The impact of fair trade certification on consumers' willingness to pay for natural cosmetics in Germany

Abstract

The cosmetics industry in Germany is diversifying its business orientation to fulfill changing customer needs towards natural cosmetics. The adoption of fair trade (FT) could offer an opportunity for cosmetics producers and this is an area of research that is limited; so far, studies mainly surround the willingness to pay (WTP) on an ethical premium for food products, such as coffee and chocolate. As consumers could react differently to this “ethical improvement” for different product types, analyzing consumer preferences for FT in the context of the cosmetics industry is of high interest. This thesis seeks to understand to what extent and under what conditions could the adoption of FT certification be beneficial for cosmetics producers in Germany. With data obtained through a questionnaire with an experimental design component, the research evaluates how the FT certification paired with brand positioning and product categories would influence the consumers’ WTP for natural cosmetics in Germany. The results suggest that FT certification of natural cosmetics leads to a high WTP an ethical premium among German female consumers. In addition, it was found that it is particularly favorable to introduce FT at products with smaller price ranges, as the WTP in percent is significantly higher for lower price ranges. Finally, it is found that the WTP for FT certified natural cosmetics varies across different product categories but does not vary significantly with brand positioning.

Date of Award	2 Jul 2013
Original language	English
Awarding Institution	Universidade Católica Portuguesa
Supervisor	Fernando Machado (Supervisor)