Today’s Ethical Consumerism Marketplace

While interest in corporate social responsibility initiatives is strong, skepticism remains.

By Gregory Stephens, RD

As consumers become more interested in aligning their personal values with the brands they buy and companies they support, companies must rise to the challenge and clearly define and articulate their corporate social responsibility (CSR) values. Consumer interest in CSR is unlikely to diminish over the coming years and ignoring consumers’ interest simply gives your competition time to establish leadership. Conversely, understanding what CSR consumer trends mean to your business allows you to capitalize on current and future efforts supporting this significant market transformation. In this column, we’ll demonstrate the importance of CSR as well as examine related consumer attitudes and behaviors.

The Natural Marketing Institute (NMI), Harleysville, PA, recently published its sixth annual research study and respective analysis of the U.S. LOHAS (Lifestyles of Health and Sustainability) consumer and marketplace. This study provides valuable insights into consumers’ interest and expectations relative to CSR.

The study also provides NMI’s 2007 proprietary LOHAS segmentation and analysis. Segmentation helps marketers identify similar groups of customers in the marketplace. Companies can use segmentation to prioritize the groups they want to address. It also helps them understand their behavior in order to respond with appropriate marketing strategies that satisfy the different preferences of each chosen segment.

The LOHAS segmentation from NMI’s 2007 research is as follows: a total of 19% of U.S. general population adults are classified as LOHAS consumers. As environmental stewards, LOHAS consumers are socially responsible, driven to protect the environment, and are avid users of green products. They take action to ensure personal and planetary health and influence others to do the same. The research study is named after this group of consumers because they represent a critical target for companies marketing green or socially-responsible products. And their buy-in is fundamental to establishing meaningful brand loyalty among most consumer segments.

NATURALITES (19% of U.S. adults) make most purchase decisions based on benefits to their personal health. While they are interested in protecting the environment—an interest mostly driven by personal health reasons—they are not as involved in planetary health. To support their healthy lifestyle, they are avid users of natural and organic consumer packaged products.

At 25% of the general population, the largest segment is the DRIFTERS. Motivated by the latest trends, their commitment to any issue, including sustainability, is constantly shifting. As the youngest segment, DRIFTERS are more likely to view price as a barrier to green living.

CONVENTIONALS make up 19% of the population. Driven by practicality and frugality rather than pure environmental benefits, these consumers are not particularly environmentally conscious. However, CONVENTIONALS do engage in some LOHAS-related behaviors, such as recycling and energy conservation.

The portion of the population that exhibits no sense of environmental responsibility is considered to be the UNCONCERNEDS (17%).

Importance of Corporate Citizenship

Simply put, socially-responsible business is the integration of societal and environmental interests within everyday business practices. Coupling social/environmental responsibility with corporate values appeals to many consumers, who in turn “vote for values with their dollars.”

Forty-four percent of the general population feels companies should be mindful of their impact on the environment and society. The LOHAS consumer response is far above other segments. In fact, LOHAS consumers are about twice as likely as other segments to care about companies’ impact on the environment and society. Consequently, they represent the primary target for socially-responsible business endeavors.

Demographics have a slight impact on this perspective. Women are 20% more likely than men to agree that companies should be concerned with their environmental/social impacts. The concern also increases with age and peaks with Boomers; Generation Y has the weakest response and Boomers have the strongest. This implies that individuals most concerned with companies’ environmental/social impacts are female Boomers, while the least concerned are men in Generation Y.

Behavioral Effects of CSR

The data in Figure 1 illustrate that the general population’s purchasing power and loyalty are swayed toward companies that are mindful of their environmental and societal impacts. In fact, 58% of the general population is more likely to buy the products/services of a company that is mindful of its impact on the environment and society. Similarly, over half of the population said such a company would gain their loyalty. These are obviously two critical consumer behaviors marketers yearn to achieve. Combining corporate responsibility behaviors and effective messaging can clearly be a critical piece of fostering these behaviors.

The Importance of CSR by
Education Level

Educational achievement affects interest and behavior related to CSR, which is a complicated topic, and one that may seem esoteric to many consumers. To that point, once a consumer has achieved a college degree, CSR appeals to and motivates them much more than less-educated consumers. Well-educated consumers are also typically higher-income consumers, which makes them more appealing to marketers.

These data suggest that current messaging on corporate responsibility should be designed for higher-education levels. Engaging consumers in a sophisticated, yet clear, conversation may attract the target consumer. While doing so would restrict the target audience (only 26% of the population has a college degree), this may be necessary in the short run, as simplistic messaging breeds skepticism.

General Population Interest in
Types of CSR

Considering consumer interest in different types of CSR is important in developing a corporate CSR strategy. Doing so ensures relevance and meaning for consumers, and enhances the probability of success. Table 1 illustrates interest in broad CSR issues. The highest interest is in environmental programs (82%), followed closely by workforce (80%), and finally community (73%). These three issues are more important than the lagging corporate ethics category (29%) to the general population.

As shown in the table, the general population typically gravitates toward basic issues like recycling, keeping jobs in the U.S., and cleaning up the communities in which they work. These are all activities the consumer can relate to on a personal level. While other activities may actually be more beneficial, they may be too esoteric to consumers (e.g., “open space”) or be expected to come at a cost the consumer is not willing to bear (renewable energy).

Notably, product user groups have different preferences for CSR information; for example, CFL (compact fluorescent lamp) users are more interested in companies’ reduced energy consumption. Understanding unique differences between user groups will ensure a campaign that is strategically viable.

It is not only important for companies to make their CSR values known and aligned to the consumer, but to do so in a way that promotes trust in the brands/products. Overall skepticism in companies’ CSR initiatives has decreased from 2006 to 2007, as shown in Figure 2. At the same time, there has been a simultaneous increase in the number of consumers who think companies are more responsible now versus several years ago. While many consumers remain unsure of the details, the corporate world does, as a whole, appear to be making some progress.

The media is likely to have played a role in these shifting attitudes. As an independent source, the media can provide a sense of authenticity to the consumer. And, environmental consciousness is currently a fashionable subject for the media, as newscasts celebrate breakthroughs in eco-friendly buildings or major publications devote cover stories to eco-topics.

Although skepticism is on the decline, a majority of consumers are still more skeptical than convinced that companies are completely truthful when touting their environmentalism. More than seven out of 10 consumers are unsure which companies are telling the truth and more than two-thirds do not think companies are being genuine. Demographic variables affect trust in CSR: men want more proof than women, as do seniors and those with a college degree or higher. So brands within a high concentration of these demographics will want to pay particular attention to this need.

Sources of Influence for CSR

Successful CSR communication is, in part, about the right message and the right amount of information, and also about the right vehicle. Most consumers prefer to learn about CSR through media, which is likely due to its overall role in consumers’ routines. LOHAS consumers, on the other hand, rely more heavily on independent third party groups because of their skepticism and lack of trust in companies.

Company websites and product packaging also play very important roles for consumers. That these are both vehicles the company controls makes them much easier to utilize. Incorporating some mention of CSR in product packaging—packaging being highly influential at the point of purchase—can be a very effective tool in impacting consumer behavior. While there is limited “real estate,” it is an important place to remind consumers what the brand stands for.

Packaging can also be used to drive consumers to the website, where they can find additional detailed CSR information. Website content should be designed to provide consumers as much (or as little) information as they want, and also link to other outside resources on the topic. Additionally, websites can provide consumers, especially LOHAS consumers, a vehicle for their CSR reports, thereby providing both transparency and substantiation of environmental and social efforts.

As people continue to strive for a feeling of connection by participating and expressing their values through their purchasing behavior, it is important for companies to develop a sound CSR strategy. Brands and companies that can support this interest in sustainable consumption and make a positive contribution appealto consumers’ current sentiments, particularly in today’s ethical consumerism marketplace.NW