For what kinds of customers is green marketing effective?
A majority of polls indicate that consumers favor green products, and are willing to pay more for them. However, the fact is that higher-priced green products have always struggled for market share. In many industries they garner only 3 percent of total market share in the consumer market; in business-to-business markets, green marketing often commands greater results. This does not mean that the majority of purchasers do not care about green marketing, but it does mean that they also care about other competitive value propositions, including quality, convenience, and cost.
The National Marketing Institute estimates that about 80 percent of consumers are engaged by green marketing at some level, with about 17 percent of consumers highly engaged. This consumer group, referred to as LOHAS (Lifestyles of Health and Sustainability), are those most likely to pay a premium for green products. As a group, they are more affluent and better educated than the general population. A related market segment, designated Naturalites, constitute an additional 19 percent of the population. This group (also more affluent and educated than the general population) is interested in green products as they appeal to health considerations. They are highly likely to buy organic foods, but are less interested in green marketing for durable products.
Highly price-sensitive consumers are the least responsive to green marketing. For those with less disposable income, being thrifty with their money becomes a more immediate concern. Green marketing therefore faces a particular challenge in times of economic slowdown, as price becomes a bigger factor in consumers’ purchasing decisions.