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 Rogers
Natural Marketing Institute

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?

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

NMI’s Top Trends for 2008

1. The Dual Society
2. Generation Zzzzzz
3. STOP – I Want Off!
4. Dr. Me
5. The Culture of Sustainability
6. Golden Opportunities
7. The New Immunity
8. Giving is the New Taking

Trends directly related to Sustainability!


Giving is the New Taking

• 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.’

The General Population Is Socially Conscious
(% consumers who completely/somewhat agree..)

87% care about CHILDREN’S 70% agree: 66% care about BUILDING A
ISSUES such as child abuse SENSE OF COMMUNITY
and child labor “I care about social WHERE THEY LIVE
consciousness”

82% care about SUPPORTING
83% care about PROTECTING
MILITARY TROOPS
WORKER’S RIGHTS

81% care about WOMEN’S ISSUES
such as equal pay for equal work
Source: LOHAS Consumer Trends Database™ Source: NMI’s 2007 LOHAS Trends Database™ 5

Activism Takes Other Forms, And Has Increased
Year Over Year
(Numbers in parentheses indicate % change since 2005)

The General Population reports that they regularly
do the following:

 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%)


Financial Support of Organizations or Causes Is
Important
(% consumers who donated money to an organization in the past year)

Two-thirds of the GP donated money to an organization
or cause during the past year
% of GP
donating
Civic-oriented groups (e.g., 27%
Salvation Army)
Did not Medical research groups (e.g., 23%
donate, American Cancer Society)
Donated
37% Religious-based groups (e.g., 21%
money, Catholic Charities)
63% Relief agencies (e.g., American 18%
Red Cross)
Animal rights groups 15%

Children’s organizations 12%

Wildlife charities 9%

Political parties 8%


And Yet Premium Prevails
Explosion of Green Luxury Countertrend

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

I do not want to sacrifice When I want to treat
anything when buying myself, I buy myself
environmentally friendly something special (56%)
products (38%)

I would be more interested in
environmentally-friendly
products if they were from
premium or specialty brands
(22%)

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!


NMI’s Top Trends for 2008

1. The Dual Society
2. Generation Zzzzzz
3. STOP – I Want Off!
4. Dr. Me
5. The Culture of Sustainability
6. Golden Opportunities
7. The New Immunity
8. Giving is the New Taking

Trends directly related to Sustainability!


The Culture of Sustainability

• 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).

Sustainability Takes Root

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

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

► 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

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

Source: LOHAS Consumer Trends Database™ Source: HBI Omnibus, October 2007 13

LOHAS Consumers (as defined) Serve as Market Predictors

New LOHAS Products Mainstreaming
Awareness
•Organic pet food
•Energy-efficient appliances
•Green dry cleaning
•Natural toys
Trial •Organic food/beverages
•Air purifiers
•Sustainable Furniture
•Carbon offsets Adoption
•Green banking
•Organic clothing Loyalty
•Many others…
Influence

NATURALITES
LOHAS CONVENTIONALS
DRIFTERS


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


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

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

LOHAS 19%
Not on radar
Environmental
stewards
UNCONCERNED 17%

CONVENTIONALS 19%

Cautious NATURALITES 19%
actors
DRIFTERS 25% Health motivated
Good intentions;
trend-oriented

The LOHAS Consumer

LOHAS 19%

A trend predictor 40 million
consumers (US)
Personal health + planetary health
Values driven
Price insensitive
High influence on others
Highest green buyers
Information junkies
Eco-lifestyle
CSR seekers (and boycotters)


NATURALITES

NATURALITES 19%
40 million
Driven by personal health and consumers (US)
wellness
High purchase of eco-
consumables
Healthy lifestyle
Want to do more for the
environment
Credible CSR affects loyalty
Attractive target for many


DRIFTERS

DRIFTERS 25%
45 million
Attitudinally predisposed to consumers (US)
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


CONVENTIONALS

CONVENTIONALS
19%
Rooted in practicality 40 million
consumers(US)
“Municipal” behaviors, including
recycling and energy
conservation
Driven more by cost savings,
rather than environment
Eco-benefits are secondary


European LOHAS Segment Sizes Compared to US

(% of population…)

Belgium Portugal
18% 17%
• Highest LOHAS – 24% High LOHAS – 21%

22% 19%

France 18% 25% UK
Highest NATURL’S – 27% Low LOHAS – 15%
Low LOHAS– 15%
24% 19%

Spain
18% 19% High LOHAS – 20%

Europe U.S.
UNCONCERNEDS
CONVENTIONALS
DRIFTERS
NATURALITES
LOHAS

Correlation Variations in LOHAS Segment Membership
Across Countries

•Willingness to pay 20% more for products which are made in an
U.K. environmentally-friendly and sustainable way
•Importance of personal care being earth-friendly
•I will choose those products and services that are environmentally
France friendly
•Importance of foods/beverages organically grown
•I try to teach family and friends about the benefits of purchasing
Germany environmentally-friendly products
•Importance of personal care products being earth-friendly
•I will choose those products and services that are environmentally

Italy
friendly
environmentally-friendly products
•I would like to learn about how I can become more involved in

Spain
protecting the environment
environmentally-friendly products


Largest Cross-Continental Differences are Evident in
NATURALITES and CONVENTIONALS

Attitude Axis
U.S. Total Passionate
Europe Total Concern

LOHAS
NATURALITES
DRIFTERS
CONVENTIONALS
UNCONCERNEDS

Committed
Action Axis Inaction
Advocacy

Opposed or
© 2008, Natural Marketing Institute Uncaring

Major Differences Between the U.S. and Europe

U.S. Buy “green” products
Europe
(average across numerous Twice as
categories) likely

Motivated to buy products with
certificate/seal indicating product is
36% more
environmentally-friendly likely

Influence friends/family 35% more
likely
25% more
Willing to pay 20% more for eco-
likely
friendly products

Recycle paper products 25% more
likely

Aside from making money, it is most 25% more
important for companies to be sensitive likely
to their environmental impact

Similarities Between US and Europe

U.S. Europe

Environmental-friendliness of companies - increases
58% 58%
purchase likelihood
Interest in learning more about how to protect the
51% 55%
environment
Interest in government funding for energy efficient
52% 54%
products

34% Purchase compact fluorescent light bulbs 34%
Belief that, after profitability, it is most important for
13% companies to support the communities in which they 15%
work


Within Europe, Individual Country Populations are also
Dynamic
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

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

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

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

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

“I am willing to pay 20% more for products which are made in an
environmentally friendly and sustainable way”
41%
29%

22%
14% 16%

UK Spain France Germany Italy

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

33%
26%

17% 15% 20%

UK Spain France Germany Italy


LOHAS Consumers Most Motivated by Certification

(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”)

GP 45% 11%

LOHAS (A) 58%BCDE 26%BCDE

10%
NATURALITES (B) 53%CDE
CDE

DRIFTERS (C) 38%E 7%E

CONVENTIONALS(D) 47%CE 8%E

UNCONCERNEDS(E) 28% 3%

Moderately agree Strongly agree

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 Traidcraft has extended its range
agriculture, that the to include Fair Trade Tissues. All
production methods paper is 100% recycled and retails
respect health and the at a competitive price.
environment, and that the
product was not tested on
animals.

32
Source Mintel’s Global New Product Database
Source: LOHAS Consumer Trends Database™

European Consumers Evangelize LOHAS-oriented
purchasing

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

Total 34%
46%

LOHAS 71%
79%

NATURALITES 34%
48%
European
27% CONVENTIONALS are
DRIFTERS
33% much more likely to
educate others about
CONVENTIONALS 22% environmentally-friendly
49%
purchasing than US
16% CONVENTIONALS
UNCONCERNED
17%

Europe US


Consumers in European Countries Report Changing
Behavior

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

Agree
completely/somewhat
68%

Disagree 58%
completely/somewhat 51% 52%
43% French
42%
consumers are
31% most likely to
report behavior
change in
response to
global warming
11% 9%
17% 17% 18%
22%
27%

US Total UK Spain France Germany Italy
Europe


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

(Q. 8) (Q. 3ee)
NMI segments indicating it is very NMI segments indicating it knowing that a
important for companies to be socially company is mindful of its impact on the
responsible) environment an society makes them more
likely to buy its product
52% 58%

76% BCDE 86%BCDE

59% CDE 63%CDE

40% E 49%E

48% CE 59%CE

32% 33%

Total EU LOHAS NATURALITES
DRIFTERS CONVENTIONALS UNCONCERNEDS

Higher in Italy, France


Local, Small is Favored by Certain Consumers

37% US General Population
39% EU General Population
It is more important to buy 37% LOHAS (A)
local than buy organic 39%C
NATURALITES (B)
60%
U.K. (F)
53%
France (G)
35%
42%
When a product says that it
is organic, I am more likely 51%
to believe a small company 48%
than a large corporation 45%
48%


CSR Starts with Taking Care of Employees

(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...) Taking
care of
63% its employees
59% 61%
57%
Being sensitive
to its
46% environmental
44%
impact
Supporting the
33% communities it
works in
26%
22% 22%
19% 20% 19%
17%
15% 15%
10%
8%

GP UK Spain France Germany Italy

New Products are Changing Rapidly………….

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

39

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.

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.

40

Natural Dermo-Care Cream
Company Elaÿs

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.

41

Mini Hoki Fishcakes
Company Sainsbury's

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.

42

Handy Gurugu Hand Cream
Company Lush

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.

43

100% Pure Fruit Smoothie
Company Ambiente

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.

44

Chenin Blanc Chardonnay Wine
Company Arniston Bay

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.

45

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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