Agro-sphere determinants of green branding: eco-consumption, loyalty, and price premium

The study explores the determinants of green branding within the agricultural sector, particularly in Ukraine, a country with significant organic farming potential but lagging in organic food consumption. Green branding, a key aspect of green marketing, aims to align branding strategies with social justice and environmental protection. The research focuses on three core principles: understanding the essence of green branding (including factors like chemical-free production, corporate social responsibility, eco-innovation, and green advertising); recognizing the role of environmentally friendly brands in fostering consumer loyalty in the eco-market (considering factors like brand ethics, consumer-producer relations, and transparency of information); and determining the size of the price premium for green brands (influenced by factors such as price competition, industry profitability, consumer income, consumer loyalty, organic certification, and green advertising costs). The study hypothesizes a correlation between per capita income and organic product consumption, a positive impact of green branding on consumer loyalty, and a multi-factor determination of green brand price premiums.

Existing research on green branding often overlooks factors influencing organic product consumption and price premiums for green brands. Studies have shown a positive relationship between brand ethics and loyalty, as well as links between green brand awareness, trust, perceived value, and purchase intention. However, a comprehensive analysis of the interplay between consumer loyalty, price premiums, and various branding factors in the agricultural context is lacking. The nonlinear relationship between consumer satisfaction and loyalty also requires further investigation.

The study used a mixed-methods approach. To test the hypothesis of a relationship between per capita income and organic product consumption (H1), correlation analysis was performed using data from 37 OECD countries from 2017-2019. Pearson and Spearman correlation coefficients were calculated to assess the correlation between per capita gross national income and per capita organic product consumption. To test the hypothesis on the impact of green branding on consumer loyalty (H2), an expert survey of 250 respondents in five Kyiv supermarkets compared consumer loyalty to regular and organic egg brands. Respondents rated eight brand attributes (product quality, environmental friendliness, organicity, price, brand image, social responsibility, advertising support, and accessibility) on a 5-point scale. A concordance coefficient assessed the reliability of responses. An integrated indicator of satisfaction was calculated, and a hyperbolic function modeled the nonlinear relationship between satisfaction and loyalty. To test the hypothesis concerning factors affecting green brand price premiums (H3), the study analyzed prices for nine green brands in five Kyiv supermarkets. Cluster analysis (hierarchical and k-means) classified brands into three price premium groups (high, medium, low), and discriminant analysis determined the functions to classify brands based on several variables.

Hypothesis H1 (correlation between per capita income and organic product consumption) was confirmed by a high positive correlation (Spearman's coefficient = 0.879). Hypothesis H2 (impact of green branding on consumer loyalty) was also confirmed; consumer loyalty to the eco-brand exceeded that of the regular brand by 3%. Analysis of variance (ANOVA) showed significant differences between the three price premium clusters identified by cluster analysis (H3). Discriminant analysis produced equations for each cluster, allowing the prediction of the price premium level for a new brand based on consumer loyalty, organic certification, green advertising costs, additional organic product costs, and average consumer income. Industry profitability was found to be less informative and excluded from the final model. The discriminant functions indicated that factors such as consumer loyalty and the presence of an organic certificate strongly influenced price premium levels.

The findings contribute significantly to green branding research by integrating multiple factors affecting consumer behavior and price premiums in the agricultural sector. The confirmation of H1 highlights the importance of economic development in driving organic food consumption. The positive impact of green branding on loyalty (H2) supports the strategic value of eco-friendly practices for agricultural businesses. The multi-factor model for price premium determination (H3) provides a practical tool for brand managers to optimize pricing strategies. The use of both cluster and discriminant analyses strengthens the robustness of the findings.

This research demonstrates the feasibility and economic validity of green branding in enhancing consumer loyalty and justifying price premiums in the agro-sphere. The developed discriminant functions offer a practical tool for brand managers to strategically determine price premiums based on key influencing factors. Future research could explore the generalizability of these findings to other agricultural sectors and geographic locations, investigate the long-term effects of green branding on consumer behavior, and examine the influence of evolving consumer preferences and sustainability concerns on green brand strategies.

The study's geographic scope is limited to Kyiv, Ukraine, potentially affecting the generalizability of the findings. The sample size, while statistically significant, might not fully capture the diversity of consumer preferences across different regions and demographics. The focus on egg brands as a case study might not represent the entire spectrum of agricultural products. Future studies could benefit from expanding both geographic scope and product categories for a more comprehensive understanding of green branding dynamics.