CONSUMER PREFERENCE TOWARDS GREEN RECYCLABLE PRODUCTS

Submitted To: Prof: Vishal

Submitted By: Section J, Group No. 10

Vikas Saini 11BSPHH010951 Piyush Chandak 11BSPHH011026 Ayushi Agarwal 11BSPHH011066 Rajan Singh 11BSPHH010640
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INDEX
S. No Particulars Page No.

Abstract

Introduction

Literature Review

Data, Variable and Methodology

Questionnaire

Working & Analysis

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Assumptions

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Discriminant Analysis

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Results

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Value addition

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Limitations

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Reference

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ABSTRACT
The purpose of the study was to examine the variables that affect the consumer preference towards green recyclable products, and then differentiate the consumer in two different group of buyer or non buyer of green product on the basis of factors or variables. Initially we selected 12 variables and prepared a Questionnaire to measure the attitude of customers towards green recyclable products through these variables but 3 variables were of not our use so we drop them. We conducted a questionnaire and focus group study to identify variables. The Questionnaire was designed based on Likert scale. The data collected and after coding used in SAS to analyze since our dependent variable is in categorical in nature we used discriminant analysis for our study, taking consumer purchase behavior as our dependent variable.

INTRODUCTION
Green recyclable products are those products which are bio-degradable and reusable the other characteristics of these products are they are non-toxic, non corrosive, and non allergenic due these characteristics these products have minimum or no harmful effect on the environment and therefore these are also known as hygienic products. These are also known as eco-friendly products made up of natural fibers and thus they help in saving the natural resources. Green recycled products can be broadly defined into various categories such as: Products That Conserve Natural Resources Products That Contribute to a Safe, Healthy Built Environment Products Made with Recycled, or Agricultural Waste Content-post and pre consumer Product Products That Avoid Toxic or Other Emissions.

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

LITERATURE REVIEW
Consumers can degrade or uplift the environment, through their buying behavior, or more precisely: how customers evaluate recycled (green products) individually and with respect to non green products? When we buy products made from recycled materials, it is a crucial step in supporting recycling programs and resource conservation. Resources are saved only when recycled products are purchased. Olyne and Bryce (1990) highlight the fact that research at individual level regarding factors that contribute towards the change in perception of consumer for recycled products is important. The growing social and regulatory concerns for the environment lead an increasing number of companies to consider green issues as a major source of strategic change. In particular, this trend has major and complex implications on the technological strategy of a company and on its product innovations. Even though it is increased eco-awareness of Sri Lankan customers during the past few decades, there are some barriers to the diffusions of more ecologically oriented consumption and production styles. Therefore, companies are increasingly recognizing the importance of green marketing concepts. The purpose of study was to investigate the attributes which influence perceptions of customers towards purchasing eco- friendly products and their willingness to pay on green products. The current rapid growth in the economy and the patterns of consumers consumption and behavior worldwide are the main cause of environmental deterioration. As the environment continues to worsen, it has become a persistent public concern in the developed countries and has recently awakens developing countries to the green movement. This paper is essentially exploratory in nature and has two objectives. The attitudebehaviour gap or valuesaction gap is where 30% of consumers report that they are very concerned about environmental issues but they are struggling to translate this into purchases. For example, the market share for ethical foods remains at 5 per cent of sales. This paper investigates the purchasing process for green consumers in relation to consumer technology products in the UK. Data were collected from 81 self-declared green consumers through in depth interviews on recent purchases of technology products. A green consumer purchasing model and success criteria for closing the gap between green consumers values and their behavior are developed. The paper concludes that incentives and single issue labels (like the current energy rating label) would help consumers concentrate

their limited efforts. More fundamentally, being green needs time and space in peoples lives that is not available in increasingly busy lifestyles. Consumers psychological benefit from the purchase was added as part of the purchase utility in this research study . The theory assumes that consumers always try to maximize their purchase utility which is the benefit received from the purchases good and the price when they make purchase decisions. It has been found that manufacturers and marketers have responded to this environmental trend . The introduction of new and green product has grown by 100% per year since 1985. However the environmental trend cannot ensure the success of the green market because consumers purchase behaviors and attitude have not changed as quickly as their environmental awareness. Consumers receive both quality benefits and psychological benefits by paying money and other costs such as time and efforts for each purchase transaction. The quality benefit is the received quality from a product itself or life improvement through using the product. On the other hand the psychological benefit is the positive feeling about the purchase for example self image built from buying a special product or a feeling of getting a deal due to the lower price. Since consumers always try to maximize their purchase utility from the purchase of the recycled product they should perceive more purchase utility from the purchase of recycled products than the purchase of the ordinary product. The hedonic price technique has been applied extensively to housing markets and labour markets. Studies showed that they care that how good is produced and look to buy environmentally friendly products when possible. It is possible that some consumers might be willing to pay more for the recycled good to improve environment quality . Overall, environmental quality would by the

improve slightly, but the improvements would not necessarily be perceived individuals making the purchase

In this paper they have tried to study approaches regarding several aspects of the decision making processes of the final consumer, analyzing, how significant their decision of buying was that prove themselves wrong later. Reusable alternative products points mostly to shopping bags. There are a number of reusable shopping bags available instead polythene bags such as recyclable paper bags, jute bags, and bags made from synthetic like polypropylene, polyethylene and nylon.
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Data, Variables & Methodology

VARIABLES: Dependent: In our research the dependent variables is categorical in nature i.e. either consumer will buy the green recycle product or they wouldnt buy. We take dependent variable as purchase behavior and ask response on 5 point Likert scale, the responses on this are taken as 0 for 1 and 2 and 1 for 4 and 5, the response 3 we did not consider in our study. So we classify it as: 0 as consumers will not buy green recyclable products. 1 as consumer will not buy green recyclable products. Independent: To find the independent variables we conducted interviews, focus group study. And we found the following independent variables. The independent variables are interval of ratio type. S. No. 1 2 3 4 5 6 7 8 9 Independent Variable Price of product Availability of product Awareness level among consumer Peer - effect (me too) Rules and regulations Promotion Safety Variety Quality (Attractiveness) Interview Source Relationship with dependent variable Direct Inverse Direct Inverse Direct Focus group study Direct Direct Direct Inverse

SAMPLE AND DATA:

Target population: Our major part of respondents are students from IBS Hyderabad as the students over here are from diverse background so its good for our study and a minor part of respondents are other people who are in contact with us from various metro cities. Sample size: We got total of 183 responses out of which some responses are incomplete which we cannot use in our study so after eliminating those responses finally we left with 152 responses.
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We are getting the data through the primary data source for which we have prepared a questionnaire that included a combination of open ended response question, fixed alternative question and Likert scale of 1-5 rating, which we have sent to our target population. The designed questionnaire is given as below:

QUESTIONNAIRE
Consumer preference towards purchasing of green recyclable products:

Rate the following questions on the basis of following 5 point likert scale. 1- Strongly Disagree; 2- Disagree; 3- Neutral; 4-Agree; 5- Strongly Agree 1. How significant do you think is to spread the awareness of the green recyclable products? 1 2 3 4 5

2. How significantly do the advertisements of these products help you to purchase these products? 1 2 3 4 5

3. Does the usage of green recyclable products help in the betterment of the environment in the long run? 1 2 3 4 5

4. Do you think that the green recyclable products are reliable? 1 2 3 4

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5. Does investing in paper bags a source of green recyclable product give a sense of contribution towards environment? 1 2 3 4 5

6. Durability is an issue while purchasing Paper Bags? 1 2 3 4 5

7. Paper Bags are easily available in the market for purchase? 1 2 3 4 5

8. Do you feel like purchasing a paper bags because your colleague/relatives/friends use it? 1 2 3 4 5

9. Do you think that the premium charged for paper bags are justified? 1 2 3 4 5

10. Safety is a concern when purchasing green recyclable products? 1 2 3 4 5

11. Do you think that paper bags are safe to use? 1 2 3 4 5

12. Promotion of bio-degradable products will help to increase awareness paper bags? 1 2 3 4 5

13. If the utility derived from Paper Bags is satisfactory will you go for repurchase? 1 2 3 4 5
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14. Does green recyclable segment market offer a variety of products? 1 2 3 4 5

15. Is Law and Regulations an effective way of forcing people to buy such green recyclable products? 1 2 3 4 5

16. Do you prefer to use or purchase paper bags instead of plastic bags? 1 2 3 4 5

17. Personal Details Name: _____________________________________ Age: ________ Gender: M Single Married Other What is your educational level?

Marital Status:

Inter Graduate Post Graduate Others What is your current occupation? *

Employed Self-employed Students If others please specify.............................. ______________________________________________________________________________

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Working and Analysis: Assumptions

1. First we filter the data as per our need or suitability for model and coded it into excel for dependent variables. Checked the independent variables whether normally distributed or not. (SAS describe distribution analysis) Tests for Normality - Shapiro-Wilk Test Variable W - Statistic p Value (Pr < W) 0.899638 <0.73451 Awareness 0.880908 <0.68638 Advertisements 0.900095 <0.85730 Availability 0.908344 <0.82326 Peer effect 0.899634 <0.80636 Price 0.846804 <0.66401 Safety 0.899638 <0.76365 Variety 0.902982 <0.74553 Law and Regulations 0.901717 <0.80042 Attractiveness

2.

Since the p value of Shapiro Wilk test for all variables are more than (0.05) so we accept the null hypothesis that the Independent variables are normally distributed. Therefore the I.Vs is normally distributed. 3. Checked the multicollinearity of independent variables with the help of VIF option of linear regression. Parameter Estimates Parameter Standard DF Estimate Error t Value Pr > |t| 1 -0.89299 0.12175 -7.33 <.0001 1 0.11189 0.02311 4.84 <.0001 1 0.08353 0.02701 3.09 0.0024 1 -0.00705 0.02814 -0.25 0.8026 1 -0.02301 0.02726 -0.84 0.4002 1 0.09199 0.02944 3.12 0.0022 1 0.04812 0.02304 2.09 0.0385 1 0.06105 0.02886 2.12 0.0362 1 0.09122 0.02108 4.33 <.0001

Variable Intercept awareness advertisements available friends Price Safety variety Law and Regulations

Variance Inflation 0 1.59476 1.47141 1.55550 1.38238 1.85939 1.58013 1.75245 1.19890
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Variable attractiveness

Parameter Estimates Parameter Standard DF Estimate Error t Value Pr > |t| 1 -0.01168 0.02327 -0.50 0.6164

Variance Inflation 1.37534

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

4. Test of Homogeneity of Within Covariance Matrices

Chi-Square DF 100.959278 45

Pr > Chi Sq <.0001

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

4. Discriminant Analysis.
a. Class level information: It shows us the proportion and weightage of sample belongs to different group i.e. out of 150 sample size 40.6% belongs to consumer not prefer green product while 59.33% belongs to consumer who prefer green products. Class Level Information Variable Prior Purchase Name Frequency Weight Proportion Probability 61 61.0000 0.406667 0.500000 00 89 89.0000 0.593333 0.500000 11

b. Univariate test statistics: Univariate Test Statistics F Statistics, Num DF=1, Den DF=148 Total Pooled Between Standard Standard Standard R-Square Deviation Deviation Deviation R-Square / (1-RSq) F Value Pr > F 1.3646 1.0614 1.2152 0.3992 0.6643 98.32 <.0001 1.1216 0.9401 0.8691 0.3022 0.4331 64.10 <.0001 1.1070 1.0168 0.6281 0.1621 0.1934 28.62 <.0001 1.0770 1.0740 0.1683 0.0123 0.0124 1.84 0.1769 1.1566 0.9581 0.9200 0.3185 0.4673 69.16 <.0001
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Variable awareness advertisements available friends Price

Univariate Test Statistics F Statistics, Num DF=1, Den DF=148 Total Pooled Between Standard Standard Standard R-Square Variable Deviation Deviation Deviation R-Square / (1-RSq) F Value Pr > F 1.3627 1.1684 0.9976 0.2697 0.3694 54.67 <.0001 Safety 1.1455 1.0162 0.7543 0.2183 0.2792 41.33 <.0001 variety 1.2971 1.1883 0.7456 0.1663 0.1995 29.53 <.0001 Law and Regulations 1.2589 1.2571 0.1731 0.0095 0.0096 1.42 0.2349 attractiveness The above table shows that except friends and attractiveness all other variables are having p value less than (.05) so for these variable null hypothesis is rejected and it can be said that these variables has significant impact on dependent variable i.e. consumer purchase preference towards green products.

c. Canonical discriminant analysis: Adju Squa Eigenvalues of sted Appr red Inv(E)*H Cano oxima Cano = CanRsq/(1-CanRsq) nical te nical Corr Stand Corr Eige Diffe Prop Cum elatio ard elatio nval renc ortio ulati n Error n ue e n ve 0.789 0.0294 0.640 1.781 1.000 1.000 218 51 499 6 0 0 Test of H0: The canonical correlations in t he current row and all that follow are zer o Likelihoo Approximat d e Num Den Pr > Ratio F Value DF DF F 0.3595008 27.71 9 140 <.000 1 1

Cano nical Corr elatio n 0.800 312

Because there are two groups in the dependents variable so only one discriminant function is estimated. The Eigen value of this function is 1.7816 which is much higher than 1 show the discriminant analysis is good and it account for 100% of the explained variance. The canonical correlation of this function is 0.800312 and the square of this correlation is 0.640499 indicates that more than 64% of the variance in the dependent variable purchase preference is explained or accounted by this model. Also it may be noted that the Wilks Lambda i.e. likelihood ratio is 0.3595 which transforms to a chi-square of 27.71 with 9 degree of freedom, this is significant beyond the (0.05) level so we can say that the model is a good one.
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d. Standardized canonical coefficients: Total-Sample Standardized Canonical Coefficients Variable Can1 0.6434619752 awareness 0.3948165697 advertisements -.0328726322 available -.1044201855 friends 0.4483738615 Price 0.2763390554 Safety 0.2946827865 variety 0.4985865572 Law and Regulations -.0619717862 attractiveness This table helps us to differentiate the consumer to different group i.e. within dependent variable. The magnitude can1 values of the respective variable indicate the strength of that variable with which it influences the dependent variable. Therefore we can classify respondents who rate high on awareness, advertisements, price, safety, variety and L&R as group 1 who prefer to buy green recyclable products and the other respondents who rate high on availability, friends and attractiveness belongs to group 0 which imply these respondents prefer not to buy green products.

e. Class means on canonical variables (Group Centroid)

Class Means on Canonical Variables Purchase Can1 0 -1.601491616 1 1.097651557 Here it shows the centroid of the two groups giving the value of the discriminant function evaluated at the group means. For group 0 the centroid is negative i.e. -1.60 and group 1 centroid is positive 1.097 their magnitude differs as the number of respondents in the group are different.

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f. Resubstitution summary: Number of Observations and Percent Classified into Purchase From Purchase 0 1 Total 0 59 2 61 96.72 3.28 100.00 1 9 80 89 10.11 89.89 100.00 Total Priors 68 82 150 45.33 54.67 100.00 0.5 0.5

The table gives us the hit ratio according to Resubstitution which develops the model considering all the data which is to be analyzed. According to this method the total hit ratio (indentify the responses correctly classified and misclassified) is 92.66% out of which 96.72% and 89.88% responses are correctly classified in group 0 and 1 respectively.

g. Cross validation summary: Number of Observations and Percent Classified into Purchase From Purchase 0 1 Total 0 57 4 61 93.44 6.56 100.00 1 12 77 89 13.48 86.52 100.00 Total 69 81 150 46.00 54.00 100.00 Priors 0.5 0.5

It develops model fixing one response which is to be analyzed and taking into consideration rest of the responses. In this model total hit ratio is 89.33%, which is lower than Resubstitution method and is better method to classify the response as correct or misclassified.

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Results:
Since the model fulfill all assumption of discriminant analysis and at the same time found good model for the study, we can drawn following inferences:

Except friends and attractiveness all other variables have significant influence on dependent variable. 64% of the variance in the dependent variable purchase preference is explained or accounted by this model. Group 1 favorable purchase behavior towards green products consists of respondents who rated high on awareness, advertisements, price, safety, variety and L&R Group 0 unfavorable purchase behavior towards green products consists of respondents who rated high on availability, friends and attractiveness Out of total responses 89.33% of responses are correctly classified.

Value:
The project generated following values: First of all this project gives us the practical exposure to carry out a research and its different aspects like questionnaire design, methodology and tool, analysis and interpretation of result. The project can be used as a pilot study for the same purpose and can be exercise at greater level outside the campus or in the company. The project tells us about the factors which influence consumer preference towards green recyclable products

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Limitations:
There are following limitation of the project:

The respondents are similar in characteristics in terms of age, education, experience and little exposure towards purchasing so the response might not be diverse in nature. Since major respondents are students therefore we could not include other important variables in our study e.g. income, age, education level etc. Due to above reasons we cannot generalize the result it may vary significantly if the respondents are really from diverse in nature.

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REFERENCES: 1. William G. Zigmund, 7th Edition, Business Research Methods. 2. Marketing Research 6th Edition, Naresh K. Malhotra and Satyabhushan Dash 3. Article New or recycled products: how much are consumers willing to pay? Leila hamzaoui Essoussi and fonathan D. Linton Telfer School of Management, Canada. 4. Article Targeting consumers who are willing to pay more for environmentally friendly products Michel Laroche, Jasmin Bergeron and Guido Barbaro-Forleo Professor of marketing, John Molson School of business, Canada. 5. The Determinants of Consumers Purchase Decisions for Recycled Products and Application Of Acquisition Transaction Utility Theory, Lien- Ti Bei, Eithel M_Simpson.mht. 6. Tan Booi Chen, Lau Teck Chai, Attitude Towards The Environment And Green Products: Consumers Perspective, 2010 (http://cscanada.net) 7. William Young, Kumju Hwang, Seonaidh McDonald, Caroline J. Oates, Sustainable Consumption: Green Consumer Behavior When Purchasing Products, 2009 (http://onlinelibrary.wiley.com) 8. W.M.C.B. Wanninayake, Pradeep Randiwela, Consumer Attractiveness Towards Green Products Of FMCG Sector: An Empirical Study, 2008 (http://www.docstoc.com) 9. Alternatives To Disposable Shopping Bags And Food Services, Prepared For Seattle Public Utilities Bags And Food Service Vol-I (www.seattlebagtax.org) 10. Public Attitudes Towards Recycling And Waste Management, The Strategy Unit, Cabinet Office 11. http://www.indiana.edu/~statmath/stat/all/normality/normality.pdf 12. http://www.uk.sagepub.com/burns/website%20material/Chapter%2025%20%20Discrimi nant%20Analysis.pdf 13. Article The link between green purchasing decisions and measures of environmental consciousness Bodo B. Schlegelmilch The American Graduate School of International Management, Glendale, Arizona, USA, Greg M. Bohlen and Adamantios Diamantopoulos

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