January 2013 Second Cycle Master Thesis in Business Administration Master's Thesis in Business ...

101 Pages·2013·0.63 MB·English

Faculty of Education and Economic Studies

Department of Business and Economic Studies

THE IMPACT OF CSR AND GREEN MARKETING ON
CONSUMER BEHAVIOR--- ICA KVANTUM BORLÄNGE
Ruby Kashif
January 2013
Second Cycle

Supervisor:
Master TheDsri.s M inar Bia uFsriengiedsosu -A Mdamlaminai stration

Master’s Thesis in Business Administration
Acknowledgement
Completion of this project would not be possible without the efforts of many people and
therefore I would like to appreciate them all.

First of all, I thank God for His grace and mercy. He provided me the strength, peace of mind,
and blessings through all the difficulties that came across while writing this term paper.

Next, I would like to thank my Thesis supervisor Dr. Maria Fregidou Malama (PhD) who has
been especially helpful throughout the entire research work. Her guidance and help was very
useful to me throughout this period.

I would also like to thank Mr. Johan Wester, Store Manager of ICA Kvantum, AB, who
provided me the opportunity to choose ICA Kvantum, Borlänge as my case company to
conduct research.

Last but not the least; I would like to express my special thanks to my friends and family.
ABSTRACT

Aim: The concept of CSR is getting more attention among various fields but there has been a
lack of research in enhancing the awareness of CSR within the field of retailing. In order to
fill this gap, the aim of this study is to investigate the significance of CSR and green
marketing (ecological labels) in the business of retailing while evaluating the affect of it on
consumer behavior.

Method: Case study research method is opted for this study to answer “why” and “how”
questions. Furthermore, quantitative data has been collected through in store and online
customer interview. The research data is analysed by using Microsoft Office Excel.

Result & Conclusions: The result shows that CSR is well incorporated and practiced by ICA
Kvantum, AB. Their business philosophy is focused on customer, product, environment,
diversity and community. They provide environmental and organic products by abiding the
rules and law of goods production that also protects the environment. Moreover, the
quantitative study reveals that Swedish female consumer between the ages of 26-35 are more
responsible towards environment. It also shows that most of the consumers are still buying
conventional (non-ecological) products and majority of them don’t check eco-labels before
purchasing but they are willing to pay more for ecological and organic foods. Thus, CSR and
green marketing affects consumer buying behavior through different ways.

Suggestions for future research: The similar research can be performed by adopting
qualitative data from company’s experts to record their perspective about CSR and green
marketing. Moreover, it would be interesting to investigate multiple retail companies
operating in different cities. Furthermore, it could give innovative results, if the study
investigates the link of trust and loyalty on consumer behavior, as they are the key
components in consumer purchase decision.

Contribution of the study: This study identifies and explains the concept of CSR and the
important elements of CSR in grocery retailing. The novel concept of green marketing and
ecological products has been studied in relation to consumer behavior. The investigation of
CSR and green marketing on consumer behavior is a unique combination which has not
investigated extensively within the field of grocery retailing.

Key words: Corporate Social Responsibility (CSR), Green marketing, Environmental
friendly products, Eco-labels, Grocery retailing, Consumer behavior.
Table of Contents

Chapter 1. INTRODUCTION .............................................................................................. 1
1.1 Background ....................................................................................................... 1
1.2 Problem formulation ......................................................................................... 4
1.3 Importance of the study .................................................................................... 5
1.4 Purpose and aim of the study ............................................................................ 5
1.5 Limitations ........................................................................................................ 6
1.6 Outline of the study .......................................................................................... 7
Chapter 2. LITERATURE REVIEW ..................................................................................... 8
2.1 Introduction to Corporate Social Responsibility (CSR) ................................... 8
2.1.1 The pyramid of Corporate Social Responsibility ............................................. 8
2.1.2 CSR in Retailing ............................................................................................. 10
2.1.3 Theoretical Framework ................................................................................... 12
2.1.4 Evidence of socially responsible behavior in retailing ................................... 13
2.1.5 Dimensions of CSR in the Grocery Industry .................................................. 14
2.1.6 CSR and stakeholder—consumer ................................................................... 16
2.2 Green Marketing ............................................................................................. 18
2.2.1 Ways to go Green ........................................................................................... 18
2.2.2 Eco labels in green marketing ........................................................................ 19
2.3 Relationship of Green Marketing with segments of consumers ..................... 20
2.4 Relationship of CSR with consumer behavior ............................................... 22
Chapter 3. METHODOLOGY ............................................................................................. 24
3.1 Research strategy ............................................................................................ 24
3.2 Quantitative research ...................................................................................... 24
3.3 Case study ....................................................................................................... 25
3.3.1 Characteristics of case study ........................................................................... 25
3.3.2 Advantages and disadvantages of case study ................................................... 26
3.4 Data collection .................................................................................................. 26
3.5 Questionnaire design ........................................................................................ 27
3.6 Data analysis and interpretation ....................................................................... 29
3.7 Classification of Questions asked in Questionnaire ......................................... 30
3.7.1 First Category ................................................................................................... 30
3.7.2 Second Category ............................................................................................... 30
3.7.3 Last Category .................................................................................................... 31
3.8 Reliability and validity in quantitative research ............................................... 31
Chapter 4. EMPIRICAL STUDY ........................................................................................ 33
4.1 The choice of the case company, ICA AB ...................................................... 33
4.1.1 Background about ICA Group AB .................................................................. 34
4.1.2 ICA Sweden ..................................................................................................... 34
4.1.3 ICA Kvantum .................................................................................................. 35
4.2.1 ICA’s commitment with Corporate Responsibility (CR) ................................ 35
4.2.1 Economic responsibilities ................................................................................ 35
4.2.2 Legal and Ethical responsibilities .................................................................... 36
4.2.3 Philanthropic responsibilities .......................................................................... 36
4.3. ICA’s commitment with CSR in Retailing ...................................................... 36
4.3.1 Environment .................................................................................................... 36
4.3.2 Product ............................................................................................................. 37
4.3.3 Stakeholders - Customers ................................................................................ 37
4.3.4 Employees and suppliers ................................................................................. 38
4.3.5 Diversity .......................................................................................................... 38
4.3.6 Community ...................................................................................................... 39
4.4 ICA’s note on changing consumer trends ........................................................ 39
4.4.1 Short term trends ............................................................................................. 40
4.4.2 Long-term trends ............................................................................................. 41
4.4.3 Customer strategies .......................................................................................... 41
4.5 Results of the Questionnaires .......................................................................... 43
4.5.1 Demographic Information ............................................................................... 43
4.5.2 Corporate Social Responsibility ...................................................................... 47
4.5.3 Green marketing and ecological products ....................................................... 48
4.5.4 Consumer behavior towards CSR and green marketing .................................. 50
4.5.5 Respondents’ comments .................................................................................. 52
4.5.6 Respondents’’ suggestions about Environmental improvement ..................... 52
4.5.7 Respondents’ suggestions about the improvement of Green and Ecological
products ................................................................................................................................ 53
Chapter 5. DISCUSSION AND ANALYSIS ...................................................................... 55
5.1 Incorporation of CSR in grocery retailing (ICA Kvantum) ........................... 55
5.1.1 Key areas of CSR in Grocery Retailing .......................................................... 56
5.1.2 Environment ................................................................................................... 56
5.1.3 Product ............................................................................................................ 57
5.1.4 Employees and Suppliers ................................................................................ 57
5.1.5 Diversity ......................................................................................................... 57
5.1.6 Community ..................................................................................................... 58
5.1.7 Non- domestic operations ............................................................................... 58
5.2 Importance of CSR perceived by consumers.................................................. 58
5.3 Green marketing and ecological products ...................................................... 59
5.4 Impact of Green Marketing on consumer behavior ........................................ 61
5.5 Impact of Corporate Social Responsibility on consumer behavior ................ 61
5.6 Significance of CSR and Green marketing on consumer behavior ................ 62
5.7 Suggestions for the improvement of environment ......................................... 63
5.7.1 Suggestions for the improvement of green and ecological products .............. 63
Chapter 6. CONCLUSION AND COMMENTS ................................................................. 65
6.1 Impact of CSR & Green marketing on Consumer Behavior ......................... 65
6.2 Contributions of the study ............................................................................. 68
6.3 Theoretical and Managerial Implications ...................................................... 68
6.4 Societal Implications ..................................................................................... 69
6.5 Reflections on the study & Suggestions for Future Research ....................... 70
REFERENCES ..................................................................................................................... 71
APPENDIX 1 ....................................................................................................................... 83
APPENDIX 2 ....................................................................................................................... 88
LIST OF FIGURES
Figure 1: Structure of the study……………………………………………..........................7
Figure 2: Carroll’s CSR Pyramid …………………………………………………..............9
Figure 3: Theoretical Framework ………………………………………………..............12
Figure 4: Model of the cognitive perspective of environmental products…………………21
Figure 5: Respondents’ Gender …………………………………………………............... 43
Figure 6 Respondents’ Age…………………………………………………...................... 44
Figure 7: Respondents’ Nationality…………………………………………………...........44
Figure 8: Respondents’ possession of ICA card…………………………………………...45
Figure 9: Respondents’ Education…………………………………………………............46
Figure 10: Respondents’ Occupation………………………………………………............46
Figure 11: Importance to ICA Kvantum’s CSR activities……………………………..........47
Figure 12: Responsibility for the betterment of environment & society………………........48
Figure 13: Purchase of non-environmental friendly products………………………………48
Figure 14: Environmental & Organic labels………………………………………………...49
Figure 15: Factors affecting purchase decision…………………………………………......50
Figure 16: Ecological & Green products………………………………………………........50
Figure 17: CSR activities by ICA Kvantum…………………………………………...........51
Figure 18: Recommendation of ICA Kvantum………………………………………..........52
LIST OF ABBREVIATIONS
ASDA Asquith and Dairies
Ch Chapter
COOP Consumer Co-operatives
CO2 Carbon-di-Oxide gas
CR Corporate Responsibility
CSR Corporate social responsibility
E.No. European number used in foods
EPA Environmental Protection Agency
GFSI Global Food Safety Initiative
GMO Genetically Modified Foods
ICA AB InköpsCentralernas AktieBolag
KRAV Kontrollföreningen för Alternativ Odling
KNEG Klimatneutrala Godstransporter på väg
MAX Max Havelaar Foundation member of the Fairtrade
Labelling Organizations International
NGO Non- governmental Organization
R&D Research and Development
TCO Tjänstemännens Centralorganisation
1 INTRODUCTION

This chapter provides an overview of the topic. It highlights the impression of CSR, Green
Marketing and their impact on consumer behavior. This background leads to the
identification of the problem in this area. After problem identification, I present the aim and
objective of this study, followed by the formulation of research questions. In the end, I discuss
the limitations of this research and a structure/outline of this work.

1.1 Background
Corporate Social Responsibility (CSR) has a long and diverse history among business
communities. The concept of CSR is getting varied and gaining attention among various
fields. In the field of formal writing, it started with the issue of Social responsibility and this
transformed later into CSR. Now it is often seen in different countries mostly in develop
countries of the world (Carroll, 1999, p. 268).

Business communities are contributing to CSR by maintaining healthy and clean environment
in order to build a better society. The actions taken by European Union are appraised by
European countries and this turns them to recognize their social responsibilities and integrate
them into their business identity. This responsibility is more towards ecological products and
most importantly to all the stakeholders of the company. Companies are engaging into CSR
practices due to the effect of globalization and fierce competition in internal and international
market having a belief that it can pay them off in the long run. Having a major focus on
generating profits, companies are contributing to better society and environment
simultaneously by simply integrating CSR into their corporate strategies and business
operations. This strategic integration can turn into investment and long-term success
(Commission of the European Communities, 2001 p. 4).

According to commission of the European communities (2001, p. 6) CSR is defined as “A
concept whereby companies integrate social and environmental concerns in their business
operations and in their interaction with their stakeholders on a voluntary basis”.

1