Understanding the LOHAS Consumer
Understanding the LOHAS Consumer: The Rise of Ethical Consumerism
A Strategic Market Research Update from The Natural Marketing Institute (NMI)By Steve French and Gwynne Rogers
“LOHAS” is quickly becoming one of the hottest trends within companies and among consumers around the world. As the only source for consumer research on the LOHAS consumer, and now with five years of quantified, annually trended LOHAS information, The Natural Marketing Institute (NMI) is fervently observing and analyzing the LOHAS market to develop strategic solutions within this new world of ethical consumerism.
For newcomers to the LOHAS space, “LOHAS” is an umbrella acronym that stands for Lifestyles Of Health And Sustainability. It refers to a wide range of industries, corporate activities and products/services that are designed to be environmentally conscious, sustainable, socially responsible, and/or healthier—both for people and the planet. The LOHAS consumer, in particular, is the leading-edge portion of the population that is attracted by their belief systems and values and who make their purchase decisions with these criteria in mind. LOHAS consumers are also used as predictors of upcoming trends, as they are early adopters of many attitudinal and behavioral dynamics. In this article, NMI summarizes its current perspective on the marketplace, using the most recent consumer data from its proprietary 2006 LOHAS Consumer Trends Database™.
New and Innovative Consumer Segmentation
As many industry observers have noted, the product and corporate standards that LOHAS consumers seek are becoming increasingly visible across many industries. In order to reflect this changing and vibrant marketplace, NMI has built increased dimensionality into its ground-breaking consumer segmentation methodology. In summary, the previous four consumer segments (LOHAS, NOMADICS, CENTRISTS and INDIFFERENTS) have been updated with a new segmentation model composed of five segments, including:
In this new segmentation model, not only does the LOHAS consumer remain the primary target for environmentally conscious, socially responsible, and healthy products, but the NATURALITES are also considered a top tier segment. Driven by the mainstreaming of the marketplace across various products/services, the two “middle” segments (DRIFTERS and CONVENTIONALS) are each drawn to different elements of the broader LOHAS marketplace. Understanding these consumers’ values, ideals and purchase criteria—each valuable in their own right—allows marketers to broaden their strategic initiatives.
Consumer Segment Snapshots
Based on the new segmentation, the LOHAS consumer comprises 16 percent of all U.S. adults in 2006 (nearly 35 million people). This group continues to show tremendous leadership in their attitudes toward the environment, society and socially responsible business; their usage of LOHAS products exceeds most other segments; and they are continually demanding greater sensitivity to these issues across numerous corporate activities. Consumers within the passionate, vigorous LOHAS segment continue to be early adopters, influential over friends and family, less price sensitive, and more brand loyal. In essence, their social structure and internalized values form the basis for making them an attractive consumer target across a host of strategic marketing activities.
The NATURALITES segment is the largest, with one out of every four U.S. adults. They are zealous about their own personal health, and use many healthy and natural consumer packaged goods (CPGs). In other words, their belief systems are manifested in the ethical consumption of consumables, but they are not highly driven to durables. Therefore, while they are less committed to the notions of “holistic sustainability,” they are also a primary target for many CPG companies, or for companies with a more mainstream proposition that have a strategic desire to appeal to a larger segment of the U.S. population. As an example, Figure 1 summarizes the differences between the LOHAS and NATURALITES segments with respect to food/beverage purchase drivers.
NATURALITES are also highly attracted to mind/body/spirit philosophies. They are the most likely segment to pray (three-quarters do regularly), and the second most likely segment to meditate (27 percent). It is clearly evident that their view of health includes not just their physical health, but their mental and spiritual dimensionalities, as well.
Figure 1: Top Food/Beverage Product Drivers
Grown Without Pesticides 61%B
Recyclable Packaging 57%B
Environmentally-Friendly Packaging 56%B
No Trans-fats 54%
Low Cholesterol 54%A
Low Fat 46%A
No GMOs 41%
Grown Without Pesticides 41%
Capital letters denote statistical significance at the 95% confidence level
CONVENTIONALS, 23 percent of the U.S. population, may also represent an attractive target for some companies, particularly those with a fiscally-responsible product like energy-efficient electronics and appliances or green building products. Their attitudes are not linearly categorized, but this segment shows predisposition to various “practical” LOHAS products and activities. In some cases, they are more behaviorally engaged than NATURALITES (though not as much as LOHAS consumers). For example, CONVENTIONALS are significantly more likely than NATURALITES to:
- Donate money to an environmental group
- Encourage elected officials to pass laws to protect the environment
- For marketers with a product/service that has a health-related and financial benefit (even over the long term), CONVENTIONALS may be part of a successful marketing strategy.
DRIFTERS, also at 23 percent of U.S. adults, are attitudinally aligned with some dimensions of the LOHAS market, though their behavior lags behind that of the “average” U.S. adult. They are a younger segment, have more financial barriers, and have not yet fully formed their optimal values structure and ethical consumption standards. While nearly half wish they did more for the environment, they are more likely to:
- Want to choose environmentally-friendly products, but often choose ones that aren’t
- Want to do more to protect the environment, but don’t know how
- Believe that considering the environmental impact of their purchase decisions is too difficult
- Think they personally cannot make a difference
Clearly, DRIFTERS are in need of some guidance, inspiration and education—an inherent opportunity to capitalize on. They represent nearly 50 million consumers, and transferring their attitudes into purchase behavior could translate into even more momentum in the LOHAS market.
Any LOHAS-related dimension falls on deaf ears for the remaining 14 percent of the population, the UNCONCERNED. These consumers are distracted by other life activities and make for an extremely challenging target.
Trends in Segment Market Size
Using the new 2006 segmentation variables on 2005 data allows for a longitudinal comparison in segment size from 2005 to 2006 [previous years are unable to be segmented]. As shown in Figure 2, there has been a significant decline in the number of UNCONCERNED consumers (down 33 percent from 2005), and significant growth in the middle three segments (CONVENTIONALS, DRIFTERS and NATURALITES). This reflects many of the mainstream sustainability activities in the marketplace over the past year, such as GE’s Ecomagination campaign, BP’s “It’s a Start” positioning, and Wal-Mart’s activities, to name a few.
While the sum of LOHAS and NATURALITES has increased eight percent since 2005, the LOHAS segment size is statistically stable since 2005. Its stability is, in part, a function of its definition: There is a natural limit to how many “leaders” and early adopters can drive the marketplace. As some existing LOHAS principles, products and services mainstream, other new ones will begin to penetrate and displace the old—in essence creating a continuous lifecycle of innovation and mainstreaming.
Figure 2: Trends in Segmentation Size
(% U.S. general population in NMI defined consumer segments)
NMI’s LOHAS Outlook
The unbridled momentum of the LOHAS market is astonishing. This new era of ethical consumerism only shows signs of accelerating and penetrating further into consumer consciousness. Watch for more industries and companies to expand their LOHAS-related efforts, both in terms of products/services and corporate social responsibility initiatives. Perhaps the LOHAS model represents the new mode of activism for the 21st century—here’s to sustainability and future generations.
NMI is a strategic consulting, market research and business development company specializing in the health, wellness and sustainability marketplace. Our capabilities focus on the well-being of people and products and the environmentally and socially responsible sustainability of the planet. By utilizing a diverse mix of proprietary strategic market development tools and methodologies, including custom qualitative and quantitative research, NMI provides its clients with insightful market analysis and strategic planning surrounding new product opportunities, branding, communications, consumer target identification, sales strategy and strategic business planning.
For more information on NMI’s LOHAS Consumer Trends DatabaseTM (LCTD), contact Gwynne Rogers at Gwynne@NMIsolutions.com or 215-513-7300, ext. 227.