CONSUMERS' BUYING BEHAVIOR TOWARDS GREEN PRODUCTS: AN EXPLORATORY STUDY

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2 Int. J. Mgmt Res. & Bus. Strat Collins Marfo Agyeman, 2014 ISSN X Vol. 3, No. 1, January IJMRBS. All Rights Reserved CONSUMERS' BUYING BEHAVIOR TOWARDS GREEN PRODUCTS: AN EXPLORATORY STUDY Collins Marfo Agyeman 1 * *Corresponding Author: Collins Marfo Agyeman sircollins28@gmail.com Over the past few years, the demand for green products in Indian has been growing significantly due to the increased interest in the environment. Consumers today are increasingly thinking green and are willing to pay more for environmentally friendly products. The increasing numbers of consumers who prefer and are willing to buy these products are subjected to the buying process. Consumers have different buying behaviours and these behaviours are constantly changing as a result of the availability of best alternatives to choose from. Products are chosen for numerous reasons. Overall, the buying process is extremely fast-paced today. Hence, the present study is conducted to explore the extent of the impact of consumers buying behaviour towards the marketing of green products in Kancheepuram District. The study investigates the relationship between variables that affect consumers buying behaviour for green products and identifies the price levels consumers prefer to pay for green products in the district. An attempt has also been made to examine the factors that affect the green products buying behaviours of the consumers. Convenience sampling method was used to select 200 respondents living in the district and who make purchases for the products. The primary data was collected from the respondents with the help of pre-tested structured opened and closed-ended questionnaires. In pursuance of the study s stated objectives, the formulated hypotheses were subjected to regression and chi-square analyzes. The findings of the study reveal that there is significant relationship between the variables which affects consumers buying behaviour for green products. Similarly, the factors affecting the consumers buying behaviour have major implications on purchasing decisions.green marketers can therefore understand, identify and design marketing mix strategies to appeal to the preferences of the market segments for green products. Keywords: Consumers' buying behavior, Green marketing, Environmentally friendly products, Green products INTRODUCTION Due to the increased importance of green marketing to market success, firms continue to launch various forms of green packaging programs through the introduction of recyclable and reusable packages. Green marketing is 1 Faculty of Management, SRM University, Nelson Mandela Hostel (NRI Block) Room 1004, Kattankulathur, Kancheepuram District, , Chennai, Tamil Nadu. 188

3 considered as one of the major trends in modern businesses (Kassaye, 2001). Today, environmental or green marketing, a strategic marketing approach, is a recent focus in business endeavours (Ottman, 1998). Consumers are therefore, becoming more sensitive in their environmental attitudes, preferences, and purchases (Sarigöllü, 2009). The desire of consumers to purchase eco-friendly products and services is rising. Many are more aware of environmental issues and consequently choose products that do not damage the environment over less environmentally friendly products, even if they cost more. Firms today are faced with consumers who are environmentally conscious when making a purchase. Environmentally preferable products are sometimes more expensive to purchase than other alternative products. Green consumers have been shown to be willing to pay a higher price for environmentally friendly products (Laroche et al, 2001; Peattie, 2001), which is a huge opportunity for companies as well as governments looking to make eco-friendly policy changes. Thus, the increasing number of consumers who prefer and are willing to buy ecofriendly products are creating opportunity for businesses that are using eco-friendly or environmentally friendly as a component of their value proposition. Businesses that offer products which are manufactured and designed with an environmental marketing mix have a long term competitive advantage. A better understanding of consumers buying behavior will allow businesses to acquire more market-applicable approach to sustain in the competitive market. Behavior has a strong influence in terms of consumer purchases. They are the main triggers in the consumer purchasing process and also influence the perception of a product. This complicated process enables businesses to attract new consumers and adapt their products or services according to their needs and wants or change consumers behavior towards their products or services. Consumers tend to reduce their impact on the environment by their purchasing decisions. There are various factors that affect the buying-decision process of consumers. A number of Researchers have identified many factors as influencing this process including; environmental knowledge (Mostafa, 2006), perceived product price and quality (D Souza et al., 2007), company s environmental reputation (Schwepker and Cornwell, 1991), environmental concerns (Phau and Ong, 2007) and credibility of environmental advertising (Thøgersen J, 2000). It has become very essential to know the factors that create the desire of consumers to purchase a product. Hence, the present study contributes to the field by investigating and exploring the extent of the impact of consumers buying behavior towards the marketing of green products. LITERATURE REVIEW According to Mostafa (2007), green purchase behavior refers to the consumption of products that are benevolent or beneficial to the environment, recyclable or conservable and sensitive or responsive to ecological concerns. Clem (2008) reveals that going green reflects a social consciousness around saving and advancing the Earth s natural resources, preserving and protecting them for the sake of civilization. Consumers are becoming more and more aware of environmental issues and this has increased the demand for ecological products. If 189

4 consumers have a favourable attitude toward greening environment, they are more inclined to purchase green products. The continuous awareness of environmental problems may in turn change consumers attitudes and purchase intentions as well. Consumer purchase intention has been an important concept in marketing literature. Previous studies have exposed that consumer with intention to buy products exhibit higher actual buying rates than those customers who demonstrate that they have no intention of buying (Brown, 2003). Blackwell et al. (2001) also support this by indicating that purchase intentions represent what consumers think they will buy. Furthermore, behavior towards a particular object is approximated by an intention to perform that behavior (Malhotra and Mccort 2001). Thus, purchase intention positively affects the probability of a customer decision that he will buy green products. Environmental concerns play an important role on consumers intention to purchase green products. Thus, environmental concerns are not the only factor for the consumers to purchase environmentally friendly products. There are other factors that lead to the purchases. Green consumers have been shown to be willing to pay a higher price for environmentally friendly products (Laroche et al, 2001; Peattie, 2001). A high price of green product is an indicator of environmental performance, because less polluting products are more costly to produce (Mahenc, 2008). A study conducted by D Souza et al., (2006) contrary reported that generally, perception of green products is negatively associated with customer s intention to purchase them if they are of higher prices and low quality in comparison to traditional products. Green product s quality is also a concerned factor for most consumers. Green consumers generally trust on these brand and are not ready to compromise on quality. As there is an expectation on the part of customers that all products offered should be environmentally safe without a need to sacrifice quality, businesses must enhance green product quality as well as focus on environmental benefits of a product, and share these aspects with customers in order to achieve the recognition in the market (D Souza et al, 2006). Hence, these reveal that traditional product characteristics such as brand name, its price and quality are still the most important ones that consumers considered when making purchasing decision (Gan et al, 2008). Other studies have indicated that many consumers are unwilling to forgo essential product benefits during their purchase decision. So therefore, green products must also perform competitively not only according to environmental aspects, but also on the basis of other important product characteristics for instance convenience or durability (Diamantopoulos et al, 2003). Consumers choice for green products can be heavily influenced by the packaging too. Packaging attributes can persuade consumers to purchase the product. According to Dantas et al., (2004), packages and labels have only a few seconds to make an impact on the consumer s mind; during that time, it must catch the consumer s eye, and convince the shopper that it is the optimum option on the shelf (Rowan, 2000). Based on the review of literature, the following factors have been chosen for this study as factors that affect consumers buying behaviors for green products; 190

5 Price Environmental concerns Quality Brandname Convenience Durability Packaging OBJECTIVES OF THE STUDY The research objectives addressed in the present study are; To investigate the relationship between the variables that affect consumers buying behaviors for green products. To examine the factors that affect consumers buying behaviors for green products. To identify the price levels consumers prefer to pay for green productsin the district. HYPOTHESIS FOR THE STUDY In exploring the relationship between consumers buying behavior and green products, the study addressed the following hypotheses; H0:Consumers buying behavior has no relationship with purchase decisions of green products. H1:Consumers buying behavior has a relationship with purchase decisions of green products. METHODOLOGY The present study utilizes the exploratory research methodology to explore the extent of the impact and establish relationship between consumers buying behavior towards the marketing of green products in Kancheepuram District. The population for this study was all consumers of the market who make the purchases of green products. Convenience sampling method was adopted to select the total sample size of 200 respondentsconsisting of 73 males and 127 females living in the district. Both the primary and secondary data collection methods were considered. However, primary data was collected from the respondents with the help of pre-tested structured opened and closedended questionnaires. Primary data was complemented with secondary data sources such as publications on the topic from journals, magazines, and internet. The responses of the measurement were scored using a 5- point Likert scale. The measurement items of the variables were created based on the literature review. Regression and chi-square analyzes were used to establish the relationships that exist between the hypotheses. Analyses of data and testing of hypotheses were performed using SPSS version 17. The analyses have been in conformity with the objectives and the hypotheses of the study. The data collection period for the study was undertaken from September 2013 to December RESULTS AND DISCUSSION The Table 1 shows majority of the respondents (63.5%) being Females and can be found in the Age category of years (32.0%). Further, most of them (41.0%) are Degree (First /Masters/ PhD) holders in terms of Educational Qualification and are Government Employees (27.5%). Lastly, in terms of Monthly income, (38.0%) they earn above Rs. 20,000 per Month, which is the highest earning category. 191

6 Table 1: Demographic Characteristics of Respondents Demographic Factors Labels n=200 % 1. Gender a. Male b. Female Age a years b years c years d years e years f. 58 years and above Educational Qualification a. None 8 4 b. Secondary c. Diploma d. Degree (First / Masters / PhD) Occupation a. Student b. Private Employee c. Government Employee d. Professional Monthly Income a. Below Rs. 5, b. Rs. 5,000-9, c. Rs. 10,000 14, d. Rs. 15,000 19, e. Rs. 20,000 and above The Relationship Between Variables Affecting Consumers Buying Behaviors for Green Products The Regression coefficient R =.973 or 97.3% means that correlation between dependent variable and independent variables is positive. The coefficient of determination R 2 =.946 indicating that 94.6% of variation in dependent variable is explained by independent variables. The F-test value of is significant because the significance level is =.000 which is less than This also implies that the correlation between dependent variable and independent variables is statistical significant and the regression model is valid. As shown in the above stepwise regression summary table, it is clear that among all the seven factors affecting consumers buying behavior, they are positively related with the purchase of green products. Hence, the researcher rejects the null hypothesis and concludes that there is sufficient evidence, at the 192

7 Table 2: Model Summary of Consumers Buying Behaviour Vs. Green Products Model Summary Model R R Square Adjusted R Square Std. Error of the Estimate a Note: a. Predictors: (Constant), Packaging, Environmental concerns, Brandname, Quality, Convenience, Durability, Price ANOVA b Model Sum of Squares df Mean Square F Sig. 1 Regression a Residual Total Note: a. Predictors: (Constant), Packaging, Environmental concerns, Brandname, Quality, Convenience, Durability, Price; b. Dependent Variable: Purchase of Green Products Coefficients a Model Unstandardized Coefficients Standardized Coefficients B Std. Error Beta t Sig. 1 (Constant) Price Environmental concerns Quality Brandname Convenience Durability Packaging Note: a. Dependent Variable: Purchase of Green Products 5% level of significance, that there is a strong positive relationship between consumers buying behavior and purchase of green products. From the Table 3, the results of Chi-square tests for all the hypotheses are in significant level. The chi-square values are greater than 0.05 significant levels. Therefore, the null hypothesis is rejected and alternative hypothesis is accepted at 5% significant level. This shows a positive association between consumers buying behavior and purchase of green products. Factors Affecting Consumers Buying Behaviors for Green Products From the review of literature, some major factors affecting consumers buying behaviors for green products were selected and respondents were asked to indicate those factors which affect them most. The following shows their responses: 193

8 Table 3: Chi-square Test Results of Consumers Buying Behaviour Vs. Green Products Research Hypotheses Chi-Square Value df Asymp. Sig. (2-sided) Results Price a Supported Environmental concerns a Supported Quality a Supported Brandname a Supported Convenience a Supported Durability a Supported Packaging a Supported Figure 1: Factors Effecting Consumers' Buying Behaviors for Green Products Table 4: Consumers Buying Behaviors Frequency Percent Valid Price Environmental concerns Quality Brandname Convenience Durability Packaging Total It can be seen from the Figure 1 and Table 4 that according to 36.5% of consumers, Price is the major factor that affects their buying Figure 2: The Price Consumers Prefer to Pay Green Products behaviors. This is followed by Quality (17%), Environmental concerns (16.5%), Packaging (12.5%), Brandname (8%), Convenience (6%) and lastly, Durability (3.5%). From the above, it is found that when it comes to purchase of green products, price, quality, and environmental Table 5: Preferences of Consumers to Pay for Green Products Frequency Percent Valid Very Costly Costly Moderate Cheap Very Cheap Total

9 concerns are still the key factors influencing their purchase decisions. The Price Levels Consumers Prefer to Pay for Green Products The respondents were asked to indicate their preference for the price of green products for which they are ready to pay for. The results are represented below: From the Figure 2 and the Table 5 above, 32.5% of the respondents hold that the prices of green products should be very cheap and also 32% prefer cheap green products. Thus, they are willing to pay more for those products which are neither costly nor very costly. CONCLUSION AND RECOMMENDATIONS This study was conducted to investigate the relationship between the variables that affect consumers buying behaviors for green products, to examine the factors that affect consumers buying behaviors for green products, to identify the price levels consumers prefer to pay for green products in the district and in summary, toexplore the impact of consumers buying behavior towards the marketing of green products in Kancheepuram District. The collected data was subjected to regression and chi-square analyzes. The results suggest that a large number of consumers in the selected areas value the environment and have a typical buying behavior. The consumers prefer green products and expect to pay a lower price for them. Consumers are willing to buy eco-friendly products, but not to pay higher prices. This indicates green product awareness among consumers. As consumers are aware and concerned about the green products, it creates an opportunity for developing green marketing focusing on more consumers. Overall, this study clearly identified a positive relationship between the variables or factors which affect consumers buying behavior for green products.consumers buying behavior acts as a predictor and have a direct influence on the decision process when purchasing a green product. The results provide reasonable support to all the hypothesized relationships. It was also identified that while consumers have positive behavior towards purchasing green products, when it comes to actual purchase, price, environmental concerns and quality are still the key factors influencing their purchase decisions. After having undertaken this research, based on the findings of the study, the following recommendations are given; The researcher noted that more in-depth follow-up investigations would be necessary to further advance understanding of the consumer. Further research in this area needs to address what influences consumers attitudes towards green purchases as this would provide the true decision-making criteria for manufacturers, businesses and marketers. Green marketers can therefore understand, identify and design marketing mix strategies to appeal to the preferences of the market segments for green products at suitable price levels and also consider environmental and quality aspects in order to attract more consumers. Hence, green products must perform competitively as there is a scope for eco-friendly marketers to capture this market for long term growth. 195

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