Linking Customer’s Cognitive, Environmental Attitude and Repeat Purchase of Green Innovative Product

Abstract

Pertalite RON 90 is a green innovative product (GIP) developed for Indonesia’s motor vehicles by Pertamina as a way to eradicate air pollution caused by vehicle fuels that are not environment friendly. This study investigates whether Indonesian customers’ environmental attitude play the role of mediator on the relationship between customers’ cognitive evaluation and their repeat purchase behaviour of Pertalite RON 90. Self-administered questionnaires were distributed to willing motor vehicles drivers in Jakarta; the respondents were those who have been and continued to buy Pertalite. In this survey, customer’s cognitive evaluation was measured through product, price, place and promotion (better known as the 4Ps) constructs. From SmartPLS-SEM analyses on 469 usable data, the study found that environmental attitude mediated the relationship between two cognitive variables (product, price) and customer’s repeat purchase of Pertalite but not for promotion and place. The findings imply that for GIP, only product and price are important in Indonesian customers’ cognitive evaluation compared to promotion and place; and that it is important for Indonesia’s GIP players and government to focus on developing customers’ environmental attitude as this factor impacted on their customer’s purchase for the product. The study’s findings have a significant impact on the country’s petroleum refuelling industry, automotive industry, and government in particular, as well as for marketing researchers.

Keywords: Cognitiveenvironmental attituderepeat purchase

Introduction

Green innovative products (GIP) such as environmentally friendly petrol is starting to gain popularity and is growing in Indonesia’s consumer market. As the operator that provides petrol for the country’s consumption, PT Pertamina has started and continues to develop quality GIP in line with the government’s policy to achieve cleaner environment. Air pollution is problematic in Indonesia as the country is ranked 8^th place globally with an average mortality rate of 50,000 people every year, and that transportation emissions has been identified as the highest contributor to air pollution in Indonesia (Comparison…, 2016). P.T. Pertamina as the organization entrusted by the Indonesian government to find strategic solution to the country’s transportation emissions pollution problem has recently developed four types of vehicle petrol for the public; all of them are categorized as GIP; and that Pertalite RON 90 is one of them.

Since its launch in July 2015, Pertalite’s price fluctuates according to the value of rupiah in the market as it is not supported by government subsidies. The selling of Pertalite RON 90 is helped by its availability in many petrol stations; for instance, while it is sold and accessible only in 874 outlets today, the number continues to increase with time. Pertamina’s (2015) study shows that Pertalite is increasingly accepted by the public as the sale of Premium RON 88 is seen to decrease from 70% to 50.3% with the consumers switching to Pertalite RON 90. This indicates that Indonesian consumers are increasingly choosing GIPs despite no subsidies given, and that they are more likely to be green consumers in future.

Problem Statement

Rapid growth of vehicles has contributed to the chronic air pollution problem faced by Indonesia. The urgency to find strategic solution is critical as the country needs to lower its emissions level. P.T. Pertamina, the organization appointed by the Indonesian government to help solve this problem tackled this problem by developing GIPs with the ability to reduce motor vehicle exhaust emissions and are lead-free. Pertalite RON 90 is one of the four GIPs developed and sold by P.T. Pertamina. In general, the literature described green products as products that are less or not at all harmful to the environment compared to substitutes for the same product category. For instance, products are considered green due to either one or several of their attributes inherent to have low environmental impact or even none (Haws et al., 2014). In the case of Pertalite RON 90, it is designed to help tackle air pollution issues in Indonesia. As a GIP, its introduction benefits not only the environment but also creates business opportunities with a growing niche market targeting green consumers in the country.

As a new product, Pertalite’s success in the marketplace depends very much on the 4Ps (product, price, promotion, place) strategies applied by Pertamina for its consumers which are hoped can influence their cognitive evaluation of the product. The 4Ps are common marketing mix tools applied by businesses believed to be effective in influencing consumers’ purchasing decisions and their consumption behavior. For example, in consumers’ cognitive evaluation of the 4Ps, product component is important as consumers need to believe that the product possess characters that they want (e.g. environment friendly, quality, unique, reliable); price is important since consumers look for product that they consider worth buying despite the price tag (e.g. fairly priced, worth to invest in); place is important as consumers want access to the product (e.g. easily available for purchase; easily accessible through the number of petrol outlets offering the product in question); and lastly promotion is important since consumers learn about the ‘what’ and ‘how’ of the product through various means (e.g. GIP advertisements, educational campaigns on air pollution).

Consumers’ environmental attitude may also play a significant role in influencing GIP purchase even when they cognitively think that the 4Ps are important. Although previous research found companies and the automotive industry to adopt a green strategy, Lee & Yun (2014) found inconsistent findings on the relationship between consumer attitudes and environmentally friendly behaviour. There is also a lack of clarity on factors that determine actual buying behavior (Sriwaranun, Gan, Lee, & Cohen, 2015). Many past studies that analyse green purchasing behaviour were found to focus on investigating behavioural intentions as proxies for individual’s actual behaviour (Lu, Chang, & Chang, 2015; Schuitema & Groot, 2015). Of consumers found in the market, consumers who are environmentally conscious are defined as those consumers who consider the environment first in their personal consumption or those who try to use their power to make environmental changes which is evidenced by their purchasing behavior (Sloan, Bodey, & Gyrd-Jones, 2015). According to Li et al. (2017), the increasing amount of information available about a product or service can increase consumer’s willingness to make a purchase; in other words, this indicates that good service has an impact on individual’s behavior.

Cognitive evaluation and shared environmental attitudes are important in determining the consistency of behaviour like repeat purchase. Chiu, Wang, Fang, and Huang’s (2014) study for instance found that cognitive relationships and attitudes explain the importance of goals (benefits) in determining one’s behaviour. In addition, Barbaro, Pickett, and Parkhill’s (2015) study show that cognitive evaluation better predicts consumers’ environmental attitudes and their behaviour of green product consumptions. Consumers were found to be objective in judging products through their environmental impact. Even when consumers were willing to buy a “greener” product, their subjective evaluation were found to be based on the need to understand the factors that influence their eco-friendly purchasing decisions. Research on green consumption has also involved the application of established theories and models, most commonly based on theories of reasoned action (Ajzen & Fishbein, 1980) and theories related to planned behavior (Ajzen, 1991). For instance, Dagher & Itani’s (2012) study showed that consumers trying to purchase green products refer to the green products as those that can help provide them with an interpretation of and as a way to help maintain the condition of the environment.

According to Gillespie and Sprott (2013), consumers determine their purchases of green innovative products through intrinsic or extrinsic context. This is why Yoon (2012) explains that one’s evaluation of the condition attached to an object or event can occur consciously and that the evaluation can either be or cannot be separated from emotions. Furthermore, Luomala (2015) states that responsibility to the environment is an object, when instructed to do so, the cause of emotions can be cognitively constructed regarding the knowledge and perceptions gained in relation to the various attributes of individual judgments made directly or globally on the objects. Individual consumer’s cognitive evaluations may be triggered by the type of product to be purchased; in other words, consumers are allowed to consume a product based on how they judge its usability and benefits.

The literature acknowledged that environmental attitudes can be obtained from time to time; for instance, an individual’s environmental friendly behavior can be easily realized when one evaluates the income s/he has over the price tag of environmentally friendly products offered (Moser, 2015). Most studies focusing on the behaviour of green consumers have evaluated environmental attitudes based on the consumer’s social and economic factors (Peattie, 2010). A large number of studies have provided a strong view on the difference between products and prices that influence individual’s environmental attitudes (Dagher & Itani, 2012). In general, cognitive and shared environmental attitudes are important in determining the consistency of one’s purchase behaviour, namely, repeat purchase.

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Based on the literature, a framework is developed as featured in Figure 01 . As can be seen, this framework considers cognitive (4Ps) and environmental attitudes to be factors that shape individual’s repeat purchase behaviour. It is acknowledged in the literature that consumers find it difficult to properly assess the environmental impact of a product (Tobler, Visschers & Siegrist, 2011). In such situation, they would depend more on cognitive evaluation they can make on the product, like the 4Ps (product, price, promotion, place) strategies applied by companies. In this study, consumers’ environmental attitude toward product is investigated as a mediator between their cognitive evaluation and repeat purchase behaviour of GIP. Four hypotheses are then developed to be tested in the study:

H1: Environmental attitude mediates a positive and significant relationship between consumers’ cognitive evaluation on product and their repeat purchase behavior of GIP.

H2: Environmental attitude mediates a positive and significant relationship between consumers’ cognitive evaluation on price and their repeat purchase behavior of GIP.

H3: Environmental attitude mediates a positive and significant relationship between consumers’ cognitive evaluation on promotion and their repeat purchase behavior of GIP.

H4: Environmental attitude mediates a positive and significant relationship between consumers’ cognitive evaluation on place and their repeat purchase behavior of GIP.

Research Questions

In general, this study attempts to answer one broad question, that is – Does consumers’ environmental attitude play a role of mediator between their cognitive evaluation of GIP (represented by 4Ps – product, price, promotion, place) and repeat purchase behaviour?

Purpose of the Study

To investigate the role of environmental attitude in mediating the relationship between consumer’s cognitive evaluation (product, price, promotion, place) and repeat purchase decision of GIP.

Research Methods

The target population for this study were four-wheeled vehicle consumers who consumed Pertalite RON 90 fuel. The survey was conducted at 22 fueling stations in the Jakarta area. Jakarta was chosen as it is the capital city of Indonesia with a large consumer population of four-wheeled vehicles compared to other cities in the country. According to latest statistics, in 2014, the city has 5,614,345 four-wheeled vehicles (jakarta.bps.go.id/backend/pdf_publikasi/Statistik-Transportasi-DKI-Jakarta-2015.pdf, retrieved on 19 July, 2017). Questionnaire items were adapted from past studies. Each item in the questionnaire was measured using a 5-point Likert scale (1=strongly disagree to 5=strongly agree). For data analysis, preliminary analysis was performed to assess the potential effects of common method bias and scale reliability. This was followed by running confirmatory factor analysis (CFA) to examine the validity of the measurement model before testing the hypotheses using structural equation modelling (SEM).

Findings

The profile of respondents (Table 01 ) is developed from data collected from 469 respondents. In brief, the majority of respondents were found to be mainly female, married, aged between 41-50 years old, earning between 10.000.001-15.000.000 IDR, educated with at least Bachelor degree, and are serving as the civil servants.

Discriminant and convergent validity tests were used to evaluate the model’s construct validity. Table 02 displays the results on the measurement of the model assessment showing the summary of the average extraction variance or AVE (to test for convergent validity), CR and Cronbach's Alpha values for the study as well as the factor load values. For convergent validity using AVE, all item values were concluded good since they are all are above 0.50 of the acceptable score following suggestion from Hair, Hult, Ringle, & Sarstedt (2014). Internal consistency reliability was tested using Composite Reliability (CR) and Cronbach's Alpha; the results show that all of the latent variables exceed the minimum limit set at 0.70 which indicates that all constructs have a high level of internal reliability (Hair et al., 2014).

As for the Heterotrait–monotrait ratio (or HTMT), all of the HTMT index obtained for the six constructs were found to be less than 0.85. As such, it is concluded that the requirements had been met. The results are displayed in Table 03 .

This study had developed four hypotheses to test the mediating role of environmental attitude on the relationship between Indonesian consumers’ cognitive evaluation (represented by product, price, promotion, place) and their repeat purchase of GIP represented by Pertalite RON 90. All of the hypotheses were tested using a structural measurement model in Smart-PLS-SEM (Table 04 ).

As can be seen from indirect effect results shown in Table 04 , the study found support only for two hypotheses, namely, for hypotheses 1 and 2. For hypothesis 1, the study found that the relationship between cognitive evaluation made on GIP product and repeat purchase of GIP was mediated by consumer’s environmental attitude with significant t-value of 4.845 value which is above the t-value (≥ 1.96) required. Similar support for Hypothesis 2 was concluded as environmental attitudes was found to mediate the relationship between cognitive evaluation of price and repeated purchase with a positive and significant t-value at 3.059 (above the recommended t-value ≥ 1.96). Unfortunately, the study found no support for both hypotheses 3 and 4. In the case of hypothesis 3, it is not supported as the t value for relationship tested on cognitive evaluation of promotion and repeat purchase proposed to be mediated by environmental attitude was at 0.674 which is less than 1.96. Lastly, similar to hypothesis 3, result on the mediating effect of environmental attitude on the relationship between cognitive evaluation of place and repeat purchase for hypothesis 4 shows a t-value of only 0.543 which is again less than the recommended t-value of 1.96. The findings are in line with Chen, Yen, Kuo, Paolo and Capistrano (2016).

Conclusion

The study concludes that consumers’ environmental attitude plays the role of mediator for only two of the four marketing mix tools used by Pertamina; namely, product and price; to promote repeat purchase of Pertalite RON 90 in Indonesia. The results indicate not only the mediating importance of environmental attitude in the selling of GIPs but also provide supporting evidence for past studies as it is found that consumers evaluated GIPS based cognitive judgments, particularly on products and pricings (e.g. Peattie, 2010; Dagher & Itani, 2012; Moser, 2015). In sum, both consumers’ cognitive evaluations and environmental attitudes are important in determining their purchase behaviour, in this case, repeat purchase of GIP. The findings imply that for product like GIP, consumers focus mainly on the products and prices only, rather than evaluating the whole components of the 4Ps. Consumers look for GIP that is of quality, environmental friendly, perceived to be reliable and help in reducing pollution. The price factor is important since consumers look one that is appropriately priced and worthy of buying (matches the benefits and quality promised at the price it is offered). It is interesting to find that consumers in Indonesia accepted Pertalite’s higher pricing although they know that the product is sold without any subsidy from the government (the price fluctuates according to rupiah value) as it categorised as premium quality product. The 4Ps strategy does not work for promotion and place in Indonesia. Possible reason may be due to the emphasis of the investigation was on consumers’ repeat purchase behaviour. It can be safely assumed that consumers may already have all the information or knowledge they need about green innovative products since they have experienced using it at least once; as such, promotion (they know what kind of promotion offered if they buy the product) and place (they know where to find the petrol stations that sell GIPs like Petrolite RON 90) are no longer considered significant.

For future research, investigation on other GIP purchases can be carried out. Other new cognitive factors in addition to the 4Ps can also be examined. Future researchers can also include the emotion or affective part of consumers’ evaluation of GIP as suggested in the theory of Cognitive-Affective-Behaviour. This way, a more holistic view of how consumers decide and behave in repeat purchase situation when mediated by environmental attitude will be better understood. Extending the model to include the role of subjective norm or perceived behavioural control or any other variables as variables to be studied is also recommended to achieve the holistic understanding of this phenomenon. This is in line with the fact that behaviour of consumers is due to many interrelated factors, rather than just one or few.

For marketing professionals and related industries (e.g. the automotive industry, government and vehicle fuel providers) that manufacture or promoting GIP like Pertalite RON 90 or similar, developing environmental attitude is important; to do this, they must find ways to make consumers aware of their responsibility to protect the environment and that (re)purchasing of green products is an example of that responsibility. To do this, industries can continue with educating the public at large via many means like environmental related campaigns through social media, through informal and non-formal education on environmental issues and promoting community participation on relevant issues. However, this must be supported by industry’s effort to upgrade the quality and environmental characteristics of their green products.

Acknowledgments

Thank you to Telkom University for funding the publication of this article

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