The Effects of Green Marketing Practices On Green Equity and Customer Tolerance
The Effects of Green Marketing Practices On Green Equity and Customer Tolerance
102-111 Sozer
THE EFFECTS OF GREEN MARKETING PRACTICES ON GREEN EQUITY AND CUSTOMER TOLERANCE
DOI: 10.17261/Pressacademia.2020.1283
JMML- V.7-ISS.3-2020(1)-p.102-111
ABSTRACT
Purpose- This study targets to fill an important gap in the green marketing literature by integrating two inter-related concepts, Green Brand Equity
and Customer Based Brand Tolerance (CBBT).
Methodology- The participants of the study were female consumers aged between 18-35, users of personal care and cosmetic products and
residents of Istanbul city. The product category selected for the purpose of this study was personal care and cosmetics. The research model and
the respective hypothesis proposed to identify the determinants of Green Brand Equity and its effect on CBBT were tested by utilizing the
Structural Equation Modeling (SEM).
Findings- The results of the study confirm that green brand satisfaction and green brand trust are the two determinants of Green Brand Equity. In
turn, the results also indicate that a strong Green Brand Equity generates a positive effect on Customer Based Brand Tolerance by increasing
consumers’ Performance Tolerance, Price Tolerance as well as Communication Tolerance levels towards the brand.
Conclusion- Overall, the study reports a positive impact of Green Brand Equity on Customer Based Brand Tolerance (CBBT). Academic as well as
managerial implications are provided based on these findings
Keywords: Green marketing, green brand equity, brand equity, customer based brand tolerance.
JEL Codes: M30, M31, M39
1. INTRODUCTION
Unprecedented population growth in the last couple of decades followed by rising global economic activities and consumption
levels, led to the uncontrolled utilization of natural resources which eventually caused severe environmental problems including
natural resource shortages for the next generations, pollution, and natural disasters. These problems reached at critical levels
which started to be threaten the life of future generations. As a response to these problems, starting from mid-seventies,
environmental movements are organized by sensitive consumer groups to attract the attention of the society on environmental
issues. One of the historical developments was the introduction of “Sustainable Development” concept in 1987 by the World
Commission on Environment and Development in their report titled “Our Common Future”. This development accelerated the
adoption of sustainability approach socially, politically as well as economically in the societies which in turn caused the individuals
and businesses to focus more on the environmental problems and increased their sensitivity. Thus, in addition to global and
macro-economic context, sustainability emerged as a critical issue in the business processes and the lifestyles of individuals
(Cantele & Cassia, 2020). In line with their responsibility towards the society, businesses started to adopt strategies and processes
which are expected to generate sustainable business models (Baumgartner & Rauter, 2017; Ottman, 1992). On the other hand,
sensitive consumers to environmental problems started to be selective on their product selections in favor of environmentally
friendly companies (Chen, 2010).
This new trend of environmental protectionism led to the rise of a new marketing practice called as Green Marketing. Since its
introduction for the first time in American Marketing Associations conference in 1975, green marketing became one of the most
critical and sensitive component of the marketing strategies and programs for many companies. In its basic form green marketing
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can be defined as the marketing programs intended to satisfy the needs of target consumers through practices which are sensitive
to environmental issues (Aytekin, 2007). Most academicians as well as professionals agree that green marketing practices should
not be limited to only product concept but needs also to be implemented on a larger scale covering all other activities of the
companies with the ultimate target of building a competent green brand which greens all other components of the marketing mix
(Kang & Hur, 2012; Chen, 2010). Thus, building a strong green brand, consequently generating a strong green equity, requires
large investments. In order to compensate these large investments with financial and performance returns, the identification of
the determinants of green brand equity and exploring how green brand equity influences consumer behavior are essential to
understand. One of the important dimensions of consumer behavior is the tolerance of consumers towards the brands. Marketing
literature includes several studies which focused on the determinants of green equity construct, where three components, namely
green image, green satisfaction, and green trust, are confirmed as the drivers of the green equity (Ha, 2020; Chen, 2010). On
other hand, as reported by Kumar (2015), there are many studies focused on the consequences of green marketing practices in
terms of consumer behavior as well as market performance. These studies provide robust frameworks and strong base of
knowledge in terms of the determinants and outcomes of green marketing practices.
This study targets to fill an important gap in the green marketing literature by measuring the influence of green brand equity on
the tolerance level of customers towards that brand in terms of product performance, price, and marketing messages. This
tolerance level is measured through the employment of Customer Based Brand Tolerance (CBBT) construct and its associated
scale developed by Sözer (2019). In the following section, green brand equity and CBBT constructs are explained in detail, their
relationship is elaborated, and research hypothesis as well as research model are proposed. In the third section, the research
methodology is presented by explaining the design of the study, sampling methodology employed, and operationalization of the
variables. In the fourth and fifth sections, the findings of the study are presented, and academic as well as managerial implications
are provided. In the final section, limitations are explained and suggestions for future research studies are provided.
2. LITERATURE REVIEW
Several push and pull factors need to be considered to understand the motives which encourage companies to develop green
marketing programs. On one hand, companies involve in green marketing programs due to the push factors which include
compliance with societal pressures, ethical responsibilities, and legal obligations (Polonsky, 1994). On the other hand, there are
also pull factors such as enhancing corporate image, obtaining competitive advantage, and increasing market performance (Chen,
2010). Whatever is the encouraging factor, the ultimate target of companies in going green is to generate a strong green equity
and support it. Thus, companies seek for strong green equities by the means of enhancing the environmental performance of
their offerings to the market.
2.1. Green Brand Equity and Its Determinants
The construct of Green Brand Equity (GBE) can be considered as a derivative of brand equity concept in the environmental context.
Although there are various definitions of brand equity provided in the marketing literature, as Aaker (1991) defined, it can be
regarded as “a set of brand assets and liabilities linked to a brand, its name and symbol, that add to or subtract from the value
provided by a product or service to a firm and/or to that firm’s customers”. In the branding literature, the concept of brand equity
is conceptualized and transformed into a multi-dimensional construct called as Customer Based Brand Equity (CBBE). Kotler and
Keller (2016) defined CBBE as “the differential effect of brand knowledge on consumer reactions towards the marketing stimuli
and activities of the brand”. As proposed by Keller (1993), CBBE construct is composed of four dimensions, namely brand
awareness, brand associations, perceived quality, and brand loyalty, which collectively help to the generation of consumer
perceptions about the overall superiority of the brand. Based on the grounds provided by the brand equity concept as well as
CBBE construct, Chen (2010) proposed the concept of Green Brand Equity (GBE) and defined it as “a set of brand assets and
liabilities about green commitments and environmental concerns linked to a brand, its name and symbol that add to or subtract
from the value provided by a product or service”. Originally proposed by Chen (2010), several other studies in the green marketing
literature also identified green brand image, green satisfaction, and green trust as the determinants of GBE (Ha, 2020; Ng et al.
2014; Kang and Hur, 2012).
According to Solomon (2018), a piece of information received by the consumer is stored in the associative network of information
and all consumers have such organized systems of concepts related to the brands or companies. Information nodes, namely pieces
of information such as concepts, features, and similar information, are the basis of the associative networks. The associations are
formed when these nodes are inter-connected in the brain. When some nodes of information are connected to the brand nodes
in the memory, they constitute the brand associations and represent the meaning of the brand for consumers (Aaker, 1991). The
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perception of consumers about the brand which is generated through these brand associations represents the image of the brand
(Cretu and Brodie, 2007). Thus, brand image can be considered as the collective and combined influence derived through these
associations (Biel, 1992). Those brands with strong, favorable, and unique associations in consumer’s mind, are expected to have
a strong and positive image (Keller, 1993). Based on the previous conceptualizations of brand image, Chen (2010) proposed the
green image concept and defined it as “a set of perceptions of a brand in a consumers’ mind that is linked to environmental
commitments and environmental concerns”. There are several studies in the marketing literature which argue and confirm the
positive influence of brand image on CBBE (Davis et al. 2008; Faircloth et al. 2001) and the positive influence of green image on
GBE (Butt et al. 2016; Namkung and Jang, 2013). In the light of the theoretical framework as well as the findings in the literature,
the following hypothesis is proposed:
H1: Green Brand Image will have a positive effect on Green Brand Equity.
As one of the concepts which has been highly investigated in the marketing literature, customer satisfaction can be defined as an
evaluation of consumers towards the brand as a result of multiple interactions (Agustin & Singh, 2005) or as a result of the last
transaction (Oliver, 1993). Thus, the satisfaction level of consumers is set through the comparison of pre-purchase expectations
about a brand or product with the post-purchase evaluation of the actual performance. Before setting their satisfaction level,
consumers evaluate the brand and company based on the multiple-criteria including product performance, service quality, and
overall business performance (Ostrom and Iacobucci, 1995). Parallel to the conceptualization of customer satisfaction, Chen
(2010) introduced the green satisfaction concept and as “a pleasurable level of consumption-related fulfillment to satisfy a
customer’s environmental desires, sustainable expectations, and green needs”. Thus, green satisfaction is the reflection of
consumer post-purchase pleasure arising from the fulfillment of environmental needs and expectations (Chang and Fong, 2010).
There are several studies in the marketing literature which argue and confirm the positive effect of customer satisfaction on brand
equity (Bekk et al., 2016; Kim et al. 2008) as well as the positive influence of green satisfaction on GBE (Ha, 2020; Chen, 2010). In
the light of the theoretical framework as well as the findings in the literature, the following hypothesis is proposed:
H2: Green Brand Satisfaction will have a positive effect on Green Brand Equity.
Marketing literature credits the concept of trust as one of the main factors in building the relationship between consumers and
brands. As Levy (1985) points out, consumers have the tendency to assign human characteristics and personality traits to brands
as if they were real people. When such personalization occurs, consumers start to generate their own perception about the brand
in a dyadic relationship format based on the trust (Elliot & Yannopoulou, 2007). Trust, in its basic form, is the belief about reliability
and honesty of one side towards the other side and it eliminates the concerns about possible opportunistic behaviors in a
relationship (Gulati, 1995). In the context of relationship marketing, trust is expected to be generated through the multiple
interactions between the consumers and brands which are consistent, competent, and responsible (Doney and Cannon, 1997). In
line with the social exchange theory, when consumers trust a brand, they are expected to commit to their relationship and
purchase the products of the brand (Gefen and Straub, 2004; Singh and Sirdeshmukh, 2000). Marketing literature includes several
studies focused on the relationship between trust and CBBE and these studies confirmed the positive influence of trust on CBBE
(Kim et al. 2008; Jevons and Gabbott, 2000). In his study, Chen (2010) introduced the concept of green trust and defined it as “a
willingness to depend on a product, service, or brand based on the belief or expectation resulting from its credibility, benevolence,
and ability about its environmental performance”. In line with the studies which measured the influence of brand trust on CBBE
and confirmed its positive effects, green trust was also found affective on GBE (Ha, 2020; Chen, 2010). In the light of the
theoretical framework as well as the findings in the literature, the following hypothesis is proposed:
H3: Green Brand Trust will have a positive effect on Green Brand Equity.
2.2. The Influence of Green Brand Equity on Customer Based Brand Tolerance (CBBT)
Tolerance is one of the concepts which is widely used in many scientific fields including the social sciences. Basically, tolerance
can be defined as a state of internal paradox resulting from accepting to do something which is not ideally preferred (Doorn,
2012). In the context of relationship marketing, tolerance can be defined as the acceptance of undesirable or unexpected costs
incurred as a result of the interactions between the customer and brand during the relationship journey. Careful review of studies
in the marketing literature shows that most of the studies are mainly focused on the tolerance related to the financial costs such
as the price level and consequently there is a lack of studies which focus on the other types of costs, such as performance, time
or even psychological costs, which may incur during the relationship. In line with the tolerance concept and in order to fill the gap
in marketing literature, Sözer (2019) introduced the Customer Based Brand Tolerance (CBBT), which is a multi-dimensional
construct composed of three dimensions including performance, price, and communication tolerance.
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It is strongly argued and confirmed in the marketing literature that strong CBBE is the pre-requisite for superior market
performance as well as strong customer equity (Leone et al. 2006). The strength of the CBBE is found to be directly affective on
market performance (Kim and Kim, 2005), purchase intentions (Jalilvand et al. 2011), and customer loyalty (Taylor et al. 2004)
collectively generating a more committed customer base, which in turn is expected to be more tolerant towards the brand in
cases of unexpected or undesired costs occurred during the journey of the customer with the brand (Sözer, 2019). As confirmed
by other studies in the marketing literature, customers of those brands with strong CBBE are expected to accept higher prices for
the products of those brands (Kabadayı and Aygün, 2007), be more tolerant towards the product failures and provide a chance
for recovery (Sözer, 2019) and finally, be more responsive, selectively attentive and tolerant towards the communication efforts
of those brands (Kent and Allen, 1994). Thus, in line with the previous arguments and findings in the literature, it is strongly
believed that a strong GBE will also have a positive effect on the generation of committed customer base, and this will lead to
increasing performance, price and communication tolerance towards the brand. In the light of the theoretical framework as well
as the findings in the literature, the following hypotheses are proposed:
H4: Green Brand Equity (GBE) will have a positive effect on performance dimension of CBBT.
H5: Green Brand Equity (GBE) will have a positive effect on price dimension of CBBT.
H6: Green Brand Equity (GBE) will have a positive effect on communication dimension of CBBT.
The conceptual model of the study and the associated hypotheses which are proposed based on the existing literature are
presented in Figure 1.
Figure 1: Conceptual Model and Hypotheses Proposed
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Following the data entry and non-response error checking, 412 valid questionnaires were employed for the analysis of the results.
Following the confirmation related to the validity and reliability of the scales employed, hypotheses were tested by employing the
Structural Equation Modeling (SEM). All statistical analyses in the study were made using IBM SPSS and IBM SPSS AMOS software,
version 26.
3.2. Operationalization of Variables
The variables in the research model are measured through the scales which are borrowed from the previous studies in the
marketing literature. All scales were translated to Turkish language for the purpose of this study. The scale group which represents
Green Brand Equity (GBE) and its determinants, namely Green Brand Image, Green Brand Satisfaction and Green Brand Trust,
were borrowed from the study of Ha (2020). The five points Likert-type scales with 1 to 5 ranging from “strongly disagree” to
“strongly agree” were originally developed and validated by Chen (2010). Green Brand Image is composed of six items, it was
validated by the respective authors and the internal reliability (Cronbach Alpha) score for the scale was reported as .918 and .744,
respectively. Green Brand Satisfaction is composed of four items, it was validated by the respective authors and the internal
reliability (Cronbach Alpha) score for the scale was reported as .896 and .724, respectively. Green Brand Trust is composed of
three items, it was validated by the respective authors and the internal reliability score (Cronbach Alpha) for the scale was
reported as .932 and .768, respectively. Finally, Green Brand Equity (GBE) scale is composed of four items, it was validated by the
respective authors and the internal reliability score (Cronbach Alpha) for the scale was reported as .837 and .876, respectively.
On the other hand, Customer Based Brand Tolerance (CBBT) construct is composed of Performance Toleration, Price Toleration,
and Communication Toleration scales. Five points, three items, Likert-type scales with 1 to 5 ranging from “strongly disagree” to
“strongly agree” were originally developed and validated by Sözer (2019). The author reported satisfactory internal reliability
(Cronbach Alpha) scores of .926, .743, and .884, for Performance Toleration, Price Toleration, and Communication Toleration
scales, respectively.
In order to confirm the validity and reliability of the scales employed, A Confirmatory Factor Analysis (CFA) was conducted. All
factor items which constitute the six variables employed in the research model were included into the analysis. The results of CFA
confirmed the construct validity by resulting in satisfactory levels of fit indices (χ2/DF =1.070, CFI=0.934, IFI=0.943, RMSEA= 0.022)
as confirmed by the respective studies in the literature (Bagozzi & Yi, 1990), CMIN/DF ratio below the threshold level of 3, CFI and
IFI scores above 0.9 and RMSEA score below 0.10 are regarded as satisfactory levels. Additionally, standardized factor loadings
for each scale are reported above 0.5 threshold level which requires no additional adjustment for the scale items. Intra-factor
loadings of the scale items are presented in Table 1.
Table 1: Factor Loadings of Scale Items
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studies which confirm the positive effect of CBBE on the positive response of consumers towards the marketing mix elements of
the brands (Sözer, 2019; Kabadayı and Aygün, 2007; Kent and Allen, 1994). In addition to the academic implications of the results,
there are also some managerial implications which needs to be considered. First of all, the results indicate that when consumers
are satisfied with the green marketing practices of the brands and they trust to the brands in terms of their sincerity in involving
into such practices, their GBE is positively influenced and becomes stronger. In order to generate such effect, brands need first to
articulate the details of their green policies through marketing communications and public relations activities, and then they need
further demonstrate how they adopt the policy into their marketing programs as well as business models. In addition to this, when
the GBE is empowered with increasing green satisfaction and green trust, consumers become more tolerant towards the
product/service failures of the brands at some extent. Moreover, they also be willing to pay more for the products of such brands
and they become more tolerant towards the price increases. Finally, the receptivity of consumers towards the marketing
communications of such brands becomes also much stronger when the brand has a strong GBE. It is an expected outcome
especially when green practices of brands are aligned with the sensitivity of consumers related to the environmental issues. Thus,
managers are recommended to periodically measure the strength of their GBE in order to maximize the benefits in terms of CBBT.
A strong CBBT empowered by GBE will help brands to increase their customer equity and generate sustainable competitive
advantage.
5. CONCLUSION
This study contributes to the existing literature by integrating Green Brand Equity (GBE) and Customer Based Brand Tolerance
(CBBT) constructs in the retailing context. There are some remarks to be made regarding the contributions, limitations and
suggestions for further research. First of all, despite the fact that there are vast number of studies, which investigated the
determinants of the Green Brand Equity (GBE) and confirmed the impact of several determinants including green brand
satisfaction, green brand trust and green brand image, this study leads the way for further investigation since the green brand
image was not found to be significantly effective on the GBE. Another important contribution and novelty provided by this study
is the finding related to the significant impact of GBE on the product, performance and communication tolerance dimensions.
In addition to the contributions provided by the study, there are also some limitations of the study in terms of generalizability
which need to be mentioned. First of all, the participants of the study were female subjects living in Istanbul city. The choice of
sample as female consumers limits the generalizability of the results covering gender types. Moreover, the geographic area of the
study was limited to one city, Istanbul, which is also an issue in terms of generalizability of the results. Finally, the product category
in the study was selected as personal care and cosmetics. In the light of the above mentioned limitations in terms of the
generalizability of the results, there is a need for research studies with broader scope and coverage. Thus, further studies are
recommended to be conducted also with the participation of male consumers, in a more expanded geographic area and finally,
on other product categories.
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