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The effect of Green Advertising in customer reaction: A

study on Financial Institution

Submitted to
Sultana, Nigar
Assistant Professor
Department of Marketing
Jahangirnagar University

Submitted By
Abdur Rahman Al Mahmud
Department of Marketing
Jahangirnagar University

Date of Submission: 15th March, 2015.

Department of Marketing

Faculty of Business Studies

Jahangirnagar University

The effect of Green Advertising in customer reaction: A

study on Financial Institution
Advertisers in Bangladesh are facing a constant battle to break through the clutter and reach
the consumers attention with their advertising. Advertises appear daily and everywhere in a
consumers life; in newspapers and magazines, online, on the TV, in the cinema and even
in mobile phones. The competition for attention has become massive and companies are
using all means necessary to reach the attention of the consumers (Kotler P. A., 2008).
The consumer and capital markets for green products, services and firms
have been expanding rapidly in the last decade. The total amount
distributed under refinance scheme was about 505 million taka in 2009
(Masukuzzaman & Aktar, 2013). At the start of 2010, professionally
managed assets utilizing socially responsible investing strategies, of which
environmental performance is a major component, were valued at 698
billion in Bangladesh, an increase of more than 38 percent from 503
million taka in a year. More companies are now communicating about the
greenness of their products and practices in order to reap the benefits of
these expanding green markets. Green advertising has increased almost
tenfold in the last 20 years and nearly tripled since 2006. As of 2009, more
than 75 percent of S&P 500 companies had website sections dedicated to
disclosing their environmental and social policies and performance. At the
same time, more and more firms are engaging in green washing,
misleading consumers about firm environmental performance or the
environmental benefits of a product or service.
The green movement was as well establishing itself in Bangladesh where the demand among
Bangladeshi consumers for environmentally friendly services and products consequently
increased. Changes taking place in consumer demand and perception caused companies
present on the Bangladeshi financial market to adapt and become more environmentally
friendly in their production and execution of activities in order to not be left behind and run
over by their competitors. Additionally, the green movement not only caused changes in
production activities, the changes also began to appear in companies marketing
communication efforts, introducing what one could call green advertising and marketing.
The condition of climate is worsening at a greater pace and with a lot of diversity. Thereby
only bearing green placard is not sufficient for banks. For this, banks will require a wellstructured and transparent policy framework as well as long-term strategy. Bangladesh Bank
is the first central bank in the world which has taken real initiatives, according to a definite

agenda in its vision and mission to play a specific role in green banking (Bangladesh Bank,
2012). As a part of indicative initiatives, it issued circular on Policy Guidelines for Green
Banking where road map is rolled out in 3 phases which are expected to be completed by
December 31, 2013. (Bangladesh Bank, 2011). Bangladesh Bank (BB) also offered some
benefits like additional point in CAMELS rating (under management component) and
disclosure of the name of top ten green banks each year, and will take into account these to
give it permission to open new branches
Many consumers believe that a companys real environmental engagement correlates with the
environmental message that is being presented within their marketing communications
efforts. However, companies have used environmental claims in order to be profiled as
green even though they are not. This activity goes under the name of Green Washing. Green
Washing takes place when companies exploit the use of green marketing to hide the fact
that they are not as environmentally friendly as they appear to be through their marketing
communication efforts. In an attempt to increase the value of a brand, companies can use
green washing to make their environmentally damaging business less detectable (Laufer,
2003), which in turn affects the attitude toward green advertising held by consumers.

Significant of the study:

Advertising-in-general is often viewed as an unwelcomed intrusion by consumers and is
often considered to be a source of irritation (Prendergast, Lui, & Poon). A reason for
experienced irritation can be that an advertiser claims something that is considered too
unbelievable and overdramatized by the consumer (Prendergast, Lui, & Poon). It is therefore
crucial that the consumer likes the particular advertisement and that it is regarded as
interesting, appealing and credible (Shavitt, Lowery, & Haefner, 1998).
To create effective advertising for financial product it is important for advertisers to be
aware of the general attitude towards advertising held by consumers. During the last
decades, due to the increase of demand of green financial product, the interest for the
environment has grown among consumers, leading advertisers to use green claims in their
advertising. Green claims can often seem vague or misleading and can easily fall into a grey
area, where the consumer finds it hard to understand the source of the message and whether
it is reliable. This is a common risk for advertisers and can cause skepticism among
consumer towards the message and its sender (Ahmad, Shah, & Ahmad, 2010).
It is a common finding that consumers want claims to be product specific and provide
detailed information regarding their true benefits, especially when dealing with green
advertising (Davis, 1993). Bangladeshi law states that consumers should not be misled and
that advertising should be credible and truthful. All claims made by advertisers are to be
documented and one should be able to control the source and understand who is behind the
From a managerial point of view, societal marketing programs can provide value to
consumers. By definition, marketing is a set of processes and actions that are oriented to
develop, communicate, and work in delivering value to stakeholders and more specifically, to
customers (American Marketing Association [AMA], 2015).

Considering this definition, concern about CSR issues, ethics, and improving life quality is
included implicitly in marketings definition (i.e., delivering value to stakeholders:
nongovernment institutions, donations, ecological- and ethically oriented programs, etc.). In a
seminal paper, Carroll (1979) stated the need for a definition of social responsibility that
included ethical, economic, legal, and discretionary categories of business performance.
Wang (2008) also mentioned that ethical and responsible advertising practice is expected
across stakeholder groups including consumer, corporation, policy maker and society
increasingly .With these theoretical contributions, it can be stated that a healthy relationship
exists among social issues, ethics, and societal marketing programs.
Since consumers of today are becoming more environmentally minded, it is important for
the advertiser to understand the differences between advertising-in-general and green
advertising and what challenges they may bring. Do consumers perceive certain factors
more important in green advertising than in advertising-in-general? If so, what could be the
reason for this and how does it affect the advertising activity?

The board objective of this research is to find out the effect of green advertising in consumer
reaction. The specific objectives are;
1. To identify the difference among attitude between green advertising and general
2. To identify how attitude towards green advertising in financial institution are influenced by
the demographic factors of the consumer
3. To identify the key success factors of the green advertising in financial institution.

Literature Review
Advertising has from its earliest days, been regarded as a way to provide strictly factual
information, so-called cognitive information. The first formal model of advertising was
AIDA, developed by Vakratsas & Ambler in their article, How Advertising Works: What Do
We Really Know? which stands for Attention-Interest-Desire-Action, and is still one of the
most commonly used advertising models (Vakratsas & Ambler, 1999). Since then, advertising
has developed and is today an important part of an organizations marketing communication
in the means of communicating with current and potential customers.
The objectives of advertising are to create awareness, inform customers and to create a
desired perception for the product or brand. According to Bendixen in his article Advertising
Effects and Effectiveness the purpose of advertising is also to create a preference for the
product or brand and to persuade consumers to purchase the product (Bendixen, 1993).
Advertising can also help to influence audiences to differentiate a product from others in the
marketplace and by that, reach large audiences through messages that help the consumers to
understand the product, and make their final decision (Percy & Elliot, 2009)
Financial advertising should provide information or create a positive feeling that goes beyond
just catching the consumers attention for the ad; it should be designed to provide information

in order to create a positive brand attitude, formed by a favorable impression (Percy & Elliot,
2009). Because the financial consumers want information rather than others. Quoted from
the book, Marketing communication: Engagements, strategies and practice Fill (2005) said
that the content and delivery of an advertising message is derived from an understanding of
the context of where the ad is to be used (Fill, 2005).
In addition to basic firm-level characteristics such as size, profitability and industry, it has
been shown that firm incentive structure and ethical climate can be determinants of firm
ethical behavior. Quoted from Relationships and Unethical Behavior: A Social Network
Perspective unethical behavior has been described as behavior that has a harmful effect on
others and is either illegal or morally unacceptable in the larger community (Daniel Brass,
1998); green washing fits this definition of unethical behavior. As such, we can draw from
existing literature on incentives and ethical climate as drivers of unethical behavior to further
inform our understanding of why a brown firm might engage in green washing
Based on the findings of 25 conclusions of previous research, Vakratsas and Amber (1999)
created a theory, developed in How Advertising Works: What Do We Really Know?,
suggesting how advertising works. The ad itself should work as an input for consumers and
trigger an unconscious or conscious response. The ad should also aim for some kind of
mental effect, for example awareness, memory or attitude, before it can have an effect on the
behavior of the consumer. Two major intermediate advertising effects of responses are
responses that are affective (emotions) and cognitive (thinking). Further, the memory or
experience also plays a major role in the consumers mind. Consumers often have conscious
or unconscious memories of product purchasing or usage, which means that the memories
affect the behavior of the consumer.
Individual responses to advertising are also affected by factors such as motivation and the
ability to process information, which are factors that can have a big impact on the response.
Factors that affect responses, can function as filters between the advertising input, the
consumers and their behavior. Dahln, Lange and Smith (2010) in their book Marketing
Communication: A Brand Narrative Approach argue that advertising is the link between
marketing communications and consumer behavior and that the latter has changed to a more
cognitive orientation. Forming attitudes is an important part of advertising and an effective
marketing campaign has the ability to form or change an attitude towards a company or
product in the mind of the consumers. Dahln et al., (2010) suggested several examples of
why companies use marketing communications where repositioning of the brand, building
credibility, changing performance and attribute beliefs of a product as well as creating new
attitudes about the companys competitors products, are examples of why a company would
create an effective and successful marketing communications strategy.

Green advertising
The competitive landscape is also a critical part of the market
environment in which a brown firm faces the decision of whether to

Organizations tend to model themselves after similar organizations in

their industry or field that they perceive to be more legitimate or
successful, and research has shown that this applies to the adoption of
green practices. This suggests that some firms might be communicating
about supposed green practices for fear of falling behind their rivals who
have already begun to do so. UBS adopted a more progressive policy on
climate change after an internal report was compiled demonstrating that
the company lagged behind its competitors in publically committing to
help mitigate global warming, for example.
Thus, as positive
communication about green practices becomes more and more common
within an industry or group of competitors, a brown firm in that industry or
competitive group is more likely to positively communicate about its
environmental practices and green wash.
Devis argued in the article, Strategies for Environmental Advertising that advertisers have
adjusted their advertising to meet the green customers and are using environmental claims
to show the benefits of a product or a service. These claims can influence the consumers
preferences of a product or service, either in a positive or in a negative way. In other words, if
an advertiser uses the environmental claims in the right way the product or image of the
company can be enhanced, and if used in a wrong way, by making false claims, can damage
the product and the company image (Davis, 1993).
It should be noted that advertisers can have a tendency to push the boundaries when it
comes to promoting these kind of appeals, for example green appeals. Kangun said in his
article Environmental Advertising Claims: A preliminary investigation that, claims can be
confusing, misleading or trivial and the potential for abuse within environmental claims are
high. Many organizations have used false or less true environmental claims in order to be
profiled as more green than they are in reality (Kangun et al., 1991).
In the article, Environmental Advertising Claims: A preliminary investigation that there are a
number of reasons that environmental advertising can be confusing or misleading to the
customer. Words like degradable, environmentally friendly or ozone-friendly have no clear
meaning and companies can use the same terms to promote different benefits.
Scientific knowledge may be required to understand certain environmental claims, since they
can be complicated and difficult to understand (Kangun et al., 1991). It can also be
questioned how consumers comprehend specific environmental claims, such as recycled or
environmentally-friendly. Studies have shown that there can be great variations between
different individuals in the interpretation of the same claims. Research has supported the view
that consumers have formed skeptical attitudes towards green advertising, leading to
avoidance in purchasing. The higher the level of perceived trickery and deception has been
found connected with lower levels of perceived credibility (Ahmad, Shah & Ahmad, 2010).
Advertisers might use vague or unspecific environmental claims without any factual support
to describe a products characteristics or benefits, where an example of vague wording could

be better for the environment (Davis, 1993). Finally the environmental benefits uses are
often limited to one benefit, which can cause uncertainty in the consumers mind about the
whole aspect of the environmental issues relating to a company. David (1993) suggests in the
article, Strategies for Environmental Advertising that environmental claims should satisfy
three criteria:
Specific environmental claims provide details is the most important aspect. Environmental
advertising claims should be informative and useful in helping the consumer to determine
differences in products and to help them make a better decision. Consumers want to be
informed in order to make product decisions and they expect green advertising to be specific,
informative and detailed, and advertisers should avoid information that is considered vague.
As a result, advertisers should provide information so the consumers can evaluate product
attributes and make an appropriate decision.
Specific environmental claims present real benefits, useful information; a common
advertising strategy is to imply superiority claims. An example of these claims is Nobody
cleans better. Consumers appear to reject these kinds of claims in the context of green
advertising because they claim it does not provide much information about how good they are
and it could be interpreted as our cleaning ability is at least as good as our competitors.
Specific environmental claims provide meaningful benefits, the products of green
advertising should contribute to a meaningful improvement of the environment. A consumer
seems to reject advertising that only provides minimal environmental improvement. Green
advertising should present real environmental sensitivity and advertisers should focus on
developing products with real benefits and not hope that advertising will convince the
consumer otherwise.
According to a conference paper named When Attitudes Towards Advertising in General
Influence Advertising Success that attitudes towards the ad have been defined as a learned
preposition to respond in the consistently favorable or unfavorable manner to advertising in
general (Mehta, 2010). Kotler and Keller (2006) suggested in their famous book,
Marketing Management that an attitude is a persons enduring favorable or unfavorable
evaluations, emotional feelings and action tendencies toward an object or an idea. Therefore,
a positive attitude towards advertising is based on the favorable evaluations and willingness
to it. Metha (2010) argues that the influence of attitudes is an important area to study because
of its implications on the industry. In order to be effective or successful in the context of the
advertising landscape today, an advertiser has to break through the clutter to get the needed
attention. (Mehta, 2010)
Attitudes exist because they serve as a function for a person and are driven by a persons
motives. People can have the same attitude towards an object but there can be different
reason behind it (Solomon, Bamossy, Askegaard, Hogg, & G, 2010). Attitude and attitude
changes can influence how people feel about their world and can have a direct or indirect
effect upon their behavior in several situations (Cacioppo, 1991). Solomon et al. said that in
the book, Consumer Behavior: A European Perspective that understanding attitudes are

important for advertisers since it is the attitude they need to make more favorable, toward a
brand or a product (Solomon et al., 2010). In other words, to create ads that result in a
positive attitude from consumers, it is important to understand what factors affect the attitude
as well as to be able to know what kind of appeals to use to achieve the desired result. It is
also important to remember that advertising is often an unwelcomed intrusion and is therefore
considered to be a source of irritation. Advertisers must therefore consider using the ad
message to differentiate themselves on the market, and at the same time be aware of the risk
of skeptical consumers (Ahmad, Shah, & Ahmad, 2010).

Research Approach:
This particular research includes a descriptive and exploratory research approach, with the
main data-collection taking place through both manually and electronically distributed
questionnaire. The goal of the study will not only to identify the effectiveness of green
advertising, but also to test hypotheses generated from results by previous studies and to find
possible correlations between the examined factors, namely entertainment, irritation,
credibility, informative and advertising value. This will be done by creating hypotheses
based on previous results, to test whether or not they can be related to the new research
context of this particular study. With this in mind, the authors of the thesis believe that a
descriptive approach, relating to the authors goal of examining the effectiveness, and the
exploratory approach, focusing on explaining possible correlations between findings, gaining
an idea of what is going on, would prove to be a suitable combination of approaches to
fulfill the purpose of the study.

Quantitative and Qualitative research

Saunders et al., (2009) suggested that there are two types of methods that can be used to
collect data, namely quantitative and qualitative methods. Data that is collected and which
can be analyzed by statistical tests and calculations not involving any in-depth analyses is
related to what is known as a quantitative research method (Williamson, 2002). On the other
hand, there is the other type of research called qualitative research that often takes place
through interviews and types of in-depth focus groups. Data received through qualitative
research will be subject to interpretation, where the goal of the researcher is to find useful
patterns to explain a certain issue or phenomenon, (Saunders, Lewis, & Thornhill, 2009).
When looking upon the purpose of the particular study, the authors regarded the
quantitative research approach to be most fitting. When aiming to find out what a situation
is like, and not digging into the underlying explanations or ideas of why something is the
way it is, a quantitative research approach is preferable, which also could provide the
research with enough data to make a generalization regarding the findings (Malhotra & Birks,
2007). The data collection technique is further discussed in the following sections.

Collection of data
Primary data
There are two types of data that can be collected for a study; primary data and secondary
data (Adams, Khan, Raeside, & White, 2007). Primary data is collected for the particular

problem related to the current research at hand, whereas secondary data relates to data that
has been collected for other purposes.
For a quantitative data collection, structured questionnaires distributed to a sample of a
population can provide useful information regarding the respondents behavior, intentions,
attitudes, awareness, and motivations and demographic and lifestyle characteristics (Malhotra
& Birks, 2007). Additionally, the use of a questionnaire is not only time and cost efficient, but
can also be easily distributed to a large amount of respondents, where the respondents can
manage the activity of answering questions without assistance (Williamson, 2002). This will
also one of the reasons that influenced the decision upon which data collection technique to
use since the authors experienced particular time limitations. With the purpose of the study
and its research objectives in mind, the quantitative technique will regarded as suitable. Not
only were the authors able to receive a comprehension of Bangladeshi consumers attitudes,
but the technique also provided data, which enabled the possibility to test hypotheses
relating to the studied area. The hypotheses can be found in the theoretical framework

The targeted population for the questionnaire consisted of Bangladeshi consumers.
Coolridge (2000) suggested that the higher the number of respondents in a quantitative study
can affect whether the sample is representative for the overall population, and this will a goal
for the study at hand.
The respondents activated a total of 120 questionnaires. This number may come across as a
fairly small size of the studied population, however Coolridge (2000) stated that there has to
be a minimum of data collected from 30 respondents from the over-all study.

Since the underlying idea behind the use of a quantitative research approach and the use
of a questionnaire will to be enabled statistical analyses to test hypotheses, the choice of
scales and statements were important. The author will apply a 5-point Likert Scale, as it is
a suitable scale for measuring attitudes among a population (Williamson, 2002).
To receive data on the respondents demographic attributes, closed, single-response
questions were used, where alternatives were provided in a list, also known as list question.

Saunders et al., (2009) propose probability and non-probability sampling as two possible
techniques when selecting the targeted respondent group. The non-probability sampling
technique will have been applied to this particular study. Malhotra and Birks (2007) state
that non-probability samples may provide a good overview of the studied populations
characteristics, however, it does not enable an objective evaluation and can therefore not
be statistically projectable to the overall population. The authors recognize this
disadvantage, however, there will no possibility to use a probability sample due to a lack of
resources. The non-probability sampling technique will be consequently chosen for the

study, involving a convenience and purposive sampling. Convenience sampling saves both
time and costs and it is often easy to access. There are however certain limitations one has to
be aware of when applying this type of sampling technique. Malhotra and Birks (2007)
present issues of selection bias and that the samples are not representative to the over- all
population. The second sampling technique used is the purposive, also known as judgmental
sampling, where the purposive sample represents consumers, since the purpose of the study
will to examine consumers. In judgmental sampling, a particular population is targeted
because of its suitability to the study. In addition, when using convenience sampling, it is
regrettably not possible to calculate a response-rate.

Data analysis
The analysis of the collected data will be done through running descriptive statistical tests to
receive an overview of the divide between the chosen demographics used in the study. The
authors will have chosen to show the divide between age, gender and income. Before
describing the chosen analyses for the study, the authors wish to inform the reader that
certain statements from the questionnaire were deleted since they proved to not be suitable
for the purpose of the study. Normal distribution, correlation and factor analysis will be used.

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