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Energy Policy 35 (2007) 4381–4390 www.elsevier.com/locate/enpol

Towards a contemporary approach for understanding consumer behaviour in the context of domestic energy use
Adam FaiersÃ,1, Matt Cook, Charles Neame
School of Applied Sciences, Cranfield University, Silsoe, Beds. MK43 0AL, UK Received 23 July 2006; accepted 4 January 2007 Available online 23 April 2007

Abstract Domestic sector energy use is increasing in the UK and currently accounts for 30% of total use. Policies of liberalised energy markets have allowed greater consumer choice but have not sought to reduce carbon emissions. Overall sales of energy efficiency products are rising, but UK housing stock standards are poor and do not facilitate improved efficiency and further, the sales of such products are influenced by their price, thus the higher capital costs of products such as boilers and solar systems make them initially unattractive to consumers. Previous market-based research into the adoption of energy efficiency products has often focused on single factors, for example demographics. This has limited the ability of policy makers to make informed decisions that address a broader range of factors, such as individuals’ cognitive abilities, values and attitudes, as well as external factors such as social networks, marketing, and products and services. This paper provides a wider critique of the theoretical base related to consumer behaviour, product attributes and socioenvironmental theories that relate to energy use. The aim of the paper is to draw together theories relevant to energy use in order to aid policy making in the broader context and to develop the discussion around integrated theories of consumer behaviour. r 2007 Elsevier Ltd. All rights reserved.
Keywords: Energy efficiency; Adoption of innovations; Consumer choice

1. The case for carbon reduction and energy efficiency During the period 1990–2004, energy use in the domestic sector increased by 18% to account for just over 30% of the UK final energy consumption. Domestic energy is used for space heating (58%), water heating (24%), and lighting and appliances (18%). The source of the energy used is predominantly from carbon fuels, such as gas, or electricity generated in large-scale power stations (DTI, 2004). European governments have been implementing policies that encourage the adoption of energy efficiency in the home through incentives and regulation. In addition, consumers have been able to exercise choice in the energy market due to liberalisation of the electricity and gas markets, allowing them to choose more easily from whom they receive their supply of energy, and also whether or not
ÃCorresponding author. Tel.: +441525237569.

E-mail address: a.j.faiers.s02@cranfield.ac.uk (A. Faiers). Current address: 4, Pinkle Hill Road, Heath and Reach, Bedfordshire, England LU7 0AG, UK.
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it has been generated from renewable sources. Legislation has also facilitated consumer investment in domestic-scale energy generation systems (solar thermal or photovoltaic systems for example) as utilities are required to buy any excess energy generated (DTI, 2001). Consequential effects of the ease to switch suppliers, foe example, the UK ‘28-day rule’, has meant that utilities have been unable to offer customers a package of energy services, for example, installing energy saving measures and charging consumers based on the savings that they made as a result, however, legislative changes in 2003 in the UK have since enabled this (DTI, 2005). In 2002, the government in the Netherlands, which had the highest level of consumer demand for green power in Europe at the time, sought to further the adoption of green energy products and their use by developing a virtuous circle whereby funding to stimulate the market increases demand for products, the demand leads to a reduction in costs, and as a consequence, reduced costs stimulate further investment in the products, which leads to greater demand. As a consequence of this, there was a total

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increase of 675,000 customers for green energy between 1995 and 2002, with premiums for green electricity falling to in some cases either zero premium or even green electricity cheaper than electricity generated by conventional fossil fuel-based processes (Bird et al., 2002). An overview of the market for heating systems in the UK shows that the uptake of measures that increase the efficiency of energy use has been increasing. In August 2004, the UK market for energy efficiency products was worth £5783 million, which was made up of thermal insulation products, high efficiency central heating systems driven by SEDBUK ‘A’ rated boilers, and double glazing and conservatories. Over the 5 years to 2009, it is expected that while growth in double glazing products and central heating will remain stable, the growth for insulation products will be strong, based on the legislative requirements for improved insulation of newbuild property (Mintel, 2005). However, legislation is not always an appropriate driver for improvements as the choice to improve energy efficiency performance is dependant on the householder. For example, it is estimated that 90% of homes have some insulation fitted, but not to the level of insulation that would be required for a newbuild property under the Part L building regulations 2006, which require 200 mm of loft insulation to be fitted (Mintel, 2005). Despite current low capital costs and rapid simple pay-back, it is estimated that in 2003 only 6.4 million households in the UK had cavity wall insulation out of a potential market of 17.8 million households with cavity walls. Whilst loft insulation has penetrated the market, with estimates of 74% of all households having loft insulation in 2003, the level of insulation varies significantly with 85% of households having less than half the recommended amount of insulation fitted (Mintel, 2005). Despite the example of the Netherlands and the other factors affecting energy consumption such as the liberalisation of the market, higher taxation on fossil fuel generation, and voluntary targets for the industry, green power generation on the whole remains low and the virtuous circle desired, for example by the Netherlands, has failed to develop past an initial stimulation of the market (van Rooijen and van Wees, 2006). Despite incentives and policy measures, domestic level renewable energy systems currently available, such as domestic solar hot water and photovoltaic systems have not penetrated the market sufficiently so as to become significant and be reported in annual market reports such as Mintel (2005). In conclusion, whilst legislation seeks to promote the use of energy efficiency products, the rate at which they are being adopted is not making a significant impact on the reduction of carbon emissions needed to meet current targets through the Kyoto Protocol. This suggests that while some householders are proactive in adopting energy efficiency measures, a key research question remains as to understanding what factors are preventing others from making similar decisions.

2. Understanding environmentally sensitive behaviour in order to aid policy decisions Factors understood to determine demand for energy efficiency measures typically include the cost of installation and the simple pay back period, i.e. the period before a return on the original investment is accrued. Market research shows that consumers are generally only willing to install measures providing the return on investment is relatively rapid (Faiers and Neame, 2006). However, simple payback periods vary significantly and do not generally account for future changes to the cost of energy, future tax implications on energy, or other changes affecting currency values. Examples show that the successful adoption of green energy occurs when the availability of the products is high, they are aggressively marketed, and competitive with other energy products, as is the case in the Netherlands and Sweden. Pricing remains a critical issue, although retail competition has stimulated the market to an extent. However, marketing activity has been slow to develop awareness and education (as reviewed by Salmela and Varho, 2006), which is considered to be one of the critical factors in adoption (Bird et al., 2002). Previous investigations that were seeking to profile potential eco-consumers have based their methodology on demographic data. However, the results of these research projects are often either inconclusive or inconsistent with each other. For example, in separate projects investigating the impact of education levels, Straughan and Roberts (1999), Vlosky et al. (1999), and Pedersen (2000) all concluded that individuals with ‘higher’ education are more likely to exhibit environmentally positive buying behaviour. However, later evidence from Peattie (2001), and Laroche et al. (2001) found that consumers of ecologically compatible products tended to be less educated. Straughan and Roberts (1999) also concluded that characteristics of age, gender and income, which may in earlier research have been found to have some correlation to stated ‘green’ consumption, on further analysis are unlikely to actually influence positive eco-behaviour. Historically, it may be that research utilised demographic data because it was accessible. Morris (2004), for example, found that although the research methodologies of a range of micro-sociological studies of participation purport to assess the cognitive processes involved, they actually utilise data regarding physical factors such as available resources, age, and income. Hence, this supposes that if specific demographic factors do not differentiate consumer behaviour, then other factors must prevail. This presumption makes certain theories and approaches less robust and in need of review, for example, those generalisations based on demographics by Rogers (1995) and is supported through Jackson’s comprehensive review of consumer behaviour in the context of sustainable development (Jackson, 2004). Models have been developed over time to explore a range of issues relevant to how individuals act in relation to

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environmentally sensitive buying. These include for example, the buying process (Peattie, 1992), attitude formation (Schiffman and Kanuk, 1997), and recently, Bagozzis’ model of consumer action (reviewed by Jackson, 2004) and an attempt to explain causal links between values and behaviour, by Thøgersen and Olander (2002). A wide range of models and theories has recently been subject to a very thorough review by Jackson (2004) who adequately demonstrates that beyond cognitive assessment and rational choice there are emotional influences and societal and cultural issues that impinge on consumer buying and individual’s behavioural choices. The review by Jackson concludes with a discussion of integrative theories, which draw together internal and external factors. The added value of integrated theories should be that alternative causal factors can be assessed, such as the impact of emotions or the environment in the buying process, for example, previously only considered as a cognitive process. Integrating theories may also further explain the impact of alternative influences on the rate at which individuals behave in respect of the buying process. However, Jackson shows that integrative theories can become cumbersome. An example is Bagozzis’ Model of Consumer Action, which is relatively inaccessible to a wider audience and cannot easily aid policy decisions despite the breadth of issues that it covers. To understand future energy use, with the intention of delivering achievable acceptable emissions of carbon, it will be necessary to understand all the external and internal influences around energy use; the technologies or processes, the adopters of such processes and the environment in which they reside. Hence, policy makers will be able to implement sound policy and practitioners will be able to deliver lasting solutions. 3. Towards a theory of efficient energy use by household consumers This section seeks to focus on the critical internal and external factors that influence consumer choice in respect of energy use, using discussion from the wide range of Consumer Behaviour Theories. Using this approach, it is hoped to generate discussion in relation to a focussed theory of efficient energy use that utilises existing Consumer Behaviour Theory where appropriate. As an aid to this overview, Table 1 provides a graphical theory map. 3.1. Consumer choice Consumer theories have provided a range of insights into principles that direct or influence consumer choice. For example, Lavoie (2004) writes on post-Keynesian Consumer Theory and how it may have potential synergies with consumer research and economic psychology. Consumers appear to utilise principles that occur in a priority order, on which they make proceduralised choices relative to their

Table 1 Overview of relevant theories and models Consumer choice Post-Keynesian Theory Behaviour Economic Theory Hierarchy of Needs Personality Theory Control Theory Self-Discrepancy Theory Pro-social Behaviour Perceived Consumer Effectiveness Collective Action Dilemma Willingness to Pay Value Belief Norm Theory Cognitive consistency Balance Theory Consistency Theory Cognitive Dissonance Theory Relational Discrepancy Theory Social Exchange Theory Behaviour Economic Theory Behaviour Perspective Model Rational Choice Theory of Reasoned Action Theory of Planned Behaviour Hierarchy of Effects Innovation Decision Theory Behavioural Economic Theory Diffusion Theory Attribute Theory (Diffusion Theory)

Needs, values and attitudes

Learning

Social learning

Buying process

Categorisation of consumers Product attributes and categorisation

needs. Procedural rationality asserts that consumers have rules that allow them to make decisions. These rules are based on non-compensatory procedures, which need not take into account all elements, but just those important to the individual. If the criteria meet those of the individual, then their needs are satisfied and they proceed with the purchase. Considering the reasons behind the consumption choice, Behavioural Economic Theory (BET, as reviewed by Diclemente and Hantula, 2003) posits that core reasons exist as to why ‘goods’ will be purchased by an individual; for maintenance, to accumulate, for pleasure, and for accomplishment. In this respect, ‘maintenance’ goods would be core goods to cover basic needs whereas ‘accumulation’ goods would be standard items but of better quality, ‘pleasure’ goods would be luxury items, and the ‘accomplishment’ goods would be innovative items that set the consumer out as a leader. This categorisation of motivations corresponds closely with the concept of ‘needs’ versus ‘wants. Individual needs will differ between needing ‘core’ goods, necessary for everyday living, and ‘peripheral’ goods, which are luxuries and based on ‘want’, compatible with the Hierarchy of Needs (Brugha, 1998). According to post-Keynesian Theory (as reviewed by Lavoie, 2004), consumers needs are satiable, separable, sub-ordinate to each other, and can ‘grow’; in other words, once a level of

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consumption has been reached, the individual as the consumer is no longer satisfied and moves onto another ‘need’. This puts some categories subordinate to others, based on the principle of irreducibility. In practical terms, it follows that individuals will allocate how much of their budget they are willing to spend within categories using their own judgement. As choices are related to income, consumers move through the hierarchy of needs and have the capacity and resources to innovate and desire new ‘needs’. 3.2. Needs, values and attitudes influencing choice ‘Needs’ and ‘wants’ will to some extent be influenced by an individual’s values and attitudes. Values are beliefs that an individual holds and which will guide their behaviour; for example self respect, or the maintenance of good health. Personality theories posit that the ‘self’ contains guides and standards that cause individuals to ‘self regulate’. The guides to this self regulation are generally accepted to be taught when the individual is still young, and depending on the style of nurturing can either be a promotional self regulation, whereby consequences are based on nurture and aspiration, or a preventive self regulation, whereby consequences are based on safety, duty, and obligation. Either way, the consequences of this self regulation, as predicted by ‘Control Theory’ and ‘Selfdiscrepancy Theory’ are emotional, motivational, or behavioural (Robins and Boldero, 2003). It has been suggested that demographics may provide subtle indicators of a person’s values. For example, Salmela and Varho (2006) also support the findings of other research where it was suggested that ‘green’ consumers were found within particular professions, such as social and healthcare sectors. However, these concepts show only indicators towards a person’s values and may not provide the causal link to them. Attitude is the way that an individual views, or behaves towards an object, often in an evaluative way (Moore, 2001). ‘Social–psychological antecedents’, or more generally ‘attitudes’ have been identified as a key determinant of environmentally conscious behaviour over demographics (Stern, 2000); attitudes such as environmental concern, political orientation, and in particular ‘perceived consumer effectiveness’ (PCE) have been proven to be causal links to behaviour (Roberts, 1996; Lee and Holden, 1999). There is also support for Batsons’ Model of Pro-social Behaviour to further understanding of these factors (Lee and Holden, 1999). Consumers can be influenced by their ethics and beliefs, for example if they are motivated by ‘moral’ or ‘material’ ethics. Where consumers are motivated on ‘moral’ grounds, they move away from material consumerism as moral issues conflict with material gain (Lavoie, 2004). PCE is based on the concept that individuals who are confident that their individual actions will lead to positive consequences for the environment will be motivated to act

if they realise that they are part of a collective effort to achieve a certain goal. (Peattie, 2001; Roberts, 1996). This also requires the individual to trust that others will do their part in achieving an overall goal, including politicians and other stakeholders in the environment (Lee and Holden, 1999). The impact of ignoring this factor for marketing would be that consumers avoid the social or societal messages marketed with a product if they felt that their actions were isolated and would have no effect; the concept known as the ‘collective action dilemma’ (Prakash, 2002). Past research on factors that influence ‘willingness to pay’ has shown that attitudes are excellent predictors of environmentally friendly behaviour (Laroche et al., 2001). This may be enhanced if manufacturers provide evidence that their products or services support environmental claims, demonstrable through such schemes as accreditation to standards (Vlosky et al., 1999) but there may still be limiting factors, such as premiums set too high (Salmela and Varho, 2006). A critical issue remains that consumers do not always purchase products despite their stated intentions to do so: for example, 20% of consumers state a willingness to pay between 10% and 20% more for green power products, yet actual adoption is less than 1% (Truffer et al., 2001). Policy makers should therefore consider the discrepancies that can exist between individuals stated and actual behaviour as referred to in the main body of this paper. Therefore, when seeking to validate policy, aspects that can lead to contradictions should be mitigated. For example, if constituents state that they would buy an affordable measure, the policy maker should determine the definition of ‘affordable’. Stern develops the role of the social environmental with the Value–Belief–Norm (VBN) Theory. Stern et al. (1999) used the basis of norm activation theories, i.e. personal and moral norms, to develop a VBN Theory, which begins to explain public support for environmentalism. Norm activation follows when an individual has become aware of potential consequences that may arise from an action. Through the ascription of responsibility for those consequences, individuals will alter their behaviour, thus activating their personal norms. Adding to this, moral norm activation theory posits that when an individual has accepted the beliefs of a particular movement, generally on altruistic principles, they accept responsibility that their own actions may affect those beliefs and modify their behaviour. As a development, VBN theorises that individuals accept the values of a movement, and that their actions could improve the situation regarding those values that may be under threat. Thus, their behaviour has been ‘normed’ through their beliefs based on the values of the movement. As with all social theories, there is the risk of free-riding, where individuals benefit from the actions of others, however, this can be overcome when there is a belief in the viability of group actions and individuals cannot distinguish their efforts from those of others. Stern et al. (1999) found that non-activist support for environmental improvements was based on the three dimensions of

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environmental citizenship, consumer behaviour and policy support, and in these three, personal pro-environmental norms were the common factor. In testing this theory, the causal links in VBN were the best theoretical account for these three dimensions. 3.3. Learning, dissonance and cognitive complexity influencing choice Developing an understanding of an issue, product or service is dependant on learning and behaviour will be shaped by values and knowledge (Kaiser et al., 1999). Of particular relevance to consumer behaviour is the concept that individuals with either more knowledge or concern about particular environmental issues state a willingness to pay higher prices for alternative products (Rowlands et al., 2002; Prakash, 2002). In a general behavioural context, as opposed to consumption behaviour, Correia et al. (2005) and Ellen (1994) both highlight examples of where the existence of higher levels of knowledge was an important predictor of pro-social and pro-environmental behaviour. Individuals will need to analyse products and services in order to learn about them. Analysis of a product will require evaluation of both the content and the structure of a product. Content in this context is defined as being a mental evaluation born from knowledge of and beliefs about that product, whereas ‘structure’ defines how the individual cognitively places the product in relationship to other products, goods or services. Therefore, an individual will seemingly categorise a product thereby easing their decision to accept or reject it. This process works by limiting available input from the environment, by organising and moderating information, to a level that the individual can still make an informed decision (Zinkhan and Braunsberger, 2004). How elaborately an individual may evaluate a product is a function of his or her ‘cognitive complexity’; the greater the degree of complexity, the higher the utilisation of product information and marketing messages on the decision to accept or reject a product. Using a repertory grid to analyse cognitive complexity in relation to consumer behaviour, Zinkhan and Braunsberger (2004) found that although individuals may have a complex understanding of one product, they may have a more ‘simple’ understanding of another, hence cognitive complexity is a ‘context specific’ phenomenon. In seeking to understand the basis of complexity, the research found support for the concept that where individuals had had more experience, and had been exposed to more stimuli regarding the products, they had developed superior evaluative criteria and problem solving skills. This in turn enabled them to make decisions independently of the experience of others, to transfer their knowledge to others and be more open to training in respect of the products. In other words, a virtuous circle had developed in that the more they knew, the more they wanted to know. The result of learning is that individuals accumulate an immense resource of knowledge over time, but they will

only employ a fraction of their knowledge at any one time; in other words, they appear to utilise a ‘working knowledge’. Generally, an individual will seek to reduce dissonance, so this working knowledge is more likely to be consistent with their current values and attitudes. This may provide an insight into why individuals change their behaviour over time as they review their ‘working knowledge’ and adopt revised values and attitudes. Self-reporting mechanisms can be used to measure attitude to a given product as behaviour includes verbal responses to products. However, it is not always possible to demonstrate a consistent relationship between attitudes and behaviour, as there are environmental factors that may influence behaviour; for example social norms and expectations (Robins and Boldero, 2003). Also of consequence are ‘habits’, where individuals may be aware of the need or a desire to change their behaviour, but because of their past behavioural patterns, or ‘habits’ they cannot make the actual change required to update their behaviour; a phenomenon identified by Salmela and Varho (2006). Cognitive consistency theories such as Balance Theory, Consistency Theory, and Cognitive Dissonance Theory highlight individuals’ need for consistency. Where individuals experience inconsistency, this creates a state of dissonance, which in turn drives a desire to return to consistency. Hence, dissonance can also be a mechanism that underlies resistance to change. Dissonance occurs at the individual level, and directly affects the decision to adopt ‘goods’, emphasising the need to investigate behaviours at the micro level (Jermias, 2001). Another example of a Cognitive Consistency Theory, Relational Discrepancy Theory, suggests that discrepancies represent different qualitative psychological situations and lead to differing outcomes, thus the consequential feelings that individuals experience may result in behaviour other than that originally intended by that individual. For example, discrepancies that occur when the individual is acting against their ‘ideal’ standard will cause a ‘dejection’-related outcome, and discrepancies that occur against a more definite standard, by which the individual believes they ‘ought’ to behave, will create an ‘agitation’-based outcome (Robins and Boldero, 2003). To avoid dissonance occurring in the first place, individuals usually favour information that confirms their beliefs and so will seek that information out. Alternatively, they may ignore or hypercritically scrutinise feedback that disagrees with their point of view. Hence, individuals have a ‘confirmatory’ bias, which will impact on marketing activities that seek to persuade or influence behaviour, as people who agree with the values of the concept will be more open to an awareness campaign. Individuals have been shown to adopt various strategies for reducing dissonance when it occurs and the extent to which these are followed is dependant on the ‘choice’ and ‘commitment’ of the individual. For example, individuals may follow a course of action but experience dissonance. Hence, they attempt to persuade themselves that having

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followed that course of action, the rejected alternative was less attractive, and that the chosen alternative was not as unattractive as they originally perceived. Similarly, the individual may exaggerate the attractiveness of the chosen alternative and the unattractiveness of the rejected alternative (Jermias, 2001). 3.4. Social learning As an alternative approach to reducing dissonance, individuals may seek advice from a social network in order to improve their own judgment or to increase their justification for a decision, in other words, learn from the social network. Hence, they will utilise that advice to fill gaps in their own knowledge or assess the value of alternative options for a decision. When presented with advice, the recipient could choose to ignore it, accept it in part with modification, or accept it unconditionally. This raises the question as to whether there are two cycles of the innovation decision process, where first, information has to be adopted, and second, the product itself. Yaniv (2004) identified factors that will affect whether or not attitudes can be changed through advice. The key influences are knowledge of the field in which the decision is made, and also the relative ‘distance’ between the opinions of the individual seeking advice and the advisor. Hence, those with less knowledge are more likely to take advice, and where advice is consistent with the individuals’ own opinion, it is regarded. However, there are no guarantees that the advice will be right, or are there clear justifications for ever accepting knowledge from others. Individuals can therefore engineer their social network to fit with their own values and attitudes. Reducing dissonance in relationships may suggest that individuals will gravitate towards others that have a closer opinion to their own. Heider’s Balance Theory, dated 1946, suggests that individuals will develop positive attitudes towards those with whom they have had previous association, which is important in that it introduces the element of ‘trust’ in a relationship. Social Exchange Theory suggests that individuals choose whom they have a relationship with based on demographic characteristics, personality attributes and their attitudes. These relationships have a strong degree of commensurability, in that individuals are more likely to engage with one another if their attributes are common, even if they are diametrically opposed (Corbitt et al., 2003). For example, if both people believe in the existence of ‘climate change’, they are more likely to engage with each other, even if they are at polar ends of the debate regarding its potential consequences, than if one of the parties had no view on or belief in its existence as an issue. Hence, if one does not share some qualities, aspirations or obligations with another, they will not connect (Robins and Boldero, 2003). Behavioural Economics Theories identify the existence of ‘classical conditioning’, where consumers have been conditioned through media to act in a certain way, or

associate certain aspects or emotions with a product. Conditioning is carried out over time through media advertising, where desirable features are always linked to a certain product or service, for example, happiness and laughter being linked to certain food products suggesting that the consumer will experience similar emotions or outcomes if they consume the product. According to the Behaviour Perspective Model, consumer choice will be influenced by various stimuli, such as hedonic reinforcement as with the example above, informational reinforcement, where ‘information’ will suffice to persuade a consumer to act in a certain way, and through ‘aversive’ stimuli, which persuade a consumer to act to avoid a negative outcome (Diclemente and Hantula, 2003). Wider cultural and societal influences will also influence behaviour (Dunphy and Herbig, 1995). A collective society will look more readily for solutions to global issues compared with an individualistic society. (Pedersen, 2000; Parthasarathy et al., 1995) Collective societies have greater social interaction and disseminate messages faster. However, individualistic societies, such as in the UK, tend towards more materialistic values (Lynn and Gelb, 1996), which is relevant to this study when considering the inclination of an individual to buy a personal, domestic power generation system. In respect of the product, Peattie (1992) and Rogers (1995) are consistent in their findings that while products must be compatible with the cultural environment in which the adopter resides; factors such as the economic climate, security of employment, political stability and climate, religious beliefs, weather and season should also be considered. In an earlier work, Lai (1991) argues that these should be considered as situational factors in the adoption process. Cultural compatibility has been proven to affect product and service choice in the buying and adoption process (Pedersen, 2000) for example; Heimburger et al. (2002) recognised that a key cause of failure to adopt emergency contraception was the role of cultural influences such as family norms and religious beliefs. 3.5. The buying process The buying process (Peattie, 1992), has been widely documented and follows the process of rational choice, whereby the evaluation of alternatives is based on an evaluation of costs against benefits. This is a cognitive process influenced by varying perspectives, such as available information, quality or value. Rational Choice is compatible with the innovation decision process (Rogers, 1995) which suggests that individuals recognise a need for a product, generate an awareness of the product based on its attributes and then decide to either consume or reject the product. If the product is consumed, its use may be later discontinued, and similarly, if it is rejected, can be later adopted. However, rational choice does not incorporate the fact that individuals also utilise their emotional perspective and may choose to either ally or distance themselves to goods or services they like or dislike (Hansen, 2005).

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The Theory of Reasoned Action (TRA), and Planned Behaviour (TPB) are established theories reviewed by many researchers (for example Jackson, 2004; Kalafatis et al., 1999; Kaiser et al., 1999). TRA and TPB attempt to place the buying decision process within a context of rational decision-making based on perceptions, values and attitudes by explaining the control that the individual has over the buying decision. The theory suggests that the level of ‘intention’ shown by an individual is the best predictor of behaviour. ‘Intention’ is influenced by internal and external control constructs, and is seen as a function of the individual’s attitude toward behaviour and any subjective norms. Hence, ‘intention’ is a cognitive representation of an individual’s behavioural tendency. Kidwell and Jewell (2003) developed this understanding of intention by establishing that an antecedent relationship exists between internal and external control influences, with external control as an antecedent and internal control as the more proximate determinant of behavioural intent. Consistent with the criticisms of rational choice however, more recent studies have agreed that TRA does not account for affective or emotional behaviour. Fitzmaurice (2005) argues that the buying decision involves hedonic and selfexpressive involvement. The findings of an experiment to judge the mediating effect of self-congruity found that ‘eagerness’ was a mediating factor on intention. In other words, the more ‘eager’ a person was to carry out a behaviour, the greater the intention to perform that behaviour. This raises the theoretical question as to the order in which consumers follow the buying process; does affective reasoning precede cognition? Fitzmaurice (2005) argues through empirical results that attitudes do not impact on ‘eagerness’, thereby implying that affective reasoning is a separate component of the process. The Hierarchy of Effects model focuses on the motivation for buying using the rational choice model but begins to incorporate affective or emotional influences. An individual progresses along a ‘think-feel-do’ path, where they think about the purchase, develop a feeling about purchasing it, based on their liking, preferences and how convinced they have become, and finally either purchase or do not. The attitude formation process (Schiffman and Kanuk, 1997) correlates with the hierarchy of effects by suggesting that attitudes are formed on the basis of how the individual has gained knowledge on the product (thought), then evaluated the product utilising both cognitive and affective (feeling) reasoning and finally formed an attitude (do). Whilst many authors have considered the merits of the ‘feel-think-do’ model and assume that behaviour is always dependant on awareness (Meyer, 2001), it might not always apply to actual buying behaviour. Parthasarathy et al. (1995) argues that later adopters, the ‘laggards’ in particular, are more motivated by the social influences around them, encouraging them to ‘do’ first, then ‘think’ and finally ‘feel’. In effect, this means that the final set of adopters will be less influenced by their own judgement, than by that of their peer groups or the society they live in.

The Hierarchy of Effects model differs from the innovation-decision process in that the ‘knowledge’ and ‘awareness’ stages are reversed, due to the different focus that the processes have. In the innovation-decision model, ‘knowledge’ refers to the adopter and how they become knowledgeable about their needs or wants, and ‘awareness’ refers to the heightened awareness of an innovation as they learn about it. In the hierarchy of effects, the focus on the adopter comes at the decision stage, as the awareness stage refers to when the potential buyer first becomes aware of the products, and then develops knowledge about it subsequently. The ‘innovation decision’ process has been used specifically to design or test projects that are being implemented. Hubbard and Mulvey (2003) and Heimburger et al. (2002) used the process to evaluate the implementation of a diffusion project, and found that the adoption rate was positively related to the level of knowledge potential adopters demonstrated, and despite some adopters rejecting the innovation due to its attributes, they remained open minded to later adoption. Morris et al. (2000) mapped the decision process that farmers took to adopt a government funded grant scheme. From their findings, the authors were able to identify where weaknesses lay with the marketing approach the government agency took; focusing primarily on the knowledge and persuasion stages but not facilitating the later stages of ‘decision, implementation and confirmation’. Other research has found that the awareness stage in the process is the optimal point at which to gain a full understanding of all the product attributes and thus overcome any post-purchase dissonance (Rogers, 1995). Kaplan (1999) takes this further by stating that the early need for ‘knowledge’ is critical, as it a pre-cursor to adoption interest. 3.6. Categorisation of consumers BET suggests four categories of consumer based on environmental and cognitive parameters. Consumers can be influenced in their moods or desires through communication techniques and will respond, in part, according to their level of ‘education’ in respect of the product in question. The four categories are ‘initiators’, ‘early’ and ‘later’ imitators, and finally, ‘last’ adopters, as outlined in Table 2 below. Within the categories, the consumers would demonstrate their type of behaviour along a high-low
Table 2 An overview of the behavioural perspective model (after Diclemente and Hantula, 2003) Antecedent influences Dominant type of behaviour Accomplishment Pleasure Accumulation Maintenance Category of adopter

Moods Ability to pay Deprivation Learning

Initiator Early imitator Later imitator Last adopter

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continuum according to the level of antecedent influences, such as their ‘moods’, their ‘ability to pay’, levels of ‘deprivation’, and the level of their ‘learning’ in respect of the product or service. BET suggests a categorisation which is in some way compatible with the categorisation of individuals that follow the innovation-decision process as generalised by Diffusion Theory (Rogers, 1995). This theory categorises adopters into five types, based on the time at which they adopt an innovation relative to its launch. From empirical evidence, the theory has identified relevant factors such as personality, values and attitudes, which affect this time difference in adoption. Adopter categories change from highly innovative to least innovative as the diffusion sequence unfolds. Adopters are categorised into (a) innovators (2.5% of adopters), (b) early adopters (12.5% of adopters), (c) early majority (35% of adopters), (d) late majority (35% of adopters) and (e) laggards (15% of adopters). The theory suggests that the distribution of these categories is normally distributed with the first 50% of consumers being in the first three adopter categories. BET allows categorisation based on dominant motivations for purchase. As seen in Table 2 below, an ‘initiator’ will have the resources and mindset to purchase products for accomplishment, whereas someone buying for ‘maintenance’ issues may be less innovative because they have priorities that are not driven by need for accomplishment or pleasure. 3.7. Product attributes and categorisation Expanding on the categorisation of products and goods in BET, Diffusion Theory models consumer expectations of products and services against product attributes, suggesting that these expectations influence the willingness to buy. Instead of goods categorised against the motivation for purchase as above, products are categorised against five predominant attributes; relative advantage, compatibility, observability, trialability, and complexity (Rogers, 1995). The ‘relative advantage’ describes the marginal advantage an innovation has over existing products. The critical aspect of relative advantage is how potential adopters perceive its advantage, rather than how it actually performs (Smizgin and Bourne, 1999; Aggarwal et al., 1998), for example, the enhanced status that ownership of a product brings (Martinez et al., 1998; Rogers, 1995). Bhate and Lawler (1997) suggest that it is factors of convenience and price that are most significant. Firms can improve the perceived relative advantage by decreasing any disadvantage and have been shown to increase the rate of adoption by offering incentives (Velayudhan, 2003; Prakash, 2002). Incentives can take many forms, either monetary or nonmonetary, but are not without risk to the firm (Prakash, 2002). For example, as Velayudhan (2003) discovered through research, featuring grants as part of the promotional package focuses attention on the high cost of the innovation and away from some other advantageous features that might have persuaded a potential consumer.

In addition, consumption on the basis of an incentive can lead to discontinued use of the product if the individual becomes disillusioned with it, and withdrawal of the incentive may lead to reduced levels of consumption (Cabraal et al., 1998; Rogers, 1995). ‘Compatibility’ describes how the product fits with the individual’s values, attitudes and behaviour. Attributes also include how visible the innovation is (‘observability’), or how accessible it is for individuals to use on a trial basis (‘trialability’). ‘Complexity’ is considered to be a restrictive factor in adoption, and describes how difficult it is to understand either the innovation, or its principles (Vollink et al., 2002; Kai-ming Au and Enderwick, 1999; Rogers, 1995). It has been demonstrated that consumers assess attributes in a stepwise process, commencing with relative advantage, then compatibility and complexity. These three attributes have been shown to hold the most influence over the purchase choice (Rogers 2001; Dunphy and Herbig, 1995; Mohr, 2001; Martinez et al., 1998). Rejection of the innovation can occur at any time in the process and attributes cannot compensate for each other. A product that demonstrates good relative advantage does not necessarily enhance the trust that adopters have in it, although it may influence their perceptions of quality and how they would use it (Vollink et al., 2002). In the case of how customers have assessed ‘green’ electricity, it would seem that consumers do not always trust ‘green power’ products to be necessarily ‘green’, in part because they are not knowledgeable about the power networks and infrastructure (Salmela and Varho, 2006). Pujari et al. (2003) propose that only two levels of attributes exist, namely ‘core’ attributes and ‘auxiliary’ attributes. Whereas ‘core’ attributes provide the basic level of benefits that consumers require, ‘auxiliary’ attributes help to define that product against another. The impact of this categorisation suggests that the success of a ‘green’ product will depend on whether the product has environmental considerations fully incorporated within it as core attributes, rather than as an auxiliary benefit added later. As seen in BET, where an individual has fewer disposable resources available they will be influenced by the degree of uncertainty or risk arising from a product or service. Hence, risk appears to be a restrictive attribute that it will lessen the likelihood of purchase (Aggarwal et al., 1998; Smizgin and Bourne, 1999; d. Ruyter et al., 2001). Consumers will perceive risk based on either issues of performance or time, or on perceptions and attitudes formed from personal or vicarious experience. Levels of risk may alter depending on the resources available to the individual; for example an adopter with adequate financial resources will view any capital risk more favourably than an adopter with poor financial resources (Martinez et al., 1998). 3.8. Towards a model for understanding behaviour In conclusion, the buying decision, or the decision to behave in a certain way towards energy use is informed by

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a wide range of internal and external factors. This paper has sought to draw together the key issues from Consumer Behaviour Theories with a view to a model of behaviour being developed in further research that can be used to inform the policy decision process. The scope of this paper has not included a discussion in relation to the ‘rebound’ effect, where technological efficiencies are cancelled out by higher levels of use due to savings made. However, this is a critical consequence on the use of energy following adoption of energy measures and should be considered in full. In advance of a model being developed that can identify causal relationships between the three central factors of the adoption decision, i.e. the product, the individual and the environment in which they are placed, policy makers should be more aware that carbon reduction targets will rely on individuals using energy efficiently and those individuals operate in a social context and the influence of cultural, social and emotional influences cannot be underestimated. To that end, it would appear that the issue of learning and awareness, coupled with accessibility to simple technologies would be a central factor to formulating effective policy. Thanks are extended to the valuable comments made by the anonymous reviewers during the publication of this material. References
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