Profiling Consumer Groups of Green Products in a Transition Economy: China



Citation:

Yong Gao, Fang Gu, Quoqing Guo, and David K. Tse (2002) ,"Profiling Consumer Groups of Green Products in a Transition Economy: China", in AP - Asia Pacific Advances in Consumer Research Volume 5, eds. Ramizwick and Tu Ping, Valdosta, GA : Association for Consumer Research, Pages: 174-177.

Asia Pacific Advances in Consumer Research Volume 5, 2002      Pages 174-177

PROFILING CONSUMER GROUPS OF GREEN PRODUCTS IN A TRANSITION ECONOMY: CHINA

Yong Gao, University of Hong Kong, Hong Kong

Fang Gu, University of Hong Kong, Hong Kong

Quoqing Guo, University of Hong Kong, Hong Kong

David K. Tse, University of Hong Kong, Hong Kong

INTRODUCTION

The acceptance of green products remains a premier world concern because after more than two decades of continuous educational efforts, only in developed economies can one notice some breakthroughs in these products. On the global front, the diversity in green product acceptance reflects a paradox. While developed economies are more receptive and are better endowed to reduce their environmental pollution, emerging economies are often less technically equipped and financially weaker to deal with problems that are often bigger and more difficult to resolve. In these economies, general public and consumers alike are often unwilling to pay a higher price premium for environmentally friendly products.

Our interests in how green products are accepted in China come from three sources. First, as the country is the world’s most populous, by its sheer size, this topic is of relevance to thelargest single consumer group of the world. Second, as the world’s fastest growing consumer market (at times, called a "king maker market" (Child and Tse, 2001)), how Chinese consumers accept green products will have an impact on many global firms in their long-term strategy on these products. Third, as in other transactional economies, environmental pollution in China has been severe. How consumers evaluate green products and what price premium they are willing to pay for them is of value to our understanding on how green products may diffuse in other transitional economies.

RESEARCH ISSUES AND OBJECTIVES

In this paper we aim to understand the profiles of consumer groups for green products in China. We pay particular attention to three research issues that are highlighted in existing literature.

First, as reflected in past studies, the acceptance of green products is category specific (e.g., Chan 1999). In our study, we reported results on respondents’ acceptance in "green" refrigerators and "green" packaged food. Both products are common purchases for respondents of varying socio-economic background, thus allowing us to cover the public as a whole. More importantly, price differences among these two product categories enable us to examine the intrigue price-value tradeoffs by different consumer groups.

Second, we recognize green product is a socially desirable concept that are often functionally less effective (lack of ingredients that harm environment), more cumbersome to use (less convenient to use), and for sale at a higher price. This is generally regarded as the main cause for the inconsistency between verbal claims and actual behavior in green product acceptance (Diekmann and Preisendorfer, 1998). In this study we have measures for respondents’ general attitudes towards environmental concerns and price premiums (like that of a dollarmetric scale) on green product purchase intention.

Third, we conceptualize green product acceptance as a social diffusion process in which consumer groups of different socio-economic backgrounds will hold varying predisposition towards its acceptance (Newell, 1997). In this study, we shall cluster consumer groups according to their acceptance of green product. By contrasting their socio-economic profiles, we assess the ability for these profiles to discriminate consumer acceptance of environmental friendly products.

RESEARCH METHOD

The data for the study was provided by a local Chinese firm that is interested in how Chinese consumers accept green products. The firm employed shopping mall intercept throughout large shopping malls in Beijing, a common method among professional marketing research firms in China. The survey was conducted in 2001. The interview was short, requiring less than 8 minutes to finish. This helped reduce non-response bias. In total, 1,225 respondents were obtained. Beijing is an interesting choice because in recent years, the Chinese capital suffers from severe air pollution. The sand-wind from the North and the uncontrolled burning of coal for warmth were regarded as the two main causes.

The interview was conducted in Chinese. It contained three sections: general attitude towards environmental issues, social influence on the purchase of green products, acceptability of price premium for two green products (refrigerators and food), and satisfaction towards past green product purchase. It also measured socio-demographic characteristics of respondents (gender, age, family income, and educational level). The measures are as follows:

General Attitude towards Environment Protection (3 to 4 point scales):

I bought green products before

When I choose home decoration, my main concern is whether it is good for health.

It is our social responsibility to take an active part to protect our environment

Many products are over packaged

Air pollution is a big problem for me

I do not use shopping bags on a voluntary basis

I throw away shopping bags provided by stores afterwards

Social Influence on Purchasing (3 to 4 point scales):

It is fashionable to buy green product

I would like to buy green product as gift

Purchasing green product enhances my self image

Mass media affects my knowledge in green products

Acceptability of Price-Premium on Green Products (4 point scale):

How high a price premium (0% to 30%) you would like to pay for green food?

How high a price premium (0% to 30%) you would like to pay for green refrigerator?

Satisfaction in Past Green Product Purchase (3 point scale):

I am satisfied with the price of the green products I purchased

FINDINGS

Three Clusters of Consumers

The respondents came from a broad cross-section of socio-economic background. About 71.3 percent of them were 21 to 50 years old and over 61 percent people had post-secondary education or above. As for their family income, 70.5 percent of the respondents had family incomes above RMB1000 and 56.9 percent had family incomes ranging from 1000 to 3000. Their characteristics match well with the population characteristics of Beijing residents (Beijing City Yearbook, 2001).

TABLE 1

CLUSTER ANALYSIS

We first cluster analyzed the respondents according three price-related variables (satisfaction on price of past green product purchase, price premium for green refrigerators, and price premiums for green package food). We did so because past studies reported that Chinese consumers are very price-value sensitive (Tse, Belk and Zhou 1989) and that perception and actual behavior in green product purchase are highly inconsistent (Diekmann and Preisendorfer, 1998). In our search for the best cluster solution, we compared three- and four- cluster solution results. The three-cluster solution provided the most meaningful and stable results and hence was selected. The clusters were labeled as: (1) universal acceptors, (2) selective acceptors, and (3) universal rejecters according to each cluster’s score on the three criterion variables (see Table 1).

The first cluster consists of 496 (40%) respondents who have the highest scores on "acceptability of price premium on green refrigerators" and "acceptability of price premium on green food" and have a medium score on "price satisfaction of past green product purchase" compared with the other two groups. They are labeled as "universal acceptors" because they have the highest score in the intention scales to pay the price premium associated with green products, no matter it is consumable or durable green product. While their satisfaction toards the price of green products is neutral (2.09 on a 3 point scale), they are willing to pay more for the sake of a better future environment. It is important to note that the mean price premium for this group is 2.75 and 2.64, that translates to less that 10% price premium according to the raw scores.

The second cluster makes up of 129 (10%) persons whose score on "acceptability of price premium on green food" is even higher than that of the universal acceptors (translate to around 12% on the raw scale) but significantly higher than the universal rejecter group. Interestingly, their price-premium acceptability is not cross-product, because their score on "acceptability of price premium on green refrigerators" is the same as the universal rejecter group and both are significantly lower than that of the universal acceptor group (translates to less than 5% price premium). It is important to note that this cluster has the highest satisfaction score towards the price of past green product purchase. We shall discuss the underlying reason for their behavior later in the paper.

The third cluster is the largest among the three, with over 50% of respondents. They scored low on all the three criterion variables. As compared to the other two groups, this third cluster is labeled as "universal rejecters", because they are most reluctant to pay the price premium for both refrigerator and food and they are most dissatisfied with green product prices. It is important to point out that their scores on the two price premiums are 1.65 and 1.86 much higher than 1. This seems to suggest that they are not rejecting green products per say, but their acceptable price premium is extremely small (less than 5% on the raw scale).

Socio-economic Profiles

We examine the socio-economic characteristics of the three consumer clusters (see Table 2). While education level and family income differ across the groups, there are no age differences among them. "Universal Acceptors" are most distinct with significantly higher educational level and higher family income than the other two groups. The results confirm studies in other economies that green product users are more likely to be of higher education and with higher family income (Berger and Corbin, 1992; Karp, 1998). As revealed in other studies, this finding is not surprising because green products are generally functionally less effective and sell at a higher price. Accordingly, higher income consumers are less sensitive to the price difference between green and non-green products. They often have higher education in order to understand the consequences of a harmful environment (Diekmann and Preisendorfer, 1998).

In contrast, the universal rejecters have lower in family income and of lower education level. To these consumers environmental concern is of less significance in their daily consumption.

The most interesting is the existence of the Selective Acceptor group. In terms of family income and education level consumers in this group showed no significant difference with the rejecter group. Yet this group differ from the rejecter group in their attitude towards environmental concern and receptivity in social influence.

Attitude towards Environmental Concern and Receptivity in Social Influences

Table 3 shows the group mean scores on respondents’ attitude towards environmental concern and receptivity in social influences. On the whole, all three groups including the rejecter group have reasonably high scores on both measures. This implies that attitudinal measure may not be sensitive to discriminate actual behavior towards green product. This echoes past studies on the inconsistency of attitude and behavior in socially desirable products.

As expected, the universal acceptor group has the highest scores on both measures while the universal rejecter group has the lowest scores. The mean group differences reflect that attitude towards environment and social influences exert significant impacts on their acceptability for higher priced green products. As for the selective acceptor group, their scores are between the two extremes.

TABLE 2

DEMOGRAPHIC CHARACTERISTICS OF THE THREE CONSUMER SEGMENTS

TABLE 3

SUMMARIZED RESULTS CONCERNING GENERAL ATTITUDE AND SOCIAL INFLUENCE

Let us focus on the selective acceptor group. As discussed, they are of the same socio-economic background as the rejecter group, so their motivation to selectively accept green products are not oriented from higher income nor from higher education. Rather, their acceptance of green product seems to be driven by more positive attitude towards environmental concerns and higher social influence on green product acceptance (Ellen and Wiener, 1991). This suggests that promotional and educational programs seem to be effective mover to this group of consumers.

SUMMARY AND DISCUSSION

In this pioneering multi-product study on how consumers in a transitional economy accept green products, we obtained a number of results that are of relevance to green product diffusion and development in China.

First, based on respondent’s acceptability to various levels of price-premiums, we obtained three distinct consumer clusters: universal acceptors, selective acceptors and universal rejecters of green products. Their group membership can be traced to their socio-economic profiles, their attitude towards environment issues, and their perceived social influences on them. The existence of these three groups and their distinct background suggests that indeed, acceptance of green products in China is a social diffusion process. While higher income and more educated consumers are "easier" converts who are committed to environmental health and are receptive to paying price premiums in different products, there are selective acceptors who are only willing to pay price premiums on some but not all products. There are also rejecters who are unwilling to pay such price premiums for green products. This implies that green product in China is not just a niche market comprising of those with higher education and higher family income. Instead, some of those who have less education and are of lower family income can be affected by promotional efforts in accepting green products. Promotional campaign effectively designed to enhance consumer attitude towards a better environment can turn some of the rejecters into selective acceptors.

In addition to communication in the mass media, personal influences can be a powerful persuasive tool. As revealed in past studies, Chinese consumers are attentive to ways of avoiding embarrassment and the need to "save face." The acceptance of socially desirable gift that saves the environment, for example, can be an effective way to help consumers focus on environmental issues. In turn, such strategies may facilitate the diffusion of green products in China (Chan, 2001).

Yet there is a limit to these communicative strategies. Our findings suggest that for selective acceptors to become universal acceptors of green products, price-value is a fundamental driver. It implies that firms need to redesign their products to have a better purchase value to gain wider acceptance of environmentally friendly products in China. Currently, consumer satisfaction toward the green product price remains low even for the universal acceptor group. This suggests that firms need to reengineer value offering of their green products.

Alternatively, firms can choose to wait for continuous improvements in the economy for China’s future green product market. Over the past 12 years, the country has maintained a robust GDP growth of 8%. In recent years, the country has also continuously raised the education achievement of its people. If our findings can be stretched over time, the country’s economic development and education enrichment will mean that there will be a greater acceptance f green products as peoples’ consumption power and education attainment improve.

The survey data we obtained was from Beijing, whose citizens are known to have the highest education attainment and one of the highest per capita income among all mainland cities. In this regard, the proportion of universal acceptors will likely to be biased upwards as compared with the rest of the country.

As a pioneering study on the green product market in Mainland China, a number of limitations in the study need to be recognized. First, this is a single city study, any generalization for the entire country is not justified. Second, we are limited by the measures used in the firm survey. Other measures such as those on the underlying motivations on the acceptance of green products are not available and hence these topics cannot be comprehensively studied. Third, as green product is a socially desirable concept, response bias is possible which needs to be recognized in future study. In an economy that is known to be highly price sensitive, it is quite a surprise to have 40% of the respondents said that they are willing to pay price premiums for green products.

REFERENCE

Berger, Ida E., Corbin, Ruth M (1992) "Perceived Consumer Effectiveness and Faith in Others as Moderators of Environmentally Responsible Behaviors" Journal of Public Policy & Marketing, Vol. 11(2), 79-90.

Beijing City Yearbook (2001), Beijing Statistical Bureau, Beijing.

Chan, Ricky Y. K. (1999) "Environmental attitudes and behavior of consumers in China: Survey findings and implications" Journal of International Consumer Marketing; New York.

Chan, Ricky Y. K. (2000) "An Emerging Green Market in China: Myth or Reality? Business Horizons 43(2) 55-60.

Chan, Ricky Y. K. (2001) "Determinants of Chinese Consumers’ Green Purchase Behavior" Psychology & Marketing, Vol. 18 (4), 389.

Child, John and David K. Tse, (2001) "China’s Transition and the Impacts on International Business," Journal of International Business Studies, 32(1), 8-21.

Diekmann, Andreas and Preisendorfer, Peter (1998) "Environmental behavior" Rationality & Society, Vol. 10 (1), 79-111.

Ellen, Pam Scholder and Wiener, Joshua Lyle (1991) "The Role of Perceived Consumer Effectiveness in Motivating" Journal of Public Policy & Marketing, V10(2),102-18.

Engel, Uwe and Potschke, Manuela (1998) "Willingness to pay for the environment: Social structure, value orientations and environmental behavior in a multilevel perspective," The European Journal of Social Sciences, Vol. 11 Issue 3.

Karp, David Gutierrez (1996), "Values and their effect on pro-environmental behavior" Environment & Behavior, Jan96, Vol. 28(1), 111-134.

Newell, Stephen J. and Green, Corliss L (1997) "Racial differences in consumer environmental concern" Journal of Consumer Affairs, Vol. 31(1), 53-70.

Tse, David K., Russell W. Belk and Nan Zhou, (1989) "Becoming a Consumer Society: A Longitudinal and Cross-cultural Content Analysis of Print Ads from People’s Republic of China, Hong Kong, and Taiwan" Journal of Consumer Research, 15(1), 457-72.

Tse, David K, Nan Zhou, Jonathan Zhu, (1999), "How They Spend Their Money: The Effects of Rising Income on Consumption Patterns in the People’s Republic of China. Working Paper, Chinese Management Center, University of Hog Kong.

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Authors

Yong Gao, University of Hong Kong, Hong Kong
Fang Gu, University of Hong Kong, Hong Kong
Quoqing Guo, University of Hong Kong, Hong Kong
David K. Tse, University of Hong Kong, Hong Kong,



Volume

AP - Asia Pacific Advances in Consumer Research Volume 5 | 2002



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