The Influence of Demographic Factors and Values on the Willingness to Pay More for Green Products

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I.INTRODUCTION 1.1. Research Background Nowadays, people have become more aware of their environment. They try to slow down the process of global warming in many different ways. One of the efforts to slow down the process of global warming is that now people try to create, produce, and market the environmental-friendly products or, also known as, green products. People who pay attention to green products are called green consumers. According to Rodriguez and Ibeas (2006), “Green consumers” are those who care about the environmental attributes, and are willing to pay a premium for products manufactured in environmental-friendly production processses. As a result, green movement has become trend of consumer behavior. This movement creates the green marketing actions in the business world. Zhang and Zhang (1999) state 2 definitions of green marketing, the first is in the narrow sense and the other in the broad sense. "Green marketing" in the narrow sense means the special way of marketing established on the basis of conventional marketing and targeting on “green goods”. And in the broad sense, "green marketing" means a whole set of ideas, methods and process to realize marketing goals of enterprises. Zhang and Zhang (1999) also state that the driving force behind the green marketing is the market demand of "green consumption" as its core, and the objectives are to spontaneously protect the environment and to promote efficient use of by enterprises. These would be achieved by means of designing, fabricating, packing, selling and recycling "green products". Considering the importance of green marketing and its issues, this study tries to find out the profile of green consumers that are willing to pay more for green product in Indonesia. Empirical study in this area is still considered rare. The previous study of Laroche et al. (2001) identified several factors that may influence consumers’ willingness to pay more for environmental-friendly products. The factors that may influence consumers’ willingness to pay a higher price for environmental-friendly products are: demography, knowledge, values, attitudes, and behavior. This research focuses on two factors of the five categories, i.e. consumer’s demographics factors and values (individualism or collectivism and security or fun/enjoyment).

In the previous study, Schwartz (1994) in Laroche et al. (2001) defines human values as desirable goals, varying in importance, that serve as guiding principles in people’s live. McCarty and Shrum (1994) in Laroche et al. (2001) believe that it makes intuitive sense that the values one holds would influence behaviors that work for a common or societal good. McCarty and Shrum (1994) in Laroche et al. (2001) also investigate the impact of two other relevant values on consumers’ environmentally conscious behavior: fun/enjoyment and security. It is found that the fun/enjoyment value is positively related to attitudes about the importance of recycling and to the recycling behavior. This relationship makes sense if one considers that those who value fun and enjoyment in life may see a fulfillment of this endstate through interaction with the environment. The security value factor is not significantly related to either the importance of recycling or the recycling behavior. After reviewing the previous studies, it can be derived that green marketing is still developing and it is interesting to conduct research in this area. In Indonesia, green movement can be considered as a new trend. This fact invites the author’s curiosity on this topic and it also invites the author to identify the problem in green marketing. The main idea of this research is then to identify which consumers are willing to pay more for green products based on demographics factors and values (individualism or collectivism and security or fun/enjoyment).

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