Consumer's Wtp Towards Environmental Friendly Goods

In nowadays, more and more evidence shows that pollution on neutral environment and loss of the Earth’s natural resources may pose a threat to human beings. Everything we do will affect the natural environment. Air quality and water quality has deteriorated, serious landscape pollution appeared, and effluent water problem and noise problem is becoming more serious (Gevert, 2007). More and more people in the world concern about the pollution and get into the environmentally conscious marketplace.

In Hong Kong, Hongkongers first learnt the concept of green consumerism in the 90s. Two opinion polls by the government in 1992/93 and 1995 found that 55% and 47% Hongkongers think that they are willing to pay more for environmentally friendly goods, respectively (Environmental Campaign Committee, 1995). In 1992, Chung and Poon (1994) did a survey of 403 Hong Kong consumers and said that 71% survey candidates accept to pay 5 to 15 percent more to buy an environmental friendly products.

Although there are many Hongkongers are willing to pay more for the goods, it is not easy for the marketing teams to identify them. The reason we choose this topic is that the deeper we know the factors affecting consumers to pay more for environmental friendly goods, the better the marketing teams to design the marketing strategies to promote the goods to the target consumers. Also, the government should help to build up a society that green consumerism is a socially desirable lifestyle.

Besides, consumers’ willingness to pay (WTP) for environmental friendly goods is important to be calculated as it is useful for marketing teams to set the compatible price of environmental friendly goods. The consumers will not be overcharged and or the producers will not suffer losses as a result.

To have a better understanding on this topic, I will firstly define WTP and environmentally friendly goods. WTP refers to the premium price that consumers willing to pay for a product or service. Environmentally friendly goods refer to goods consist of at least one of following elements: biodegradable, free-of-chemical, natural, organic and sustainable. Vining (1990) suggested that product with following three elements are environmentally friendly goods: (i) sold with little packaging or without packaging, (ii) made from ingredients from the natural, and (iii) made without produced any pollutants. In 1997, an author from The E-Factor, Joel, stated "At its essence, being 'green,' for all the many things it entails boils down to two basic goals: reducing waste and maximizing resource efficiency"

On the bases of the study background and problem statement the following research questions can be formulated as follow:-

1. Gan et. al. (2008) found that consumers who are environmentally conscious are more likely to purchase green products. Are there any factors that influence consumer’s willingness to pay environmentally friendly products? (factors that impacts of customers’ WTP )

2. What shall be included in the questionnaire and what shall the format and sequence of the questions? How can you attract more people to cooperate in your survey?

Next, I am going to talk about the details of the essay about the factors that affect the consumers to pay a higher price to buy environmentally friendly goods in different perspective.

While I look into different academic paper, I discovered that there are four factors that may affect consumers’ WTP to buy environmentally friendly goods, which are attitude, behavior, knowledge and value. All of the factors can be integrated with the theory of reasoned action (Ajzen and Fishbein, 1980; Fishbein and Ajzen, 1975), which suggested that one’s behavior can be best predicted by exanimate the “intention” level. “Intention” is affected by both internal and external control factors, and show the consumer’s attitude toward subjective norms and behavior. As a result ‘Intention’ is the “cognitive representation” of the consumer’s wants and demands of goods. The theory also suggested that when an individual has a positive attitude and a supportive social norm, he or she will has a higher intention to have the behavior if the person thinks that he or she has a greater control over the individual’s own behavior. According to the theory of Kotchen & Reiling (2000) and Cooper et al. (2004), WTF is link to an individual’s attitudes and beliefs.

As I have mentioned, value, attitude, behavior and knowledge (inputs) and intervening variables will affect one’s decision on buying environmentally friendly goods. I have drew a figure to explain how these factors affect individuals to make buying decisions for environmentally friendly goods.

FIGURE

Values

Triandis (1993) suggested that “individualism” and “collectivism” are two great factors that affect consumers’ buying behavior. (i) Individualism means how much an individual focus on the independent self, which means how the person depends on his or her own only. Individualism people take part in voluntary associations and they will remain distinct persons, even they are part of a group. This kind of person competes with the others to gain status, which means they depend heavily on accomplishments, rather than on group memberships only (Triandis, 1993). I assum that this kind of individuals would not very conductive to environment protection nor environmental friendness. (ii) By the way, collectivism means express consideration, cooperation and helpfulness towards the groups he or she belongs to. Being collectivism means that one may put group’s benefit higher that his or her own benefit. Moreover, according to Triandis (1993) and McCarty and Shrum (1994), individuals being collectivism behaviors more environmentally friendly, and one being individualism tends to be less environmentally friendly.

Attitudes

Importance and inconvenience are the two important factors to study attutdies while studying environmentally friendly issues. According to Amyx et al. (1994) importance means does the individual treat environmentally friendly behaviors as important as themselves or his or her society. Inconvenience means the degree of inconvenient the individual’s felling to behave in an ecologically favorable fashion.

Behavior

While