European Applied Business Research Conference
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Can Eco-Labels Attract Buyers?
Clement S.F. Chow, Hong Kong Polytechnic University, Hong Kong
Esther P.Y. Tang, Hong Kong Polytechnic University, Hong Kong
Gerald E. Fryxell, China Europe International Business School, China
Abstract
Environmental friendly purchase behaviour covers a broad range of possible actions such as
using biodegradable materials, avoiding products with damaging contents, boycotting products,
favouring recycled materials, using refillable packaging, and so on. However such actions depend
on possessing reasonably accurate information about product alternatives. Eco-labels are meant
to convey information to consumers about the environmental implications of purchasing the
product, so that consumers who care about such effects can express their desires in the market.
This study examines the influence of eco-labels on purchase intention. Acknowledging the fact that
opinion survey can measure respondents’ environmental friendly attitudes accurately but fail to
measure their actual behaviours, a simulation of web-based shopping was used. Participants were
randomly assigned one of four possible treatments where one of them contains no eco-label and
the other three contain three different eco-label designs. It was found that the presence of an ecolabel did induce higher rate of purchase.
Introduction
With the emergence of green consumerism, businesses have been under growing pressure of producing green
products. To some manufacturers, it is not a threat but an opportunity because it suggests that products with
environmentally friendly nature would attract consumers to buy. To convey the message that a product is
environmentally friendly, marketers have been using advertising and/or packaging as the media for communication.
When packaging is used for such purpose, certain form of eco-label on product packaging certified by a third-party
program serves as a proof of environmental performance of the product. While literature suggests that consumers
respond positively to environmental claims, many of which in the form of eco-label (e.g., Chase and Smith 1992;
Hayhurst 2000; Salzman 1991; Wiltberger 1999), the true behaviours as displayed in their actual purchases have not
been fully investigated.
This research attempted to simulate a web-based shopping environment in which how the actual purchase
intention of Chinese consumers is to be affected by the presence and absence of eco-label on product packaging was
investigated. An experimental design was employed in an attempt to enhance internal validity, and considerable
effort was made to obscure the purpose of the study in order to avoid issues related to hypothesis guessing and social
desirability bias. The context of this study is important for three reasons. First, the condition of the natural
environment in China is among our greatest global concerns (Sims, 1999; World Bank, 1997). Second, China has
the world’s largest population. Consequently, the aggregated behaviour of Chinese consumers has a tremendous
potential impact on the environment. Third, the growth of ISO 14001 EMSs in China is growing exponentially to a
point that an empirical link between eco-label and purchase intention should be established.
Literature Review
Environmental protection has become an issue of both regional and global importance (e.g., Asprion, 2000;
Dunlap et al., 1993; Dunlap and Saad, 2000; Kornblut, 2001; McDaniel and Rylander, 1993). Although surveys
typically suggest that consumers would favour green products (e.g., Bhate and Lawler, 1997; Dagnoli, 1991;
Freeman and Dagnoli, 1990), actual consumer response to green marketing efforts has often fallen short of
expectations. Reasons for the gap between reported preference for green products and the actual purchase of such
products are cited in many studies (e.g., Ellen, 1994; Morris et al., 1995; Walley and Whitehead, 1994). Some of the
explanations that have been proposed include excessive price premiums for environmentally friendly products,
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reluctance to change purchasing habits, little societal pressure to conform and inability to identify the real
environmental attributes.
Most surveys in Europe and North America do indicate that consumers are becoming more environmentally
conscious (Dagnoli, 1991; Freeman and Dagnoli, 1990; Rolfes, 1990) but, relative to other considerations
(especially price), the importance of specific environmental attributes of products is much less certain. Moreover, it
is likely that cultural and economic considerations will lead to variance on this issue by region. British consumers,
for example, stated they were willing to pay more for environmentally friendly products (Bhate and Lawler, 1997;
Prothero, 1990). In the US, a telephone survey revealed that 25% of respondents claimed to have stopped buying at
least one company’s product because they believed the company was not “a good environmental citizen” (Freeman
and Dagnoli, 1990). With the notable exception of Japan, where citizens thought that environmental problems were
especially serious (McClure, 1991), in most other Asian countries, consumer interest in protecting the environment,
especially for poorer populations, is a relatively more recent and less developed phenomena. However, such
awareness may be emerging. A 1991 consumer survey in Singapore revealed that almost all respondents indicated
that they would like to know where they could buy environmentally friendly products (Shamdasani et al., 1993).
Similarly, a survey of more than five thousand citizens in Hong Kong found that more than half of the respondents
claimed to have shopped for environmentally safe products (ECCO, 1996).
One troublesome aspect of many studies on green consumerism is that the results may be method-bound.
Social desirability and other biases may lead respondents to profess to be more environmentally enlightened than
they would actually behave at the cash register. In particular, green purchasing intention is easily set aside when a
product is disadvantaged on other criteria. Two more studies (i.e., Chan and Yam, 1995; Yam-Tang and Chan, 1998)
found that Chinese people readily abandoned their environmental purchase intention in the face of incrementally
higher price and/or a modicum of inconvenience.
In summary, research has generally shown that most consumers in developed countries claim to care about the
environmental performance of products. However, in most of these studies, consumers have also demonstrated that
environmental considerations are secondary and that a preference for environmentally friendly products is manifest
only when products attain parity on more essential product attributes (e.g., price, performance and convenience).
Thus, for products where the price and performance of “green” products attain a reasonable level of parity with their
more harmful alternatives, there should be viable market segments. However, for this to occur, there has to be some
mechanism that clearly signals such environmental attributes. In addition, because some products may be modestly
beneficial to the environment in some aspects, while being highly damaging in others, it is relatively easy for
producers to erroneously exploit green consumers. For example, a producer of paper diapers can extol the virtue of
requiring less hot water than cloth diapers, while at the same time ignoring the fact that its use can lead to more solid
waste and create health problems. Consequently, consumers and the overall society would benefit from some
mechanism for ensuring the credibility of such claims.
Thøgersen (2000) cited some literature to suggest that eco-labelling is one of the most effective forms of
communicative instruments for providing timely and relevant information for consumers (Hansen and Kull, 1994;
Miljø-og Energiministeriet, 1995; Scammon and Mayer, 1993). Eco-labels seek to promote green purchase
behaviour by credibly signalling that a product is environmentally friendly. An eco-label can be defined as any
symbol appearing on product packaging informing consumers that a particular product is in some significant way
less harmful to the environment than purchase alternatives. An eco-label can address a single dimension (a Type 1
eco-label as described in ISO 14020) or multiple ones. An example of the former would be the energy-use labels
commonly found on various “white goods” (e.g., refrigerators, air conditioners, etc.). Those addressing multiple
attributes may use a “report card” approach and often seek to evaluate the product over its complete “life cycle” (a
Type 3 label). Unfortunately, increasing information content runs the risk of exceeding consumer patience and/or
capacity for interpretation. The most common approach to eco-labelling awards a “seal of approval” based on a
third party evaluation of multiple attributes (a Type 2 label).
While eco-labels have widely been used, surprisingly, little research has been conducted on the influence of
eco-labels on actual consumer purchasing behaviour. The few studies that have focused specifically on eco-labels
have tended to evaluate the labelling scheme itself, the label’s popularity or the reasons why consumers notice the
label. Manhoudt et al. (2002) studied four environmental certification schemes involving agricultural crops in the
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Netherlands. Thøgersen (2000) developed a psychological model to explain variations in consumer attention
towards eco-labels and tested the model using data collected from several EU countries. Their findings suggest that
a majority of the consumers notice eco-labels, albeit sporadically. Imkamp (2000) replicated a study done in 1989
where one of the questions sought consumers’ preferences for quality vs. ecological labels and found that
preferences for eco-label had risen from 19% in 1989 to 46% in 1998. In a very recent study, Teisl et al. (2002)
investigated the effectiveness of eco-label and its design but the study was limited to forest products using focus
groups only. In the conclusion, the authors mentioned that the focus group approach sought to develop general
insights and directions rather than quantitatively provide precise or absolute measures and that the research wanted
to trigger a more quantitative study of eco-labelling. Therefore, this study arguably addresses a need for quantitative
research in this area. Moreover, we attempted to measure the actual behaviour, rather than a reported one, of
consumers in making their purchase decision over a wide range of grocery products usually found in supermarkets.
Hypotheses
From our literature review, three broad conclusions about eco-labels seem warranted: 1) Consumers generally
profess a desire to purchase more environmentally friendly products; 2) Consumer expressed that eco-labels can
influence their purchase intention; 3) The influence of eco-labels is likely to erode rapidly should the perceptions of
other product attributes be found wanting (e.g., performance, price, and appearance). In order to single out the
effect of eco-labels, we have to bring our subjects to an experiment condition in which only one independent
variable, presence (or absence) of eco-labels, varies. Since an eco-label can be in the form of words, picture, or both,
we aimed at examining the effect of each form of eco-label on consumer purchase intention. Therefore, the study is
to test the following three hypotheses.
H1:
H2:
H3:
The presence of an eco-label in words-form induces higher purchase intention.
The presence of an eco-label in picture-form induces higher purchase intention.
The presence of an eco-label in hybrid-form (i.e. picture plus words) induces higher purchase intention.
Methodology
An experimental design was used to test these hypotheses. The subjects used for this study were university
students of Chinese ethnicity in HKSAR, China, who were requested to participate in this study as part of their
coursework. Although the use of students is often considered a liability due to legitimate concerns regarding external
validity (i.e., the ability to generalize findings to more relevant populations), this is less problematic in this study
than would normally be the case. This is because students are major consumers of many products and an explicit
effort was made to select products for this experiment that would likely be purchased by students. Two hundred and
thirty-four students participated in this study. Each was randomly assigned into one of four treatment groups of
approximately sixty people each. Given the beauty of randomisation, variation between groups could be assumed
insignificant.
In order to more realistically simulate a web-based shopping experience, shopping catalogues resembling to
web pages were distributed to subjects during regular classes. These web pages like shopping catalogues were
modelled on a major supermarket chain’s shopping website. Shopping for such items either through catalogues or
web is sufficiently popular in a Chinese community such that the subjects were familiar with this approach.
Each respondent was informed that he/she had a budget of HK$500 (~ 65 Euros) to freely spend on the
products displayed. Altogether, there were ten product categories, as follows: potato chips, batteries, tissues,
washing powder, light bulbs, cooking oil, hairspray, fruit drinks, pain reliever, and printer paper. These categories
were selected because most of them are frequent purchases of the subjects. For each product category, there were
some different brands from which to choose. The subjects were instructed to purchase whatever they would
normally choose with the money given. They were not required to purchase any particular type of product nor were
they required to use all of the money.
A control group was established where the subjects saw no eco-label in any of the products displayed. The
other three groups were presented a particular form of eco-labels in the product description boxes of some products.
One of these groups saw the words-form eco-labels while the other one saw the picture-form eco-labels, and the last
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group saw the hybrid-form (i.e. picture plus words) eco-labels. Each of these three groups was to be compared with
the control group in terms of their actual purchase of green products.
A substantial amount of effort was expended to avoid any social desirability bias that might have resulted from
hypothesis guessing. Consequently, the purpose of the study was disguised in three ways.
1) Each product had all the other usual information about it that would be included in a shopping catalogue,
such as dimensions, volume, price, and other relevant features.
2) Although the subjects chose among ten product categories, only four product categories had treatments
associated with one product choice in each category. The other six were included for the sole purpose of providing
additional shopping choices so as to further cover up the purpose of the study.
3) We employed a variety of other types of labels which were deliberately spread among all the product
categories. These additional labels referred to product attributes related to quality, various endorsements, specific
product attributes (e.g., aspirin free, vitamins added), as well as ambiguous claims (e.g., a “superbrand”).
Along with receiving the shopping catalogue, the respondents were instructed to complete an attached
shopping list to be returned to the experimenter after approximately twenty minutes. The independent variable of
this study is the presence and absence of eco-labels and the dependent variable is the total amount of money spent
on the “green” products (i.e. green purchases).
Results
The mean value of the money spent on green products in each eco-label group was compared with the mean
value of the money spent on the same items (without the eco-labels) in the control group by t-test. Each comparison
served to test one hypothesis and the results are as below:
1)
Results of control group versus words-form eco-label group:
Control
Words-form Eco-label
Mean
57.75
85.43
Standard Deviation
59.38
77.62
t-test for equality of means
t statistic
-2.109
Significance
0.037
As we can see from the result, spending on green products in the words-form eco-label group is
significantly higher than that in the control group (i.e., sig. < 0.05, mean: 27.68 higher), we can conclude
that the first hypothesis, “The presence of an eco-label in words-form induces higher purchase
intention”, is supported.
2)
Results of control group versus picture-form eco-label group:
Control
Picture-form Eco-label
Mean
57.75
84.57
Standard Deviation
59.38
72.71
t-test for equality of means
t statistic
-2.178
Significance
0.031
As we can see from the result, spending on green products in the picture-form eco-label group is
significantly higher than that in the control group (i.e., sig. < 0.05, mean: 26.82 higher), we can conclude
that the second hypothesis, “The presence of an eco-label in picture-form induces higher purchase
intention”, is supported.
3)
Results of control group versus hybrid-form eco-label group:
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Control
Hybrid-form Eco-label
Mean
57.75
99.55
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Standard Deviation
59.38
97.32
t-test for equality of means
t statistic
-2.820
Significance
0.006
As we can see from the result, spending on green products in the hybrid-form eco-label group is
significantly higher than that in the control group (i.e., sig. < 0.05, mean: 41.80 higher), we can conclude
that the third hypothesis, “The presence of an eco-label in hybrid-form induces higher purchase
intention”, is supported.
Discussion
We simulated a web-based shopping experience in an experimental design to keep track of the consumer
behaviour in terms of buying eco-labelled products, which is unprecedented among literature where studies have
mostly been done through asking consumers survey questions. Therefore, we would assert that this study makes a
methodological contribution to the debate on how green consumerism affects attitudes (i.e., the claimed behaviour)
versus behaviour (i.e., the actual behaviour). Clearly, in this area, the literature shows that there is a troublesome gap
between what consumers say they will do (i.e., choosing a product because of its environmentally friendly nature)
and how they actually behave (i.e., actual allocations of dollars in purchases). Accordingly, we used a controlled
experiment to measure actual, rather than claimed green behaviour. Although it is impossible to rule out all
possibilities of bias, we would assert that this study has come relatively closer to measuring actual purchasing
behaviour than previous work on the relationship between consumer behaviours and eco-labels. Moreover, this
study adds an element of generalizability to this body of evidence by studying the phenomenon in a Chinese
community and using a relatively youthful group of consumers who are purchasing day-to-day, relatively lowpriced, fast-moving consumer goods.
We would also assert that an effective eco-labelling program be accompanied by a consumer education
campaign aimed at raising the awareness of their power to influence product development and eco-labelling
programs. Depending on the context and on how much government backing there is for such an effort, it may be
possible to use a broad range of media to raise awareness. It is also important to provide consumers with the
necessary details about eco-labels and the accreditation process. The effectiveness of any eco-label would probably
diminish if the consumers are sceptical towards the environmental claims and/or do not trust the certification
organization (Teisl et al., 2002). Integrity is the key to success in any eco-labelling program.
Two limitations of this study warrant additional comment. First, this was a simulated shopping experience
where purchasers did not use their own money. Obviously, this is a relevant departure from how people may
actually behave. However, some marketing studies do provide some reassurance in this regard. For example, Gabor
et al. (1970) conducted an experiment to look at real and hypothetical shop situations. In their study, results of home
interviews were compared with those conducted outside the supermarket right after the interviewees had purchased
at least one common product. They concluded: “the hypothetical shop situation method, being flexible, quick, and
cheap, can provide data of great reliability where there is a high degree of effective competition between established
brands.”
Second, the use of a student sample has already been discussed. However, we might point out that the use of
students represents a trade-off between internal validity and external validity. Arguably, however, as students are
also consumers of day-to-day fast moving consumer goods, they are relevant buying decision-makers.
Conclusion
Eco-labelling has been widely accepted as a communicative instrument to convey the environmental message.
However, the effectiveness of it on consumer purchase intention has not been tested empirically. By using a
simulation of web-based shopping, it was found that an eco-label, regardless of whether it comprises of some words,
picture, or both, has positive effect on consumer purchase intention. Consequently, as many firms nowadays facing
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razor-thin margins and so high breakeven volumes, investments in green products and thus eco-labelling would
appear to provide reasonable payoffs for them. At the same time, eco-labelling also proved to be an efficient way for
policy makers to add one more brick in the wall of environmental protection. Therefore, we would assert that ecolabelling programs should be included as part of the policy mechanisms that are designed to guide consumer markets
to be more environmentally friendly. Given an established role for eco-labels in accomplishing this, it is our hope
that this study will stimulate future research into eco-labelling issues.
Suggestions for Future Research
According to the findings of this study, it appears to suggest that effect of an eco-label in hybrid-form is
higher than in any of the other two forms (i.e., mean is 41.80 higher than control group in hybrid-form versus 27.68
in words-form and 26.82 in picture-form), therefore, future research can focus on how consumer purchase intention
be affected by the verbal (i.e., words) versus visual (i.e., picture) effect of an eco-label and see how the combination
of these effects reinforces (or diminishes) the intention. Future research can also concentrate on what kind of
information to be communicated through the eco-label is most effective on consumer purchase intention. While
environmentally friendly product attributes seems to be good candidates, focus group findings also indicate that
contact information, such as toll-free telephone number or website address of the certification organization and/or
information about the standards used for the certification process all carry some interest to consumers (Teisl et al.
2002). This raises another question of what is the optimal amount of information to be put onto the eco-label. The
same focus group study found mixed results in this issue. Some respondents wanted details about the various
product attributes that were assessed and the assessment procedure while other wanted simple, uncluttered
information within the eco-label. All these qualitative findings can be tested quantitatively by a similar
experimental design as the one we used in this study.
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