Research
Working Papers
Levin Zhu, Bryan Bollinger, and Randi Kronthal-Sacco. “Loyalty in Sustainable Product Choice.” Job market paper.
We utilize household purchase histories across five consumer packaged goods (CPG) categories from 64,298 households across the US from 2015 to 2021 to investigate consumer loyalty towards sustainable products. For most of the product categories in our study, we find consumers on average exhibit loyalty towards sustainability claims ("sustainability loyalty") but not towards the brand of the product when it has a sustainability claim ("sustainable brand loyalty"). That is, households in our sample are more likely to purchase a sustainable product if their previous product purchased in the category was also sustainable, but they are relatively less likely to purchase a sustainable product compared to a non-sustainable product if the previous product purchased was from the same brand. We analyze a theoretical model of market segmentation and product line design that incorporates the descriptive evidence of low sustainable brand loyalty to explore the implications for firms and the optimal pricing policies and sustainability levels of their product line. We show low sustainable brand loyalty can lead to lower margins for sustainable products compared to non-sustainable products. Of particular interest, we show when consumers in the segment with higher sustainability valuations have similar preferences for sustainability to the low valuation segment, firms are incentivized to increase the sustainability levels (above efficient levels) as well as prices of their high sustainability products to keep separation between consumer segments. We discuss the managerial implications of our findings and outline future research directions.
Bryan Bollinger, Randi Kronthal-Sacco, and Levin Zhu. “Sustainable Product Demand and Profit Potential.” Revise & resubmit at Journal of Marketing.
In recent years, consumers have become much more interested in purchasing products produced using more sustainable practices, and much of the recent growth in consumer packaged goods (CPGs) within the United States has been from products with clearly labelled sustainability claims on their packaging. However, many categories still have low levels of sustainable product market share, with substantial geographic variation. This paper assesses the role of both the “profit potential” (which is determined by equilibrium quantity, price, and price elasticity) and the availability for sustainable products in explaining this heterogeneity as it relates to demographic variables. We estimate product and county-specific demand elasticities for six CPG subcategories. Within grocery stores, we find that the profit potential for sustainable products relative to non-sustainable products increases for at least three of six subcategories with income, Democratic vote share, and the fraction of the county that is white, college educated, and female; these demographic variables also predict sustainable product availability. These race and gender effects are absent in mass merchandiser stores, despite the fact that the availability of sustainable products is lower for counties with smaller white populations and larger female populations. Thus, profitability cannot be used to justify the reduced access to sustainable products in mass merchandiser stores for these groups.
Work in Progress
Steve Zhang, Bryan Bollinger, Randi Kronthal-Sacco, and Levin Zhu. “Nature Exposure and Sustainable Consumption.” Work in progress.
Although there is research examining heterogeneity in consumers’ desire to purchase more sustainable products, less is known about contextual factors that may shift such purchases. Using detailed grocery store transaction data and cell phone tracking data capturing park visitation, this paper demonstrates that increased exposure to the natural environment leads to increases in purchases of sustainability-labelled consumer packaged goods in 4 of the 6 categories studied and can shift purchases away from subcategories perceived as less sustainable. In contrast, exposure to extreme temperature shocks only increases sustainable purchases in one of the categories studied. We hypothesize that park visitations are associated with a positive experience with the environment, which lead to greater sustainable intentions, compared to the negative experiences associated with extreme temperature shocks. We are currently testing this hypothesis using a series of online survey experiments.
Levin Zhu. “An Indirect Utility Framework for Consumer Response to Sustainability Claims: A Literature Review.” Work in progress.
This paper summarizes the literature on how consumers respond to products with sustainability claims. I survey first the literature documenting the direct effect of sustainability claims on overall consumer demand. I then discuss research regarding the indirect effect of sustainability claims as informative signals about underlying product attributes. I also review the extant literature on sources of heterogeneity in the consumer response. Throughout, I highlight avenues for future research in an area of growing managerial and societal importance.