Manoshi Samaraweera, Jeanetta D. Sims and Dini M. Homsey
Would a green color label increase the dollar amount consumers are willing to pay for a green product? Would nature images (such as a leaf or flower) on the label have the same…
Abstract
Purpose
Would a green color label increase the dollar amount consumers are willing to pay for a green product? Would nature images (such as a leaf or flower) on the label have the same effect? This paper aims to examine the role of these labeling strategies in influencing consumer willing to pay.
Design/methodology/approach
Using a 2 × 3 experiment, the authors empirically test the research questions across two studies: in the controlled-lab setting with 160 students (Study 1) and in a field-setting with 268 consumers shopping at a grocery store (Study 2).
Findings
Results are consistent across both studies. Surprisingly, participants are willing to pay more for the product when it has a white-toned label rather than a green-toned one. Follow-up path analysis, with Study 2 data, reveals that a white-toned label has both an indirect (through more favorable evaluations of the product’s environmental friendliness), as well as a direct impact on willingness to pay. In providing a post hoc explanation, it is argued that a white-toned label better directs attention towards the claim signaling the product’s eco-friendliness, while providing a “clean”, “high-quality” look. In both studies however, nature images on the label did not have a significant effect.
Practical implications
Insights are particularly interesting for practitioners seeking to better label/package green products.
Originality/value
This investigation is the first to empirically examine how color and images on the label influence the dollar amount consumers are willing to pay for a green product. Findings reveal that counter to common belief, the heavy use of the color green on eco-friendly product labels might not be appropriate; a predominantly white-toned label works better.
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Keywords
Manoshi Samaraweera and Betsy D. Gelb
This paper aims to offer a new perspective on increasing advertising effectiveness, testing the idea that the link between advertising expenditures and brand equity is greater…
Abstract
Purpose
This paper aims to offer a new perspective on increasing advertising effectiveness, testing the idea that the link between advertising expenditures and brand equity is greater when a company's consumer satisfaction ratings exceed those of their competitors than when such ratings trail those of competitors.
Design/methodology/approach
The study used published data for 27 companies and their competitors from 2001 to 2009, providing 182 observations for analysis using hierarchical linear modeling. Annual data on advertising expenditures (obtained from Compustat) for companies whose corporate names are synonymous with their brand (e.g. Apple, McDonald's, Nike) formed the basis for testing the proposition of interest. Yearly brand equity data obtained from Interbrand, and customer satisfaction (CS) ratings from the American Customer Satisfaction Index website were employed to test whether year‐over‐year increases in advertising expenditure resulted in increasing the value of the brand and whether this positive effect was accentuated when a company's CS ratings exceeded those of its competitors.
Findings
As expected, a year‐over‐year increase in advertising expenditures contributed to enhance brand equity, but this positive effect was significantly greater when a company's CS ratings trumped the CS ratings of its competitors as opposed to trailing them.
Originality/value
If a company trumps its competitors in CS ratings, it should consider spending more on advertising, because now their ad dollars have a bigger bang for the buck in contributing to enhance the value of the brand. A company trailing its competitors in CS ratings should consider taking funds from the advertising budget to remedy that disparity, whether by product improvements, sales training, customer service hires, or whatever seems needed. Not only can increasing CS make future ad dollars more effective, on the flip side, it can make competitors' ad dollars less so.