Will Consumers Pay More For Ethically Produced Goods

Introduction

Companies have been accused of exploiting workers and ignoring environmental damage in the pursuit of bigger profits. The fact is that they could not do his without the agreement of the consumer. However consumers are now becoming more aware of the value of ethical business management and adverse publicity will continue to play a vital role in the education of consumers, but will consumers pay the price increase?

The purpose of this investigation is to find an answer to the proposed question, 'will customers pay more for ethically produced goods?' In order to find an answer to the question primary and secondary research will be conducted.

Primary Research

A brief questionnaire was created and presented to members of the public shopping in Birkenhead. 50 shoppers were interviewed using the questionnaire. The questionnaire contained questions asking shoppers about whether they thought workers producing products should receive decent pay and good working conditions. Shoppers were also asked whether they thought most products were made under good working conditions. The questionnaire concluded with the question 'would you be prepared to pay a little extra for an item if it meant the workers were treated and paid well?' The questions asked were closed questions and the fixed responses were 'yes', 'no' or 'unsure' for when the shopper was undecided on an answer. (The questionnaire can be found in the appendix.)

Findings

Below the results from the questionnaire are presented in the form of pie charts.

Question 1.

Do you think that workers who made goods should have decent pay and a good working environment?

Question 2.

Do you think most products are made under good working conditions?

Question 3.

Would you be prepared to pay a little extra for an item if it meant the workers were treated and paid well?

Secondary Research.

In a recent poll commissioned by the observer, the newspaper found that two out of three people in the UK agree to some extent that advertising products as 'ethical' is often a way to charge more. However other results from the poll show that almost half of the people asked would be willing to pay up to 10% more for goods that were "ethically" sound.

Research conducted by the company Fairtrade showed the percentage of people in different age groups that would be willing to pay more to ensure workers welfare. The results are displayed on a bar chart. (See figure 1)

Figure 1.

Fairtrade also found that better educated consumers were more willing to pay more for an ethically produced product. Better educated consumers are more informed and concerned about ethical issues. 97% of those with higher educational qualifications were willing to pay a little extra to ensure workers making their products had decent pay and good working conditions. (see figure 2)

Figure 2.

Dave Hieatt is a Co-founder of Howies, a clothing company that uses organic cotton to produce T-shirts, jumpers and jeans. He admits that producing ethically means that he is more expensive than his rivals. He believes brands that can prove their ethical credentials will benefit from a shift in consumer behavior.

Marks & Spencer is set to join the ethical trading drive with a launch of a Fairtrade cotton clothing range. The move is