The Impact of Eco-Labeling on Customers’ Green Purchase Intention: A Comparative Study Between Cargills Food City and Lanka Sathosa Supermarkets in Polonnaruwa District

The Impact of Eco-Labeling on Customers’ Green Purchase Intention: A Comparative Study Between Cargills Food City and Lanka Sathosa Supermarkets in Polonnaruwa District

R.A.D. Nirmani¹ & Dr. T. Prabaharan²   

¹Assistant Lecturer, ² Senior Lecturer

Department of Management, Faculty of Commerce and Management, Eastern University, Sri Lanka.

DOI: https://dx.doi.org/10.47772/IJRISS.2024.803102

Received: 12 March 2024; Revised: 21 March 2024; Accepted: 26 March 2024; Published: 09 April 2024

ABSTRACT

The increasing global concern over environmental degradation has prompted both consumers and businesses to prioritize eco-friendly practices and products. This study investigates the role of Eco-labeling as a green marketing strategy and its influence on customers’ green purchase intention within the context of the supermarket industry in Sri Lanka, focusing on Cargills Food City and Lanka Sathosa supermarkets in the Polonnaruwa District. The objectives of this research are twofold: firstly, to assess the current level of eco labeling and customers’ green purchase intention, and secondly, to analyze the impact of eco labeling on customers’ green purchase intention in the selected two supermarkets. The study aims to bridge existing research gaps in understanding green marketing strategies within the Sri Lankan market, particularly in the supermarket industry. By exploring eco labeling as a green marketing strategy, this research seeks to enhance consumers’ awareness of the environmental attributes and benefits of green products, thereby influencing their purchasing behavior towards more environmentally sustainable choices. The study was conducted as a comparative study. Structured questionnaire was used as the method of data collection and selected 380 supermarket customers of Cargills Food City and Lanka Sathosa supermarket in Polonnaruwa district as the sample of this study. Convenience sampling method was used to make the sampling frame and quantitative research approach used for this study. Univariate and regression analyses were used to analyze the data. The findings indicate that there is a strong positive impact of eco labeling on customers’ green purchase Intention in both supermarkets. Moreover, this study supposed that the suitable usage of Eco Labeling will increases the Customers’ Green purchase Intention.

Keywords: Eco Labeling, Green Purchase Intention, Cargills Food City, Lanka Sathosa supermarket.

INTRODUCTION

Today, the environmental issue is a common topic and most of the country’s government as well as the society are starting to become more aware of this issue over the past few decades due to global warming and increasing climate change. Degradation of the environment is one of the important challenges in the 21st century (Solekah et al., 2020). Some environmental challenges, such as global warming, the effects of greenhouse gases, pollution, and global climate change are directly connected to the agricultural and manufacturing industries, which have a devastating impact on human behaviors. These environmental issues that are emerging can only be solved if consumers are responsible for reducing the hazardous effects on the environment by using a larger quantity of green products (Nekmahmud & Fekete-Farkas, 2020). Consumers’ willingness and inclination to choose these environmentally sustainable products over conventional alternatives can be defined as the green purchase intention. This concept has gained prominence in recent years as environmental concerns have become increasingly prevalent in society. Consumers who exhibit green purchase intention prioritize the environmental impact of their purchasing decisions, seeking products that minimize harm to the planet (Nekmahmud & Fekete-Farkas, 2020).

In Sri Lanka, a country grappling with its own set of environmental challenges, such as air pollution, waste management issues, and deforestation, green purchase intention takes on added significance. The Sri Lankan population, increasingly cognizant of the detrimental effects of environmental degradation on their communities and livelihoods, has shown a growing interest in eco-friendly products and sustainable consumption practices (Samarasinghe & Samarasinghe, 2013). This is particularly evident in urban areas, where rising levels of pollution and environmental degradation have spurred individuals to seek out greener alternatives. Furthermore, initiatives within Sri Lanka, such as government-led sustainability campaigns and corporate social responsibility efforts by local businesses, contribute to the promotion of green purchase intention among consumers (Karunarathna et al., 2020). These initiatives aim to raise awareness about the importance of sustainable consumption and encourage individuals to make environmentally conscious choices in their purchasing decisions.

The concept of eco-labeling has been emerged in response with this global environmentalism movement, which involves concerned citizens and governments aiming to reduce environmental damage and improve quality of life caused by traditional marketing practices (Kotler & Armstrong, 2008). Product labels provide consumers with information to make choices. Sustainability labels serve as a marketing technique to inform consumers that a company has engaged in processes to protect the environment. When advertising these eco-products, companies publicize the message through symbols or claims on labels regarding the ecological benefits the product offers (Gutierrez et al., 2020).  Xu, Yan (2013), stated that for businesses, getting a green certification and putting the green label on products is a smart move. It helps customers easily recognize eco-friendly products, giving the company an edge in the market. This label not only sets apart green products from others but also boosts the company’s reputation and makes customers trust them more. For consumers, the green label is like a clear sign that tells them a product is environmentally friendly. It makes it easier for them to choose green products and ensures they’re getting good quality and value. Therefore, this study focuses on assessing the impact of eco labeling on customers’ green purchase intention, with a specific comparison between Cargills Food City and Lanka Sathosa supermarkets in the Polonnaruwa District. Eco labeling serve as tool to facilitate consumers’ perception and awareness of the attributes and characteristics of green products, thereby guiding them towards purchasing environmentally friendly products.

The objectives of this study are:

1. To identify the existing level of eco labeling and customers’ green purchase intention of Cargills Food City and Lanka Sathosa supermarkets in Polonnaruwa district.
2. To identify the impact of eco labeling on customers’ green purchase intention in Cargills Food City and Lanka Sathosa supermarkets in Polonnaruwa district.

PROBLEM STATEMENT

In the contemporary environment, green marketing strategies has becoming increasingly significant globally (Shabbir et al., 2020). This has made both consumers and businesses in more concerned about the environment. As a result, there’s a growing group of consumers in Sri Lanka who care deeply about environmental and social issues because of how businesses operate (Samarasinghe & Samarasinghe, 2013). According to Karunarathna et al., 2020 where the supermarket industry is concerned, it has developed significantly over the past decade but faces a new challenge of meeting the demand for environmentally friendly products. After studying a lot of argument from different studies Khalida (2020), stated that there is a research gap that how the supermarket can effectively promote green marketing activities and what factors will influence to consumer purchase intention. According to a study conducted among the customers of some selected supermarkets in Colombo district by Fernando et al., (2017), declared that customers are unable to identify whether Sri Lankan supermarkets have implemented such green concepts (Karunarathna et al., 2020).

However, still there are very few studies that have discussed on green issues in the Sri Lankan market context reference to the supermarket industry. The present study trying to fill this gap by doing empirical study to explore “eco labeling” as a green marketing strategy and its influence on customers’ green purchase intention with reference to the Cargills Food City and Lanka Sathosa supermarkets in Polonnaruwa District. These strategies aim to increase consumers’ awareness of the attributes and benefits of green products, ultimately influencing their purchasing behavior to reduce the environmental impact of synthetic products (Rahbar & Wahid, 2011).

LITERATURE REVIEW

3.1 Green Purchase Intention

Mirabi et al., (2015), defined customers’ Purchase Intention as a “kind of decision-making that studies the reason to buy a particular brand by consumer”.  It’s a complicated process that’s usually linked to consumer behavior, perceptions, and attitudes. Green purchase intentions refer to an individual’s readiness to perform green buying behavior, mainly reflecting the consideration of less pollution. It is considered that is an immediate antecedent of behavior. Also, green purchase intention can be defined as the possibility that consumers would like to purchase environmentally friendly products (Chen & Deng, 2016). Chen & Chang (2012) defined green purchase intention as the likelihood that a consumer would buy a particular product resulting from his or her environmental needs. There are multiple green practices that are getting more popular. Some of them include recycling, saving paper and electricity, avoiding the use of aerosols, encouraging the use of biodegradable products, use of organic food and so on (Gilg, Barr, & Ford, 2005). Consumer demand in terms of green movement is gradually sloping upwards (Han, Hsu, & Sheu, 2010). The reason for this shift towards green purchases could be a result of consumers’ realization of the impact their behavior has on the environment (Jaju, 2016).

3.2 Eco Labeling

One of the significant green marketing tools is using eco-labeling on environmental friendly products (Rahbar & Wahid, 2011). Eco-labeling can be defined as “making relevant environmental information about a product available to the appropriate consumers through the product label to promote an environmental goal, cause or objective through consumer choice” (Banerjee & Solomon, 2003). Solaiman et al., (2011) defined eco-labeling as “a marketing strategy that comes from inclined environmental awareness in the global climate change”. According to Banerjee & Solomon (2003), products may be labeled based on a wide range of environmental considerations, such as recycled content, biodegradability, toxic emissions, waste generation, harm to wildlife, etc. Rashid (2009), stated that they are indicators of the environmental performance of a product, developed to try to prevent consumers from being confused over claims of environmental friendliness. Many of the research studies on eco-labels looking for the ways to make them effective in consumers’ purchase behavior of environmentally friendly products. According to Rashid (2009), consumer awareness of eco-label has favorable impact between knowledge of green product and consumer’s intention to purchase. However, some other studies indicate that although the functions of labels are recognized by some consumers, but this does not automatically lead them to green purchasing decisions (Rahbar & Wahid, 2011). Few studies have investigated the link between environmental labeling and a consumer’s intention and behavior to purchase environmentally friendly products (Rahbar & Wahid, 2011). Therefore, based on these empirical evidence and discussion this study develops the following hypothesis.

H1: Eco Labeling is significantly and positively impact on Customers’ Green Purchase Intention

THEORETICAL FRAMEWORK

The Theory of Planned Behavior

A variety of explanatory theories of consumer behavior have been put forward over the past years. Although those theories describe an understanding of alternative brands or products are compared, they do not explain how such comparisons are translated into buying decisions. Theory of planned behavior (TPB) is a theory that links one’s beliefs and behavior. According to the theory, attitude toward behavior, Subjective norms, and perceived behavioral control, together shape an individual’s behavioral intentions and behaviors. The Theory of Planned Behavior (TPB) confirms that beliefs that shape attitudes to behavior influence buying intentions (Jaju, 2016). Icek Ajzen proposed this concept to improve on the predictive power of the theory of reasoned action by including perceived behavioral control. Further, as stated by Mahmoud et al., (2017), the theory of planned behavior (TPB) has been validated in the context of pro-environmental behavior. The TPB proposes that one’s intention to perform a behavior is predicted by attitudes, subjective norms, and perceived behavioral control. According to the theory of planned behavior, perceived behavioral control, together with behavioral intention, can be used directly to predict behavioral achievement.

CONCEPTUAL FRAMEWORK

Figure 1: Conceptual Framework

Sources: (Rahbar & Wahid, 2011)

MATERIAL AND METHODS

Kothari (1990), defined research methodology is a way to systematically solve the research problem. This study employed a quantitative research approach. Further the study conducted using the deductive approach as the most appropriate method of research approach for this study and it constituted developing an assumption base on the existing theories and forming a research plan to test that assumptions. As the study population the researcher chose “customers who are buying goods and services from Cargills Food City and Lanka Sathosa supermarkets in Polonnaruwa district” in order to collect and analyze the study variables by selecting a convenience sample out of them, where it represented the entire group of customers. It was very difficult to get accurate information regarding the number of customers, who are buying goods and services from particular supermarkets in Polonnaruwa district. Therefore, the population of this study was unknown. The study was conducted within the cross-sectional time horizon as it collected data within a particular period of time and considered Polonnaruwa district as the research area due to the convenience of the researcher to collect the relevant research information from the customers who are buying goods and services from supermarkets in Polonnaruwa district. Researcher selected two supermarkets for the perspective of comparative study which were Cargills Food City and Lanka Sathosa Supermarkets. For study objectives, the researcher has chosen 380 customers as the sample size and 190 customers for each sector. A closed-ended questionnaire served as the sole source of data for the data collection process. There were two parts of the questionnaire: Part I and Part II. Part II complied with the research related information, while Part I complied with personal information. The variables was measured via the “Five Point Likert Scale.” Customer’s age, gender, monthly income level and education level were all listed in Part I. Part II of the questionnaire used the research information scale, which consisted of five boxes ranging from “Strongly Disagree” to “Strongly Agree,” to identify responses. The tools used in this investigation were taken from (Juwaheer, Pudaruth, & Noyaux, 2012) & Yan, 2013. Cronbach’s Alpha Coefficient (CAC) has been utilized in this study to analyze the reliability instrument. The gathered data was analyzed using descriptive and multi-step regression analysis in SPSS version 22.0 to meet the study’s objectives.

DISCUSSION AND FINDINGS

7.1. Reliability Analysis

Table 1: Analysis of Cronbach’s Alpha Coefficient (CAC)

(Source: Survey Data)

According to Table 1, Cronbach’s values of all variables were more than the cut-off value of 0.7. It indicates that the data is reliable and adequate for further analysis.

7.2 Descriptive Statistics

Objective 1: To identify the existing level of eco labeling and customers’ green purchase intention of Cargills Food City and Lanka Sathosa supermarkets in Polonnaruwa district.

Table 2: Descriptive Statistics of Eco Labeling and Green Purchase Intention.

(Source: Survey Data)

Table 2 indicates that the level of eco-labeling at Cargills Food City was found to be higher, with a mean value of 4.166 and a standard deviation of 0.568. In comparison, at Lanka Sathosa supermarkets, the level of eco-labeling was also high but slightly lower, with a mean value of 3.809 and a standard deviation of 0.494.

7.3 Regression Analysis

Objective 2: To identify the impact of eco labeling on customers’ green purchase intention in Cargills Food City and Lanka Sathosa supermarkets in Polonnaruwa district.

Sector 1- Cargills Food City

Table 3: Model Summary of eco labeling (EL) and Green Purchase Intention

Table 3 indicates that the R Square statistic value is 0.530, which means 53% of the variation in the dependent variable of green purchase intention (GPI) can be explained by the independent variable of eco labeling (EL).

Table 4: ANOVA for eco labeling (EL) and Green Purchase Intention

According to the table 4, the regression model was significant (F = 212.397; p = 0.000). It can be concluded that the chosen regression model has a strong model fit (p < 0.001) for the data in Cargills Food City.

Table 5: Coefficients of eco labeling (EL) and green purchase intention (GPI).

The β coefficient of EL is 0.835. The β coefficient shows that for every unit of increasing in EL, there is an increase of GPI in 0.835 units. The p-value (0.000) is higher compared to chosen alpha level (0.05). It explains that the β value for EL statistically significant to make decisions in Cargills Food City.

Therefore, the simple regression equation calculation data from the data for chosen regression model can be shown as below.

GPI = 0.709 + 0.835(EL)

Sector 2: Lanka Sathosa Supermarket

Table 6: Model Summary of eco labeling (EL) and Green Purchase Intention

Table 6 indicates that the R Square statistic value is 0.394, which means 39.4% of the variation in the dependent variable of green purchase intention (GPI) can be explained by the independent variable of eco labeling (EL).

Table 7: ANOVA for eco labeling (EL) and Green Purchase Intention

According to the table 7, the regression model was significant (F = 122.161; p = 0.000). It can be concluded that the chosen regression model has a strong model fit (p < 0.001) for the data in Lanka sathosa.

Table 8: Coefficients of eco labeling (EL) and green purchase intention (GPI).

The β coefficient of EL is 0.738. The β coefficient shows that for every unit of increasing in EL, there is an increase of GPI in 0.738 units. The p-value (0.000) is higher compared to chosen alpha level (0.05). It explains that the β value for EL statistically significant to make decisions in Lanka sathosa.

Therefore, the simple regression equation calculation data from the data for chosen regression model can be shown as below.

GPI = 1.238 + 0.738(EL)

CONCLUSION

This study, conducted with 380 customers who are buying goods and services from Cargills Food City and Lanka Sathosa supermarkets in Polonnaruwa district, Sri Lanka, examined the impact of eco labeling on green purchase intention. The first objective of this study was associated with assessing the level of eco labeling and green purchase intention. Based on the results of descriptive analysis, in the study, it was observed that most respondents from Cargills Food City shared similar opinions compared to those from Lanka Sathosa supermarkets. The level of eco-labeling at Cargills Food City was found to be higher, with a mean value of 4.17 and a standard deviation of 0.568. In comparison, at Lanka Sathosa supermarkets, the level of eco-labeling was also high but slightly lower, with a mean value of 3.81 and a standard deviation of 0.494. These findings align with a study by Masocha (2021), which reported a high level of eco-labeling with a mean value of 4.58. Further, the overall GPI was at high level among Cargills Food City (Mean = 4.1895) and Lanka Sathosa supermarkets (Mean = 4.0474). But relatively, Cargills Food City had better level than Lanka Sathosa supermarkets. In addition to that, most of the Cargills Food City respondents expressed the common opinion regarding the GPI (SD = 0.651) compare with Lanka Sathosa supermarkets respondents (SD = 0.581). The result was matched with Karunarathna et al., (2020), and based on their descriptive statistics the dependent variable green purchase intention has showed the high-level mean of 4.07 with a standard deviation of 0.519.

The second objective of this study was to assess the impact of eco labeling on green purchase intention. Based on the results of simple regression analysis, the study concludes that green purchase intention is influenced by eco labeling in both two sectors but slightly high in cargills food city compared with Lanka sathosa supermarkets. The result was matched with Song et al., (2019), showed that eco-labels have a significant effect on purchase behavior directly with the path coefficient of 0.199. According to the findings it is clear that as a green Marketing strategy, eco labeling in today’s dynamic corporate environment is very important. It makes easier for consumers to perceive and become aware of the attributes and characteristics of green products.

LIMITATIONS AND FUTURE DIRECTIONS

From this research, it can be identified few limitations. As the researcher considers only the study sample, the whole population can’t examine totally. The lack in sample size and the method of data collection through convenient sampling is another drawback in this research, as convenience sampling is not considered as robust as simple random sampling. The scale used to measure the research questions were five point Likert scale. Instead, if a seven point scale were used, measurement that is more accurate would have been taken for each variable. Due to analysis complexity, this was avoided. Further, this study seeks only to understand the effect of eco labeling on customers’ green purchase intention, where the research site of the study is concerning only two selected supermarkets in Polonnaruwa district.

To get more generalized results, future research might consider a large size of the sample as well as by adding new variables and dimensions in order to make the findings results more accurate and reliable. Also, future researchers can incorporate quantitative and qualitative data collection to gather more explanations. This research study has campaigned based on cross–sectional time horizon. Future research might be conducted to use longitudinal designs and can conduct the similar research with reference to other different industries in Sri Lanka.

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