Impact of Peer Influence and Environmental Knowledge on Green Consumption: Moderated by Price Premium

Introduction

For attaining global sustainability, environmental protection is considered to be one of the world’s most vital requisite (Nouri et al., 2008). “Consumers generally claim that they want to buy ecologically friendly products and, thereby, help in the environment sustainability. But when they get to the cash register, their Earth-minded sentiments die on the vine. Although individual quirks underlie some of this hypocrisy, businesses can do a lot more to help would-be green consumers turn their talk into walk” (Bonini and Oppenheim, 2008). This situation is changing steadily; in current times organic products have gained tremendous importance in emerging nations such as India (Nath et al., 2013). A recent research showcased by Unilever (2017) claims that 33 per cent of the consumers consider environmental friendly practices as a criterion to choose products. This indicates that consumers have become more observant towards the consumption related environmental problems (Paul et al., 2016) and it influences their purchase decisions. Ellinger and Traichal (2000) claimed that consumers are more concerned towards environmental issues and they have a favorable attitude towards organizations which produces environmental friendly products. We understand and cannot deny the fact that the economic system is heavily dependent on the social and the ecological systems of the universe. The environmental friendly consumption practices which are also known as “sustainable consumption”, has gained the interest and attention from academicians and corporate in the recent period (Hult, 2011). Over the past few years abundant studies have been carried out to understand the consumer’s preference and attitude towards sustainable consumption. Most of these studies start with “environmental knowledge and environmental concern”, both are individual level factors which have the power to influence the consumer’s green purchase intention.

Roberts and Bacon (1997) suggested that environmental concern will be a dominant theme and driving force behind the shift to sustainable consumption practices. The literature defines concern as an “individual’s degree of emotional attachment to ecological issues”. Though the consumer has the knowledge towards deteriorating environmental conditions, without the concern the consumer may not exhibit sustainable behavior. The literature provides enough support to the link between environmental concern and environmental friendly practices (Ellinger and Traichal, 2000; Lee, 2008; Lee, 2010; Brosdahl and Carpenter, 2010). Ellinger and Traichal (2000) advocated that the green consumption starts with consumer knowledge and it leads to concern. They claimed that there is a link between the consumer concern for the environment and also their knowledge levels about the environment friendly products. When consumers are highly concerned, they tend to collect more information and they tend to become more knowledgeable.

Primarily the knowledge is expressed as the consumer awareness towards the conditions, without the awareness the consumption will not happen (Keller, 1993). The consumer’s knowledge towards the deteriorating environmental conditions and sustainable produced products are the precursors to the sustainable consumption behavior. Hallinan and Williams (1990) claimed that in order to act consumers’ need information and it is gathered from outside sources. The willingness to accept information is based on the trust individuals have on the source. While most of the studies agree that environmental knowledge and environmental concern as the prime factors, how consumers gain this knowledge and concern was not adequately explained. Only a handful of studies has explored this influence of external factors such as peers (Childers and Rao, 1992; Lee, 2008; Lee, 2010; Khare, 2013), family (Childers and Rao, 1992), social influence (Salazar et al., 2013; Paul et al, 2015), environmental influence (Lee, 2010) marketer’s influence (Gleim et al., 2013). This study focuses on the impact of peers in influencing the green purchase behavior.