America's
50 Million Cultural Creatives
Impact the Marketplace
July 20, 2003
They Care About the World (and They
Shop, Too)
By AMY CORTESE
The New York Times
THERE'S a name floating around for consumers who worry about the
environment, want products to be produced in a sustainable way and spend
money to advance what they see as their personal development and
potential.
It's Lohas, which may sound like a
disease but is an acronym for "lifestyles of health and sustainability."
The name was coined a few years ago by marketers trying to define what
they regarded as a growing opportunity for products and services that
appeal to a certain type of consumer.
It may be the biggest market you have
never heard of, encompassing things like organic foods, energy-efficient
appliances and solar panels as well as alternative medicine, yoga tapes
and eco-tourism. Taken together, they accounted for a $230 billion
market in 2000, according to Natural Business Communications, a company
in Broomfield, Colo., that publishes The Lohas Journal and is credited
with introducing the term. The company, which will release an updated
estimate later this year, figures that the total market has grown by
double-digit percentages annually.
In its second annual study of the
Lohas market, conducted earlier this year, the Natural Marketing
Institute, a research and consulting firm in Harleysville, Pa.,
estimated that 68 million Americans, about a third of the adult
population, qualified as Lohas consumers, the kind of people who take
environmental and social issues into account when they make purchases.
That was up from 30 percent a year earlier.
Ninety percent of the Lohas consumers
said they preferred to make purchases from companies that shared their
values, and many said they were willing to pay a premium for products
and services they considered sustainable, which means that they are made
in a way that minimizes harm to the environment and society.
Consumers are spending more in
categories like organic foods and alternative medicine. But even some
sympathetic observers are skeptical about attempts to define such a
sprawling market. "I've been listening to this conversation for 15
years," said Joel Makower, founder of GreenBiz.com, which tracks
business and environmental issues.
"We're still waiting for this great
wave of purchasing changes around values and desires to make the world a
better place," Mr. Makower said. "The only thing that's changed is now
we have an acronym."
There is, in fact, a yawning gap
between what consumers say in surveys about what they will buy and the
actual sales data. For example, in a Natural Marketing Institute study,
40 percent of the Americans surveyed said they had bought organic food
and beverages, but only 2 percent of the $600 billion in food and
beverage sales in the United States comes from organic products.
Steven W. French, a managing partner
at the institute, attributes the gaps to the fact that while consumers
base some purchasing decisions on values, factors like convenience and
price also matter.
Education and availability are
issues, too. For instance, renewable power may not be available from a
local utility, and even if it is, consumers may not be aware of it.
Still, there is no doubt that some
Lohas segments are booming. Sales of natural products, including food
and personal care products, were $36
billion last year in the United
States, up from $14.8 billion five years earlier, according to the
investment bank Adams, Harkness & Hill. And yoga, alternative medicine
and energy-efficient appliances are finding mainstream appeal.
Lohas proponents build on research
indicating that a cultural shift is under way that could have
significant impact on consumer purchasing behavior.
Paul H. Ray, executive vice president
of American Lives Inc., an opinion polling company, has surveyed people
about their values and lifestyles for more than a dozen years and has
identified an emerging subculture that he calls the cultural creatives.
This group, which Mr. Ray said included 50 million people in the United
States and Europe ‹ and is the subject of "The Cultural Creatives," his
book ‹ is socially conscious, involved in improving communities and
willing to translate values into action, he said.
Not surprisingly, the cultural
creatives tend to overlap with Lohas consumers. "What you're seeing is a
demand for products of equal quality that are also virtuous," said Mr.
Ray, who is now co-chairman of an institute within the Global Academy, a
nonprofit group, that focuses on long-range societal issues. Speaking of
similarities between his research and that of the Natural Marketing
Institute, he said, "You get to the same phenomenon regardless of how
you get into it."
RoperASW, a research and consulting
firm, figures that 16 percent of adult Americans are "green" consumers
and that an additional 33 percent of the population can be persuaded to
base their spending on their environmental values. The firm has also
tracked consumers' rising interest in health and alternative medicine
and in buying brands that are aligned with their values.
These studies suggest that companies
may benefit from considering values as well as conventional
demographics, like age and income, when trying to understand customers.
"This is a mind-set change for how companies and consumers look at
products and services," said Mr. French of the marketing institute.
RATHER than looking at discrete product categories like cars, he said,
it is more important when dealing with the Lohas market to look at the
common factors linking diverse product groups ‹ for example, at cars,
energy and household products that are perceived as better for the
environment and society.
The Lohas Market Trends Conference,
held in June in Broomfield, Colo., drew nearly 450 people. Organized by
Natural Business Communications, it offered business sessions punctuated
with yoga classes and massages, and meals were planned by Mollie Katzen,
the author of best-selling vegetarian cookbooks, including "The
Enchanted Broccoli Forest."
Though most of the companies
represented at the conference were small or clearly identified with the
healthy lifestyle market, like Patagonia and Tom's of Maine, there was
also interest from corporations that are not squarely in that market.
Sheri Shapiro, the assistant
marketing manager for the Escape sport utility vehicle at Ford Motor,
was there to learn about the Lohas consumer. When her team was
researching the potential customer base for a hybrid version of the Ford
Escape planned for next year, it kept running across the term "Lohas."
"We didn't know exactly what it was,"
Ms. Shapiro said. So when she heard about the conference, she decided to
attend. As it turned out, she said, "the values and attitudes of the
Lohas customers matched our own research."
Or consider Staples, the office
products retailer. It didn't send anyone to the conference, but it has
added more products with recycled materials and has promoted recycling
programs at its stores for printer cartridges and consumer electronics
products.
"We are really taking a look at
sustainable business practices and what our social and environmental
commitments are and how we convey that to customers," said Mark Buckley,
vice president for environmental affairs at Staples, based in
Framingham, Mass.
As more large corporations introduce
environmentally friendly products or acquire organic brands, they often
find themselves in unfamiliar territory. "Companies realize they have a
different kind of customer, that conventional selling strategies are a
complete bomb with," said Mr. Ray, at American Lives. Large companies,
he added, "are used to thinking in mass-market ways."
People in the Lohas crowd tend to be
well informed, discerning and skeptical of advertising claims, the
institute says. Ms. Shapiro said she would think differently about
marketing to this group.
"There might be different strategies
and tactics to market to them," she said, like advertising in health and
lifestyle publications and aligning the marketing message with Lohas
values. "Whether it's vitamins or hybrid vehicles, it's the common
values that really tie together all of these products."
That is where Lohas comes in. Tying
them together makes sense, because "it's helpful to define an industry,"
said Lynn Powers, president of Gaiam, which sells products like organic
cotton sheets, yoga tapes and solar panels through its catalogs and Web
sites.
Still, the conference on Lohas
illustrated how unwieldy a concept it can be.. In the main exhibit hall,
makers of healthy candy bars, meditation videos, energy turbines and
therapies labeled as cancer cures promoted their wares side by side.
Frank Lampe, the editorial and
conference director at Conscious Media, which owns Natural Business
Communications, acknowledged that Lohas might be too sweeping a term.
His company is refining its definition of the Lohas market and may drop
some categories. "We've tried to get too many things into the space," he
said.
Copyright 2003 The New York Times
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