New or recycled products: how much are consumers willing to pay?

Abstract

Purpose: This paper aims to consider the price premium that consumers state they are willing to pay for products with reused or recycled content. It also aims to address the effect of the impact of product category on consumers' willingness to pay premium prices. Design/approach/methodology: Willingness to pay was studied for seven different product categories (n=49). Findings: Perceived functional risk is an important determinant of the price that consumers are willing to pay for products that have recycled or reused content. It was also found that consumers will switch from a recycled product to a new product within a smaller range of price for products with high functional risk. Research limitations/implications: The study is exploratory, while it serves its purpose by raising initial questions and finding that this is a complex area that is worth studying. Additional work is clearly required to consider the wide range of potentially relevant variables and a sampling plan that ensures an understanding of the generalisability of findings across the population within a region and across regions. Practical implications: A technique for understanding consumer willingness‐to‐pay (WTP) is provided and insights into differences are offered between products in terms of WTP for greener products. Practitioners can use this technique to determine the price range and indirectly the profitability of a version of their product based on recycled or reused content. Originality/value: An understanding of WTP for products with recycled or reused content is developed. This is important as legislation in many countries aims at diverting disposed product from waste dumps to consumers.