of innovation diffusion between fair

(1)

Fair trade on the rise? A comparison

of innovation diffusion between fair

trade products and non-fair trade

products.

Master thesis defence

Dennis Reitsma

(2)

Content

› Introduction

› Conceptual model

› Data

› Methodology

› Results

(3)

Introduction (1)

› Consumption of ethical products is highly desirable in

society (Muster, 2011)

› Revenue 2004: 838 million dollars (Statista, 2018)

› Revenue 2016: 7880 million dollars (Statista, 2018)

› Growth is dependent on innovation (OECD, 2007)

› Theoretical relevance

 Innovation diffusion of fair trade products.

› Managerial relevance

(4)

Introduction (2)

› Research question

How does the diffusion process of fair trade

product introductions differ from the

diffusion process of non-fair trade product

introductions in the same product

(5)

(6)

Data (1)

› GfK

› 365 weeks

 Start: fourth quarter of 2008  End: third quarter of 2015

› 16936 product introductions in 86 different product

Data manipulation

› Aggregation to quarters (28)

› Omit irrelevant product categories

 Relevant: Chocolate, tea, coffee and ice cream

› 1765 product introductions

(7)

Data (2)

Product selection

› 10 products per product category for fair trade and

non-fair trade

(8)

Methodology (1)

› Bass diffusion model

 Innovators (p), imitators (q) and market potential (m)

› Analysis of variance

 Compare p, q and m of fair trade vs non-fair trade.  TukeyHSD for between group differences

› Ordinary least squares regression

 Measure effect of independent variables on dependent variables, p, q

(9)

(10)

(11)

Results (3)

p as dependent variable

 Fair trade products higher p than non-fair trade products (0.062)

- Support for hypothesis 1

 No significant other effects

q as dependent variable

 Chocolate higher q on average than tea and coffee (0.135)  Ice cream highest q (0.363)

 No significant other effects

m as dependent variable

 Chocolate highest m (445.92)

(12)

Implications

Managerial implications

 Fair trade attracts more innovative customers

- Younger companies profit from this

 No difference in market potential

- Dutch consumers are ready for more ethical products

 No difference between fair trade product categories

- Same marketing strategy

Academic implications

 Support for earlier findings

(13)

Limitations and future research

› Only Dutch market has been investigated

› Price has not been taken into account

› Limited data

(14)

of innovation diffusion between fair

Fair trade on the rise? A comparison