Half of Americans say they want to buy green products, but don't, according to a Nielsen Consumer Insight report. As the market becomes more crowded and complex, consumers also have become more sophisticated. While the payout for successfully launching a new product as green can be substantial, getting there requires a unique approach.

A Wealth of Opportunity
There's a wealth of opportunity with green products that remains untapped, says the report, entitled "Winning at Green Innovation," by Robert Mooth, VP, Client Consulting, Nielsen BASES. The Natural Marketing Institute (NMI) estimates that the size of the green marketplace (defined here as products that are organic, natural or have an environmentally friendly benefit) is expected to reach $420 billion by 2010. In addition, hundreds of certification programs now offer 'eco-labels' for green products. Yet, evidence shows that there is still room for growth. The question is: How can marketers satisfy the consumer who aspires to buy green with innovations that also rationalize with a stable of 'traditional' branded products?

Green Product Development
Successfully developing and positioning a new product as 'green' can present different challenges from traditional new product launches. In addition to having a compelling consumer proposition, it's also necessary to redefine competitors (are they green or traditional?), account for new pricing dynamics, adapt marketing communications tactics, and understand a new group of target consumers.

The payout, however, can be substantial. Nielsen BASES and NMI experience shows that green products generate consumer interest and have an easier time standing out from the competition. And while line extensions to major brands are often highly cannibalistic, green products can offer higher-than-normal incremental growth. As an added bonus, green products frequently command a premium price, giving manufacturers an opportunity to build profitability by line extending without being locked into line pricing.

LOHAS Consumer Model
NMI has interviewed U.S. consumers for their attitudes and behaviors toward sustainability and environmental concerns every year since 2002. From this knowledge, the LOHAS (Lifestyles of Health and Sustainability) segmentation model has been developed that classifies five kinds of consumers when it comes to green purchasing.

The five LOHAS segments as defined by NMI include:
LOHAS (17 percent): Active environmental stewards dedicated to personal and planetary health. These are the heaviest purchasers of green/socially responsible products and the early adapters who influence others heavily.

Naturalites (17 percent): Motivated primarily by personal health considerations. Tend to purchase more LOHAS consumable products vs. durable items.

Drifters (24 percent): While their intentions may be good, drifters follow trends when it's easy and affordable. They are currently quite engaged in green purchasing behaviors.

Conventionals (26 percent): Pragmatists who embrace LOHAS behavior when they believe they can make a difference, but are primarily focused on being very careful with their resources and doing the 'right' thing because it will save them money.

Unconcerned (16 percent): Focused on getting by, these consumers are either unaware or unconcerned about the environment and societal issues, mainly because they don't have the time or the means.

Green: More than a Niche
Many of the earliest entrants into the green segment were niche items due to a narrow consumer base, targeted benefits, premium pricing and limited availability. Today, however, green has become mainstream in many categories. While nearly 20 percent of consumers fall into the LOHAS 'environmental steward' category, more than 60 percent have at least some interest in green, and are willing to try products that are relevant to their needs.

Brand Identity
Branding is, of course, one of the primary considerations for green initiatives. Many of the early entries into the green segment were built around new brands to compete credibly. As consumer awareness and interest in green has evolved, mainstream brands have attempted to play in the green space as well. In fact, most consumers show a clear preference for buying green products from traditional brands. Even the LOHAS consumer segment is open to buying green products from established brands.

Getting Beyond 'Niche'
To win at green, appealing to the LOHAS consumer is typically a critical first step, but ultimately, mass market success comes to those with broad appeal. New green product initiatives that have legs demonstrate similar growth potential with LOHAS consumers, as well as consumers in other segments.

Green products often have a dual communication challenge -- convincing consumers that the new product delivers on both its primary benefit as well as its green promise. Some consumers will need reassurance on the core promise, while others will need to be convinced that it is truly green. Different segments will likely respond to different messages and features, so these choices are critical.

Few Consumers Compromise
After paying a premium for most green products, most consumers are unwilling to make concessions on product performance. Post-use responses to green products in the Nielsen BASES Database indicate that consumers are nearly twice as likely to suggest that green foods improve their taste and that green household products improve their efficacy, relative to their feedback for traditional products. When trying a green household product or food for the first time, some triers may well be hypersensitive to aspects like taste and effectiveness. Regardless of ingoing expectations, it should be clear that manufacturers cannot afford to lower the bar, as consumers are unlikely to make repeat purchases for items that sacrifice performance for green benefits.

The Right Target
While the weakening economy shows signs of slowing the growth of green, Nielsen sees the longer-term green shift persisting. Innovation in green will continue to be an area that grocers and manufacturers can leverage to differentiate themselves from the competition. Winning at green starts with relevant product ideas, but breaking through to a broad audience likely requires a more sophisticated targeting and communication strategy. Making thoughtful choices in this area could represent the difference between an initiative being a 'nice little idea' or becoming the next big thing.