Relative willingness to pay for environmentally friendly products and its relation with eco-certification

Freriks, Peter (2012) Relative willingness to pay for environmentally friendly products and its relation with eco-certification.

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Abstract:This research investigated the relationship between eco-certification and the willingness to pay (WTP) for environmentally friendly branded products. The research was originated in Canada, where Essoussi and Linton (2010) compared products with an recycled component and tested what the impact was for different product groups on consumers’ WTP. This research is an important part of a widely international investigation to environmentally friendly products. The main reason for it is that there is a significant increase of interest in natural environment because legislation in many countries aims at diverting disposed product from waste dumps to consumers. The main aim of this research was to see if an interest in environmentally friendly products concerns appears to lead to the feeling that environmental certification is important. This was done by asking respondents the maximum price they would pay for a branded and recycled products. The same question was asked about branded and recycled products with an eco-certificate, so that those two variables can be compared. 230 students from the University of Twente were asked to fill in a questionnaire about environmentally friendly products. The participant were first year bachelor students from four different bachelor programs: Business Administration, International Business Administration, Civil Engineering and Industrial Design. The surveys were conducted in January and February 2011. Results indicated that people are WTP more for branded and recycled products with an eco-certificate vs. non-certificated branded and recycled products. This counts for five of the six product groups. Only for Xerox white paper, respondents would not pay a price premium for an eco-certificate. Another result, which is similar to the study of Essoussi and Linton (2010), is that the consumers’ WTP price premium for recycled products with an eco-certificate is product specific. Also the level of functional risk of recycled products with an eco-certificate has statistically proven that it is of influence on WTP. This means that products perceived with a low level of risk, like for example white paper (relatively low cost, no harm for the customer) are statistically different compared to products containing a high level of risk, like for example a car tire. This project has taken an initial step to see if environmental interest leads to the feeling that environmental certification is important. It can be concluded that eco-certification plays a significant role on the six tested product groups. Still, the main reasons or argumentation for buying eco-certificated products over regular recycled products needs to be further investigated, not only by asking the respondents the maximum price premium they want to pay, but also look for motivation why they want to pay more for a certificated product. Also psychological related items needs to be further understand, and at the same time companies must be convinced what kind of contribution and advantage eco-certification can produce towards environmentally friendly products.
Item Type:Essay (Master)
Faculty:BMS: Behavioural, Management and Social Sciences
Subject:85 business administration, organizational science
Programme:Business Administration MSc (60644)
Link to this item:http://purl.utwente.nl/essays/61455
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