Journal of Business Ethics (2010) 97:613624 DOI 10.

1007/s10551-010-0528-8

Springer 2010

Do Ethical Values Work? A Quantitative Study of the Impact of Fair Trade Coffee on Consumer Behavior

Patrice Cailleba Herbert Casteran

ABSTRACT. This study investigates the large French fair trade (FT) market and the importance of FT coffee within it, in an attempt to identify some general features of FT consumers. On the basis of 7,587 transactions, the authors also determine the impact of FT characteristics on customer behavior. The main result is somewhat surprising: FT coffee purchases seem to involve a temporary commitment as FT coffee consumers appear less loyal than traditional coffee consumers. The authors derive some business and academic implications. KEY WORDS: Fair Trade, coffee, consumer, France, retail, quantitative analysis, brand loyalty, satisfactionprot chain

Introduction Fair Trade (FT) is no longer a niche market, appealing just to socially aware and middle-class consumers. In 2007, worldwide FT retail values exceeded e2.3 billion (FLO, 2007), with sales of e730.8 million in the US and e704.3 million in the UK (Max Havelaar France, 2008). European sales increased by a factor of six times since 2002 (Krier, 2005; Max Havelaar France, 2008). Thus, not only has FT become one of the fastest growing markets in the world, but also Europe has emerged as one of the biggest markets for FT products, with an estimated 65% of all global sales (Max Havelaar France, 2008). In the European coffee market for example, FT coffee is the only segment to have grown signicantly since 2000. Traditional coffee sales growth has been weak even as FT coffee growth has risen constantly;

between 1999 and 2004, FT coffee market shares multiplied by nearly ve times in major European markets (e.g., UK, Switzerland, Austria, Denmark, Ireland). In 2004, the FT share of the coffee market reached 20% in the UK (Krier, 2005). This trend has forced many coffee actors to develop products that appeal to ethical consumption motives. Coffee is still the top FT commodity, especially in France. Total French FT turnover between 2002 and 2007 increased from e21 to e210 million (Max Havelaar France, 2006, 2008) and by 27% during the last 2 years. Other products (e.g., cotton, tea) have joined the FT market, and more and more certied products are being sold. In addition, FT coffee sales in France have continued to grow, from e40.6 million in 2004 (58% of e70 million for certied products) to e76.36 million in 2006 (46% of e166 million for certied products) (Max Havelaar France, 2006). In comparison with other domestic coffee markets in Europe, French FT coffee achieved the second highest market share in 2008. This study examines brand loyalty in the French FT coffee market. In prior literature, very few attempts relate FT to brand loyalty or explore customer behavior. Therefore, we begin with a review of literature pertaining to FT, its history, and its denition. We also examine studies that investigate FT coffee and brand loyalty. Next, we present the aim and objectives of our study, followed by a description of the methodology for our quantitative analysis. Finally, we present our results and their implications. Literature review After World War II, many actors tried to implement new kinds of trade to give people, in accordance with the Universal Declaration of Human Rights (adopted December 10, 1948), an existence worthy

All computations were performed using R 2.8.0. (R Development Core Team, 2008).

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Patrice Cailleba and Herbert Casteran psychological processes. Later authors (Dick and Basu, 1994; Oliver, 1997) also insisted on the effect of commitment effect, such that loyalty must be composed of the full spectrum of cognitive, affective, and conative dimensions, which cause repetitive same-brand or same brand-set purchasing, despite situational inuences and marketing efforts having the potential to cause switching behavior (Oliver, 1999, p. 34). Alternatively, loyalty might be dened by the consumers resistance to other external marketing pressures. Although some studies suggest the impact of brand loyalty on protability has been overestimated (Aksoy et al., 2005), few deny that it remains the main objective of an effective customer relationship. Yet, prior FT studies largely ignore brand loyalty and instead focus on consumer perceptions or values to highlight decisionmaking processes with regard to ethical consumption. For example, essentially qualitative studies address ethical consumption in France (de Ferran, 2004, 2007, 2008; Ozcaglar-Toulouse, 2005; Ozcaglar-Toulouse et al., 2006; Cailleba and Casteran, 2009). In traditional (i.e., non-FT) coffee markets, however, brand loyalty is a frequent topic. Although the entire marketing environment clearly inuences consumers (Bawa et al., 1989; Grover and Srinivasan, 1992; Rigaux-Bricmont, 1982), the coffee market is unique, in that it contains a pool of consumer switchers who are less loyal to any particular brand (Srivastava, 2007). They respond fairly and readily to changes in marketing variables (Bawa and Ghosh, 1991; Guadagni and Little, 1983). However, the market also contains loyal coffee consumers who are less price sensitive (Krishnamurthi and Raj, 1991). A question thus remains: Does brand loyalty exert an inuence in the FT coffee market? To answer this question, we consider the process that may lead to brand loyalty, namely, reinforcement, commitment, dependence, and satisfaction. According to Skinner (1938) and Hilgard and Marquis (1940), people repeat the same behavior if they receive a reward as a consequence of that action. In a marketing context, positive reinforcement causes loyalty toward products (Bennett and Mandel, 1969). Therefore, if a person has purchased FT coffee, he or she may receive a positive stimulus that increases his or her loyalty toward FT coffee. Kiesler (1971) denes commitment as the link between a person and his or her own actions, such

of human dignity, and supplemented, if necessary, by other means of social protection (article 23 (3)). Many therefore proposed FT denitions; however, the varied and competing denitions prevented the movement from developing beyond limited social circles. In 2001, four international FT associations joined together in an informal group, FINE, named to reect the rst letters of each groups name. Together, they proposed a common denition: Fair Trade is a trading partnership, based on dialog, transparency and respect, that seeks greater equity in international trade. It contributes to sustainable development by offering better trading conditions to, and securing the rights of, marginalized producers and workers especially in the South. Fair Trade organizations (backed by consumers) are engaged actively in supporting producers, awareness raising and in campaigning for changes in the rules and practice of conventional international trade (Krier, 2005). We rely on that denition for this study. The denition of brand loyalty similarly has been subject to some debate since its initial appearance in the marketing research eld (Copeland, 1923). Most studies adopt one of the three main approaches: behavioral, attitudinal, or some combination. The behavioral approach focuses on a consumers regular purchases of a particular brand (Sheth, 1968), so loyalty measures include real purchases according to frequency (Brown, 1952), probability (Guadagni and Little, 1983), or average amount per purchase (Bitran and Mondstein, 1996). The attitudinal approach instead emphasizes favorable attitudes adopted by the consumer toward the brand and thus measures loyalty according to specic intentions (Anderson and Fornell, 1994; Dubois and Quaghebeur, 1997), commitment, or attachment (Aaker, 1994; Lacoeuilhe, 2000), or else postpurchase recommendations (Bei and Chiao, 2001; Cronin et al., 2000; Cristau, 2001). The composite approach instead proposes that loyalty consists of both behavioral and attitudinal elements (Jacoby and Chestnut, 1978). Therefore, a loyal consumer is dened by his or her frequent purchases of and positive attitude toward a brand (Assael, 1987; Day, 1969; Frisou, 2005). In one of the most common denitions of brand loyalty, Jacoby and Kyner (1973) suggest six criteria: Loyalty is a biased, behavioral response, expressed over time, by some decision-making unit, with respect to one or more alternative brands, which is a function of

Do Ethical Values Work? that congruence exists with individual values. Commitment is a continuous variable, rather than a dichotomous one, in that people are more or less committed. When they have the opportunity to act on their commitment (e.g., buy an FT product), they should not hesitate. Therefore, commitment to certain values should incite the customer to be loyal, especially in the case of ethical matters. Loyalty also might result from strong dependence (Ryans and Wittink, 1977) or switching costs. That is, factors that make it more difcult or expensive to switch from a previous supplier (or product) to a new one increase the dependence of the consumer (Jones et al., 2000). However, the ease with which consumers may buy one coffee brand instead of another makes this concept seemingly irrelevant for our study context, so we do not consider this factor. Finally, customer loyalty depends on customer satisfaction. This relationship is clear: By improving the offer (e.g., coffee that has been fairly traded), the rm can increase customer satisfaction, which should encourage them to stay with the company. This loyalty then should have positive effects for rm protability. Anderson and Mittal (2000) therefore dene a satisfactionprot chain, as follows: performance customer satisfaction customer retention prot. Retention (or loyalty) is a consequence of a positive change in performance; the changes linear and symmetrical impact on customer retention then affects prots. Many studies conrm the relevance of the satisfactionprot chain (SPC) across multiple industries (Anderson et al., 1994; Kamakura et al., 2000; Loveman, 1998; Rucci et al., 1998). However, Anderson and Mittal (2000) also show that the links within the chain can be asymmetric and nonlinear. In an asymmetric situation, the impact of an increase is different from the impact of an equivalent decrease, not only in terms of direction but also in terms of size (Anderson and Mittal, 2000, p. 108). Thus, there might be negative asymmetry (e.g., slower provision might have a greater impact on customer satisfaction than faster supply) or a positive asymmetry (e.g., increasing the use of humor likely has a greater impact on customer satisfaction than does decreasing it). This dimension aligns with prospect theory as well (Kahneman and Tversky, 1979). In terms of nonlinearity, each additional one-unit increase in an input may have a smaller impact than the preceding one-unit increase. As in

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marginal cost analyses in economics, this trend suggests diminishing returns.

The study Research goals Signicant evidence supports the conceptual logic underlying the SPC. Yet, the situation may be different for FT products, and FT coffee in particular. Other than its FT sourcing, there is no universal difference between FT and traditional coffee, especially in organoleptic terms. Moreover, for FT coffee, customer satisfaction does not depend solely on taste, quality, or price but also reects an attribute external to the consumption experience, over which the customer has no control or feedback. We, therefore, consider the relevance of the SPC in relation to the FT coffee market in France by studying the relationship between performance on the FT attribute and customer retention. The intervening links in this chain may imply a linear, symmetrical SPC or a nonlinear, asymmetrical SPC. Furthermore, in our effort to investigate how FT attributes affect customer loyalty and purchase frequency, we formulate two main hypotheses. Average FT coffee purchase frequency per household is lower than traditional coffee purchase frequency. H2: (a) Exclusive FT coffee consumers are more loyal than are traditional coffee consumers, whereas (b) mixed consumers are less loyal toward FT coffee than toward traditional (less expensive) coffee.
H1:

First, we posit that, as dened by Yanchus and de Vanssay (2004, p. 236), an FT price is equal to the market-determined price of a good plus an additional premium that consumers are willing to pay for the guarantee that specic inputs are paid at a certain socially acceptable rate. The price premium for FT coffee in our study is 14% (11.67e per kg for the traditional coffee, 13.32e per kg for FT). According to de Pelsmacker et al.s (2005) study of actual willingness to pay for FT coffee, the average price premium Belgian consumers pay for FT coffee is 10%. If the price is higher than this premium, even if

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Patrice Cailleba and Herbert Casteran price, promotions). We focus our analysis on the number of transactions made by each customer. A cohort of 4,340 households made their rst purchases within the same three-month period (January March 2005). We limit our attention to this cohort to avoid excessive heterogeneity. Of their 153,907 transactions, we identify 111,098 traditional coffee purchases (72%), 7,875 FT coffee purchases (5%), and 34,934 of unknown type (23%). We also distinguish three subpopulations in the estimation period: FT coffee customers, traditional coffee customers, and customers who purchase both traditional and FT coffee during the estimation period.

consumers value ethical consumption, their behavior might not be consistent with their attitudes (Wathieu and Bertini, 2007). Therefore, we propose in H1 that consumers average FT coffee purchase frequency is lower than average traditional coffee purchase frequency. As purchase rate frequency has a direct impact on coffee consumption, it should exert a positive or negative reinforcement effect. We implicitly assume this direct link between consumption and purchase frequency; though such an assumption should be veried, it has been widely supported (e.g., Fader et al., 2005a). Second, in a previous study based on a sample of 5,668 households, we (Cailleba and Casteran, 2009) nd that the French FT coffee market contains three different segments: (1) exclusive traditional consumers, (2) exclusive FT coffee consumers, and (3) mixed consumers. The sizes of these segments are very dissimilar: 93.5%, 0.5%, and 6%, respectively. The segments also exhibit varying levels of involvement, as measured by the price they pay (Laurent and Kapferer, 1985). That is, the segments pay on average 2.85, 3.54, and 2.7e for their coffee purchases, respectively. The third segment clearly is interested in low prices; so FT coffee purchases are a function of price promotions for these consumers. In turn, we expect exclusive FT consumers loyalty to be stronger than exclusive traditional consumers loyalty. For the mixed consumers, we have no expectations about FT coffee, other than their opportunistic purchases based on price. In general, the third segments loyalty to traditional (less expensive) coffee should be stronger than their loyalty to the FT coffee. To measure commitment and test H2, we use expected inactivity dates as measured by the models.

The model We consider transactions in a noncontractual setting; so customers do not necessarily alert the rm when they disappear (Dwyer, 1989; Jackson, 1985). In such settings, such as the grocery sector, the rm generally possesses just two types of transaction data: purchase frequency and time elapsed since the last transaction (recency). We adopt continuous mixture models, specically, the beta-geometric (BG)/NBD model (Fader et al., 2005a). We prefer this approach to the Pareto/NBD model (Schmittlein et al., 1987) because it creates fewer estimation problems and offers clear interpretations. The BG/NBD approach considers two processes, purchase frequency and the death of the customer, and it makes two fundamental assumptions about purchase frequency and inactivity. For frequency (i.e., distribution of the number of purchases and heterogeneity across customers), the number of purchases Y follows a Poisson distribution with a transaction rate k. The probability that a customery makes y transactions during time t is PY y kt ekt : This expression y! means the interpurchase time follows an exponential distribution. The process is without memory, and there is a constant probability of a transaction in each period. The market is fundamentally stationary. These assumptions have been well validated for frequently purchased goods (Ehrenberg, 1959, 1988). Furthermore, heterogeneity across customers is represented by the gamma distribution of k with the parameters r (shape) and a (scale): f kjr; a ar r1 ak e ; where k > 0, r > 0, and a > 0. We Crk choose the gamma distribution for its exibility and

Data We base our analysis on data from the BehaviorScan single-source panel. This retailing panel represents 5,668 households that purchased coffee at least once in a supermarket or discount store between January 2005 and June 2007. A transaction characterizes the purchase of one stock-keeping unit (SKU) per day and per household. In 166,945 transactions involving at least one package of ground coffee, the households purchased 8,431 of which contained FT coffee. The choice to purchase FT coffee depends on personal characteristics as well as the purchase context (e.g.,

Do Ethical Values Work? convenience in mathematical terms. We can directly r derive E kjr; a a and ignore explanatory variables, which are considered latent traits that depend on the distribution of the k. To model client inactivity, the BG/NBD model assumes the customer has a xed probability p to become inactive immediately after any repeated transaction. This assumption seems reasonable for frequently purchased goods (Fader et al., 2005b). Thus, the probability of inactivity is geometrically distributed, P (inactive after the jth purchase) = p(1 - p)j-1. Heterogeneity in p then is modeled with a beta distribution, which ensures exibility and values between 0 and 1. The beta distribution is gpja; b pa1 1pb1 Ba;b : Nevertheless, the probability p of becoming inactive after any transaction and the transaction rate k both vary independently across customers. Fader et al. (2005a) show a link between dropout probability and date of inactivity s, 1 E sjk; p kp; which can be considered an effect of exhaustion.

617

Figure 1. Distribution of average transaction value by transaction quantity.

Results We rely on an underlying assumption about the independence between purchase frequency and the average amount spent in a transaction. If this assumption holds, purchase frequency is a good proxy for coffee consumption. We use a Box-and-Wisker plot to summarize the distribution of the average transaction value per transaction, as we show in Figure 1. We nd no signicant differences in the means. To conrm this result, we use an ANOVA test and nd the results in Table I. There is no link between purchase frequency and average amount per transaction, which implies that the purchase frequency represents coffee consumption well. Our dependent variable thus is purchase frequency, which is highly correlated with the number of packages purchased; the Pearson coefcient of the correlation is 0.929. We adopt a popular adjustment criterion, the Bayesian information criterion (BIC), and base the values on a log scale, written as follows: BIC = -2LL + k ln(n), where LL is the log-likelihood value, k is the number of parameters, and n is the sample size. This criterion measures the efciency of

the model in terms of predicting the data; the lower its value, the better is the model. Instead of detailing the coefcients, we discuss the two main derived expressions. (We detail the formulae in Appendix 1.) First, we express the purchase rate in terms of weekly transactions. Second, we compute an average inactivity date. We obtain the results in Table II. The quality of the estimation based on the BIC is very specic: It is poor for the traditional transactions (especially consumers who only buy traditional coffee), which likely reects their high degree of heterogeneity. Considering the various types of traditional coffees available as one unique product is clearly a limit for the accuracy of our analysis. The purchase rate expected represents the average number of coffee transactions per week and per customer. A transaction might include several packages (i.e., on average, 1.3 packages per transaction). Similarly, the inactivity date expected is the average lifespan of a customer, which reects when the household stops purchasing coffee or FT coffee for any reason. It is interesting to project the expected transactions over a ve-year period with our coefcients and our three-month cohort (see Figure 2). Figure 2 cannot indicate the overall evolution of coffee consumption, which includes the arrival of new customers. However, we obtain a good representation of general evolutions. For comparison purposes, we set the base value to 100 purchases for each segment; for mixed consumers, we divide this value between FT and traditional coffee transactions. As

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Patrice Cailleba and Herbert Casteran

TABLE I Analysis of variance of average value between number of transactions ANOVA Sum of squares df 6 3,901 3,907 Mean of squares 2,609 2,551 F-test 1,023 Signicance 0.408

Intergroup Intragroup Total

15,654 9,950,455 9,966,108

TABLE II Expressions derived from the BG/NBD models Transactions by Type of product E(k): purchase rate expected E(s): inactivity date expected BIC FT coffee customers FT transactions 0.184 3 years and 4 months 2,368 Traditional coffee customers Traditional transactions 0.205 15 years and 4 months 161,110 Mixed customers FT transactions 0.146 1 year 9,623 Traditional transactions 0.232 4 years and 10 months 23,265

we have noted, the transactions reect consumption, due to the independence between purchase frequency and the average quantity per transaction. The evolutions appear quite clearly. Other than in their behavior, the consumer segments differ signicantly in terms of income as we show in Appendix 2 but not in terms of household size and average age. The traditional coffee customers have the lowest income: the exclusiveFT-customer income is 8% higher and the mixedcustomer is 21% higher. However, there does not seem to be any link between the evolution of coffee transactions and income. The highest income segment shows the same evolution of the traditional coffee purchases as the lowest income segment. However, this highest income segment exhibits a smaller decrease in FT coffee consumption than the medium income segment. The difference in terms of income has no clear implication on coffee consumption. The fact that there is no proved link between income and consumption evolution enables us to assert that FT coffee consumption decreases faster than traditional coffee consumption, all other things being equal. Five years later, the transactions

generated by the FT customers have fallen by 31% (black dotted line), whereas those by traditional coffee customers fall by only 17% (black continuous line). After three and a half years, the decline in FT coffee consumption accelerates; this point corresponds to the average expected inactivity date. For the mixed customers, we note that traditional transactions (gray continuous line) evolve similarly to the coffee transactions for exclusive traditional customers (black continuous line). Both curves have the same shape, and though their expected inactivity dates may differ, traditional coffee transactions for mixed and exclusive customers move in parallel. Moreover, the FT coffee transactions for mixed customers (gray dotted line) fall sharply from the very start, and by -31% in relative terms in the rst year (see Figure 1). The same reduction takes 5 years for exclusive FT customers.

Interpretation and discussion Our results show that exclusive traditional customers exhibit a higher purchase frequency than exclusive

Do Ethical Values Work?

619

Figure 2. Coffee transactions over 5 years.

FT customers: 0.205 versus 0.184, or a difference of 10.3%. In terms of the similarities of these segments, we note that exclusive FT coffee customers do not drink as much coffee as exclusive traditional coffee drinkers, who are clearly regular and heavy coffee drinkers. Although FT coffee should represent a positive attribute for FT customers, their purchase rate frequency is lower than that of traditional coffee customers. The 14% difference in price that we nd may constitute transgressive pricing, that is, above consumers willingness to pay (Wathieu and Bertini, 2007). In support of H1, we nd no reinforcement effect, in that FT coffee consumption is lower than traditional coffee consumption. An FT purchase, therefore, could signal simply weak interest in the product. Exclusive FT coffee customers also do not appear to be heavy coffee drinkers. They may purchase it occasionally, probably for friends, family, or just ethical purposes (i.e., for Fair Trades sake). The mixed coffee consumption segment serves to increase traditional coffee consumption levels. During the limited period of time we study, mixed customers buy much more traditional coffee than do exclusive traditional customers: 0.232 versus 0.205, or a difference of 13.1%. Despite their weak lifespans, mixed customers represent heavy purchasers during their consumption periods. As observed by

` de Canniere et al. (2009), general trends among customers often hide opposing trends. The consumption of FT coffee is systematically associated with a low consumer lifespan. The exclusive traditional customers exhibit an expected inactivity date approximately four times higher than those of the exclusive FT coffee customers (15.3 vs. 3.3 years). In the French coffee market, FT characteristics thus appear to include lower customer retention compared with traditional coffee customers. Even if they are satised with an initial FT coffee purchase, their retention lasts less than 4 years. Moreover, it does not move higher than the retention rates of traditional coffee customers. Therefore, we do not nd support for H2a, and FT coffee purchases appear to involve a temporary commitment, with an average maximum duration of 3 years and 4 months (see Figure 1). Finally, when consumers buy both FT and traditional coffee, their inactivity date differs from that of other coffee consumers, reaching nearly 5 years for traditional coffee and 1 year for FT transactions. Again, the FT attributes appear to lower the lifespan. Yet, of all FT coffee buyers, mixed consumers seem least loyal to FT. They buy FT coffee for just 1 year; exclusive FT coffee customers buy it for more than 3 years (see Figure 1). Thus, we nd support for H2b.

620 Implications and conclusions

Patrice Cailleba and Herbert Casteran If the lifespan of FT coffee consumption remains low, FT coffee sellers must attract more and more new customers to continue increasing sales. Marketing practitioners should develop new FT campaigns to conquer new customers. All other things being equal though, a threshold effect may occur if customer retention cannot be increased. Therefore, specic marketing campaigns should work to build real customer loyalty among exclusive and mixed FT consumers. As we have noted previously (Cailleba and Casteran, 2009), the French FT market experiences a consumption peak in May, during the FT fair (i.e., la quinzaine du commerce equitable). To increase the purchase frequency and FT loyalty, a new FT event might be created during the second half of the year to promote FT and increase sales more persistently. Price remains a signicant barrier to the purchase of FT products. This observation conrms past studies (de Pelsmacker et al., 2005, 2006; Shaw and Clarke, 1999; Shaw et al., 2006) that regard price, quality, and brand as the main purchase determinants. Therefore, FT actors should expand their offers by featuring, for example, new premium FT coffee brands, as well as discount or competitively priced FT coffee. Furthermore, FT professionals should invest in detailed tracking systems to understand FT customers satisfaction and behavior. Carrigan and Attalla (2001, p. 568) observe that ethics only matter to consumers if they have a vested personal interested in, which implies an FT characteristic alone may not be sufcient to capture customers and build loyalty. Health attributes might generate higher commitment; similar to Shaw and Clarke (1999) and Shaw et al. (2006), we imagine that adding organic attributes to the FT offer could increase market success. Furthermore, as the initial investigation of this market, this study contains some assumptions that should be relaxed. First, the underlying assumptions of the BG/NBD model are strong, especially those regarding the stationarity of the market due to the Poisson formulation and the constant defection probability. Those hypotheses may not be appropriate for a fast changing market like FT coffee. They might be relaxed by changing the distribution of the interpurchase time and adopting, for example, a Weibull distribution (Mac Shane et al., 2008). Second, our unit of measure, the transaction, could be generalized to the number of products

As our primary nding, we note that FT is not a persistently attractive attribute. In the FT coffee market, we nd no commitment or reinforcement effect. FT coffee consumption implies a segmentation in which ethical consumption may not be the only means of discrimination. That is, the purchase of FT coffee may be a civic or ostentatious action, but it is not motivated by the desire to consume coffee for coffees sake. People who buy FT coffee therefore might not be regular customers. The low purchase frequency cannot be attributed to a distribution problem; two-thirds of all FT sales occur in hyper- and supermarkets (Max Havelaar France, 2008). Thus, FT consumption, though often presented as a new way to consume, appears more like a purchase with few links to a personal interest in the product. The immediate implication is a short consumer lifespan and low purchase frequency. Moreover, we nd that the SPC does not apply in a traditional manner to the French FT coffee market. We predicted that a positive change in coffee attributes (i.e., turning coffee into FT coffee) would have two different consequences. First, among mixed consumers, the FT characteristic might imply a linear and symmetrical SPC. However, we nd that the FT attribute actually is associated with an increase of traditional coffee consumption among these consumers. Second, for exclusive FT customers, we predicted the FT characteristic would have generated a nonlinear, asymmetrical SPC, because the positive change associated with the FT attribute should have a greater impact on their satisfaction and therefore loyalty to FT coffee (positive asymmetry). However, we note no long or sustainable commitment by exclusive FT customers in their FT coffee consumption. The FT characteristic does not generate a linear, symmetrical relationship, nor a nonlinear, asymmetrical relationship with customer retention. In our study, the FT characteristic has negative impacts on both purchase rate frequency and lifetime consumption. Despite the general increase in FT sales, especially in FT coffee, we also observe low loyalty among FT customers (mixed and exclusive). More people appear to have become temporary and infrequent buyers of FT over time. Thus, we derive some key managerial and academic implications.

Do Ethical Values Work? purchased or amount. However, we also note that in our case, the number of transactions and number of products purchased are strongly correlated. Third, further research should be more precise regarding the nature of the products. All traditional coffees cannot be considered a single product; their marketing characteristics are very different. However, the same concern does not apply to FT coffee, for which the FT characteristic appears determinant. Our research also could be extended with an investigation of the motivations and attitudes toward FT products. Our study cannot identify these motivations. If the motivation is ethical, it may

621

pregure and determine a way of life; our rst results are not very encouraging in this sense though. Acknowledgments
This article is a revised version of a presentation made during the B&ESI Conference, Acapulco, January 2009. We sincerely thank Pascal Poutet, Stephen Platt, and the JBE anonymous reviewers for their valuable comments, as well as IRMAPE members for fruitful discussions.

Appendix

APPENDIX 1 Value of the estimated coefcients Transactions by Type of product a b r a FT coffee customers FT transactions 0.05605518 1.75549353 0.82417728 4.4807945 Traditional coffee customers Traditional transactions 0.02256481 3.67124042 1.29822104 6.32707268 Mixed customers FT transactions 0.4445869 3.0294465 0.4812762 3.2966507 Traditional transactions 0.03858352 2.20348663 1.43720043 6.20451634

r The expression of the expected purchase rate is Ek a: The inactivity date is Es aab (see Fader and Hardie, ra 2010).

APPENDIX 2 ANOVAs for three segments of coffee drinkers ANOVA Sum of squares Household size Intergroup Intragroup Total Average age Intergroup Intragroup Total Household net income Intergroup Intragroup Total df Mean of squares F-test Signication

5,938 3553,893 3559,831 22,344 17962,889 17985,233 118,767 8167,965 8286,731

2 2138 2140 2 2138 2140 2 2106 2108

2,969 1,662

1,786

0.168

11,172 8,402

1,330

0.265

59,383 3,878

15,311

0.000

622 References

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Groupe ESC Pau, Pau, France E-mail: patrice.cailleba@esc-pau.fr

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