Marketing Sustainability in Retail Understanding Consumer Market Trends

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Marketing Sustainability in Retail
Understanding Consumer Market Trends

• Laurie Demeritt

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Sustainability from a Consumer Perspective

• The Hartman Group, Inc.

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The Hartman Group, Inc.

• A full-service strategic consultancy and market
  insights provider.
• Founded 1989
• Headquarters Bellevue, WA
• Staff Composition Anthropologists, sociologists
  and psychologists, visual analysts and linguists,
  MBAs, marketers and innovators
• Tinderbox Dedicated to culture, innovation and
  trends

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Multi-Disciplinary Team of Experts

• Michelle Barry, PhD Sociocultural and Medical
  Anthropology
• James Richardson, PhD Anthropology
• Shelley Balanko, PhD Applied Social Psychology
• David Moore, PhD Sociology
• Jarrett Paschel, PhD Sociology
• Nasser Kamali, PhD Sociology
• Kirk Cornell, PhD Business and Industrial
  Anthropology
• Brent Baxter, PhD Sociology
• Greg Prang, PhD Sociocultural Anthropology
• Samantha Goodwin, MSc Visual Anthropology
• Karen Stockert, MA Cultural Communications and
  Design
• Arwen Kimmel, MA Linguistics
• Lucy Norris, MA, Food Studies
• Melissa Abbott, MS Food Nutrition

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Sustainability Study Research Methods

• Qualitative Consumer Immersion
• Over 150 hours of consumer interviews
• In-depth interviews in homes
• Social network parties
• Observation of sustainability activities
• Consumer photo journaling
• Field locations Chicago, Raleigh, Boston,
  Newark, Los Angeles, Seattle
• Quantitative National Survey
• Custom online survey sample size 1,600
• Nationally representative survey of the US
  population
• Conducted January 2007

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A Consumer Centric Approach to Sustainability

• We designed our research methods to give
  consumers great freedom to talk about specific
  topics however they liked
• We asked consumers to describe their dealings
  with many of the things that sustain and support
  human life (e.g.,food, water, air).
• We asked general, open questions, such as
• Is this weather typical for this time of year?
• What comes to mind when I say the words tap
  water?
• What do you consider safe food?
• We introduced the term sustainability only near
  the end of our interviews to gauge consumer
  familiarity and understandings of it

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Sustainability has a History

• Report Says Global Warming Poses Threat to
  Public Health
• The New York Times
• "Most Consumers Say They Would Like More Green
  Products
• The Financial Times
• "More New Alternative Fuel Vehicles Continue to
  Roll Off US Automaker Assembly Lines
• The Oil Gas Journal
• "Tomorrow's Shade of Green Environmentally
  Oriented Construction Materials for the 21st
  Century
• Home Improvement Market
• "Can Retailers Turn Green This Year?
• Marketing Magazine
• These headlines all occurred between 1996 and
  1997

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Sustainability Seems to Be Everywhere These Days

• Food Beverages
• fresh, local, seasonal, organic, biodynamic
• farmers markets, CSA
• wild salmon, grass fed beef, free range chicken
• Rainforest Alliance, Free Trade

Sources writings Al Gore, Michael Pollan, Marion
Nestle food movements Slow Foods blogs
Greentopia, Ideal Bite lifestyle retailers Whole
Foods Market, Timberland, IKEA, American Apparel

• Home
• sustainably harvested wood
• solar panels
• programmable thermostats
• natural/organic cleaners
• green waste recycling
• faucet aerators

Goods green/organic skin care bamboo hemp
clothing bedding reusable shopping bags Prius,
bus pass, biking Sigg water bottles
Garden garden in every school, urban
gardening grow-your-own veggies herbs drip
irrigation system ladybugs native plants
Pet Care raw foods organic food herbals,
acupuncture non-toxic pet grooming
products non-PVC toys
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Sustainability is NOT a Household Word

• Though widely used in business circles, the term
  sustainability is little used in consumer
  circles.
• Just over half (54) of consumers claim any
  familiarity at all with the term sustainability
  (and most of these consumers cannot define it
  appropriately upon probing)
• Only 5 indicate they know which companies
  support sustainability values (unaided)
• 12 indicate they know where to buy products from
  companies that support sustainability values
• As a marketing term, sustainability has limited
  traction it is not a household word

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Sustainability Awareness

• Though the term sustainability is limited in
  usage, most people operate with varying degrees
  of sustainability consciousness.
• Sustainability consciousness refers to the way
  people link everyday life to big problems
  (e.g., food, water and air quality)
• Sustainability consciousness is not just about
  eco-conscious consumers and the environment
• Its everyday people and broadly distributed
  across society
• Sustainability consciousness emerges as consumers
  gain experience dealing with risks in everyday
  life

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Risk in Everyday Life

• Most consumers believe that daily life requires
  practical adaptations to risks if potentially
  harmful outcomes are to be avoided.
• Some adaptations to risk are firmly established
  habits
• Avoiding unfiltered tap water whenever possible
• Wearing sunglasses and sunscreens to block out
  harmful UV rays
• Avoiding outdoor exercise on high pollution days
• Some adaptations to risk are only now emerging
• Using sanitary wipes to wipe down grocery carts
• Routinely using air filters in living rooms
• Questioning the purity of water in plastic bottles

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Perception of Risks from the Environment
Percentage answering Agree rather than
Disagree or Neither agree nor
disagree.Source 2007 Sustainability Survey
(n1,489 consumers within the World of
Sustainability).
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Current Adoption is Incremental
Many consumers are making incremental individual
changes, but primarily in activities that are
low-sacrifice and low-risk, require little to no
monetary investment (with the exception of food)
and need no significant change in behavior (e.g.,
turning off the water faucet while brushing
teeth). Initial changes toward a sustainable
lifestyle are more about making conscious
decisions and choices and investments of time
rather than purchasing products.
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Current or Future Participation in Sustainable
Activities
Examples provided to respondents were church,
school, human services, neighborhood advocacy
group, and arts organizations.Note Remaining
percentageanswering, Im not ever likely to do
thisis not shown.Source 2007 Sustainability
Survey (n1,489 consumers within the World of
Sustainability).
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Occasional Organic Usage is Consistently Strong
Sources Healthy Living, August 2000 (n4,942)
Organic 2006 Survey, December 2005 (n2,109)
Organic 2008, March 2008 (n2,161) Note
Percentages may not sum up to 100 due to
rounding.
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The Absence of Leads the List of Properties
Suggested by Organic
From the following list, what properties do you
think are implied or suggested by the term
"ORGANIC"?
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Consumers Are Most Willing to Pay a Premium for
Fresh Organic Categories
For which organic foods/beverages are you willing
to pay 30 more than their conventional versions?
Organic category buyers (Primary HH shoppers who
have purchased organic in particular product
category in past 3 months) (n 87 to 877)
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Sizing Sustainability

• Consumers can be analyzed according to their
  lifestyle orientation within a given world of
  activityhere the World of Sustainability
• Segments vary according to the intensity of
  involvement in that world.
• The Core The Core is the most intensely
  involved - early adopters, trendsetters and
  evangelists
• The Mid-level The majority of consumers are in
  the Mid-Level, they are changing their attitudes
  and behaviors
• The Periphery Consumers begin their journey at
  the Periphery of the World, and are usually more
  attitudinally than behaviorally inclined

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Defining the World of Sustainability
A small percentage of consumers (7) do not
participate in the World of Sustainability in any
meaningful way. Consumers who are not in the
World of Sustainability are those who Rarely
base their purchasing decisions upon their
concerns for issues such as the environment and
social well-being and fail to do so because Im
not really concerned. AND Chose the response I
dont think there are significant problems
facing the world at this time.
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Measuring Involvement in the World of
Sustainability
The World of Sustainability can be segmented
according to how consumers make sense of risks.
This is because they think about sustainable
products in terms of lowering risk to themselves,
to a community or to the world.
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Who is the Periphery Consumer?

• Meet Linda.
• If gas prices rise even higher she feels she has
  a good reason to trade-in her SUV
• Drinks water from the tap unless it smells and/or
  tastes bad
• Does not believe the hype about organic food
• Believes climate change might be happening but
  defers to the experts
• Travels with a waterless hand sanitizer because
  she wants to avoid germs in public places
• Just bought an energy efficient dishwasher
  because of a rebate
• Curbside recycles because it lowers the cost of
  her trash bill

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Who is the Mid-Level Consumer?

• Meet John.
• Lacks deep knowledge of organic farming, but buys
  organic occasionally because it makes him feel
  safer
• Wears sunscreen because the hole in the ozone
  layer makes it more dangerous to be in the sun
• Uses a water filter on the kitchen tap but not in
  the shower
• Recycles out of an ambiguous sense of moral duty
• Ponders the possibility of buying a hybrid
  vehicle someday
• Enjoys buying brands that symbolically align with
  his identity and values

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Who is the Core Consumer?

• Meet Kim.
• Pays premium prices for items produced by
  companies who treat their workers fairly
• Avoids plastic packaging and containers due to
  concerns about leeching
• Strategically plans errand trips so that she can
  minimize her gas consumption
• Recently purchased sustainable cotton bed sheets
  for her home
• Follows some of the products she buys
  throughout their lifecycle
• Buys only cruelty-free personal care products
• Believes her purchase decisions are a form of
  direct democracy

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Dimensions of Sustainable Lifestyles
Core, Mid-level and Periphery Sustainability
Consumers are drawn to different attributes of
products, settings and services.
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Key Purchase Criteria Periphery

• Convenience
• Availability in stores ease and efficacy of use
• If its hard to find or I cant figure out how
  to use it, forget it.
• Price
• Consumer perception vs. actual price how added
  value is conveyed
• Why would I pay 10 bucks for a light bulb?
• Personal Benefits
• Health is typically the primary benefit
• Im trying to do the right thing for myself and
  my family

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Key Purchase Criteria Mid-Level

• Expert Opinion
• Weighing options seeking direction reinforcing
  choices
• Ambivalent reliance on science (subject to change
  and too complex)
• Derived from friends, family and colleagues My
  sister knows all about this, shes hard core.
• Experience
• Meaningful interactions with products and
  companies
• Relevant product design and use
• Opportunities to connect through stories about
  people, places and processes
• Knowledge
• About benefits (for self and others), company
  values, resonance to way of living and goals

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Key Purchase Criteria Core

• Greater Good
• Expanded consciousness holistic thinking about
  how we live and interact with each other and the
  world
• The decisions I make and the things I do impact
  more than just myself
• Partnership
• Striving for similar goals and ideals
  like-minded equal participation and effort
• Were in this together
• Transparency
• Access to company values, policies, and
  practices open communications
• Nothing to hide
• Authenticity
• True and consistent values driven
• The real deal, grassroots, the way things
  should be

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The Mid-level Represents the Largest Opportunity

• The Mid-level is changing their attitudes and
  behavior regarding sustainable products
• The Periphery isnt putting their money were
  their mouth is and the Core is going entirely
  outside of mainstream distribution channels to
  buy sustainable products

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The Mid-level Thinks About Sustainability
Realistically
Doing the right thing has to be balanced by my
family budget and by how our life runs.

• Food thats healthier for my family and the
  planet fresh, all natural, local, few
  ingredients, little packaging, pesticide-free
• Trade-offs occur in finding the balance between
  the right thing to do and whats reasonably
  priced, well known and trusted brands, what my
  family will eat, picking and choosing my
  battles
• Food producers need to show value added through
  sustainable practices, attention to detail, extra
  care, passion about what you do
• Sustainability means doing the right thing,
  but also doing what you can because there is
  no silver bullet
• Doing what you can includes living more simply,
  giving back, recycling, reducing waste,
  education, being connected

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Key Triggers to Participating in Sustainability
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Why Environmental and Social Well-Being Concerns
Have No Influence on Some Purchasing Decisions
2007 Sustainability Survey (n1,489 consumers
within the World of Sustainability).
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Feeling that the Quality of Life Will Change for
the Worse
Percentage answering much worse or somewhat
worse to the question When you think about the
direction things are headed, how you think the
quality of life will change in each of the
following areas? Source 2007 Sustainability
Survey (n1,489 consumers within the World of
Sustainability).
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Sustainability Perceptions are Evolving to be
More Proactive and Local
Small, easy, positive Mass participation
Personal, not political Optimistic and
hopeful Focus on social elements of sustainability
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Sustainability Awareness Works from the Inside Out
The home is the place that is most stable and
safe. The farther one ventures outside a
familiar environment (into the outside world) the
more uncertainty and risk one expects to
encounter. Products that clearly have a direct
personal benefit to health and well-being are the
gateway to purchasing sustainable products.
Therefore, food and beverage products are top of
mind when it comes to purchasing products with
sustainable values.
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Sustainable Product Adoption
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Systems Thinking and Interconnectedness

• The ability and tendency to look beyond the
  personal is a marker of systems thinking which
  believes that everything is interconnected.
  Examples of systems thinking that motivate
  increased interest in sustainability include
• Having children tends to dramatically increase
  mental and practical investments in issues of
  sustainability
• Participating in outdoor recreation that centers
  on or around wilderness areas brings face-to-face
  confrontation with balancing conflicting needs
• When a cherished way of life shared by many
  people comes under siege of broader changes (when
  a future life that was assumed as a given by the
  group becomes threatened) questions of
  sustainability are likely to arise (e.g., Will I
  have access to clean water?, Will I still be
  able to buy local produce?)

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Sustainability and Food Quality
Shows respondents who agree. Source 2007
Sustainability Survey (n1600).
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Sustainable Food Cues by Product Category
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Consumers Believe Businesses Should Provide
Leadership in Environmental AND Social Aspects of
Sustainability
Most companies are only talking about
environmental initiatives when it comes to
sustainability. These companies talk about
green as though it is the only element that
consumers consider to be part of
sustainability. Equally if not more important
than environmentally responsible business
practices are human ethics and social
responsibility. Consumers expect and want to know
that businesses treat employees and other
stakeholders well in terms of safety and fairness.
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Important Business Practices Influencing a
Consumer to Buy a Product
Shows agreement with very important and
somewhat important. Source 2007 Sustainability
Study (n 1,600)
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Strategic Guidelines Around Sustainability
Orient company innovation, communication and
experiences toward consumer definitions, not
industry definitions, of sustainability. Health
and wellness involvement is the most significant
connection point consumers have as they enter the
World of Sustainability. Link personal health
and/or wellness benefits to sustainable products
and services wherever possible. Stay cognizant of
where products and services fall on the
sustainability adoption pathway to determine
which dimensions of consumption to address and
what key benefits, language and visual cues to
leverage.
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Sustainability Language
The most relevant linguistic themes and imagery
around sustainability are
Authenticity Simplicity Efficiency Simple
Living Organic Seasonal
Reliability Care/Nurturing Control Health Fres
h Unpackaged
Hope Connection Responsibility Similar
Values Local Artisanal
The most relevant linguistic themes and imagery
for food specifically are
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Strategic Guidelines Around Sustainability
Address key barriers to regular participation
price, convenience and availability. Allow
participation in products, services and retail
experiences to be flexible and occur in the
course of a consumers everyday behavior (i.e.,
shopping at the grocery store, dining out, at a
social event). Follow Core consumers to identify
possible future trends in sustainability.
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Strategic Guidelines Around Sustainability
Open up the business for direct consumer input
as well as transparency about company processes,
values, etc. Communicate brand and company
narratives that connect consumers to the people,
places and processes that epitomize your company.
Show them how the company is part of a community,
and stay inclusive. Create opportunities for
consumers to connect and share their experiences
and opinions with one another.
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