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Cosmethica Conf2009

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Cosmethica Conf2009

  1. 1. Customer expectations and behaviour trends in regard to biodiversity preservation, social responsibility, fair trade … What strategies and practices to address these changes? Michel Gutsatz [email_address] October 14 th 2009
  2. 2. “ It is important for all of us to understand that there are a number of issues facing the world that will profoundly affect our lives and our company. I am talking to you about issues like international trade, climate change, water shortages, social and economic inequities, infrastructure and foreign oil. Wal-Mart can take a leadership role, get out in front of the future, and make a difference that is good for our business and the world. Leadership is not about looking over your shoulder and living in the past. It is about looking over the horizon and envisioning the future” Lee Scott, CEO Wal Mart, January 23 2008
  3. 3. Outline <ul><li>A new positive collective ideal is shaping the 21st century: Green Living </li></ul><ul><ul><li>5 major consumer trends that shape the 21st century </li></ul></ul><ul><ul><li>… but all « green » consumers are not equal </li></ul></ul><ul><ul><li>T he barriers to “Green Living” </li></ul></ul><ul><li>Companies & Brands try to meet these new expectations – but do they succeed? </li></ul><ul><ul><li>4 values of Green Living that brands must understand as being critical </li></ul></ul><ul><ul><li>Greenwashing </li></ul></ul><ul><ul><li>How to address these issues </li></ul></ul>
  4. 4. Our framework
  5. 5. MEGA TREND 1 Growing anxiety… COMPLEXITY LONGEVITY SWINE FLU AIDS CLIMATE CHANGE POLLUTION
  6. 6. 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…) Uncontrollable change Unemployment Relocations and closures of sites The retroactivity of some laws New laws and rules Medias Medias
  7. 7. 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 BRANDS w ith a meaning GREEN LIVING A positive collective ideal A CRAVE FOR REASSURANCE
  8. 8. MEGA TREND 2 Health is a central issue <ul><li>Human longevity increases </li></ul><ul><li>Health is now considered as a capital to be managed over the long term </li></ul><ul><li>The growing cost of all social security & health systems : non-responsible attitudes are considered as not socially acceptable any more </li></ul><ul><li>A new social norm: Health Duty </li></ul><ul><ul><li>All citizens & consumers are asked to manage their health: no smoking, weight control to fight obesity, minimize heart risks, manage food and lead a healthy life </li></ul></ul><ul><ul><li>The development of OTC and auto-medication </li></ul></ul><ul><ul><li>Incentives to alternative medicines </li></ul></ul>
  9. 9. <ul><li>Giving a meaning to one’s actions is a fundamental characteristic of man </li></ul><ul><li>The « disappearance » of the great external sources of meaning – religion / ideologies – have led men to « invent » their own personal meanings of life </li></ul><ul><ul><li>The « coming back » of spiritual experiences : collective emotions (sport / music /…) – religion …. </li></ul></ul><ul><ul><li>The « small pleasures » of daily life: well-being / friends & tribes / sensory pleasures…. </li></ul></ul><ul><ul><li>The essential role of family </li></ul></ul><ul><ul><li>Brands as a substitute </li></ul></ul><ul><li>Consequence: a new vision of the world based on « personal development » </li></ul>MEGA TREND 3 … In search of an ideal
  10. 10. <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>MEGA TREND 4 The growing level of education and access to knowledge of the consumer… The consumer has become an expert
  11. 11. <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>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>
  12. 12. MEGA TREND 5 The need for sensations - leading « a full rich life »
  13. 13. Emotions and feeling are a growing dimension of the new individual/consumer...
  14. 14.
  15. 15. A NEW POSITIVE COLLECTIVE IDEAL
  16. 16. For the first time in many years a new collective positive ideal is shared globally <ul><li>A 19-nation poll (GlobeScan 2006) shows that large majorities around the world see grave threats from the way the world currently produces and uses energy . </li></ul><ul><li>There is overwhelming support (80%) for “creating tax incentives to encourage the development and use of alternative energy sources, such as solar.” </li></ul><ul><li>83% say it will be necessary “to make changes in their life style and behavior in order to reduce the amount of climate changing gases they produce.” (Fall 2007 BBC/GlobalScan poll) </li></ul>
  17. 17. For the first time in many years a new collective positive ideal is shared globally – by executives Source: McKinsey – 3000 global executives, 2007
  18. 18. A new collective positive ideal is shared globally – by Millenials (ages 10-25)
  19. 19. A new collective positive ideal is shared globally – by consumers (UK) Source: The Cooperative Bank, Ethical Consumerism Report 2008
  20. 20. This new collective ideal is called GREEN LIVING Green Living : way beyond basic “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
  21. 21. The new individual is holistic & in osmosis with the planet
  22. 22. 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 Other people It all starts here…. Egoistic motives are better predictors of purchase of organic products than are altruistic motives
  23. 23. This is confirmed by in-store behaviour: a « green product » is… <ul><li>A safer product </li></ul><ul><li>A healthier product </li></ul><ul><li>A quality product </li></ul><ul><li>A product that is better for ME & US </li></ul>Source: Grail Research « The Green Revolution », 2009
  24. 24. Green Living is structured along 3 levels of expectations OTHERS Ethical Trade CSR - Biodiversity “ Free range” Protection of endangered species ME Nutrition Organics Spas, Vacations US Protecting the planet Recycling Local production
  25. 25. 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 “ Medium involvement” Concerned by “Me” & “Us” By price By their experiences By the knowledge they have of brands & products Follow expert advice LOHAS Concerned by “Me”, “ Us” & “Others” By authenticity & values By transparency By production methods By packaging Holistic vision of the world Follow peer advice
  26. 26. Consumers have a very precise definition of what is a « green product » <ul><li>Products that minimize impact on the environment: </li></ul><ul><ul><li>Recyclable packaging </li></ul></ul><ul><ul><li>Energy efficient </li></ul></ul><ul><ul><li>Less greenhouse gas </li></ul></ul><ul><li>Organic / Natural ingredients </li></ul><ul><li>Non-toxic i.e. safe for my health </li></ul><ul><li>Only a minority speak of CSR / Animal testing / Local production / Free range </li></ul>Source: Grail Research « The Green Revolution », 2009
  27. 27. Information overload & price are the major barriers to green consumption <ul><li>Importance of the cognitive effort in researching, decision-making & searching for the products </li></ul><ul><ul><li>Lack of available information on the environmental & social performance of products </li></ul></ul><ul><ul><li>Lack of time for research, decision-making and purchase </li></ul></ul><ul><li>The importance & priority given to non-green habits, desires & decision criteria </li></ul><ul><li>Price of the products </li></ul>Brand Size Price Discount Information source Budget Previous experience Type Model Trust in… Appearance Design Colour Age Sales technique Retailer choice Timely delivery Free delivery Reduce cognitive effort Have green products available Level off prices
  28. 28. Price is a real barrier to green products <ul><li>« Light Green » consumers that say «  some of the products I currently buy are green  » are very price-sensitive </li></ul>Source: Grail Research « The Green Revolution », 2009 <ul><li>« Dark green » consumers that say  «  Most of the products I currently buy are green  » will pay a premium to access these products </li></ul>8 % 76%
  29. 29. The last major barrier is confusion and inconsistency SUSTAINABLE RESPONSIBLE CSR
  30. 30. Outline <ul><li>A new positive collective ideal is shaping the 21st century: Green Living </li></ul><ul><ul><li>5 major consumer trends that shape the 21st century </li></ul></ul><ul><ul><li>… but all « green » consumers are not equal </li></ul></ul><ul><ul><li>The barriers to “Green Living” </li></ul></ul><ul><li>Companies & Brands try to meet these new expectations – but do they succeed? </li></ul><ul><ul><li>4 values of Green Living that brands must understand as being critical </li></ul></ul><ul><ul><li>Greenwashing </li></ul></ul><ul><ul><li>How to address these issues </li></ul></ul>
  31. 31. 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><ul><li>Respect is an attitude: a clear & understandable communication / is embedded in the product itself / Respect is in the quality of the service offered </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><ul><li>Answerring questions that were never asked before: How & by whom was the product made? What about its ingredients? How did it get to its point of sale? What effects on the environment will it have after purchasing? </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>
  32. 32. The Dole Organic case www.doleorganic.com
  33. 33. <ul><li>All brands must today act responsibily, build a contract with their customers and communicate these commitments </li></ul><ul><li>Be simple </li></ul><ul><li>Walk the Talk… </li></ul>Commitment Is it true?... What does this mean?
  34. 34. Education
  35. 35. Education: use the web to build a conversation with your customers <ul><li>The brand offers the consumer non-commercial services: practical advice, online services, forums, etc </li></ul><ul><li>The websites allow consumers to meet & dialogue: it develops the sense of belonging </li></ul>Virtual Room Creator Selling your Baby Products
  36. 36. Trust in business has fallen dramatically since the early 1980s (UK)
  37. 37. Marketing pitfall n°1: 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>
  38. 38.
  39. 39.
  40. 40. Marketing pitfall n°1: 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>
  41. 41. 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 – the whole product is dubbed “green” because on of its atrribute is. </li></ul><ul><li>2. Sin of No Proof (26%): any claim that cannot be substantiated 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>
  42. 42. The six sins of Greenwashing <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>
  43. 43. <ul><li>An ad campaign by the US cotton industry has been banned by the Advertising Standards Authority (UK) for making misleading claims promoting the material as an environmentally-friendly product. </li></ul><ul><li>Cotton Council International argued that US cotton production met &quot;reasonable and generally accepted&quot; definitions of sustainability </li></ul><ul><li>ASA said there was no &quot;universal acceptance&quot; that the US cotton industry had no negative impact on economies on developing countries. </li></ul><ul><li>In this context the term &quot;sustainable&quot; was likely to be ambiguous and unclear to consumers and that the CCI had not justified the claim. </li></ul>US cotton ad banned over green claims Mark Sweney guardian.co.uk , Wednesday 12 March 2008
  44. 44. Many companies are actively involved in sustainable initiatives
  45. 45. .. But consumers are NOT aware of these green initiatives Source: MIT Sloane Management« The Sustainability Initiative », 2009
  46. 46. Why do we have such a misunderstanding? <ul><li>The question of trust in business </li></ul><ul><li>Companies are reluctant to communicate with consumers due to fears of greenwashing complaints: as a result they keep their sustainability initiatives behind closed doors </li></ul><ul><li>Others are sceptical that consumers would be interested, aware or even comprehend </li></ul><ul><li>Some companies are interested in consumer point-of-view but have difficulty measuring consumer perception of their activities </li></ul><ul><li>External & Internal actions are needed </li></ul>
  47. 47. What can companies & brands do? NB: it is NOT a question of bad communication <ul><li>Externally : It is a question of consistent implementation at all consumer touchpoints – Walk the Talk </li></ul><ul><li>There is no « one size fits all » green strategy </li></ul><ul><li>Reduce prices </li></ul>RESPECT TRANSPARENCY COMMITMENT EDUCATION <ul><li>Implement the 4 values of Green Living </li></ul><ul><li>Make your products available </li></ul>
  48. 48. What can companies & brands do? NB: it is NOT a short-term involvement <ul><li>Internally : It is a question of consistent strategy & cultural integration </li></ul><ul><li>Share a common definition of « sustainability » and an understanding of how it will impact business </li></ul><ul><li>Conduct a thorough assessment of the drivers of sustainability that present the greatest opportunities/risks </li></ul><ul><li>Define a clear sustainability strategy </li></ul><ul><li>Determine the short-term & mid-term sustainability business model </li></ul><ul><li>Define metrics </li></ul><ul><li>Execution, execution, execution </li></ul><ul><ul><li>Integration into processes & operations </li></ul></ul><ul><ul><li>Focus and support from senior management </li></ul></ul><ul><ul><li>Alignment with all relevant stakeholders </li></ul></ul>
  49. 49. A 4-step framework The broad & « basic » stakes Public relations Compliance with regulations Capturing cost efficiencies Short Term Long Term Company specific Shared Time horizon of sustainability effort Good business practices Transparency Supply chain productivity Capturing competitive advantage Product redesign New market entry New organizational models Game-changing innovations Reframed business models Partnerships with external stakeholders
  50. 50. THANK YOU! www.michelgutsatz.com

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