Millennials perceptions - PARADIS.pdf - studia - yeciu

Refereed paper – 5th International Academy of Wine Business Research Conference, 8‐10 Feb. 2010 Auckland (NZ)

Millennials' perceptions to environmentally responsible winery practices: An exploratory study

Linda Nowak, Sandra Newton and Armand Gilinsky

Contact: linda.nowak@sonoma.edu

The purpose of this exploratory study is to ascertain the existence and strength of the relationship

between environmentally responsible winery practices and Millennials’ perceptions. A methodology for

grouping participants based on winery website information and gender is developed. Five hypotheses

regarding brand perceptions are tested via website evaluations using a survey instrument. Preliminary

results from 149 Millennials indicate that perceptions about product quality, consumer trust, and brand

equity are positively related to perceived web site quality. Positive expectations regarding a winery’s

environmental practices appear to increase Millennials’ purchase intentions.

Key Words: Wine Marketing, Brand Equity, Millennial Consumers, E‐Commerce, Environmental

Responsibility

Introduction

In the global marketplace of wine, how does a wine brand differentiate itself from the competition? As

profit margins shrink due to intensifying competition and unfavorable economic and trading conditions,

each winery must make strategic choices about differentiating itself in a crowded market. Many rivals

attempt to distinguish themselves via superior product quality, awards, origin or appellation, and overall

image. Some try to capitalize upon community involvement and charitable giving. Some are using an

emerging differentiation strategy encompassing organic and pro‐environmental practices that are said

to be incurring incremental production costs (Storchmann, 2008).

Many U.S. wineries have developed web sites in an effort to build a customer base and to

encourage consumers to visit the tasting room or buy direct. Tapscott (1998) emphasizes that the

Millennial generation, i.e., those born between 1977 and 1999, is the first group of consumers to grow

up immersed in a digital and Internet‐driven world. Millennial consumers evince a high comfort level

with respect to gathering information from the web (Lancaster and Stillman, 2002; Jayson, 2006). In the

U.S., Millennial consumers are the largest by population, 76 million, and have annual incomes

approximating $211 billion (Harris Interactive, 2001). Millennials are therefore an important and

emerging demographic target market for the wine industry; recent wine consumption growth in the U.S.

has been attributed in part to the Millennials (Saad, 2005; Wine Market Council, 2008). According to

Adams (2004), Millennials grew up with organic foods and are a powerful force in shaping trends for

food and beverage manufacturers. Are Millennial consumer reactions likely to be more favorable to

those wineries professing to be environmentally friendly (e.g., organic, biodynamic, eco‐friendly,

sustainable) than to those who do not promote themselves as such?

We now turn to a brief review of the literature on consumer trust, brand equity, purchase

intentions, environmental benefits, and gender differences in purchase decisions based on perceptions

of social responsibility. This is followed by the development of five hypotheses for testing. We then turn

to the selection and composition of a sample of Millennial wine consumers, followed by an innovative

method for grouping respondents based on type of website under evaluation. Results from hypothesis

testing are presented and discussed. We close with preliminary observations and suggestions for further

research, noting implications for wine businesses marketing managers.

RELEVANT RESEARCH ORIENTATIONS

How does a winery catch the attention and then win the hearts of consumers? Building a strong

relationship with consumers requires: (1) understanding their shopping patterns, attitudes and beliefs,

and buying behaviors, and (2) responding to those behaviors. By understanding wine consumers’

attitudes, wineries may learn to meet customers’ expectations for the type of business practices that

lead to positive word of mouth, wine club membership longevity, and repeat purchases. Wine quality,

service, and overall wine country experience are positively related to brand building (Getz, Dowling,

Carlsen, and Anderson, 1999). Consumer perceptions of wine quality coupled with perceived value are

positively related to consumer trust (Nowak and Washburn, 2002). Aaker (1991, 1996) describes brand

equity as brand loyalty, brand awareness, perceived quality, brand associations, and other specific brand

assets. Brand equity is alternatively described as the “incremental value added to a product because of

its brand name” (Farquhar, 1994). Brand equity can increase cash flow to the firm because of consumer

loyalty (Simon and Sullivan, 1993) and create competitive advantages based on non‐price competition

(Aaker, 1991). Its value may be reflected in higher prices that customers are willing to pay for a

particular brand, or via a commitment toward a brand that is difficult to articulate in measurable terms.

Wine quality, trust in the winery, service quality, and fair pricing are significant contributors to a

winery’s brand equity (Nowak and Washburn, 2002 ; Nowak, Thach and Olsen, 2006). In the process of

“doing something good for the environment,” wineries may increase awareness for wine brands and

build intangible assets such as brand equity, employee commitment, and trust or goodwill among

opinion leaders and decision makers (Meenaghan, 2001). Pro‐environmental winery practices may also

positively affect the image of the winery and its wines. For example, involvement in the arts such as

ballet or classical music has been found to be an effective way to transfer this “sophisticated” image to

the sponsor (Meenaghan and Shipley, 1999). Perceptions of a winery’s web site quality, and expected

consequences of the winery’s pro‐environmental actions are hypothesized to be predictors of increased

brand equity and increased purchase intentions (see Table 1 for a summary of the literature on these

topics). The research framework above lends support for the proposed hypotheses, which are outlined

in Table 2 in the Results section.

Table 1. Summary of the literature used to develop hypotheses

Independent

variables

Dependent variables

Authors

Consumer Trust Stakeholder relationships

Young, 1995

Schurr and Ozanne, 1985; Dwyer, Schurr, and Oh,

1987

Buyer‐seller relationships

Commitment formation

Achrol, 1991; Morgan and Hunt, 1994

Services marketing

Berry and Parasuraman, 1991

Intra‐organizational relations Moorman, Zaltman, and Deshpande 1992

Pro‐environmental decisions Hosmer, 1994

Osterhus, 1997; Nowak, Fucciolo, and Ponsford,

2000

Adoption of social causes

Ottman 1992; Stisser 1994; Thorson, Page, and

Moore, 1995

Source credibility

Lynch and Horton, 2002; Everard and Galletta,

2006

Website design

Brand Equity

Pro‐environmental practices Meenaghan, 2001

Community support for the

arts

Meenaghan and Shipley, 1999

Visible use of product or

service

Lemon, Rust, and Zeithaml, 2001

Loyalty and purchase

behavior

Nowak and Washburn, 2002

Purchase

Intentions

Satisfaction with winery visit Nowak and Newton, 2006

Web site quality

Nowak and Newton, 2008

Impact on environment

Nielsen Company, 2008

Millennials and organic foods Adams, 2004

Environmental vs.

Economic Benefit

Costs outweigh behavior

change

Osterhus, 1997; Schwartz, 1977; Rangan, Karim,

and Sandberg 1996

Price,

quality,

and

Ottman 1992; Roberts 1996a

convenience

Consumer ability to change Roberts 1996b

Consumer price sensitivity

Nielsen Company, 2008

Gender differences Socially

responsible

Roper Organization, 1992

consumers

Cause‐related marketing by

small firms

Nowak, Fucciolo, and Ponsford, 2000

“Green” food and drink

purchase behavior

Full Glass Research, 2007

METHODOLOGY

A convenience sample of one hundred and fifty undergraduate and graduate students of a

public university in northern California participated. Participants, Millennials, who are typically adept

with maneuvering around the World Wide Web on a routine basis, were given a two‐page printout of

winery web pages, asked to read the information carefully, and then fill out a questionnaire evaluating

the winery web site on the variables of interest. Participants also provided demographic information:

age, gender, and approximate number of wineries they had visited in their lifetime.

Four different sets of winery web pages were randomly distributed to participants. Group 1

received the homepage of a well‐known local winery, and the pages contained information about its

sustainable growing and wine making practices. Group 2 received the home page of the same well‐

known local winery; however, this time the pages did not mention sustainable business practices, but

instead listed upcoming concerts and events. Group 3 received the same homepage as Group 1, with

the name of the winery removed and an “unknown” winery name inserted in its place, and pages

contained information about sustainable growing and wine making practices. Group 4 received the

same home page as Group 2, but again with the “unknown” winery name, and the pages did not

mention sustainable business practices, but instead listed upcoming concerts and events.

One questionnaire was incomplete, and was removed from the analysis, leaving Group 1 with 38

respondents, Group 2 with 36, Group 3 with 37, and Group 4 with 38, for a total number of 149 valid

responses from a sample of 150. Average age of each group was 22 years old and each group was

balanced between males and females. The number of previous winery visits ranged from 0 to 100, and

the average number of visits was 6.82.

RESULTS

SPSS 17.0 was used to analyze the data and test the hypotheses. Exploratory factor analysis was

conducted using promax rotation with results of with high loadings on hypothesized factors and low

cross‐loadings. The overall factor solution for the seven factors explains 78% of the variation. Items

measuring each construct were adapted from existing scales where possible and developed based on

previous literature. The items to each construct, the author(s) of the items, and the construct reliability

scores, which ranged from a Cronbach’s alpha of 0.75 to 0.92, are listed in the Appendix. Inter‐

correlations between the constructs using Pearson Correlations ranged from ‐0 to .556.

Results from the hypothesis tests are summarized in Table 2; alpha cutoff α = .10 was used in

the analyses.

Table 2. Hypotheses summary

Hypothesis

Results

H1a: Increased perceptions of web site quality will lead to increased levels of trust and

increased levels of perceptions of product quality.

Supported

H1b: Positive evaluations of the winery’s web site will lead to increased brand equity.

Supported

H2: Positive evaluations of the winery’s pro‐environmental business policies will lead to

increased brand equity for the winery.

Not

Supported

H3: Wineries that profess their sustainability practices on their web sites will have higher

levels of purchase intentions than wineries that do not supply this information.

Supported

H4: Consumers who believe that the winery’s pro‐environmental business practices will

make a difference will have increased purchase intentions.

Supported

H5a: Gender will be a predictor of brand equity for a winery that adopts pro‐

environmental policies.

Supported

H5b: Gender will be a predictor of purchase intentions for a winery that adopts pro‐

environmental policies.

Supported

The four omnibus MANOVA test statistics were significant with an F‐Statistic = 2007.868 and Sig.

= .000, validating support for H1a. Its univariate tests were conducted for the dependent variable, trust;

it was significant at (F‐Statistic 3.626, Sig. = .016, but the dependent variable, product quality was not

significant (F‐Statistic 1.371, Sig. = .256). Analysis of variance (ANOVA) or regression analyses were

conducted to test the remaining hypotheses. For Hypothesis 1b, the model was found significant with F‐

Statistic 3.020, Sig. = .000, explaining 20.6% of the variance in the model (Adjusted R 2 ) offering support

for H1b. For H2, the model was found not significant with F‐Statistic .907, Sig. = .439; H2 was not

supported. For H3, the model was found significant with F‐Statistic 3.259, Sig. = .023 with an Adjusted R 2

= 4.4% offering support for H3. For H4, purchase intentions as the dependent variable and

consequences of the company’s actions, and a dummy variable for the groups were entered as main

effects independent variables. Here the model was significant with an F‐Statistic 2.004, Sig. = .006 with

an Adjusted R 2 = 15%, offering support for H4.

For H5a with brand equity as the dependent variable and gender, a dummy variable for the

groups, and interaction effects between the dummy variable and gender entered as the independent

variables, the test was significant with F‐Statistic 1.818, Sig. = .088 with an Adjusted R 2 = 3.7% offering

support for H5a. For H5b with purchase intentions as the dependent variable and gender, a dummy

variable for the groups, and interaction effects between the dummy variable and gender entered as the

independent variables. Here the test was significant with F‐Statistic 2.617, Sig. = .014 with an Adjusted

R 2 = 7.1% offering support for H5b.

The estimated marginal means of dependent variables product quality, trust, brand equity, and

purchase intentions are plotted for the four groups to visually depict the differences found in their

respective analyses and are shown in Figure 1. Hypothesis 5a and 5b tested gender as predictor of

dependent variables brand equity and purchase intentions; the estimated marginal means are plotted

for the four groups and males and females to visually depict the differences found in their respective

analyses and are shown in Figure 2.

5.5

5.3

4.8

4.5

4.3

3.8

3.5

3.3

Gp1

Gp2

Gp3

Gp4

2.8

5.15

4.61

4.93

ProdQual

F,1

M,1

F,2

M,2

F,3

M,3

F,4

M,4

Trust

5.11

4.41

4.79

4.43

BrandEq

4.1

3.4

3.71

3.63

3.65

3.34

3.04

3.74

B_Equity

3.78

3.67

3.51

3.43

4.87

3.9

4.57

3.8

3.95

3.76

3.69

3.32

PurIntent

4.69

4.14

3.97

3.4

P_Intention

Figure 1. Estimated marginal means for Figure 2. Gender (F,M)*Group (1,2,3,4) means for

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