The most likely to own a hybrid and CFLs

Spain• Find it more important for companies to support the communities in which

they work• Unlikely to use natural garden products, CFLs, and renewable power

United Kingdom• Particularly reluctant to pay a premium for environmentally-friendly products• Less likely to use natural/organic personal care and natural feminine hygiene

products

France• Second only to Belgium in usage of natural lawn & garden products• Second to Portugal in the number of consumers who’ve changed their

behavior to minimize their impact on global warming • The least likely to use vegetarian foods, and foods with a specific health

claim• The least likely to belong to a fitness center/gym


Italians Least Price Sensitive for LOHAS; UK and Germany Most

14%22%

29%

16%

41%

UK Spain France Germany Italy

“Organic foods are worth paying an extra 20% for”

“I am willing to pay 20% more for products which are made in an environmentally friendly and sustainable way”

17%

26%

15% 20%

33%


(Q. 3gg, 53a -% General Population by country agreeing completely/somewhat with…)


LOHAS Consumers Most Motivated by Certification

28%

45% 11%

47%CE

38%E

53%CDE

58%BCDE

8%E

7%E

10%CDE

26%BCDE

3%UNCONCERNEDS(E)

CONVENTIONALS(D)

DRIFTERS (C)

NATURALITES (B)

LOHAS (A)

GP

Moderately agree Strongly agree

(Q. 3ll-% NMI segments indicating they agree strongly/moderately with the statement “A seal or certification mark indicating a product is environmentally-friendly increases the likelihood I will buy it”)


Fair-trade Certified Products

The Inca Inchi Night Cream displays the Max

Havelaar logo that guarantees that Fair

Trade ingredients have been used. The product is also Cosmebio and

Ecocert certified, which guarantees that the

product is formulated with at least 95% natural ingredients, mainly

obtained from organic agriculture, that the production methods

respect health and the environment, and that the product was not tested on

animals.

Traidcraft has extended its range to include Fair Trade Tissues. All paper is 100% recycled and retails

at a competitive price.

Source Mintel’s Global New Product Database


European Consumers Evangelize LOHAS-oriented purchasing

16%

22%

27%

34%

71%

34%46%

79%

48%

33%

49%

17%UNCONCERNED

CONVENTIONALS

DRIFTERS

NATURALITES

LOHAS

Total

Europe US

(Q. 32a-% NMI segments agreeing completely/somewhat with “I try to teach family and friends about the benefits of purchasing environmentally-friendly products”)

European CONVENTIONALS are much more likely to educate others about environmentally-friendly purchasing than US CONVENTIONALS

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Consumers in European Countries Report Changing Behavior

42%

51% 52%

43%

68%

31%

58%

9%

27%

11%

18%17%17%22%

US TotalEurope


Agreecompletely/somewhat

Disagreecompletely/somewhat

(Q. 3kk-% total country consumers indicating level of agreement with “I have personally changed my behavior to minimize my effect on global warming”)

French consumers are most likely to report behavior change in response to global warming


CHALLENGE

• Consumers are interested in the topic of sustainability – they believe it affects them, their families, the future

• Consumers are willing to take action• Some Consumers are willing to pay “more” for

products that help/don’t hurt the environment• Certifications/Authenticity is important – don’t #@%

me!

What can you, your products, your brands, be doing to create real actions, supported/endorsed by real agencies, to make a real difference?


Consumers Expect Companies to Show Socially Responsible Behavior

52%

32%

76% BCDE

59% CDE

40% E

48% CE

Total EU LOHAS NATURALITESDRIFTERS CONVENTIONALS UNCONCERNEDS

(Q. 8)NMI segments indicating it is veryimportant for companies to be sociallyresponsible)

58%

33%

86%BCDE

63%CDE

49%E

59%CE

(Q. 3ee)NMI segments indicating it knowing that a company is mindful of its impact on the environment an society makes them more likely to buy its product

Higher in Italy, France


Local, Small is Favored by Certain Consumers

37%

35%

39%

42%

37%

45%

53%

48%

51%48%

39%C60%

It is more important to buylocal than buy organic

When a product says that itis organic, I am more likelyto believe a small company

than a large corporation

US General Population

EU General Population

LOHAS (A)

NATURALITES (B)

U.K. (F)

France (G)

Presenter

Presentation Notes

More commonality across countries


CSR Starts with Taking Care of Employees

44%

63%61%

46%

59%57%

33%

22%20%

26%

17%22%

19%

8%10%

19%15%15%

ItalyGermanyFranceSpainUKGP

Taking care ofits employees

Being sensitiveto itsenvironmentalimpactSupporting thecommunities itworks in

(Q. 10 - % consumers in each country indicating that besides making money for shareholders, which of the following is most important for a company to focus on...)


New Products are Changing Rapidly………….


EU USANew Products w/recycle or recyclable claims (12 mos) 892 555New Products w/recycle or recyclable claims (6 mos) 652 393New Products w/local or locally sourced claims (12 mos) 148 89New Products using Carbon Footprint specific claims 12 2


Method Lil' Bowl Blu Toilet Bowl Cleaner is available in an Eucalyptus Mint scent. This non-toxic toilet bowl cleaner is naturally derived and biodegradable for happy pipes and a happy planet. The cleaner uses the natural power of lactic acid to dissolve grime, rust, calcium deposits and ring-around-the-rim. It is easy to use and people friendly. This product has not been tested on animals and is available in a 24-fl. oz. bottle. The bottle is made with 25% recycled plastic.

Recycled Materials/Recyclable


Pringles Light Original Fat Free Potato Crisps are now available with a newly designed label that highlights that the product is light and fat free. The product contains 50% fewer calories than regular potato chips and is made with olestra. This product retails in a 6 1/2-oz. pack. The pack is made with 50% recycled materials of which 15% is post-consumer material.


Elaÿs (Crème Naturelle Dermo-Soin) Natural Dermo-Care Cream is designed to repair, moisturise and fortify hands, feet and nails. This regenerative treatment is formulated with champagne (moisturising, antioxidant, anti-microbial, anti-ageing), certified organic shea butter, grape seed oil, luffa cylindrica, borage oil, glycerine, organic natural vine leaf extract, white nettle extract, and vitamin E. The company does not test its product on animals, it is said to be committed to sustainable development and all packaging and components are recyclable or have been made from recycled materials and use vegetable-based ink. Formulations are free from parabens, silicones, petrochemicals derivative, PEG, phenoxyethanol, SLS or colourants. Elaÿs is a member of the "1% for the Planet" association and as in so doing will give 1% of its turnover to finance environmental or ecological projects.The product was on display at In-Cosmetics, Amsterdam, April 15-17 2008.

Natural Dermo-Care CreamCompany Elaÿs


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Sainsbury's Kid's Mini Hoki Fishcakes are made of MSC New Zealand Hoki mixed fillets with Rösti potato and béchamel sauce, coated in light and crispy Signature breadcrumb. This product is claimed to be nutritionally balanced and designed especially for children 4-8 years old, making it a convenient and tasty way to eat healthily. This freezable product contains no artificial colours, flavourings, preservatives or sweeteners. It is claimed to come from a fishery which meets the Marine Stewardship Council's environmental standard for a well managed and sustainable fishery. The Signature breadcrumb is made using Country Ground Flour, milled in Linconshire from locally sourced wheat. The product retails in a 200g pack.

Mini Hoki FishcakesCompany Sainsbury's


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Lush Handy Gurugu Hand Cream is described as a fabulous, easily absorbed hand cream made with rose water, six natural oils and butters, and luxuriously soothing essential oils. When sourcing the rich shea butters, the creative buying team traveled for 15 hours on a rickety bus along potholed roads to find villages where it is handmade by the local women. Handy Gurugu makes a big difference to the skin and a huge difference to the villagers who make the shea butter. The fresh, handmade hand cream is available in a 3.5-oz. tub.

Handy Gurugu Hand CreamCompany Lush


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Fruit Factory 100% Pure Fruit Smoothie is targeted specifically at the teenage and young adult market. The product is not from concentrate, and the packaging is carbon footprint friendly. This preservatives-free product is available in the following variants: Mango, Orange & Passion Fruit; Pineapple, Banana & Coconut; Strawberry & Banana. This product was on display at the Food & Drink Expo 2008, in Birmingham.

100% Pure Fruit SmoothieCompany Ambiente




Arniston Bay Chenin Blanc Chardonnay Wine comprises a 1.5L decanting pouch of South African white wine. It is said to have an 80% lower carbon footprint and 90% less waste and landfill than glass. This product is available in a convenient on-the-go pack, which equates to two 750ml bottles.

Chenin Blanc Chardonnay WineCompany Arniston Bay




Marketing LOHAS in Europe: A “To Do” List

• Do recognize the differences across countries• Do recognize the potential value of each segment• Do include the role of outside endorsements• Do utilize LOHAS consumers as your grass-roots evangelizers• Do appreciate the value that CSR can have on consumer behavior• Do align consumer values with corporate actions

• Do NOT assume price insensitivity for green

Most importantly,• DO evaluate the opportunity to grow your brand globally

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Green Marketing and Sustainability Research with LOHAS

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