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Research Finds People Willing to Pay More for Real Green Products

To cash in on consumers’ willingness to pay higher prices for green products, several companies are promoting conventional products as green by highlighting a few green attributes. Researchers at Drexel University looked at how consumers perceive such attempts and whether they are effective in convincing consumers to pay more for products that aren’t comprehensively green.

Doctoral candidates Jeonggyu Lee and Siddharth Bhatt together with Rajneesh Suri, PhD, vice dean for research and professor of marketing in Drexel’s LeBow College of Business, found that consumers are more likely to pay a higher price for a truly green product, but they will not for greenwashed items—those with only a few green attributes, such as:

There is a widespread prevalence of greenwashing in industries ranging from soft drinks to electronics, and the list goes on. According to the researchers, when it comes to these types of products, consumers tend to read the ingredients and look at labels more closely before deciding to pay the higher price.

“When an otherwise conventional product is promoted as green, the incongruence between its otherwise high price and only a few green attributes become salient,” said Siddharth. “This heightens consumers’ concerns about the ethicality of the firm, leading them to scrutinize the monetary sacrifice associated with the purchase.”

The research also demonstrates that endowing the product with a few green attributes does not create a green perception for the product. Consumers systematically evaluate the attributes and differentiate between comprehensively green products and their greenwashed counterparts.

The researchers conclude that to take advantage of consumers’ willingness to pay price premiums, marketers must focus on creating products that are bottom up green. “Only comprehensively green products are immune to negative product evaluations and the dire consequences of ethical stereotyping of the company itself,” said Jeonggyu.

Their paper, “When Consumers Penalize Not So Green Products,” is forthcoming in Psychology & Marketing.

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