July 23, 2008

From Purchaser to Participant – Keeping Consumers’ Interest During Recession

Even in times of economic strain, people continue to strive for a feeling of connection by participating and expressing their values through their purchasing behavior. Perhaps consumers feel it adds meaning and connection to their lives to shop in a particular way, or they like the image that certain brand associations bring. Perhaps they simply want to feel that they are improving the world around them. Whatever the cause, the effect is that brands that can support this interest in sustainable consumption and make a positive contribution are appealing to consumers’ current sentiments, particularly in today’s ethical consumerism.

This is, in fact, the foundation of the LOHAS consumer marketplace. LOHAS consumers, in particular, are price-insensitive (Figure 1); therefore, price is not a main factor in their purchase decision process. They are interested in purchasing products from sustainable sources and are willing to pay 20% more to get them, while the general population’s purchase decision is more focused on price alone. In place of price, LOHAS consumers emphasize reviewing a brand’s stance on issues that matter to them. This is what separates a brand like Toyota from one like Ford, and an Aveda from a Paul Mitchell.

However, society is unlikely to be able to shop its way to sustainability. After all, if consumers are still consuming resources, there is continued environmental impact. Moving consumers from purchasers to participants is the next generation. Doing so reinforces the feeling of connection consumers are striving for, brings future rewards to the brand (such as increased loyalty, etc.), and moves the focus from price to partnership.

For those who are more price sensitive, participation does not have to be consumptive, costly or complex — it can be as simple as reminding consumers to bring their own non-plastic bags to the store (or giving them an incentive to do so). Other examples include:

•    Starbucks’ Grounds for Your Garden program
•    Yoplait Lids to Save Lives campaign
•    Staples, Office Depot, and other retailers’ in-store programs to recycle ink, toner cartridges, and small electronics
•    Driving consumers to a website to learn more about green activities they can be involved in (as Dean Foods did with its Green Caps program)

The point is that action is required both on the part of the brand, and on the part of the consumer, and that the brand is the consumer’s partner in making a difference. The brand provides the leadership and information that the consumer would not otherwise have access to, and facilitates an action the consumer might not have been able to engage in otherwise.

These programs can also be designed to have benefits beyond increased customer loyalty and brand equity. For example, retailers are saving money by not providing free bags to consumers; Starbucks avoids paying to dispose of its coffee grounds; and ink manufacturers are able to repurpose the materials in the cartridges.

Another approach involves using such programs as a part of a campaign to improve a retailer’s CSR image that may have been damaged in this climate of “Greenwashing Washout,” an insight into the ineffectiveness of sustainability messaging. As Figure 2 shows, a rift appears in consumer awareness of company environmental and societal responsibility efforts: only 69% of the general population is aware of any measured company having tried to improve its environmental and social image.

Those rating the highest are McDonald’s and Wal-Mart, at 31% and 29%. This is notable in contrast to companies that have made a more public media commitment to corporate environmental management, such as General Electric and British Petroleum. The LOHAS segment showed greater awareness of any company making an effort to improve its environmental/social image, as well as greater awareness for each individual company, though for those communicating CSR, these awareness levels may seem quite low.

For the predictable future, LOHAS consumers will still purchase sustainable products based on their values. The recession is not as impactful on their purchase behavior as it is on the general population because for LOHAS consumers, price has never been an issue. For the more price sensitive consumer, implementing participation programs may be a way to give eco-purchases more of a purpose. Saving energy and being more conscientious in purchase patterns are very consistent with behaviors evident during recessionary times so while green may take a back seat in the headline news, the green behaviors will not.  In addition, consumers will have many chances to become aware of corporate efforts toward sustainability and these types of win-win initiatives which can lead to long-term loyalty from consumers, customers, employees, stakeholders, communities — and impact the environment.

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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