Wednesday, April 21, 2010

Eco-Steps Toward a Better Tomorrow

The Conscious Shift in Consumer Behaviors

Sunday, April 11, 2010 by Ted Ning
The global economic downturn has not only affected many people’s wallets it has also caused a dramatic shift in the way people look at the choices they are making in their lives. In the U.S. there is a strong desire to be self reliant and to conserve resources as people prioritize their spending and behaviors towards more purposeful decisions. Choices as small as bringing meals to work rather than eating out, taking public transport instead of spending on gasoline and garden grown foods rather than store bought foods are some examples of trends that are picking up. These are changing the way companies approach green business strategy.

Today not only LOHAS consumers but ALL consumers are demanding a greater value from products and services. This value is derived from a strong desire to make the most of everything that a person has. Considerations including investment, functionality and cost are being assessed and are creating new dimensions of ROI that are increasingly a part of the emotional and social values a brand typically provides.

According to a new survey by firms Landor Associates, Penn Schoen Berland and Burson-Marsteller, transparency and corporate responsibility have become far more important to consumers in a tough economy. It found that despite the recession, 75% of consumers believe social responsibility is important, and 55% of consumers said they would choose a product that supports a particular cause against similar products that don't. The most surprising findings pointed to the fact that nearly 50% of 18-24 and 25-34 year olds said they are more likely to take a pay cut to work for a socially responsible company—a much higher percentage than any other age group. This may be because this is a year where there seems have been so much social responsibility expressed, especially in light of the earthquake in Haiti. But the report also said only 11% of Americans say they’ve heard corporate CSR communications.

Redefining Luxury

The shift in values in not only from those ages 18-34 but also affluent families who are redefining luxury. A recent study called "The New Face of Affluence," from Dwell Strategy and Research focuses on attributes that drive purchase decisions of newly affluent U.S. households, whose average age is 45 and income of nearly $200,000. These people are called “New Affluents” and claim, "luxury" brands, are no longer important to them, or even relevant; neither is "overall social status." These people have the economy and the environment top-of-mind when making purchase decisions. The study found that most are shunning "conspicuous consumption" in favor of brands that represent quality, aesthetics and authenticity. These attributes, along with uniqueness, integrity, design and performance, represent today's "prestige" for these high-end consumers. There is a shift occurring in society that demonstrates how a brand does not have to be expensive to attract customers. What consumers are now demanding from brands is a new and different kind of relationship. And, as supported by these findings, the days of controlled, top-down brand marketing are over, especially for this sector. These wealthy and would-be elites are actually looking for brand interaction -- a dialogue -- based on integrity, authenticity and performance. And not only are they equipped for interaction, they're demanding it. In fact, Dwell compiled a visual so that brand representative could see, clearly, how the top 50 companies named by the surveyed group compete against one another. The size of the text in the following word cloud connotes its ranking:

So what brands do New Affluents find meaningful, authentic and relevant? Apple, Sony, BMW and Ralph Lauren, unsurprisingly. But Crate & Barrel, Ikea, Whole Foods and Levi's, too. Porsche, Lexus, Chanel and Viking. And Target, North Face, Volkswagen and The Gap. Missing from this segment's 75 favorites list are classic luxury brands like Cadillac, Gucci, Louis Vuitton, Armani and Versace who have yet to demonstrate how they are keeping up with emerging trends.

People Want to Simplify

There are growing desires for purity and simplicity. Companies should respond with a move to simpler inputs, focused messaging, cleaner labeling, streamlined design and easy delivery of goods and services. Society is also demanding the removal of the layers of complexity – a change desired because it becomes easier to determine the true fit of products and services with personal values. This “less is more” trend is resonating with consumers everywhere – purity and simplicity is now the ultimate sophistication! Indeed some companies are doing this. For example the beverage ‘Innocent’ from the UK has an ingredient list of 6 items that are all recognizable fruits with no additives or preservatives. This is very different from typical soda or juice ingredient lists we commonly see in conventional stores. 

Green is Recession Resistant

Green products still appear to maintain their value among shoppers despite the recession. According to a survey on “green” living from market research firm Mintel research firm Mintel 35% of U.S. consumers say they would pay more for environmentally-friendly products. Mintel found the green market outperformed the economy as a whole, growing more than six percent in 2008, followed by flat growth in 2009. The report also finds that the market took a hit from tighter consumer budgets due to the recession and trading down from high-end green brands. Even though the green market grew about 41% from 2004 to 2009 the report finds that the number of consumers purchasing all categories of green household consumer goods declined slightly in 2009, primarily due to the recession with household cleaners and paper products still the most frequently purchased green products.

The Future is Now

We find ourselves facing a complex set of problems that threaten the global population, economy and environment. The recession has sped up the inevitable evolution of our society and economic system that puts businesses and consumers in the driver seat of change. People are paying more attention to what they spend money on and demand a new definition of sophisticated value from companies. Those companies that cannot keep up with the progression of LOHAS consumer demand risk losing market share. Those companies that do respond will not only provide superior LOHAS products but also provide a better company overall for society and the planet. Together we can help transform the problems we have today to the solutions of tomorrow.

No comments:

Post a Comment