Dr. Theo Araujo Lotte van der Sijs 10769722 Master’s Thesis Graduate School Communication Science Corporate communication 29-01-2016
COMMUNICATING A PRICE INCREASE DUE TO
ENVIRONMENTAL CONCERNS: HOW TO RETAIN
REPURCHASE INTENTIONS AND BRAND ATTITUDES
Abstract
Organizations are under an increasing pressure to act on environmental concerns, yet fear negative consequences of potential price increases that may be necessary to finance the costs of adopting a more sustainable way of conducting business. This research focuses on how organizations can communicate a price increase that is instated due to environmental concerns, while retaining brand attitudes and repurchase intentions. In doing so, two
characteristics of the message were studied: type of source (controlled by the organizations or not controlled) and type of frame (avoiding losses frame or making gains frame). To test these hypotheses, an online survey was conducted in which participants (N = 88) read a news article announcing a price increase due to environmental concerns, differing only as to the source and frame. The results show that both source and frame have no effect on brand attitudes and repurchase intentions, however, climate skepticism and regulatory focus do have an effect. This indicates that personal factors are more important in predicting how consumers respond to a price increase than features of the message that is used to communicate. Therefore, organizations may want to focus less on the message, and more on getting to know their customers in order to find out how they respond when prices are increased.
Communicating a price increase due to environmental concerns: how to retain purchase intentions and brand attitudes
In a historical court case in June 2015, a Dutch judge decided that the government of The Netherlands is obliged to reduce CO2 emissions more than is currently planned. Instead of the planned 17% reduction by 2020, the court judged that there should be at least 25% reduction of CO2 emissions. According to the judge, it is the duty of the state to protect its citizens from the harm that is caused by climate change and therefore emissions should be further reduced. (Trommelen, 2015). While it may take some time before the Dutch government will act on this verdict, this court case shows that concerns about the environment are growing and that governments are under increasing pressure to take action on climate change. This pressure extends to commercial organizations as well, as new regulations are likely to affect their ways of conducting business also. In the future this pressure is likely to only increase, since the threat of climate change is severe: floods, extinction of vulnerable species, and water shortages are just a few consequences of climate change (WWF, 2015).
While many take environmental concerns seriously, some organizations fear that
giving in to pressure and taking action against climate change will have negative
consequences for economic growth (Mohr & Webb, 2005). After all, it is conceivable – if not likely – that some organizations are going to have to raise prices of their products in order to finance the necessary adjustments that are demanded by environmental regulations. In attempting to answer whether a price increase due to environmental concerns affects sales, research comes to differing conclusions; Bhate and Lawler (1997) found that consumers do not object to a higher price for a sustainable product, while Barone, Miyazaki and Taylor (2000) found that a higher price could be an issue to consumers.
Research on price increases in general partly confirms this negative outlook; a price
and it can lower the perceived attractiveness and utility of product, which in turn can lead to boycotts and lower sales (Sen, Gtirhan-Canli & Morwitz, 2001). Therefore, brand attitudes and repurchase intentions are at stake when a price increase is announced. Repurchase
intentions are an individual’s conscious plan to make an effort to repurchase a brand, as based on the definition of purchase intentions by Spears and Singh (2004). Brand attitudes is defined as “a relatively enduring, unidimensional summary evaluation of the brand that presumably energizes behavior’’ (Spears and Singh, p. 55).
This possible decrease in repurchase intentions and brand attitudes may make
organizations hesitant to act against climate change. Therefore, it is important to gain
knowledge on how organizations can avoid these effects. This research hopes to contribute to knowledge on communicating a price increase due to environmental concerns, by studying the effects different aspects of communication may have on brand attitudes and purchase
intentions. When organizations know how to communicate a price increase in a way that preserves sales and brand attitudes – or perhaps even improve them –, managers may be less hesitant to take action against climate change, even if this means increasing product prices.
Much research has already been conducted on organizations behaving more socially
responsible and on communicating environmental policies. Research on corporate social responsibility (CSR) has studied how the public responds towards an organization engaging in CSR (Du, Bhattacharya and Sen, 2010; Yoon, Gurhan-Canli, & Schwarz, 2006). This line of research has put forward the source of a CSR messages as a relevant predictor of brand attitudes and purchase intentions, yet this influence has not been studied when a CSR initiative leads to a price increase. Furthermore, CSR research has often focused on brand attitudes and purchase intentions, but – to the author’s knowledge – not on repurchase intentions. The effect on repurchase intentions will be the focus in this study, because I am interested in the influence a price increase has on an organization’s current customers.
Studies on climate change communication have concentrated on providing advice on how to communicate policies that have been incorporated out of environmental concerns (Dryzek & Lo, 2014; Bertolotti & Catellani, 2014). Researchers in this field often advise placing the message in a frame, by selecting and highlighting certain pieces of information. In climate change communication an avoidance of losses frame is often used. However, most studies on framing were conducted on governmental policies, and the effects on brand attitudes and repurchase intentions were not studied.
This study aims to fill the gaps in these research fields by combining theory of these
lines of research to create a broad approach on communication of a price increase due to environmental concerns. In doing so, the central research question is:
RQ: How do source type (controllable or uncontrollable) and frame (gain or loss) influence brand attitudes and repurchase intentions when communicating a price increase due to environmental concerns?
Theoretical background
CSR and environmental concerns
More than ever before, companies are devoting substantial resources to various social initiatives, such as community outreach programs, environmental protection projects and responsible business efforts (Du, Bhattacharya & Sen, 2010). These initiatives are a form of corporate social responsibility (CSR). Corporate social responsibility can be defined as a company's obligation to exert a positive impact and minimize its negative impact on society (Pride & Ferrell, 2006). CSR focuses on nine areas: ethics, governance, transparency,
business relationships, financial return, community involvement, product value, employment practices and environmental protection (Epstein, 2008).
CSR activities of organizations acting out of environmental concerns belong to this last category. Environmental concerns can be defined as “a general attitude towards preserving the environment’’ (Minton & Rose, 1997, p. 38). In many organizations, this attitude towards preserving the environment is becoming increasingly important in various aspects of conducting business. Even without governments issuing new sustainability laws, according to Haugh and Talwar (2010), “there is a growing belief that corporations can, and indeed should, pursue more active strategies to achieve sustainable solutions to social and environmental problems’’ (p.384). It is not yet mandatory to be fully sustainable, “but internal and external pressures urge organizations to confront these issues’’ (p. 385).
Environmental concerns can come from both stakeholders inside the organization,
stakeholders outside the organization, as well as from institutional forces such as governments. Each of these groups can pressure an organization into taking a more sustainable course. This can result in many different sustainable policies, such as ethical sourcing initiatives, environmentally sensitive facilities, product design and production methods that reduce energy consumption and control emissions, and active participation in social and humanitarian projects (Haugh and Talwar, 2010).
While CSR efforts may have very positive consequences for the cause, CSR efforts
can also have unfavorable consequences. Consumers may view the organization more negatively because of skepticism about an organization’s motives (Skarmeas & Leonidou, 2013), and may hold even more unfavorable views when a price increase is involved.
CSR and scepticism
CSR efforts are not always driven by normative thinking that corporations can make a positive change, but can also be motivated by “the multi-faceted business returns that
p.8). CSR has been shown to affect consumer attitudes and behaviors, such as the attitudes toward firms (Brown & Dacin, 1997), brands (Klein & Dawar, 2004), and retail stores (Lichtenstein, Drumwright, & Braig, 2004), purchase behaviors (Mohr & Webb, 2005) and identification with companies (Sen & Bhattacharya, 2001).While increasingly more
organizations engage in and communicate about their CSR projects, consumers “tend to question why companies embrace CSR and how such activities contribute to social well-being and become sceptical about corporate social involvement’’ (Skarmeas & Leonidou, 2013, p. 1831).
This scepticism relates mainly to the motives an organization has to engage in CSR. Individuals usually attribute two types of motives to an organization’s CSR initiative: intrinsic and extrinsic. When intrinsic motives are attributed, the company is viewed as acting out of genuine concern for the issue it is involved in. The attribution of mainly intrinsic motives can lead stakeholders to react more positively towards the organization (Du, Bhattacharya & Sen). When extrinsic motives are attributed, the motives for engaging in CSR are attributed to causes external to the issue. The organization is therefore seen as using CSR to increase its profits or look good. This leads to less favorable attitudes and behaviors, such as lower levels of retailer equity, reducing the value of the retailers' name in consumers' minds (Skarmeas & Leonidou), a lower intent to purchase the organization’s products and a more negative consumer attitude towards the organization (Elving, 2013). Despite the benefits CSR efforts may bring about, adopting a sustainable policy may therefore also have damaging
consequences when consumers become sceptical about an organization’s motives.
Source of the message
Consumer scepticism and negative responses to a price increase may cause an organization damage when implementing a sustainable policy. It is therefore of great importance to
minimize these possible harmful effects when communicating a new policy. One factor that has been found to be important, is the source through which the message is communicated.
As mentioned before, consumers can become sceptical about an organization’s
motives for engaging in CSR. One way of avoiding this scepticism may be through
communicating through the right source. The source is the channel through which a message is received. Organizations have many channels at hand to communicate about their CSR initiatives, such as annual reports, press releases, a section on their corporate website, but also TV commercials, product packaging, and magazine or billboard advertisements. These
channels are all controlled by the organization. However, according to Du, Bhattacharya and Sen (2010) “there is likely to be a trade-off between the controllability and credibility of CSR communication; the less controllable the communicator is, the more credible it is, and vice versa’’ (p.13). Stakeholders will, according to Du, Bhattacharya and Sen, view the
organization itself as more self-interested than uncontrollable sources outside the
organization, such as the news media. Since individuals are more critical of messages from sources they perceive as self-interested, communication through an organizational channel will be viewed with scepticism. Furthermore, extrinsic motives are attributed because the reason for engaging in CSR is seen to be external of the actual cause (Du, Bhattacharya and Sen). As stated before, this leads can lead to unfavorable brand attitudes and purchase intentions (Elving, 2012).
Yoon, Gurhan-Canli and Schwarz (2006) found evidence to support this expectation,
when they discovered the public was more positive towards an organization’s CSR campaign when it was communicated through an uncontrollable source – in this case an independent organization that provides unbiased evaluations of corporate activities. Flöter, Benkenstein and Uhrich (2015) found similar evidence; their research shows that communication through the least controllable source – the news media – resulted in more positive brand attitudes.
Therefore, I expect that an uncontrollable source leads to more positive brand attitudes and repurchase intentions than a controllable source, and propose the following hypotheses: H1a: Consumers will have increased attitudes towards the brand when they receive the message from an uncontrollable source, when compared to receiving the message from a controllable source.
H1b: Consumers will have higher repurchase intentions towards the brand when they receive the message from an uncontrollable source, when compared to receiving the message from a controllable source.
Framing of the message
Another factor that may contribute to higher brand attitudes and purchase intentions, is the way the message about a price increase is framed. A widely used definition of framing is formulated by Entman (1993), and reads “to frame is to select some aspects of a perceived reality and make them more salient in a communicating text, in such a way as to promote a particular problem definition, causal interpretation, moral evaluation, and/or treatment recommendation”(p. 52). Frames therefore select and highlight particular pieces of information, elevating them into salience so they become noticeable, meaningful or
memorable in the mind of individuals. A frame manifests itself in many aspects of a text, such as word choice, metaphors, exemplars, descriptions, arguments, and visual images (Van Gorp, 2007).
Traditionally, communicating a new policy related to sustainability and preventing
climate change is framed in purely scientific terms. However, researchers have found this to be ineffective. As Moser and Dilling (2011) demonstrate, providing more and better
information does not have an effect, and emphasizing the authority of science and scientists does not lead to an acceptance on the causes and severity of climate changes. Many
the same science about the reality or severity of climate change. Dryzek and Lo (2014) argue that despite not agreeing on the content of climate change, through rhetorical tactics
individuals can still accept measures that require people to contribute financially to policies for greenhouse-gas reduction and even consent to their adoption. According to them, “rhetoric can move people when logic does not” (p.3).
While many researchers agree framing can be useful, there is no conclusive evidence
on which type of frame is most advantageous. However, there seems to be some agreement that framing the message in such a way that it emphasizes the avoidance of losses is
successful in making the public accept a new environmental policy (Bull, 2012; DeBono, Vincenti and Calleja, 2010, Bertolotti and Catellani, 2014) . This frame emphasizes the negative consequences that could occur, and stresses that these will be avoided. In a study on why consumers buy environmentally friendly laundry machines, Bull (2015) writes
“behavioural economics has shown that people tend to be ‘loss averse’, meaning that they can be encouraged to take a risk or make a particular choice by framing the consequences as a means of avoiding losses rather than making gains” (p.244). His results support this statement: laundry machines were preferred when the product description was framed in terms of avoiding losses. A study by Bertolotti and Catellani (2014) elaborates further on this. They also find that framing a message about a sustainable policy in terms of avoiding losses is successful, but only when the message itself is negative, such as reducing emissions.
However, in communicating a policy that is more positive, such as the promoting of
sustainable energy, they find it is better to frame the message in a way that focuses on making gains. A making gain frame emphasizes the positive consequences of a policy, and how these can be achieved.
A price increase can be seen as a negative policy, since consumers are going to have to
expect that when an organization announces a price increase, framing in terms of avoiding losses is more successful than framing in terms of making gains. Using an avoiding losses frame will therefore result in both higher brand attitudes and purchase intentions, as proposed in the following hypotheses.
H2a: Consumers will have increased attitudes towards the brand when they receive the message framed in terms of avoiding of losses, when compared to receiving the message framed in terms of making gains.
H2b: Consumers will have higher repurchase intentions towards the brand when they receive the message framed in terms of avoiding of losses, when compared to receiving the message framed in terms of making gains.
Perceived motive fairness
Research on price increases (Homburg, Hoyer & Koschate, 2005) has found that an important factor in predicting whether a consumer would repurchase a product is perceived motive fairness. Perceived motive fairness refers to how a consumer judges the motives for
increasing a price. When customers believe that the organization has a negative motive – such as attempting to exploit customers -, the price increase will be seen as unfair. However, when customers think that the organization has a positive motive for the increase in price – such as that it is necessary to cover increasing costs – the increase is perceived as more fair
(Campbell, 1999). Perceived motive fairness has a direct effect on repurchase intentions, as shown by Homburg, Hoyer and Koschate (2005). According to them, “when the motive is perceived as fair, customers are more willing to accept a price increase’’ (p. 46). Furthermore, perceived motive fairness could also affect brand attitudes. After all, when a price increase is perceived as unfair, consumers might feel more negative towards the organization for
incorporating such an unfair increase.
brand attitudes, it is important to determine whether different aspects of communication can affect this. As previously stated, research has found that the type of source that is used to communicate a price increase due to environmental concerns, is of importance to whether stakeholders judge the message positively or negatively. When an organization uses a controllable channel, stakeholders might be wary of an organization’s motives, while an uncontrollable source from outside the organization has more credibility and will lead to less doubt about an organization’s motives (Du, Bhattacharya & Sen, 2010). Therefore, it is likely that when the message is communicated through an uncontrollable source, stakeholders judge the organization’s motives as more fair than when it is communicated through controllable channels. This, in turn, will affect repurchase intentions and brand attitudes. As a result, the effect of type of source on brand attitudes and repurchase intentions will be at least partly indirect, via perceived motive fairness. Therefore, I propose the following hypotheses:
H3a. When communicating a price increase due to environmental concerns, the effect of type of source on repurchase intentions is mediated by perceived motive fairness.
H3b. When communicating a price increase due to environmental concerns, the effect of type of source on brand attitudes is mediated by perceived motive fairness.
Furthermore, the way a message is framed might also lead to different levels in
perceived motive fairness. As Bertolotti and Catellani (2014) show, when communicating a negative policy, an avoidance of losses frame is preferred, while when communicating a positive policy, a gain of positive consequences frame is preferred. A frame might therefore be judged as a fair motive or an unfair motive for instating a policy, depending on the situation. For this reason, the effect of type of frame on repurchase intentions and brand attitudes could also be mediated by perceived motive fairness. When communicating a price increase due to environmental concerns, an avoiding losses frame would therefore lead to
increased perceived motive fairness, which in turn leads to increased purchase intentions and increased brand attitudes. I therefore propose the following hypotheses:
H3c. When communicating a price increase due to environmental concerns, the effect of type of source on repurchase intentions is mediated by perceived motive fairness.
H3d. When communicating a price increase due to environmental concerns, the effect of type of frame on brand attitudes is mediated by perceived motive fairness.
Brand attitudes and repurchase intentions
While the main aim of this research is studying the effect type of frame and type of source have when communicating a price increase, another aim is exploring the relationship between brand attitudes and repurchase intentions. Because aside from the effects of type of source, type of frame and perceived motive fairness on repurchase intentions and brand attitudes, there may also be a relation between repurchase intentions and brand attitudes themselves. While not much research has been conducted on the relationship between brand attitudes and repurchase intentions, brand attitudes and purchase intentions have been found to be related concepts. Spears and Singh (2004) show, using factor analysis, that while they are different constructs, there is a strong correlation between them. According to them, attitude towards a brand “energizes behavior” (p.55), such as purchasing behaviors. Therefore, favorable brand attitudes would lead to higher purchase intentions. While in their study, Spears and Singh focused on the relationship between brand attitudes and purchase intentions, the same may hold for repurchase intentions.
In this study, this assumption is elaborated on further, by proposing that brand
attitudes acts as a mediator between the message that announces the price increase, and repurchase intentions. The message – featuring a particular frame and source – will firstly have an effect on brand attitudes, because this is the immediate evaluation of a brand. In turn, these attitudes “energize” behavior, such as purchasing behaviors. Therefore, the source and
frame used in the message is expected to influence repurchase intentions at least partly indirectly, through mediation of brand attitudes. This leads to my final hypotheses:
H4a. When communicating a price increase due to environmental concerns, the effect of type of frame on repurchase intentions is mediated by brand attitudes.
H4b. When communicating a price increase due to environmental concerns, the effect of type of source on repurchase intentions is mediated by brand attitudes.
Methods
Research design
To test the proposed hypotheses, an online experiment was conducted among adults (N=88) in The Netherlands. The experiment employed a 2 (controllable source vs. uncontrollable source) × 2 (avoidance of losses frame vs. making gains frame) between-subjects design. The experiment consisted of a survey and a text, differing as to which type of source and which frame were used.
Procedure. Participants in the experiment were invited to partake by email and social media. To access the online survey they clicked on a link that was included in the invitation. The study began with several demographic questions concerning gender, age and education. After this, participants were asked what toothpaste brand they use, and about their attitudes towards this brand. Then, participants were randomly shown one of the four articles, as described in more detail below. After reading, participants answered questions about their repurchase intentions, brand attitudes and perceived motive fairness. They also answered several questions that functioned as manipulation and attention check. Finally, as control variables, participants were asked about their level of climate scepticism and their regulatory focus. At the end of the survey participants were shown a message that stated that
Sample. The survey was finished by 88 participants, which were all adults living in The Netherlands, as the language of the survey was Dutch. Convenience and snowball-sampling methods were used to for recruiting. No incentives were offered to attract
participants. The average age of participants was 40 (SD = 15.02) and 61.4 % of participants was female. Furthermore, 86.4% of participants had attended university or HBO (higher professional education), which is more than the percentage in the general Dutch population. The most popular toothpaste brands were Aquafresh and Prodent, which were both used by 18.2% of the participants.
Stimuli
The four texts that were used as stimuli were articles about an organization that chooses to use different materials during the production process, which are more sustainable yet more expensive. The organization therefore announces that the increase in cost will be charged to customers. To make the situation as realistic as possible, actual product brands were used. Toothpaste brands were selected, as it is an everyday item that does not appeal to a specific gender or age group. Participants were asked what toothpaste brand they use, and the answer to this question was featured in the article they read, and the questions that followed.
Source. In the controllable source situation, it was stated that the article was
published on the website of the organization announcing the price increase. Furthermore, the text spoke of ‘we’ instead of the name of the organization. In the uncontrollable source situation, the article was stated to be published by a daily newspaper. It contained the same basic text as the controllable situation, but the explanation for the price increase was shown as a quote from the organization. Furthermore, it had some typical features of a newspaper article, such as the place of the news and that it was written by a reporter.
Frame. The articles also differed in terms of the frames that were used to describe the reasons why the organization is increasing its prices. In the avoidance of losses frame, the
organization states that climate change leads to several harmful consequences, such as
floods, droughts and worldwide food- and water shortages, and that the organization is trying to avoid this. In the making gains frame, the organization emphasizes the positive
consequences of the new price increase. These include a cleaner, healthier world, where vulnerable species are preserved and children can grow up in safely. In this frame, the organization emphasizes that it is contributing to these positive outcomes.
Pretest. A pretest was held to determine whether the different texts that were to be used as stimuli were clear to participants as to what the source was, and what type of framing was used. Participants (N = 10) were recruited through social media. They were randomly assigned to two out of four texts that they were questioned about. Regarding the
controllability of the source, participants read four statements and indicated how much they agreed with them on a 5-point Likert scale. One of these statement was “The brand had a lot of influence on what is written in this article”. A 5-point perceived controllability scale (which will be discussed in the measures section) was computed from the average of the answers to these statements, (M = 4.24, SD = 0.43, α = 0.61). On average, participants rated the controllable text higher on this scale (M = 4.48, SD = 0.69, 95% CI [3.52, 4.46]) than the uncontrollable text (M = 4.0, SD = 0.76, 95% CI = [4.02, 4.86]), but the difference is not significant t(18) = -1.458, p = 0.162. Adjustments were made in order to make the
uncontrollable situation seem less controllable in the main experiment, such as adding a logo of an existing newspaper, and adding some neutral text about other toothpaste brands.
Considering the frames used in the articles, participants of the pretest were asked two
questions about the text to check if they perceived the frames the way they were meant. The first question was ‘What was the motivation of the organization to instate a price increase?’ and the second question was ‘What does CO2 reduction lead to according to the text?’. For the first question, four answer options were given, of which one corresponded with an
avoiding losses frame, and one with a making gains frame. For the second question, two answer options were given, of which each corresponded with a different type of frame. Out of the participants who had seen the making gains frame (n = 10), most answered the first question (n = 8) and the second question (n = 7) in terms of the organization implementing the price increase to make gains. In the avoiding losses situation (n = 10), only few people answered the first question (n = 2) or the second question (n = 6) in terms of the organization implementing a price increase to avoid losses. There was no significant difference between the two groups in terms of how participants perceived the frame, during both the first
question (Fisher-exact p = 0.27) and the second question (Fisher-exact p = 0.37). To create a greater difference between the groups, adjustments were made in the text in the main
experiment, such as mentioning more times that the organization is either trying to reach a positive goal, or to avoid negative consequences.
Finally, the pretest was also used to determine the level of the price increase, as
would be communicated in the main experiment. A study by Barone, Miyazaki and Taylor (2000) shows that consumers are prepared to pay a little more for a sustainable product, but that there is a limit. An aim of the pretest was to find this limit. Participants were therefore asked what type of price increase they would accept if an organization was to be more sustainable. There were 10 options featuring percentages, of which participants were
randomly shown 5. All participants answered they would accept a price increase, but while a relatively large part of the participants would still accept a price increase of 25% (n = 4), only one person would accept a price increase higher than that. Therefore, the price increase of 25% was chosen for the main experiment.
Manipulation and attention check. To check whether the different type of source and different type of frame were actually perceived differently during the experiment, participants also answered questions regarding the perceived the controllability of the source
of the text, and the type of frame that was used. Because no perceived controllability scale existed yet, it was created by the author. It consisted of four statements, and was used both in the pretest and in the experiment itself. The four statements that were used featured two that stated that the organization had control or influence over the written text, and two that were more concrete, stating that the author of the text must be working for the organization, and that the organization has determined everything that is written. Principal component factor analysis shows that all four items load highly on one factor, which explains 74.01% of the variance. Additionally, the scale was shown to be reliable, α = 0.88. The average score for all participants on this scale is 5.03 (SD = 1.30), whereas the average for participants in the controllable source condition is 5.69 (SD = 1.22) and for participants in the uncontrollable source condition the average is 4.43 (SD = 1.07). This difference is significant, t(86) = -5.14,
p < 0.001, 95% CI [-1.74, -0.77], which means that participants in the controllable source condition, did indeed perceive the source as more controllable than participants in the non-controllable source condition.
Since there is not an established way of measuring perceived frame either, a new
scale was created by the author. Differently than in the pretest, participants saw three sets of two opposite statements regarding the reasons. They were asked to indicate which one seemed to fit the motivation they had read in the text more on a 7-point scale. Examples of two of these statements are ‘The organization is raising its prices because..’ ‘to avoid global warming’ or ‘to achieve a cleaner world’. Scoring high on these statements indicates that participants perceive the explanation of the organization in terms of making gains, whereas a low score indicates that participants perceive the explanation in terms of avoiding losses. Principal component factor analysis shows that while two sets of statements loaded highly on the same factor, the third did not. The scale also proved to be more reliable without this item, reaching an acceptable α = 0.70 instead of α = 0.68, and this item was therefore excluded
from further analysis. On average, participants scored 3.91 (SD = 1.74) on the perceived frame scale. In the making gains frame condition, participants scored 4.51 on average (SD = 1.63) and in the avoiding losses frame condition, participants scored 3.26 on average (SD = 4.51). This difference is significant, t(86) = -3.58, p = 0.001, 95% CI [-1.94, -0.56] indicating that the two conditions were perceived differently.
Finally, to check whether participants were paying attention when they read the
article, they were asked how high the price increase was that was mentioned in the article. 84.1 % Of the respondents remembered the correct price increase, indicating that most participants paid attention when reading the article. Respondents who did not remember the exact price increase were wrong by either 5% or 10%, and did not differ significantly in terms of change in brand attitudes, t (86) = -0.99, p = 0.33, 95% CI [-0.91, 0.31] or in repurchase intentions, t (86) = 0.58, p = 0.562, 95% CI [-0.61, 1.12]. Therefore, I decided to not remove them from the sample.
Measures
Repurchase intentions. The measure for the dependent variable repurchase intentions featured three statements about how likely it was that the participant would buy the product again, as used by Chang, Ghao and Zhu (2015). Participants could indicate how much they agree with each statement on a 7-point scale. An example of a statement is ‘I would buy products of this brand again’. Principal component factor analysis shows that one of the statements did not load highly on the main factor. Furthermore, the reliability of the scale increases when this item is removed. This statement, ‘I would buy products from this brand more often’, might have confused participants because most toothpaste brands only sell toothpaste and therefore participants cannot buy more products. This statement was therefore removed from the scale, which was sufficiently reliable, α = 0.81. On average, participants scored 5.11 (SD = 1.49) on this scale.
Brand attitudes. Brand attitudes were measured using a scale by Spears and Singh (2012). This featured five opposite descriptions, such as bad-good and
unattractive-attractive. Participants were asked to indicate on a 7-point scale how they felt about the brand, both before and after reading the news article. Principal component factor analysis finds that most of the variance both times is explained by one factor, that all items load on. Furthermore, the reliability of the scale is high both times, α = 0.91 during the first measure and α = 0.89 during the second. All items were therefore retained. On average, participants scored 5.53 (SD = 1.04) when brand attitudes was measured before reading the text, and 5.44 (SD = 1.05) after reading the text.
Perceived motive fairness. The mediating variable in this study is perceived motive fairness. This was measured by three questions, that inquired about how reasonable
participants believed the reasons for the price increase to be, and how likely they thought there was some ulterior motive, as used by Homburg, Hoyer & Koschate (2005). Answers were given on a 7-point scale. The three questions were ‘Do you think this organization is trying to increase its own profits with this price increase?’, ‘Do you think the price increase is mainly in the advantage of this organization’ and ‘Do you find the reasons for this price increase reasonable?’. However, principal component factor analysis shows that all three items load highly on different factors. Furthermore, by leaving out questions the reliability does not reach a higher level than α = 0.68. Therefore, the only item that was retained, inquired whether participants rated the reasons of the organization as reasonable. This question inquired directly about how participants judged the motivations for the price
increase, whereas the other questions inquired mainly about whether participants thought the price increase may benefit the organization. On average, participants scored a 4.97 on this scale (SD = 1.58).
variables. Furthermore, participants were also asked questions regarding climate skepticism, which measures participants’ attitudes towards climate change (Whitmarsh, 2011). This scale consisted of 8 items which were measured on a 7-point scale, and was found to be reliable (α = 0.89 ). On average participants scored 2.51 (SD = 1.07). Furthermore, participants were asked questions regarding regulatory focus, which measures whether a participant tends to avoid losses or make gains (Fellner, Holler, Kirchler & Schabmann, 2007). This scale consisted of 10 items, which, as confirmed in factor analysis, measure four different aspects of regulatory focus. Together the items form a scale on which a high score represents a tendency to seek gains, whereas a low score represents a tendency to avoid losses. On average, participants scored a 3.61 (SD = 0.47) on this scale.
Results
Effects of source and frame
Brand attitudes. A two factor repeated measures analysis of variance was carried out, to assess the impact of type of source (controllable or uncontrollable) and type of frame (making gains or avoiding losses) on participants’ brand attitudes. Because participants’ brand attitudes were measured before and after reading the text, both scores were included as within subject factor, whereas type of source and type of frame were included as between group factors. For both times brand attitudes was measured Levene’s test was not significant, meaning homogeneity of variances can be assumed. Furthermore, brand attitudes were checked for normality, and were found to be normally distributed. The means and standard deviations for each group can be found in table 1. The analysis shows there is no significant difference in participants’ brand attitudes before and after reading the text, F (1, 84) = 0.63, p = 0.431, η2 = 0.01. Both type of source, F (1, 84) = 0.57. p = 0.454, η2 = 0.01, and type of frame, F (1, 84) = 0.28, p = 0.597, η2 < 0.01, had no significant effect on this.
uncontrollable source was also not significant, F (1, 84) = 0.07, p = 0.79, η2 <.01, nor was variation in brand attitudes between the groups who had seen the avoiding losses or making gains frame, F (1, 84) = 1.77, p = 0.19, η2 <.02. Finally, no significant interaction effect was found either, F (1, 84) < 0.001, p = 0.93, η2 <0.01. Therefore, there is no significant effect of type of source and type of frame on either variation within participants or on variation
between the different experimental groups, meaning H1a and H2a are not supported. Table 1. Average brand attitudes (BA) for frame and source across two times
BA before reading text BA after reading text
n M SD M SD
Source Controllable 42 5.55 1.11 5.37 1.20
Uncontrollable 46 5.51 0.99 5.50 0.89
Frame Avoiding losses 42 5.36 1.18 5.34 1.11
Making gains 46 5.68 0.89 5.53 0.99
Repurchase intentions. To assess the effect of type of frame and type of source on repurchase intentions, a two factor analysis of variance was conducted. Levene’s test was not significant, meaning homogeneity of variances can be assumed for repurchase intentions. Furthermore, repurchase intentions was checked for normality and was found to be normally distributed. The results of the analysis show no significant effect of source on repurchase intentions, F (1, 84) = 1.60, p = 0.21, η2 =.019, no significant effect of type of frame, F (1, 84) = 1.03, p = 0.312, η2 = 0.012, and no significant interaction effect, F (1, 84) = 0.09, p = 0.76, , η2 < 0.01. Therefore, there is no significant main- or interaction effect of type of source and type of frame on repurchase intentions, and H1b and H2b are rejected. Table 2 shows the averages of participants in each category.
Table 2. Average repurchase intentions for frame and source
Repurchase intentions
N M SD
Source Controllable 42 5.32 1.43
Uncontrollable 46 4.91 1.52
Frame Avoiding losses 42 4.94 1.63
Making gains 46 5.26 1.34
Interaction effects. Control variables were added as covariates to the model predicting brand attitudes and repurchase intentions, to observe whether these affect the results. Age, gender and education were shown not to be significant predictors of either brand attitudes or repurchase intentions, nor do not produce any significant interaction effects. However, climate scepticism and regulatory focus were found to have an effect on both outcome variables, and were therefore tested further.
Climate scepticism. Climate scepticism was found to be a significant predictor of variation in brand attitudes within subjects during the two times it was measured, F (1, 83) = 4.27, p = 0.042, η2 = 0.05, and of variation in brand attitudes between subjects, F (1, 83) = 4.01, p = 0.049, η2 = 0.05. Since climate scepticism was the only significant predictor in this model, its effect was tested using climate scepticism as a sole predictor of brand attitudes in a repeated measures analysis of variance. As a predictor of variation within subjects, climate scepticism reaches near significance, F (1, 86) = 3.23, p = 0.076, being only significant when p < 0.1, instead of the commonly accepted 0.05 level (Field, 2013). As a predictor of variation in brand attitudes between subjects, climate scepticism is significant, F (1, 83) = 4.59, p = 0.035, η2 = 0.05. Therefore, climate scepticism can be used to predict variation in brand
attitudes between subjects, b* = -0.23, t = -2.14, p = 0.035, 95% CI [-3.62, 0.02], explaining 5.2% of the variance (R² = 0.05). This shows that the less sceptical a person is about climate change, the higher are his or her brand attitudes.
Regulatory focus. Another variable that was found to have an effect on both the outcome variables was regulatory focus. In a two factor analysis of variance featuring type of frame and type of source as predictors of repurchase intentions, regulatory focus is the only significant predictor of repurchase intentions, F (1, 83) = 5.27, p = 0.024, η2 = 0.06.
Therefore, regulatory focus was tested further using a regression in which it was the only predictor of repurchase intentions. This model was found to be significant, F (1, 86) = 6.11, p = 0.015, explaining 7% of variation in repurchase intentions (R² = 0.07). Regulatory focus has a significant, moderate association with repurchase intentions, b* = -0.26, t = -2.47, p = 0.015, 95% CI [-1.42, -0.21]. This shows that the more risk averse a person is, the higher are his or her repurchase intentions.
Finally, regulatory focus also had an effect on brand attitudes. In a model featuring
both type of frame and type of source, it was shown to be the only significant predictor of variation in brand attitudes between subjects, F (1, 83) = 5.88, p = 0.018, η2 = 0.07. This was tested more, using regulatory focus as the sole predictor in a repeated measures analysis of variance. The results of this analysis show that regulatory focus is also a predictor of variation in brand attitudes between subjects on its own, F (1, 83) = 6.87, p = 0.010, η2 = 0.07.
Regulatory focus explains 7.4% of the variance in brand attitudes (R² = 0.07), and has a moderate association, b* = -0.27, t = -2.62, p = 0.010, 95% CI[-0.88, -0.15]. Therefore, the more risk averse a person is, the higher are his or her brand attitudes towards the organization.
Perceived motive fairness as mediator
While I already established type of source and type of frame are on their own not significant predictors of change of brand attitudes or repurchase intentions, adding perceived motive
fairness to the model does provide some interesting insights. To test whether perceived motive fairness acts as a mediator as proposed by hypothesis H3, the PROCESS application (Hayes, 2013) was used. Firstly, perceived motive fairness was tested as a mediator between source and repurchase intentions. All effects are displayed in table 3. These results show that there is a significant relationship between perceived motive fairness and repurchase
intentions, and that there is a significant direct relationship between type of source and repurchase intentions. However, there is no mediation because type of source has no significant effect on perceived motive fairness, nor does it have a total or indirect effect on repurchase intentions. Therefore, H3a is rejected.
Table 3. Perceived motive fairness (PMF) as mediator between source (S) and repurchase intentions (RI) B t p BootCI Effect S on PMF -0.34 -1.02 0.309 Effect PMF on RI 0.46 5.19 <0.001 Total effect S on RI 0.41 1.29 0.200 Direct effect S on RI 0.57 2.03 0.045 Indirect effect S on RI -0.16 -0.355, 0.115
I have shown that type of source does not affect perceived motive fairness, which
makes mediation of perceived motive fairness between type of source and change in brand attitudes impossible. However, in order to see in more detail what kind of effect type of source and perceived motive fairness have on change in brand attitudes, I still conducted the mediation analyses. As proposed in H3b, perceived motive fairness was used as a mediator between type of source and change in brand attitudes. For this analysis, change in brand
attitudes was computed by calculating the difference in brand attitudes between the two times it was measured. All effects can be found in table 4. While I already established there is no mediation, this analysis further shows that none of the other inspected relationships were significant; type of source and perceived motive fairness do not affect change in brand attitudes. H3b is therefore rejected.
Table 4. Perceived motive fairness (PMF) as mediator between source (S) and change in brand attitudes (CBA)
b t p BootCI
Effect S on PMF -0.34 -1.01 0.309
Effect PMF on CBA 0.08 1.07 0.287
Total effect S on CBA -0.17 -0.75 0.457
Direct effect S on CBA -0.14 -0.63 0.534
Indirect effect S on CBA -0.03 -0.233, 0.025
H3c proposed that perceived motive fairness is a mediator between type of frame and repurchase intentions. This was tested, and all effects are displayed in table 5. The only significant effect that was found was of perceived motive fairness on repurchase intentions. Because there was no significant effect of type of frame on perceived motive fairness, nor on repurchase intentions, there is no mediation and H3c must be rejected.
Table 5. Perceived motive fairness (PMF) as mediator between frame (F) and repurchase intentions (RI) b t p BootCI Effect F on PMF -0.20 -0.60 0.552 Effect PMF on RI 0.45 5.03 <0.001 Total effect F on RI 0.32 1.00 0.317 Direct effect F on RI 0.41 1.46 0.147 Indirect effect F on RI -0.09 -0.437, 0.157
Finally, hypothesis H4d proposed that perceived motive fairness acts as a mediator
between type of frame and change in brand attitudes. Since I have already established type of frame does not affect perceived motive fairness, and perceived motive fairness does not affect change in brand attitudes, no mediation can take place. Nevertheless, the mediation analysis was conducted to confirm this. All effects are shown in table 6. These indeed show that no effects were significant. Therefore, H3d is also rejected.
Table 6. Perceived motive fairness (PMF) as mediator between frame (F) and change in brand attitudes (CBA)
b t p BootCI
Effect F on PMF -0.20 -0.60 0.552
Effect PMF on CBA 0.08 1.11 0.269
Total effect F on CBA -0.12 -0.55 0.582
Direct effect F on CBA -0.11 -0.48 0.632
To check whether there was a difference between change in brand attitudes and brand attitudes measured only after reading the text, the same analyses were conducted using brand attitudes the second time it was measured as dependent variable. In a model using frame as the independent variable, perceived motive fairness could be used to predict brand attitudes, b = 0.27, t = 4.04, p < 0.001. In a model using source as independent variable, the results are similar and perceived motive fairness can also be used to predict variation in brand attitudes,
b = 0.26, t = 3.89, p < 0.001. However, in both models the relationship between the type of
source and the type of frame does not predict variation in brand attitudes, and there can be no mediation. Therefore, hypotheses H3b and H4d are still not supported when using only brand attitudes measured after participants read the different texts as dependent variable.
Brand attitudes and repurchase intentions
To uncover the relationship between brand attitudes and repurchase intentions is, I firstly conducted a regression analysis to see whether brand attitudes is a predictor of repurchase intentions. In this analysis, brand attitudes were included as measured after participants had read the text, since I am measuring the effect of brand attitudes as they are currently
experienced by participants, and not the effect of change in brand attitudes. The results show that brand attitudes are indeed a relevant predictor of repurchase intentions, F (1, 86) = 13.27,
p < 0.001. Brand attitudes has a moderately strong association with repurchase intentions, b*
= 0.37, t = 3.64, p < 0.001.
So while brand attitudes and repurchase intentions correlate, I hypothesized that brand
attitudes may also act as a mediator between the independent variables type of source and type of frame, and repurchase intentions. To see if this is correct, another analysis was
conducted using PROCESS. Firstly, I used type of source as an independent variable. Similar as to the effect on change in brand attitudes, the results show that type of source had no effect on brand attitudes, F (1, 86) = 0.38, p = 0.557, making mediation impossible. Then, type of
frame was included as an independent variable. These results were similar; type of frame had no significant effect on brand attitudes, F (1, 86) = 0.77, p = 0.384. Brand attitudes does therefore not act as a mediator between type of source and repurchase intentions or between type of frame and repurchase intentions. H4a and H4b are therefore rejected.
Finally, since perceived motive fairness has been proposed as a mediator to both
repurchase intentions and brand attitudes, and – while not being a mediator – was shown to affect both variables, an additional analysis was conducted to assess whether brand attitudes is a mediator between perceived motive fairness and repurchase intentions. The results are displayed in table 7, and show that perceived motive fairness can be used to predict brand attitudes, and brand attitudes can be used to predict repurchase intentions. Furthermore, perceived motive fairness has a significant total effect on repurchase intentions, which is partly direct, and partly indirect through brand attitudes. Brand attitudes therefore acts as a mediator between perceived motive fairness and repurchase intentions. All effects are positive, showing that the higher participants judged the fairness of the motives of an
organization, the higher were their brand attitudes and the higher their repurchase intentions. While this effect was not directly hypothesized, it does provide insight on the relationship between brand attitudes and repurchase intentions, and on the relevance of perceived motive fairness.
Table 7. Brand attitudes (BA) as mediator between perceived motive fairness (PMF) and repurchase intentions (RI)
b t p BootCI Effect PMF on BA 0.26 3.96 <0.001 Effect BA on RI 0.30 2.11 0.037 Total effect PMF on RI 0.44 4.91 <0.001 Direct effect PMF on RI 0.36 3.78 <0.001 Indirect effect PMF on RI 0.08 <0.001, 0.247 Discussion
Facing the threat of climate change and its hazardous consequences, many organizations are under increasing internal and external pressure to act on these environmental concerns (Haugh & Talwar, 2010). However, organizations may be hesitant to do so because of the involved costs, which they fear to pass on to consumers because this could lead to lower brand attitudes (Kachersky, 2011) and lower sales (Sen, Gtirhan-Canli & Morwitz, 2001). The aim of this study was to research how an organization should communicate a price increase due to environmental concerns, while retaining brand attitudes and repurchase intentions.
In doing so, I proposed that communicating a price increase through an uncontrollable
source would be perceived as less self-interested than communication through a controllable source. Therefore, an uncontrollable source would lead to less scepticism about an
organization’s motives for engaging in CSR (Du, Bhattacharya and Sen, 2010), which would lead to higher brand attitudes and purchase intentions. The results of this study do not provide support for this; the type of source was not found to have any effect on either brand attitudes or repurchase intentions. An explanation for this could be that it is in fact not the source of the message that causes scepticism, but the way of communication associated with the source.
The controllable sources of an organization – among which website texts, as was used in this experiment, but also TV commercials, online banners, advertisements and product packaging – are often used to promote the organization or its products. If a message concerning CSR is communicated in such a way that it appears to promote the organization itself, consumers are more likely to become sceptical of an organization’s motives. In this experiment consumers may not have been as sceptical because the text used in the controllable source situation was largely the same as in the uncontrollable source situation. The lack of promotional style writing may therefore explain why the type of source had no effect on brand attitudes and repurchase intentions. This lack may also explain why type of source had no effect on perceived motive fairness, as the absence of self-promotion might have led participants to view the motives of the organization as not self-interested, and therefore more fair.
The results regarding type of frame were also unexpected, because several studies
have found that the type of frame does have an influence on various attitudes and behaviors (Bertolotti & Catellani, 2014; DeBono, Vincenti & Calleja, 2010; Dryzeka & Lo, 2015). An explanation for this difference could be that studies that did find that type of frame is a significant predictor, usually measured agreement with the policy as dependent variable and not brand attitudes or repurchase intentions. Consumers may – due to a particular frame – agree or disagree that a certain policy is necessary, but this may not automatically affect repurchase intentions or brand attitudes. This is all the more likely when a price increase is involved; consumers may agree with the policy, but because of the extra costs they may not feel increased brand attitudes or repurchase intentions.
While type of source and type of frame were not found to be significant predictors of
brand attitudes and repurchase intentions, other factors that were used as control variables did have a significant influence. Climate scepticism was found to be a significant predictor of brand attitudes within subjects, and regulatory focus was found to have a significant effect on
repurchase intentions. Furthermore, perceived motive fairness was also found to have an effect on both dependent variables. This indicates that personal beliefs and traits have more value in predicting brand attitudes and repurchase intentions, than specifications of the message that announces the price increase.
The importance of personal beliefs has been studied by Sen and Bhattacharya (2001),
who found that these could play a major role in determining how consumers respond to CSR initiatives. According to their study, consumers only respond positively to an organization engaging in CSR when CSR involves issues they themselves support. This clarifies the results relating to the effect of climate scepticism: consumers who score high on the climate
scepticism scale do not view climate change as an urgent issue. Their lack of support of the issue therefore explains their lower brand attitudes.
Furthermore, the relationship between regulatory focus and repurchase intentions has
also been confirmed by several studies (Bull, 2012; Chang & Chou, 2008). The findings of my study indicate that people who are risk averse are willing to pay more for the same
product, possibly because they feel climate change is a risk to them. It is however noteworthy that the type of frame that was used did not have an effect on this relationship; risk averse participants were more willing to repurchase the product, no matter whether they saw the message framed in terms of avoiding losses or making gains frame. This could mean that participants see climate change as a risk, regardless of how it is framed.
Implications for research. A key finding of this study is that type of frame and type of source do not have an effect on consumers’ brand attitudes or repurchase intentions. As suggested, the finding regarding type of source can perhaps be explained by the lack of promotional writing that was used in this study. This indicates that it is not actually the type of source that influences brand attitudes and repurchase intentions, but the associated style of communication. Further research could test this hypothesis. Regarding type of frame, future
research could study the relationship between agreeing with a policy – as other studies found to be affected by the type of frame that was used – and brand attitudes and repurchase intentions. Furthermore, another important finding of this study was that perceived motive fairness was found to be a predictor of repurchase intentions and to a lesser extent brand attitudes, yet type of source and type of frame had no effect on it. Future research could therefore focus on finding what does affect perceived motive fairness.
Finally, I found that personal characteristics, such as climate scepticism and regulatory
focus, were the only significant predictors of brand attitudes and repurchase intentions. Further research could determine if other personal factors are relevant, and which these are. Implications for practice. An aim of this study was to provide organizations with knowledge on how to communicate a price increase due to environmental concerns. However, results indicate that simply selecting an uncontrollable source over a controllable source has no effect on brand attitudes and repurchase intentions. For organizations, this means fewer resources can be put in attaining media coverage when announcing a price increase, since this has little effect on their customers. Instead, organizations may need to focus on not using a promotional style of writing as this may lead to increased scepticism, but this is yet to be confirmed. Furthermore, in terms of type of frame, choosing an avoiding losses frame over a making gains frame does not result in higher brand attitudes or repurchase intentions,
indicating that either can be used.
While characteristics of the message have no effect on brand attitudes and repurchase
intentions, personal characteristics of consumers do. It is therefore advisable that
organizations know their customers in terms of their view of climate change and in terms of their regulatory focus. Furthermore, organizations could start a dialogue with their customers, in which they can investigate whether their motives for the price increase are perceived as fair, since this is a significant predictor of repurchase intentions. While these personal
characteristics are difficult to affect, being aware of them can help predict organizations how their customers will respond.
Finally, for organizations it is also important to keep in mind that in terms of brand
attitudes, there was no significant difference between participants before and after reading the experimental text. Consumers therefore do not feel more positively or negatively about an organization when it increases prices due to environmental concerns. Repurchase intentions were only measured after the experiment, making a comparison between before and after impossible, but they were still relatively high. The results of this study therefore indicate that when an organization announces a price increase due to environmental concerns, consumers do not feel very different towards the organization, nor will they stop buying its products. Limitations. This study does have some limitations. Participants saw the stimuli in the context of a survey, and not actually on a website of a brand or in a newspaper. Furthermore, participants may indicate they would buy a product again, but in reality they might decide differently once they are in a store. Therefore, this experiment was not completely
ecologically valid, and consumers may act differently when a real price increase is involved.
In terms of external validity, the sample is not fully representative of the entire Dutch
population, because snowball sampling was used. Despite having tried to gather a varied selection of participants, the sample included more women and more highly educated
participants than is found in the general population. While these factors did not seem to affect the outcome variables, a random sample would have been more representative. Additionally, the sample was relatively small, which might have led to smaller effects remaining hidden, while they are present in the general population.
Furthermore, because toothpaste was used, the results of my study may only be
generalizable to similar products. Toothpaste is considered a low involvement product (de Run, Sian & Khalique, 2011), meaning that consumers do not use much cognitive processing
when purchasing, because it brings along little financial or psychological risk. Purchasing something involving more risk, such as a laundry machine, requires different processing mechanisms, which might mean the results of this study do not apply. Finally, this study featured a price increase of 25%. As shown during the pretest, this price increase is already on the border of what is found acceptable. Higher price increases may therefore lead to different findings. Despite these limitations, this study has made some important contributions to knowledge on communicating a price increase due to environmental concerns.
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