Do Consumers Really Go for Green?
The market for green consumer goods has held steady, even through the recession. Green electronics, including those with displays, appear to be an important part of that market into the future. But determining which types of green electronics will sell, and why, is far from an exact science.
by Jenny Donelan
HOW IMPORTANT is environmental friendliness when it comes to the purchase of a product? Judging from the proliferation of "green" items for sale – from planet-friendly paper towels to hybrid cars to mobile phones made from recycled plastic – the answer would seem to be "very important." But are such offerings more a nod to product differentiation than a testament to the concerns of companies and customers for the planet? Do consumers really care about buying a television that uses less energy when they can buy a more power-hungry model for less money? The answer is yes – and no. The underlying reasons why people make purchases of any kind are, as advertising agencies have known for years, as much based on emotion as practicality.
People buy green for many reasons: to save money, to make a statement, to act in accordance with their lifestyle, to keep themselves and their families safe – or any combination of these and more. The lifestyle factor is probably the easiest to predict for a certain segment of the population. These are the people who are almost always going to make the "environmentally correct" choice, and they tend to be educated with regard to what that is. For example, most of the televisions on sale at Best Buy stores in the U.S. carry the label for complying with current Energy Star regulations. But the labels, or lack thereof, are not always a point for buyer comparison. As Chris Curran, a Magnolia Home Theater specialist at Best Buy in Dedham, Massachusetts, puts it, "I wouldn't say that a lot of people pay attention to it, but there's always a handful that do."
Saving money by buying green resonates with just about everyone, but customers need to be convinced of the payoff. Replacing an elderly refrigerator is an obvious wise move, for example. If you own a large side-by-side that was built between 1980 and 1989, you are probably paying about $250 a year to run it. If you were to replace it with an equivalent new Energy Star model, your electricity costs would plummet to about $60 a year. You would save nearly $1000 over a 5-year period.1 It is true that some individuals have trouble thinking that far ahead, and certainly there is the matter of having to pay for the new refrigerator up front. (And once you do take the plunge, the installer may explain that you will be lucky if it lasts 5 years, but that's another story.) In general, most consumers understand that large, old appliances gobble electricity. Large TVs, however, do not trigger that kind of recognition. People are not accustomed to thinking of TVs as potential energy hogs, and they are not as likely to shop accordingly – at least not yet.
As the TV page on the Energy Star Web site notes, "TVs are getting larger. In fact, some of the largest, high-resolution direct-view TVs (versus rear-projection products) can use as much electricity each year as a new, conventional refrigerator, or roughly 500 kWh, every year." 2 Energy Star is a joint program between the Environmental Protection Agency and the U.S. Department of Energy that was introduced in 1992 to promote energy-efficient products and practices. Its site also states that Energy-Star-qualified TVs use, on average, 40% less energy than non-qualified units. Even among the approximately 730 qualified LCD, plasma, and other models listed as having met the requirements, energy usage varies a great deal, with display size being the surest predictor. 19-in. LCD TVs from one major manufacturer, for example, consume between 49 and 58 kWh/year. 47-in. models from the same manufacturer range from 132 kWh/year to well over 200 kWh/year, and the company's 60-in. unit consumes 367 kWh annually. In stores, qualified TVs come with basic Energy Star labels earned on a pass/fail basis, with no ratings, but interested buyers should consult the spreadsheets available in both PDF and Excel formats on the Energy Star TV pages.2 kWh consumed per year are listed for each model, as well as many other specifications, including screen resolution, power consumed in sleep mode, and luminance in default mode as shipped.
Making a statement is yet another motivator for buying green. Earlier this year, the Journal of Personality and Social Psychologypublished a widely circulated article, "Going Green to Be Seen: Status, Reputation, and Conspicuous Conservation," which proposed that many individuals buy lower performing, higher priced products for the sake of showing that they care, and perhaps also to show that they can afford to care.3 One of the authors' primary examples is the highly successful Toyota Prius, a hybrid gas–electric car that is less expensive to fuel and has lower emissions than many cars, but often costs more up front than a comparable well-performing, conventional yet still fuel-efficient car. Because a car in particular makes a public lifestyle statement, the authors suggest that "Prii" can serve as "conspicuous displays of altruism" that convey social status on the buyer. Their research even suggests that many green products that do not come at a price premium are less attractive to buyers (from this standpoint, an inexpensive, non-motorized push lawnmower has less appeal than a more expensive, gas-powered ride-on model) and that people tend to buy fewer green products for private use when there is no possibility of gaining status through doing so. In the case of the push lawnmower, however, very few people would be willing or able to mow an acre of grass with one. Some personal sacrifices are just too great, even if the entire neighborhood is watching. An exception to the private use trend would be food and household cleaning products, many of which are perceived to present a potential hazard to users, who may opt for more "natural" or organic alternatives, particularly where offspring are concerned.
Green Sector Is Strong; Green Electronics Coming Along
Although their reasons may vary widely, many consumers are reaching for that green product on the shelf, according to a recent study from market-research-firm Mintel International Group. Mintel's February 2010 report, "Green Living – U.S.," found that the green market, which had expanded rapidly for several years, went essentially flat in 2009; in other words, it outperformed the overall economy at the time. Mintel forecasts that the market will increase in step with the economy, and, in any case, "will continue to outperform the larger U.S. consumer market for the foreseeable future." 4
According to Mintel senior-market-research-analyst Colleen Ryan, "55% of consumers claim that they are willing to pay a premium for green products in general. This number fell sharply during the recession, from70% in 2008 to 55% in 2009." As stated above, Mintel expects these numbers to recover if and when the economy does. "Of course," says Ryan, "not all of those people will follow through on their green intentions, and the number who are willing to go out of their way to figure out which brands are green is much smaller." This is demonstrated in Table 1, which shows a breakdown for the influence of green factors on major purchase decisions.
Influence of Green Factors on Major Purchases: 2008 and 2009
Green Display Products
According to the Mintel report, green elec-tronics products represent a growth area within green consumer goods overall. Many of these products contain displays. Cell phones, although small, have very short lifecycles and have thus come under scrutiny for their contribution to the e-waste stream. Major retailers such as Best Buy and Walmart now offer nationwide recycling programs, not only for phones but for many other electronic devices. But manufacturers are also looking at what goes into the products.5 Companies such as Merck, which makes many of the materials that go into displays, such as liquid crystals, have made great strides in developing more energy efficient products and processes, helping the industry overall. The average consumer, however, is not tuned in to this part of the supply chain and is most likely to be attracted by a product that is clearly labeled "green."
One example of a green product that is marketed as such is Sony Ericsson's GreenHeart line of cell phones, which features reduction or elimination of "unwanted" substances, an in-line (as opposed to paper) phone manual, post-consumer recycled plastics, and waterborne paint. All this, claims the manufacturer,means that overall CO2 emissions for these phones' "footprints" are reduced by approximately 15% over non-GreenHeart models. These phones (see Fig. 1) are streamlined but do not advertise their greenness in any obvious way.
Fig. 1: The 3G Cedar is a new member of Sony Ericsson's GreenHeart line, designed to appeal to environmentally conscious consumers. This model is set to launch in Europe in late 2010. Image courtesy Sony Ericsson.
The analysts interviewed by Information Display did not have market share figures for green phones or other green products vs.non-green versions (nor did Best Buy), but they were much in agreement that, in the future, green might figure prominently into the purchase decision for televisions in particular. "I think it [greenness] is more important for a TV because consumers expect it to have a much longer life and it, self evidently, uses a lot more materials and power," says Bob Raikes, Managing Director for display-market-research-specialist Meko Ltd. "I don't have any data on the other items [laptops, phones]," he says, "but I would be surprised if greenness was a major factor."
Of course, as previously mentioned, consumer awareness of the potential for big TVs to draw energy is currently limited. Says Ryan, "As TVs get bigger, their impact on a family's energy budget becomes substantial. In theory, this should mean that people are willing to pay a premium for efficient TVs. Energy efficiency can be a strong motivator for products that consume a lot of energy, but so far there does not seem to be much public awareness of how much energy TVs consume. Product categories where consumers have been well-educated about energy costs and savings (major appliances and cars) are the leading categories for green shopping." She continues, "TVs and other displays are now so complex, with such an array of technical features, that most consumers are confused by all of the choices. We don't have specific data on this, but I suspect that environmental issues, even ones like energy efficiency, which can have a big impact on household budgets, get lost in the noise for the vast majority of shoppers."
TVs and Energy Star
This is a situation that Energy Star has begun addressing. It collected data, for example, on consumer buying habits and awareness of Energy Star labeling for large-screen televisions for the first time in the biennial report, "2010 Energy Conservation, Efficiency, and Demand Response." Among the findings: of 676 surveyed consumers asked to report an unprompted product association with the Energy Star label, 31% named washing machines, 6% televisions, and 1% computer printers. Another interesting aspect of the Energy Star labeling – why it may not seem to matter, according to DisplaySearch analyst Norbert Hildebrand – is that more and more televisions are meeting the current Energy Star requirements, so that the label has become fairly common. In fact, notes Katharine Kaplan, Team Leader for Energy Star Product Development, the EPA is preparing to propose an earlier-than-planned effective date for the 5.1 requirements, as the number of products that now meet Energy 4.1 requirements is large. "Anecdotally," says Kaplan, "it's from 50 to 80% of the market." After 5.1 kicks in, presumably fewer TVs will sport Energy Star logos for a time, until everyone catches up, at which point the requirements will become harder to meet again. (For more about Energy Star 5.1, see this month's Industry News section.)
One of the reasons that companies are so far ahead of the game, notes Hildebrand, is that they are finding it behooves them to keep designing to meet future requirements. However, he cautions: "From a display manufacturer's point of view, this development is not gradual but in stages. For example, LCD backlights can become very efficient as you transition to LEDs from CCFLs. But what was easy this time may not be as easy for the next level of Energy Star requirements if no new technology [such as LED backlighting] comes to the market to allow an equivalent increase in efficiency." In other words, the schedule might be moved up but it could take the industry longer to catch up to the next set of requirements. Even so, catch up they will, eventually. And even if that means regulators such as the EPA in the U.S. and the EU in Europe keep raising the bar, everyone wins – the environment, the consumer, and, eventually, the company that is farthest along the way toward meeting or exceeding regulations – especially if the consumer can be convinced of the value of greenness.
With regard to that value, if customers cur-rently do not base their display-product buying decision on environmental friendliness, what do they base it on? "It depends on which consumer we're talking about," says Hildebrand. "A certain percentage will do environmental factors, but price is probably the larger." Raikes believes the same thing. "I would say price, image, and energy consumption – in that order." In other words, consumers look for the best image quality they can get at their target budget price. Green is important, but low-power displays will not be successful if they do not look good. If a company can create a TV that combines great imagery and efficient operation at a reasonable price, it will command a powerful share in the marketplace.
1Calculations based on Energy Star "Refrigerator Retirement Savings Calculator" at http:// www.energystar.gov/index.cfm?fuseaction= refrig.calculator.
3V. Griskevicius, J. M. Tybur, and B. Van den Bergh, "Going Green to Be Seen: Status, Reputation, and Conspicuous Conservation,"Journal of Personality and Social Psychology 98, No. 3, 392-404 (2010); http://www.csom. umn.edu/assets/140554.pdf.
4"Green Living – U.S. – February 2010," Mintel International Group Limited.
5"Green Living – U.S. – February 2010," Mintel International Group Limited. •