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June 11, 2008

Shades of Green for Everyone – The Effects of Premium Green and Sustainable Style

Patti Marshman-Goldblatt
Senior Vice President, NMI

According to the latest edition of NMI’s LOHAS Consumer Trends Report, many consumers’ purchasing patterns are affected by the phenomenon of trading up: a willingness to pay more for a product that is emotionally satisfying in terms of the perceived quality, performance, brand image, and the stature it provides. Green products are no exception. And marketers are taking full advantage of this opportunity by adopting the stance that virtually no product or service is incapable of being “greened.”

The increasing availability of eco-friendly products, services, and green behaviors is empowering a wider array of consumers to act green – regardless of their interest in planetary sustainability. Green products are becoming more prevalent in surprising areas, such as luxury, premium, and specialty brands in the fashion, automotive, home decor and personal care industries.

A lifestyle that was once described as “burlap and Birkenstock” is now hip and stylish, as brands such as The Gap, Levi’s, Barneys, Lexus, Pottery Barn, Williams-Sonoma and Aveda try to appeal to the desirable LOHAS consumer – while simultaneously attracting new consumers to green living one product at a time. As shown in the chart below, 38% of consumers believe eco-friendly premium products are a good way to help the environment without the trade off on quality. And more than half of LOHAS consumers feel this way. Thus, supporting the emergence of premium green and the fact that some consumers, even LOHAS consumers, do not want to sacrifice quality in order to be eco-friendly.

Some consumers are skeptical of premium green. In fact 30% of consumers believe that environmentally-friendly products should be inherently simple, as shown in the chart below. They question whether there is truly anything sustainable about a $50,000 car, or a 5,000 square foot home with solar panels. However that is the beauty of green individualism.

As shown in the chart below, nearly six in ten consumers and 63% of LOHAS consumers believe that everyone has different tastes, so a wide variety of eco-friendly products is good. And the increased opportunity for consumers to engage in non-consumptive, environmentally-friendly behavior paves the way for mainstream consumers to explore the LOHAS lifestyle and marketplace, and find a niche that both suits their lifestyle and allows them to “do their part” for the environment. This behavior also is fostered by wider product distribution, smaller price premiums, and improved product performance. Examples of products that fit this lifestyle are Method-branded cleaning products sold at Target and Yesterday’s News kitty litter sold at PetSmart.

Our research shows that the best way to market premium green to consumers is to use the words “premium” or “specialty” which are better received than “luxury.” Consumers are driven to trade up to premium/specialty brands which are perceived as high quality and somewhat differentiated, but are less interested in luxurious products, which may be equated with overindulgence and overconsumption. This point is exemplified in the chart below where 27% of consumers would be more interested in environmentally-friendly products if they were from premium/specialty brands and only 13% that agree they would be more interested in these types of products if they were more luxurious.

These dual dynamics, where both LOHAS consumers and mainstream consumers are trying to green themselves, leads NMI to expect that as long as there continues to be variety in the marketplace, there will be a steadily increasing adoption of green behavior among all consumers, with each at a level where they feel most comfortable and can afford.

LOHAS consumers’ appetite for green products is insatiable, as early adopters of these products marketers will need to periodically reformulate or reinvent products to remain appealing to this demanding, yet all-important segment. Consequently, the future market potential for this segment is very opportunistic and provides an incentive to drive green innovation forward.

Patti Marshman-Goldblatt is a Senior Vice President at NMI. She brings 25+ years of marketing and research expertise to her position at NMI including senior leadership at The Nielsen Company in both Spectra Marketing and Homescan.

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