Advanced Marketing (GEST-D-403)

Fairtrade:

Motivations of Customers to Engage in Fairtrade Purchases

and the

Implications for Marketing Professionals

Essay for Advanced Marketing 2007/08
(3126 words)

Outline:

Since their introduction several years ago Fairtrade products have remained subject to low

sales and failed to win satisfactory market shares. Investigating into the reasons for the

observed underperformance the study will begin by analysing customers′ motivations to

buy Fairtrade products and their reasons to refrain from Fairtrade purchases.

After the analysis of the various important influences on customers′ Fairtrade buying

behaviour, it will examine some of the implications this may have for marketing

professionals. The study will conclude that some of the main factors affecting Fairtrade

purchases are of demographical nature, while others stem from customer equity

dimensions, before it will propose a number of possible actions to increase the success of

the Fairtrade initiative.

Submitted by:

Jens Hillebrand

Solvay Business School

International Master of Management Science

Introduction

Farmers ­ or generally producers ­ in the developing world who enter into a

partnership with the Fairtrade Labelling Organisation (FLO) are guaranteed living

incomes and the opportunity to borrow money at affordable rates which helps them to

cope with the volatility of the world′s commodity markets. They also receive training

and education on sustainable production methods as well as support in product

development, logistics and marketing (FLO, 2007).

In return they devote themselves and their practices to the compliance with a variety

of standards defined by the organisation. These comprise amongst others the

meeting of certain product quality standards, avoidance of toxic or genetically

modified materials and substances in the production process, granting employees the

right to form trade unions and abstaining from child labour if it interferes with the

children′s education (FLO, 2007).

In a European study by de Pelsmacker & Janssens (2007) nearly half of the surveyed

consumers claimed they were willing to buy Fairtrade products even at a significant

price premium. In line with this the European Fairtrade market has seen tremendous

growth rates over the past years, with average annual growth rates of 20% since

2000 (FLO, 2007).

Nevertheless, despite staggering growth rates in some markets and a generally

positive consumer attitude towards Fairtrade and other ethical label products, the

products′ market shares remain at low levels (MORI, 2000 cited in de Pelsmacker &

Janssens, 2007). Investigating into the reasons for the observed underperformance

this study will start by examining customer motivations to buy Fairtrade products and

their reasons to refrain from Fairtrade purchases.

After the analysis of the various important influences on customers′ buying behaviour

regarding Fairtrade, the study will look at some of the implications this may have for

marketing professionals. Finally, the study will conclude that some of the main factors

affecting Fairtrade purchases are of demographical nature, while others stem from

customer equity dimensions, before it will propose a number of possible actions to

increase the success of the Fairtrade initiative.

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Analysis

To begin with, there are three important demographical factors that can have an

influence on Fairtrade buying behaviour. These are the customers′ age, their level of

education, and the income of the household they live in.

First of all, older customers tend to be more inclined to purchase Fairtrade products

than younger customers. As de Pelsmacker et al. (2005) suggest, people between 31

and 44 years of age belong to the group which on average buy the most Fairtrade

products followed by the over 45 year olds. Secondly, in the same study the authors

also found that people with higher education (more than twelve years of education)

tend to purchase more Fairtrade products than the less educated. Finally, the market

research company TNS Emnid (cited in Witkowski, 2005) conducted a study among

German consumers which suggested that the amount of Fairtrade purchases be

positively correlated to the level of household incomes ­ the more people earn, the

more Fairtrade product they buy.

A limitation to the studies of de Pelsmacker et al. (2005) as well as Witkowski (2005)

has to be seen, however, in the fact that both have been conducted with customers

of one nationality only ­ Belgium and German respectively ­ under the presumption

that these form a fair representation of the average European customer. Questioning

the validity of these studies, other researchers have come to the conclusion that

neither age nor education have significant impact on socially responsible buying

behaviour (Dickson, 2001). Thus, despite certain indications of customers′ decisions

on Fairtrade purchases being influenced by the aforementioned demographical

factors their actual impact remains ambiguous.

Besides demographical factors, there is a variety of motives related to personal

norms and attitudes that induce consumers to choose Fairtrade products. Some

customers identify themselves with the ethical issues the Fairtrade initiative

addresses. The pursuance of human equality, for instance, forms an integral part of

many people′s value systems. Hence, purchases of Fairtrade products for them

represent a contribution to the elimination of global disparities (Connolly & Shaw,

2006). Others see the protection of the natural environment as an ethical obligation

towards future generations as well as other species on the planet (de Ferran &

Grunert, 2007). Ethically motivated customers thus buy Fairtrade products because

(a) they feel they have responsibilities towards a broad set of stakeholders and (b)

they believe they are able to make a difference the lives of these (Shaw et al., 2000).

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