FairTrade Market Research

1
FairTrade Market Research

• By ACNielsen Intl Research (Hong Kong)

2
Table of Contents

• Contents Page No.
• Background Objectives ..3
• Research Design Coverage..5
• Executive Summary...6
• Main Findings..10
• Respondents...11
• Awareness and Purchase of FairTrade and FairTrade
  Products..18
• Attitude towards FairTrade Products after Reading
  the Concept...20

3
Background

• Oxfam has seen the success of FairTrade practice
  in Europe and the United States. Oxfam Hong Kong
  wishes to promote FairTrade in Asia, particularly
  among consumers, to ensure a demand-led market
  development for FairTrade products.
• Oxfam approached ACNielsen (China), Ltd for the
  purpose of conducting consumer research to
  determine the extent of understanding and
  patronage of FairTrade products in Hong Kong.

4
Objectives

• Research objective to determine Hong Kong
  consumers interest in FairTrade
• Specific aims
• determine consumer awareness, understanding and
  definition of FairTrade among consumers
• profile FairTrade consumers
• determine current consumer interest in terms of
  incidence of FairTrade product purchase among
  those MHI gtHKD20,000
• identify consumer product categories with
  FairTrade potential in Hong Kong and key access
  points.
• identify barriers that prevent consumers from
  purchasing FairTrade products
• identify key motivators that encourage purchase
  of FairTrade products.

5
Research Design

• Methodology Online Quantitative Survey
• Location Hong Kong
• Respondents Main Sample (n304)
• - Male/Female probability respondents,
• - 18-45 years old with MHIgtHKD20,000
  Core Target (n110)
• - Same as main sample those who purchased
  any Fair Trade Product in the past year
• Fieldwork Dates From Jul 21st 2006 Jul 27th
  2006

6
Executive Summary
7
Executive Summary

• FairTrade is known to a high number of Hong Kong
  consumers (70). However, this awareness does
  not translate to purchase only 37 have bought
  a FairTrade product in the past. What is
  encouraging, though, is that quite a number who
  bought become frequent buyers.
• Developing purchase generating activities could
  prove worthwhile as FairTrade products are able
  to convert triers to frequent buyers. The highly
  educated group is a good target for these
  activities as they are familiar with FairTrade
  but have not bought any product yet.
• Triers and current buyers of FairTrade products
  are likely to be males and females between 30 to
  39 years old and are early adopters (love to
  try and tell others about new things).
• Newspapers and television are the main source of
  awareness for Fair Trade. Magazines and the
  internet are also quite popular sources.
• Coffee/Coffee Beans are by far the most popularly
  known and bought FairTrade product.
• The two major supermarket chains, Park N Shop
  and Wellcome are seen to be the primary sources
  of purchase. City Super and the chain coffee
  shops are also important.

8
Executive Summary

• Consumers are receptive to FairTrade concepts.
• It is interesting to note that more elaboration
  of FairTrade concepts created a change in the
  purchase decision of the consumers. After
  reading FairTrade definitions and impacts, all
  respondents expressed an interest to buy a
  FairTrade product. The desire to support the
  FairTrade idea and to be able to help others are
  now as much a purchase reason as product meeting
  a personal need.
• This indicates that exposure to even a simple
  stimulus is enough for consumers to recognise the
  value of FairTrade and how they can help promote
  the practice.
• The values of FairTrade appeal directly to the
  emotions of the consumer and they are willing
  to respond to that appeal with a purchase.

9
Executive Summary

• There is strong potential to develop the market
  for FairTrade product.
• A key success factor would be an effective
  educational or promotional campaign whereby
  relevant key messages are communicated
• FairTrade improves lives of producers, and real
  life stories are featured.
• This justifies possible premium pricing for
  FairTrade products (its partly charity).
• FairTrade products will not force anyone to
  compromise on quality. FairTrade products
  quality is comparable to any commercial
  alternative.
• With a good quality of consumer awareness,
  research data suggest that people will be more
  than willing to buy these products on a more
  regular basis even with a slight price premium.

10
Main Findings
11
Respondent Profile

• Respondent characteristics are as follows
• Quotas were set to reflect the general
  populations characteristics among middle to upper
  income class (with monthly household income
  higher than HKD20,000) in terms of gender and age
• Half have at least completed college. Majority
  are either white collar or professional
• Almost equal split in terms of for marital status
  single versus married
• They tend to adopt new ideas and new products
  easily

12
Awareness and Purchase of Fair Trade Fair
Trade Products
13
Awareness and Purchase of Fair Trade Fair
Trade Products

• Awareness and Purchase Level
• FairTrade or FairTrade products have a good
  saliency.
• Based on FGDs, fair trade concept is largely
  confused with WTO. Hence most consumers are not
  aware of the fact that fair trade leads to
  improved living standards of producers.
• Awareness therefore is not easily translated into
  purchase as fair trade products are not clearly
  differentiated in consumer minds. Purchase level
  of Fair Trade products is just average and can
  still be improved, especially among those with
  higher education level (college or above).
• Majority of frequent FairTrade product buyers are
  the early adopters who love trying new things and
  are willing to tell others about these new
  things.
• Awareness Channels
• Newspapers (68) and television (61) are the
  main sources of awareness for FairTrade and its
  products. The Internet (30), magazines(26) and
  radio (22) are also important sources of
  awareness.
• On the average, consumers are aware of about
  three to four products from FairTrade, and not
  surprisingly, current FairTrade product buyers
  are able to mention up to 5 products on average.
• Coffee and Coffee Beans (78) are the most
  familiar FairTrade product among HK consumers.

14

• Majority learned about Fair Trade and its
  products from the newspapers and via television.
  About a third learned about it through the
  internet and magazines.

Channels to know about Fair Trade/ Fair Trade
Products -
Total

Newspapers Television Internet Magazines
Radio World Trade Organization
Charity/Non-profit Organizations Retailers/
Shop selling Fair Trade products TV ad
Newsletter Print Ad Friends/ relatives
Outdoor Ad
More popular among higher education
group(college) and professional
More popular among middle income group
(HKD20K-45K)
More popular among higher education
group(college) and Fair Trade products buyers,
particularly occasional buyer
Average no. of channels mentioned 2.8
Base Aware of Fair Trade/ FT Pdts (n213)
Q7. How did you come to know about Fair Trade/
Fair Trade Products?
15

• Park N Shop and Wellcome are the primary
  purchase outlets for FairTrade products.
• City Super and chain coffee shops are important
  sources as well.

Channels of purchasing Fair Trade Products -

Park N' Shop Welcome Chain Coffee Shops
City's Super Marks Spencer Personal Care
shops (e.g. Watson's, Mannings) Other
supermarkets Independent Coffee Shops Body
Shop Charity/ Non-profit Organizations
Organic Product Stores Overseas
Base Ever Buyers of Fair Trade Products (N 112)
Q10. Where did you buy Fair Trade Products?
16
Reasons for buying Fair Trade Products before
reading the Concepts -

• Product need (70) is the main reason for buying
  a Fair Trade product, followed by a recognition
  of its quality (55) and its reasonable price
  (36).
• Buying to support the Fair Trade concept and the
  belief that purchasing will help others and
  sustain the world are cited by about a third of
  respondents especially among the higher educated
  and the professionals or businessmen.

For my needs For its quality For its reasonable
price Support Fair Trade concept Believe
buying can help others Believe buying can help
the world's sustainability For own's
health None
Base Ever Buyers of Fair Trade Products (N 112)
Q14 What are the reasons for you to buy Fair
Trade Products?
17
Attitude towards Fair Trade Products after
Reading Fair Trade Concepts
18
Reasons for buying Fair Trade Products after
reading the Concepts -

• The concepts changed consumers reasons for
  wanting to buy a Fair Trade product. Support for
  what Fair Trade stands for and a belief that they
  are helping others have now become as important
  as buying to fill a need. This suggests that
  more information about the Fair Trade purpose and
  causes will create a positive impact on potential
  buyers.

Before reading the tested concepts
After reading the tested concepts
Support Fair Trade concept Believe buying can
help others For my needs Believe buying can help
the world's sustainability For its quality For
its reasonable price For own's health None
Base All respondent who express purchase
interest after reading the tested concepts (N
302)
Base Ever Buyers of Fair Trade Products (N 112)
Q20 What are the reasons for you to buy Fair
Trade Products after reading the concepts?
19

• After reading the Fair Trade concepts, purchase
  of products is now equally driven by the
  products price and quality and by a desire to
  help other people.

Main driver for buying Fair Trade Products -
Base All Respondents (n 304)
Q33 Which of the following best describe your
opinion towards Fair Trade?
20

• Supermarkets remain to be the more popular trade
  channels but there is an increased expectation
  that these products can also be sourced from
  charity/non-profit organizations (like Oxfam).

Channels interested to buy FT products in after
reading Fair Trade Concepts-
Before reading the tested concepts
After reading the tested concepts

Park N' Shop Welcome City's Super Charity/
Non-profit Organizations (e.g. Oxfam) Personal
Care shops (e.g. Watson's, Mannings) Chain
Coffee Shops Other supermarkets Marks
Spencer Organic Product Stores Body Shop
Independent Coffee Shops Overseas
Base All respondent who express purchase
interest after reading the tested concepts (N
302)
Base Ever Buyers of Fair Trade Products (N 112)
Q21. What sorts of Fair Trade products are you
interested to buy?
21

• Improved interest in Fair Trade crops (such as
  fruit and vegetables) as well as Handicrafts and
  drinks like Tea and Milk was noted after
  consumers were exposed to the concepts tested.

Fair Trade Products interested in after reading
Fair Trade Concepts-
After reading the tested concepts
Before reading the tested concepts

Fruit Coffee/ Coffee Beans Vegetable
Chocolate Clothings Tea Handicraft Milk
Sugar Sports shoes Dried Fruit Cotton
Base All respondent who express purchase
interest after reading the tested concepts (N
302)
Base Ever Buyers of Fair Trade Products (N 112)
Q21. What sorts of Fair Trade products are you
interested to buy?
22

• All respondents expressed an interest to buy Fair
  Trade products instead of what they are currently
  buying.

Product Replacement Behavior
All Respondents (n304) 100
Do not have Purchase Intent in both concepts
(B2B) (n2) 0
Have Purchase Intent (T3B) (n302) 100
Buy as Product Replacement (n218) 72
Buy as Additional Product (n86) 28
More popular among frequent buyers or lower
education group
Totally replace more popular among mature adult
(aged 40-45) or early adopters. From time to
time more popular among young adult (aged
18-29), non buyers, higher education group
(college ) and mid/late adopters
23

• The Local Government and Non-Profit Organizations
  emerged as the strongest entities perceived to be
  responsible for promoting Fair Trade in Hong Kong.

Company/ Organization responsible for promoting
Fair Trade -

Local Government Non-profit Organizations
Reputable commercial company Consumer
Organization (e.g. Consumer Council) Charity
Organizations Benefited personnel of Fair Trade
(e.g. Farmers) University/ Academic Institute
Q26. Which company or organization has the
responsibility to promote Fair Trade?
Base All respondents (N 304)
24
Maximum additional price willing to pay for Fair
Trade products -

• On the average, consumers are willing to pay for
  a HKD 24.4 premium for Fair Trade products.
• This was, expectedly higher for the more open
  consumers such as those aged 30-39 years old,
  work as professionals and can be classified as
  early adopters.

Mean HKD24.4 Adult 30-39 (HKD29.0)Professional
(HKD29.1) and Early adopters (HKD27.6) are
willing to pay a slight premium.
Base All respondents (N 304)
Q29 Assuming that a certain kind of non-fair
trade food costs around HK50 in the market. For
the same kind of food which is under the fair
trade, what is the maximum additional price that
you are willing to pay for?