Meeting Consumers expectations for Natural and Organic products (NATURAL BEAUTY SUMMIT 2008)


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A Conference I gave last october on the major issues facing natural & organic beauty brands

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Meeting Consumers expectations for Natural and Organic products (NATURAL BEAUTY SUMMIT 2008)

  1. 1. Meeting Consumer Expectations for Natural & Organic Michel Gutsatz [email_address] October 9th 2008
  2. 2. TREND 1 New threats: a growing concern … Risks on my health Food: conservatives and artificial flavors, allergens, trans fats,… Beauty: parabens, phtalates, etc… UV rays Quality of water Quality of air Diffusion of germs AIDS Risks on nature Global warming Cloning Risks on biodiversity Nanotechnologies Bioengineering Pollution Catastrophes September 11 and terrorism Tankers sinking: Erika – Exxon Valdez Financial crisis Tchernobyl The Asian tsunami Hurricanes (Katrina…) Uncontrolable change Unemployment Relocations and closures of sites The retroactivity of some laws New laws and rules Medias Medias
  3. 3. New sanitary threats : from AIDS to obesity Complexity of the world we live in: We do not understand Environmental risks : depletion of resources… … consumers need to be reassured Ideals disappear : find a meaning to life MEDICALISATION OF FOOD Banning GMOs COSMETICS “ WITHOUT” In search of zero risk TRANSPARENCY Make information understandable In search of references ORGANICS Natural ingredients SUSTAINABLE DEVELOPMENT Osmosis with nature In search of an ideal GREEN LIVING A positive collective ideal A CRAVE FOR REASSURANCE
  4. 4. TREND 2 Health is a growing concern because of longevity & new social norms Question: what can guarantee social order in troubled times when everything is changing ever so rapidly ? Answer: New Social Norms SELF CONTROL HEALTH AS A DUTY I must be in good health SELF IMAGE BEAUTY AS A DUTY I must be beautiful MEDICALISATION OF FOOD Functional Foods I eat so as to be in good health HOLISTIC VISION HEALTH – FOOD - BEAUTY I eat to keep healthy Being beautiful is a question of harmony
  5. 5. <ul><li>France: 70% of children of a given generation reach the baccalauréat in 2000 - 10% at the end of the ’50s and 30% in the ’70s </li></ul><ul><li>Teaching methods change : children are not asked to learn and accept but to deduct and understand </li></ul><ul><li>The development of internet & magazines that popularize science, marketing, arts… </li></ul>TREND 3 The growing level of education and access to knowledge of the consumer… The consumer has become an expert
  6. 6. <ul><li>An American teenager has received 250 000 commercial messages by the time he is 17 </li></ul><ul><li>A consumer that wishes to know : </li></ul><ul><ul><li>What a product contains </li></ul></ul><ul><ul><li>What (s)he eats </li></ul></ul><ul><ul><li>If the price paid is the right price </li></ul></ul><ul><li>Information flows instantly – allowing the immediate satisfaction of all wishes </li></ul><ul><ul><li>Price comparison websites </li></ul></ul><ul><ul><li>Blogs & Newsletters </li></ul></ul><ul><ul><li>« Cool hunting » sites </li></ul></ul><ul><ul><li>« Watchdog » sites…. </li></ul></ul><ul><li>Informed consumers that can identify </li></ul><ul><ul><li>The Cheapest of the Cheapest </li></ul></ul><ul><ul><li>The Best of the Best </li></ul></ul><ul><ul><li>…… .. </li></ul></ul>Informed consumers are more demanding <ul><li>Consumers that have an extensive knowledge of brands, of products, of their pros and cons, of their strengths & weaknesses… </li></ul>
  7. 7. This new collective ideal is called GREEN LIVING Green Living : way beyond “green”, a way of life at the service of an ideal that will drive a new ethics of consumption A new positive collective ideal is back
  8. 8. This new ideal is structured in 3 concentric circles ME My Health My beauty My emotions My well-being US My children The Planet My friends My country OTHERS Animals Third World countries It all starts here…. Egoistic motives are better predictors of purchase of organic products than are altruistic motives
  9. 9. … and their related expectations ME Nutrition, Functional food, Organics , spas, vacations… US Protecting the planet, recycling local production… OTHERS Ethical Trade, “free range” protection of endangered species …
  10. 10. Green Living, the new ethics of the 21st century <ul><li>4 values of Green Living that brands must understand as being critical: </li></ul><ul><li>Respect </li></ul><ul><ul><li>Respecting the consumer makes a brand respectable </li></ul></ul><ul><li>Transparency </li></ul><ul><ul><li>A metaphor of purity, that only those that have nothing to hide can put forward </li></ul></ul><ul><li>Commitment </li></ul><ul><ul><li>The contract that exists between the brand and its consumers </li></ul></ul><ul><li>Education </li></ul><ul><ul><li>A proof that a non-commercial link may exist </li></ul></ul>
  11. 11. To understand the Beauty issues… keep your eyes open on Food categories
  12. 12. Why is anything « natural » considered as positive ? <ul><li>They are considered better for 3 ( not necessarily proved ) practical reasons : </li></ul><ul><ul><li>« Healthier » </li></ul></ul><ul><ul><li>Tastier </li></ul></ul><ul><ul><li>Safer for the environment </li></ul></ul><ul><li>They are considered better because they are an ideal : </li></ul><ul><ul><li>An ideal of purity </li></ul></ul><ul><ul><li>An ideal of the « original » form of things </li></ul></ul>« Natural » is a question of perception « Nature » is an image
  13. 13. « Natural » is a question of perception - « Nature » is an image The 8 reasons why consumers will prefer « natural » products <ul><li>They have faith in the « goodness » of Nature </li></ul><ul><li>The word « chemical » has a very negative bias </li></ul><ul><li>There is a positive link between « plants » and « natural » … and a negative one between « natural » and « animal » </li></ul><ul><li>When man mixes « natural » products, the result is still considered « natural » </li></ul><ul><li>Physical modifications (like deep freeze) of « natural » products do not alter their « naturality » </li></ul><ul><li>Chemical transformations of « natural » products create products that are no more considered as « natural » </li></ul><ul><li>Adding something to a « natural » product… decreases its naturality </li></ul><ul><li>Taking away something from a « natural » product (i.e. skimming the milk) does not alter its naturality … and may even increase it, if something « chemical » is taken away (like chemical elements present in mineral water) </li></ul>
  14. 14. Organics: a perfect example <ul><li>For American consumers (2005) the perception of Organics is that of a world “without”: </li></ul><ul><ul><li>Without pesticides </li></ul></ul><ul><ul><li>Without growth hormones </li></ul></ul><ul><ul><li>Without GMO </li></ul></ul><ul><ul><li>Without antibiotics </li></ul></ul><ul><ul><li>Without food irradiation </li></ul></ul><ul><ul><li>Without BSE (mad cow disease)…. </li></ul></ul><ul><li>Consequence: it is “chemical free” </li></ul><ul><li>Organics are also: </li></ul><ul><ul><li>Safer </li></ul></ul><ul><ul><li>Tastier </li></ul></ul><ul><ul><li>Environment-friendly… </li></ul></ul>
  15. 15. Brands try to meet these new expectations by developing new product offers <ul><li>Organics is part of both of these : it leads to two distinct reassurances </li></ul><ul><li>reassurance by the “zero risk” promise </li></ul><ul><li>reassurance by proximity/osmosis with Nature: “naturally rich” products </li></ul>They try to reassure consumers by Eliminating risk factors The “Without” products Adding “benefits” Food Supplements (to balance deficits created by our lifestyles ) “ Enriched” products “ Naturally rich in” products
  16. 16. « Without » products <ul><li>Without conservatives </li></ul><ul><li>Without parabens </li></ul><ul><li>Without mineral oils </li></ul><ul><li>Without ingredients from petroleum </li></ul><ul><li>Without synthetic colours </li></ul><ul><li>Without animal testing </li></ul><ul><li>Without pesticides </li></ul><ul><li>… .. Without risk </li></ul>
  17. 17. « Without » products <ul><li>Without allergens </li></ul><ul><li>Without pesticides </li></ul><ul><li>Without trans fats </li></ul><ul><li>Without added sugar </li></ul><ul><li>Without salt </li></ul><ul><li>Without conservatives </li></ul><ul><li>Without artificial colorings </li></ul><ul><li>… .. Without risks </li></ul>
  18. 18. “ Enriched” products Tropicana: fruit juices with health claims With Selenium, Vitamin C & Vitamin E With Probiotics With Omega 3 – vitamin C Potassium & Folates
  19. 19. “ Enriched” products (with antioxidants: aloe vera, apple and grapes) A Mineral water with health & beauty claims
  20. 20. “ Naturally rich” products Chocolate, source of antioxidants <ul><li>HERSHEY’S site presents chocolate as a natural source of antioxidants: flavanols </li></ul><ul><ul><li>Black chocolate is said to be the food with the greatest antioxidant power </li></ul></ul><ul><ul><li>A list of scientific proofs of the benefits of antioxidant consumption on health is given </li></ul></ul><ul><li>BARRY CALLEBAUT claims its extraction process is the one that preserves most flavanols (80%) (vs. 30% only in standard processes) </li></ul><ul><li>… and patents its chocolate under the name ACTICOA </li></ul>
  21. 21. “ Naturally rich” products Coffee: anti-aging and therapeutic benefits <ul><li>Antioxidant benefits.. </li></ul><ul><li>A protection against heart troubles… </li></ul><ul><li>A protection against specific cancers.. </li></ul><ul><li>A measurable protection against cirrhosis… </li></ul><ul><li>A protection against type 2 diabetes… </li></ul><ul><li>A protection against Parkinson… </li></ul><ul><li>Coffee, a global remedy ? </li></ul>
  22. 22. Two major marketing pitfalls
  23. 23. Marketing pitfall n°1: which is the « correct » price for organics? <ul><li>Shampoo </li></ul><ul><li>Hydrating cream </li></ul>10 € 200ml 9.75 € 200ml 21.20 € 200ml 12.30 € 250ml 4.90 € 400ml 19 € 200ml 1.9 1 13.80 € 50ml 47.70 € 50ml 44.80 € 50ml 3.5 40.90 € 50ml 3 21 € / 30ml 35 € / 50 ml 2.5 17.5 € / 40ml 22 € / 50 ml 1.5 26.90 € 50ml 2
  24. 24. Marketing pitfall n°2: Greenwashing <ul><li>September 2008: French consumer magazine « Que Choisir » tests 22 « natural » & « organic » beauty products from 21 brands </li></ul><ul><li>Results show that: </li></ul><ul><ul><li>5 brands have claims that are 100% consistent : they implement the certification requirements / they have no prohibited or dubious preservatives / they contain no allergens </li></ul></ul><ul><ul><li>12 « certified » brands are not 100% consistent: the products include parabens & phenoxyethanol / 9 products when contaminated see the quantity of bacterias grow! / allergens are not listed / total quantities of allergens are way too high </li></ul></ul><ul><ul><li>3 non certified brands have « natural » products that are not significantly different from « traditionnal » cosmetics </li></ul></ul><ul><li>Given the influence of this magazine, this can be devastating </li></ul>
  25. 27. Marketing pitfall n°2: Greenwashing <ul><li>2006: The French DGCCRF controlled 47 different « organic » cosmetics products – all bearing « organic labels » </li></ul><ul><ul><li>6 products were found to be non-consistent with the label’s criteria </li></ul></ul><ul><ul><li>2 brands were fined for selling products that had « natural » & « organic » unsubstantiated claims </li></ul></ul><ul><li>According to a 2007 report by TerraChoice Environmental Marketing, using metrics from the Federal Trade Commission (FTC)’s Environmental Marketing Claim Guidelines, an overwhelming majority of environmental claims in the US are inaccurate, inappropriate or unsubstantiated: all but ONE of more than 1000 products reviewed commited at least one of the Six Sins of Greenwashing!!! </li></ul>
  26. 28. The six sins of Greenwashing <ul><li>1. Sin of the Hidden Trade-Off (57%) : claims that suggest a product is &quot;green&quot; based on a single environmental attribute. While not exactly false it paints a much &quot;greener“ picture of the product. </li></ul><ul><li>2. Sin of No Proof (26%): any claim that cannot be substantiated by easily accessible supporting information, or by a reliable third-party certification. </li></ul><ul><ul><li>Personal care products (such as shampoos and conditioners) that claim not to have been tested on animals, but offer no evidence or certification of this claim. </li></ul></ul><ul><ul><li>Facial tissues and paper towels that claim post-consumer recycled content without providing evidence. </li></ul></ul><ul><li>3. Sin of Vagueness (11%): every claim that is so poorly defined or broad that its real meaning is likely to be misunderstood by the intended consumer such as chemical-free pesticide. </li></ul><ul><ul><li>“ Non-toxic”. Everything is toxic in sufficient dosage. Water, oxygen, and salt are all potentially hazardous. </li></ul></ul><ul><ul><li>“ All Natural”. Arsenic is natural. So are uranium, mercury, and formaldehyde. All are poisonous. </li></ul></ul><ul><ul><li>“ Green”, “Environmentally friendly”, and “Eco-conscious” (to name just a few) which are utterly meaningless without elaboration. </li></ul></ul><ul><li>4. Sin of Irrelevance (4%): claims that may be truthful but are unimportant and unhelpful for consumers and also distracting. Worst offenders: claiming to be CFC-free, ozone-depleting chlorofluorocarbons have been outlawed since the late 1980s. </li></ul><ul><li>5. Sin of Lesser of Two Evils (1%): environmental claims that may be true, but risk distracting the consumer from the greater environmental impacts of the category as a whole such as organic tobacco or green insecticides. </li></ul><ul><li>6. Sin of Fibbing (10 products <1%): claims that are simply false, typically by misusing or misrepresenting certification by an independent authority, when no such certification had been made. </li></ul><ul><ul><li>Several shampoos that claimed to be “certified organic”, but for which research could find no such certification </li></ul></ul>
  27. 29. Natural & Organic – a major opportunity but… <ul><li>A major opportunity : because it is in line with the new emergent collective ideal - Green Living </li></ul><ul><li>The Golden Goose syndrom : everyone is boarding the « green » ship </li></ul><ul><ul><li>Major brands (by launching new organic lines or buying organic brands) </li></ul></ul><ul><ul><li>Distributors with their Private Labels </li></ul></ul><ul><ul><li>New entrants… </li></ul></ul><ul><ul><li>… All come alongside established « natural » & « organic » brands </li></ul></ul><ul><li>But this creates a chaotic situation in ALL categories: a new Wild West ? </li></ul><ul><ul><li>The temptation of Greenwashing </li></ul></ul><ul><ul><li>The temptation to « hide » behind the Numerous labels with conflicting definitions </li></ul></ul><ul><li>Never forget consumers – and specifically those that adhere to « natural & organic » – are educated and often « fluent in cosmetics »… </li></ul><ul><li>Building a (long-term) brand is building trust </li></ul><ul><li>The winners (survivors ?) will be those that will be consistent … and trustworthy ! </li></ul>
  28. 30. Thank you !
  29. 31. back
  30. 32. Business Issue n°1: will this be your future ?
  31. 33. Business Issue n°2: will this be your future ?
  32. 34. Green Living: consumers will have different concerns and levels of involvement * Source: The Hartman Group, 2007 “ Periphery” Concerned primarily by “Me” By price By convenience: accessibility & functionality Follow family advice USA 17% * “ Medium involvement” Concerned by “Me” & “Us” By their experiences By the knowledge they have of brands & products Follow expert advice USA 65% * LOHAS Concerned by “Me”, “ Us” & “Others” By authenticity & values By transparency By production methods By packaging Holistic vision of the world Follow peer advice USA 18% *
  33. 35. Market trends (in food) prove this… “ Without” “ Naturally rich” “ Naturally rich” “ Enriched in” “ Naturally rich” “ Enriched in” “ Naturally rich” “ Without” “ Without” “ Without”