Targeting consumers who are willing to pay more for environmentally friendly products

Concerns related to the environment are evident in the increasingly ecologically conscious marketplace. Using various statistical analyses, investigats the demographic, psychological and behavioral profiles of consumers who are willing to pay more for environmentally friendly products. Finds that this segment of consumers were more likely to be females, married and with at least one child living at home. They reported that today’s ecological problems are severe, that corporations do not act responsibly toward the environment and that behaving in an ecologically favorable fashion is important and not inconvenient. They place a high importance on security and warm relationshipswith others, and they often consider ecological issues when making a purchase. Managerial implications for green marketers and suggestions for future research are discussed. Concerns related to the environment are evident in the increasingly environmentally conscious marketplace. Over the years, a majority of consumers have realized that their purchasing behavior had a direct impact on many ecological problems. Customers adapted to this new threatening situation by considering environmental issues when shopping (e.g. checking if the product is wrapped in recycled material) and by purchasing only ecologically compatible products (e.g. biodegradable paint, CFC-free hairspray or unbleached coffee filters). Perhaps the most convincing evidence supporting the growth of ecologically favorable consumer behavior is the increasing number of individuals who are willing to pay more for environmentally friendly products. In 1989, 67 percent of Americans stated that they were willing to pay 5-10 percent more for ecologically compatible products (Coddington, 1990). By 1991, environmentally conscious individuals were willing to pay between 15-20 percent more for green products (Suchard and Polonsky, 1991). By 1993, Myburgh-Louw and O’Shaughnessy (1994) conducted a mail survey of female consumers in the UK to examine their perceptions of environmental claims on the packaging of clothes detergents. They found The research register for this journal is available at http://www.mcbup.com/research_registers The current issue and full text archive of this journal is available at http://www.emerald-library.com/ft The authors gratefully acknowledge the financial support of the Fonds FCAR (Quebec), and the able assistance of Isabelle Miodek. Concerns related ot the environment JOURNAL OF CONSUMER MARKETING, VOL. 18 NO. 6 2001, pp. 503-520,#MCB UNIVERSITY PRESS, 0736-3761 503 An executive summary for managers and executive readers can be found at the end of this article that 79 percent of their sample agreed to pay up to 40 percent more for a product which was identical in every respect to their own brand and which had been proven to be green. An important challenge facing marketers is to identify which consumers are willing to pay more for environmentally friendly products. It is apparent that an enhanced knowledge of the profile of this segment of consumers would be extremely useful. The closer we move to an understanding of what causes individuals to pay more for green products, the better marketers will be able to develop strategies specifically targeted at these consumers. Our purpose in this study was twofold: (1) to identify a profile of consumers who are likely to pay more for environmentally friendly products; and (2) to elaborate marketing strategies that arise from an improved understanding of the profile of this segment of consumers. Given the shifts in customer buying criteria toward environmental responsibility, corporate focus on this segment may provide a source of distinctive competitive advantage in the future. It is conceivable that at some time in the future, the idea of `̀ environmental justice’’ may be accorded a status as high as that wielded by the concept of civil rights in contemporary USA (Noah, 1994). Profiles of green consumers: a literature review Following an exhaustive review of the relevant literature, several factors that may influence consumers’ willingness to pay more for environmentally friendly products have been identified. These factors can be classified into five categories: demographics, knowledge, values, attitudes and behavior. Figure 1 proposes a theoretical framework for these factors. A review of the literature supporting the relationships posited in Figure 1 follows. Consumers’ demographic characteristics Efforts to identify environmentally friendly consumers can be traced back to the early 1970s. Berkowitz and Lutterman (1968), as well as Anderson and Cunningham (1972), were pioneers in studying the profile of socially responsible consumers. Overall, their combined results portray a highly socially conscious person as female, pre-middle aged, with a high level of education (finished high school) and above average socioeconomic status. Figure 1. Conceptual framework Corporate focus 504 JOURNAL OF CONSUMER MARKETING, VOL. 18 NO. 6 2001 In the past two decades, the results of Berkowitz and Lutterman (1968) and Anderson and Cunningham (1972) were sometimes supported, but often not. For example, recent studies found that females tend to be more ecologically conscious than men (McIntyre et al., 1993; Banerjee and McKeage, 1994). However, Reizenstein et al. (1974) found that only men were willing to pay more for control of air pollution, and Balderjahn (1988) reported that the relationship between environmentally conscious attitudes and the use of non-polluting products was more intensive among men than among women. Following Berkowitz and Lutterman’s (1968) study, Henion (1972) also thought that consumers with medium or high incomes would be more likely to act in an ecologically compatible manner due to their higher levels of education and therefore to their increased sensitivity to social problems. However, the results did not support his hypothesis: environmentally friendly behavior was consistent across income groups. Moreover, Sandahl and Robertson (1989) found that the environmentally conscious consumer is less educated and has a lower income than the average American. This brought them to conclude that income and education are not good predictors of environmental concern or purchase behavior. Early research identified the green consumer as being younger than average (Berkowitz and Lutterman, 1968; Anderson and Cunningham, 1972; Van Liere and Dunlap, 1981). Surprisingly, this trend has been reversed in the last decade and several recent studies identified the green consumer as being older than average (Sandahl and Robertson, 1989; Vining and Ebreo, 1990; Roberts, 1996). Although most findings about the impact of consumers’ demographic characteristics on their environmentally conscious behavior are contradictory (Roberts, 1996), it is clear that they exert a significant influence. However, most authors agree that demographics are less important than knowledge, values and/or attitude in explaining ecologically friendly behavior (Webster, 1975; Brooker, 1976; Banerjee and McKeage, 1994; Chan, 1999). Consumers’ knowledge or ecoliteracy Knowledge is recognized in consumer research as a characteristic that influences all phases in the decision process. Specifically, knowledge is a relevant and significant construct that affects how consumers gather and organize information (Alba and Hutchinson, 1987), how much information is used in decision making (Brucks, 1985) and how consumers evaluate products and services (Murray and Schlacter, 1990). Once again, empirical support for the influence of consumers’ environmental knowledge on their ecologically favorable behavior is contradictory. On one hand, Maloney and Ward (1973) reported no significant linkage between environmental knowledge and ecologically compatible behavior. On the other hand, Vining and Ebreo (1990), as well as Chan (1999), have shown that knowledge about ecological issues is a significant predictor of environmentally friendly behavior. Amyx et al. (1994) even found that individuals highly knowledgeable about environmental issues were more willing to pay a premium price for green products. Ecoliteracy was developed by Laroche et al. (1996) to measure the respondent’s ability to identify or define a number of ecologically-related symbols, concepts and behaviors. It was found to be correlated with some attitudes and behavior toward the environment. Ecologically compatible manner