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2.3
Energy Labelling Programmes and Their Effective Implementation: Perspectives on Consumer Behaviour
by Kwisun Huh, Senior Researcher, Institute of Environmental Engineering, Hankuk University of Foreign Studies, Seoul, Republic of Korea
2.3.1
Introduction
During the past decade, introduction of energy standards as well as energy labelling programmes for electrical appliances have played an increasingly important role in national energy efficiency promotion strategies both in developed and developing countries. The purposes of energy labelling programmes are multifaceted. At the national level, the main objective is energy conservation and reduction of carbon dioxide emissions. For appliance manufacturers and suppliers, labelling programmes may increase business opportunities, while for consumers labelling programmes are to provide additional product information and result in better product choices and higher consumer satisfaction. In doing so, not like other energy policy or regulation, the whole scheme of energy labelling programme anticipates improved consumer awareness and consumer's purchasing decision towards energy efficient products ultimately play as a pulling force in the market. Which means improved consumer awareness and changing purchasing behaviour would be a key element of success of the programme.
However, in the case of energy efficiency, typically technology considers first then considers the actions of the market and of government. Technical-economic mindset dominates energy policy and its analysis and there are not much room left considering consumer's point of view (or human factor). This explains partially, despite of huge time, efforts and financial input why previous technical and economical energy policies including energy labelling programmes have not been successful nor consistent to change individual consumer behaviour.
In its nature, the issue of sustainable energy consumption is multi-faceted and multi-dimensional interactions among technology, individual, groups, institution, society and government as well as the outcome influenced by cultural, social practices and human feelings. Yet the same nature has been largely overlooked and been a vital blind spot in energy policy. Given this as background, this brief paper is to impart psychological perspective of consumer behaviour for promoting effective energy labelling programmes.
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2.3.2 A psychological perspective of consumer behaviour
From a perspective of behavioural psychology, human organism as a system that is acts upon the environment. The result of this is a continuous process of interaction in the environment of an almost infinite array of stimuli to which individual acts with an infinite array of responses. The environmental features or inputs to which one is in some way responsive are stimuli. This input is transformed through complex internal processes that lead the organism to react in some way or other. This reaction becomes output--the response or behavior that occurs as a result of the process of the input of stimuli. As a result, the response or output is fed back into the organism, which may then react to its own response by emitting a new response that may be the same as the previous response or that may intensify it or modify it in some other way in which this whole feedback process forms one's reinforcing system (Figure 2.3.1).
Each of us is organized in such a way that we are more likely to emit certain responses to any stimuli in the environment because they, than the other, are more appropriate to the stimuli that satisfy our needs. Theses more appropriate responses are rewarded or reinforced. Any changes in behaviour that result from interaction with the stimulus, response, and reinforcement, is the basic event that makes learning possible.
Figure
2.3.1 Human organism as a system
Consumer reaction on the energy label and following purchasing behaviour can be analyzed in same manner. It can be assumed that an energy label, as one of many product stimuli, could draw out a series of consumer responses (Figure 2.3.2). From the consumer's initial notice of energy label (stimulus) to the final purchasing behaviour (response), the process of response is complicated and mediated by a host of internal and external influences and constraints. Any behaviour as an outcome of stimulus-response process is comprised of three behavioural dimensions; physical, cognitive and affective which are reflected as awareness, knowledge and preference.
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Figure
2.3.2 Consumer behaviour as a system
2.3.3 The process of energy label information
Despite of the availability of various types energy labels and sufficient amount of information on products, relatively little efforts were given to assess how these information were perceived, understood, and utilized by consumers. Utilizing aforementioned three behavioural dimensions as criteria, the effectiveness of energy labelling programme could be evaluated. In this section will review the process of three behavioural dimensions of stimulus -response (how consumer perceive, understand, and use the label information) and also critical factors on each dimension to promote effective energy labelling programme.
2.3.3.1 Awareness: label recognition
In this beginning stage of the response process, the consumer is exposed to the product stimulus for the response to occur (i.e., new product and/or the energy label). The consumer is aware the physical existence, figures and characteristics of the energy label. Label recognition by individual consumers ranges from simple awareness of the physical existence of a label to complete familiarity with the label and/or energy efficiency programme.
Recognition of the energy label by a consumer is important because it is the essential initial step if any further meaningful process of response is ever to ensue. However, awareness occurs in a short period of time and involves processing little information. Therefore the response is simple recognition and notice of the stimulus may generate just enough interest to carry over to the next steps. So the critical point on this stage would be "Are consumers aware of the energy label?"
Previous studies showed that differences in consumer's awareness of energy labels among different countries. Why are there differences? What are the causes? It may be poor label design, wrong colour or simply too small size and poor location? Whatever the reason is, visibility so that consumers are aware of the label is very important first step of success of labelling programme.
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2.3.3.2 Knowledge: label comprehension
This next stage is whether consumer knows and understands what the label says. Knowledge is a basic underpinning to most explanations of consumer behaviour. Knowledge of the product stimulus means acquaintance with and understanding of the product. Simple notice of the existence of an energy label without any further meaning on the part of the consumer is not likely to result in any impact on the consumer's purchasing decision.
One of the impeding factors of success of labelling programme is unintended consumer's misunderstanding. Understanding the stimulus and use of information for the individual's purchasing decision will be important. Though the understanding and label comprehension process is largely based on individual consumer's previous learning experiences and ability, the way information is presented and introduced to consumers is vital. Energy labels should not be just perceived as a "yellow thing" on the product. Consumer should rather comprehend what the energy label says, understand what the numbers or the symbols on the label stand for and finally process this information for their own purpose or purchasing decision.
On the issue of label comprehension, the results of the review indicate that most consumers, regardless of country, showed their intention to use label information. Despite a consumer's desire to use the information, label comprehension can be difficult and frustrating. The consumer's lack of skill, insufficient label information and the complexity and diversity of the appliance market may all be factors contributing to these difficulties. Simplifying energy labels and at the same time providing relevant information to consumers may involve some unavoidable tradeoffs. However, the label which is simple enough to meet the needs of the general consumer and is also supported by enough complementary information to satisfy individual consumers' different information needs may work the best.
2.3.3.3 Preference: priority of energy efficiency
The consumer's favourable attitudes towards the energy label have developed to the point of preferring energy efficiency to other properties or possibilities. Even if the label information reaches the consumer, the consumer may not respond. Stimulus reception does not guarantee equal direct response. The related question of this stage is "Do consumer regard as energy efficiency in purchasing decision?"
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On subject of preference, it is important to take into account that people buy things not only for the properties or the monetary values of the product, but also for what they mean. Products vary in the degree to which social-symbolic meaning is important. Each consumer as an individual has different values and motivations that are influenced by society. This situation is reflected in each purchasing decision.
A consumer's preference created by energy labels may be measured by the priority given to energy efficiency over other factors. However that same energy efficiency number on the label could stand for variously between economic benefits, environmental concerns, equipment performance and product quality. Consumer preferences appear to depend on each country's economic and social system as well as on individual experiences with earlier appliance purchases. In general, a high percentage of consumers consider energy efficiency as a priority in appliance purchasing. Despite claims by some appliance manufacturers that "efficiency won't sell", a significant percentage of consumers said they were willing to pay a higher price for highly energy efficient appliances.
2.3.4 Promoting effective energy labelling programmes
Based on review of limited studies on impacts of energy label on consumer behaviour and three criteria of the effective energy label programme, ways of facilitating consumer response and promoting the effective implementation of energy labelling programmes will be summarized below.
2.3.4.1 User-friendly label: simple, easy, reliable information
The ultimate goal of the energy label is to provide the proper information to consumers. As a stimulus energy label serves important role of getting attention of consumer, providing necessary knowledge to make better choice via improving awareness of energy efficiency. Social psychologists and marketing professionals know that information is more likely to change behaviour when it is specific, vivid, and personalized.
Energy label should be designed for the benefit and the convenience of consumers. Many energy labels convey too much technical information. In many cases, consumers may not use the provided information. Only when Energy labels are simple and easy to understand, they will be processed as meaningful information so that consumer could utilize it in making decision. However, a simple label should be accompanied with supplementary in-depth information provided as brochures or user manuals. Variety of formal and informal information should be available such as energy labels, advertisement, campaign, brochure, comparative product test report and so on.
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Better delivery of messages and careful framing of energy information can also make it more effective. In each culture has different perceptive connotation/nuance on certain words, numbers, symbols, and colours. Although energy label is targeted to influence on each individual's purchasing decision, examine and understand general cultural characteristic of each society or country ahead of developing any energy labelling scheme would be beneficial.
Another crucial concern of label information is its reliability no matter how simple it is. Labels should not mislead or misinform consumers. The source of information, particularly its trustworthiness and credibility can make a great difference in the effectiveness of a message. This fact helps explain the strong influence of information from non-expert friends and relatives on purchasing household appliance decisions. Consumers tend to base their decision on information that captures their attention and wins their confidence.
2.3.4.2 Value add-on label: creating publicity
Purchasing a refrigerator or a washing machine in one country do not represent same meaning in another country as well as among different group membership within a society. Although energy efficiency may be the primary information on a product energy label, it could be related to other values such as monetary benefits, environmental impact, equipment quality, high technique and performance. If more criteria or values are added-on to the label information, more diverse consumers may be attracted. With information on additional values, energy labels would no longer be just about efficiency but would also convey social-symbolic meaning and "say something more".
Contrary to most economical incentive model, saving money is not the only motive that can be used to promote energy label information. This point is going to be especially crucial for the next decades because energy conservation efforts may not be helped along by positive association between the level of consumption and the social status among many countries. Many early energy information programs failed because they simply made information available, without serious effort to use psychological techniques to get the intended effort to pay attention (Dennis et al, 1990). With information what makes consumer to aware is not how much is made available, but how the information is conveyed.
Programme marketing and implementation can have a greater effect than a large financial incentive, such as creating energy efficiency as a new trend. Consumer is not only purchasing product for its service (function), but also for its symbol. If consumer could associates purchasing energy efficient product as a symbol of prestigious status or just as trendy and chic things to do, then investing higher premium cost would not be matter that much. Creating new value on energy efficiency by means of publicity, media advertisements, bring celebrity into play, and/or collaborative efforts among government, utilities, manufacturers, business and consumer organizations may therefore be very useful in developing and promoting energy labels and labelling programmes.
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2.3.5 Conclusion
As already reviewed, sustainable energy consumption cannot be achieved by means of promoting environmental awareness and improved information alone. To achieve the purpose of energy labelling programme it is obvious that collaborative works among each and every sector of society are necessary. Build up this collaborative relationship earlier in planning stage would be even more effective. From the very initial set off of the labelling scheme to the final stage of label layout, take consumer's point of view and regard consumer as one of stakeholders is important. By doing so consumers would be introduced the whole concept and the scheme of labelling programme and any necessary point consumer could input different perspectives. Most energy labelling programmes let in consumers only at the very final stage when they try out the label design. Energy labelling programme is not the information showed on the label only, it is the process of whole scheme.
Last but not the least point is that energy policy makers, appliance manufacturers and market should pay attention to the emerging trend of growing environmental consumerism in consumer purchasing behaviour. In any one country there exists a certain group of consumers who actively seek out products perceived as having relatively minimal impact on the environment. These groups of consumers ("green" consumers) have developed a keen interest in product quality and are rejecting companies and products with insincere, inaccurate or incomplete environmental action programmes.
The most significant implication for the market of this emerging "green consumerism" is that individuals are acting upon their values through the power of their purchasing decisions. Among "green consumers", products are evaluated not only on basis of performance or price, but also on the social responsibility of manufacturers (Shrum, L.J., et. al., 1995). This emerging "environmental consumerism" may have profound implications both for the way products are developed and marketed in the future and the way energy efficiency and energy labelling programmes are promoted. Utilizing this group as diffusion of energy efficiency could be win/win strategy for both business and consumers alike.
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References
Dennis, M.L., Sodeerstrom, E.J., Koncinski, W.S., Jr., & Cavanaugh, B. (1990). Effective dissemination of energy-related information: Applying social psychology and evaluation research. American Psychologist, 45, 1109-1117.
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Shrum, L.J., McCarty, J.A., and Lowrey, T.M., Buyer Characteristics of the Green Consumer and Their Implications for Advertising Strategy, Journal of Advertising, 26(2), Summer, 71-81, 1995.
Train, K.E., Atherton, T., Rebates, Loans, and Customers' Choice of Appliance Efficiency Level: Combining Stated and Revealed-preference Data, The Energy Journal, 16(1), 55-69, 1995.
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