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IN THIS ISSUE

ISSUE 2.11 | GREEN REPORT

In honor of Earth Month, this issue of The Checkout looks at Green behavior shifts for consumers, how this affects in-store shopping motives, and ultimately, purchase intent.

• It’s all about Green-venience. Participation rates drop 13 percent when considering Green acts that require an increase in time commitment and price-point.

• Behavioral Economics has a shade of green. The Status Quo Bias indicates just how far shoppers will go to be green. (Read more on page 3)

• Is intention enough to create change? 36 percent of shoppers agree with the statement “I would pay more for environmentally friendly products.” But do good intentions translate into purchase decisions?

Going Green: What shoppers are and aren’t willing to do to make a sustainable impact.

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Green behavior worth the sacrifice? While going Green may be a lifestyle change and associated with a certain social status for some, many shop-pers are only willing to go so far to earn their sustainability stripes. When asked about Green activities within the past year, the good deeds that rose to the top of shopper’s lists pander to convenience moreso than the amount of impact on the environment. More than two-thirds of shoppers (Figure 1) reported replacing regular light bulbs with more energy- efficient bulbs as well as enrolling in online bill pay. But participation rates drop by 13 percent when considering Green acts that require an increase in time commitment and price-point. Reducing waste in landfills may be important to respondents, but has no immediate benefit to them personally.

The convenience of buying bottled water versus filtering tap water gives an immediate and convenient benefit. What it means to be Green has evolved; expectations of doing good no longer revolve around overall environmental benefit, but seem to be more about the end reward for the consumer.

Instant gratification trumps long-term impact. When ranking priorities regarding routine shopping, quality (50 percent) and price (47 percent) were cited as the most important factors (Figure 2). No matter shopper’s Green motives, aspects of the standard value equation—quality and price—are key influences in purchase.

Green-minded or just green-venient?

Issue 2.11

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Figure 2. Shopping Priorities

Source: The Integer Group | M/A/R/C Research March 2011 Checkout Study, N = 1,204, *results are top two box Q: For each priority in the list, pick a number from 1 to 10 to indicate how important it is to YOU when you are doing routine shopping.

Figure 1. Green Activities Done Within Past Year

Source: The Integer Group | M/A/R/C Research March 2011 Checkout Study, N = 1,204 Q: . Which of the following activities, if any, have you done within the past year? Please select all that apply.

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Purchased hybrid car

Supported environmental businesses

Avoided non-environmental businesses

Purchased fuel-efficient car

Installed low-flow toilet

Took advantage of government green tax

Installed low-flow showerhead

Switched from bottled to filtered tap water

Purchased energy-efficient appliances

Recycled electronics

Purchased more energy-efficient bulbs

Paperless statements

Online bill pay

Replaced lights with energy-efficient bulbs

No Yes

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Creatures of habit.

Issue 2.11

Behavioral Economics has a shade of Green. Shoppers are creatures of habit, basing decisions on what is comfortable and familiar. This habitual behavior is often known in the behavioral economics field as the Status Quo Bias1, a cognitive phenomenon where people tend to prefer that things remain the same or that things change as little as possible if they absolutely must be altered. This bias often applies to shoppers as many are adverse to change and the introduction of new behaviors. When it comes to acting Green, daily decisions like keeping unneeded lights off are easy to integrate into an already existing routine, whereas introducing a new behavior like carpooling is a whole new routine. Eating local means buying new products in new ways, and routine shopping trips require more of an effort. To change behavior, the incentive to change must be compelling. This gets back to the idea of tangible benefits. If people can’t see or feel an immediate reward for this new behavior—saving money, time, creating social change, etc.— they’ll opt to stick with what they know or reduce existing behavior over taking on a new task. Enabling shoppers to become change agents means helping them overcome deeper psychological barriers within.

82%of Shoppers always or often keep unneeded

lights off on a daily basis. *Top-two box

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Figure 3. Daily Green Behaviors

Source: The Integer Group | M/A/R/C Research March 2011 Checkout Study, N = 1,204 www.shopperculture.comQ: How often do you do each of the following in your daily life?1 Kahneman, D., Knetsch, J. L. & Thaler, R. H. (1991). Anomalies: The Endowment Effect, Loss Aversion, and Status Quo Bias. Journal of Economic Perspectives, 5, 1, pp. 193-206.

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Is intention enough when creating change?

Issue 2.11

Tension between Green motives and innate purchase drivers. America is by no means lacking a desire to help the environment. In fact, this study shows 36 percent of shoppers agree with the statement “I would pay more for environmentally friendly products.” But does good intention translate to purchase decisions in the store? As mentioned in previous sections, 47 percent of shoppers cited price as the most important factor while routine shopping (Figure 2). Is there a tension between green motives and innate purchase drivers of the standard value equation, price, time, quality and experience? For example Sun Chips introduced a 100-percent compostable bag but it didn’t go over well with many shoppers because of the loud and inconvenient noise the bag makes.

Functional versus emotional benefits. How do shoppers rationalize when to lean one way over the other? And when do brands and retail-ers have the biggest opportunity to influence the ranking of priorities? The idea of providing a larger benefit for the shopper seems to play a role here as well. Make it worth their while. Price and quality are largely functional benefits. An emotional reward that focuses on how consumers feel versus the functional environmental benefit is the territory in which marketers must play.

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36%of shoppers agree with

the statement “I am willing to pay more for environmently friendly

products.” *Top-two box

Figure 4. Willingness to Pay More for Environmentally Friendly Products

Source: The Integer Group | M/A/R/C Research March 2011 Checkout, Study N = 1,204 www.shopperculture.comQ: Do you agree with the following statement? “I am willing to pay more for environmentally friendly products.”

Strongly Agree Strongly Disagree

4.4% 31.5% 43.4% 15.2% 5.6%

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Youth slow to embrace change. While college-aged consumers may be expected to quickly to embrace the ever-changing trends of eco-concerns, they aren’t necessarily willing to pay to back it up. In fact, 35-44-year-olds are the age group with the largest segment willing to pay for environmentally friendly products. Whether this is because of higher incomes or children in the house that make them think more about the future, is unclear. What we do know is that nearly 1 in 4 are willing to pay to save the environment. Also intriguing is a higher eco-consciousness amongst the 55+ set compared to younger generations. They could be empty-nesters with more disposable income who look at the future with a different perspective than younger Americans or; potentially for some, having grandchildren could give them a renewed sense of consciousness. Whatever the reason, for marketers playing in the Green arena, it’s become apparent that the appeal of environmental friendly products has reached across multiple generations.

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Generations of Green.

41%of 18-34 -year-olds agree with the statement “I am willing to pay more for

environmentally friendly products.”

*Top-two box

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Source: The Integer Group | M/A/R/C Research March 2011 Checkout, Study N = 1,204 www.shopperculture.comQ: Do you agree with the following statement? “I am willing to pay more for environmentally friendly products.” *Top-two box: strongly agree and agree.

Figure 5. Willingness to Pay More for Environmentally Friendly Products

0%

5%

10%

15%

20%

25%

18 to 24 25 to 34 35 to 44 45 to 49 50 to 54 55 to 64 65 and above

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Implications for brands and retailers.

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Create a feeling.Focus on the emotional instead of only functional benefits. Make people feel like they are making a difference in a meaningful way. Truly build not just loyalty, but a real connection on a human level. For example, Dawn dish soap launched a campaign focusing on protecting the wildlife in response to oil spills in the Gulf. The program featured a widely talked about television spot featuring animals covered in oil and Dawn showcased as an eco-friendly substance used to clean the animals. The campaign allowed shoppers to take action with $1 donations to wildlife for the purchase of specially-marked bottles supported by a dedicated web site and social media.

Reward good behavior. Provide a personal benefit that rewards shoppers for making a Greener choice. The greater the involvement, the larger the incentive they expect. Make it worth their while. For example Starbucks offered free coffee and tea to consumers who brought in a reusable mug on Earth Day.

ROI: Return on Involvement. The harder the shopper works to reap the benefits of buying and/ or using the product or service, the higher the expectations for the reward earned on the back end. Make sure your brand matches that effort. For example Home Depot hosted free local workshops Earth Day weekend, showcasing eco-friendly gardening tips and Eco-Options products that can help shoppers save money and energy long-term. Dedicating two hours to Green education results in a year’s worth of benefit.

Engagement shouldn’t end at the checkout. This rule should apply to all promotional time periods, but especially Earth month. Social awareness is at an all-time high for consumers given the Green holiday. The halo of marketers’ efforts supporting the cause shouldn’t stop once the shopper leaves the store. Brands and retailers are urging buyers to make the Green purchase decision at the shelf, but what about the long-term? Doing good isn’t a short-term commitment. Maintain the dialogue and keep rewards coming in Post-TailTM so shoppers see the long-term picture.

Green is a year-round cause. And should be treated as such. In the past, environmental deeds used to start and end in the month of April, but the world has entered into a new era. Many people now have a heightened sense of urgency to help save the state of the planet. This means thinking and acting Green is a new state of mind. And brands must mold to fit into this new way of living. That means standing for something bigger than a short-term, once-a-year promotion. For example Malt-O-Meal touts its eco-friendly and 100-percent recyclable packaging all year round.

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powered by The Integer Group® and M/A/R/C® ResearchIssue 2.11

The Integer Group® is one of the world’s largest promotional, retail, and shopper marketing agen-cies, and a key member of Omnicom Group Inc. Integer lives at the Intersection of Branding and Selling® and creates strategic marketing solutions for clients in categories that include retail, bever-age, packaged goods, telecommunications, home and shelter, automotive aftermarket, and power sports. Integer has more than 1,200 employees working in U.S. locations as well as international offices in Africa, Asia, Australia, Europe, Middle East, North and South America. Join the conver-sation on shopping culture and brand strategy at www.shopperculture.com.

The Integer GroupCraig ElstonSr. VP, Insight & Strategycelston@integer.com7245 West Alaska DriveLakewood, CO 80226

M/A/R/C® Research is a brand development firm dedicated to helping clients create, evaluate, and strengthen their brands. Our teams design and execute qualitative and quantitative, traditional, and online solutions while adhering to a client-service ethic built on being easy to work with and delivering what is promised. Our core competency is measuring attitudes and behaviors to accurately explain and predict market share,revenue, and bottom-line impact of a client’s actions. We help our clients address consumer, channel, and B2B marketing issues to launch better products and services attract and retain valuable customers, and build stronger brands. Our proven, marketing-issue-focused solutions support clients’ brand-building efforts.

M/A/R/C ResearchRandy WahlEVP, Advanced AnalyticsRandy.Wahl@MARCresearch.com1660 North Westridge CircleIrving, TX 75038

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The Checkout is based on a nationally representative survey of 1,200 U.S. adults conducted monthly by M/A/R/C Research. Please contact us to learn more about the data we collect or additional analysis.

©2011 by The Integer Group® and M/A/R/C® Research. All rights reserved.The data contained in this report may be reproduced in any form as long as the data is cited from The Integer Group and M/A/R/C Research. www.ShopperCulture.com.