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The bad economy impacts willingness to spend more for some eco-friendly products.

America's migration toward green products such as compact florescent bulbs and hybrid cars has become yet another casualty of the economic apocalypse that's now being called The Great Recession. After several years of uninterrupted steady growth, both categories have shrunk over the last year.

But marketing eco-friendly products isn't all bleak. Some product categories are holding their own, and others are actually growing strongly.

Compact florescent sales dim.

Compact fluorescents' share of the U.S. light bulb market has dropped from 23% in 2007 to 21% in 2008 according to Department of Energy data quoted in The Wall Street Journal. The Journal succinctly encapsulated the reason for the decline with a quote from a shopper buying bulbs: "I buy the cheap ones," Dallas resident Betty Ferrell said as she reached for a pack of incandescents at a local Wal-Mart store. "They may not be cheap in the long run, but they're cheap for what I have in my purse now."

At around ten times the price of incandescents, compact fluorescents couldn't sustain their momentum during the present downturn.

Compact fluorescents' declining share isn't surprising. Depending on whose data you believe, somewhere between 10% and 16% of consumers are hardcore eco-friendly shoppers who buy green even when green products cost more. A much larger segment – variously estimated at 23% to 25% of consumers – buy green products to save money in the long run. And investment spending on light bulbs for long-term savings on electricity has become an unaffordable luxury for many people these days.

Hybrid car sales hit a roadblock.

The same economic dynamics that have reduced compact fluorescents' market share have also sharply cut hybrid car sales.

In a 2008 J.D. Powers study quoted in another Journal article, 23% of consumers were "definitely interested" in a hybrid car. By 2009, after the price of gasoline dropped dramatically, only 15% expressed "definite interest." Then, when respondents were told that hybrid-electric technology would add $5,000 to a car's price, those still "definitely interested" fell to just 4.2%.

As the price of oil went from $140 a barrel at the time of the 2008 survey to $50 a barrel during the 2009 study, sales of the Toyota Prius (the gas-electric hybrid sales leader) dropped 46%.

Organic food growth slows.

Organic foods grew 116% from 2004 through 2007, but growth slowed to an annual rate of just 5.6% in 2008. That 5.6% increase means that organics' share of market was up only slightly in 2008, a year which saw a 5.1% increase in overall grocery sales. Compared to major food companies, organics lost ground. Del Monte's consumer food business was up 11.7% in 2008.

Of course, not all organic food purchases are motivated by environmental concerns. Just as many consumers buy eco-friendly products to save money, others buy organic foods because of perceived health benefits. That group represents roughly 25% of all shoppers. (Naturally there's some overlap between consumers who buy environmentally-friendly products to save money and those who buy them for health benefits.)

Surprisingly, the consumers who are cutting back on environmentally-friendly foods are the mostly upscale hardcore green households. In 2008 they cut unit purchases by 6.6%, but price increases in the organic food category has kept their spending about where it was in 2007. The category growth is coming from middle-income Hispanic families, who increased their unit volume 3.9% and their dollar volume 15.5% in 2008.

Eco-friendly cleaning products are cleaning up.

One category of environmentally-compatible products hasn't been hit hard by the recession. Green household cleaning products are doing extremely well. Green cleaning product sales grew 108% in 2008.

To some extent, eco-friendly cleansers, detergents and dishwashing soaps benefit from being relatively recent entrants in the mass consumer market, so they're still gaining adherents among the more committed environmentalist shoppers. SC Johnson's recently launched Nature's Source products and Clorox's Green Works brands generated growth in the category previously dominated by niche brands like Seventh Generation. (Although they're somewhat eclipsed by the major consumer package goods entrants, Seventh Generation's results are pretty impressive, too. They grew 50% in 2008.)

Post-consumer paper has consumers excited.

The next big surge in environmental products will probably come in the paper products category. Just as in the case of household cleaning products, the category surge will come as major, familiar brands bring these products out of the hardcore environmentalist niche and into the mainstream market.

Advertising Age reports that Scott is offering toilet paper, paper towels and napkins with 40% to 80% recycled content. Wal-Mart's store brand toilet paper, White Cloud, will be 100% recycled. And Kimberly-Clark is about to launch Huggies Pure & Natural, a disposable diaper with more natural ingredients and an as-yet-unspecified amount of post-consumer recycled content.

The energy-efficient light at the end of the tunnel.

Despite what it must seem like to many marketers and ad agencies these days, the recession won't last forever. When it's over, environmentally compatible products will see a significant growth surge. The indicators?

Mintel, a Chicago market research firm, projects 19% growth for environmental products through 2013.

Aric Melzel of Scott said "If you go back 10, 20, 30 years, other green movements ultimately have the air taken out of them by recessions... this time the green mind-set is much more solidified."

Tom Vierhile of Datamonitor agrees. "It looks like the green trend is going to survive the recession." He believes that interest in green products has reached beyond the 10% to 16% who are hardcore environmentalists and has gone mainstream.

The entry of well-known and respected consumer package goods companies like SC Johnson and Scott into the environmental-products arena will diminish the perception that eco-friendly products have lower quality than conventional products.

The big CPG companies coming into the market will also have the economies of scale to drive down the price of green products, and 54% of consumers say they'd buy more environmental products if they were cheaper.

There's a lot of room to grow. Organic foods, for example, have just 3.2% of the total food market. The upside potential is tremendous.

A lot of companies agree with our optimistic outlook for green products in the near-term future. According to Advertising Age, launches of new green products are on pace to reach 1,570. That's triple 2008's level. And 2008 launches were double 2007's.

The present consumer base is relatively small, but the opportunity is big. Green products have a firm cadre of hardcore supporters and a growing contingent of mainstream adherents.

Consumers are confused and skeptical about environmental claims.

A recent study by Retrevo, a leading consumer electronics information web site, found that only 13% of respondents believe electronics manufacturers' green claims.

That dismally low number for may reflect the fact that it's hard to imagine an eco-friendly 50-inch plasma screen.

Claims of environmental compatibility by companies in other industries fare better. In a broadly-based study by the Boston College Center for Corporate Citizenship, 47% of respondents found companies' eco-friendly claims believable.

But even that overall 47% credibility factor for environmental claims is below the norms for advertising in general.

A study by University of Miami professor Don W. Stacks and marketing communications researcher David Michaelson found that 78% of respondents believe the claims in newspaper ads. Online claims are believed by 64%. Only radio, the least-credible medium studied with a 46% credibility rating, matched the low believability levels of environmental claims.

So why don't consumers give as much credence to environmental claims as they do to claims about the digestive efficacy of Activia, the low prices at Walmart or the stain-fighting power of new Tide Total Care?

Two reasons: confusion and skepticism.

Confusion.

Most consumers don't even know the meaning of terms used in environmental marketing communications. Even those self-described as green. For example, the Boston College Center for Corporate Citizenship study found that 48% of folks who call themselves green think earth-friendly products actually benefit the environment. Only 22% know that these products simply do less damage.

The most widely-acclaimed source of environmental information since Rachael Carson's Silent Spring was published in 1962 was Al Gore's book-cum-movie An Inconvenient Truth. The effort won Gore a Nobel Prize, but only 18% of American consumers read the book or saw the movie according to Yankelovich's "Going Green" survey.

More confusion? In BBMG's Conscious Consumer Report 23% of respondents say they have no way of knowing if a product is green or actually does what it claims. In fact, 7% named Walmart as the company that's most socially or environmentally responsible and 9% named them as the least responsible.

Joel Makower's "Whatever Happened to Green Consumers?" posting on eartheasy.com cites complexity as an important contributing factor to creating confusion about environmental claims. "Shopping with Mother Earth in mind is no mean feat, even for the most savvy of shoppers. After all, understanding the environmental implications of something as simple as paper versus plastic shopping bags requires digesting a fair amount of science, some of which is inconclusive, contradictory or simply arguable. Both, after all, come from limited, declining resources, can be made from recycled material and can be recycled. Which is better? Even scientists don't agree." He goes on to point out that most consumers never even consider the possibility of reusable cotton bags, which are clearly the most environmentally compatible way to haul groceries home.

Skepticism.

A lot of early eco-friendly claims were ridiculous – and obviously untrue. Remember biodegradable trash bags and ozone-friendly aerosols? Most consumers probably can't recall the specifics of those bald-faced frauds, but they do remember that environmental claims were exposed as shams. That predisposes those consumers to believe that other environmental compatibility claims are phonies, too.

That tradition of hyperbole – or outright prevarication – in green claims continues. In 2007 TerraChoice examined 1,753 environmental product claims and found that all but one were overstated, misleading or simply false.

Skepticism is also triggered by vague eco-friendly claims and smoke-and-mirrors misleading truths rather than outright misrepresentation. A recent study by The Sage Group found that "Consumers consider the authenticity and integrity of environmental claims to be essential, and they recognize greenwashing." The insecticide that touts "No CFCs" doesn't get much credence among environmentally-aware consumers who know that those compounds have been banned in the U.S. for years.

One result? Reticence.

Many companies avoid communicating about their environmental responsibility. In a January/February 2009 Fleischman-Hilliard study, more than half the marketing and PR professionals at companies which are increasing their sustainability initiatives don't plan to advertise or publicize the new efforts.

Part of that reticence about corporate environmental responsibility is due to marketers' awareness that consumers believe eco-friendly products have higher prices and/or lower quality than conventional products. According to Advertising Age,"...a vast majority of consumers said they believe green products cost more and don't perform as well as others."

A GfK Roper study found that 61% of Americans believe green goods perform worse than conventional items. That's a strong deterrent to communicating a products' environmental benefits.

The fear of overstating a green claim and being outed is also a barrier to capitalizing on companies' sustainability/eco-friendliness. And that's happening with increasing frequency.

• Consumers regularly expose real or imagined transgressions on blogs and social media.
• In 2007, complaints about misleading environmental claims to Britain's Advertising Standards Authority increased by 400%.
• Just last week the FTC charged K-Mart with making "false and unsubstantiated claims" that it's American Fare paper plates are biodegradable. Actually, the plates are biodegradable in a compost heap. But not in the anaerobic confines of a landfill, where most paper plates end up. So K-Mart got slammed for greenwashing although their claim was technically correct.

That kind of scrutiny and exposure is a strong incentive for keeping mum about green claims to avoid inadvertently stepping over the line.

Who (and what) do consumers believe?

The BBMG Conscious Consumer Study found that consumers base their judgments on products' environmental compatibility on three main factors:

• Consumer reports (in the generic sense, not just the magazine of that name)
• Certification seals or labels (such as Energy Star)
• Lists of ingredients on products

According to Yahoo's Green Study, trusted sources of environmental information are:

• 72% traditional media reportage (unspecified, but we suspect primarily print)
• 51% portal websites
• 47% TV ads
• 44% search
• 40% online user reviews
• 24% professional reviews
• 20% company blogs and websites

Except for TV ads, credibility seems to be the almost exclusive domain of third parties. Only one in four or one in five consumers believe professional reviewers or company blogs and websites.

There is one proven way for companies to enhance the credibility of their environmental claims without third-party endorsements: be specific. Use data rather than generalities. The Boston College Center for Corporate Citizenship study found that 36% of environmentally-motivated shoppers would believe a paper product's claim of being "environmentally friendly," but 60% would believe a claim that the product is "made with 80% post-consumer recycled paper."

How to use environmental claims effectively

Whether or not to use an environmental appeal as the principal marketing communications message for a brand is an important strategic decision. We wouldn't presume to suggest whether or not it's the right direction to pursue without some digging and study of strategy. If you've done that digging and have decided that capturing a fanatically devoted 10% to 13% of the consumer marketplace would benefit your brand, here are some basic principles to apply:

• Be honest. Actually, be more than literally honest. Don't use hyperbole, weasel words or preemptive claims of parity features.
• Use any credible seal of approval you can get. An Energy Star rating, a Certified Organic seal or another reasonably believable imprimatur from a respected third-party organization.
• Engage environmentally-conscious consumers with social media. There's going to be conversation about your brand. Be part of it. And be upfront about who you are.
• Track your brand on social media and blogs.
• Use traditional media. Newspaper has great credibility and TV ads are the third most trusted source of environmental information about brands.
• Use public relations. Third-party stories and articles about your brand are almost always more effective than what you say about yourself.
• Be specific. Use data to substantiate your claims.
• Walk the walk. It seems obvious, but print your brochure with soy-based inks on post-consumer recycled paper. Your press conference should be illuminated with LED bulbs, or perhaps conducted online to eliminate the environmental cost of travel. If your headquarters is in the Southwest, make sure the CEO's boots aren't made from an endangered species.

Consumers' awareness of--and attitudes toward--environmental impact vary tremendously.

A recent Yahoo! study found that 77% of consumers identify themselves as "green." But only 57% claim to have made any green purchase in the past six months.

The Yahoo! study's results may have been skewed by an unrepresentative sample. They queried residents of New York, Chicago and Portland only. (And Yahoo's relatively small – 17.6% – share of search traffic might also have compromised statistical validity.)

Skewed or not, the 20 percentage point disparity between consumers calling themselves green and those who made even one green purchase in the last six months is telling.

And that 20-point gap may be optimistic. A Stanford University study found that only 33% of people are ready to make eco-friendly purchase decisions.

Two of the most popular green consumer ranking systems may help clarify the dichotomy between the significant majority of adults who proclaim themselves to be eco-friendly consumers and minority who actually are:

The Natural Marketing Institute's lifestyle segmentation provides an interesting model of consumers' attitudes and actions on environmentally-influenced purchase decisions:

• LOHAS (lifestyles of health and sustainability) – environmentally engaged and involved, they buy green even if the products are more expensive: 16% of total population.
• Naturalites – use natural products because of a perception of health/wellness benefits: 25%.
• Conventional – want green products that save them money in the long run (such as compact florescent bulbs and high gas-mileage cars): 23%.
• Drifters – not very concerned with environmental issues: 23%.
• Unconcerned – environmental considerations don't enter into their purchase decisions: 14%.

Mediamark Research & Intelligence's study defined six categories of consumers' environmentally-related beliefs and actions:

• Green Advocates – Environmental impact is a significant – often the most significant – factor in brand choice. They are also environmental activists/evangelists.
• Green At Their Best – Environmental impact is significant. They choose green brands even if they're more expensive or less convenient.
• Green But Only If – They think and act green, but not if choosing a green brand costs more or is less convenient.
• Green In Theory – They talk the talk but don't walk the walk.
• Green At The Supermarket – They buy organic foods, but more because of health and wellness concerns than for environmental considerations.
• UnGreen – No interest in environmental products or issues.

MRI found some interesting – and occasionally counterintuitive – demographic correlations to these psychographic profiles:

• Millenials (b. 1997-1994) were disproportionately UnGreen. They were 18% more likely than the norm to be UnGreen.
• Older people were the greenest. Boomers (b. 1946-1964) were by far the most active Green Advocates, at 28% above the norm. Pre-Boomers (b. before 1946) were the most likely to be Green At Their Best, at 14% over norm.
• GenXers were the most likely to be Green at the Supermarket, at 6% more than the norm.

National Geographic recently released their annual Greendex survey, and America was firmly ensconced in last place among the eighteen nations surveyed. Large developing nations, like India and Brazil, dominated the top spots. That may simply indicate that their people cannot afford the automobiles, energy use and solid waste which are within the means of people in more developed countries. But even among developed nations, we're dead last.

Apparently, despite our professions of environmental concern, we don't do much about it.

One reason for this disparity was pointed out by Joel Makower in an "eartheasy" posting: "Though polls tell us that most consumers prefer green products, the polls are misleading: they fail to ask the right questions. If I pose a question as a green versus ungreen choice...the answer is obvious: everyone prefers the greener choice. But if you probe deeper into consumer attitudes, the real answer is that consumers will choose the greener product if it doesn't cost more, comes from a brand they know and trust, can be purchased at stores where they already shop, doesn't require a significant change of habits to use and has at least the same level of quality, performance and endurance as the less-green alternative."

Makower's estimate of the green marketplace is significantly lower than the 64% total of LOHAS, Naturalites and Conventionals in the Natural Marketing Institute's matrix; lower than the 57% claimed in the Yahoo study; and even lower than the 33% in the Stanford research. Makower estimates green consumers – those who regularly seek out and buy green products regardless of how much more they cost or what lengths to which one must go to find them – at 10% to 12% of the total.

That number is reinforced by The Hartman Group, a Washington state research firm. Their studies estimate green consumers at 13%.

That small base of truly green consumers presents a marketing and communications challenge.

At first it might seem that a green claim couldn't hurt, since about three-quarters of consumers pay lip service to the idea of buying green products. But an article in the January, 2008, Harvard Business Review refutes that concept. According to "Don't Bother with the 'Green' Consumer," marketers should choose between an environmental appeal targeted to the small green consumer core group or a more generic claim aimed at a broader population. Their findings were that environmentally-targeted claims are relatively ineffective toward the population as a whole.

Our conclusion is that marketers must decide whether they want to capture a smaller core green group – who can probably be turned into fanatic supporters of a brand that promises and delivers green benefits – or use a more "What's in it for me?" approach to go after the much larger group, peripherally green consumers. Either approach can be effective, but you can't have it both ways.

At least not until America catches up with France and Russia in environmentalism.

For the first time in history, there are four generations working and active in our society.

And each approaches everything differently. This poses the challenge of trying to craft messages that will be important to the specific generation (or generations) you’re trying to reach.

For green communications, understanding these differences can be particularly critical, because they have very different attitudes towards environmental issues. To talk to each generation, a good starting point is to understand core values and how they react to communications. Here are some snapshots:

Traditionalists (born 1922-43). Duty-driven. Work is an obligation, and they are used to a top-down management structure. Respect is very important, and they’re more likely to respond positively if new products or ideas are related to what worked in the past. They need detailed instructions. Traditionalists are the most eco-friendly group. They are most willing to pay more for environmentally compatible products and most likely to recycle and to be environmental activists.

Baby Boomers (born 1944-60). Boomers approach life and work as an adventure, and they’ve become very good at blending (but not necessarily balancing) the two. Recognition is important, and they’re consensus builders who like to meet and discuss. They’re idealists, and the word “old” is not in their vocabulary. Boomers tend to be "coincidental greens." They use compact florescent bulbs and drive hybrids to save money on electricity and gas. Reducing environmental impact is welcome a side benefit, but not the main factor motivating their decisions.

Generation X (born 1961-80). X'ers are skeptics and individualists who prefer to ignore rules and structure. They prefer balance and would rather have more time off than a promotion. They thrive on feedback, and they’ll ask for it if they don’t get it. They expect instant payoff, so just cut to the chase. And they’re financially conservative. Gen X'ers' environmental involvement is motivated as much by trendiness as by a concern for the planet's health. Although they're individualists, they participate in environmental activities "because everyone is doing it." They are slightly more involved in eco-friendly activities than Boomers.

Generation Y (born 1981-2000). The Millennials, as they’re also known, are participatory rather than individualists, and they’re very social (but don't expect them to come to meetings). They also have a unique sense of responsibility, similar to the Traditionalists. They’re not afraid to challenge authority, because for them, the world has always been about being equal. They multitask comfortably, so don't think they're not listening. Millennials talk the talk but don't necessarily walk the walk. Although 76% of Millennials say environmental concerns are important, they are the least likely group to actually adopt green behaviors and lifestyles.

If you have to communicate across generational lines, realize the risk that trying to use a single approach can have. What works for one generation may not work for another.