Socially Conscious Consumerism Highlights for Educators from a Systematic Review of the Body of Research Dr. June Cotte Richard Ivey School of Business Commissioned by: Network for Business Sustainability

The Terra Bite Case Study A case study (available here) was developed to support this project. It deals with voluntary consumer payment method The implicit assumption of the owners is ethical behaviour on the part of consumers, most of the time Another implicit assumption is that socially responsible consumers will pay enough of a premium to more than compensate for free-loaders The results of a knowledge project undertaken for the Network for Business Sustainability looked deep into the evidence underlying these and similar assumptions

Research Question and Approach Are consumers willing to reward firms for their positive CSR-related actions? if so, by how much? what factors influence whether they will? do they also punish (monetarily)?

What is CSR? Keywords searched: Organic products Local purchasing Recycling Slow food Socially conscious consumerism Environmental consumerism Social marketing Green consumption Cause-related marketing Eco-friendly products Paying for ethical behaviour Sustainable products / consumption Ethical firm behaviour Corporate social responsibility

What is included in the study? Search found nearly 1,700 academic articles and industry reports Excluded least relevant and worst quality studies Analyzed 91 articles on consumer willingness to pay for CSR initiatives

Results: Types of Studies

Results: Location of Consumers

Results: Meaning of CSR

Results: Meaning of CSR

Results: Consumer Willingness to…

Results: Attitudes

Results: Behaviours

Results: Intentions

Results: Intentions vs. Behaviours Note: based on a small set of the total studies that included specific increases (13/91).

Conclusions Behavioural studies trump surveys Surveys yield wider range of results than observing consumer choices Attitude-Behaviour gap confirmed Intentions > behaviours Biggest gap on the environment: consumers are willing to change but not pay more Smallest gap on organic, ethical sourcing, and animal rights: fewer studies show willingness to change, but those that do also show that consumers are willing to pay more

What’s a Marketer to Do? “…assuming all else is constant, consumers are more likely to purchase from companies that engage in CSR actions, particularly in domains that consumers deem appropriate and personally relevant… [but]… little is constant in the real marketplace.” (Du, Bhattacharya and Sen 2007) Messaging needs to position along the lines of “there is no trade-off” — consumers expect the “better” alternative to be at least equal in price and quality to what they are already buying If you plan to charge a premium, messaging needs to revolve around other ways your offering saves money (the ‘value in use’ argument from the B2B area)

Future Opportunities What influences consumers? We lack consensus on the profile of the socially conscious consumer and company: My final report will have a model of possible influences But we must better understand the influences and the gaps between attitudes, intentions, and behaviours Research in this area needs to be more rigorous. Price and quality are never equal, so let’s not assume they are

Research Opportunities Enough surveys. We need better methods: Self-reported survey results simply are not up to the task of determining a price premium, or real marketplace behaviour Consumers often assume the socially conscious choice must be either more expensive, or not as effective More rigorous methods include conjoint, forced-choice, traditional experiments

Social and Peer Influence Influences Gender, Age, Education SEC, Culture, Nation Involvement Social and Peer Influence Gov’t Policy Willingness to Change Behavior Willingness to Pay a Premium Firm CSR Actions Consumer Attitudes towards CSR Actions Consumer Behavioral Intentions Willingness to Punish Enhancements and Impediments Impediments: Contradictory firm actions Prior negative consumer knowledge or attitude re: firm Enhancements: Consumer knowledge of action Consumer understanding Prior positive consumer attitude re: firm Company / issue fit Impediments: Negative consumer attributions (why? greenwashing) Effect on perceived quality Negative perceptions of consumer efficacy Consumer sacrifice Enhancements: Positive perceptions of consumer efficacy Acceptance of firm and consumer responsibility Impediments: Competitive actions Confusion at POP Habit Misleading packaging Required trade-offs Enhancements: Clear benefit Prior small commitment Consistency/fit with brand Salience of issue Simplified claims/labels In-store education