SATISFACTION TOWARDS ECO-FRIENDLY PRODUCTS

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FACTORS AFFECTING MALAYSIAN CONSUMERS’

SATISFACTION TOWARDS ECO-FRIENDLY PRODUCTS

BY

FAHRIBA ABDULLAH

A dissertation submitted in fulfilment of the requirement for the degree of Master of Science (Marketing)

Kulliyyah of Economics and Management Sciences International Islamic University Malaysia

SEPTEMBER 2017

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ABSTRACT

This study identifies the factors affecting Malaysian consumers’ satisfaction towards eco-friendly products. Four variables namely, price, quality, availability and user friendly are proposed to have strong correlations with customer satisfaction in the context of Malaysia. It has been a global concern for the preservation of the polluting and degrading of the environment. Many studies have been done on green marketing exploring the importance of the topic and relationship with the factors of eco-friendly products and customer satisfaction. Through vital and rich information provided by experts and competent and experienced researchers, companies have understood the importance of eco-friendly products to satisfy customers. The objective of this research is to explore the four factors or elements, towards eco-friendly products. The purpose of the study is to obtain information from the consumers’ point of view. Furthermore, one perspective of the study is to look at the consumers’ perception towards eco-friendly products. A questionnaire was distributed to obtain the views of the Malaysian customers, how they are influenced by the factors or elements to be satisfied in using eco-friendly products. A quantitative approach was adopted for the study by giving a questionnaire to 250 respondents. Furthermore, convenient sampling was used to collect data so the chosen boundary was Kuala Lumpur. Findings indicate that consumers, who had already bought eco-friendly products and those who were satisfied by these previous purchases, were willing to repeat purchases. Positive attitudes concerning willingness to pay an extra price for green products were also correlated with satisfaction. Moreover, we discovered also that quality of the products, availability and user friendliness towards eco-friendly products were also positive.

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ثحبلا ةصلاخ

ABSTRACT IN ARABIC

حترقيو .ايزيلام في ءلامعلا اضر ونح ةئيبلل ةقيدصلا تاجتنلما لماوعب قلعتي اميف ةسيئرلا تايقبسلأا ددتح ةساردلا هذه ةئيب في ءلامعلا اضر عم ةيوق تاقلاع اله نوكت نأ مدختسملل ةقيدصو ،رفاوتلاو ،ةدولجاو ،رعسلا يهو ،تايقبسأ عبرأ يزيلام قيوستلا ىلع تاساردلا نم ديدعلا يرجأ دقو .اهروهدتو ةئيبلا ثولت ىلع ةظفاحملل ايلماع لاغاش ناك دقو .ة تامولعلما للاخ نم .ءلامعلا اضرو ةئيبلل ةقيدصلا تاجتنلما لماوعب هتقلاعو عوضولما اذه ةيهمأ فاشكتساو ،قيدصلا

تلما نوثحابلاو ،ءابرلخا اهمدقي تيلا ةينغلاو ةيويلحا صلا تاجتنلما ةيهمأ تاكرشلا تمهف دق ،ةبرلخا وذو ،نوصصخ

ةئيبلل ةقيد

ينب ةصاخو ،ءلامعلا اضر ونح ،ةعبرلأا رصانعلا وأ لماوعلا يرثأت فاشكتسا وه ةساردلا هذه نم فدلهاو .ءلامعلا ةيبلتل تسلما رظن ةهجو نم تامولعم ىلع لوصلحا وه ةساردلا هذه نم ضرغلاو .ينيزيلالما ءلامعلا ىلع ةولاعو .ينكله

،كلذ

ىلع لوصحلل ةنايبتسا عيزوت تم .ةئيبلل ةقيدصلا تاجتنلما ونح كلهتسلما روصت في رظنلا وه ةساردلل ادحاو اروظنم نأ .ةئيبلل ةقيدصلا تاجتنلما مادختسا في ةيضرم نوكت نأ بيج تيلا رصانعلا وأ لماوعلا رثأتت فيكو ،ينيزيلالما ءلامعلا ءارآ دامتعلاا تم لىإ ةنايبتسا عيزوتب ةساردلل يمك جهنم ىلع

ةمئلام ةنيع تمدختسا ،كلذ ىلع ةولاعو .كراشم 250

تاجتنم لعفلاب اوترشا نيذلا ينكلهتسلما نأ لىإ انجئاتن يرشتو .روبلملااوك يه ةراتخلما دودلحا تناك ثيبح تانايبلا عملج اسلا تايترشلما هذه نع ينضار اوناك نيذلاو ةئيبلل ةقيدص ا تناكو .ءارشلا تايلمع راركتل دادعتسا ىلع اوناك ةقب

فقاولم

اضيأ انفشتكا ،كلذ ىلع ةولاع .حايترلااب اضيأ ةطبترم ةقيدصلا تاجتنملل فياضإ نثم عفد في ةبغرلاب ةقلعتلما ةيبايجلإا

.اضيأ ةيبايجإ تناك ءلامعلا اضر ونح مادختسلاا ةلوهسو رفاوتو ،تاجتنلما ةدوج نأ

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APPROVAL PAGE

I certify that I have supervised and read this study and that in my opinion, it conforms to acceptable standards of scholarly presentation and is fully adequate, in scope and quality, as a thesis for the degree of Master of Science (Marketing).

………..

A.K.M. Ahasanul Haque Supervisor

………..

Rozailin Abdul Rahman Co-Supervisor

I certify that I have read this study and that in my opinion it conforms to acceptable standards of scholarly presentation and is fully adequate, in scope and quality, as a thesis for the degree of Master of Science (Marketing).

………..

Kalthom Abdullah Examiner

………..

Muhammad Tahir Jan Examiner

This thesis was submitted to the Department of Business Administration and is accepted as a fulfilment of the requirement for the degree of Master of Science (Marketing).

………..

Noor Hazilah Abd Manaf Head, Department of Business Administration

This thesis was submitted to the Kulliyyah of Economics and Management Sciences and is accepted as a fulfilment of the requirement for the degree of Master of Science (Marketing).

………..

Maliah Sulaiman

Dean, Kulliyyah of Economics and Management Sciences

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DECLARATION

I hereby declare that this dissertation is the result of my own investigations, except where otherwise stated. I also declare that it has not been previously or concurrently submitted for any other degrees at IIUM or other institutions.

Fahriba Abdullah

Signature………....………. Date …….……….

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COPYRIGHT

INTERNATIONAL ISLAMIC UNIVERSITY MALAYSIA

DECLARATION OF COPYRIGHT AND AFFIRMATION OF FAIR USE OF UNPUBLISHED RESEARCH

FACTORS AFFECTING MALAYSIAN CONSUMERS’

SATISFACTION TOWARDS ECO-FRIENDLY PRODUCTS

I declare that the copyright holder of this dissertation is jointly owned by the student and IIUM.

No part of this unpublished research may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying,

recording or otherwise without prior written permission of the copyright holder except as provided below

1. Any material contained in or derived from this unpublished research may be used by others in their writing with due acknowledgement.

2. IIUM or its library will have the right to make and transmit copies (print or electronic) for institutional and academic purposes.

3. The IIUM library will have the right to make, store in a retrieved system and supply copies of this unpublished research if requested by other universities and research libraries.

By signing this form, I acknowledged that I have read and understand the IIUM Intellectual Property Right and Commercialization policy.

Affirmed by Fahriba Abdullah

……..……….. ………..

Signature Date

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DEDICATION

I dedicate this dissertation work to my beloved parents.

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ACKNOWLEDGEMENTS

First, all praises to the Almighty God, Allah Taalaa, may He always have blessed our Prophet Muhammad the Seal of the Prophets and whom perfected His religion for him and his community. All praises go to Allah Taala for giving me the health and the patience in completing this research. Starting this, I give my deepest gratitude and appreciation to my beloved parents and family thank you for the support and the love that all of you had given me throughout these years and patience they had shown me, for me to achieve and fulfil my dreams. Not forgetting to my beloved mother, I miss her and pray for her; may Allah always bless her, because she always motivates and energizes me to do my thesis.

Next, my thankful gratitude and appreciation to my Supervisor, Professor. Dr. A.K.M.

Ahasanul Haque, for helping and supporting me in completing my work and guiding me in my research. My supervisor cooperated and suggested me to accomplish the thesis in every phase of my research work.

Thirdly, I would like to thank my examiners, Dr Muhammad Tahir Jan and Associate Professor. Dr Kalthom Abdullah, for their suggestions and corrections to improve my thesis works which helped me to come up with the last version of this dissertation. Dr.

Nurita always directed me and inspired me to work on my research and I am always thankful to her for her kind support and care she showed me.

Lastly, my appreciation goes to all colleagues who have helped me a lot in giving me advises and lifting up my spirits when I was in need. They have always given me right information regarding my thesis and boost me up to complete my work on time. To all, I wish all the best of life, and May all of them be blessed by Allah in their life always.

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LIST OF TABLES

Table 3.1 Items for all Constructs 45

Table 3.2 Assessment Reliability and Validity of the Questionnaire 48

Table 4.1 Skewness and Kurtosis Statistics 54

Table 4.2 Descriptive Frequencies: Gender 56

Table 4.3 Descriptive Frequencies: Age 57

Table 4.4 Descriptive Frequencies: Marital Status 57

Table 4.5 Descriptive Frequencies: Income 58

Table 4.6 Descriptive Frequencies: Profession 58

Table 4.7 KMO and Bartlett’s Test 60

Table 4.8 Total Variance Explained Output 61

Table 4.9 Rotated Component Matrix 63

Table 4.10 Reliability Statistics: All Constructs 65

Table 4.11 Item Statistics of Mean & Standard Deviation (SD) 66 Table 4.12 Reliability Statistics for Individual Variables 67 Table 4.13 Correlation between Price and customer loyalty of eco-friendly products

72 Table 4.14 Correlation between Price and customer loyalty of eco-friendly products

74 Table 4.17 Correlation between Customer Satisfaction and Price, Quality,

Availability and Ease of Use 74

Table 4.18 Model summary of Regression Analysis 76

Table 4.19 Regression analysis of ANOVA test 76

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Table 4.20 Regression Analysis 77

Table 5.1 Summary of Research Hypotheses 81

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LIST OF FIGURES

Figure 2.1 Theoretical Framework with Hypothesized Relationship among the

Main Construct 29

Figure 3.1 Research Design Strategies 37

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CHAPTER ONE INTRODUCTION

1.1 INTRODUCTION

The rapid growth of the global economy is always linked to the increasing consumer consumption worldwide. However, environmental deterioration caused by over consumption and over utilization of natural resources by consumers is always a concern of the public. As the environment continues to worsen, it has become a persistent public concern in developed countries. Moreover, it has also awakened developing countries to the green movement for the preservation of the environment. Human activities influence the ecology and the loss of natural resources and the threats stood by effluence of the environment have become much more obvious. The pollution and noise are aggregating, the landscape and geography has transformed and the quality of air and water is declining (Alodini, 2008). Overtime, evidence of consumer consumption all over the world is growing rapidly with the growth of economy. Over populated consumers cause over consumption and exploitation of natural resources which are waning the environmental capacity (Booi & Tech, 2010). Global warming, diminution of stratospheric ozone layer, effluence of sea and river water, noise and light contamination, acid rain and dissertation are the consequences of ecological deprivation (Ramlogan, 1997). Domestic consumption activities are one of the reasons for 40percent of ecological deprivation. The environmental condition is deteriorating and this has become a determined public concern in developed and industrialized countries (Joy, 1994). Moreover, this determination has caused developing countries like Malaysia to become more conscious about the green movements and activities for conservation of the environment.

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Terms like phosphate free, recyclable, reusable, returnable, ozone friendly and environmentally friendly are some ideas that customers most often associate with comprehensive perception and beginning, that can be useful and representative to consumer goods, manufacturing goods, technologically advanced products, commercial products and even services and facilities. Everywhere in the world there are possibilities and opportunities that are commencing to encourage themselves as “eco visitor”

services, services that “concentrate” in going through the environmental or operational in a technique and process that decreases their ecological effect and impact (Joy, 1994).

The environment has become a significant public concern over the past few decades and researchers are also frequently studying this crucial topic because nowadays consumers are more conscious about eco-friendly products. The increased level of environmental responsiveness and understanding since the 1970s has brought a positive change in consumer behaviour towards environmentally friendly products.

Within the design, production, packaging, labeling and consumption are the positivity and aim of eco-friendly products and consumers’ behaviour is also changed towards eco-friendly products to lower the affects on the environment (Lee, 2008). To comprehend the factors that inspire consumers behaviour it is extremely necessary for companies to study consumers’ eco-friendly behaviours. (Alodini, 2008) (Alodini, 2008) Alodini (2008) found that nowadays the environmental impacts of the products consumed by customers have made them relatively more responsive and apprehensive about the environment. Eco-friendly products have started to be surface in people’s buying pattern which has caused consumers to become more aware about the environment, increasing their demands and preferences to purchase, green products. If companies focus on this issue, they need to know what their consumers will consume, they need to be knowledgeable about their competitors whether they are producing the

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same products or different ones. Nowadays, connection and correlation among consumer behaviour, marketing and the environment are more focused because of the increasing attention on and importance of which are specified and demonstrated in two ways. In the case of environmental characteristic; consumer attentiveness and approach ability are increasing day by day even though the activities that are environmental friendly have also expanded among consumers purchasing behaviour (Fisher, Bashyal,

& Bachman, 2012).

1.2 BACKGROUND OF THE STUDY

Environmental concern has become a major area of interest for multi-national corporations, government, academics and other stakeholders over the past decades.

Consumers are becoming increasingly environmentally conscious (Laroche et al., 2001). Companies and consumers are more thoughtful of green marketing now (Paettie

& Crane, 2005). Today's market place is different from the yesteryears in a sense that it is more environment-friendly. They are concerned about the planet they are living on and want to contribute towards its longevity and well-being. This positive attitude towards the environment is evidenced by their shopping habits, such as their concern regarding CFC and product-recycling. Convincing evidence is an upward trend in paying more for environment friendly products by the consumers (Laroche et al., 2001).

Because of this, manufacturing firms should be cautious about their products and consumer needs. If they fail to comply, they may face tough regulations and customer demands (Grant, 2008).

This trend towards an eco-friendly attitude has developed the concept of green marketing. It is a relatively new concept with its origins in the latter half of the 20th century (Peattie & Crane, 2005). Green-marketing activities include manufacturing,

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differentiating, pricing and promoting products and services which can satisfy consumers environmental needs (Paettie, 1992 as cited by Chen & Chang, 2012). These green marketing efforts enhance consumers purchase intentions. Companies need to focus on reducing the green perceived risk by giving trustworthy information so that it helps build trust in customers, improve the green perceived value and enhance the purchase intentions of buying green products and in this way, one customers can be satisfied. Besides this, consumers propose that quality of the eco-friendly products, pricing, user friendly status and availability of the products are more effective in enhancing their knowledge about green products, keeping them satisfied and more interested to consume these products (Akehurst et al., 2012). Therefore, eco-friendly products can help enhance motivation towards buying green products based on customer satisfaction in Malaysia. Moreover, according to Hartmann and Ibanez (2006), consumers will more likely buy green products having ecological packaging provided they meet cost benefit analysis. Sustainability is also demanded from industrial suppliers, and exporters are under pressure to supply eco-packed products (Saxena &

Khandelwal, 2012). Ecologically conscious consumers are willing to pay high prices for such products (Laroche et al., 2011).

Thus, the aim of the present study is to determine the impact of eco-friendly products on customer satisfaction in Malaysia. To keep the environment healthy, companies are introducing various eco-friendly products. It is interesting to see what motivates and satisfies the consumers to purchase eco-friendly products. Hence, the objective of this study is formulated to find the family and social influences which motivate and satisfy consumers in purchasing environment friendly products in Malaysia. Nowadays, Malaysian consumers are increasingly implementing chooing eco-friendly products and realizing the effect of eco-friendliness to save the

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environment. Many firms have perceived this intensified and supported environmental consciousness among consumers as an increasing opportunity of eco-friendly products.

However, this requires professionals to state the association between ecological influences and supplier’s selection. The most significant inspirations on supplier selection are potential liability, followed by cost associated with the disposal of hazardous materials and compliance with state and federal environmental regulations.

The importance of the issues and impacts may stem from fear of accountability process and fines and succeeding adverse marketing (Zhour, 1997). To attract more consumers to buy eco-products, marketers should focus on creating effective marketing strategies and promotional activities, because nowadays Malaysian consumers are happy to purchase eco-products as they are more aware of consuming resources and energy which cause minimum ecological damage and are also easy to reuse, disassemble, decompose and recycle. Marketers should emphasize on consumer’s environmental satisfaction and increase reliability levels by monitoring and improving the quality and features of eco-friendly products.

This study will advance marketers’ and strategy makers’ understanding of the identification of consumer satisfaction towards eco-friendly products in the connection between environmentally friendly products and consumer loyalty and satisfaction examined in the Malaysian background (Suki, 2010). The total population of Malaysia has been estimated at 31.7 million (Department of Statistics, 2016). Out of this, 68.6 percent are Bumiputeras, 23.4 percent are Chinese, 7.0 percent are Indians and 1.0 percent is others. This diverse population purchase several types of things. Their purchase intention and pattern also vary based on their traditional, social and family background. Since the utilization of environment friendly products is growing in Malaysia, henceforth it is stimulating to see how people from these various backgrounds

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show their intention and satisfaction towards the purchase of those green or eco-friendly products.

1.3 ECO-FRIENDLY PRODUCT SITUATION IN MALAYSIA

In Malaysia, the satisfaction towards the ecology and peer pressure significantly influences eco-friendly product purchasing intention (Mei et al., 2012). The socio- demographic characteristics of age, gender, income, marital status, income level and educational level are significant influences on eco-friendly products in Malaysia which have been specified in the psychology studies on eco-friendly behaviour (Robinson et al., 2002). For example, in a research on eco-friendly products in Malaysia, it was found that socio demographic variables significantly influence the respondent’s intention and satisfaction towards eco-friendly product purchasing (Rezai et al., 2011). The perception of eco-friendly is new in Malaysia and the Malaysian government has taken initiative to protect the ecology. Consumers may not have the knowledge on eco- friendly products and importantly, they are hardly conscious about eco-friendly products and barely observe these. Hence, it is necessary to identify if Malaysian consumers have the intention to purchase eco-friendly products (Nezakati, &

Hosseinpour, 2015).

1.4 PROBLEM STATEMENT

The purpose of the study is to examine the relationship between the price, quality, availability and user-friendliness of eco-friendly products to satisfy consumers and to provide business people the proper information to develop customer satisfaction towards eco-friendly products. The necessity to manage the high rate of failure of e- waste and to produce more eco-friendly products is the basic business problem,

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therefore a growing eco-friendly consumer market (Isaacs, 2015). Studies on Malaysian consumers found that the level of consumer satisfaction towards eco-friendly products is still low (Nik Ramli, 2009). Consumers all over the world are becoming interested to protect the environment; thus, if would be helpful for organizations to spread awareness to consumers as it is more profitable and eco-friendlier for them (Nandini & Deshpande, 2011). Abdul Wahid et al. (2002) state that consumers who are concerned about the environmental will show their purchasing behaviour through supporting on “Eco- friendly products.

In addition, many institutions have actively launched and participated in promoting green programmes to communities such as eco-friendly products. These includes environmental outreach program for communities and industry players to advance the cause of environmental issues through better and wider dissemination of environmental news and views. Furthermore, many people believe that introducing eco- friendly products to the public is one of the market means to increase their consumers’

consumption rate and boost their sales than just to satisfy consumers’ needs and wants.

According to Grunert (1993), only few customers demonstrate their environmental concerns and show it in their actual purchase behaviour. Despite many environmental friendly products with green attribute and features introduced in the markets, consumers have not totally changed their tastes and old habits. Even though many people are aware about the environmental issues and are willing to respond by using environmentally friendly products or services, survey results show that only 8 percent of respondents change their purchasing tendency to benefit the environment (Our Green World, 2008).

Besides, a study conducted by Rashid (2009) shows that consumers may not necessarily purchase green products or services although they have plenty of knowledge on green products and eco-labels. Moreover, another research found that although consumers

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care for their environment they still do not buy green products or services (Yam- Tang

& Chan, 1998). This means that they do not seem to support environmental issues although they realize that the environment is degrading. Therefore, it is worth finding out what causes consumers not to behave in an environmental friendly manner even though they are aware of the environmental issues. On the other hand, there have been a few studies regarding customer satisfaction on eco-friendly products in Malaysia (Chan & Lau, 2000; Soonthonsmai, 2001; Tanner & Kast, 2003; Kamal & Vinnie, 2007;

Lee, 2008; Cheah, 20090. Most of the researchers are focused on youth or general consumers than working consumers. The results vary due to the origin or different samples used in different states in Malaysia. In this study, researcher decided to focus on the factors of eco-friendly products which are not so popular with the general public in this country and how these influences the customers to become satisfied.

1.5 RESEARCH OBJECTIVES

Research objectives are discussed in two modes in the following, namely general and specific objectives. The general objective of this research is to identify and test the comprehensiveness of the conceptual model of the customer satisfaction development in relation to the factors of eco-friendly products in Malaysia. Various factors of eco- friendly products are examined to measure the satisfaction of Malaysian customers.

Specific Objective:

1. To find out the relationship between the price of eco-friendly products and customer satisfaction in Malaysia.

2. To determine the relationship between quality of eco-friendly products and customer satisfaction in Malaysia.

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3. To determine the relationship between availability of eco-friendly products and customer satisfaction in Malaysia.

4. To determine the user-friendly relationship between eco-friendly products and customer satisfaction in Malaysia.

1.6 RESEARCH QUESTION

1. Does the price of eco-friendly products have a significant impact on customer satisfaction in Malaysia?

2. Does the quality of eco-friendly products have a significant impact on customer satisfaction in Malaysia?

3. Does the availability of eco-friendly products have a significant impact on customer satisfaction in Malaysia?

4. Does friendly use of eco-friendly products have a significant impact on customer satisfaction in Malaysia?

1.7 SIGNIFICANCE OF STUDY

A distinctive contribution of this study is to the field of eco-friendly products and customer satisfaction towards eco-friendly products in Malaysia.

Some obstacles exist in changing in consumption patterns and behaviours, although the convenience and ease to use eco-friendly products are essentially and extensively disseminated and circulated in the market by eco-friendly products marketers. But it is indispensable and necessary for consumers to substitute and support eco-friendly activities which can motivate and stimulate environmentally friendly behaviour and activities among them (Griskevicius, Tybur, & Bergh, 2010). Nowadays it has been found through research that most consumers are concerned about the ecology

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and want to purchase eco-friendly products, but if the price of eco-friendly products exceeds their budget they cannot consume them and they decide to go for conventional and non-green products and services. But marketers of eco-friendly products are unable to motivate and inspire consumers to purchase their products even though the cultivating products and car sales have recorded satisfactory and acceptable statistic after the recession of 2008 (Durif, Boivin, & Julien, 2010).

Eco-friendly behaviour and attitude are essential aspects to influence and motivate consumers’ enthusiasm and satisfaction to spend more on eco-friendly products. According to research findings, consumers are satisfied and considered environmental consequences and factors when buying and spending more on eco-friendly products. Social compression and desirability are features of ecologically responsive respondents. To extend environmental advantages from one environmentally aware activity to another, an organization must be careful (Laroche, Bergeron, & Barbaro-Forleo, 2001). Ecologically aware and responsible consumer activities communicate consumption behaviours that assist the ecology. Therefore, the emphasis and concentration of sustainable consumption can bring social and ecological assistance by relating to financial actions, by indicating, selecting, consuming and recycling goods and services. Eco-friendly consumers can behave in a more enthusiastic way by changing the patterns of products they consume in purchasing, using and recycling (Haron, Paim, & Yahaya, 2005). Eco-friendly products have become a priority to the Malaysian government and this is a new trend. The Malaysian government has taken the initiative to be involved in many eco- friendly projects and activities to encourage eco-friendly consumption among Malaysians.

Therefore, based on ecological ratings, this has succeeded in developing the country (GreenTech Malaysia, 2010). Environmental rating provides a standard for a country on how close it has set environmental policy goals, which is essential. According to the World Environmental Performance Index, Malaysia was ranked at number 27 out of 163 countries in 2008 but has pointedly declined to number 54 in 2010 (Yale University, 2011). By 2020, Malaysia needs to develop and recover its ranking if the country wants to accomplish its goal