Executive summary of “Sustainability labelling as a challenge to legitimacy: spillover effects of organic Fairtrade coffee on consumer perceptions of mainstream products and retailers”

Citation

(2015), "Executive summary of “Sustainability labelling as a challenge to legitimacy: spillover effects of organic Fairtrade coffee on consumer perceptions of mainstream products and retailers”", Journal of Consumer Marketing, Vol. 32 No. 6. https://doi.org/10.1108/JCM-09-2015-043

Executive summary of “Sustainability labelling as a challenge to legitimacy: spillover effects of organic Fairtrade coffee on consumer perceptions of mainstream products and retailers”

Article Type: Executive summary and implications for managers and executives From: Journal of Consumer Marketing, Volume 32, Issue 6

This summary has been provided to allow managers and executives a rapid appreciation of the content of this article. Those with a particular interest in the topic covered may then read the article in toto to take advantage of the more comprehensive description of the research undertaken and its results to get the full benefits of the material present.

Growing concerns about societal and environmental issues have influenced the purchase decision-making of a growing number of consumers over the last two decades or so. Choice is no longer determined by factors like taste, price and quality alone for such individuals. They additionally consider climate change, living standards in developing nations and animal welfare among other issues.

This emphasis on sustainability has been accompanied by growth in the number of products under prominent labels like Fairtrade and Organic. Certification of this nature confirms the social and environmental sustainability of products and also differentiates them from mainstream offerings. Research has found that a smallish band of highly involved consumers who are strongly inclined toward sustainable products and some are highly critical of non-sustainable alternatives.

The introduction of sustainable products within a certain category prompts consumers to question the “legitimacy” of incumbent brands which do not possess this certification. Legitimacy in this context refers to being perceived as adhering to the “ruling norms” within a society. When labels such as Fairtrade and Organic enter a market and demonstrate the feasibility of sustainable product options, prevailing norms come under pressure and can evolve into new social norms.

It is essentially argued that launching an Organic-Fairtrade product in a certain market can impact on how consumers perceive existing brands through what are termed as “spillover effects”. This possibility exists in both a “competitive situation” and a “collaborative situation”. In the first instance, the sustainable product is introduced as a new brand that competes against existing products in a market. The second refers to situations where an existing brand launches a sustainable alternative as a result of forming a coalition with Fairtrade, Organic or some other sustainability label. Developments of this nature have recently occurred in The Netherlands, with the result being that sustainable coffee now accounts for approximately 75 per cent of the total coffee market in that nation.

Spillover effects have been the subject of considerable research attention. One recurring sign is that these effects can occur between products and various other entities. The potential to have an impact on other products within the store is widely noted. For instance, the emergence of Organic-Fairtrade coffee differentiates the offering in terms of social and environmental performance. This performance aspect is thus added to the criteria used as part of the product evaluation process. A likely outcome is that mainstream products will become unfavorably perceived with regards to sustainability factors due to the strength in this respect of the Organic-Fairtrade option.

Correspondingly, potential also exists for changes in perception of product quality. This again occurs due to quality perceptions becoming partly based on sustainable performance. Mainstream products that lack social and environmental attributes are likely to be unfavorably evaluated.

In an earlier work, it was argued that consumers look to find the causes of change when it occurs. This includes contexts in which product attributes are altered. Depending on their perception of whether change is good or bad, those involved will be rewarded or punished accordingly. Finding Organic-Fairtrade products on a store shelf will trigger positive “attributions” towards the retailer involved. It is the same mechanism whereby a store can gain from the presence of strong brands. However, this positive attribution tends to be directed towards the brand owner rather than the store when that brand offers a sustainable alternative alongside its mainstream options.

An additional situation is when spillover effects impinge on product manufacturers. The impact here is on consumer perception of the firm’s corporate social responsibility (CSR) and on their general attitude towards the company. The same reward-punishment dichotomy exists in this context. Therefore, those which have launched Organic-Fairtrade products as brand extensions will be significantly favoured, relative to companies failing to incorporate sustainability attributes into alternative offerings.

In the present study, Anagnostou et al. recruited participants from a university in The Netherlands. The 166 subjects were similar in terms of age, income and education. Females accounted for 54.22 per cent of the sample which consisted of individuals reporting that they were not loyal buyers of Organic-Fairtrade coffee. A market-leading brand was indicated as the favorite coffee brand by 72 per cent of subjects.

Participants completed the first part of the questionnaire, in which they were exposed to a shopping scenario where they purchased their favorite brand of coffee. Demographic data were then requested before subjects were randomly exposed to one of three conditions in the second part of the scenario. When shopping, they found adjacent to their favorite coffee an unfamiliar brand from Mexico certified as meeting Fairtrade and Organic requirements; an alternative of their usual brand with the same certification; or a variety of other well-known coffee brands. The scenario then stated that they would purchase their favorite coffee brand and continue shopping. Further questions addressed their sensitivity to environmental and social issues.

Analysis confirmed that when consumers encounter Organic-Fairtrade coffee their perceptions of the:

• social and environmental performance of mainstream products would be more negative in both the competitive and collaborative situations;

• quality of the mainstream product will become more negative in both competitive and collaborative situations;

• store’s image are positively influenced in the competitive situation but not in the collaborative one; and

• company’s CSR images are more negative in the competitive situation but more positive in the collaborative one. The consumer’s general attitude towards the firm is influenced in the same way.

The authors point out the persistent nature of the negative impact on mainstream products. It is additionally noted that positive spillover effects can benefit either the store or the brand owner but not both. Which entity gains depends on whether the situation is competitive or collaborative. Overall, the study illustrates the potential of sustainability labeling to increase consumer awareness and eventually alter society norms regarding product legitimacy.

Retailers are advised to move quickly by forming partnerships with sustainability labels and get such products on their store shelves before established brands can adopt the label. For their part, company managers must become more attuned to social and environmental issues and assume a more proactive approach. Incorporating sustainability into some products will positively impact perceived CSR image and the general attitude of consumers towards the firm. However, this will not prevent negativity pertaining to other products in the assortment. Anagnostou et al. believe that changing the whole product line might be a better move should social norms shift drastically. Increasing the presence and visibility of sustainable products in various categories and outlets can help policy makers who harbor aims of attaining social objectives.

Using more representative samples in future work is recommended as is the consideration of other products and categories. Scholars could also examine different certification methods and the role of competition from, such as, retailer brands. Longitudinal study to examine the impact on actual choices and consumption behaviour is another possibility.

To read the full article enter 10.1108/JCM-11-2014-1213 into your search engine.

(A précis of the article “Sustainability labelling as a challenge to legitimacy: spillover effects of organic Fairtrade coffee on consumer perceptions of mainstream products and retailers”. Supplied by Marketing Consultants for Emerald.)