The Influence of Eco-Labelling on Consumer Behaviour
Paper accepted for publication in Business Strategy & the Environment (forthcoming). Version: Sept. 1, 2005
The Influence of Eco-Labelling on Consumer Behaviour – Results of a Discrete Choice Analysis Katharina Sammer and Rolf Wüstenhagen* Institute for Economy and the Environment (IWOe-HSG), University of St. Gallen, Switzerland
Abstract Eco-labelling is an important tool to overcome market failure due to information asymmetries for environmental products. While previous research has discussed the importance of labelling, this paper provides empirical data on the influence of eco-labels on consumer behaviour for household appliances. It reports on the results of a survey involving a total of 300 choice-based conjoint interviews conducted in Switzerland in Spring 2004. Choice-based conjoint analysis (also known as Discrete Choice) has been applied to reveal the relative importance of various product attributes for consumers. The EU Energy label is used for the two product categories in our survey, light bulbs and washing machines, and we investigate the relative importance of this eco-label compared to other product features (like brand name) in consumers’ purchasing decisions. We discuss differences between the two product categories, and draw conclusions for sustainability marketing and policy.
Keywords: Information asymmetry, consumer behaviour, eco-labelling, choice-based conjoint analysis, discrete choice, household appliances, EU energy label, sustainability marketing.
* Correspondence to: Rolf Wüstenhagen, Institute for Economy and the Environment, Tigerbergstrasse 2, CH-9000 St. Gallen, Switzerland. E-mail: rolf.wuestenhagen@unisg.ch, www.iwoe.unisg.ch.
Page 1 of 28
1
Introduction
Consumers are interested in goods as a bundle of different product characteristics (Lancaster, 1966) that can be distinguished by search, experience and credence characteristics. While search characteristics can be identified by consumers prior to purchase,
The Influence of Eco-Labelling on Consumer Behaviour – Results of a Discrete Choice Analysis Katharina Sammer and Rolf Wüstenhagen* Institute for Economy and the Environment (IWOe-HSG), University of St. Gallen, Switzerland
Abstract Eco-labelling is an important tool to overcome market failure due to information asymmetries for environmental products. While previous research has discussed the importance of labelling, this paper provides empirical data on the influence of eco-labels on consumer behaviour for household appliances. It reports on the results of a survey involving a total of 300 choice-based conjoint interviews conducted in Switzerland in Spring 2004. Choice-based conjoint analysis (also known as Discrete Choice) has been applied to reveal the relative importance of various product attributes for consumers. The EU Energy label is used for the two product categories in our survey, light bulbs and washing machines, and we investigate the relative importance of this eco-label compared to other product features (like brand name) in consumers’ purchasing decisions. We discuss differences between the two product categories, and draw conclusions for sustainability marketing and policy.
Keywords: Information asymmetry, consumer behaviour, eco-labelling, choice-based conjoint analysis, discrete choice, household appliances, EU energy label, sustainability marketing.
* Correspondence to: Rolf Wüstenhagen, Institute for Economy and the Environment, Tigerbergstrasse 2, CH-9000 St. Gallen, Switzerland. E-mail: rolf.wuestenhagen@unisg.ch, www.iwoe.unisg.ch.
Page 1 of 28
1
Introduction
Consumers are interested in goods as a bundle of different product characteristics (Lancaster, 1966) that can be distinguished by search, experience and credence characteristics. While search characteristics can be identified by consumers prior to purchase,