SUSTAINABLE BUSINESS DEVELOPMENT PERSPECTIVES

Evaluation of Product Recall Activities from the Perspective of Customers and Retailers

Martina Jantová¹, Katarína Gubíniová¹ & Gabriela Pajtinková Bartáková^,1

¹Comenius University in Bratislava, Faculty of Management

https://doi.org/10.5817/CZ.MUNI.P280-0197-2022-9

Abstract

The main goal of the paper is to evaluate the product recall activities from the perspective of customers and retail representatives. To achieve this goal, primary quantitative research has been carried out, which examines consumers' attitudes towards the environmentally responsible activities of organizations and towards activities supporting the recall of unnecessary products. The survey was performed between November and December 2020 and involved 4,888 Slovak consumers. Respondents were selected to meet a representative sample for gender, age, education, size of residence, and income. Clearly, there is room for improving the awareness of ultimate customer on the market. The fact that quite a high number of customers would be willing to behave desirably, however they “forget”, appears positive. It is therefore a task of a number of entities involved in the modern marketing management (for-profit organisations, non-profit organisations, civil initiatives, educational institutions at several levels, state apparatus, etc.) to sufficiently communicate the purpose of the reverse distribution in order to clarify the role of the driving force for ultimate customers.

Keywords: Customer behaviour, Distribution Channels, Sustainable distribution

1 Introduction

The production of excessive amount of waste can causes serious problems within the distribution channel and can contribute to the creation of additional costs (financial or nonfinancial). Waste is produced at almost every point in the distribution channel. In the past, the members of distribution channel tried to "got rid of" waste in the closest possible way, and at the same time in the same way. These activities very often caused various damages to water, soil, and air. Linear distribution channels are capable of increasing toxic substances in the biosphere – they participate in the reduction and elimination of the efficiency of natural systems, as well as in harming people and their quality of life. Other products that make the distribution channels unsustainable is the fact that the production of waste can cause the organization of high costs. Costs arise during the production of waste, as well as during its disposal. However, with proper management, the amount (volume) of produced waste can be eliminated, or converted into a source of income.

The concept, or the cradle-to-cradle philosophy (Harris, 2007; Shaw, 2003; Braungart, 2021) assumes that all industrially produced waste can and should be eliminated by having its components serve as biodegradable components in natural systems (biosphere) or can be reclaimed in human technological systems (technosphere). The certification, which confirms that the organization adheres to the concept of "cradle to cradle", helps organizations to create such products that are reabsorbed into nature without causing harm or reintroduced into the technosphere through recycling. Manufacturers who respect and comply with the terms of this concept and certification produce their products using renewable energy sources, with an effort to reduce, for example, water consumption or more efficient consumption ( Osuntuyi & Lean, 2022) and treat human resources (whether employees or customers) with a sense of responsibility. The concept "from cradle to cradle" will manifest itself in the distribution channel in the form of a reduction in the amount of produced waste, and customers (from the market of final customers, respectively from the market of organizations) will become suppliers of many raw materials needed for further production processes. However, it is necessary to emphasize the fact that the ability to (re)obtain recycled product components also depends on the design of the product (Fan, 2022; Santor, 2020). The design of the product respecting its decomposition enables a simplified reduction of the product to components (for example in the form of materials) after the end of its life cycle.

Reverse logistics ( Shamsuddoha , 2022; Sun, 2022) involves the systematic transfer of produced waste in the distribution channel in order to transform it into usable raw materials. Solid waste recycling should be the main ecological goal of organizations ( Haase & Becker & Pick, 2018) . Recycling is technologically feasible, changing material flows in distribution channels therefore presents managers with a challenge and an opportunity for change. In such an approach, the motivation of the customer is extremely important – he/she must be motivated enough to understand his role as a "producer" and to actively behave in this way, as the customer is the driving force in the reverse distribution channel ( Chamberlin & Boks, 2018) . One of the ways in which the concept of reverse logistics can be realized is the activities of retailers, or other members of the distribution channel consisting, for example, in taking back recyclable materials, or products after the end of their life cycle. For the implementation of this strategy, material return flows must become common activities within the distribution channel, thus transforming distribution channels into distribution cycles in which customers or end users of the product play the role of suppliers of raw materials and components to processors and manufacturers ( Sheth & Sisodia, 2005) .

2 Methodology

The main goal of the paper is to evaluate the product recall activities from the perspective of customers and retail representatives. To achieve this goal, primary quantitative research has been carried out, which examines consumers' attitudes towards the environmentally responsible activities of organizations and towards activities supporting the recall of unnecessary products.

The survey was performed between November and December 2020 and involved 4,888 Slovak consumers. Respondents were selected to meet a representative sample for gender, age, education, size of residence, and income. Description of the sample based on socio-demographic factors can be found in Appendix A.

The answers were collected in order to evaluate the complex view on current marketing management and contains several questions related to the researched issue of thte paper. In them, we asked respondents if they think that companies in Slovakia are trying to reduce the impact of business on the environment, in which areas they perceive such activities and what are the reasons that companies include environmental and socially responsible activities in their strategy. The next part of the questionnaire was focused on the activities of companies that try to motivate customers to bring unnecessary products to the store. We are interested in whether such activities have been noticed at all and, if so, where. We also want to find out if customers used this opportunity and brought the products to the store and also what their motivation was to do so. We have also linked three hypotheses to these questions, examining whether demographic parameters such as gender, age and education have an impact on customers taking advantage of product recall. The hypotheses are as follows:

H0: There is no statistically significant effect of gender/age/education on whether customers use the option to recall unnecessary products.

H1: There is statistically significant effect of gender/age/education on whether customers use the option to recall unnecessary products.

We test hypotheses at a significance level of alpha = 5% using the Chi-Square test, which is suitable for categorical variables. We hypothesis H0 if the p-value is less than 0.05 and we accept H1. The conditions of the Chi-Square test are met due to the fact that each of the questions was mandatory, so the individual observations ins the PivotTable are independent and at least 80% of the cells in the PivotTable have an expected frequency of more than 5, which is verified by testing the hypotheses in SPSS at the end of each Chi-square table listed for each hypothesis. Detailed results from the SPSS software can be found in Appendix B.

Other methods that were used to evaluate the data were descriptive statistics and analysis of contingency tables.

3 Results

Environmental behavior of companies from the perspective of consumers

First of all, we asked the respondents if they think that companies in Slovakia are trying to reduce the impact of business on the environment. It turned out that two-fifths of respondents did not have an opinion on the issue. The rest of the respondents were more in favor of a positive answer, although the difference is not significant – 32% of respondents answered "yes" and 5 percentage points fewer respondents answered "no" (see Chart 1).

Chart 1

Consumer views on companies' efforts to reduce their environmental impact

Respondents who answered "yes" to the previous question identified waste minimization and recycling as the main domains in which Slovak companies are trying to reduce their impact on the environment. As many as 1,435 respondents identified this answer, which is almost three quarters of respondents who notice the companies' efforts to reduce their impact on the environment. The second most frequently marked answer was energy savings, followed by environmental protection and pollution prevention with a similar number of responses. One third of respondents think that the involvement of employees in environmental protection is a domain in which companies in Slovakia are trying to reduce the impact of business on the environment. The least indicated answer was the assessment and management of environmental aspects (such as noise, pollution, etc.), which indicated about 20% of respondents (see Chart 2).

Chart 2

Domains where are companies in Slovakia trying to reduce the impact of business on the environment

It turned out that 69% of respondents think that the reason why companies include environmentally and socially responsible activities in their strategy is mainly the image and reputation of the company. The second most frequently mentioned reason was the visibility of the company followed by adaptation to new market trends. Approximately 38% of respondents also identified the company's social awareness as a reason for environmentally and socially responsible activities, followed by a profitable investment to increase the company's profit and economic results with a similar number of responses. Interestingly, just over 30% of respondents identified real interest in the environmental environment as a reason why companies incorporate environmentally responsible activities into their strategy. Respondents included cost reduction and training and building employee loyalty and loyalty among the least frequently marked answers (see Chart 3).

Chart 3

Reasons why companies include environmentally and socially responsible activities in their strategy

Evaluation of product recall activities from the perspective of customers

The basic question is whether consumers even notice the activities of companies that motivate customers to bring unnecessary products to the store. Surprisingly, less than half of consumers have registered such activities, only 43% of respondents (see Chart 4).

Chart 4

Noticing activities of companies that currently motivate customers to bring unnecessary products (clothing, mobile phones) to the store

We asked the respondents where they noticed activities of companies that currently motivate customers to bring unnecessary products to the store. In this open question, telecommunications companies were the most common, where customers can hand over old mobile phones and get a bonus. By far the most mentioned company in this area was the company Orange, which gives extra data for the old telephone or a discount to the bookstore. The second major category mentioned by respondents was clothing stores, with the most frequent respondents mentioning the H&M chain. The third large group of stores mentioned by the respondents were electronics stores, where it is possible to bring unnecessary electronics. Namely, the most frequently mentioned stores were Nay, Okay and iStores.

However, if we look at how many of those consumers who have noticed such activities have actually taken such products to the store, consumers are more inclined to answer "no". Of those who noticed the activities of companies motivating customers to bring unnecessary products to the store, only 43% of them actually brought products to the store.

If we look at the hypothesis whether there is a statistically significant relationship between men and women in bringing unnecessary products to the store, based on the Chi-square test, where the p-value came out less than 0.05, we can reject hypothesis H0 and can state that there is a statistically significant difference between the attitudes of men and women. While almost half of men have not seen such activities, there are 10 percentage points fewer responses among women. If customers have already noticed the activities of companies trying to motivate customers to bring unnecessary products to the store, more women than men have done so (see Chart 5).

Chart 5

Bringing products into the store with regard to gender

Education has also proven to be a significant parameter in whether customers recycle unnecessary products in stores (p-value is less than 0.001, so again we can reject hypothesis H0). We've found that customers over the age of 60 and under the age of 18 are the least likely to see an opportunity to bring products to the store. Although consumers between the ages of 18 and 29 noticed such activities of the companies to the greatest extent, 36% of respondents in this age group did not use the opportunity to bring unnecessary products into the store. The most respondents who took the opportunity to recycle products in the store were between the ages from 50 to 59 (see Chart 6).

Chart 6

Bringing products into the store with regard to age

Last but not least, we analyzed whether education divides consumers into statistically significantly different groups in terms of the use recall activities in store. It turned out that the activities aimed at product recall were most often noticed by consumers with a higher education, who also most often indicated that they also took the opportunity of such activities. On the other hand, three-fifths of respondents with primary and secondary vocational education without GSCE did not register activities aimed at promoting recycling and bringing unnecessary products to the store. Of these educational groups, there are also the least responses declaring the use of such a product recycling option (see Chart 7).

Chart 7

Bringing products into the store with regard to education

The most common reason why respondents took the opportunity to bring unnecessary products to the store was to get rid of things they didn't need. Only a few respondents less indicated the answer that their ecological thinking led them to do so. The following two answers – getting a discount on the purchase of another products and feeling good – were the reason for bringing the products to the store for about 42% of those who have ever done so (see Chart 8).

Chart 8

Reason for bringing unnecessary products into the store

4 Discussion

In the secondary data analysis, focused on identifying the preparedness of retail institutions for the product recall activities, retail institutions were selected.

Table 1

Particular product recall activities of selected retailers

The following conclusions were drawn from the gained results. Clearly, there is room for improving the awareness of ultimate customer on the market. The fact that quite a high number of customers would be willing to behave desirably, however they “forget”, appears positive. It is therefore a task of a number of entities involved in the modern marketing management (for-profit organisations, non-profit organisations, civil initiatives, educational institutions at several levels, state apparatus, etc.) to sufficiently communicate the purpose of the reverse distribution in order to clarify the role of the driving force for ultimate customers.

It can be concluded from the perspective of the analysed organisations, respectively their representatives selected especially with the view to the market shares that they respect the obligations prescribed by law; only one of the analysed organisations provided financial rebates to customers upon returning unnecessary products (clothes in this case) to the store. With regard to the fact that the modern marketing management system is currently comprehensive and interconnected, such entities will probably have to take certain responsibility in educating the ultimate customers on the basis of their position in the reverse distribution.

As materials remain in closed distribution cycles, they become resources for further production processes (instead of waste) and thus their value increases. This approach brings financial benefits to customers, but also to other members of the distribution channel, thanks to careful management of resources, unification and return to the distribution cycle. However, in many cases, customers do not demand direct monetary compensation (for example, for waste recycling), but for example, savings on collection bins, on fees for the disposal of hazardous waste - this is possible for electronics, light bulbs, medicines, toxic materials (motor oil, batteries) , which require special care for safe recycling.

Acknowledgments Funding

This research was funded by the Scientific Grant Agency of the Ministry of Education, Science, Research, and Sport of the Slovak Republic, grant registration number 1/0737/20—Consumer Literacy and Intergenerational Changes in Consumer Preferences when Purchasing Slovak Products.

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Corresponding author

Mgr. Martina Jantová

Comenius University in Bratislava, Faculty of Management, Department of Marketing

Odbojárov 10, 820 05 Bratislava 25, Slovak Republic

jantova9@uniba.sk

doc. JUDr. PhDr. Katarína Gubíniová, PhD.

Comenius University in Bratislava, Faculty of Management, Department of Marketing

Odbojárov 10, 820 05 Bratislava 25, Slovak Republic

katarina.gubiniova@fm.uniba.sk

doc. Ing. Gabriela Pajtinková Bartáková, PhD.

Comenius University in Bratislava, Faculty of Management, Department of Marketing

Odbojárov 10, 820 05 Bratislava 25, Slovak Republic

gabriela.pajtinkova.bartakova@fm.uniba.sk

Appendix A

Socio-demographic composition of the examined sample

Appendix B

Chi-square test results from SAS software