Co-op America: Market Is Ready for Socially Responsible Business

The studies show that between 40 and 50 million Americans -- about 25% of the adult population -- are beginning to make these value-based choices in more and more product categories. Taken together, these studies show that when price and quality are comparable, socially responsible businesses have the advantage.

If you own or work for a socially responsible business, these studies are a gold mine for understanding current social and marketing trends -- and developing strategies for taking advantage of the trends. The studies have data useful for marketing and business plans. And they underscore how important socially responsible businesses are to our society.

Social Trends: Common Concerns

Americans increasingly share common concerns about the future. Many leading polls, including a comprehensive study by the Harwood Group, show that the majority of Americans across all walks of life, name problems such as greed and selfishness, the deteriorating environment, increasing stress on families and communities, and the growing gap between 'have' and 'have nots' as major obstacles endangering America's future (see Figure 1).

The Harwood Group study also shows that as Americans go about their everyday lives -- making decisions about work, purchases and investments -- they are seeking to reclaim core values such as relationships, meaningful work, economic security, personal safety, quality education for their children, thriving communities and a healthy planet.

Social Trends: A New Worldview -- A New Mainstream

If Americans share so many common concerns, why is there so much disagreement about how to solve our problems?

A path-breaking study, The Integral Culture, by Paul Ray for the Institute for Noetic Sciences and the Fetzer Institute, set out to answer this question. If you read only one study this year to understand social and market trends for your business and your efforts to improve society -- this is the one.

What Ray discovered is that there are three competing worldviews, or paradigms, in America today (see Figure 2). People's worldviews, the sum total of their assumptions and values, determine their beliefs and practices.

These three contemporary worldviews all have long historical roots. What Ray calls the Traditionalist or Heartlander paradigm was the worldview that dominated in the early days of the United States, when Europeans first began to arrive here. A faith-based worldview, it has changed over the years and now includes many people who would identify themselves as part of the religious right. It is declining rapidly and now includes about 56 million Americans, about 29% of the adult population. Heartlanders propose to solve today's problems by returning to what worked earlier in this century.

The Modernist worldview is what most people would call the mainstream. It includes about 88 million Americans, about 47% of the adult population. The Modernist worldview emerged with the industrial revolution and became the dominant paradigm early in this century. It grew rapidly throughout this century, but is now leveling off. Modernists believe that progress and the good life are defined by increasing material wealth. Modernists recognize that there are problem facing society but believe they can be fixed by adjusting the present system. Almost all of our contemporary political, business, media and religious leaders share this worldview.

A new worldview, the Cultural Creatives, began to emerge and grow rapidly in the 1970s. It now includes about 44 million Americans, 24% of the adult population. The Cultural Creatives believe society faces significant problems and needs to reinvent its culture, institutions and practices to solve them and provide a future for our children. Cultural Creatives are seeking to reintegrate their values into their everyday lives and are ready to take action on a wide range of social, environmental and spiritual concerns.

People come to the Cultural Creatives worldview from many different pathways and issues -- environmental, social justice, civil rights, health and healing, spiritual, new age. It's core values are ecological sustainability; civil rights for women and communities of color; self-actualization and spirituality; and social conscience and optimism.

Interestingly, although Cultural Creatives are 44 million strong and growing rapidly, most Cultural Creatives think they represent a tiny, minority worldview -- maybe as small as themselves and their ten best friends. This happens for two reasons. First, because it is an emerging worldview and people have come to it from many pathways, the worldview is still highly fragmented. People within it don't yet share a common language or recognize people who come to this worldview from different pathways as allies.

Second, one of the jobs of the dominant paradigm is to marginalize new ideas. So the feedback from the Modernist mainstream is that Cultural Creative thinking is a small, fringe worldview. Cultural Creatives don't see themselves reflected in the media or the institutions of our times, so it is easy to believe that there are not many people like them. This phenomenon causes many Cultural Creatives to lie low, expressing their values in their homes but not at work or other aspects of public life. Likewise, it may be causing many socially responsible businesses to see and act as if their market is much smaller than it really is.

With 24% of the population and growing rapidly, the Cultural Creatives are beginning to define the new mainstream.

Market Trends: Cultural Creatives as Consumers

Socially responsible businesses will recognize the profile of the Cultural Creative as their customers: They are more likely to be women than men. Their median age is 42 and although they come from all walks of life, they are likely to be well educated and in the upper middle class (see Figure 3).

Figure 3: Cultural Creatives’ Characteristics

Women: 60%; Men: 40%
Median Age: 42
Median Family Income: $47,500
Upper Middle Class
(46% are in the top quartile of the income distribution)
Ready to Take Action on Their Values
No Common Language

Cultural Creatives are information junkies. Their cognitive style is to scan the horizon for information, delve into their interests, and then put what they learn into the big picture. They are ready to take action on their values, and especially in their homes, are already beginning to integrate their values into their everyday decisions, purchases and investments. This integration will continue to be a guiding imperative for them -- and increasingly in the marketplace, at work and in other public arenas.

Cultural Creatives are careful consumers -- and experiential consumers, they like to "kick the tires," learn from others, find out how and why others are using products and services. They want the whole story on products and services. They get their information from other people, print and radio, but are low TV users (they don't see people like themselves on TV). They desire integrity, authenticity and quality (see Figure 4).

Figure 4: Cultural Creatives as Consumers

Information Junkies
Cognitive Style: Scan / Explore / Develop Big Picture
Print and Radio, not TV
Need Good Story
Careful Consumers
Technology Moderates
Home as a Nest
Desire for Authenticity
Experiential Consumers
Big Purchases (Home, Car) Symbolize Values
Holistic Everything

The key products Cultural Creatives seek reflect their core values and are the key products of socially responsible businesses -- natural food, natural body care products, eco-travel, wellness health care, education and workshops, arts and culture, values-based investments services (see Figure 5).

Figure 5: Cultural Creatives’ Key Products

Arts and Culture
Education and Workshops
Quality Food / Natural Food
Natural Body Care
Personalization of Home
Travel
Alternative Health Care
Wellness Health Care (e.g. Massage)
Psychotherapy and Counseling
Investment Services (Values Based)

Whole Foods is an example of a company that understands and reaches the Cultural Creative consumer. Compare a Whole Foods store to a mainstream grocery such as a Safeway, and you'll get an immediate experience of the difference between the Cultural Creative and Modernist paradigms in the business world.

Market Trends: Growth Opportunities

Other recent market studies corroborate the Cultural Creatives trend. Kaagen Research Associates identified a segment of 50 million Americans as "socially responsible" in their purchasing and investing activities. In the food purchasing category, The Hartman Group found a "new green mainstream" of at least 45 million Americans.

The growth of key Cultural Creative products and consumer practices are showing up in other market surveys around the country. The sales of organic food are growing at 20 - 25% per year, while the food industry itself is growing at 3- 5% annually. The social investing market has more than doubled in two years, now representing over $1.2 trillion. At least 84% of Americans would pay more for clothes made without sweatshop or child labor. (See Figure 6).

Figure 6:
Growth Opportunities Reflect Trends

Organic food product sales growing at 20% per year.¹
Social investing growth from $639 billion to 1.2 trillion in 2 years.²
Hemp industry projected to double or triple in two years from $100 million.³
When price and quality are equal, 76% of consumers would switch brands or retailers if a company is associated with a good cause.⁴
59% of Americans would like to change their investments to support environmental concerns.⁵
84% of Americans would pay more for sweatshop-free and child labor-free clothing.⁶

Market Trends: Cautions

These same studies also provide insight into what it takes to reach this market: A values-based approach is necessary but not sufficient. Businesses must still satisfy the Cultural Creative consumer's core purchase criteria.

Indeed, several studies show that the social or environmental characteristics of the product are the most important purchasing criteria for only about 5 - 10% of this market. The Hartman Group calls these the "True Greens." The True Greens will pay more and go way out of their way to purchase responsible products from responsible companies. Many socially responsible businesses are limiting their market to the True Greens, when there is a much larger market out there -- the new mainstream of the Cultural Creatives.

For the rest of the Cultural Creatives market, businesses must first reach them with the core purchasing criteria for the product (i.e. price, quality, appearance, taste, availability, convenience) and then include the social and environmental message.

Furthermore, businesses must understand which social or environmental message works with which product. For example, the Hartman Group found that for many (but not all) food products, pesticide-free was the most important environmental message. Other environmental messages, such as chemical-free, risks to farm workers and soil erosion were less effective.

In short, for the socially responsible business marketing to the Cultural Creatives, sales growth requires both satisfaction of the core purchasing criteria for the particular product and the communication of the social or environmental message.

Market Trends: Lessons Learned

It’s clear that these and other social trends are showing that the time for socially responsible business is now. Market trends show a growing market for socially responsible businesses and products.

There is a growing segment of Americans, the Cultural Creatives, who now number between 40 - 50 million people and are ready to act on their social, environmental and spiritual values. They desire to integrate these values into their everyday decisions, purchases and investments.

Socially responsible businesses are uniquely positioned to deliver on the core values of this segment of Americans. The Cultural Creatives are clearly the target customers for socially responsible businesses.

This market is larger and stronger than many socially responsible businesses have measured. Many socially responsible businesses are targeting just the "True Greens," which represent only about 5% - 10% of this market. The large and growing size of the entire Cultural Creatives market, the market's interest in integrating its values into purchasing decisions, and the relatively small market share of most socially responsible businesses and products mean that there is an enormous market potential for socially responsible businesses.

However, the market is fragmented and does not yet share a common language or identity. Careful market segmentation and research is required to reach it successfully.

Market success depends on satisfying consumers core purchase requirements and communicating the larger social and environmental message. No one message works -- there's no magic set of words. However, when price and quality are comparable socially responsible businesses will increasingly have the advantage.

As Harvey Hartman, president of the Hartman Group put it: "The 'green' consumer is now mainstream. There is significant market potential for earth-sustainable products. It is not merely a market niche. It is a market that is here to stay and is still untapped."

Sources

1. American Demographics
Ray, Paul H. "The Emerging Culture." American Demographics. February 1997.
2. The Hartman Group. The Hartman Report, Food and the Environment: A Consumer's Perspective, Phase I. Bellevue, WA. 1996.
3. The Harwood Group, prepared for the Merck Family Fund. Yearning for Balance - Views of Americans on Consumption, Materialism and the Environment. Takoma Park, MD. 1995.
4. Ray, Paul H. The Integral Culture Survey: A Study of the Emergence of Transformational Values in America. Institute of Noetic Sciences, Sausalito, CA and Fetzer Institute, Kalamazoo, MI. 1996.
5. Kaagan Research Associates. Survey. November 1996.
6. Social Investment Forum. Report. November 1997.
7. Cone/Roper
8. Walker Research