LOHAS Market 2005 Research Review: Marketplace Opportunities Abound
By Steve French and Gwynne Rogers© 2005, The Natural Marketing Institute (NMI)
For the past four years, The Natural Marketing Institute (NMI) has conducted primary consumer research on the LOHAS consumer. The objective of the research is to investigate a hypothesis that there is a sizable portion of the
Based on an annual, nationally-projectable, consumer research study, NMI’s LOHAS Consumer Trends Database™ (LCTD), this has allowed NMI to generate a unique perspective on the evolution of consumer attitudes, and more specifically, how marketers can better understand these consumers, identify them, and communicate with them.
With four years of trended perspective, based on quantitative surveys of more than 8,000 consumers, NMI is taking this opportunity to provide an update on the LOHAS consumer and the respective marketplace.
Sizing the LOHAS Marketplace
Based on NMI’s proprietary LOHAS consumer segmentation modeling, twenty-three percent of the
NOMADICS (representing 38% of the population) are the largest segment, representing nearly one in four adults. They are less resolute in their LOHAS attitudes, though still show moderate levels of related concern and select LOHAS behaviors (such as recycling, among others).
Continuing to move across the spectrum, CENTRISTS represent 27% of the
Finally, INDIFFERENTS represent 12% of the population, and are so disinterested that they do not even consider most environment or related platforms. To them, attitudes and behavior are driven by immediate needs, not the health and sustainability of the planet or society.
Compared to previous years of research, the percent of LOHAS consumers is down slightly. The percent of LOHAS consumers was highest in 2003, at 34% of the
Figure 2 – Usage Growth Rates of Select Environmentally-Friendly Products
(% change in usage for each product by consumer segment, 2004-2005)
|
|
Gen Pop |
LOHAS |
Non-LOHAS |
|
Hybrid Vehicles |
+267% |
+57% |
+450% |
|
Compact Fluorescent Light Bulbs |
+22% |
+38% |
+16% |
|
Energy Efficient Windows |
+18% |
+35% |
+10% |
|
Solar Panels |
+17% |
+44% |
+13% |
|
Organic Foods/Beverages |
+8% |
+3% |
+12% |
|
Natural Household Cleaning Products |
+13% |
+29% |
+5% |
This growth includes the consumption of many products and services considered part of the LOHAS market, such as organic foods and hybrid cars (Figure 2). In fact, many mainstream companies are becoming increasingly involved in numerous LOHAS markets. So, what explains this seeming dichotomy? NMI sees three predominant reasons:
1. Expectation of Benefits
In some cases, environmental benefits have come to be expected, such as with energy-efficient electronics and appliances. Due to a variety of forces, such as energy blackouts, escalating fuel costs, and improved technology, buying energy-efficient appliances and electronics is now second nature to many consumers. These market forces have also been driven from decades of government involvement, through programs such as ENERGY STAR.
Furthermore, about two-thirds of consumers indicate a willingness to spend more on the initial purchase price for products that will save them money on their electric or water bills in the future. This shows a predisposition to “invest now for future savings.”
The same pattern of the mainstreaming of (formerly) LOHAS benefits can be seen in many other industries, whether that’s foods and beverages (where trans fats are being eliminated), new personal care products (made with ingredients like green tea), or various lifestyle activities (such as yoga, Pilates, or the spa industry itself).
2. No Need to Compromise/Values-Driven Consumption
Secondly, many environmentally-friendly products on the market today are attractive to consumers, even if the primary benefit is not solely environmental. For example, many products offer health benefits (such as natural/organic food and personal care). Others offer cost savings (as with energy efficient products and hybrid cars). And, many premium brands incorporate LOHAS values; consider brands such as Aveda, Ben & Jerry’s, or
Figure 3 – Importance of Corporate Social Responsibility
(% consumer segment stating they agree completely with the following)
|
|
Gen Pop |
LOHAS |
Non-LOHAS |
|
It is important for companies to not just be profitable, but to be mindful of their impact on the environment and society |
49% |
82% |
40% |
|
Knowing that a company is mindful of their impact on the environment and society makes me more likely to buy their products or services |
27% |
68% |
15% |
|
Knowing that a company is mindful of their impact on the environment and society makes me more likely to buy their stock |
18% |
52% |
8% |
3. The Role of Corporate Social Responsibility
Increasing attention to corporate social responsibility (CSR) has also been driving a move toward more LOHAS-friendly products and services. For example, companies are increasingly putting emphasis on their activities in the community (either locally or nationally), among many other CSR activities. While it is difficult to put a value on the benefits of corporate citizenship, NMI’s research does indicate that it translates into favorable consumer and investor behavior (Figure 3). This is especially true when looking at LOHAS consumers, 68% of whom state that knowing that a company is mindful of its impact on the environment and society makes them more likely to buy their products and services, and 52% state that it makes them more likely to buy stock. Corporate boardrooms should take note.
NMI expects many CSR-related trends to continue and permeate a variety of organizations and industries. When consumers are asked if they care about socially responsible business, 80% of LOHAS consumers stated they did in 2005, up from 74% in 2003, showing growth rates for future opportunities.
What Does the Future Hold?
To formulate upcoming consumer trends, NMI monitors the attribute drivers of particular product choices. Of the markets measured this year, the largest increases were in the food/beverage and green building industries. The attributes with the biggest growth rates are shown in Figure 4.
Figure 4. Largest Increases in LOHAS Product Attribute Drivers
(% LOHAS consumers stating the following are important in product purchase influence)
|
|
|
% LOHAS - 2003 |
% LOHAS - 2005 |
Compound Annual Growth |
|
Food & Beverage |
Contains soy |
7% |
14% |
+100% |
|
Organically grown |
25% |
40% |
+63% | |
|
No artificial colors |
31% |
47% |
+50% | |
|
|
ENERGY STAR qualified |
37% |
68% |
+35% |
|
No Synthetics |
19% |
25% |
+15% | |
|
Natural |
32% |
38% |
+10% |
Within the food/beverage industry, the data indicates increasing interest in more nutritious, pure and natural products. Within the green building marketplace, it is evident that there is still room for growth in products that are relatively accessible, such as ENERGY STAR qualified products, and for products that are natural – perhaps exhibiting consumer interest migration patterns from industry to industry.
Consequently, NMI expects to see continued growth and activity in the LOHAS marketplace. This will likely manifest itself in LOHAS products replacing some conventional products as LOHAS products become more competitive and increasingly available. It will also be a result of companies becoming more socially responsible, as they acknowledge that doing so has an impact on consumers, competition, and stakeholders. For these reasons, NMI sees the future of the LOHAS market as opportunistic and green – for many companies and consumers.
Steve French is a managing partner at The Natural Marketing Institute and has extensive experience across many LOHAS-related industries . Gwynne Rogers is a strategic marketing analyst at NMI and provides analysis and strategic solutions from NMI’s LOHAS Consumer Trends Database.
