CONSUMER PREFERENCE TOWARDS GREEN RECYCLABLE PRODUCTS

Submitted To:

Prof: Vishal

Submitted By: Section J, Group No. 10

Vikas Saini 11BSPHH010951

Piyush Chandak 11BSPHH011026

Ayushi Agarwal 11BSPHH011066

Rajan Singh 11BSPHH010640

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INDEX

S. No Particulars Page No.

1 Abstract 3

2 Introduction 3

3 Literature Review 4

4 Data, Variable and Methodology 6

5 Questionnaire 7

6 Working & Analysis 10

7 Assumptions 10

8 Discriminant Analysis 11

9 Results 15

10 Value addition 15

11 Limitations 16

12 Reference 17

ABSTRACT

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The purpose of the study was to examine the variables that affect the consumer preference

towards green recyclable products, and then differentiate the consumer in two different group of

buyer or non buyer of green product on the basis of factors or variables.

Initially we selected 12 variables and prepared a Questionnaire to measure the attitude of

customers towards green recyclable products through these variables but 3 variables were of not

our use so we drop them. We conducted a questionnaire and focus group study to identify

variables. The Questionnaire was designed based on Likert scale.

The data collected and after coding used in SAS to analyze since our dependent variable is in categorical in nature we used discriminant analysis for our study, taking consumer purchase behavior as our dependent variable.

INTRODUCTION

Green recyclable products are those products which are bio-degradable and reusable the other characteristics of these products are they are non-toxic, non corrosive, and non allergenic due these characteristics these products have minimum or no harmful effect on the environment and therefore these are also known as hygienic products. These are also known as eco-friendly products made up of natural fibers and thus they help in saving the natural resources.

Green recycled products can be broadly defined into various categories such as:

Products That Conserve Natural Resources Products That Contribute to a Safe, Healthy Built Environment Products Made with Recycled, or Agricultural Waste Content-post and pre consumer

Product Products That Avoid Toxic or Other Emissions.

Some of the examples of green products are: cloth/paper/jute bags, recycled paper cartons, and recycled paper notebooks, cola in recycled cans, green building products i.e. AAC (Aerated Aerocon Cement Blocks, Flex-o-board) and other products which can be created through the recycling process.

LITERATURE REVIEW

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Consumers can degrade or uplift the environment, through their buying behavior, or more

precisely: how customers evaluate recycled (green products) individually and with respect to non

green products? When we buy products made from recycled materials, it is a crucial step in

supporting recycling programs and resource conservation. Resources are saved only when

recycled products are purchased. Olyne and Bryce (1990) highlight the fact that research at

individual level regarding factors that contribute towards the change in perception of consumer

for recycled products is important. The growing social and regulatory concerns for the

environment lead an increasing number of companies to consider green issues as a major source

of strategic change. In particular, this trend has major and complex implications on the

technological strategy of a company and on its product innovations. Even though it is increased

eco-awareness of Sri Lankan customers during the past few decades, there are some barriers to

the diffusions of more ecologically oriented consumption and production styles. Therefore,

companies are increasingly recognizing the importance of green marketing concepts. The

purpose of study was to investigate the attributes which influence perceptions of customers

towards purchasing eco- friendly products and their willingness to pay on green products.

The current rapid growth in the economy and the patterns of consumers’ consumption and

behavior worldwide are the main cause of environmental deterioration. As the environment

continues to worsen, it has become a persistent public concern in the developed countries and has

recently awakens developing countries to the green movement. This paper is essentially

exploratory in nature and has two objectives. The ‘attitude–behaviour gap’ or ‘values–action

gap’ is where 30% of consumers report that they are very concerned about environmental issues

but they are struggling to translate this into purchases. For example, the market share for ethical

foods remains at 5 per cent of sales. This paper investigates the purchasing process for green

consumers in relation to consumer technology products in the UK. Data were collected from 81

self-declared green consumers through in depth interviews on recent purchases of technology

products. A green consumer purchasing model and success criteria for closing the gap between

green consumers’ values and their behavior are developed. The paper concludes that incentives

and single issue labels (like the current energy rating label) would help consumers concentrate

their limited efforts. More fundamentally, ‘being green’ needs time and space in people’s lives

that is not available in increasingly busy lifestyles.

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Consumers psychological benefit from the purchase was added as part of the purchase

utility in this research study . The theory assumes that consumers always try to maximize

their purchase utility which is the benefit received from the purchases good and the price

when they make purchase decisions. It has been found that manufacturers and marketers

have responded to this environmental trend . The introduction of new and green product

has grown by 100% per year since 1985. However the environmental trend cannot ensure

the success of the green market because consumers purchase behaviors and attitude have

not changed as quickly as their environmental awareness. Consumers receive both quality

benefits and psychological benefits by paying money and other costs such as time and

efforts for each purchase transaction. The quality benefit is the received quality from a

product itself or life improvement through using the product. On the other hand the

psychological benefit is the positive feeling about the purchase for example self image

built from buying a special product or a feeling of getting a deal due to the lower price.

Since consumers always try to maximize their purchase utility from the purchase of the

recycled product they should perceive more purchase utility from the purchase of

recycled products than the purchase of the ordinary product. The hedonic price technique

has been applied extensively to housing markets and labour markets. Studies showed that

they care that how good is produced and look to buy environmentally friendly products

when possible. It is possible that some consumers might be willing to pay more for the

recycled good to improve environment quality . Overall, environmental quality would

improve slightly, but the improvements would not necessarily be perceived by the

individuals making the purchase

In this paper they have tried to study approaches regarding several aspects of the decision

making processes of the final consumer, analyzing, how significant their decision of buying was

that prove themselves wrong later. Reusable alternative products points mostly to shopping bags.

There are a number of reusable shopping bags available instead polythene bags such as

recyclable paper bags, jute bags, and bags made from synthetic like polypropylene, polyethylene

and nylon.

Data, Variables & Methodology

VARIABLES:

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Dependent: In our research the dependent variables is categorical in nature i.e. either consumer will buy the green recycle product or they wouldn’t buy. We take dependent variable as purchase behavior and ask response on 5 point Likert scale, the responses on this are taken as ‘0’ for 1 and 2 and ‘1’ for 4 and 5, the response ‘3’ we did not consider in our study.

So we classify it as:

0 as consumers will not buy green recyclable products.

1 as consumer will not buy green recyclable products.

Independent: To find the independent variables we conducted interviews, focus group study. And we found the following independent variables. The independent variables are interval of ratio type.

S. No. Independent Variable Source Relationship with dependent variable

1 Price of product

Interview

Direct

2 Availability of product Inverse

3 Awareness level among consumer Direct

4 Peer - effect (me too)

Focus group study

Inverse

5 Rules and regulations Direct

6 Promotion Direct

7 Safety Direct

8 Variety Direct

9 Quality (Attractiveness) Inverse

SAMPLE AND DATA:

Target population: Our major part of respondents are students from IBS Hyderabad as the students over here are from diverse background so it’s good for our study and a minor part of respondents are other people who are in contact with us from various metro cities.

Sample size: We got total of 183 responses out of which some responses are incomplete which we cannot use in our study so after eliminating those responses finally we left with 152 responses.

We are getting the data through the primary data source for which we have prepared a questionnaire that included a combination of open ended response question, fixed alternative question and Likert scale of 1-5 rating, which we have sent to our target population. The designed questionnaire is given as below:

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QUESTIONNAIRE

Consumer preference towards purchasing of green recyclable products:

Rate the following questions on the basis of following 5 point likert scale.

1- Strongly Disagree; 2- Disagree; 3- Neutral; 4-Agree; 5- Strongly Agree

1. How significant do you think is to spread the awareness of the green recyclable

products?

1 2 3 4 5

2. How significantly do the advertisements of these products help you to purchase

these products?

1 2 3 4 5

3. Does the usage of green recyclable products help in the betterment of the

environment in the long run?

1 2 3 4 5

4. Do you think that the green recyclable products are reliable?

1 2 3 4 5

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5. Does investing in paper bags a source of green recyclable product give a sense of

contribution towards environment?

1 2 3 4 5

6. Durability is an issue while purchasing Paper Bags?

1 2 3 4 5

7. Paper Bags are easily available in the market for purchase?

1 2 3 4 5

8. Do you feel like purchasing a paper bags because your colleague/relatives/friends

use it?

1 2 3 4 5

9. Do you think that the premium charged for paper bags are justified?

1 2 3 4 5

10. Safety is a concern when purchasing green recyclable products?

1 2 3 4 5

11. Do you think that paper bags are safe to use?

1 2 3 4 5

12. Promotion of bio-degradable products will help to increase awareness paper bags?

1 2 3 4 5

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13. If the utility derived from Paper Bags is satisfactory will you go for repurchase?

1 2 3 4 5

14. Does green recyclable segment market offer a variety of products?

1 2 3 4 5

15. Is Law and Regulations an effective way of forcing people to buy such green

recyclable products?

1 2 3 4 5

16. Do you prefer to use or purchase paper bags instead of plastic bags?

1 2 3 4 5

17. Personal Details

Name: _____________________________________

Age: ________

Gender: M F

Marital Status: Single

Married

Other

What is your educational level? 

 Inter

 Graduate

 Post Graduate

 Others

What is your current occupation? *

 Employed

 Self-employed

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 Students

 If others please specify..............................

______________________________________________________________________________

Working and Analysis:

Assumptions

1. First we filter the data as per our need or suitability for model and coded it into excel for dependent variables.

2. Checked the independent variables whether normally distributed or not. (SAS describe distribution analysis)

Tests for Normality - Shapiro-Wilk Test

Variable W - Statistic p Value (Pr < W)Awareness 0.899638 <0.73451Advertisements 0.880908 <0.68638Availability 0.900095 <0.85730Peer effect 0.908344 <0.82326Price 0.899634 <0.80636Safety 0.846804 <0.66401Variety 0.899638 <0.76365Law and Regulations 0.902982 <0.74553Attractiveness 0.901717 <0.80042

Since the p – value of Shapiro – Wilk test for all variables are more than (0.05) so we accept the null hypothesis that the Independent variables are normally distributed. Therefore the I.Vs is normally distributed.

3. Checked the multicollinearity of independent variables with the help of VIF option of linear regression.

Parameter Estimates

Variable DFParameter

EstimateStandard

Error t Value Pr > |t|VarianceInflation

Intercept 1 -0.89299 0.12175 -7.33 <.0001 0awareness 1 0.11189 0.02311 4.84 <.0001 1.59476advertisements 1 0.08353 0.02701 3.09 0.0024 1.47141available 1 -0.00705 0.02814 -0.25 0.8026 1.55550friends 1 -0.02301 0.02726 -0.84 0.4002 1.38238

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Parameter Estimates

Variable DFParameter

EstimateStandard

Error t Value Pr > |t|VarianceInflation

Price 1 0.09199 0.02944 3.12 0.0022 1.85939Safety 1 0.04812 0.02304 2.09 0.0385 1.58013variety 1 0.06105 0.02886 2.12 0.0362 1.75245Law and Regulations 1 0.09122 0.02108 4.33 <.0001 1.19890attractiveness 1 -0.01168 0.02327 -0.50 0.6164 1.37534

The Variance Inflation for all the variables is less than 5 therefore there is no multicollinearity exist between the independent variables. The data is free from multicollinearity.

4. Test of Homogeneity of Within Covariance Matrices

Chi-Square DF Pr > Chi Sq100.959278 45 <.0001

Since the Chi-Square value is very high than p – value so we accept the null hypothesis that the covariance among variables of different group are same.

4. Discriminant Analysis.

a. Class level information: It shows us the proportion and weightage of sample belongs to different group i.e. out of 150 sample size 40.6% belongs to consumer not prefer green product while 59.33% belongs to consumer who prefer green products.

Class Level Information

PurchaseVariableName Frequency Weight Proportion

PriorProbability

00 61 61.0000 0.406667 0.50000011 89 89.0000 0.593333 0.500000

b. Univariate test statistics:

Univariate Test StatisticsF Statistics, Num DF=1, Den DF=148

Variable

TotalStandardDeviation

PooledStandardDeviation

BetweenStandardDeviation R-Square

R-Square/ (1-RSq) F Value Pr > F

awareness 1.3646 1.0614 1.2152 0.3992 0.6643 98.32 <.0001

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Univariate Test StatisticsF Statistics, Num DF=1, Den DF=148

Variable

TotalStandardDeviation

PooledStandardDeviation

BetweenStandardDeviation R-Square

R-Square/ (1-RSq) F Value Pr > F

advertisements 1.1216 0.9401 0.8691 0.3022 0.4331 64.10 <.0001available 1.1070 1.0168 0.6281 0.1621 0.1934 28.62 <.0001friends 1.0770 1.0740 0.1683 0.0123 0.0124 1.84 0.1769Price 1.1566 0.9581 0.9200 0.3185 0.4673 69.16 <.0001Safety 1.3627 1.1684 0.9976 0.2697 0.3694 54.67 <.0001variety 1.1455 1.0162 0.7543 0.2183 0.2792 41.33 <.0001Law and Regulations 1.2971 1.1883 0.7456 0.1663 0.1995 29.53 <.0001attractiveness 1.2589 1.2571 0.1731 0.0095 0.0096 1.42 0.2349

The above table shows that except friends and attractiveness all other variables are having p –

value less than (.05) so for these variable null hypothesis is rejected and it can be said that these

variables has significant impact on dependent variable i.e. consumer purchase preference

towards green products.

c. Canonical discriminant analysis:

CanonicalCorrelatio

n

Adjusted

CanonicalCorrelatio

n

Approximat

eStandard

Error

Squared

CanonicalCorrelatio

n

Eigenvalues of Inv(E)*H

= CanRsq/(1-CanRsq)Test of H0: The canonical correlations in the current row and all that follow are zero

Eigenvalu

e

Differenc

e

Proportio

n

Cumulativ

e

Likelihood

Ratio

Approximate

F ValueNumDF

DenDF Pr > F

0.800312

0.789218

0.029451

0.640499

1.7816

1.0000

1.0000

0.35950081

27.71 9 140 <.0001

Because there are two groups in the dependents variable so only one discriminant function is

estimated. The Eigen value of this function is 1.7816 which is much higher than 1 show the

discriminant analysis is good and it account for 100% of the explained variance.

The canonical correlation of this function is 0.800312 and the square of this correlation is

0.640499 indicates that more than 64% of the variance in the dependent variable purchase

preference is explained or accounted by this model.

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Also it may be noted that the Wilk’s Lambda i.e. likelihood ratio is 0.3595 which transforms to a

chi-square of 27.71 with 9 degree of freedom, this is significant beyond the (0.05) level so we

can say that the model is a good one.

d. Standardized canonical coefficients:

Total-Sample Standardized CanonicalCoefficients

Variable Can1awareness 0.6434619752advertisements 0.3948165697available -.0328726322friends -.1044201855Price 0.4483738615Safety 0.2763390554variety 0.2946827865Law and Regulations 0.4985865572attractiveness -.0619717862

This table helps us to differentiate the consumer to different group i.e. within dependent variable.

The magnitude can1 values of the respective variable indicate the strength of that variable with

which it influences the dependent variable. Therefore we can classify respondents who rate high

on awareness, advertisements, price, safety, variety and L&R as group ‘1’ who prefer to buy

green recyclable products and the other respondents who rate high on availability, friends and

attractiveness belongs to group ‘0’ which imply these respondents prefer not to buy green

products.

e. Class means on canonical variables (Group Centroid)

Class Means on CanonicalVariables

Purchase Can10 -1.6014916161 1.097651557

Here it shows the centroid of the two groups giving the value of the discriminant function

evaluated at the group means. For group ‘0’ the centroid is negative i.e. -1.60 and group ‘1’

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centroid is positive 1.097 their magnitude differs as the number of respondents in the group are

different.

f. Resubstitution summary:

Number of Observations and PercentClassified into Purchase

From Purchase 0 1 Total0 59

96.722

3.2861

100.00

1 910.11

8089.89

89100.00

Total 6845.33

8254.67

150100.00

Priors 0.5 

0.5 

  

The table gives us the hit ratio according to Resubstitution which develops the model considering

all the data which is to be analyzed. According to this method the total hit ratio (indentify the

responses correctly classified and misclassified) is 92.66% out of which 96.72% and 89.88%

responses are correctly classified in group ‘0’ and ‘1’ respectively.

g. Cross validation summary:

Number of Observations and PercentClassified into Purchase

From Purchase 0 1 Total0 57

93.444

6.5661

100.00

1 1213.48

7786.52

89100.00

Total 6946.00

8154.00

150100.00

Priors 0.5 

0.5 

  

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It develops model fixing one response which is to be analyzed and taking into consideration rest

of the responses. In this model total hit ratio is 89.33%, which is lower than Resubstitution

method and is better method to classify the response as correct or misclassified.

Results:

Since the model fulfill all assumption of discriminant analysis and at the same time found good

model for the study, we can drawn following inferences:

Except friends and attractiveness all other variables have significant influence on

dependent variable.

64% of the variance in the dependent variable purchase preference is explained or

accounted by this model.

Group ‘1’ favorable purchase behavior towards green products consists of respondents

who rated high on awareness, advertisements, price, safety, variety and L&R

Group ‘0’ unfavorable purchase behavior towards green products consists of respondents

who rated high on availability, friends and attractiveness

Out of total responses 89.33% of responses are correctly classified.

Value:

The project generated following values:

First of all this project gives us the practical exposure to carry out a research and it’s

different aspects like questionnaire design, methodology and tool, analysis and

interpretation of result.

The project can be used as a pilot study for the same purpose and can be exercise at

greater level outside the campus or in the company.

The project tells us about the factors which influence consumer preference towards green

recyclable products

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Limitations:

There are following limitation of the project:

The respondents are similar in characteristics in terms of age, education, experience and

little exposure towards purchasing so the response might not be diverse in nature.

Since major respondents are students therefore we could not include other important

variables in our study e.g. income, age, education level etc.

Due to above reasons we cannot generalize the result it may vary significantly if the

respondents are really from diverse in nature.

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REFERENCES:

1. William G. Zigmund, 7th Edition, Business Research Methods.

2. Marketing Research 6th Edition, Naresh K. Malhotra and Satyabhushan Dash

3. Article “New or recycled products: how much are consumers willing to pay?”Leila hamzaoui Essoussi and fonathan D. LintonTelfer School of Management, Canada.

4. Article “Targeting consumers who are willing to pay more for environmentally friendly products”Michel Laroche, Jasmin Bergeron and Guido Barbaro-ForleoProfessor of marketing, John Molson School of business, Canada.

5. The Determinants of Consumers’ Purchase Decisions for Recycled Products and Application Of Acquisition – Transaction Utility Theory, Lien- Ti Bei, Eithel M_Simpson.mht.

6. Tan Booi Chen, Lau Teck Chai, Attitude Towards The Environment And Green Products: Consumers’ Perspective, 2010 (http://cscanada.net)

7. William Young, Kumju Hwang, Seonaidh McDonald, Caroline J. Oates, Sustainable Consumption: Green Consumer Behavior When Purchasing Products, 2009 (http://onlinelibrary.wiley.com)

8. W.M.C.B. Wanninayake, Pradeep Randiwela, Consumer Attractiveness Towards Green Products Of FMCG Sector: An Empirical Study, 2008 (http://www.docstoc.com)

9. Alternatives To Disposable Shopping Bags And Food Services, Prepared For Seattle Public Utilities Bags And Food Service Vol-I (www.seattlebagtax.org)

10. Public Attitudes Towards Recycling And Waste Management, The Strategy Unit, Cabinet Office

11. http://www.indiana.edu/~statmath/stat/all/normality/normality.pdf

12. http://www.uk.sagepub.com/burns/website%20material/Chapter%2025%20%20Discriminant%20Analysis.pdf

13. Article “The link between green purchasing decisions and measures of environmental consciousness Bodo B. Schlegelmilch”

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The American Graduate School of International Management,Glendale, Arizona, USA, Greg M. Bohlen and Adamantios Diamantopoulos

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