Research on consumers' willingness to pay premium for green products/services

Abstract

As environmental concerns and climate change impacts intensify globally, the trend of green consumption has emerged as a significant movement reshaping consumer behavior and market dynamics. While green products offer tangible environmental benefits through their sustainable materials, energy-efficient production processes, and biodegradable packaging, their adoption in developing economies like Vietnam remains limited due to price premium barriers. Despite rising environmental consciousness in Ho Chi Minh City, Vietnam's economic hub, there exists a notable gap between consumers' environmental awareness and their actual purchasing behavior, particularly regarding willingness to pay premium prices for eco-friendly products. To address the limited empirical research on green consumption behavior in Vietnam, this study investigates the factors influencing consumers' willingness to pay for green products, focusing on urban consumers in Ho Chi Minh City, where rising income levels and educational attainment have created a more sophisticated consumer base increasingly aware of environmental issues. To predict the factors affecting the willingness to purchase green products and services with premium prices, this study employed the Customer Perceived Value (CPV) theory. The survey was conducted among 400 participants currently living in Ho Chi Minh City in January 2024. After checking and filtering the data, 381 valid samples remained for analysis in Chapter 4. The research methods included Cronbach's Alpha test, EFA, Pearson's correlation test, and Multiple linear regression analysis. The research results reveal five factors affecting Personal Value (PV), arranged in descending order of impact: Environmental Concern (EC), ESG Knowledge (EK), Green Brand Communication (GBC), Brand Reputation (BR), and ESG Engagement (EE). Similarly, four factors influence Social Value (SV) in descending order: ESG Engagement (EE), Green Brand Communication (GBC), Brand Reputation (BR), and ESG Knowledge (EK). Notably, Personal Value acts as a key mediator for Willingness to Pay Premium (WTPP) and Top-of-Mind Brand Awareness (TBA), followed by Social Value. In particular, consumers with high PGE demonstrate a stronger relationship between PV and WTPP. Further studies will be needed to overcome these limitations and provide more conclusive evidence