Environmental issues: managing product switching intentions among Indonesian consumers
| Pages | 99-116 |
| DOI | https://doi.org/10.1108/JABS-06-2015-0066 |
| Date | 02 January 2018 |
| Published date | 02 January 2018 |
| Author | Burhanudin Burhanudin,David Ferguson |
| Subject Matter | Strategy,International business |
Environmental issues: managing product
switching intentions among Indonesian
consumers
Burhanudin Burhanudin and David Ferguson
Burhanudin Burhanudin is
a Researcher at the
School of Management,
Asian Institute of
Technology, Klong
Luang, Thailand, and the
STIE Perbanas Surabaya,
Surabaya, Indonesia.
David Ferguson is PhD
Supervisor at the
Cranfield School of
Management, Cranfield,
UK.
Abstract
Purpose –This study aims to explore the factors that make Indonesian consumers differ in their
intentions to switch to products that are more eco-friendly than their current products.
Design/methodology/approach –Consumers’ experiences with their current product and evaluation
of its more eco-friendly alternative were simulated; the effects on intention to switch to the better product
were then investigated.
Findings –This study found that the differences in intentions to switch are attributable to loss aversion
and focusing illusion. When consumers follow the principle of loss aversion (exaggeration of greater loss
than gain), they are more likely to switch to leave unattractive product (i.e. a product that they perceive
as contributing to environmental degradation) than when they do not. Also, when consumers
experience focusing illusion concerning the environment (determining happiness based on
environmental conditions), they are more likely to switch to make their lives happier than when they do
not.
Practical implications –In managing consumer intention to switch, companies should effectively
communicate how their products save the environment. This communication could make their
customers less likely to give up their current products to live happier lives. Similarly, companies could
encourage target customers to switch to their products by arguing that giving up their current products
would help them live happier lives.
Originality/value –This study provides empirical evidence that perceived budget constraints may not
inhibit consumers from switching to more eco-friendly products to live happier lives.
Keywords Indonesia, Environmental issues, Loss aversion, Counterfactual thinking, Focusing illusion,
Intention to switch
Paper type Research paper
1. Introduction
The environmental issues surrounding consumers are a challenge to business. Air
pollution, loss of biodiversity, water contamination and land degradation are among the
issues that business professionals face in capturing opportunities (Howes and Wyrwoll,
2012;Nielsen, 2015;Shah, 2014). In Asia, business opportunities share these typical
challenges, especially concerning water contamination and land degradation (ADB, 2011;
Howes and Wyrwoll, 2012;Yam-Tang and Chan, 1998). Business professionals have
started to realize that environmental issues can serve as threats as well as opportunities to
their businesses (ABC, 2015;McKinsey, 2010). Consumer switching is a clear business
threat, as companies may lose customers due to their switching to competitor products and
business opportunities, as target customers may opt for other companies’ products.
Investigating consumer intention to switch to products that are more eco-friendly compared
to the products they purchase currently is therefore essential. Within the environmental
context, such investigation is useful for finding ways to manage intention to switch, i.e. how
Received 4 June 2015
Revised 3 December 2015
26 May 2016
6 July 2016
Accepted 24 July 2016
DOI 10.1108/JABS-06-2015-0066 VOL. 12 NO. 1 2018, pp. 99-116, © Emerald Publishing Limited, ISSN 1558-7894 JOURNAL OF ASIA BUSINESS STUDIES PAGE 99
to avoid customers switching to a competitor’s products and encourage them to switch to
one’s own products.
Consumer switching has received attention from scholars in the past. A recent survey
suggests that consumers have to spend more to switch to more eco-friendly products
(Nielsen, 2015). Large business opportunities, especially in Asia, are generated by
consumers who generally have low per capita incomes (less than US$1.25 per day); to
reduce living costs, they are highly dependent on the environment, e.g. as a source of daily
drinking water (ADB, 2011;Howes and Wyrwoll, 2012). As such, environmental
degradation and environmental improvement have a direct impact on their lives.
Customers’ intentions to switch to eco-friendly products remain unexplored in studies on
consumer switching (see Njite et al., 2008) and on eco-friendly purchases (see Joshi and
Rahman, 2015). Thus, it is still unclear how to manage consumer intention to switch to more
eco-friendly products, given their perceived budget constraints.
Regardless of background such as income level, consumers want to live happily.
Happiness is an ultimate life goal that every consumer generally wants to achieve (Larsen
and Eid, 2008, p. 8), and they often purchase products to achieve this goal (Schkade and
Kahneman, 1998). Happiness is highly subjective, but it is simply about accomplishing
what one desires (Lazarus, 1991, p. 267). Therefore, those who are highly dependent on
the environment potentially perceive that environmental improvement would make their
lives happier. Currently, environmental degradation makes consumers live less happily
because such degradation creates diseases (e.g. cancer) (Cuñado and Gracia, 2013); this
suggests that consumers may select more eco-friendly products to improve the
environment. The above discussion implies that it is still unclear how to manage consumer
intention to switch to more eco-friendly products given their perceived budget constraints
on living happier lives.
Indonesia is a suitable country for investigating intentions to switch among consumers. In
2012, this country provided US$0.5tn in business opportunities, and by 2030, such
opportunities are estimated to reach US$1.8tn (Oberman et al., 2012). These opportunities
are too big to ignore. As in many Asian countries, business opportunities are challenging
to pursue, as consumers generally have low income and live less well because
environmental degradation creates diseases and unhealthy conditions (Statistics Indonesia
et al., 2013;Howes and Wyrwoll, 2012;Oberman et al., 2012). For that reason, Indonesian
consumers potentially seek ways of switching to more eco-friendly products without having
to spend more to live healthier and hence happier lives.
This study aims to explore factors that make Indonesian consumers differ in their intentions
to switch to more eco-friendly products. Exploring these factors is intended to identify ways
of managing their intentions to switch. This study contributes to the marketing literature on
managing intentions to switch among consumers who perceive that they can switch to
more eco-friendly products without spending more, to make their lives happier.
The remainder of the paper proceeds as follows. The next section reviews the relevant
literature. Hypotheses based on the review are then proposed and the experimental
methods are described. The results and discussion are then presented, followed by an
indication of the limitations and suggestions for future research directions.
2. Background and hypotheses
2.1 Background
Consumers may have their own reasons for switching to another product. They may switch
to obtain lower-priced products, seek variety or improve current decisions (Njite et al.,
2008). According to Njite et al. (2008), consumers generally switch for the last reason. Once
consumers switch, they are less likely to go back to the products they purchased
previously. This typical switching behavior has a great impact on business. Thus, this study
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