Fairtrade: Motivations of customers to engage in Fairtrade purchases and the implications for marketing professionals


Essay, 2007
11 Pages, Grade: 1,7

Excerpt

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.

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). When buying Fairtrade products the aforementioned customers perceive their purchase decisions to be ethically sound and in line with personally and widely held moral standards which lets them attain some degree of personal satisfaction (Geographical, 2005).

Personal satisfaction now leads the study on to the next set of motivations for consumers to buy Fairtrade products. As outlined above, one way to achieve personal satisfaction is to adhere to moral obligations and hence serve collective interests, i.e. the good of the wider society. Yet, another way to achieve personal satisfaction is the pursuance of one’s own individual interest. Thus, the reasons for Fairtrade purchases extend beyond merely altruistic motives. For instance, an increasing number of customers see the value of consuming Fairtrade products in getting a feeling of belonging to a community of similar concerned consumers (Ozcaglar-Toulouse et al., 2005). For some Fairtrade even represents a kind of lifestyle and so a major reason why they engage in Fairtrade purchases is the image they obtain through it in the eyes of others. This pattern is understood as “conspicuous consumption” as the consumers buy the products in order to attract attention (Moore et al., 2006).

A further motive that serves the individual interest and personal satisfaction which is becoming ever more prevalent is the demand for outstanding quality, like for example great taste in the case of Fairtrade coffee and cocoa (Alexander & Nicholls, 2006). Over the years, the Fairtrade initiative has continuously spent efforts to drastically improve their products’ quality as these had suffered from a bad public reputation in this respect. As a result of these efforts Fairtrade products are nowadays widely recognized as being of superior quality. Hence, consumers in search for enjoyment also include this dimension in their decision to buy Fairtrade products (de Pelsmacker et al., 2005).

As the above makes clear, personal satisfaction is a central motive for customers and in the case of Fairtrade purchases it is achieved through a balancing act between hedonistic and individual interests on the one hand and collective ones on the other.

Having mentioned taste and quality as a reason for customers to buy Fairtrade products, it is important to note that this has become an inducement only in the more recent past. For a long time this aspect had actually been one of the major reasons why customers turned their back on Fairtrade products. In fact, today for some customers Fairtrade still does not stand for good quality which keeps them from buying the products (de Ferran & Grunert, 2007).

The issue of quality becomes ever more important to customers when seen in combination with the price premium they have to pay for a Fairtrade product compared to the price of a “regular” good. Many customers state they do not see the price premium charged for Fairtrade products as justified. Indeed, in a study by Browne et al., 2000 it was estimated that 80% of customers would buy ethical products like Fairtrade products if no such premium would apply.

When being asked what they believe are the reasons for such a premium many customers can only give an imprecise, if any answer at all. This indicates that a lack of information is a further important aspect related to people’s reluctance to buy Fairtrade products (de Pelsmacker et al., 2005; de Ferran & Grunert, 2007; de Pelsmacker & Janssens, 2007). A great deal of people thinks that information on the Fairtrade initiative, its goals and strategies as well as their achievements is simply to scarce. They would like to see facts about the initiative be more widely and easily available. A considerable number of customers regards the unavailability of information at the point of purchase as a major flaw and contend they were more likely to buy Fairtrade products if their questions could be answered at the place where and time when they are considering the purchase (de Ferran & Grunert, 2007).

Rather than criticising the mere availability, another group of customers is concerned with the content of the distributed information. They find the initiative’s claims and allegations incredible at best, if not unjustified. This suggests a lack of confidence and a certain degree of suspicion towards the initiative which can stem from a variety of sources. Nilsson et al. (2004) argue that the level of complexity the initiative has reached over time is starting to confuse customers and overstrain their information processing and absorption capabilities. De Pelsmacker & Janssens (2007) add that inappropriate information distributed by other ethical labelling organisations leads to a spill-over effect on the Fairtrade brand. Although being concerned with the distribution of fair and accurate information itself, the Fairtrade initiative suffers from damages to its image through the actions of a number of “black sheep” in the field. Additionally, increased marketing of Fairtrade products in conjunction with multinational corporations raises concerns among customers that the initiative is selling itself out to the ‘incorporation of exploitation’ (Parry, 2004; Watson, 2006).

Another factor keeping customers from purchasing Fairtrade products is the aspect of brand familiarity. Though linked to the issue of information availability and quality discussed above, this aspect is of special importance in the field of marketing and hence needs to be analyzed in a separate section. Nicholls & Lee (2006) found that when confronted with the decision between a familiar brand and an unfamiliar one many customers favour the product and brand they know. The authors found that in the case of Fairtrade this plays a major role regarding the decisions against the products. Although the Fairtrade brand has achieved some recognition by now, other brands still dominate in customers minds. In combination with a reluctance to changing habits, as described by de Pelsmacker & Janssens (2007), this helps explain why many customers do not switch from the brand and product they are used to to Fairtrade products.

A final aspect why customers do not buy Fairtrade products can be subsumed under the convenience aspect. As stated in the previous paragraph, some customers are reluctant to changing their habits and the additional effort necessary when buying a different product - like comparing prices, collecting information about the initiative, etc. - are regarded as too substantial to be willing to break their existing habits. However, a second and perhaps more important issue in terms of convenience is the availability of Fairtrade products. Many customers assert as a major reason for them not buying the products is that the products are difficult to be found where they do their shopping. According to these customers if the products were readily available in supermarkets, instead of mainly being sold in speciality stores, they would be much more inclined to purchase them (Alexander, & Nicholls, 2006; de Ferran & Grunert, 2007).

[...]

Excerpt out of 11 pages

Details

Title
Fairtrade: Motivations of customers to engage in Fairtrade purchases and the implications for marketing professionals
Course
Advanced Marketing
Grade
1,7
Author
Year
2007
Pages
11
Catalog Number
V118320
ISBN (eBook)
9783640213696
ISBN (Book)
9783640213856
File size
381 KB
Language
English
Tags
Fairtrade, Motivations, Advanced, Marketing
Quote paper
Jens Hillebrand (Author), 2007, Fairtrade: Motivations of customers to engage in Fairtrade purchases and the implications for marketing professionals, Munich, GRIN Verlag, https://www.grin.com/document/118320

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