Sustainability, Big Data, and Consumer Behavior: A Supply Chain Framework
Brianna A. Currie
Alexandra D. French
M. Ali Ulku
It is consumer demand that drives businesses. A business would be as sustainable as the society in which it operates in and the society will be as sustainable as nature allows. Therefore, as has been evident with the COVID-19 pandemic, it is of the utmost importance that human consumption and behavior should minimize the burden it places on the environment, strive toward a just and equitable society in which diversity is truly embraced and seen as strength. Businesses should be resilient and smart enough to respond to the constantly changing demands of a volatile and global economy. The current pandemic has highlighted the immense value of resiliency in the local and global healthcare supply chains and commercial goods.
Almost all the news related to the pandemic mention the word “supply chain.” This global health crisis provides an unprecedented opportunity for rethinking the “business as usual” mentality; one that is better by incorporating more sustainability goals and practices than the prepandemic one. Accordingly, supply chain researchers all around the world are working hard to help recovery (e.g., Esper 2020; Ivanov 2020; Ulkii and Engau 2020). Therefore, in these tumultuous times, understanding the changing dynamics of consumer behavior and how technology can enhance sustainable efficiency in supply chain operations is pivotal for viability and resiliency. This chapter focuses on consumer behavior toward sustainable products with the goal of developing a framework for how companies can respond to such emerging segmented markets (c.f., Laroche et al. 2001; do Pa§o et al. 2009) using big data capabilities such as those found in a supply chain.
Within this chapter, the term “product” represents a general class of commodities for sale; it could be a manufactured good (e.g., a bar of soap), a service (e.g., banking), or a combination of both (e.g., an automobile with service warranties). A distinction is also made between the terms “customer” and “consumer.” A consumer is the end-customer, who buys the final finished product. On the other hand, a customer could be any supply chain member; a retailer is a customer to the manufacturer, so is a manufacturer to a raw material supplier. In other words, while customers engage in a business-to-business (B2B) relationship, a retailer for example, is in a business-to-consumer (B2C) relationship. The term, “sustainability,” is the avoidance of the depletion of natural resources, such that an ecological balance is sustained. Sustainability in business is generally coined with the term, triple bottom line, TBL (Elkington 1998). TBL approach includes the financial (profit), environmental (planet), and social (people) performance measures that impact an enterprise.
Evidently, the markets for sustainable products such as organic fresh produce and fair-trade goods have seen dramatic increases in sales in the past decade (Khalamayzer 2017). The growth of sustainability labels on products is a major sign of the ideas increasing popularity, empowering consumers to make more sustainable choices (Van Loo et al. 2015). According to Sachs (2015),
Sustainable development is both a way of looking at the world with a focus on interlinkages of economic, social and environmental change and a way of describing our shared aspirations for a decent life, combining economic development, social inclusion and environmental sustainability.
While past research has evaluated consumer’s attention to product information before purchase (e.g., Ulkii and Hsuan 2017), not much is known regarding the factors involved in formulating a demand for the sustainability of a product, and how recent changes in shopping behavior and logistics capabilities can be molded into a supply chain framework. This chapter aims to address this gap in research by carefully reviewing scholarly publications focused on the intersection between consumer’s reasons for choosing a product and sustainability issues. Behe et al. (2015) noted that highly involved consumers exhibited greater fixation on product information compared to consumers with lower product involvement. This research will also investigate whether consumers with this high involvement are more likely to make purchasing choices based on the sustainability information.
Transparent, complete, and detailed information on products (from sourcing of the raw supplies to the delivery of the finished goods to the consumer), unfortunately, or perhaps strategically, is rarely communicated in an effective manner. Thus, the consumers are given no or insufficient information to understand sustainability policies or actions of the company (and its links in the supply chain) that manufactured and distributed the product (Hill and Lee 2012). In a worst-case scenario, a company may make unsupported claims about their product or its content. For example, unlike the food industry, there are no laws requiring companies that manufacture personal care products to meet specific standards before labeling a product as “natural” or “organic” (Beerling and Sahota 2014). Conversely, some companies are revising their business models to match sustainability requirements while still managing to generate profits. Because of their sustainability-related activities, they have been referred to as Sustainability-Driven Innovators (Kiron et al. 2013).
Sustainability characteristics for many products are credence attributes. This means that products have attributes that are not directly observable by consumers before purchase and cannot be experienced after purchase (Van Loo et al. 2015). Such credence issues make it very difficult for consumers to assess the utility of the product. However, consumers may resort to using different factors in their choices of sustainable products. Simply labeling a product is not sufficient to influence a decision; consumers seek involvement with a product. Zaichkowsky (1985) defined involvement as “a person’s perceived relevance of the object based on inherent needs, values, and interests.” Such involvement influences the type of information sought by consumers for their purchasing decision process (Laaksonen 1994). It generally includes factors such as price, utility function, quality, support services, and return policy. The aim of this research is to explore how these factors affect consumer choice behavior when purchasing sustainable products.
For this research, a thorough review of several broad databases was conducted to identify scholarly publications related to sustainability and consumer-purchasing choices. This comprised three main steps: database searches, article selection, and content analysis of the selected articles. Through extensive research, key terms related to consumer demands and sustainability were used as filters to obtain relevant articles. Selected articles were then critically examined to ascertain their fit by factor (price, utility function, quality, services, and return policy) and relevance to sustainability.
Figure 7.1 shows the number of publications, as of June 20, 2020, related to the keywords chosen for this study, namely, “sustainability,” “supply chain,” “consumer behavio(u)r,” and “big data”. Each pie-chart displays the percentage of those publications (journal articles, books, theses, and other citable works; cases, lawsuits, and patents excluded) with respect to the segmented decades (1990-1999, 2000-2009, and 2010-2019) with the total number of publications indicated below the pie chart. For instance, in the last three decades, more than 4.5 million publications included the keyword “sustainability,” with 95% of them almost equally divided between the last two decades.
The next largest number of publications (876,000), in comparison with the selected four keywords, relates to “supply chain” where 60% of the publications in the domain of supply chain belong to 2010-2019. “Big data” resulted in about 493,000 publications, 96% of which date between 2010 and 2019. Finally, the word “consumer behavior,” in
FIGURE 7.1 Keyword-based publication searches in Google Scholar, within 1990-2019 date range.
FIGURE 7.2 Joint search of keywords, for the date range 1990-2019.
American English, or “consumer behaviour” in British English, appeared in almost 50,000 publications in the last three decades, the majority of which (72%) have been published since 2000. These numbers support the fact that the prevalence of technology (particularly, Internet and cloud computing) has increased in our daily lives, impacting the consumers’ changing demand on the products (e.g., greener products) and the way they purchase (e.g., through omnichannel retailers). These observations form the basis for Bartels and Onwezen (2014) claiming that different streams of literature are increasingly focusing on sustainable consumer behavior.
Results of the search for article that included all the keywords (sustainability, big data, consumer behavior, and supply chain) are presented in Figure 7.2. These results indicate that in the last decade, there was a sharp increase in the number of publications that jointly studied or mentioned all four of the preceding keywords in their texts.
This chapter contributes to literature by first proposing a renewed understanding of consumer purchase decision attributes toward sustainable products, and then by offering a generalized supply chain framework in which those attributes are linked to supply chain operations, product/process/consumer data generation, and sustainability goals. A systemic literature review is conducted for the concepts used in building the framework, where for brevity and clarity, referencing to the pertinent literature is done throughout the text, rather than condensing them in one part.
Next, in Section 7.2, the attributes consumers would most likely consider in their purchases are evaluated, and the cross-effects of those attributes, such as the intricate relationship between the quality of the product and the information transparency, are discussed. Then, we introduce our supply chain framework in Section 7.3. This framework provides a holistic view of the interactions among and the data generated by the consumers, supply chain partners (i.e., raw-material supplier, manufacturer, distributor, retailer) and the strategic goals of sustainability. Finally, concluding comments are presented in Section 7.4.