Green marketing: what the Millennials buy

Abstract

Purpose - To develop an understanding of the Millennial Generation's consumption of green products. Specifically, our research sought to address the following two research questions in regard to this generation's consumption behavior: What product attributes have significant effects on purchases of green products? What are the primary reasons for not adopting green products? Design/methodology/approach - A questionnaire was administered to 197 undergraduates at a private university in the southern US. The sample was 59 percent female and ages ranged from less than 18 to 25. Full time students represented 95 percent of the sample. Findings - The findings suggest that when developing marketing communications, marketers may want to devote more attention to recyclability or re-usability, biodegradableness, and positive health effects stemming from eco-friendly product attributes, as these characteristics shared the strongest associations with Millennial intent to purchase green products. The results also indicate that the primary reason Millennials do not purchase green products is the belief that green products are too expensive. Research limitations/implications - To capture opinions of members of the Millennial Generation, the study used a sample of students at a private university which may not be representative of the entire population of Millennials. Since all participants were enrolled in higher education, there may be some relationship between education and green consumption behavior. Originality/value - This research offers marketers a richer understanding of this segments' consumption behavior of green products, in addition to highlighting important obstacles marketers need to overcome to transition non-purchasers to purchasers of green products.

Without a question, green marketing is a major trend in competitive business. The practice of green marketing is largely growing as a result of the increased value consumers place on sustainability. Regardless of size, companies recognize the benefits of going green. In 2009, a study conducted by the American Marketing Association revealed that over half of corporate marketers thought their companies would increase sustainability efforts throughout 2010 and 2011 (AVS Group). In addition, 43 percent stated that their companies would increase the marketing of these efforts (AVS Group). Although various definitions of green marketing exist, we adhere to the definition provided by [3] Grewal and Levy (2008), such that green marketing is defined as a strategic effort made by firms to provide customers with environment-friendly (i.e. eco-friendly or green) merchandise.

Although the practice of and research on green marketing is growing, little academic research has devoted attention to understanding the Millennial Generation's (also referred to as Generation Y's or Echo Boomers) ([7] McKay, 2010) consumption of green products ([10] Smith and Brower, 2012). While researchers have yet to establish specific cutoff dates, there is a general consensus that the Millennial Generation is comprised of individuals born throughout the 1980s and early 2000s. Millennials make up a sizable market opportunity. In fact, Information Research, Inc. (IRI) estimates that Millennials represent a growing $54.3 billion opportunity ([7] McKay, 2010). According to California Green Solutions (2007) as cited in [20] Smith (2010), Millennials care about the environment; and as a result, most Millennials possess positive attitudes toward green products and are willing to pay more for green services, products, or brands. Nonetheless, it is a challenge for retailers to successfully communicate "green" messages. As a result of the importance Millennials place on the environment, green (i.e. eco-friendly) product characteristics are considerable factors on which to build customer loyalty ([10] Smith and Brower, 2012). The current research contributes to the literature by gaining a more in-depth understanding of the Millennial Generation's consumption of green products. Specifically, our research sought to address the following two research questions in regards to this Generation's consumption behavior:

RQ1. What product attributes have significant effects on purchases of green products?

RQ2. What are the primary reasons for not adopting green products?

Providing insight to these questions offers marketers a richer understanding of this segment's consumption behavior of green products, in addition to highlighting important obstacles marketers need to overcome to transition non-purchasers to purchasers of green products.

The remainder of this article proceeds as follows. First, we review the literature on green marketing, the green consumer, and the Millennial Generation. We then explain the survey used to address the aforementioned research questions. This is followed by a discussion of the results, which indicate that certain product attributes are more meaningful than others in regards to Millennials' intent to purchase green products. We then conclude by discussing managerial implications and the limitations of the study.

Historical overview of green marketing

Beginning in the 1960s, breakthroughs in scientific and technological research fueled concerns about the health of the earth and its finite resources ([15] Zinkhan and Carlson, 1995). During the 1970s, increasing oil prices forced consumers to question if the world's resources were sufficient to sustain the American standard of living ([4] Haytko and Matulich, 2008). During this time and throughout the 1980s, research on environmental issues focused on political reform regarding the usage of natural resources. Consumers paid little attention to the impact of material goods and services on the environment ([1] Finisterra do Paço et al. , 2009). The 1990s ushered in "the earth decade" and marked the beginning of a new consumer trend. The earth decade not only instigated the creation of greener products, but also the need for green marketing. A poll taken in 1991 showed that 90 percent of American consumers were concerned about the ecological impact of their purchases ([9] Schuhwerk and Lefkoff-Hagius, 1995). As consumers placed more importance on environmental and social problems, companies and organizations increased the creation of environmentally friendly products and services while striving to maximize profits ([1] Finisterra do Paço et al. , 2009).

Although the market for green products experienced a huge growth during the 1990s, it also experienced shortcomings. During this period, several companies were found guilty of falsely advertising environmentally conscious attributes. Companies often advertised new green products, yet the products were either unchanged or the environmental claims were unproven ([8] Montague and Mukherjee, 2010). This practice is considered greenwashing, and refers to such deceiving acts, or any company practice that intentionally misleads consumers through false advertisement ([13] Vermillion and Peart, 2010). As a result of greenwashing, companies sacrificed long-term customer loyalty for short-term profits and sales; and consumers developed a deep mistrust for the environmental efforts of many organizations ([15] Zinkhan and Carlson, 1995).

In 1992, the Federal Trade Commission (FTC) introduced regulations and guidelines regarding the exploitation of environmental claims in an effort to prevent false advertisements and decrease consumer mistrust ([8] Montague and Mukherjee, 2010). In 1999, the FTC partnered with the Environmental Protection Agency (EPA) to release an article titled "Sorting out 'green' advertising claims" to further address this issue. Although these proactive steps were taken, greenwashing is still an issue today ([8] Montague and Mukherjee, 2010), and environmental organizations continue to actively work alongside the government to prevent companies from misleading consumers ([13] Vermillion and Peart, 2010).

Despite previous acts of fraudulent behavior, consumers' environmental concerns have not decreased. In 2008, a study taken by Mintel International Group found that 36 percent of American consumers purchased green products on a regular basis ([8] Montague and Mukherjee, 2010). Further supporting the growth of consumers' environmental concerns, in the spring of 2008, the search phrase "going green" reached 31 million hits on search engines such as Google and Yahoo ([4] Haytko and Matulich, 2008). Additionally, during the recession in 2009, a poll conducted by Green Seal and EnviroMedia Social Marketing revealed that four out of five consumers would buy green products at a higher cost despite the poor economic conditions ([13] Vermillion and Peart, 2010).

Undoubtedly, environmentally concerned consumers can be a profitable market segment ([10] Smith and Brower, 2012). Research indicates that as a result of going green or using green marketing, a company's image may be enhanced, leading to increased profits and customer loyalty ([8] Montague and Mukherjee, 2010). In addition, by introducing ecologically friendly products and services into the market, companies can accomplish two goals. First, these products and services can address the needs of already environmentally conscious consumers; and second, companies can create the opportunity for consumers to become ecologically conscious and more aware of environmental issues ([15] Zinkhan and Carlson, 1995).

The green consumer

Green consumers are the motivating force behind the green industry. Concern for the environment drives consumer values, lifestyles, and the purchasing of green products. According to [9] Schuhwerk and Lefkoff-Hagius (1995), individuals who engage in environmental activities are more prone to purchase green goods. Targeting green consumers can be challenging for companies. Green consumers not only desire green products, but also desire that companies engage in green practices, such as recycling and energy efficiency ([8] Montague and Mukherjee, 2010).

The consumer's level of commitment to environmental issues, attitude, and behavior segment the green market ([9] Schuhwerk and Lefkoff-Hagius, 1995). The Roper Organization categorizes five green consumer segments in the USA ([12] Suplico, 2009). First, "true-blue green" consumers strongly believe that their actions have an impact on the environment. They are willing to invest more on green products and willingly engage in ecological activities, like recycling and composting. They are the most environmentally conscious consumer group and will make certain to purchase green products only from trustworthy, environmentally conscious companies. Second, "greenback green" consumers invest in more expensive green products, but are not willing to engage in environmental activities. In order to protect their lifestyle, these consumers only engage in environmental activities through monetary means. Third, "sprouts" are green consumers that support environmental regulations. Yet, they are less likely to spend more money on green products. Fourth, "grousers" believe that it is not their responsibility to solve environmental issues. This consumer group chooses regular products over green products to avoid higher costs. Finally, the "basic brown" segment believes that no amount of personal, commercial, or political effort can solve ecological problems ([12] Suplico, 2009).

Green consumers want products that will protect or benefit the environment, yet, they will not sacrifice quality or change in their lifestyles ([8] Montague and Mukherjee, 2010). According to [13] Vermillion and Peart (2010), consumers are not likely to purchase a product only for its environmentally friendly attributes. A product must also contain an added benefit, such as safety, health, or cost efficiency ([13] Vermillion and Peart, 2010). Likewise, research indicates that consumers will not sacrifice product characteristics such as convenience, availability, price, quality and performance in place of green or eco-friendly characteristics ([2] Ginsberg and Bloom, 2004). Instead, green and non-green products must be deemed equivalent in regards to these attributes in order for most consumers to even consider purchasing the green product ([2] Ginsberg and Bloom, 2004).

Additionally, green consumers may harbor distrust and biases against large corporations and advertisers. A report by Green Gauge found that 55 percent of consumers surveyed believed that products that allege ecological attributes actually possess no green qualities ([13] Vermillion and Peart, 2010). This segment of green consumers can be the greatest challenge for marketers. Therefore, research aiming to understand why Millennials do not adopt green products is important since it reveals marketing communication tactics that may potentially switch non-purchasers to purchasers of green products.

Millennial generation: the college consumer

The twenty-first century introduced the Millennial Generation, often termed Generation Y or Echo Boomers; a new demographic segment comprised of individuals between the ages of 18 and 34. Millennials are said to be extremely diverse, educated, and technologically savvy ([5] Hood, 2012). Some studies have found that this group of consumers is the most environmentally conscious ([13] Vermillion and Peart, 2010). According to the College Explorer , 33 percent of college students surveyed favor socially and environmentally friendly brands ([11] Spehar, 2006). Studies have also shown that educated consumers are increasingly worried about the long-term effects of products on their health, community, and environment ([11] Spehar, 2006).

Marketing to the Millennial Generation creates a profitable opportunity for many companies. In fact, this generation of consumers is estimated to be a $54.3 billion opportunity for marketers ([7] McKay, 2010). Attracting Millennials is important because younger consumers may influence the purchases of their peers and families. Peer relationships create a social environmental pressure to conform to group norms, such as brand preferences, and in Western society, social pressures are found to be a major influence on the green purchase behavior of adults ([6] Lee, 2011).

In addition, this generation of consumers may be the most educated. According to the Pew Research Center, pressure from parents to attain university-level educations and the lack of jobs due to the current recession will influence Millennials to stay in school ([11] Spehar, 2006). The recession will influence young consumers to reduce their personal expenditures, and once the economy improves, Millennials will have accumulated large personal savings ([5] Hood, 2012). Furthermore, education may increase Millennials' awareness of the benefits of going green and environmental issues ([11] Spehar, 2006).

In summary, this review has illustrated the growing practice of green marketing, characteristics of the green consumer, as well as the importance of the Millennial Generation. There is a large opportunity that companies can exploit by manufacturing and marketing green products and services to Milllennials ([5] Hood, 2012); yet the literature reveals that little is known about the specific attributes that impact this generation's intent to purchase green products, and the reasons why this group of consumers may not adopt green products. Thus, the following study was conducted to explore these two fundamental deficiencies in the literature.

Survey approach

A questionnaire was administered to 197 undergraduates at a private university in the southern USA. The sample was 59 percent female and ages ranged from less than 18 to 25. Full time students represented 95 percent of the sample. Research investigating Millennials and green marketing has utilized college students ([10] Smith and Brower, 2012), and given that the traditional college student identifies with the Millennial Generation, we believed a student sample was appropriate.

The survey began by telling students that the researchers were interested in their opinions of the environment and green marketing. To help ensure similar interpretations of green marketing, the following definition was provided: green marketing is the practice of promoting products and services that have a positive environmental impact. Students were then asked the following: how concerned are you about the current state of the environment; how important is creating environmentally safe products; how likely would you be to purchase brands that support an environmental cause or activity; and if you have never purchased green products, why? For the latter question, five opinions were provided, including: green products are too expensive, I do not trust manufacturers of green products, I cannot differentiate between green products and non-green products, green products are lower quality than non-green products, and other. If other was selected, students were asked to describe their reason for not purchasing green products. Finally, several product attributes were presented and students were asked to indicate the importance of each attribute in regards to their purchase of green products or services. All items were presented utilizing a seven point scale.

Results

RQ1 . What product attributes have significant effects on purchases of green products?

The first analysis sought to identify product attributes that have a critical influence on Millennials' intent to purchase brands that support environmental causes. Correlations among product attributes and purchase intent are provided in Table I [Figure omitted. See Article Image.]. As noted in Table I [Figure omitted. See Article Image.], all product attributes were positively correlated with purchase intent except for budget and price, which held non-significant correlations with purchase intent. These results support the notion that although cost of green products is important to Millennials, its relationship with purchase intent is limited compared to other product attributes, including promotion (r =0.32), product availability (r =0.32), non-toxic ingredients or material (r =0.40), recyclability or reuseability (r =0.52), biodegradableness (r =0.47), being free from animal testing (r =0.35), having ecofriendly production methods (r =0.40), having a brand associated with environmental causes and activities (r =0.40), and providing positive health effects (r =0.41). These results highlight that recyclability has the strongest, while the importance of one's budget has the weakest association with a Millennial's intent to purchase green products.

RQ2 . What are the primary reasons for not adopting green products?

The second analysis sought to understand the primary reasons why Millennials do not adopt green products. Similar to existing findings, our results revealed that the primary reason for not purchasing green products is that they are considered too expensive. This was indicated by 51 percent of those that do not purchase green products. The second most common reason for not purchasing green products was that consumers are unable to differentiate between green and non-green products, indicated by 21.6 percent of non-users; followed by consumers not trusting the manufacturer of green products, as represented by 7.8 percent of non-users; and the belief that green products are of lower quality than non-green products, as represented by 5.9 percent of non-users. Various other reasons for failing to purchase green products represented 13.7 percent of non-users; such reasons included not caring about the environment, not going out of one's way to find green products, not paying attention to green marketing, purchasing out of habit, feeling that there is less variety among green products, and the belief that green products are not as well advertised compared to non-green products.

Conclusions and implications

Our findings present several compelling implications for practitioners. First, although several correlations could be found among product attributes and the intent to purchase green products, recyclability or re-usability, biodegradableness, and positive health effects stemming from eco-friendly product attributes demonstrated the strongest relationships with Millennial purchase intent. This finding suggests that marketers may want devote more attention to these attributes when developing their marketing strategy. Specifically, an organization's promotional elements may want to focus on communicating the specific linkages among these product attributes and an organization's products or services. In addition, this finding adheres to prior work that articulates that consumers are not willing to give up certain product attributes just to "go green." Research has revealed that convenience, availability, price, quality and performance continue to be important when considering the intent to purchase green products ([2] Ginsberg and Bloom, 2004). Likewise, our results demonstrate that availability and promotion continue to have a critical effect on whether one decides to purchase green products. Additionally, we find it interesting that brand association was positively correlated with purchase intent, however this correlation was not nearly as strong as the correlations found between purchase intent and recyclability or purchase intent and biodegradableness. From this result, we can interpret that although corporate brand associations with green marketing are important, Millennials tend to place more importance on the actual product characteristics than brand affiliation. This finding further articulates that firms should devote more attention to greening their products by implementing marketing communications that articulate the green attributes of their products.

In addition, our findings suggest that Millennials do not purchase green products for four reasons:

green products are considered too expensive;

Millennial consumers are unable to differentiate between green and non-green products;

there is a lack of trust surrounding green products; and

Millennials often believe that green products are of inferior quality.

Not surprisingly, the belief that green products are too expensive is a commonly held belief by several consumers. However, the notion that Millennials indicate a difficult time differentiating between green and non-green products suggests that marketers may need to intensify their communication efforts as to how a firm's green products are in fact different. Providing clear communication that allows consumers to easily distinguish between green and non-green products is likely to yield increased awareness of the difference between these products and consequently, increased consumer demand for green products. The notion that there is a lack of trust surrounding green products is likely to stem from the deceiving acts of greenwashing. These deceptive practices have fostered consumer mistrust of green marketing ([15] Zinkhan and Carlson, 1995) and unfortunately, greenwashing continues to occur today ([8] Montague and Mukherjee, 2010). Due to increased regulations surrounding the practice of green marketing, it is hopeful that consumer perceptions of green marketing as well as trust will improve. Lastly, Millennials often mentioned the belief that green products are of inferior quality. This impediment was considered over ten years ago, and it continues to impact the industry today. Specifically, in a 2002 Roper survey, 41 percent of consumers mentioned not purchasing green products as result of their concern regarding diminished quality ([2] Ginsberg and Bloom, 2004). Thus, although ten years have passed, low quality perceptions continue to hinder consumers from purchasing green products.

Limitations and future research

To capture opinions of members of the Millennial Generation, this study used a sample of students at a private university which may not be representative of the entire population of Millennials. Since all participants were enrolled in higher education, there may be some relationship between education and green consumption behavior. Thus, future research may want to explore if differences exist between Millennials that attend versus not attend a higher education institution. In particular, differences in these two groups may exist in regards to the product attributes that are most influential in affecting purchase intent of green products as well as reasons for non-adoption. For instance, typical college graduates tend to attain higher incomes than non-graduates, thus price may have a weaker impact on the purchase intentions of green products for graduates compared to non-graduates.

In addition, our study which concerns environmental matters may be subject to social desirability bias. Given that anonymity was assured and no personal information was collected, the threats to social desirable responding were mitigated. Since our results were correlational, future research may want to further investigate our findings using experimental methods. Particularly, future work may want to develop advertisements reflecting recyclability, biodegrableness, and positive health effects stemming from ecofriendly attributes to investigate how exposure to advertisements containing such messages impact a Millennial's desire to purchase green products.

Proceedings of the Northeast Business and Economics Association

References

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Appendix

Corresponding author

Professor Mathew Joseph can be contacted at: [email protected]

  

Illustration

Table I: Correlations among product attributes and purchase intent of green products