The success of market promotion of a certain cleaner products considerably depends on accuracy of the account of personal characteristics of existing and potential consumers, of their attitude towards ecological compatibility of production (either to buy cheap products, not paying attention to their ecological compatibility or to protect oneself against detrimental health effect by choosing green ones).
By the attitude towards ecological compatibility of the goods consumers are divided into such who pay attention to ecological compatibility and those who do not pay (indifferent in this respect). There is also a small category of customers who think that the information on ecological compatibility is an advertising gimmick and therefore do not believe and show a negative attitude towards ecological compatibility data.
Annotation
The important and perspective purchasing power of green goods is children. They essentially influence the decision of parents concerning purchases, and they are the future consumers and intermediaries between manufacturers and parents themselves. In the USA more than 1/3 of parents have changed the consumer behavior because their children convinced them of importance of environmental problems. 26 percent of US college freshmen participate in programs on cleaning and environment preservation. Students are also active supporters of environmental organizations as they, as a rule, are most socially active group of the population. Thus, in 1990 students have sent about 3000 letters to McDonalds’s headquaters, where they demanded to stop using foam plastic containers.
In turn people, who pay attention to ecological compatibility of products, are divided into three groups: truly green, moderately green and green-like [55].
Annotation
Domestic researches on discovery of market shares of various consumers with different strength of motive of environmentally focused consumption have not been conducted. For acquaintance there is the segmentation of the North America market in appendix A.
Truly green consumers are customers who take part in many environmentally focused measures, from recirculation till making environmentally focused purchases and are ready to pay higher price for ecological compatibility of products.
The consumers who are ready to pay reasonably advanced price for eco-friendly goods (in American slang they are called "green-back") are moderately green.
Green-like are consumers who as for the mental attitude towards environmental problems approximate to the green ones, however do not carry out environmentally focused measures. They are concerned very much with environmental condition, wish to improve it, but do not manifest environmentally focused behavior, including consumer one.
Annotation
There are also other approaches to the similar classification. Thus, being guided by the Roper Organization's research (1992) and by own results of researches, J. Ottman divides all customers into the following groups [13]:
• truly "green” (fans) - 20%;
• potentially "green” (youth) - 5%;
• passive "green” (those who have not decided yet) - 31%;
• dissatisfied - 9%;
• the rest part of the population - 35%.
Besides, J. Ottman’s research shows that females are more environmentally informed than males, and the most active consumers of cleaner products are families with children.
This is due to the fact that women trust more in environmental appeals more trustfully and have well developed instinct of self- and family preservation. The typical "green" consumer - educated, rich, politically liberal female, at the age of from 30 till 49 with children, wishing to preserve one’s own health and that of the family, and the planet for the future generations too. Purchasing power and ability to influence people is a desirable type of environmentally conscious customer.
As a result of other research carried out by the Roper Organizatiоn (1992), they have distinguished the following four groups of environmentally conscious consumers:
• 1st group: "green" activists (5-15% of the population) - supporters or members of environmental organizations;
• 2nd group: "green" thinkers (30% of the population with 1st group included) - search for new green goods and services, new ways and possibilities for strengthening of safety of their life and health;
• 3rd group: "green" consumers (45-60%, together with 1st and 2nd groups) - buy and consume production related to eco-friendly one;
• 4th group: prospective customers (90%, including the previous groups) - assert that they are interested in ecological results.
Let us consider the utility received by different types of consumers due to ecological compatibility, and readiness to pay a premium for ecological compatibility of products (cleaner foodstuff as an example).
At the normal premium, types of consumers with different attitude towards ecological compatibility have different utility from each additional unit of ecological compatibility (fig. 8.1).
Fig. 8.1. Utility functions of ecological compatibility (Ue, $) At the normal premium (Np, $) for different types of customers: 1 - truly green; 2 - moderately green; 3 – green-like
The consumer who is indifferent to ecological compatibility even at the same price for cleaner and doubtful product will choose cheaper product.
For truly green consumer each additional unit of ecological compatibility causes the increasing utility at reasonable price growth (i.e. such which really reflects ecological compatibility increase, for foodstuff it is about 4-6%, on fig. 8.2 - 5%).
Even faster the utility increases at low premiums (2-4%, on fig. 8.2 - 3%).
Graphically the utility growth at ecological compatibility increase can be represented in the form of a semiparabola abruptly rising upwards. At the high premium (6-10%, on fig. 8.2 - 7%) linear utility growth occurs, at low one - its rapid growth.
Fig. 8.2. Functions of specific (per unit of additional ecological compatibility) utility (Ue.u.) of truly green customer at different price premiums
1 2
3 Ue
Np
3% 5% 7%
Ue.u.
P
For moderately green consumer the even increase in ecological compatibility at the normal price premium causes linear growth of the utility, and at low - its rapid growth. At the high price premium there is almost no utility growth (fig. 8.3).
Fig. 8.3. Functions of specific ecological compatibility utility of moderately green customer at different price premiums
The green-like consumers feel the utility growth only at ecological compatibility increase that is accompanied by slight increase of prices (fig. 8.4). Along with ecological compatibility growth and accordingly that of prices, the utility gain decreases at each proportional increase in ecological compatibility and accordingly in prices.
Fig. 8.4. Functions of specific ecological compatibility utility of the green-like customers at different price premiums
The attitude of customers towards ecological compatibility is different concerning various green products. They are willing to pay for some kinds of cleaner food a sufficiently high price, but they do not pay attention to ecological compatibility of others.
3%
7%
Ue.u. 5%
P
Ue.u.
P 3%
7%
5%
It is necessary to mention that the premium up to 2% is ultralow one because it is beyond the bounds of consciousness. It can be safely used even in case of consumers indifferent to ecological compatibility.
Making division of consumers into the mentioned groups in modern conditions is extremely important while forming marketing price policy of enterprises-manufacturers and sellers of foodstuff.
Example
During research of the market of cleaner cultured milk foods in Sumy city real consumers of groups 3-4 (fig. 17.1) by readiness to pay for ecological compatibility of production different premiums, it was stated at the survey, all consumers have been divided into the following groups (fig. 8.5).
In the course of research of the market of cleaner cultured milk foods in Sumy city it turned out that those who pay the most attention to ecological compatibility of production were females buying it for children or having high income level. In the group of customers willing to pay for ecological compatibility the premium higher than 10%, there are mostly well-to-do people. In total the considerable part of the population buys cleaner cultured milk foods, but only about 7% because of its ecological compatibility. Middle-income people are guided simultaneously by ecological compatibility and flavouring qualities. When offered to choose from three kinds of products 40 percent have chosen a traditional kefir, 25 percent - biokefir, 35 percent - kefir with lactose. Frequencies of the choice of cultured milk foods of the same level of ecological compatibility of different manufacturers vary.
Fig. 8.5. Groups of actual consumers according to their readiness to pay different price premiums for environmental cleanliness of food
Many consumers give preference to the definite trade mark. For example, when one needs to purchase cultured milk foods s/he comes to a shop and looks for or asks a shop assistant for the products of Temirtau dairy factory. However if there is none s/he buys products of other marks. The choice among the various goods and trade marks is made when there is a sufficient assortment.
4 ≤ P ≤ 6 16%
6 < P ≤ 10 8%
P > 10
14% 0 ≤ P ≤ 2
42%
20%
2 < P ≤ 4
At that consumers can be divided into the following groups:
1) supporters of the certain trade mark;
2) supporters of a certain variety of products (for example, containing bifidus bacteria);
3) those who make choice irregularly and spontaneously.
The bulk of consumers when a new product appears at the market gets at first read carefully foodstuff content, attentively rereads the information given on its package, thus estimating product environmental cleanliness. Hereinafter customers only compare the product price, the idea about environmental cleanliness of production; they have got at their first acquaintance with it, as well as the taste of analyzed products.
To know the types of consumers by ecological compatibility of their behavior is necessary at segmentation of the green products market, and also while forming a marketing price policy of enterprises promoting green production to the market.
Topic 9. Readiness of consumers to pay a premium for ecological