A Guide to the Green Consumer Market Segment
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SO YOU WANT TO GO GREEN? A GUIDE TO THE GREEN CONSUMER MARKET SEGMENT By Alister Shirazi A Project Presented to The Faculty of Humboldt State University In Partial Fulfillment of the Requirements for the Degree Master of Business Administration Committee Membership Carol Telesky, Ph.D, Committee Chair David Sleeth-Keppler, Ph.D, Graduate Coordinator July, 2014 ABSTRACT SO YOU WANT TO GO GREEN? A GUIDE TO THE GREEN MARKET SEGMENT FOR MARKETERS Alister Shirazi This paper serves as a guide for organizations interested in appealing to the green consumer market. A green consumer is defined as one that is sympathetic to social and environmental causes. The green consumer often purchases products that align with her values, but this is not a requirement for a consumer to be classified as a member of the green consumer market segment. Traditional demographics measures, such as age, income, education and gender are examined for patterns. Further, the paper introduces psychographics. Psychographics provide insight into the values, attitudes and lifestyle factors that influence purchase intention. This paper also describes actionable steps that organizations can take to begin their journey toward sustainability. ii TABLE OF CONTENTS ABSTRACT ........................................................................................................................ ii TABLE OF CONTENTS ................................................................................................... iii LIST OF FIGURES ............................................................................................................ v INTRODUCTION .............................................................................................................. 1 THE GREEN MARKET..................................................................................................... 3 Why Go Green? .............................................................................................................. 3 Who Are Green Consumers ............................................................................................ 4 TRADITIONAL DEMOGRAPHICS ................................................................................. 5 Age .................................................................................................................................. 5 Gender ............................................................................................................................. 5 Politics............................................................................................................................. 6 Income............................................................................................................................. 6 PSYCHOGRAPHICS ......................................................................................................... 9 VALS Segmentation ..................................................................................................... 11 Green Consumer - VALS Profile Segment ................................................................... 15 Types of Green Consumers ........................................................................................... 18 NOTES AND TIPS ON SELLING GREEN 20 Effort Required by Consumer ....................................................................................... 20 iii Green Washing.............................................................................................................. 21 Tips For Selling Green .................................................................................................. 22 SMALL STEPS YOUR BUSINESS CAN TAKE TO GO GREEN ................................ 24 Go Paperless.................................................................................................................. 24 Cyber Meet Whenever Possible .................................................................................... 24 Appoint a “Sustainability Chief” .................................................................................. 25 Seek Third Party Assistance ......................................................................................... 26 CONCLUSION ................................................................................................................. 27 REFERENCES ................................................................................................................. 28 iv LIST OF FIGURES Figure 1. VALS Character Types outlines the basic layout of VALS profiles. ................ 12 v LIST OF TABLES Table 1. Green Consumers VS All Consumers .................................................................. 8 Table 2. Key Environmental Attitudes and Behaviours by VALS™1VALS Segments % Compared to the US Population2 ...................................................................................... 16 vi 1 INTRODUCTION There is a marked shift in consumer sentiment in the global marketplace. Consumers now, more than ever, are becoming concerned with environmental issues including waste management, recyclability of products, humane production practices, global warming, etc. A study conducted by the Mintel organization concludes that sales of green products have tripled in the past decade (Makower 2007). Also, the study concluded that the number of consumers that refused to buy green products had been cut in half in the same time period. In order for a company to appeal to the green market segment, they must first understand the green market and gain insight into the sentiment and mentality of the green consumer. The purpose of this study is to provide a concise and useful guide for marketers to utilize to most efficiently and effectively target the green market segment. This study will review literature from recent and current articles and databases to provide the most relevant information possible. When deciding to market to the green consumer segment, the marketer must understand the sentiment and unique attributes and purchase intentions that are associated with the green consumer. This study will be a concise guide to the green consumer market segment and will be useful in determining where to expend marketing resources and how to appeal to this new a powerful segment of American consumers. It will include profiles of consumer demographics including age, gender, income, political affiliation and categories of green consumers. It will also include a 2 collection of tips for how to appeal to the green consumer, as well as a general overview of the green market and what it means for a company to “go green”. In going green, business might realize the economic benefits of appealing to a more dedicated customer base with generally higher income levels, as well as enjoy the efficiencies associated with the innovation that is required to alter products to appeal to this market segment. Ultimately, after reading this study, product designers and business professionals will realize that implementing sustainable business practices and economic prosperity do not have to exist in conflict with each other. 3 THE GREEN MARKET This section examines overall market trends and identifies the characteristics that make the green market unique. Why Go Green? An article by Richard Marriott titled “5 Ways Going Green is Good For The Customer” (Marriott 2012) outlines why going green is not only good for the customer, but is also good for long-term business. 1) Green businesses create an environment that promotes innovation. As companies seek to create more sustainable products, oftentimes they find areas where they can advance the functionality of their products, and reduce costs. Both of these lead to increases in customer value. 2) Businesses that are concerned with sustainability approaches are concerned with the long run business cycle. When a business thinks long term, they can think about and adapt to the changes in the business environment for the future, creating greater customer satisfaction. 3) Consumers now, more than ever before, have access to large amounts of information. This means they are becoming wiser consumers. As more consumers are becoming concerned with the sustainability cause, opportunities open up for businesses to meet the demand of consumers. 4) Many people expect green products to be more expensive. However often times acting sustainably means acting efficiently. With this increased efficiency often come cost savings. These cost savings can increase profits and/or sales. 5) Creating a 4 green work environment works to strengthen employee morale and culture. (Marriott 2012) Who Are Green Consumers This section will outline both the traditional demographic metrics as well as information about a deeper method of segmentation called psychographics. Age, gender, income, political affiliation, education and VALS profiles have all been examined and a summary provided about each. This section will also distinguish between the different types of green consumers as well as the unique challenges that come with targeting this specific audience. 5 TRADITIONAL DEMOGRAPHICS Age There seems to be very little agreement among studies and researchers about which age groups are most representative of the average green consumer. Some research shows no correlation, while others show a negative correlation between age and environmental awareness (Paco 2010). However, over the last couple decades, many studies have concluded that the green consumer is older than average. (Akehurst 2012). As a marketer, the decision