influence of eco-labelling on consumer buying behaviour...

Influence of Eco-Labelling on Consumer BuyingBehaviour – A Study of FMCG & Apparel

Sector at Ludhiana

*Sandhya Mehta and **Rajan Sridhar

AbstractLabeling is a important tool in packaging. It provides the essential information regarding the prod-uct. It is helpful for customers to know the price, ingredients, weight etc and also compare with othercompany products. Ecolabels provide consumers with an opportunity to choose more environmen-tally friendly products and in so doing influencing the market to produce less harmful goods. Labels,providing consumers with environmental and ethical information, persuade them to opt for thoseproducts over other available in the market. The intension of this paper is to discuss the impact of eco-labeling on consumer buying behaviour

INTRODUCTIONLabelling is an important market tool constituting an integral part of communication betweenactors in society (i.e. businesses, public authorities and consumers). Although ecolabels arebased on voluntary initiatives, in some markets they are becoming an important factor forcompetition. Ecolabelling helps foster innovation in technological development, managementand marketing. Moreover, ecolabels protect innovative manufacturers from ‘free-riders’ whoseproducts and processes bear little commitment to environmental protection. Various labellingprogrammes exist which are managed by government, private companies or non-governmental organizations.

Ecolabels provide consumers with an opportunity to choose more environmentallyfriendly products and in so doing influencing the market to produce less harmful goods.Labels, providing consumers with environmental and ethical information, persuade them toopt for those products over other available in the market.

* Deputy Director, GNIMT, Ludhiana, Punjab. Email: [email protected]** Assistant Professor, GNIMT, Ludhiana, Punjab. Email: [email protected]

The 21st Century ConsumersA Behavioural Perspective

Edited byM. Ganesh Babu, G. Vani

and Dr. N. Panchanatham

Publish by Global Vision Publishing House

82 Sandhya Mehta and Rajan Sridhar

Label HistoryThe origins of Ecolabelling can be found in growing global concern on the part of

governments, businesses and general public for environmental protection. Ecolabelling wasidentified as a significant theme in Agenda 21 at the UN Conference on Environment andDevelopment in 1992. More recently, the Johannesburg Plan of Implementation concluded atthe World Summit on Sustainable Development in 2002, recognized the importance ofconsumer information related to sustainable consumption and explicitly noted the continuedneed to work in this area.

In developed countries, as commercial enterprises recognized that environmental concernscould be translated into a market advantage for certain products, a number of environmentaldeclarations and claims emerged in association with certain products. These include labelswith such claims as “recyclable”, “eco-friendly”, “low energy”, and “recycled content”.

This concern with regard to credibility and impartiality led to the formation of privateand public organizations providing third party labelling. In many instances, such labellingtook and continues to take the form of ecolabels awarded by programmes operated at nationaland regional (i.e. multinational) levels.

Eco labels are increasingly based on an environmental policy tool known as life cycleassessment (LCA). LCA is a method in which the environmental effects of a particular productare evaluated by analysis of the inputs and outputs of materials and energy and other importantfactors related to the product. LCA informs the consumer about the real reductions of theenvironmental stress and not merely the transfer of environmental harm in stages of theproduct’s life cycle. Though many existing Ecolabelling programmes may not apply acomprehensive LCA, Ecolabelling schemes will typically involve a sequence of procedureson criteria setting, testing, monitoring and certifying. Criteria for the labels differ in termsof scope and stringency.Types of Ecolabel

There are many different voluntary (and mandatory) environmental performance labelsand declarations. Different labelling programmes are run by governments, private companiesand non-governmental organizations. The International Organization for Standardization(ISO) has identified three broad types of voluntary labels described hereunder.

ISO Definitions of Environmental Performance LabellingType I A voluntary, multiple criteria based, third party programme thatEnvironmental awards a license authorizing the use of indicating overalllabeling environmental preferability of a product within a particular product

category based on life cycle considerations. Most existing Ecolabellingschemes can be attributed to Type I.

Type II Informative environmental self-declaration claims. These areSelf-declaration environmental claims made about goods by their manufacturers,claims importers and distributors. They are not independently verified, do

not use predetermined and accepted criteria for reference, and arearguably the least informative of the three types of environmental

Influence of Eco-Labelling on Consumer Buying Behaviour... 83

labels. A label claiming a product to be “biodegradable”, withoutdefining the term, is a Type II label.

Type III Voluntary programmes that provide quantified environmental dataEnvironmental of a product, under pre-set categories of parameters established by aDeclarations qualified third party and based on life cycle assessment, and verified

by that or another qualified third party.

Ecolabelling ObjectivesProtecting the environmentEncouraging Environmentally Sound Innovation and LeadershipBuilding Consumer Awareness for Environmental Issues

Consumer Behaviour and Eco-LabellingRecent years have seen an increase in the use of market based instruments to improve

environmental conditions. These include the use of ecolabels as a marketing tool to influencethe choice of consumers in favour of environment friendly products. A number of countrieshave introduced ecolabels for products considered to be particularly damaging to theenvironment.

Ecolabels can contribute to the improvement of environmental performance in a twoimportant ways. Firstly, they can increase consumer awareness of environmental issues andinfluence their choice in favour of less polluting products. Secondly, they can push industryto produce and market environmentally friendly products.

Ecolabels are market-based instruments used to complement environmental laws andregulations. They are used to inform consumers that a labeled product is environmentallyfriendlier than other products in the same category.” Ecolabelling can be based on two typesof criteria: product related or production-related. Product-related criteria relate to theenvironmental impact of the product only. Production-related criteria relate to process andproduction methods (PPMs) and cover the environmental impact of an entire productionprocess. PPMs can affect the environmental performance of a product in two major ways.Firstly, they can affect the characteristics of a product so that the product itself may polluteor degrade the environment. Secondly, a process or production method itself can havenegative impact on the environment. This could be caused by excessive and wasteful use ofnatural resources and energy, and the emission of harmful effluents.Ecolabelling in FMCG Sector

India’s FMCG sector is the fourth largest sector in the economy and the total FMCGmarket is in excess of Rs. 85,000 Crores. It is currently growing at double digit growth rateand is expected to maintain a high growth rate. Eco labeling in FMCG will soon become arequirement. No company can ever think of loosing business in such a lucrative market.Eco Labelling in Apparel Section

India has witnessed rapid strides of development at sustained growth rates of more than8% and has seen a huge spurt in consumption. Consequently, it has been estimated that theincreased consumption may result in the country becoming one of the leading offenders


relating to environmental pollution. The textiles industry in India is traditionally one of theworst offenders of pollution, with its small units following outdated technology processes.One opportunity to reduce the environmental impact of clothing industry in India is toconcentrate textile production within environmentally certified or eco-labelled clothing.Organic Cotton in India

The fact is India is now the world leader in production of organic cotton. Organic cottongrowth is very rapid but still represents small percentage of the total cotton market around0.2% of the total cotton crop. Organic cotton is grown using methods and materials thathave a low impact on the environment. India took over Turkey’s long-standing position asthe leader, seeing its production increase by 292 per cent to reach 73, 702 metric tonnes, orabout half of world organic cotton production.Objectives of the Study

1. To study the awareness among the consumers regarding Eco-Labelled products inFMCG and Apparel sector in Ludhiana.

2. To study the effect of Eco-Labelling on buying behaviour of consumers in FMCGand Apparel sector in Ludhiana.

RESEARCH METHODOLOGYPrimary data was collected with the help of a structured questionnaires. For the collection ofdata a questionnaire was framed which was to be filled by consumers. The questionnaireincluded open ended as well as close ended questions, so as to access the awareness as wellas knowledge about the eco labelling. Population premises included the residents of Ludhianacity. Convenient Sampling technique used for the primary data collection. Respondents werechosen from various segments of society like Business Class, Service Class, Professionals andStudents.

Secondary data was collected from published or unpublished sources e.g. magazines,books, news papers, journals of marketing and consumer behaviour. Internet was also usedto find the relevant secondary data.SamplingSampling Unit: Respondents from Ludhiana city represented Sampling Unit. Various segmentsof society were chosen (like Business Class, Service Class, Professionals and Students) inLudhiana city.Sample Size: The Sample Size for this study consists of 100 respondents.Sample Method: For this survey Convenient as well as Judgement Sampling Method waschosen.Area Covered: The study was conducted among various segments of society like BusinessClass, Service Class, Professionals and Students of Ludhiana city.LimitationDue to time and financial constraints, scope of the study was limited to the city of Ludhiana.The sample size for the study was only 100 that too may not be a representative sample


considering the population of Ludhiana. Sampling procedure chosen was convenient andjudgement sampling so there may be biasness in the results of the study. There is a need toconduct a full fledged research in this field.

ANALYSISTable 1: Growth in the various economies in the world is causing a drift in the

consumption pattern among the consumers.

Alternative No. of Respondents Mean Score

Strongly Agree 12

Agree 71

Neutral 17 3.95

Disagree 0

Strongly Disagree 0

Majority of the respondents agree to the point that there is upward trend in theconsumption of goods and services due to buoancy in the economies in the developingcountries.

Fig. 1: Education of the consumer is opening up new avenues for the companies tolaunch products which are safer to use and do not cause damage to the environment.

Most of the respondents understands that now consumer is much more educated aboutthe environmental issues and prefer eco friendly products.


Table 2: Concern about the degradation of the environment.(Rating as with 5 being no concern & 1 being very concerned).

Alternative No. of Respondents Mean Score5 (E) 34 (D) 103 (C) 28 2.152 (B) 17

1 (A) 42

Majority of the respondent are concerned with the degradation of the environment andthe mean score also indicates the same.

Table 3: Awareness about the eco-labelled products in market.

Alternative No. of Respondents Mean ScoreStrongly Agree 21Agree 52Neutral 23 3.90Disagree 4

Strongly Disagree 0

Awareness level of the respondents about the eco label is just above fifty percent. Still rest ofthe half of the respondents are not aware about the ecolabeled goods available in the market.Hypothesis:

H0= There is significant difference between the awareness levels for Eco-Labelledproducts amongst Business Class, Service Class, Professionals and Students

Ha= There is no significant difference between the awareness levels for Eco-Labelledproducts amongst Business Class, Service Class, Professionals and Students

Table 4:Analysis of Variance- One Way Classification Table

Source of Sum ofVariation Squares d.f. M.S. F Ratio 5% F Limit

BETWEEN 0.8629/1.232SAMPLES 2.5888 4-1=3 2.5888/3=0.8629 =0.7004 F (3,96) = 2.68

WITH IN 100-4 = 96SAMPLES 118.2792 96 118.2792/96=1.2320

99Calculated Value < Tabulated Value0.7004 < 2.68Alternative Hypothesis is accepted


The above table shows that calculated value of F is 0.7004 which is less than the tablevalue of 2.68 at 5% level with d.f. being v1=3 and v2=96.

Thus from the above findings it is concluded that there is no significant difference betweenthe awareness levels for Eco-Labelled products amongst Business Class, Service Class,Professionals and Students.

Table 5: Priority to eco-labelled products while purchasing

Alternative No. of Respondents Mean ScoreStrongly Agree 13Agree 66Neutral 17 3.88

Disagree 4

Strongly Disagree 0

It is clear from the findings that majority i.e. seventy nine percent of the respondentsconsider the eco labels while shopping and seventeen percent respondents remained neutralto the choice.

Table 6: Acceptance of Eco labelled Food & FMCG goods to the consumer


Strongly Disagree 0

Seventy nine percent of the respondents prefer and accept goods and services markedwith eco labels. Fifteen percent were neutral to the choice and only four percent of therespondets disagree with the choice.

Table 7: Relation of eco-friendly (Eco labelled) products with good health


Strongly Disagree 0

Eighty one percent of the respondents agree to the fact that eco labels are related withthe health and their well being. While six percent of the respondents remained neutral onlythree percent of the respondents disagreed.


Table 8: Eco-friendly products and its relation with the safety of the environment


Strongly Disagree 0

Eighty four percent of the respondents associated eco friendly products with theenvironment , fifteen percent of the respondents remained neutral to the statement.

Table 9: Eco labeled goods will enhance the quality of life


Strongly Agree 32

Agree 53

Neutral 14 4.16

Disagree 1

Strongly Disagree 0

Majority of the respondents were of the opinion that usage of eco friendly productsenhances their own quality of life and standard of living.

Table 10: Eco-friendly products are just a fad


Strongly Disagree 3

Twenty eight percent of the respondents agreed with the fact that eco labelling of goodsand services is just a fad but thirty six pecent of the respondents were against the statement.Interestingly thirty six percent of the respondents were having no comments for thisstatement.


Table 11: Eco-friendly products are costlier than other


Strongly Disagree 0

Almost sixty percent of the respondents were of the opinion that eco labelled productsare costlier. Thirty percent of them remained neutral and ten percent of the total respondentswere neutral.

Table 12: In spite of high cost consumers will adopt Eco-labelled products


Strongly Disagree 0

Majority of the respondents i.e. sixty eight percent was ready to pay extra price for the ecolabelled goods, but surprisingly twenty six percent of the respondent remained neutral onthisissue. But six percent of the respondents were not ready to pay premium on the eco labeled goods.

Table 13: Buying decisions to buy eco- labelled products are affected by

[PRICE]


Disagree 17

Strongly Disagree 2

Almost fifty percent of the respondents feel that higher price tag with eco labeled goodsaffect their buying decision, while thirty two percent of the respondents were no about thisand nineteen percent denied this statement.



[PERFORMANCE]


Strongly Disagree 2

Sixty eight percent of the respondents were of the opinion that they do consider theperformance of the product along with the eco label. Twenty percent buy eco- labelledproducts and 20 respondents remained neutral on this statement.


[QUALITY]


Strongly Disagree 2

Eighty two percent of the respondents agree that quality do matter in their buyingdecisions to buy eco- labelled products and fourteen percent remained neutral.


[CONVENIENCE]


Strongly Disagree 1

Seventy one percent of the respondents agree to the point that convenience of buying domatter in their buying decisions to buy eco- labelled products. Twenty three percent of therespondents remained neutral and only six percent of the total respondents denied the factof convenience.



[DESIGN]


Strongly Disagree 2

Sixty two percent of the respondents agree to the statement that Design affects in buyingdecisions to buy eco- labelled products and ten percent of the respondents disagree to thisstatement. Twenty eight percent of the respondents remained neutral.


[PACKAGING]Alternative No. of Respondents Mean ScoreStrongly Agree 15Agree 46Neutral 30 3.63Disagree 5

Strongly Disagree 4

From the above findings it is concluded that fifty one percent of the respondents agree tothe statement that Packaging affects their buying decisions to buy eco- labelled productsand 30 respondents remained neutral to this statement.


[CONCERN FOR ENVIRONMENT]


Disagree 0

Strongly Disagree 1


Majority of the respondents (eighty five percent) maintained that major factor behindbuying of eco labelled goods is their concern for the environment; fourteen percent of therespondents remained neutral to thus question.


[SAFE TO USE]


Strongly Disagree 2

Eighty six percent of the respondents were of the opinion that safe to use eco labeledgoods is the reason behind their buying decisions. Ten percent of the respondents remainedneutral.

Table 21: Awareness of environmental symbols on product packages


Strongly Disagree 12

Only sixty four percent of the respondents were aware about the approved eco labelsmarked on the goods. Quite a big chunk of the respondents were unaware about the ecolabel marks.Table 22: Recalling some of the environmental symbols on product packages that consumersare aware of.

From the above findings it is concluded that 83 respondents out of 100 are aware withthe symbol of “Do not Litter” on product packages and then with the symbol of “Recycle”.But their awarenes about rest of the label is very low.


Fig.2

Fig.3

Alternative No. of Respondents

A 64

B

83

C

15

D

29

E

43

F

24


Table 23: Eco-labelled goods are really safe to use.


Strongly Disagree 0

From the above findings it is concluded that seventy seven percent of the respondentsout of 100 agree to the statement that Eco-Labelled goods are really safe to use. Twenty onepercent of the respondents were neutral.

Table 24: Charging of higher price for Eco-labelled goods is justified.

Alternative No. of Respondents Mean ScoreStrongly Agree 3Agree 49Neutral 37 2.44Disagree 11Strongly Disagree 0

Only fifty two percent of the respondents found it proper to charge more for eco labelledgoods. Thirty seven percent did not give their view and eleven percent did not agree to thestatement.

Table 25: Awareness of Eco- Labeled Apparels among the consumers.

Alternative No. of Respondents

From several years (A) 26

Have been a regular user of it (B) 20

Never (C) 13

For the first time in my life (D) 23

Have heard but never used (E) 18

Others (F) 0

Majority of the respondents are not aware about the availability of the eco friendlyapparels. Forty six percent of the respondents are already aware and using these kind ofapparels.


Table 26: Awareness about the specialized outlets in the city selling Eco-Labelled products.


Strongly Disagree 0

Little less than fifty percent of the respondents are still not aware about the specialisedoutlets for the purchase of eco labelled goods.

Table 27: Eco- Friendly products are easily available in the market


Strongly Agree 8Agree 50Neutral 26 3.49Disagree 15

Strongly Disagree 1

Majority of the respondents (fifty eight percent) maintain that eco labelled goods areeasily available in the market.

Table 28: Consumers have become more responsible towards environment now while shopping becauseof availability of Eco-labelled goods.


Strongly Disagree 0

Almost seventy percent of the respondents are of the view that availability of eco friendlyand eco labeled goods have made them more responsive towards the environment.


Table 29: Eco-Labelled products enhance Brand Value


Strongly Disagree 0

Eighty percent of the respondents maintained that eco labeled goods enhances the brandequity.

Table 30: Claims about Eco-Friendliness of Eco-labelled goods are absolutely true


Strongly Disagree 0

Around sixty percent of the respondents are sure about the claims about the eco frienlinessof the products. Thirty two percent are either not sure or don’t know. Only ten percentdisagreed to the statement.

Table 31: Ranking the following Eco Labelled product categories (from 1-4) in terms of preferences.

Product 1st 2nd 3rd 4th Weighted RankCategories Score

Food 51 24 14 11 3.15 1Toiletries 9 38 27 26 2.30 3Apparel 11 12 30 47 1.87 4FMCG 29 26 29 16 2.68 2


Food and FMCG are the product categories which are preferred by the consumers themost in Eco-Labelled Products in the market.

Table 32: Consumers get to know about Eco labelled or Eco-friendly products from.(Rank from 1-5)

Attributes Ranks 1st 2nd 3rd 4th 5th Weighted Rank

Score

TV 30 18 31 18 3 3.54 2

Internet 18 31 14 32 5 3.25 3

Newspaper 26 35 22 16 1 3.69 1

Food Packages 25 12 31 26 6 2.24 4

Others 2 3 2 8 85 1.29 5

Fig.4


Newspaper, Television and Internet are the major sources which makes the consumersaware of the Eco-Labelled products the most.

Table 33: Consumers use Eco-labelled goods because: (Rank from 1-7)

Attributes Ranks

Weighted Rank1st 2nd 3rd 4th 5th 6th 7th Score

Environment Friendly 31 51 12 6 0 0 0 6.07 2

Good for Health 52 37 5 5 0 1 0 6.33 1

Others are using so I am 12 3 38 17 16 10 4 4.32 3

Because they are Costly 3 5 13 25 23 18 8 3.29 5

Forced by Law 2 2 14 33 25 19 5 3.46 4

Compulsion by Family 0 1 14 9 19 38 19 2.64 6

No Reason to use 0 2 3 5 13 13 64 1.76 7

Fig.5


Environment Friendliness and Good for Health are the attributes due to which consumersuse Eco-Labelled goods the most.

FINDINGS AND CONCLUSIONMost of the respondents agree that growth in the various economies in the world iscausing a drift in the consumption pattern among the consumers.From the study it is concluded that most of the respondents agree that education ofthe consumer is opening up new avenues for the companies to launch products whichare safer to use and do not cause damage to the environment.From the study it is concluded that overall the consumers do have a concern with thedegradation of the environment.Most of the respondents agree that they are fully aware with Eco-Labelled productsin market.Most of the respondents agree that they give priority to eco-labelled products whilepurchasing.Overall consumers agree that Eco labeled Food & FMCG goods are more acceptableto them.From the study it is concluded that respondents agree that they relate eco-friendly(Eco labelled) products with good health.Most of the respondents strongly agree with the statement that they buy eco-friendlyproducts for the safety of the environment.Most of the respondents strongly agree to the statement that Eco labeled goods willenhance their quality of life.

Fig.6


Most of the consumers agree that Eco-Labelled products are costlier than otherproducts.Most of the consumers agree to the statement that In spite of high cost they willadopt Eco-labelled products.Most of the consumers agree that they know what environmental symbols mean onproduct packages.From the above study it is concluded that respondents are mostly aware with thesymbol of “Do not Litter” on product packages and then with the symbol of “Recycle”.Most of the consumers disagree to the statement that charging of higher price forEco-labelled goods is justified.From the above study it is concluded that most of the respondents are aware of Eco-Labelled Apparels from several years but they are not a regular user of them.Most of the consumers are neutral to this statement that they are aware about thespecialized outlets in the city selling Eco-Labelled products.Most of the consumers agree that Eco-Labelled products can easily differentiatethemselves from others.Consumers are neutral to this statement that eco labeled products are easily availablein the market.Overall consumers agree that Eco-Labelled products enhance Brand Value.Most of the consumers are neutral to this statement that claims about Eco-Friendlinessof Eco-labelled goods are absolutely true.Food and FMCG are the product categories which are preferred by the consumersthe most in Eco-Labelled Products in the market.Television, Internet and Newspaper are the sources which makes the consumersaware of the Eco-Labelled products the most.Environment Friendliness and Good for Health are the attributes due to whichconsumers use Eco-Labelled goods the most.

SuggestionsBased on the findings of the study, following are the suggestions & recommendations.1. The study was limited so there is a need of further investigation and research which

may be beneficial for consumers and industry.2. Increase public awareness of environmental issues and the importance of Ecolabelling.3. Government should simplify the procedure of obtaining Ecolabels.4. Government should provide financial and technical support to industry to adopt

environmentally friendly technologies.5. Consumers should give more importance to environmental considerations while

choosing products.6. Consumers should be prepared to pay more for environmentally friendly products.


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