The Price of Ethical Products
Are we really what we eat or drink?
by György András Bobvos Jr. | S3161692
Master Thesis Marketing Management – EBM867B20.2018-2019.2 Faculty of Economics and Business – Department of Marketing
Supervisor – dr. J. (Jing) Wan
Agenda
› Problem statement
› Extant literature & research question › Numeracy in a moderating capacity › Conceptual model
› Methodology
› Results (vis-à-vis H1 & H2, and covariates) › Discussion & managerial implications
Problem statement
“Despite the successes of Fair Trade, there is currently a large discrepancy between those consumers who identify themselves as
purchasers of ethical products and, therefore, likely supporters of Fair Trade, and the market share of many Fair Trade products.”
(Nicholls & Lee, 2006, p. 370)
› The main focus of the hereby conducted research was to offer an applicable solution to this seemingly paradoxical consumer
Extant literature & research question
› The attitude-behavior gap and the ethical consumer › Price sensitivity in ethical consumption
› Processing of price versus quantity information • Framing of price and quantity
› Research question:
Are consumers more willing to make a concession on the quantity rather than the price when it comes to switching from a
Numeracy in a moderating capacity
› Consumers often display an inability and unwillingness to deal with metric / numerical information, particularly in situations where the processing of quantity information is required (see, e.g., Lennard et al., 2001; Friedman, 1966)
› Objective (Schwartz et al., 1997) versus subjective measures (Fagerlin et al., 2007) of numeracy, as differentiated in Gamliel et al. (2015), Peters et al. (2006), and Garcia-Retamero and
Results vis-à-vis H1 & H2
› H1 – In all five of the tested regression models, respondents in the price condition consistently displayed a lower willingness to concede than those in the quantity condition
Results vis-à-vis covariates
› Recurring effects:
• The higher / lower (as compared to the mean attitude) a respondent’s indicated attitude, the higher / lower their respective concession on either price or quantity
• The higher / lower (as compared to the mean income) a
respondent’s indicated income level, the higher / lower their respective concession on either price or quantity
› Conditional effect (with objective measures of numeracy):
Discussion & managerial implications
› Consumers are indeed more sensitive to price cues than they are to quantity cues (Gourville & Koehler, 2004)
• Downsizing to overcome consumers’ acute price sensitivity › Consumers’ attitude towards a given ethical product is a reliable
predictor of their ethical buying behavior
• Promotional material and advertising with a focus on societal and environmental benefits
› Consumers’ (current) income level is a reliable predictor of their ethical buying behavior
Limitations & implications for future research
› Inability to apply original construction of the moderator variable • Recreate the study and implement original construction
› The validity of numeracy in a moderating capacity
• Attention-based measures as a substitute for numeracy › Relatively complex and ambiguous dependent variable
Thank you for your attention!
References
› Fagerlin, A., Zikmund-Fisher, B. J., Ubel, P. A., Jankovic, A., Derry, H. A., & Smith, D. M. (2007). Measuring
numeracy without a math test: Development of the subjective numeracy scale. Medical Decision Making, 27, 672-680.
› Friedman, M.P. (1966). Consumer confusion in the selection of supermarket products. Journal of Applied Psychology,
50(6), 529-534.
› Gamliel, E., Kreiner, H., & Garcia-Retamero, R. (2015). The moderating role of objective and subjective numeracy in
attribute framing. International Journal of Psychology, 51(2), 109-116.
› Garcia-Retamero, R., & Galesic, M. (2010). Who profits from visual aids: Overcoming challenges in peoples’
understanding of risks. Social Science & Medicine, 70(7), 1019-1025.
› Gourville, J. T., & Koehler, J. J. (2004). Downsizing price increases: a greater sensitivity to price than quantity in consumer markets. Harvard Business School Marketing Research Papers, 4(1), 1-41.
› Lennard, D., Mitchell, V.W., McGoldrick, P. & Betts, E. (2001). Why consumers under-use food quantity indicators.
International Review of Retail, Distribution & Consumer Research, 11(2), 177-199.
› Nicholls, A., & Lee, N. (2006). Purchase decision‐making in fair trade and the ethical purchase ‘gap’: ‘is there a fair trade twix?’. Journal of Strategic Marketing, (14)4, 369-386.
› Peters, E., Västfjäll, D., Slovic, P., Mertz, C. K., Mazzocco, K., & Dickert, S. (2006). Numeracy and Decision
Making. Psychological Science, 17(5), 407-413.
› Schwartz, L. M.L, Woloshin, S. S., Black, W. C. W., & Welch, H. G. H. (1997). The role of numeracy in
