Consumer behaviour and the decision-making process of the LOHAS target group in the automotive industry

Table of contents

List of figures

List of abbreviations

1 Introduction
1.1 Context of research
1.2 Scientific formulation of research objectives and aim
1.3 Methodology
1.4 Terminology
1.5 Structure

2 Literature review
2.1 The LOHAS target group
2.1.1 Definition and origin
2.1.2 Segmentation and characteristics
2.1.3 Recent market conditions
2.1.4 State of research
2.1.5 Implications for research
2.2 Consumer Behaviour
2.2.1 Decision-making process
2.2.2 Implications for research

3 Empirical research
3.1 Research design and philosophy
3.2 Focus group
3.2.1 General organisation of the focus group
3.2.2 Characterisation of the research question
3.2.3 Conducting the focus group
3.2.4 Methods of data analysis
3.3 Quality criteria
3.3.1 Credibility
3.3.2 Transferability
3.3.3 Dependability
3.3.4 Pre-test
3.4 Ethical issues

4 Description and insights of the focus groups
4.1 General attitude of LOHAS towards cars and AFVs
4.2 The AFV purchase decision-making process of LOHAS
4.3 Advertisement for the LOHAS
4.4 Additional insights

5 Conclusion
5.1 Summary
5.2 Managerial implications
5.3 Limitations
5.4 Discussion
5.5 Further research

6 References

7 Appendix
7.1 Appendix 1: Report focus groups
7.2 Appendix 2: Questionnaire for sampling
7.3 Appendix 3: Manual focus group

Abstract

The world is facing several environmental problems that are getting visible especially in the growing number of natural disasters. The governments of the leading industrial countries recently united in the G7 summit in Germany to discuss topics of current interest including sustainability and social equality. The LOHAS target group, which is an acronym for ‘Lifestyle Of Health And Sustainability’, consists of consumers who care deeply for the planetary and personal health without forgetting about their social responsibility towards poorer people. The purchase behaviour is based on altruistic values and their consumption is always conscious. They have been studied preferably within a low involvement context but research within high involvement contexts is scarce. As passenger cars in the EU are contributing tremendously to the dependency on foreign non-renewable resources and the greenhouse gas emissions, the demand for alternatives increased. Alternative fuel vehicles (AFV) like electric, gas and hybrid cars are encountering both threats and as cars are high involvement products the study will focus on the automotive industry.

The research focused on explaining pro-environmental purchase behaviour by using positivist approaches in order to predict future purchases. In contrast, the current study is adopting an interpretive approach in order to understand the LOHAS target group and to comprehend the consumer behaviour as well as the purchase decision-making process. Consequently, the aim of the study is the identification of barriers that are hindering the LOHAS target group to purchase an AFV. Therefore, a qualitative method in form of two focus groups has been identified as the most suitable inquiry to achieve the research aim.

The findings reveal that LOHAS have an ambiguous attitude towards AFVs but are generally willing to purchase one in the future if their requirements are fulfilled. The main problem is the lack of trust into the alternative technology. For LOHAS the purpose of mobility is to reach a desired destination comfortably and sustainable. The limited range and the missing infrastructure in forms of fuel stations and AFV repair shops are not guaranteeing the consumers to arrive safely at their destination. Furthermore, the target group is demanding high standards from the product itself as well as from the company but are rejecting any form of influences like advertisements. They prefer to detect congruencies between different sources of information to establish an own opinion.

If a company plans to address the LOHAS target group, the philosophy has to be in line with their values and has to be implemented in all products, subsidiaries and economic sectors to fulfil the requirement of authenticity. It is found that advertisements that are just slightly intervening the autonomy of the LOHAS are rejected and lead to a negative perception of the company. However, even though the standards of the target group are higher and more complex than for conventional consumers, they are also providing a significant market potential that is continuously growing. In the end managerial implications and future research are discussed.

List of figures

figure 1: Organic Food; Source: Statista, 2013,a

figure 2: Organic Cosmetics; Source: Statista, 2013, b

figure 3: Registration of Alternative Fuel Vehicles in 2014; Source: Statista, 2014

figure 4: Model TPB Factors Effects on EFA Purchase Intentions; Source: Cowan and Kinley (2014, p.495)

figure 5: The Mediating Effects of Self-Concept Motives on the Relationship between Self-Congruity and Purchase Behaviour; transmitted from Sirgy and Su (2000)

figure 6: The Research ‘Onion’; Source: Saunders et al. (2009, p. 128)

List of abbreviations

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1 Introduction

1.1 Context of research

In the 21st century the world is facing heavy environmental problems like the climate change and the rising greenhouse gas emissions that are causing weather extremes like hurricanes, droughts and floods all over the globe. Governments started already in 1992 with the United Nations (UN) conference in Rio de Janeiro to react on the dramatic development. The result was a framework convention containing agreements upon a specific reduction of the greenhouse gas emissions for the participating countries within a timeframe. Until now the convention could not stop the climate change enhancing the demand that governments, businesses and the population have to consider and evaluate their own individual contribution to the environment.

Road transport is responsible for about 20 per cent of the European Union (EU) total emissions of carbon dioxide (in the following CO2) and is the major source of greenhouse gas emissions in the EU after power generation. Emissions in this sector increased by 22,6 per cent within 20 years. Especially passenger cars still contribute around twelve per cent of the EU’s CO2 emissions even though the vehicle technology has been significantly improved in recent years. The cars are more fuel-efficient that is leading to less CO2 but is still not enough to neutralise the growing traffic and car sizes (European Commission, n.d.). According to the European Commission (2011) by 2050 the CO2 emissions related to transport are supposed to be diminished by 60 per cent in comparison to the year 2000. As about 50 per cent of the CO2 emissions in transport are emitted through passenger cars in the EU, the necessity for alternative fuel vehicles (in the following AFV) is growing. The advantages of AFVs like electric, hybrid or fuel cell cars are that they use non-fossil fuel and will possibly emit only a small proportion of CO2 in comparison to conventional diesel and petrol cars. Especially for Germany the need for alternative fuels is growing because they are dependent on foreign energy resources.

Germany has the aim of a 100 per cent energy transition and to stop generating energy through non-renewable resources and nuclear energy and instead, draw energy from renewable sources like wind and solar power. However, a turnaround requires a lot of time and meanwhile the demand for energy-efficient production is rising to bypass the shift.

As not only governments but also especially the population itself is involved, a cultural shift has been recognised as well. People include sustainability as a factor for purchase decision-making and furthermore, are more mindful for their own health and well being. The market responded to the demand by supplying food from sustainable production, with healthy ingredients, anti-stress teas and clothes made of hemp. The market for sustainable products has been rising tremendously in the recent years especially within the low-involvement market. Researchers conducted research on the reasons for thinking, acting and buying pro-environmentally and in business context they focused on low-involvement products because high-involvement products were rare. The term LOHAS that is an acronym for ‘Lifestyle of health and sustainability’ has been used for marketing purposes and depicts a target group that is highly influenced through their values and beliefs.

Cars are responsible for a critical amount of carbon-dioxide production supporting global warming through the use of combustion engines. Furthermore, the production of petrol is unsustainable because it is based on crude oil, a non-renewable resource. Germany is dependent on the foreign supply of this resource but is working on an energy transition. Consequently, alternative fuel vehicles are not only a logical consequence for the future but also a necessity. Especially for Germany that is highly dependent on the success of the domestic car manufacturers.

The LOHAS target group has been of great significance for marketers in the recent years and as I count myself to this particular group, I have the ambition to contribute to the development of a resource-efficient economy. Therefore, the study is investigating the purchase decision-making process of the LOHAS target group concerning AFVs in order to identify barriers for purchases, new insights to foster the understanding of the target group and also to be able to advertise the products most effectively.

1.2 Scientific formulation of research objectives and aim

The aim of this master thesis is to identify factors that are significant for the LOHAS target group for purchasing an AFV. Different objectives have been developed to support the logical flow and the structure of the research process and lastly, to give an appropriate answer to the research question. The first objective of the master thesis is to critically evaluate the relative literature concerning the LOHAS target group, consumer behaviour and the decision-making process in order to narrow down the focus of the research. The review serves as a basic understanding of the lifestyle of health and sustainability itself and to identify key contemporary topics and their components in consumer behaviour. On the one hand the literature about the LOHAS target group is supposed to be reviewed to clarify the term, to determine the state of the research and to provide a basis for selecting an appropriate sample for the data collection. On the other hand the literature about consumer behaviour and the decision-making process gives insights to further relevant theories and concepts in purchase situations and serves as an essential part for the developing of the manual for the focus groups. The following objective is to collect the relevant primary data on the basis of the literature review that has to be analysed critically afterwards in order to answer the research question. Additionally, managerial implications are supposed to be formulated including practical advice to overcome barriers within the automotive industry when targeting LOHAS consumers.

1.3 Methodology

For identifying a suitable methodology the key literature about research methods of Fisher (2007) and Saunders et al. (2009) is used. Additionally, the quality criteria for qualitative research are based on the work of Lincoln and Guba (1985).

The research philosophy follows an interpretive approach because the world is seen as too complex to generalise it through laws and theories. A structured approach is adopted implying that concepts are defined and the conceptual framework drafted at the beginning of the research process. The decision-making process of Kotler (1997) that is widely used in consumer behaviour textbooks is used as the conceptual framework and is mainly structuring and guiding the data collection process. The reviewed literature about the LOHAS target group is supposed to familiarise with the culture in order to be prepared for the moderation of the focus groups. The research approach is inductive analysing the behaviour empirically for a small group in order to be able to generate generalisable insights for the target group. The results are not claimed to be representative, as they have to be proven through quantitative, statistical data collection and analysis. Consequently, a qualitative research method will be applied in form of two focus groups. Maximum variation sampling is supposed to ensure a diversity of perspectives and a multitude of insights into the topic of AFVs within the given target group. For the focus groups different research questions have been developed to support the research aim. The first question involves the general attitude of the LOHAS target group towards cars and AFVs and is followed by the question to what extent the purchase behaviour is relying on the decision-making process. Finally, the study is trying to answer how the target group can be properly advertised. Also other topics may rise within the research process especially because the focus group will be conducted with semi-structured manuals providing enough opportunities for generating additional insights that were not considered before. The data analysis is based on the qualitative content analysis of Mayring (2015) categorising the raw data into different areas of interest that are described precisely and concluded in chapter four

The quality criteria for the qualitative inquiry are based on the work of Lincoln and Guba (1985). The concepts of reliability, internal and external validity, and construct validity that are mainly used in positivist approaches are exchanged by the alternative constructs of credibility, dependability, conformability and transferability. They are supposed to contribute to the overall trustworthiness of the study. Different approaches have been identified that are applicable for the current study in order to enhance the particular constructs. For example the ‘triangulation of sources’ is the basis for a satisfactory level of credibility, whereas ‘thick descriptions’ is used to promote the transferability of the findings.

1.4 Terminology

The purpose of this sub-chapter is to explain the range of definitions that are available in the relevant literature in order to choose one that is evaluated as best suitable for the current research. Henceforward in the master thesis the terms will be used depicting the preferred definition.

Jansson (2011, p.193) defines alternative fuel vehicles as “passenger cars that can be fuelled to some extent by alternative fuels such as bio ethanol, bio/natural gas, and/or electricity.” Hoen and Koetse (2014) also identified fuel cells, (plug-in) hybrids and flexi-fuel cars as AFVs. Thus, every car that is fuelled with a renewable resource can be called alternative fuel vehicle because it is simply an alternative to petrol combustion engines and will be predominant in this master thesis.

Ray and Anderson (2000) were the first who detected the hidden culture that they called cultural creatives (in the following CC) within the American population. Regarding their findings they segmented the population into traditionals, moderns and CC. Furthermore, the CC are divided into the core group and the green group. The LOHAS target group is connected to the CC and widely used as a synonym. However, they are not providing a general definition, whereas the Natural Marketing Institute (in the following NMI) defines LOHAS as people that are caring for their own health and of the planet, demand social justice and like spirituality. In contrast, the segmentation approach includes five different groups including LOHAS, the sustainable mainstream consisting of three groups and lastly, the group that is unconcerned. The predominant definition for this study includes the sustainable mainstream because the values are consistent but leading to different behaviour that will be discussed in chapter 2.1.1.

1.5 Structure

The current study is divided into five chapters. Chapter one includes the introduction where the research aim, methodology and terminology is defined and described in order to provide a short insight into the master thesis. The second chapter includes the literature review and is split into two parts investigating on the one hand the LOHAS target group and on the other hand the decision-making process and consumer behaviour. At the end of both halves the implications for the study are described that are used as the basis for the data collection. The literature about the LOHAS target group revealed that the sample has to be identified through values. Conventional approaches select the samples based on demographic variables. However, they are not applicable for this specific group but rather the values and attitudes the behaviour is based on. Regarding the decision-making process five steps are of importance, which include further theories that are investigated. The mentioned theories within the decision-making process like for example the recognition of a need are investigated further. In this case Maslow’s (1943) hierarchy of needs depicts the diversity and is therefore, providing the basis for the manual of the focus groups. It is followed by a chapter about research methods that is describing and justifying the methodology of the study on a scientific basis. A qualitative inquiry in form of focus groups is used to be able to understand the target group within the social context. Furthermore, the organisation of the focus groups is planned in order to meet the quality criteria. It is based on the works of Morgan et al. (1998). The conventional quality criteria reliability and validity are substituted by the demand for trustworthiness including credibility, transferability, dependability and conformability (Lincoln and Guba, 1985). Approaches like thick description, familiarity with the culture and triangulation of sources have been evaluated as suitable to guarantee that the required quality of a scientific master thesis is met. The fourth chapter is depicting the discussions of the participants and are concluded to generate insights concerning the target group. The last chapter is summarising the whole study, describes managerial implications and limitations and ends with the identification of topics for further research.

2 Literature review

2.1 The LOHAS target group

The last centuries were shaped by enhancement in all areas. Companies invested into their production in order to grow, people were motivated to educate themselves in order to be employed and to earn a high salary. Consequently, the purchasing power for consumer goods grew individually and also companies profited. Nations and their governments subsidised companies in specific branches to boost their performance and to achieve a continuously and slightly economic growth. Everything was shaped by progress and growth. It also caused an increase in the pollution that leaded to an upturn of the temperature making the Antarctic start to melt. The model of the ‘homo oeconomicus’ is describing a prototype that is acting only on his self-interest. The essence is that when everyone is working for the own profit the market will grow and nobody loses. Nowadays, the world is facing environmental problems like global warming and the reduction of the ozone layer. Every human is supposed to profit from the system but the environment loses as industries have overcome the limit of the resources that can be used without negative consequences for the ecology. As every person on the planet is unique and is developing own value and belief systems the diversity of lifestyles and worldviews is huge. Nevertheless, Ray and Anderson (2000) were able to consolidate three main groups that mainly share the same values that are called moderns, traditionals and the CC.

2.1.1 Definition and origin

The sociologist Paul Ray and psychologist Sherry Ruth Anderson are the inventors of the term ‘Cultural Creatives’ (CC) that was first mentioned in their book “Cultural Creatives: How 50 million people are changing the world” (2000). Survey research was conducted with more than 100,000 Americans, more than 100 focus groups in addition and in-depth interviews by the dozens over a time period of thirteen years. The married couple found a hidden subculture in America that they called CC and that could not be identified through demographics like age, income or the social class. All income classes are involved but there are fewer poor and very rich income classes. A correlation with age was not found but there are less people involved that are over 70. Only gender has a slight correlation, as 60 per cent of the CC are women. They claim that “values are the best single predictor of real behavior (!)” (Ray and Anderson, 2000, p.7) and in contrast opinions and attitudes often change depending on situations, circumstances or surroundings. The communalities of CC are the values and the consequential worldview. They care as deeply for themselves as they are care for the planet.

The authors divide the culture into two groups: the core half is more active and on the one hand very concerned about the development of the psychic and spiritual life and on the other about social justice. They are frequently using and practising alternative healthcare. The other half is called green CC and is less active but has the same value and belief system. Both groups are careful shoppers and do not buy on impulse but rather research before they purchase and additionally are reading labels regularly. With this culture the norm of authenticity emerged and behaviour should be consistent with the individual beliefs and what is communicated to others. They prefer to gather new information what they interpret as authentic topics by experiencing it directly and personally or by a scientific way of knowing. Consequently, advertisement is seen very critically because it is objective and may be manipulative in comparison to academic resources.

According to Ray and Anderson (2000, p.361a) “the term lifestyle of health and sustainability was developed by Natural Business Communications, Inc., and by GAIAM, INC.” LOHAS is an acronym for Lifestyle of Health and Sustainability and focuses on physical and psychological health, personal development, social justice, sustainable living and the environment.

2.1.2 Segmentation and characteristics

The core group of the CC consist of educated opinion leaders and are on the one hand focusing on spirituality and on the other hand on social activism, whereas the majority of the green group is following the opinion of the core group. The natural marketing institute (in the following NMI) identified a new segmentation model composing five segments based on research of the U.S. market in 2006. The primary target group is the LOHAS consumer that represents 16 per cent of U.S. population (nearly 35 million people) and exceeds the other segments in the usage of sustainable products. The attitudes of LOHAS about their personal and the planetary health are implemented into their behaviour. They were identified as opinion leaders having strong influential impacts on the reference group like the family and friends. Their attitudes towards the society, businesses and environmental aspects are equal and they are not as price sensitive as conventional consumers but more brand loyal. The second segment is called ‘naturalites’ and is the largest within the segmentation model with 25 per cent of U.S. adults. They care mostly about their personal health and consequently purchasing natural and healthy consumer packaged goods. Protecting the environment is a by-product of their buying behaviour but not manifested in their belief system. Their view of health does not only include physical health but also the spiritual and mental dimensions. In comparison to the LOHAS consumers who are committed to a holistic approach, the belief system of the ‘naturalites’ is concentrated on purchasing consumables ethically but rather less on durables. ‘Conventionals’ represent 23 per cent of the U.S. population and are focusing on energy-efficient products that also save their money. They are more likely than ‘naturalites’ to donate money and to recycle and are also more engaged in behaviourally activities. The youngest segment is called drifters representing 23 per cent of U.S. population. For them sustainability is seen as a current trend but nevertheless, they are not fully committed to it like LOHAS consumers. Even though they have similar attitudes like the LOHAS, they are facing several barriers. They are restricted through their financial resources and knowledge but are willing to purchase environment-friendly products but often choose others. Their intention is to protect the environment but the behaviour is limited through the lack of knowledge. They are in a development stage and are searching for standards matching their values in order to consume ethically. 14 per cent of the U.S. are segmented as ‘unconcerneds’ and focus on other life activities (French and Rogers, 2006; Rogers, 2010).

Halfmann (2014) states that hybrid consumers tend to choose between two or more principles of actions. Consequently, LOHAS can be defined as hybrid shoppers because on the one hand they are actively searching for information about the products and decisions are based on the factors of sustainable production, quality, environmental friendly use and social equality and on the other hand they do not want to resign luxury goods or high-tech products (Schetter, 2009).

According to Wenzel et al. (20007) values, beliefs and norms are the main factors that are responsible for the thoughts and actions of the LOHAS consumers. Even though they seem partially inconsistent because they do not deny pleasure and especially luxury, they care deeply for ecology and health. They act mainly on the basis of self-responsibility and self-concept that will be investigated more comprehensive in the following chapter. The mentioned aspects result in a high set of standards for AFVs concerning quality without losses in ethical and ecological issues. Nevertheless, consumption is not the essence of the target group as health, time sovereignty and quality of living are more significant for them than monetary and tangible goods. Consequently, purchases are not impulsive but rather prudent following a complex purchase decision-making process.

In the recent years the unstoppable process of globalisation and digitalisation has increased the demand for social responsibility of every individual and consequently, for the LOHAS target group it is essential to critically evaluate the production process of the goods they are considering to purchase. As a result, they are demanding corporate socially responsibility from companies. Questionable advertisements that are engendering the suspicion of green washing are penalised by ignorance and disgust and is influencing future purchase behaviour negatively. The target group developed from a passive observer to a participating communicator that is actively seeking contention with companies (Wenzel et al., 2007, p.127).

Wenzel et al. (2007) and Köhn-Ladenburger (2013) agreed that LOHAS are rather a lifestyle or social movement than a target group because conventional demographic variables are not applicable and include people from all social classes that have oriented their lives towards health and sustainability. Only gender is a weak indicator for the target group because the western culture and society is shifting to female values and those are congruent to the values of LOHAS. Köhn-Ladenburger (2013) evaluated LOHAS as a premium target group with a great purchasing power and also willingness to consume. The consumption is more influenced by sustainability in comparison to the aspect of health and furthermore, is more relevant in the context of automotives. Nevertheless, health is a key characteristic of the lifestyle and consequently must not be neglected.

The Brundtland Report defined sustainable development as satisfying „the needs of the present without compromising the ability of future generation to meet their needs“ (World Commission on Environment and Development, 1987, p.43) and was the first time that socio-economic questions were related to environmental ones. Even though the definitions of sustainability that are derived from sustainable development are slightly different depending on the source, the relevant areas are the same involving energy, water, nutrition, agriculture, living and mobility.

2.1.3 Recent market conditions

According to the U.S. Organic Industry Survey 2014 the sale of organic products in the United States jumped from 31,5 billion US-Dollar in 2012 to 35,1 billion US-Dollar in 2013 (Organic Trade Association, 2014). Furthermore, the NMI (2010) stated that the population of the United States purchased sustainable products and services worth 300 billion US-Dollar in 2008. Since 2005 the LOHAS market is growing at an annual rate of 16 per cent. For the products and services six main sectors have been identified: Green buildings, personal health, eco-tourism, alternative transportation, natural lifestyles and alternative energy. The majority of the spending (76 per cent) was used for green buildings like certified homes or solar panel systems and for personal health including organic food and personal care. The personal health category is the largest one within the LOHAS marketplace and is valued at 117 billion US-Dollar for 2008, whereas green buildings contributed 100 billion US-Dollar. The alternative transportation category involves hybrid, electro and diesel cars and also car sharing programs. The market had a value of 20 billion US-Dollar but is growing continuously. The available models of hybrid cars more than doubled within three years and almost three percent of U.S. consumers drove a hybrid in 2008, whereas only one percent did in 2005 (Natural Marketing Institute, 2010).

Rogers (2010) references in his article a segmentation of countries that was designed by the NMI. Germany has with eight per cent (equals around six million Germans) the lowest percentage of ‘unconcerneds’. 15 per cent are attributed as LOHAS and 78 per cent as sustainable mainstream (equals 63,18 million). As the population of Germany in 2014 was around 81 million and 15 per cent are counted as LOHAS, it involves around 12,15 million people. 75 million people in Germany are more or less environmentally conscious.

The percentage of organic food within the total expenditure for food and beverages of LOHAS and ‘unconcerneds’ in Germany in 2012 and 2013 is shown in figure one. In the year 2012 the core group of the LOHAS target group has spend 10,1 per cent of their total expenditure for food and beverages for organic food and has increased in one year by 0,5 per cent. The proportion of the sustainable mainstream was 4,5 per cent in 2012 and 4,8 per cent in 2013. The ‘unconcerneds’ were stable at an amount of two per cent.

illustration not visible in this excerpt

figure 1: Organic Food; Source: Statista, 2013,a

Figure two depicts the percentage of organic cosmetics within the total expenditure for body care and cosmetics of LOHAS and ‘unconcerneds’ in Germany in 2012 and 2013. The core group has spent 11,8 per cent of their total expenditure of cosmetics on organic cosmetics that also increased within one year by one per cent. In 2012 5,1 per cent of the expenditure for cosmetics of the sustainable mainstream is assigned to organic cosmetics and body care and increase by a further 0,7 per cent for 2013 to 5,8 per cent. Even the ‘unconcerneds’ increased their rate of 2,4 per cent to 2,7 per cent.

Hence the percentage of the expenditure for organic food and cosmetics seems to be small, it has to be emphasised that the figures only include products with BIO seals and neglect seals like fair trade. The figures show that the LOHAS, the sustainable mainstream and even the unconcerned consumers are increasingly demanding sustainable and fair products and the market has a significant potential.

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figure 2: Organic Cosmetics; Source: Statista, 2013, b

Furthermore, figure three shows the amount of passenger car registrations with alternative engines in Germany in 2014. It can be seen that gas and electric engines have a relatively small amount of new registrations in comparison to hybrid cars. As the literature review is not focusing on AFVs in general, no explanations can be assumed and should be investigated within the focus groups.Abbildung in dieser Leseprobe nicht enthalten

figure 3: Registration of Alternative Fuel Vehicles in 2014; Source: Statista, 2014

2.1.4 State of research

The main focus of the research concerning the LOHAS target group was and is to understand consumers and their reasons for acting environmentally. Consumer behaviour is a process and should not only be downscaled to purchasing because it includes the stages before and afterwards as well. It is also important to understand the motivation of the consumer to buy a product, how information are gathered, on which basis they decide for an alternative, how the product is used, what they want to achieve with the product and how it is disposed (Solomon, 2006).

It is difficult to find academic research that focused on the LOHAS target group itself but in contrast pro-environmental purchase behaviour has been studied a lot. In this context the terms conscious, green, ecological and ethical purchase behaviour are widely used as synonyms. Several studies investigate ethical consumption, conscious consumer behaviour, green consumerism and ecological purchasing behaviour. The overall aim is to understand the consumer and the reasons for acting environmental friendly in order to gain insights that can be used to develop specific products and to address the target group properly. The results of different studies showed that values and beliefs are the main factor for acting environmental friendly (Makatouni, 2002; Jansson et al., 2010; Fraj and Martinez, 2006; Cowan and Kinley, 2014; Stern, 2000).

Stern (2000) developed the value-belief-norm theory in order to explain the psychological reasons for environmentally friendly behaviour. The theory of planned behaviour by Ajzen (1991) is a concept for predicting environment-friendly behaviour as well but is measuring the intention to do so.

Most of the studies in the relevant area used one of these two concepts as theoretical frameworks for different contexts (Cowan and Kinley, 2014; Jansson et al., 2010). For example the study of Cowan and Kinley (2014) investigated the fashion market concerning environmentally friendly apparel (EFA) in order to serve the LOHAS segment with new products and businesses because the hospitality and food industry already entered the market. In order to explain and predict actions the TPB was used measuring the intention to act. It is based on three belief systems called behavioural beliefs that is measuring the attitude in the relation to the outcome, the normative beliefs, which focus on the effects of others on own decision-making and perceives behavioural control, which recognises the extent of confidence that is based on personal experience and the ease to which behaviour occurs (cf. figure 4).

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figure 4: Model TPB Factors Effects on EFA Purchase Intentions; Source: Cowan and Kinley (2014, p.495)

In order to measure the belief factors environmental concern, environmental knowledge and the attitude towards EFA were investigated. The normative influence factors included the social pressure to act green and the perceived environmental guilt. Lastly, the perceived behavioural control factors like previous EFA purchases, perceived convenience of EFA options and the willingness to pay more for EFA were of interest for the researcher. Cowan and Kinley (2010, p.497) conclude that “most individuals do not believe their actions impact the environment” and is consistent with the findings of Joergens (2006) and De Barcellos et al. (2011). According to Ellen et al. (1991, p.103) „perceived consumer effectiveness is defined as a domain-specific belief that the effort of an individual can make a difference in the solution to a problem“ and should be involved in the concept of perceived behavioural control. Furthermore, Straughan and Roberts (1999) conclude that perceived consumer effectiveness is the variable that explains ecologically conscious behaviour best. The study is based on the premise that consumer have the belief to be able to positively influence environmental problems. As a consequence, people will only act pro-environmentally if they feel confirmed that their decision-making is effectively contributing to solving environmental problems (Moisander, 2007).

According to Jansson et al. (2010) investigating purchasing behaviour of green high involvement products has been neglected in academic research. Even though it was found that moral concerns are responsible for pro-environmental curtailment behaviour, the influence on consumers’ high involvement purchase behaviour for green products is scarce (Thøgersen, 1999). Furthermore, Follows and Jobber (2000) state that research is focusing on reducing negative impacts for the environment through curtailment behaviour like energy conversation or recycling because the market previously could not supply a variety of products. Non-consumption and post-consumption behaviour have been consequently studied preferably. They support Thøgersen’s (1999) assertation that an understanding of pro-environmental consumer behaviour concerning high involvement products is lacking.

As already mentioned the targeting of LOHAS is complex and has been proven by Jansson et al. (2010) recommending that the segmentation approach is more effective when it includes attitudinal factors (such as values, beliefs and norms) and habits as profiling constructs compared to using only socio-demographic variables.

2.1.5 Implications for research

Research about green consumer behaviour focused especially on low-involvement products, post- and pre-purchase behaviour and neglected high-involvement markets.

Typically segmentations are based on demographic variables like age, gender, social class and income. For pro-environmental purchase behaviour, researchers claim that attitudinal factors and habits are more significant to segment the market that is valuable for selecting the sample for this study. Identifying LOHAS consumers has to be based on different values concerning sustainability, health, social justice and spiritualism and as mentioned above, demographic variables are not an appropriate basis. Based on the work of Ajzen (1991) and Stern (2000) researchers tested the effects of values, attitudes and beliefs on purchase intentions and not on actual purchase behaviour. Concerning the values of LOHAS consumers, intentions are widely given. The study is investigating the whole decision-making process and consumer behaviour of the LOHAS target group for AFV purchases in order to identify barriers. Literature concerning low-involvement purchases is reviewed to find initials and congruencies.

For low-involvement products different variables affecting the decision-making process have been identified and are contributing to the investigation of a high-involvement context. PCE has been identified to be a premise for pro-environmental behaviour. Consequently, the question rises if LOHAS consumers think they influence environmental problems positively by buying an AFV.

The identified characteristics of the LOHAS target group like their values, their pre-, post-and purchase behaviour are contributing to the overall understanding of the lifestyle. The early gained familiarity with the culture is essential for the performance of the moderator because it provides the opportunity to enquire where it seems necessary.

The new car registrations (cf. figure 3) show a significant anomaly within the column of hybrid engines in contrast to electric and gas fuelled cars. Consequently, it is of interest why consumers prefer hybrids instead of an electric car. The study of Cowan and Kinley (2014) show that the distance to the next shop that is offering EFA has been identified as significant factor for their purchase-decision making. This may be true for EFA or even for low-involvement products in general but cannot be transferred to a high involvement context. Consequently, it is of importance to determine which characteristics of an AFV have to be given for LOHAS that they accept the product or even purchase it.

2.2 Consumer Behaviour

The literature concerning consumer behaviour and especially the concept of decision-making processes is reviewed in the following in order to apply the model as a conceptual framework and to structure the manual for the focus groups. The attention is focused on the psychological determinants rather than on external influences in order to enhance the understanding of the target group. Nevertheless, also some important influences like for example reference groups are considered as well.

2.2.1 Decision-making process

In the beginning of the research on consumer behaviour Mehrabian and Russell (1974) developed a concept that suggested that an external stimulus (S) is received by the organism (O) and processed to a behavioural response (P). They called it the S-O-R model and is the basis for further concepts trying to fully explain purchase decisions like the concept of Howard and Sheth (1969) or Kollat et al. (1970). According to Bongard (2002) the complexity of the Howard-Sheth-Model makes an empirical validation difficult or even impossible and does not provide the suitable basis for a master thesis.

Another concept has been developed by Kotler (1977) who defined the decision-making process as a complex five-stage model starting with the recognition of a problem of an unfulfilled need. In order to solve this problem information are searched, alternatives evaluated and a purchase decision is made. Depending on the experience of this decision post-purchase decision are made afterwards like re-buy, purchasing a substitute, a competitive product or no action. It is assumed that the consumer is acting on a rational basis and is following the model step by step (Omar, 1999).

Furthermore, consumer behaviour is expanding the stages of decision-making because it “involves processes when individuals or groups select, purchase, use, or dispose products, services, or experience to satisfy needs and desires” (Solomon, 2011, p.647) and includes for example the concepts of motivations and motives (cf. figure 5).

2.2.1.1 Problem recognition

A need arises if an individual is not satisfied with the actual situation and has identified a desired state that should be achieved. The purpose of the decision-making process is to reach the desired state with the input of acceptable resources. It is called problem if the individual did not find an answer to the question how the desired situation is achieved. Needs can be recognised differently and are mainly influenced by external and internal stimuli. Sensory receptors for instance eyes, ears, nose, mouth or fingers directly register basic external stimuli like light, colour or sound and evoke possible attention of the recipient. The attention differs on how much the consumer focus on the stimuli and is interpreted assigning a meaning to it (Punj and Brookes, 2002).

Salomon et al. (2006, p.36f) state “perception is the process of selecting, organising and interpreting information inputs to produce meaning. Information inputs are the sensations received through sight, taste, hearing, smell and touch.” Consequently, a need can emerge from external stimuli. An internal stimuli is for instances a physiological need like hunger, thirst, sleep or sex. Maslow’s (1943) hierarchy of needs depicts a pyramid with five different levels, whereas on the bottom the basic physiological are situated. The second level is the need for safety, followed by the need for belongingness like receiving love and the need for esteem like recognition, status and success. The last level is self-actualisation or self-fulfilment. He considers the self-actualisation or fulfilment as an ultimate goal in life and supposes that if one need is satisfied there is no more motivation to achieve it and will progress to the next level in the hierarchy. Nevertheless, the individual may be attempted to satisfy different needs from different levels in the same time (Gilbert, 1999) . If an individual recognised an unfulfilled need, the mind is in an uncomfortable condition and is willing to solve the problem and has a specific goal. Gollwitzer and Bargh (1996, p.1) say that “goals primarily are considered to be directors of action” and according to this view motivation emerges when people behave with a certain purpose and have the intention to achieve a certain goal. The level of motivation depends on different factors and the studies of Rotter (1966), Seligman (1975) and Bandura (1977) state that the prerequisites for a high level of motivation are the beliefs that the person is able to complete objectives and reach a goal through their self-efficacy, that the outcome depends on their own actions (internal locus of control) and the decision is made on the basis of the expectancy that the action will lead to a positive outcome (high-expectancy-valence).

2.2.1.2 Information Search

Solomon (2011, p.337) states in his book about consumer behaviour: “Information search is the process by which we survey the environment for appropriate data to make a reasonable decision”. If consumers recognise a need, they automatically search for information from their long-term memory in order to identify existing and satisfactory alternatives. The internal information search can be based on previous experiences with relevant products, brands or topics. But also advertisement may have settled information or even a specific alternative in the memory of the consumers (Pizam and Mansfeld, 1999). If a decision cannot be made through the existing knowledge, the consumer may acquire information through external information search. These sources can be divided into four basic categories. The personal category depicts advice from family, friends and relatives, the marketer-dominated information are available through advertisement in TV, radio or brochures. Through the Internet consumers can more easily find forums or organisations providing neutral information about products and services. The last category is called experiential source of information and involves inspections or store contacts (Beatty and Smith, 1987).

Depending on the extent of the consumer’s involvement, the external and internal information search can be simplified through heuristics or it is a complex matter of gathering different perspectives. Engel et al. (1982) determine involvement as a factor that is influencing consumers’ decision-making. As involvement is a part of the process of decision-making, it is goal-directed and is based on a stimulus that generated a particular need and is resulting in a motivational mental state (Zaltman and Wallendorf, 1983). Laurent and Kapferer (1985) state five aspects of consumer involvement that are called perceived importance, pleasure, perceived sign value, perceived risk and the subjective probability of a disinvestment. Depending on the individual capabilities and the personal circumstances, the consumer can be low and high involved in the purchase decision. In general high involvement products include for example birthday gifts as they have a high perceived importance for the individual, expensive products because financial investment is perceived as more risky than cheaper products and also products that are appreciated a lot. As a consequence, the decision-making process for high involvement products is more complex and time-consuming than for low involvement products. Consumers focus especially on the adequate information search within the pre-purchase phase (Lee et al., 1999). Furthermore, even product attributes like sustainable production and eco-friendliness are able to increase the involvement of the consumer in the decision-making process (Thøgersen et al., 2012). In order to save time and resources mental shortcuts, called heuristics, are used to avoid a time intensive decision-making process. Especially, in fast moving environments and low involvement contexts these simple rules are supporting a quick choice (Bingham and Eisenhardt, 2014) . Tversky and Kahneman (1974) examined three principle heuristics that are called representativeness, anchoring-and-adjustment and availability. Consumers often use the anchoring and adjustment heuristic for numerical estimations. Prices are providing an initial approximation for the value of a product and the consumer makes an adjustment concerning the given approximation based on additional information like brand, packaging or design. This heuristic also has been proven to be existent and assistant for children, which is indicating that the process may be naturalistic (Smith, 1999). The heuristic of availability is assigning the probability of an event occurring to the ease with which information are brought to mind. The representativeness heuristic is used for judging probabilities by the degree to which one category is comparable to another one, assigning the similarity of both to other situations (Harvey, 2007). Furthermore, the cue utilization theory claims that when consumers are making quality judgments direct indicators like texture and ingredients and indirect indicators like price or brand name are used (of quality). Mostly, consumers are making quality judgements using indirect measures, which are easily interpreted, evaluated and assessed rather than using direct cues like the quality of ingredients because most customers do not have specific knowledge (Cox, 1967).

2.2.1.3 Evaluation of Alternatives

Ever since Graves and Howard (1964) introduced the concept of evoked sets, consumer choice sets have been of interest for the research community. Due to the overwhelming supply of alternatives, consumers are searching instantly for strategies to simplify the decision-making process. To screen relevant alternatives a cost-benefit analysis is used due the limited knowledge about product specific information (Brand and Cronin, 1997). This theory is applied as a consequence of the internal information search process. As people have several brands or products in their evoked set, buying decision are ought to be simplified. Past experience or recommendations from the reference group lower the perceived risk to purchase a certain brand. Due to the higher perceived risk of disinvestment high involvement decisions are more complex and time-consuming. Nevertheless, the evoked set only supports the screening process of the consumer and provides a selection of suitable alternatives.

The evaluation of the attributes of a product is based on two different aspects. On the one hand objective characteristics like the functionality and features of the product are involved in the process and on the other hand subjective characteristics like the perception of the brand and the resulting perceived value and also the reputation. The importance of the attributes depends on the preferences of the individual consumer. If the requirements are fulfilled by a product or brand, it is associated in the evoked set as a possible purchase alternative. In contrast the inept set includes products and brands that have no chance of being bought by the consumer. The inert set depicts the one no opinion has been developed yet (Narayana and Markin, 1975).

2.2.1.4 Product Choice

After evaluating the possible alternatives, the consumer has to make a choice for a company, a brand or a specific product. The choice is depending on the characteristics their associated importance and highest perceived value (Solomon, 2011). Nevertheless, it is also important that the consumer perceives a similarity between the individual’s self-image and the image of the product (company or brand) itself (Graeff, 1996). On the one hand there is the self-concept that Malhotra (1988, p.7) describes as “the totality of the individual’s thoughts and feeling having reference to themselves as subjects as well as objects” and consists of different perspectives. It is distinguished between three ways of the self: the ‘actual self’ is the way in which a person sees himself now, the ‘ideal self’ in which a person would like to see himself and the ‘social self’ in which a person believes others see him (Abel et al., 2013). Furthermore, Sirgy (1980) also identified the ideal social self-image as an important aspect of self-concept in order to predict purchase behaviour and is defined as the way the consumers want to be perceived by others that are relevant for them.

It is assumed that the likelihood to purchase a brand is depending on the extent the product or brand image is matching the consumer’s self-concept or rather some of the dimensions. Therefore, the different ways of the self and their inherent motives are investigated more precisely (cf. figure 5).

The actual self-image is part of the private self and includes images that an individual has about himself. It is defined as how consumers see themselves and is also called the personal identity of the individual. In personality-social psychology the tendency to act in ways consistent with one’s personal identity is referred to the self-consistency motive. If the consumer behaviour is based on this motive the consumer will purchase or already own products that are expressing their actual-self. Research about the effects of the actual self-congruity model on consumer behaviour in the context of consumer goods shows that a brand or product image that is consistent with the way they see themselves is preferred (Sirgy, 1980; Landon, 1974; Sirgy and Su, 2000). In the context of automotives it shows that for example a successful business owner purchases or owns a car that is expressing his actual self-image with the attributes wealthy, luxury and extraordinary. If the owners feel that the attributes are consistent with their personal identity, they are experiencing the actual self-congruity (Sirgy and Su, 2000).

Ideal self-congruity refers to the degree a product or brand image meets the consumer’s ideal self-image. As already mentioned above the ideal self-image depicts the way consumers would like to see themselves. The ideal self is affected by the motive for self-esteem and is motivating the consumer’s behaviour. Purchasing a product that is consistent with the ideal-self will promote their self-esteem. Also the effect of the ideal self-congruity model on the behaviour of consumers has been widely investigated by different studies and show that in the context of consumer goods consumers tend to purchase products that are consistent with the way they would like to see themselves (Sirgy, 1980; Sirgy and Su, 2000). Consequently, people from lower classes purchase cars that are depicting a higher class rather than their own ones. Even though the original theory of Maynard Keynes (1936) in his influential work “The general theory of employment, interest and money” uses the term trickle-up theory for describing the effect of governmental measures like subsidies for purchases of the middle-class, it also depicts the intention to purchase certain products to express the belonging to the higher class without the given advantages of the government.

Social self-congruity refers to the extent the product or brand image is consistent with the way the consumer is seen by others. In contrast to the already mentioned self-images, the social-self is not part of the private self but the public self. The behaviour is mainly influenced by the motive for social consistency. People have the motivation to preserve the image that others developed because otherwise they might feel uncomfortable if they act against the expectations of others (Sirgy, 1980; Sirgy and Su, 2000).

Ideal social self-congruity refers to the extent the consumer’s ideal social self-image is consistent with the brand or product image. Regarding the automotive industry the consumer would purchase a car with an image that is approving the expectations of people who are relevant for the individual. In the current context of automotives the way the consumer would like to be seen by others are expressed through the image of the car and the brand. The subsequent motive is called social approval motive and is directly affecting the purchasing behaviour of the consumer (Sirgy, 1980; Sirgy and Su, 2000).

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figure 5: The Mediating Effects of Self-Concept Motives on the Relationship between Self-Congruity and Purchase Behaviour; transmitted from Sirgy and Su (2000)

The research general states an agreement that the consumer’s attitude, purchase intention and brand preference are influenced by an apprehended communality between the self-image and the image of the brand (Abel et al., 2013). Thus, consumers purchase goods, which they perceive as similar to their self-concept or that, the bargain is even progressing their self-concept (Landon, 1974). It is examined that some consumers purchase products according to their actual self-image, while others buy products based on their ideal self-image.

Jennifer Aaker (1997, p.347) developed the construct of brand personality based on the theory of self-congruity and defines it as “a set of human characteristics associated with a brand.” The “Big Five” model for describing human personality has simply been applied for brands in order to enhance the perceived similarity between the self and the product and furthermore, to foster the possibility of differentiating products more effectively (Franzen and Moriarty, 2009). The first category is sincerity with attributes like domestic, honest and down-to-earth. It is followed by excitement including daring, spirited and imaginative. Competence consists of the attributes reliable, responsible, dependable and efficient. Sophistication is attributed to females and described through glamorous, pretentious, charming and romantic, whereas the fifth category ruggedness is connected to masculinity with the characteristics tough, strong, outdoorsy and rugged (Aaker, 1997).

2.2.1.5 Post-purchase behaviour

After the purchase has been made, the consumer will evaluate the product on the basis of the recognised need and the desired outcome. The question the customer asks himself is wheatear the decision was right or wrong. If the consumer is satisfied, future decision-making processes will be influenced positively by the experience. It is probable that less information are searched and less alternatives evaluated in order to diminish the effort for solving the problem. The consumer is also likely to purchase products from the same brand again because the memory is retrieving the positive experience that may lead to customer loyalty. In contrast an unsatisfied consumer has to repeat the process where the chosen alternative is excluded (Solomon, 2011). The last possibility is that the decision-maker is relativising the purchase as the mind is in a state of inconsistency causing stress and discomfort. Referring to the theory of cognitive dissonance by Festinger (1962) the mind tries to reduce the uncomfortable psychological condition by grading up the chosen alternative or denigrating the other alternatives. Furthermore, situations and information that are likely to increase the inconsistency again are avoided.

However, the purchase decision has not only consequences for the individual itself but also for the belonging reference group as the positive or negative opinion about the product is shared with families and friends. Furthermore, social media platforms can be used as a medium to share customer experience as well (Solomon, 2011).

2.2.2 Implications for research

Implications for the current research have been identified regarding each step of the decision-making process. The insights that have been investigated through this chapter are used as a basis for the manual of the focus group. Concerning problem recognition it is of interest which definite goal (desired state) the target group has and furthermore, which level of motivation for AFV purchases is included in the problem solving. Therefore, the perception of self-efficacy, locus of control and expectancy-valence will be measured. It is essential to determine the extent AFVs are relevant for the LOHAS target group as a medium to achieve their goal. Relevant information can be searched with external and internal sources. Therefore, it should be investigated what the target group prefers. How relevant are similar experience like car purchases in the past of the participants for the information search concerning AFVs. The review showed that external search is divided into the four categories personal, marketed-dominated, neutral and experiential sources of information and the focus groups are supposed to determine which category is favoured. Subjective and objective characteristics have been identified as the basis for the evaluation of alternatives. Even though the characteristics have to be seen individually, the aim is to identify patterns or coincidences within the target group. However, also the preferences that cannot be generalised are valuable insights to improve the conception of AFVs. Furthermore, an evaluation of the characteristics is not only depicting the strengths of AFV but also the barriers and weaknesses. Even though the decisions are already made after this stage, the post-purchase behaviour is providing valuable insights for the understanding of the target group. It is of interest if they are sharing their experience with others like the reference group and if they use social networks as well. It is possible that they are brand ambassadors if the purchase was satisfying the need and should be considered in the manual of the focus group. As the theory of self-congruity has been ranked as one of the strongest factors for decision-making, it should definitely be included in the discussion of the inquiry. However, measuring self-concepts and motives is difficult and requires projective questions. Consequently, it is rather an aspect for future research that utilises in-depth interviews.

3 Empirical research

As a master thesis has the demand of being methodologically rigour, the research has to be designed with caution and has to be based on scientific literature about research methods. Therefore, the works of Saunders et al. (2009) and Fisher (2007) have been identified as most suitable. This chapter is divided into four parts. Firstly, the theoretical foundation of research methods is described, the appropriate method concerning the research aim is identified and lastly, justified. Afterwards the data collection process has to be planned including a variety of aspects that have to be considered before, meanwhile and after the conduct. The general organisation is planned in chapter 3.2 and is followed by the evaluation of appropriate quality criteria for the study. Lastly, ethical issues that may be of importance are considered.

3.1 Research design and philosophy

The research ‘onion’ depicts the relevant aspects for designing empirical research (cf. figure 6). The utter shell is symbolising the philosophy of the research and can be positivism, realism, interpretivism and pragmatism. It is followed by the approach involving deduction, abduction or induction. The third shell is called methodological choice and can be on the one hand qualitative and on the other hand quantitative. Within those two possibilities it can be differentiated between mono method and mixed method. Depending on the choose method, the research strategy has to be defined. Every method is providing a variety of approaches with advantages and disadvantages that are supposed to be considered before. However, the strategy may involve one or also more approaches and is depending on the research aim of the particular study. If the researcher clarified the research strategy, a time-horizon has to be identified as well. Here only the options cross-sectional and longitudinal are provided. Lastly, the data collection has to be organised and planned, afterwards conducted and finally, analysed (Saunders et al., 2009).

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figure 6: The Research ‘Onion’; Source: Saunders et al. (2009, p. 128)

The research question of the study focuses on the decision-making process and the consumer behaviour of LOHAS in the automotive market. The process itself has been researched a lot in the recent decades for different markets and target groups. The LOHAS target group has been identified in regards of conscious, ethical and pro-environmentally purchasing behaviour. Nevertheless, the sustainable consumption patterns have been mostly explored in the context of low involvement products. Consequently, the current study is on the one hand describing the decision-making process and consumer behaviour of LOHAS and on the other hand explores it within a high involvement market (in this case automotive). As the research utilises description as a precursor to explanation it is called according to Saunders et al. (2009) a descripto-explanatory study.

Starting to peel the research onion, the outer shell requires that the researcher decide on an adequate philosophy that is adopted in study. According to Saunders et al. (2009) the epistemological research methodology that will be adopted follows an interpretive philosophy because the social world is too complex to be defined through theories and laws like in physical sciences. Theorising limits the rich insights for the complex world, as its complexity is reduced through a series of generalisations. Consequently, the aim of the study is neither to generate a new theory or model nor to modify it. Interpretivism supports the necessity for researchers to understand humans in the roles of social actors and is consequently conducting research amongst individuals rather than objects. The difficulty concerning the philosophy is the researcher’s empathy. The social world of the research subject has to be adopted in order to understand the world from the target’s point of view. Saunders et al. (2009) emphasises that the set of circumstances and the individuals meeting at a specific time are ever changing and consequently situations are complex and always unique.

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