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UNLV Theses/Dissertations/Professional Papers/Capstones 12-1-2010 A Study on eco-friendly merchandise in a resort retail environment Lindsey C. Patrick University of Nevada, Las Vegas Repository Citation Patrick, Lindsey C. , “A Study on eco-friendly merchandise in a resort retail environment” (2010). UNLV Theses/Dissertations/ Professional Papers/Capstones. Paper 723. http://digitalcommons. library. unlv. edu/thesesdissertations/723 This Thesis is brought to you for free and open access by University Libraries.
It has been accepted for inclusion in UNLV Theses/Dissertations/ Professional Papers/Capstones by an authorized administrator of University Libraries. For more information, please contact marianne. buehler@unlv. edu. A STUDY ON ECO-FRIENDLY MERCHANDISE IN A RESORT RETAIL ENVIRONMENT by Lindsey Clarissa Patrick Bachelor of Science University of South Carolina 2006 A thesis submitted in partial fulfillment of the requirements for the Master of Science in Hotel Administration William F. Harrah College of Hotel Administration Graduate College University of Nevada, Las Vegas December 2010
Copyright by Lindsey Clarissa Patrick 2010 All Rights Reserved THE GRADUATE COLLEGE We recommend the thesis prepared under our supervision by Lindsey Clarissa Patrick entitled A Study on Eco-Friendly Merchandise in a Resort Retail Environment be accepted in partial fulfillment of the requirements for the degree of Master of Science in Hotel Administration William F. Harrah College of Hotel Administration Curtis Love, Committee Chair Karl Mayer, Committee Member Bo Bernhard, Committee Member Jack Schibrowsky, Graduate Faculty Representative Ronald Smith, Ph. D. Vice President for Research and Graduate Studies and Dean of the Graduate College December 2010 ii ABSTRACT A Study on Eco-Friendly Merchandise in a Resort Retail Environment by Lindsey Clarissa Patrick Curtis Love, Examination Committee Chair Associate Professor of University of Nevada, Las Vegas The purpose of this study is to determine consumer purchasing habits of ecofriendly apparel in a retail resort environment. In order to find the rationale behind purchasing decisions, this study measured sales and survey responses based on the choice of two tee shirt options, eco-friendly tee shirts and regular cotton tee shirts.
The survey was given to all customers purchasing these tee shirts in order to determine specific demographic information as well as their personal opinions on eco-friendliness, and willingness to pay a premium for eco-friendly products. Due to a lack of previous research in this field, this study is considered exploratory. The data was collected from a resort retail store in Ocean Beach, NY. All surveys were completed during the 2010 summer season. Data analysis found that positive attitudes regarding eco-friendliness and the willingness to pay a premium for eco-friendly products were indicators of eco-friendly apparel purchases.
There was also a positive relationship between the percentage more customers were willing to pay for eco-friendly products and their overall eco-friendliness. The respondent demographics that led to an increased purchase of eco-friendly apparel included gender (females) and permanent residence (urban). iii ACKNOWLEDGEMENTS I would like to begin by thanking all of my thesis committee members as their help and guidance was invaluable to the completion of my thesis. As my committee chair, Dr. Curtis Love assisted me in the development of my topic and provided the direction and tools needed to complete my study.
Due to his retail background, Dr. Love was able to guide me in the steps towards turning an idea into a study and creating the groundwork needed for my final product. Dr. Love’s interest and encouragement towards my topic lead to the successful completion of my thesis. Dr. Karl Mayer has been a wonderful advisor throughout my time at the College of Hotel Administration and has not only helped to perfect the final copy of my thesis, but has also provided his breadth of knowledge and assistance to my entire experience in this program. Dr. Bo Bernhard was the catalyst in my idea to write a thesis.
Due to his enthusiasm for research, I was motivated to develop my own study and compile data through original research. Dr. Jack Schibrowsky has assisted me in the development of my topic and the examination of the data results. He has also provided insight into the importance of research studies and will have a lasting impression on me due to his unconventional wisdom. I would like to thank all of the employees at my store, Bambootique. Without their support in this study and their assistance in dispersing the surveys to customers, I would not have been able to collect enough data to conduct this study.
I would also like to thank my family for all of their support in this process. I would like to thank my mom, Ilene Patrick, for all of her help facilitating the study in Bambootique. She was an important asset to the placement and displays used for the tee iv shirts, the handling of the customer surveys, and the support in trying to get as many surveys completed as possible. I would like to thank my dad, Bob Patrick, as he has been a long-term supporter of my education and has provided motivation throughout.
He has been able to guide me through this process, and I would not have made it this far if it wasn’t for his similar passion for education. Finally, I would like to thank my soon-to-be husband, Sean Klentzin, for his of dedication to my research and his support throughout. He had the original idea for me to conduct a study on eco-friendly apparel, and spent countless hours working with me as I expanded on his notion into a research study. Thank you to everyone for their support and dedication to this project. v
TABLE OF CONTENTS ABSTRACT……………………………………………………………………………………………………….. iii ACKNOWLEDGEMENTS ………………………………………………………………………………….. iv LIST OF TABLES ……………………………………………………………………………………………… vii CHAPTER 1 INTRODUCTION …………………………………………………………………………… 1 Purpose……………………………………………………………………………………………………… Research Questions …………………………………………………………………………………….. 1 Research Hypotheses ………………………………………………………………………………….. 2 Research Implications ………………………………………………………………….. …………….. 2 Limitations ………………………………………………………………………………………………… 3 Definitions of Key Terms ……………………………………………………………………………. Summary …………………………………………………………………………………………………… 4 CHAPTER 2 LITERATURE REVIEW …………………………………………………………………. 5 Introduction ……………………………………………………………………………………………….. 5 The History of the Green Movement …………………………………………………………….. 6 Consumer and Corporate Driven Green Initiatives ……………………………………….. 2 Eco-Friendly Industries ……………………………………………………………………………… 17 Studies on Eco-Friendly Products ……………………………………………………………….. 22 Summary of Literature ………………………………………………………………………………. 26 CHAPTER 3 METHODOLOGY ………………………………………………………………………… 28 The Setting ………………………………………………………………………………………………. 8 Ocean Beach Customers ……………………………………………………………………………. 29 Eco-Friendly Tee Shirt Study …………………………………………………………………….. 30 Customer Survey………………………………………………………………………………………. 32 Data Analysis Methods ……………………………………………………………………………… 34 CHAPTER 4 STUDY RESULTS ………………………………………………………………………… 5 Coding of the Responses ………………………………………………………………….. ……….. 35 Total Responses ……………………………………………………………………………………….. 36 Hypothesis Testing……………………………………………………………………………………. 39 Conclusions of Data Results ………………………………………………………………………. 50 CHAPTER 5 SUMMARY ………………………………………………………………………………….. 1 Summary of Data ……………………………………………………………………………………… 51 Limitations ………………………………………………………………………………………………. 58 Sampling Frame ……………………………………………………………………………………….. 60 Future Research ……………………………………………………………………………………….. 61 vi APPENDIX A UNLV IRB APPROVAL………………………………………………………………… 2 APPENDIX B CUSTOMER SURVEY ………………………………………………………………….. 63 APPENDIX C CUSTOMER SURVEY RESPONSES …………………………………………….. 64 REFERENCES …………………………………………………………………………………………………… 65 VITA …………………………………………………………………………………………………………………. 71 vii LIST OF TABLES Table 1 Table 2 Table 3 Table 4 Table 5 Table 6 Table 7 Table 8 Table 9 Table 10 Table 11 Table 12 Table 13 Table 14 Table 15 Table 16
Table 17 Table 18 Table 19 Customer Tee Shirt Options ……………………………………………………………. 31 Customer Tee Shirt Choice Frequencies …………………………………………… 39 Chi-Square Test for Tee Shirt Choice Frequencies …………………………….. 40 Cross Tabulation of Eco-Friendliness and Tee Shirt Choice ……………….. 41 Chi-Square Test of Eco-Friendliness and Tee Shirt Choice Cross Tabulation …………………………………………………………………………………….. 1 Cross Tabulation of Percentage More Willing to Spend on Eco-Friendly Products and Tee Shirt Choice …………………………………………………………. 42 Chi-Square Test of Percentage More Willing to Spend on Eco-Friendly Products and Shirt Choice Cross Tabulation ……………………………………… 43 Cross Tabulation of Tee Shirt Choice and Eco-Friendly as Purchasing Factor …………………………………………………………………………………………… 4 Chi-Square Test of Tee Shirt Choice and Eco-Friendly as Purchasing Factor Cross Tabulation ………………………………………………………………….. 44 Cross Tabulation of Eco-Friendliness and Percentage Willing to Spend on Eco-friendly Products ……………………………………………………………………. 45 Spearman’s Rho Correlation of Eco-Friendliness and Percentage Willing to Spend on Eco-Friendly Products ………………………………………………….. 46 Cross Tabulation of Gender and Tee Shirt Choice ……………………………… 6 Chi-Square Test of Gender and Tee Shirt Choice Cross Tabulation ……… 47 Cross Tabulation of Gender and Eco-Friendliness ……………………………… 48 Chi-Square Test of Gender and Eco-Friendliness Cross Tabulation ……… 48 Cross Tabulation of Residence and Tee Shirt Choice …………………………. 49 Chi-Square Test for Residence and Tee Shirt Choice Cross Tabulation … 49 Cross Tabulation of Education and Tee Shirt Choice ………………………….. 50 Chi-Square Test for Education and Tee Shirt Choice Cross Tabulation … 50 viii
CHAPTER 1 INTRODUCTION Purpose The purpose of this study is to identify customer buying habits for eco-friendly apparel and the rationale behind their purchasing decisions. This study will involve the measurement of sales of similarly situated tee shirts that are offered in both eco-friendly and regular cotton fabrics. The customers who purchase these products will be surveyed to distinguish the reasons behind their purchase. Other factors, which will be surveyed, include the customers’ demographic information, their personal opinion on ecofriendliness, and their willingness to pay a premium for environmentally-friendly products.
All of these factors will be used together to decide if there is similarity and/or meaningful relationships between consumers’ purchasing habits and their survey responses. Research Questions The research questions that will be investigated by this study include the following: 1. Are customers willing to pay more for eco-friendly apparel when there is a less expensive non-eco-friendly option available? 2. Which customer demographic groups purchase the most eco-friendly clothing? 3. How much more are customers willing to spend on green products? 1
Research Hypotheses Based on the research questions previously listed, there are research hypotheses that were tested after the survey data was collected. H1: Customers are more likely to purchase eco-friendly clothing than non-ecofriendly clothing. H2: Customers with an eco-friendly attitude are more likely to purchase ecofriendly clothing. H3: Customers who were willing to pay a price premium for eco-friendly products purchased the eco-friendly clothing more often than the non-eco-friendly clothing. H4: Customers who stated that eco-friendly was the most important factor during their purchasing decision also purchased eco-friendly clothing.
H5: Customers with an eco-friendly attitude are more likely to pay a premium for eco-friendly products. H6: Females are more likely to purchase eco-friendly apparel than males. H6a: Urban residents are more likely to purchase eco-friendly apparel than residents in other areas. H6b: Respondents with a college degree or higher are more likely to purchase eco-friendly apparel. Research Implications Because there have not been similar studies on customers who choose to purchase either eco-friendly or non-eco-friendly apparel items, the results of this study can be used by other academics in the future to conduct similar studies on green apparel.
As the popularity of eco-friendly clothing continues to grow, there will not only be studies 2 conducted by academics, but also by the clothing manufacturers themselves. The results from this study can be combined with other research in order to develop “green” apparel customer marketing solutions and product lines. Hopefully, this study will impact other researchers within the apparel industry to conduct further studies and discover the trends among consumers and the necessity of producing eco-friendly apparel.
There are also implications for this type of study within the hospitality industry as hotels, casinos, and restaurants are also feeling the impact of the green movement. This study can be useful for resorts and casinos in determining the product mix to sell in their retail outlets and the impact of offering eco-friendly options to guests. Limitations/Delimitations The limitations of this study include the location, sample size (110 survey respondents), sampling method used (convenience sample), tee shirt display method, and respondent bias. These limitations will be explained in further detail in Chapter 5.
The delimitations of this study include the lack of demographic questions asked on the survey and the initiative to study all of the customers in the store instead of only those purchasing the tee shirts used in the study. If more questions had been added to the survey there could have been more statistical relationships derived from demographic information. If customers other than those who purchased the tee shirts were surveyed on their opinions on eco-friendliness there would have been more data and a larger sample size. 3 Definitions of Key Terms The following terms were used in conjunction with this thesis.
They are defined below and include trade and business terminology that was used to develop the literature review and supporting data analysis. CSR (Corporate Social Responsibility): when used in this thesis, CSR will be defined as a company’s actions that foster a positive impact on social causes. This definition is derived from previous definitions and can be found on page 12 in Chapter 2. EPA (environmentally preferred apparel): clothing that has been produced using environmentally preferable fibres or environmentally preferred production processes (Connell, 2010).
PET (Polyethylene Terephalate): a polyester fabric made out of recycled plastic bottles (usually soda bottles or water bottles) (Brown & Wilmanns, 1997). PLA (Polylactic Acid): a fibre derived from corn sugar during the fermentation process (Hustvedt & Bernard, 2008). Summary The introduction of this thesis serves as the foundation for the eco-friendly tee shirt study and the literature which supports this study. Chapter 2 will include a literature review which was used in order to develop methodology for the study and the data analysis techniques used.
The literature review provides a synopsis of previous research findings which will then be used in order to determine relationships between the survey data analyzed in Chapter 4. 4 CHAPTER 2 LITERATURE REVIEW Introduction In recent years, there has been an influx of eco-friendly apparel by all types of manufacturers. The apparel industry, like many other industries, is focusing on sustainability and the use of green products as clothing components. The integration of these eco-friendly items into a normal product mix constitutes little work on behalf of the manufacturer, but requires retailers to educate consumers.
It wasn’t long ago that the only companies who were selling items made out of eco-fabric were so-called “treehugging” or “hippie” retailers. In the last twenty years, this has changed drastically as the use of organic cotton, bamboo, and PET (recycled polyester) has become mainstream. High-fashion designers and lifestyle companies have been gradually placing green merchandise into their product lines. Patagonia, a manufacturer of outdoor apparel and one of the first movers within this industry, was around before the internet and before most consumers had any knowledge of eco-friendly apparel.
Today, even mass-market retailers, such as the Gap and Target, are selling EPA (environmentally preferred apparel) merchandise to consumers. However, the question regarding green apparel is whether consumers are ready for it. Consumers may be ready for green clothing, but they also may need more education to entice them to purchase the environmentally friendly options that are available. Although there are green apparel options in most retail outlets today, many consumers need help identifying these items. As the eco-friendly apparel industry is relatively new within the United States (U. S. , the amount of previous research on eco-friendly apparel is limited. In order to 5 understand modern research on green clothing, it is also important to understand the history of environmentalism in the U. S. Research in other areas within the hospitality industry, along with organic food and green consumer products can be used as reference studies when discussing eco-friendly apparel. The History of the Green Movement Historical Environmental Theories Throughout history, the rise and fall of civilizations have been directly connected to the environment and the ecosystems created by their inhabitants.
Many of the early empires were destroyed due to their lack of environmental consideration as they changed the natural surroundings in order to accommodate population growth (Tainter, 1988). Some examples of these early ecological problems include deforestation, irrigation, and the development of ecosystems uncommon to the respective region (Ponting, 2007). Although science was not as advanced thousands of years ago, modern anthropologists and archeologists have been able to uncover the reasons why many inhabited regions died off, and they have been able to conclude that changes in the environment had a major effect on the population.
As early as 500 BC, the Chinese philosopher Confucius began teaching the Chinese about the importance of the environment (Yao, 2000). Confucian followers developed important environmental ethics to foster the future preservation of nature (Tianchen, 2003). They also made conclusions regarding the possible results that can occur when the environment is not treated properly by its inhabitants. Even though Confucianism teaches to hold nature in high regard, it does not promote a lack of development in order to keep the environment in a constant state (Tianchen, 2003). According to Yao (2000), “As Heaven has a dimension of Nature or Natural Law, harmony between Heaven and humans is understood to be a co-operative relationship between humans and their natural environment, in which natural laws should be followed and the natural environment protected” (p. 175). The summarized teachings of Confucianism with respect to the environment conclude that humans can take from nature, but they must give back, as people and nature work together as a team.
Ponting (2007) made a great summary of changes in the way nature is viewed by religions: One of the fundamental issues addressed by all traditions is the relationship between humans and the rest of nature. Are humans an integral part of nature or are they separate from it and in some way superior to it? The answer to this question is crucial in determining how different thinkers and religions decide which human actions can be regarded as legitimate or morally justified (p. 116).
As each religion has its own beliefs on the importance of nature and the environment, each individual also has his own set of beliefs and ideas with respect to the environment. Since most early publications involving the environment were deemed religious, as noted in Confucianism, it wasn’t until the mid-1800s when numerous authors began publishing works on nature. Early American Environmentalism In the mid-1800s, the western world began focusing on the environment through different outlets, such as writing and artwork.
Some famous authors that expressed the value of nature through their individual writing in the 1800s include Charles Darwin, Ralph Waldo Emerson, Henry David Thoreau, and George Perkins Marsh. Charles 7 Darwin published the highly acclaimed On the Origin of Species after developing his scientific theory of evolution (Darwin, 1864). Emerson published Nature showcasing a new idea about the environment and the American way of life (Emerson, 1849). Thoreau is known for his environmental views through the publication of his book, Walden, which he wrote about his experience living at Walden Pond in the 1840s (Thoreau, 1854).
Thoreau accredits his idea for Walden to Emerson, as Nature was a big influence on his decision to live at Walden Pond (Meltzer, 2007). George Perkins Marsh published Man and Nature in 1864 and developed ideas that were not formally researched until the 1960s (Marsh, 1864). Marsh’s book spoke of the amount of destruction and waste occurring in the world, and claimed that it would eventually lead to the demise of the human race. Most of the prominent nature-inspired artwork developed a little later than its literary counterparts.
Notable artists that portrayed the natural environment of the United States include Ansel Adams, Georgia O’Keefe, and John James Audubon. As these artists were influenced by the changing views on the natural world, they became very popular for their work depicting the environment as its own form of art. Ansel Adams became a famous photographer due to his environmental black and white photographs of Yosemite National Park in the early 1900s (Alinder, 1996). Georgia O’Keefe, the most popular of these artists, is known for her simplistic paintings that portray American culture and nature (Robinson, 1989).
John James Audubon was a naturalist, taxidermist, and the most renowned ornithologist known throughout history (Herrick, 1917). Audubon is most famous for his 12-year creation of Birds of America, which was issued 8 in volumes that featured his paintings of over 700 different species of birds from North America (Herrick, 1917). Environmental protection was not only seen in literature and artwork at this time, but societies and foundations began to form in the late 1800s and early 1900s, whose main goal was to protect nature and promote further emphasis on the environment.
In 1905 Gilbert Pearson created The National Audubon Society, which was named in honor of Audubon (Herrick, 1917). Prior to the National Audubon Society, Pearson had established smaller Audubon clubs around the concept to protect wild birds and their eggs. Its mission statement explains its conservation efforts, “to conserve and restore natural ecosystems, focusing on birds, other wildlife, and their habitats for the benefit of humanity and the earth’s biological diversity” (National Audubon, 2010). One of the major events in U.
S. history of environmentalism, which was a turning point for the government’s emphasis on sustaining nature in a pure form, was the 1864 public transfer of land from Yosemite and the Mariposa Grove to the state of California (McCormick, 1989). This area was donated as public use land for California residents to enjoy. In 1872, the government signed over two million acres of what is now known as Yellowstone National Park, in Wyoming (McCormick, 1989). This marked the first national park to be created in the entire world.
Many other countries modeled own national parks after Yellowstone. Theodore Roosevelt was an environmental activist who assisted the country during his Presidency to develop programs to increase knowledge and awareness of conservation. Before Roosevelt took office in 1901, the federal government of the U. S. did not take a significant number of precautions to protect the natural environment. As 9 President, Theodore Roosevelt assisted in the expansion of Forest Reserves in the United States through his appointment of Gifford Pinchot to the U.
S. Forest Service (formerly the Division of Forestry) (Brinkley, 2009, p. 341). During Roosevelt’s presidency (19011909), Pinchot effectively expanded forest reserves from 43 million acres to 174 million acres (Brinkley, 2009, p. 803). In February, 1909, Roosevelt held the North American Conservation Conference where discussions were held regarding the international aspect of future conservation especially and the idea of a further meeting to continue the idea of global conservation (Brinkley, 2009, p. 804).
Overall, Roosevelt is remembered by Americans, even today, as one of the early supporters of nature on a national level. Modern Day Environmentalism In the 1960s, the U. S. was in the beginning stages of the modern environmental movement. During this time the American public became more aware of adverse environmental impacts, which were causing changes to the earth as a whole. Although there were many federal environmental laws on record before this time, it took until the 1970s for many of these laws to be fully enforced.
The issue with these federal laws involved the assignment of responsibility of enforcement, as each state was deemed responsible for “policing” all of the environmental laws without federal assistance (Freeman, 2002). According to Freeman (2002), not only did the 1970s bring about the first Earth Day (April 22, 1970), but this time period also saw the beginning of strict federal involvement in passing and enforcing necessary environmental laws. In 1970 alone, the Clean Water Act was passed and the Environmental Protection Agency was founded.
In the years that followed, the federal government passed the following acts in order to 10 subside the detrimental harm to the earth: Federal Water Pollution Act (1972), Safe Drinking Water Act (1974), Toxic Substances Control Act (1976), Resource Conservation and Recovery Act (1976), and the “Superfund” (Comprehensive Environmental Response, Compensation, and Liability Act, 1980). These acts were passed after toxic substances had entered the environment, but they were still viewed as a step towards greater environmental concern (Freeman, 2002).
In order to enforce these new legislative acts and also further the focus on the state of nature in the U. S. , the federal government has spent billions of dollars over the years and will continue to spend more into the future. The Environmental Protection Agency has spent a lot of time assessing the environmental damage that has occurred and has developed approximate costs for research and “clean up” to be well into billions of dollars (Freeman, 2002). All of the above acts which were passed in the 1970s and the Superfund (1980), have lead to an overall movement throughout the U. S. owards further prevention of pollution and other activities that are detrimental to the earth’s ecosystem. The first world environmental summit was held in Stockholm in 1972, followed by Rio de Janeiro (1992) and Johannesburg (2002) (Najam & Cleveland, 2003; Seyfang, 2003). The objective of these conferences was to discuss and find ways to achieve global sustainability by working together and finding goals which could be achieved by UN (United Nations) member nations, both individually and as a group (Seyfang, 2003). Between the first summit and the second, the Brundtland (1987) Report was delivered to the
World on Environment and Development to discuss methods to reduce further environmental problems. Brundtland (1987) explained that governments must take responsibility for their actions, all environmental agencies must be strengthen at the 11 national and international level, and environmental agencies within the United Nations should take steps to link international politics on this important topic. Consumer and Corporate Driven Green Initiatives Marketing towards Green Customers According to Peattie (2001) there are three different ways to market towards green customers.
These include ecological marketing, environmental marketing, and sustainable marketing. Ecological marketing is not geared towards the typical consumer; it is used more with consumers who are looking to minimize their use of products, which are detrimental to the environment. Environmental marketing is a more popular approach, as it allows for companies to use green customers to drive the demand for products. Environmental marketing can be used by industries, like the hospitality and apparel industry, in order to sell products that reduce damage to the environment.
Sustainable marketing covers a niche customer base due to offering sustainable products that through creation and purchase lead to a sustainable economy. Overall, these three different marketing concepts can be used to attract different types of consumers, ranging from those only slightly impacted by the idea of purchasing eco-friendly products, to those who will only buy items that are produced, packaged, and sold in a green manner (Peattie, 2001). Peattie and Crane (2005) dissected the idea of green marketing throughout the 1990s and its falloff in the 2000s.
The early stages of green marketing were seen in the late 1980s as corporations began to look to green products and academia began producing more research on green businesses. According to the authors, the 1990s were expected to provide much steam behind the idea of green marketing due to the large corporate 12 investments in the promotion of green products. Unfortunately, this was not the case due to the change in advertising that featured green components of products, without further development of items into eco-friendly offerings.
This was an easy way for companies to make money without investing in new production techniques. Since the products being marketed to consumers were not truly eco-friendly, this lead to a distrust of the green products industry and a reluctance of consumers to want to “go green”. The companies that made an investment in order to make actual eco-friendly products found that production costs on eco-friendly items were decreasing; however, the products were still selling at a higher price with no savings passed down to the consumer (Peattie & Crane, 2005).
Producing Green Products Many companies claim that producing green products can cause manufacturing costs to increase drastically while the actual sale of eco-friendly items does not necessarily cover these expenses. When looking at eco-friendly items for sale in any type of retail environment, there is normally a premium price associated with the items available in a green alternative. Sometimes, this increased price can be due to a higher cost associated with production, but many instances the price increase is due to materials in the product and the marketing costs associated with promoting these items.
A study conducted by Pujari, Wright, and Peattie (2003) found that manufacturers in the United Kingdom have been moving towards more eco-friendly approaches to creating new products due to an increase in environmental production policies. According to Frei (1998) and Pujari et al. (2003), companies have been developing methods in order to produce new goods in the most environmentally friendly ways 13 possible, beginning with the first steps taken in product development. Many companies have also been working on developing more eco-friendly production methods for items already in existence (Pujari et al. 2003). Their study also created a set of standards for companies to use in order to make sure their new product development coincides with their initiatives to make their products by using the most efficient, environmentally sound methods. Customers Demand Green Products Due to an increasing interest by the public, both within the U. S. and internationally to protect the environment, companies have been faced with major decisions regarding their production methods. Companies have been lured by consumers into producing products and offering services, which take the state of the environment into account.
By the mid-1990s, many consumer studies showed that at least 70% of consumers considered the environment while making purchasing decisions (Wagner, 1997). At this point in time, eco-friendly products were sold at a premium price whether the items did or did not cost more to produce then conventional equivalents (Peattie & Crane, 2005). For some customers, this concept was equated to green products (they are good for the environment so they should cost more), but for many consumers, this attitude could have a negative impact on overall green sales.
Peattie and Crane (2005) explained that many startup companies, considered enviropreneurs, developed in the 1990s to only create environmentally friendly products. Many of these companies did not make profits consistent with the numbers produced by marketers inducing these trends. Many surveys conducted in the late 1980s and early 1990s showed that Americans cared about the environment and wanted to pay more for 14 products which were created in an eco-friendly manner (Roberts, 1996).
Even though such results came from these surveys, the buying patterns of consumers did not always agree with their aforementioned habits (Peattie & Crane, 2005). Much of the research was inconclusive due to a wide scope of differentiated results in the relationships between demographic groups, and their environmental awareness and concern (Roberts, 1996; Straughan & Roberts, 1999). There has been much controversy over the different research findings as marketing efforts may not have been directed towards the correct consumers.
Straughan and Roberts (1999) and Roberts (1996) studied different variations on purchasing behavior of eco-friendly products and green intentions of customers. Roberts (1996) developed a validated survey to determine the demographics of U. S. customers who behaved in an ecologically conscious manner. The outcome of this study found the following demographics were more ecologically conscious: older consumers; females; lower income (very small difference); and higher education (however, when attitudes were entered into the study, education did not make a difference).
Roberts (1996) results conformed to prior research in the field; however, due to the variation in study results from other publications it is hard to determine who the green customer is and why they buy green products. The study conducted by Straughan and Roberts (1999) looked at the future of green marketing and developed a way to test psychographic criteria instead of only using customer demographics. Based on Roberts (1996) and other studies in this field, they concluded that demographic data is not always the most sufficient to determine green consumers. Using original measures from the study conducted by Roberts (1996), the 5 authors developed specific criteria to test both the demographics and psychographics of customers. The following demographics were used: age; family income; gender; and, academic classification (students were surveyed). The following psychographic information was collected using a Likert scale from 1-5: liberalism; perceived consumer effectiveness; environmental concern; and, altruism. The overall findings of this study when compared to Roberts’ prior work in this area, found that the best approach to determine potential green customers is with psychographic data, or a combination of psychographic and demographic data.
Corporate Social Responsibility According to Carroll (1999), many large companies began to acknowledge Corporate Social Responsibility (CSR) in the 1950s. There are many different definitions of CSR that have been developed by different researchers throughout the years. One of the modern definitions of CSR, developed by McWilliams and Siegel (2001, p. 117) is, “actions that appear to further some social good, beyond the interests of the firm and that which is required by law. ” The CSR pyramid was published by Carroll (1991) and develops four segments of CSR, which include philanthropic, ethical, legal, and economic responsibilities.
According to Carroll (1991, p. 42) philanthropic responsibilities are at the top of the pyramid and include the following: “Be a good corporate citizen. Contribute resources to the community; improve quality of life. ” Ethical responsibilities are the second level down on the pyramid and state, “Be ethical. Obligation to do what is right, just, and fair. Avoid harm. ” Legal responsibilities are the third level down on the pyramid and they entail the following, “Obey the law. Law is society’s codification of right and wrong. 16 Play by the rules of the game. Carroll (1991, p. 42) placed economic responsibilities on the bottom of his pyramid with the explanation, “Be profitable. The foundation upon which all others rest. ” The bottom (economic responsibilities) would go on the bottom as the foundation for the other activities, as a business cannot run without making a profit. Philanthropic responsibilities are at the top of the pyramid, and all other responsibilities (economic, legal, and ethic) must be reached before a company can start taking on the social responsibility of helping others (Carroll, 1991).
Incorporating these different definitions of CSR, it can be defined as a company’s actions that foster a positive impact on social causes. Through the evolution of CSR, companies have taken more steps in order to promote themselves as socially responsible. The public opinion of socially responsible companies helps them to outweigh the costs of following the four segments of Carroll’s (1991) pyramid. A company that is able to promote itself as socially responsible can develop better and longer lasting relationships with customers.
The influx of corporate concern over social responsibility has lead to the development of eco-friendly products in many different industries. The consumer awareness for green offerings has lead to the development of entire industries surrounding eco-friendly products and services, which cater to individuals to whom green products are of value. Eco-Friendly Industries Over the past 20 to 30 years, specific industries have taken strides towards producing products with less detriment to the environment. Although most products produced today are not completely eco-friendly, there have been industry-wide 7 movements to further the production of items that cause little or no harm to the environment. Due to the impact of CSR on many companies, they have felt compelled to take initiative to change their production and product offerings due to an increased awareness in sustainability. Many service industries that have taken action to provide eco-friendly alternatives to customers including hotels, restaurants, and airlines. Some of the more prominently purchased consumer goods made out of organic or eco-friendly components include food, clothing, and methods of transportation.
Green Service in the Hospitality Industry Due to the influx of international pressure on corporations to provide services, which have less environmental waste, many service-based organizations have developed green components to keep up with CSR in the current business environment. Using the hospitality industry as a basis for service-based sales, many studies have been conducted to determine the type of green customer and the preferences within this industry for green options. A study was conducted by Kang, Lee, and Huh (2010), on CSR activities within the hospitality industry.
This study encompasses the hotel, casino, restaurant, and airline industry to determine the relationship between these industries and CSR activities (including environmental concerns). The overall results of this study found that within each separate industry (i. e. hotel, casino, restaurant and airline), there were different financial results based on both positive and negative CSR. Hotels and restaurants should continue to increase their positive CSR initiatives while the airlines need to decrease their negative CSR issues. Similar studies have been conducted not only on CSR activities 8 (environmental concerns are included in CSR activities), but also on the direct impact of environmentally friendly alternatives (Kang et al. , 2010). During the last 10-15 years, many areas of the hospitality industry have been working towards more environmental concern in order for the business to compete in terms of expenses (lower cost can sometimes be associated with more eco-friendly practices- i. e. less water and electricity consumption), the attraction of green customers, and the compliance with environmental regulations (Font, 2002; Kasim, 2008).
There have been many different debates on the willingness for customers to spend more for accommodations that are more eco-friendly; however, this industry is still implementing a movement towards greener practices (Kasim, 2008). Many small hospitality firms are implementing environmentally friendly initiatives at a slow and steady rate in order to save them money and keep up with the current socio-cultural trends within this industry (Tzschentke, Kirk, & Lynch, 2007). The findings on eco-friendly consumers within the hospitality industry are not always the same (Kasim, 2008).
As will be seen later in the literature review, the organic food industry and the apparel industry also have conflicting results on customer price sensitivity with respect to green products. Environmentally Focused Products Two large worldwide industries in which eco-friendly products are prominent include the grocery/food industry and the transportation industry. There was a 20. 9% annual increase in the sale of organic food products between 2005 and 2006 (Organic Trade Association, 2007). In 2006, overall consumer spending on organic foods reached $16. 7 billion due to increased knowledge by consumers of organic products and 9 environmental factors (OTA, 2007). The USDA (United States Department of Agriculture) requirements for food labeling (organic) require that at least 95% of the product must be made out of organic ingredients (Winter & Davis, 2006). Organic food products can be similarly associated with other products that are eco-friendly in nature, such as cars and apparel. With respect to research and findings on green consumers within the transportation industry, Kahn (2007) found that green consumers were more likely to use green methods of transportation which included the purchase of hybrid vehicles.
Due to government incentives and high gasoline prices, many consumers who are not typically considered “green” have been purchasing hybrid automobiles. Although the increase of hybrid purchases can correlated with the price of gas, an increase was not correlated with the government incentives offered with purchases of hybrid vehicles. The calculated premium price associated with the purchase of a hybrid vehicle versus the necessity based on variables (incentives, gas price, and mileage driving) was unable to solidify exact reactions to each of these factors individually.
As gas costs rise, it is hard to determine the real reason behind hybrid vehicle purchases. Hybrid vehicle purchasing without incentives and increasing gas prices, could use research techniques similar to those used within the apparel industry. Eco-Friendly Movement in the Apparel Industry One of the first movers in the early years of the eco-friendly clothing movement was Patagonia. Patagonia, a large manufacturer of outdoor sportswear, began using organic cotton in its product mix in the early 1990s. As this was early on in the movement for retailers to sell merchandise online, there were many small catalog 20 ompanies offering eco-friendly apparel in the late 1990s. The catalyst of the internet made it easier for many of these small EPA manufacturers to sell their products and develop a larger customer base. According to Nimon and Beghin (1999), the potential market power of Patagonia was important to the price of the entire eco-friendly apparel industry. As the future of environmentally preferred apparel (EPA) was predicted to increase in the late 2000s, Nimon and Beghin (1999) concluded that Patagonia would be able to charge a premium for its products due to the eco-fabric content, brand name, and demand for Patagonia products.
Since the study in 1999, it has become apparent that Patagonia has been successful in marketing its eco-friendly apparel and building its brand name. Now, in 2010, Patagonia is sold at outlets worldwide. One of the biggest issues prevalent in the eco-friendly apparel industry is the high price to produce merchandise made out of organic and eco-friendly materials. After years of producing organic cotton, it still costs anywhere from 20% to 50% more than regular cotton and is not offered in as many ranges as normal cotton.
Even though the demand and production of apparel made out of organic cotton is increasing, the prices associated with its growth have not. There are many companies that have began to focus on not only organic cotton tees, but they are now producing jeans made out of organic cotton and dyed using vegetable, soy, and other natural dyes (Tran & Isabelle, 2009). Some other popular fabrics used in creating EPA clothing include bamboo and PET. These two fabrics are both used in the same manner as organic cotton in order to market products as eco-friendly.
There has been some controversy over bamboo since some companies use harsh chemicals to turn bamboo (which is a sustainable, renewable resource) into a fabric like viscose (Binkley, 2009). PET which is a polyester fabric 21 made out of recycled water bottles has made its way into the eco-fabric mainstream as well. PET is used in items from tee shirts (blended with cotton), fleeces, and men’s swim shorts. Patagonia first began using PET in its fleeces in 1993 (Brown & Wilmanns, 1997) and many companies have since jumped on the concept of PET fiber in various apparel items.
Studies on Eco-Friendly Products Organic Food Studies Many studies on eco-friendly products have been conducted within the organic food segment, and can be used as a comparison to studies on eco-friendly apparel. Although the product is not the same, a lot of consumers who will only purchase organic food are the same consumers who will only purchase eco-friendly clothing. This type of consumer has changed a lot in the last 20 to 30 years. As organic food has been available for sale and consumption for years, environmentally friendly apparel has not been massproduced until the late 1990s or 2000s.
Beaudreault (2009) developed a study in on consumer preferences within the organic food market. This study took place at Ohio State University and was made up of undergraduate students enrolled in a course in the College of Food, Agriculture, and Environmental Sciences’. This class was chosen because its students were familiar with the topic and subject matter, and a thorough investigation into customer price preferences was possible without additional information and training.
The students in this study claimed that their perceptions of organic food came from both celebrities and “green” non-profit organizations. According to this study, 53% of students stated the media influenced their personal perception of organic food. Beaudreault (2009) also concluded 22 that female students were more price-sensitive with respect to organic food, as 86% claimed that price influenced their perception versus 68% of males. Another study on organic foods was conducted by Pearson and Henryks (2008), which focused on pricing and the perceived quality of organic foods.
They found that consumers are likely to follow an inverse demand curve in regards to price and quantity purchased when buying organic food products. Normal food products (non-organic) will typically constitute fewer purchases as price increases; organic products have the opposite effect because customers perceive a better quality when they are paying a higher price. Although consumers of organic food products perceive higher quality when prices are higher, there is a certain point when price overcomes quality.
Many grocery store customers are also less price sensitive when purchasing organic food as they are normally purchasing multiple items at a discount (other than their organic merchandise), so to these customers, paying a little more for a few items becomes irrelevant (Pearson & Henryks, 2008). The same study found that customers were very confused over branded labeling of organic food products. Due to the lack of distinct branding in this industry and the confusion over USDA certified organic products versus products that claim to be organic, many consumers are confused and unaware of specialty organic brands.
As there aren’t any specific federal guidelines in place for labeling organic products, the only guarantee of an organic food item is one that states, USDA certified organic. According to Pearson and Henryks (2008), the only way to persuade grocery store customers, who are not ecosavvy, to buy organic, is to display organic products in an easily visible location in the grocery store that is regularly passed on the way to other items. 23 Dettmann and Dimitri (2010) conducted a study on the demographics of consumers who purchased organic produce by using Nielsen data in order to compile customer demographics.
This study concluded that Caucasian households were more likely to purchase organic produce than African-American households. Other findings of this study were as education level increased, the percentage of consumers purchasing organic produce increased as well (Dettmann & Dimitri, 2010). Lohr and Park (1999) conducted another study on organic produce. They tested price sensitivity among consumers purchasing organic broccoli and carrots. Wholesalers of organic produce, such as broccoli and carrots reported and average mark up of 36% and 37% respectively, on the retail price of these items.
This study found that a 1% increase in retail price for broccoli resulted in a 9. 9% decrease in quantity demanded, and a similar 1% price increase for carrots results in a 5. 7% decrease in quantity demanded. Lohr and Park (1999) established that retail demand elasticity would increase due to the shift of organic products becoming mainstream and being sold in regular supermarkets. They also indicated that most organic produce was sold at specialty retailers instead of being sold in regular supermarkets as it is today. The results from the studies on organic food vary drastically.
Lohr and Park (1999) claimed that when the price of organic produce (specifically broccoli and carrots) increased demand decreased, whereas Pearson and Henryks (2008) found that perceived quality of organic food increases when price increases therefore no decrease in demand (to a specified limit). Due to an inconsistency of results, specific conclusions cannot be drawn with respect to these studies. 24 Studies on Eco-Friendly Apparel Nimon and Beghin (1999) developed one of the first studies on eco-friendly fabrics used in the apparel industry.
This study showed that there was a significant price premium for organic cotton, as the average markup given to organic items was 33. 8%. Nimon and Beghin (1999) concluded that similarly situated organic products resulted in similar price markups across the apparel industry. Although this research was conducted in the late 1990s, there is still a higher cost associated with organic apparel today. A study in 2010 would most likely yield smaller results in price differentials since the EPA industry has become more prominent in the last ten years.
Hustvedt and Bernard (2008) conducted a study with students from Texas State University in order to determine the prices that participants were willing to pay for ecofriendly, genetically modified, corn based fabric and regular cotton. Price differentials were developed for the different fabrics by asking the students to assign monetary value to different socks. The socks that were tested in this study were made out of five different fabrics, including regular cotton, non-genetically modified (GM) cotton, organic cotton, regular PLA (a fiber derived from corn), and non-GM PLA.
In the first phase of research the students were asked to feel five socks, each one made out of one of the previously listed fibers. After feeling the socks, the students were asked to determine a sales price that they would be willing to pay for the socks without knowing their actual fabric composition. The results from the first price determination were used as the dependent variable to determine a base price for the socks. In their study, the base prices were used as a comparison to the price assigned when the participants were informed of the fabric content of each sock.
The results of this study 25 found that the students were willing to pay up to $1. 86 more for the organic socks. The consumer willingness to spend more on EPA can be used in this study as a comparison, the only hindrance on this result is that the students did not actually purchase the product; they were simply asked how much more they would be willing to spend. Another study on EPA apparel was conducted by Connell (2010), on ecoconscious consumers who were preselected from two email listservs (lists of all email addresses of members).
One of the email lists was from a retail company that sold EPA and the other email list was from a list of members at an environmental organization. The findings of this study were that the green consumers had a difficult time distinguishing between the fiber content of the eco-friendly apparel. Consumers from this study were unaware of brick-and-mortar retail stores that offered EPA products and even if they wanted to try and purchase EPA items, they were unsure where to find them. According to Connell’s (2010) findings, eco-friendly apparel needs to be more fashionforward, heavily marketed, and have more choices available for consumers.
Summary of Literature The previous studies related to the green movement were used to develop the methodology and the survey for this study. Since there is limited published research on eco-friendly apparel, other studies on green products and green industries can be used as a comparison. Overall, many of the studies within the different industries (hospitality and organic foods) are somewhat similar in scope and test the amount of money customers are willing to spend on green accommodations or products. Some other research tests customer willingness to “go green” with, or without a price premium for eco-friendly products. 6 The research studies developed on green consumers and their preferences can be used as references to create a study on eco-friendly clothing in a resort-retail environment. The survey found in Appendix B was derived from prior research studies on green products. Conclusions based on the data analysis of the survey results will be discussed in Chapter 5 and inferences between the research results from the literature review and the findings from this study will be made. Due to a lack of research on EPA, the other industries discussed in this chapter will be used as references throughout the study.
Chapter 3 will discuss the methodology that was used to investigate the Research Hypotheses stated in Chapter 1. 27 CHAPTER 3 METHODOLOGY The Setting The data was collected for this thesis from a resort retail environment in Ocean Beach, NY during the summer of 2010. The store where the study took place is called Bambootique, a boutique surf shop that is open seasonally from May until October. Ocean Beach is a resort beach community located on Fire Island and has daily seasonal population fluctuations based on tourist visitation.
The population fluctuation depends upon various factors, such as the day of the week, the weather, and the economy. The daily population fluctuation could have affect the results of the study because different tourists makes different purchasing decisions. Bambootique is a brand new store that opened in May 2010. It sells apparel and accessories for men, women, and kids. Bambootique has been marketed as an ecofriendly store, as many of the items carried are made out of organic or recycled goods. Some of the clothing materials used in products sold in the store include bamboo, organic cotton, and recycled PET.
The store also has many components made out of bamboo, such as the window display and the clothing racks. The use of bamboo throughout the store furthers the idea of sustainability, as bamboo is a renewable resource. All of the receipt paper and shopping bags used at Bambootique are made out of recycled paper and plastic. Customers are encouraged to recycle or reuse their shopping bags. Due to the publicity on the eco-friendly component of Bambootique, customers who are environmentally savvy have heard about the different initiatives Bambootique has taken in order to eliminate waste and sell merchandise with an eco-friendly flair. 8 Ocean Beach Customers The only way to get to Ocean Beach is by taking a ferry ride from Long Island. Due to the tourism on the island, there are different types of customers. The community consists of summer homes that have individual owners. There are a few hundred people that live on the island year round and there are many homeowners that spend their entire summers in Ocean Beach. Some owners go back and forth from their permanent residence to their beach home, while others rent out their house for a week, a month, or the entire summer season.
Due to the different rental options available to beachgoers, there are many changes in the population during the summer. Other than just singlefamily rentals, there are share houses, where numerous people rent alternating weeks or weekends for the summer. Along with the house rental options, there are also a few hotels where guests can spend a night or a week. There is another segment of the market in Ocean Beach, which consists of people that take the ferry to come out to the beach for the day. These potential customers are not as likely to spend money as the customers spending the night, the week, or the entire summer season.
Many people that come to Ocean Beach for the day are frequent visitors, whereas others spend the $16 needed for the ferry ride, pack lunch, and do not even visit the commercial district. As this is a resort environment with different types of customers, there is a demand for different items. All different types of customers purchase Fire Island and Ocean Beach-branded logo merchandise, and there are many different types of logo items available. Bambootique sells Fire Island branded tee shirts for men, women, and children. These tee shirts are available in many different colors, sizes, and even fabrics. 29
In order to continue with the eco-friendly items available in the store, many of the Fire Island tee shirts are available in eco-friendly fabrics. Eco-Friendly Tee Shirt Study The study that took place at Bambootique involved the sale of different tee shirts that were available in both regular cotton and an eco-friendly material, which was either organic cotton or bamboo. The tee shirts used in this study were identical in terms of size, color (slight variations), design, and branded label. All of the shirts were ordered from the same manufacturer ensuring that all of the items are made in the same size sets.
The colors were almost identical between the different fabrics in order to keep the tee shirts consistent and comparable, there were slight variations between the plain white tee shirts and the white bamboo tee shirts. Each shirt with the same design was offered in two different fabrics. There were four design options for men’s tee shirts and four design options for women’s tee shirts. All of the tee shirts were branded with Fire Island along with the designated design. All of the tee shirts were branded with a label inside the top seam with the “Bambootique” logo.
The care labels underneath the Bambootique label stated the fabric content. Table 1 shows the different tee shirts that were used in this study. 30 Table 1 Customer Tee Shirt Options Eco-Friendly Men’s Surfboard Tee Shirts Men’s “Gas is for Suckers” Tee Shirts Fire Island Wagon Tee Shirts * Fire Island Bicycle Tee Shirts * Women’s Fire Island Beach Chair Tee Shirts Women’s Fire Island Girl Tee Shirts Black Organic Cotton Black Organic Cotton White Bamboo White Bamboo Black Organic Cotton Black Organic Cotton Regular Cotton Black Black White White Black Black Note: * Available in men’s and women’s tee shirts.
In order to make sure that customers were aware of the different fabric options available to them, there were a few steps taken to distinguish the fabrics from one another. Each display had a sign to show which tee shirts were found in each pile. All of the eco-friendly tee shirts were placed in a different pile than the regular cotton tee shirts. Each individual tee shirt had a sticker placed on it showing the fabric content as well. This step was taken in order to eliminate the mix-up of the tee shirts as shoppers tend to put items back in the wrong piles.
The pictures located in Figure 1 show the placement of the tee shirts and associated signage. 31 Figure 1. A display of eco-friendly tee shirts and regular cotton tee shirts. The price differential between the regular cotton and eco-friendly tee shirts was $