Energy Information At the Point of Sale: a Field Experiment

ABSTRACT - This study represents an application of consumer research to energy conservation policies. Through a large scale experiment conducted in a field setting among consumers actually seeking a refrigerator-freezer the study investigates (1) the initial impact on consumers of Canada's new energy labeling program for major appliances and (2) the role of the retail sales force in providing energy information and in influencing consumers' appliance decision processes. Results highlight the low impact of the labels themselves and emphasize the vital role of the retail sales force. Implications are drawn for the future development or extension of the appliance energy labeling program.

Citation:

John D. Claxton and C. Dennis Anderson (1980) ,"Energy Information At the Point of Sale: a Field Experiment", in NA - Advances in Consumer Research Volume 07, eds. Jerry C. Olson, Ann Abor, MI : Association for Consumer Research, Pages: 277-282.

Advances in Consumer Research Volume 7, 1980     Pages 277-282

ENERGY INFORMATION AT THE POINT OF SALE: A FIELD EXPERIMENT

John D. Claxton, University of British Columbia

C. Dennis Anderson, University of Manitoba

ABSTRACT -

This study represents an application of consumer research to energy conservation policies. Through a large scale experiment conducted in a field setting among consumers actually seeking a refrigerator-freezer the study investigates (1) the initial impact on consumers of Canada's new energy labeling program for major appliances and (2) the role of the retail sales force in providing energy information and in influencing consumers' appliance decision processes. Results highlight the low impact of the labels themselves and emphasize the vital role of the retail sales force. Implications are drawn for the future development or extension of the appliance energy labeling program.

INTRODUCTION

There are a number of programs in Canada, United States, and Europe designed to achieve residential energy conservation. Many of the programs focus on conservation in the areas of space heating, which accounts for approximately 50-70% of residential energy use, and water heating, which accounts for 15-20%. [A range of percentages is given because estimates vary from one source to another and from one country to another. The figures for Canada are estimated to be 70% for space heating and 18% for water heating (Energy, Mines and Resources, 1977).] There are also serious policy attempts to achieve energy conservation for the seven major household appliances: refrigerators, freezers, ranges, automatic dishwashers, clothes washers, clothes dryers and air conditions. These major appliances account for 8% of Canadian household energy consumption (Cullen 1978). Butler and Dunbar (1978) place American figures even higher at 9% for food cooling/ freezing alone, 7% for air conditioning, and 5% for cooking.

Residential energy conservation can be achieved through a variety of direct (regulatory) or indirect (informational) interventions. These can be focused on (1) design of more efficient products, (2) consumer purchase of more energy efficient brands/models, or (3) reduced or more efficient usage of energy consuming products. The particular focus of this research is an indirect intervention designed to alter purchase decisions via the provision of energy information at the point of sale (EIPS). In particular, the research provides an assessment of a new energy labeling program for home appliances, called ENERGUIDE, introduced jointly by the Canadian government and Canada's appliance manufacturers.

The first ENERGUIDE labeling requirement--for refrigerators--was introduced in October, 1978. Under this program all refrigerators manufactured after September 30, 1978 are required to have attached to them an ENERGUIDE label which states "this appliance model number _____ uses ____ kWh of electricity per month when tested in accordance with CSA standards." [kWh refers to kilowatt hours; CSA refers to the Canadian Standards Association.] Though the labels could be placed on the outside or inside of the product, manufacturers have placed them on the inside of refrigerators. A sample label is shown in Figure 1. Over the next several years consumption labels for the other major appliances are scheduled to appear.

FIGURE 1

CANADA'S ENERGY LABEL FOR MAJOR APPLIANCES

The ENERGUIDE program represents an attempt by the Canadian government to ensure a "Consumer Information Environment'' whereby substantial residential energy savings will be achieved via modification of consumers' purchase decisions. The specific objectives for the program (as outlined by the Hon. Warren Allmand, Minister of Consumer and Corporate Affairs, Canada, in a May 16, 1978 news release) are:

(1) to permit consumers to select, among otherwise comparable models, refrigerators that consume the least amount of energy.

(2) to enable the consumer to realize a monetary saving by using energy consumption as a purchase criterion.

(3) to encourage manufacturers to continue to improve the energy consumption of their appliances.

The present research was carried out at the inception of the ENERGUIDE program with a view to (1) understanding the salience of energy information to consumers, (2) understanding the role of the retail salesforce in appliance purchase decisions, and (3) providing a timely assessment of the initial impact of the program.

RESEARCH ISSUES

Four general areas of concern formed the background for this research. The first involved uncertainty regarding the potential energy savings that could result from informed refrigerator selection by consumers. It was clear that improvements in refrigerator design would result in energy savings (Dewees 1977). However, the magnitude of energy saving that might result through consumers' decisions to select more efficient models of refrigerators needed to be assessed.

The second issue centered on consumer reaction to energy information at the point of sale (EIPS). When choosing a refrigerator consumers face a broad range of product characteristics and a large selection of models. Although consumers have indicated some concern for energy conservation issues (Milstein 1976; Contemporary Research 1977a) whether or not the salience of this attribute was sufficient to have an impact on the purchase choice remained uncertain. In fact, there was growing evidence that energy attributes ranked low as choice criteria (Anderson 1977a; Denham et al. 1977). In addition, there was specific evidence that energy information labels, by themselves, produce no significant change in consumers" appliance choice behavior (McNeill 1977).

The third issue centered on the reaction of retail salespeople. Given the dominance of salespeople in major appliance durables/purchases (Olshavsky 1973; Anderson 1977b), it was clear that their interest in incorporating objective energy information into sales discussions needed to be determined. Determining this was particularly important when it was unlikely that energy labels, by themselves, would have a significant influence on consumers.

Finally, there remained the issue of the nature and presentation of energy information. The base point for the research, the ENERGUIDE labeling program, has several key characteristics: the label is simple (containing a single piece of energy consumption information), the units used for energy consumption are kilowatt hours per month; and, the program allows the labels to be placed inside the refrigerator. Arguments could, however, be made for the use of more detailed information, for the use of dollar operating costs, and for having the label on the front of the refrigerator. The extent to which these format concerns influence consumers' information utilization remained uncertain (Contemporary Research 1977b; Response Analysis 1977; McNeill 1977; Hutton 1978).

METHODOLOGY

Experimental Design

The approach used in this research was to test the ENERGUIDE labels for refrigerators in actual retail settings. Through the cooperation of a major national department store chain, a set of twelve stores in western Canada was selected for purposes of experimental manipulation of energy information at point of sale (EIPS). An additional six control stores were monitored under a "no energy information' condition. The twelve test stores were divided into four judgmentally matched groups with each group receiving a different EIPS treatment. The four treatments are indicated in Figure 2.

FIGURE 2

EXPERIMENTAL DESIGN

As indicated there were two EIPS variables of central concern: information label format (kilowatt hours or dollars) and degree of sales force emphasis on energy (no emphasis or emphasis). The four combinations of these, plus a no energy information (control) treatment formed the five experimental conditions. These were operationalized as follows:

(1) Kilowatt hour labels: ENERGUIDE labels indicating energy consumption in kilowatt hours per month for each model on display were fixed to the inside, hinge wall of each refrigerator.

(2) Dollar cost labels: ENERGUIDE labels modified to indicate energy consumption in dollars per year for each model on display were fixed to the inside, hinge wall of each refrigerator.

(3) No "sales push" of energy information: Salespeople were asked to avoid mentioning energy consumption during the six weeks of the experiment. If consumers inquired about the energy labels the salesperson was to explain briefly and avoid drawing attention to comparisons across models.

(4) "Sales push" of energy information: Each store where this condition was in effect displayed two point of sale posters containing a sample ENERGUIDE label and an appeal suggesting that consumers compare operating efficiency across models. In addition, salespeople were provided with a Fact Sheet that they could use to help consumers compare models. The Fact Sheet contained a list of refrigerator models sold by the store, grouped according to type of defrost and size. The following energy consumption data was given for each model: (1) kWh per month, (2) annual electricity costs for three different rates (2.5c/kWh, 4c/kWh, 6c/kWh). Finally, the table contained three columns headed "estimated 10 year operating cost," "purchase price" and "total cost" for use by salespeople in arriving at "lifetime" costs for the particular models being considered by a customer. In this manner the concept of life cycle cost could be communicated. Salespeople were specifically requested to discuss energy consumption with each customer.

(5) Control stores: No labels or point of sale information were allowed in the stores used for this treatment.

Data Collection

Prior to the study data was collected on historical refrigerator model sales by store.

The assessment of EIPS impact required data on both the process of deciding which refrigerator to buy and the actual refrigerator choice. The choice data was supplied by the retail stores in the form of a listing of all refrigerators (720 in total) purchased in each store over the duration of the experiment. The process data covered topics such as consumers' awareness, understanding and preferences with respect to refrigerator energy consumption attributes and energy information labels. The process data was obtained primarily by means of a consumer post purchase questionnaire (42% response rate) and, secondarily, by means of a post experiment salesperson questionnaire. In addition, during the experiment, trained shoppers visited each store weekly to monitor the EIPS treatments.

RESULTS

The results reported here first provide an indication as to the magnitude of potential energy savings that could result from choice of more energy efficient refrigerators. Second, the salience of energy information is assessed. Third, the role of the retail sales force is evaluated. Finally, a model is presented to guide the development of EIPS programs.

Potential Savings Via Choice of Efficient Refrigerators

This issue can be viewed in two ways. First, simply by reviewing the energy consumption of the refrigerators3 available at the retail stores involved in the study, [These data resulted from tests conducted by the Canadian Standards Association as part of the ENERGUIDE program.] several potential savings can be observed (see the first three columns of Table 1). For example, a shift from a thirteen cubic foot frost free to the same size manual defrost could result in an energy saving of approximately 59 percent (132 to 54 kilowatt hours per month). A shift from a large to a small frost free could result in approximately 29 percent saving (185 to 132 kilowatt hours per month for 19 vs. 13 cubic foot sizes). Within a given size a shift from one brand to another could result in a saving of 18 percent (177 to 146 kilowatt hours per month within the 16 cubic foot size).

TABLE 1

MIX OF REFRIGERATORS PURCHASED DURING EXPERIMENT

To put these percentage savings into perspective, earlier research has indicates national annual refrigerator sales of 600,000 units [This figure includes sales to intermediaries such as apartment owners.] in Canada with a weighted average energy consumption of approximately 125 kilowatt hours per month per unit (Hirshhorn 1978). Thus, even a 10 percent saving in energy consumption could amount to a national saving of approximately 90 million kilowatt hours per year. To the consumers buying new refrigerators, this represents an annual saving in the neighborhood of two million dollars per year over the life of the new refrigerators.

Although the above indicates the general magnitude of potential savings, a better indication comes from looking at the specific mix of refrigerators being sold (see last two columns of Table 1) and addressing a series of "what if" questions. For example, what if everyone bought the most efficient refrigerator of the same size? Analysis of the mix of refrigerators sold during the six week experiment indicates that an energy saving of approximately 3 percent would result from this type of shift in consumer choices. If every consumer shifted one size smaller and selected the most efficient model of that size the energy savings would be approximately 10 percent. If all consumers who purchased 13 cubic foot frost free refrigerators shifted to the same size manual refrigerator (which is the largest manual defrost readily available), the savings would be approximately 6 percent.

Clearly the savings, both in terms of national energy consumption and consumer electricity bills, can be substantial even from relatively minor shifts in consumer purchase decisions. The remainder of the research dealt with the extent to which these shifts might be achieved as a result of the provision of energy information at the point of sale.

Importance of Energy Information to Consumers

Findings on salience to consumers of refrigerator energy consumption indicated that this characteristic was not particularly salient to the majority of consumers (Table 2). Averaged across all respondents, the importance of "operating cost of electricity" was ranked 15th of 19 characteristics. In contrast, "type of defrost," an energy-consuming attribute, ranked first. Ranked second to fifth were "warrantee," "total storage capacity," "color," and "arrangement of shelves." "Low price" ranked tenth, well behind a number of special features.

TABLE 2

IMPORTANCE OF PRODUCT CHARACTERISTICS WHEN CHOOSING REFRIGERATORS

When asked specifically about refrigerator energy consumption, only 26% thought that there would be major differences in consumption from model to model. The mean estimate of difference in electricity costs among the refrigerators available today was 25 dollars per year. Although consumers did not expect the energy consumption would differ substantially across models, (1) 81% thought consumers would make serious efforts to purchase energy efficient refrigerators, and (2) 92% thought the government should make energy consumption labels a requirement on all major appliances sold in Canada. Further, 10% of consumers indicated that the energy labels were "the most important consideration" or "one of a few major considerations" influencing their refrigerator selection.

Consumer Decision Styles and Information From Salespeople

Consumers were asked a series of questions regarding their reliance on refrigerator salespeople. Three major decision styles can be presented. First, Independent was used to describe consumers who made purchase decisions without accepting information or assistance from a salesperson. This could be the result of their perceiving the salesperson to be uninformed or untrustworthy. Second, Aided was used to describe consumers who, after accepting information from a salesperson, made their own refrigerator selection. Third, Dominated was used to describe consumers who essentially abdicated the decision to the salesperson whom they appeared to see as much more capable of making a wise choice. Diagrams of these three styles are provided below.

DIAGRAM

There are important implications of these decision styles for the focus of EIPS programs, as will be discussed below. However, determining the proportion of consumers in each category is a difficult measurement problem. Clearly, consumers are biased against admitting that salespeople make the final purchase choice. On the other hand, salespeople are likely inclined to attribute more control to themselves than is truly the case. Based on consumers' responses regarding their experiences with salespeople, the findings were that 44 percent were "independent," 27 percent were "aided," and 29 percent were "dominated." This is viewed by the researchers as a conservative view of the role of retail salespeople.

Importance of Energy Information To Salespeople

The view held by salespeople was that consumers are not interested in energy information (they indicated "operating cost" would rank 17th of 18 product features consumers might consider). Further, they reported that only 5 to 10% of customers ask about operating cost. As a result they felt that there is little value in including energy information in sales discussions. However, after they were shown a sales aid (energy fact sheet) that could be used to help a customer compare energy consumption across refrigerators, 66 percent indicated they would use this type of aid in their sales presentations. During the experiment, the trained shoppers who visited stores where salespeople had been specifically asked to use a similar sales aid found that the aid was used 47 percent of the time. This appears to indicate some reticence on the part of salespeople to modify their tried and true sales presentations.

FIGURE 3

IMPACT MODEL: ALTERNATIVE CONSUMER DECISION PATHS

Maximizing EIPS Impact

While aggregate salience of EIPS is important, it is perhaps more important to look at the importance to subgroups of consumers. This can be accomplished by recognizing that consumers have various decision styles and that the process by which EIPS has an impact will vary from style to style.

The three decision styles discussed earlier (Independent, Aided, and Dominated) were used as the base point for a model (called IMPACT) of alternative consumer decision paths. The IMPACT model was developed to assess alternative initiatives for maximizing EIPS impact. As indicated in Figure 3, the main components of the model were: consumer dependence on the salesperson, importance of operating costs in refrigerator choice, and exposure to and understanding of energy labels.

The model can be interpreted as a series of paths that a consumer might follow. Each terminus, identified "A" through "I," represents the point at which a refrigerator choice is made (choice point). The important issues that needed consideration were:

(1) What proportion of consumers would arrive at each of the nine choice points?

(2) At which choice points would EIPS have a positive effect (lead to energy efficient refrigerator choices)?

(3) What managerial initiatives would be required to shift consumers from each choice point where EIPS has no effect?

The answers to these questions are presented in an IMPACT summary in Table 3. In summary, the study findings indicated that 56 percent of consumers who purchase a refrigerator used information provided by salespeople to aid them in their selection. 37 percent would likely receive positive advice regarding EIPS, while 19 percent likely would not. Of consumers that do not use the advice of salespeople (44 percent), the vast majority would be unlikely to use EIPS - 59 percent of these (26 percent of 44 percent) not considering operating costs an important consideration, 27 percent not noticing the EIPS, and 12 percent not completely understanding the significance of the information.

The initiatives that would help to increase the impact of EIPS are also summarized in Table 3. These will be discussed in the next section.

SUMMARY AND IMPLICATIONS

The results reported have concentrated primarily on attitudinal data obtained via post purchase consumer and salesforce questionnaires. Detailed analysis of the effects of label formats and degrees of sales force emphasis is reported elsewhere (Anderson and Claxton 1979). The purpose here is to summarize the major conclusions from the results presented and to focus on implications for future EIPS programs as suggested by the IMPACT model.

The major conclusions resulting from the analysis presented in this paper are:

There is a clear potential for achieving worthwhile energy savings via shifts in consumer refrigerator choices.

To date, only a relatively small proportion of consumers has considered energy consumption to be important when selecting a refrigerator.

A majority of consumers has depended on retail salespeople at least for information and often to recommend which refrigerator to buy.

Retail salespeople, although not in the habit of discussing energy information with customers, have indicated an interest in using a sales aid that would help compare operating costs of the models on display.

TABLE 3

IMPACT SUMMARY

The IMPACT model identified four types of initiatives that could be used to increase the influence of EIPS. The initiative with by far the greatest potential would be education of retail salespeople. IMPACT shows that at least 56 percent of refrigerator buyers depend on retail salespeople for information and advice. In the context of sales training done for the experiment, 66 percent of the salespeople indicated interest in using energy comparison sales aids. In other words, through this initiative alone, 37 percent of all consumers could have EIPS presented to them in a favorable manner.

A second initiative that would influence a major group of consumers would be efforts to change consumer attitudes regarding the salience of operating costs. Although this initiative could increase the influence of EIPS for a major group of consumers, it clearly would be a long uphill effort. It is obviously much more difficult to change an opinion about what is important than' to provide information to someone who is already convinced.

The third initiative suggested by the model is one that would influence consumers who do not use a salesperson's advice, who consider operating costs important, but who do not notice the labels. The initiative needed is to make the labels more obvious, by means such as having them attached to the front of the refrigerator rather than hidden away on the inside.

The final initiative need is one that would help consumers more fully understand the labels. This could be accomplished by having a simple information pamphlet available at point of sale. The pamphlet could provide information on energy consumption for alternative models of refrigerators, cost of electricity by region, and example calculations to show how refrigerator operating costs could be compared.

The present research study can also be used to guide the development of energy labels for other major appliances. Perhaps its major contribution is the evidence that significant residential energy conservation could result from shifts in consumer appliance purchase decisions but that the retail sales force appears to have a key role in determining whether such shifts are likely to occur. Energy labels by themselves are likely to have minimal impact without a supportive point of sale information environment created by informing and motivating retail salespeople to incorporate energy information in their sales presentations.

REFERENCES

Anderson, C. Dennis (1977a), "Consumer Behavior and Energy Information Labels for Home Appliances," in Marketing: The Canadian Perspective, eds. G. H. G. McDougall and R. Drolet, Fredericton: Canadian Association of Administrative Science, pp. 276-287.

Anderson, C. Dennis (1977b), "Consumer Information Seeking for a Durable Product," unpublished Ph.D. dissertation. University of Western Ontario.

Anderson, C. Dennis and Claxton, John D., (1979), "Impact on Consumer Refrigerator Purchases of Energy Consumption Information At Point of Sale," unpublished report, Ottawa: Consumer and Corporate Affairs Canada.

Butler, S. E. and Dunbar, W. S. (1978), "The Dimensions of Consumer Energy Use and the Roles of Price and Information in Promoting Conservation," working paper, Cambridge, MA: M.I.T. Centre for Policy Alternatives.

Contemporary Research (1977a), "A Study of the Canadian Public's Attitudes Toward the Energy Situation in Canada," unpublished report, Ottawa: Energy Mines and Resources.

Contemporary Research (1977b), Report of a Qualitative Study on Energy Efficiency Label Designs," unpublished report, Ottawa: Energy Mines and Resources.

Cullen, Carman W. (1978), "The Potential for Energy Conservation in the Residential Sector," unpublished report, Ottawa: Consumer and Corporate Affairs Canada.

Denham, F. R., Fairhead, N., and Fontaine, P. L. (1977), "Major Domestic Appliances and Automobile Tires -Environmental and Economic Impacts of Product Durability," unpublished report, Ottawa: Energy Mines and Resources Canada.

Dewees, D. N. (1977), "Energy Conservation in Home Refrigerators," unpublished report, Toronto: University of Toronto Institute for Policy Analysis.

Energy Mines and Resources (1977), Energy Conservation in Canada: Programs and Prospects, Ottawa: Energy Mines and Resources Canada.

Hirshhorn, R. (1978), "A Case Study of the Proposals for Energy Consumption Labeling of Refrigerators," working paper. Ottawa: Economic Council of Canada.

Hutton, R. Bruce (1978), "Life Cycle Cost: Impact on Consumer Response to New Product Information for Major House Appliances," working paper, Department of Marketing, University of Denver.

McNeill, Dennis L. (1977), "An Investigation of Issues Surrounding the Disclosure of Energy Use Data on Major House Appliances," unpublished Ph.D. Dissertation. University of Florida.

Milstein, Jeffrey (1976), "Attitudes, Knowledge and Behavior of American Consumers Regarding Energy Conservation With Some Implications for Government Action," unpublished report, Washington, D.C.: Department of Energy.

Olshavsky, Richard W. (1973), "Customer Salesperson Interaction in Appliance Retailing," Journal of Marketing Research, 10, 208-212.

Response Analysis Corporation (1977), "Communication Effectiveness of Energy Consumption Labels for Major Appliances," unpublished report, Washington, D.C.: Federal Trade Commission.

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