Sustainability and Branding: An Integrated Perspective of Eco-innovation and Brand

Abstract

Eco-innovation presents a tool that helps companies to transform environmental constraints into opportunities and advantages such as cost reduction, better reputation, and benefit for new markets. The purpose of the paper is to evaluate the perception of eco-innovation and green brands in the context of sustainability in Slovakia and their mutual relation. The applied research focused on the perception of eco-innovation and green brands. The survey was realized by the Kano model that provides customers’ opinions regarding the requirements of the monitored object. In our case, the research object is ecological innovation evaluated in terms of selected parameters. To generalize the relationships among examined parameters, cluster analysis was applied to identify clusters of examined parameters of ecological innovations. The aim of the contribution is to present the output of the cluster analysis in a form of a dendrogram showing a graphical grouping of related objects in three clusters that include examined parameters according to their perception by customers.

1. Introduction

The scale of environmental problems, as well as competitiveness challenges within the global economy, has raised increasing awareness of the need to change and renew existing technological production and social behavioral patterns. Such awareness may produce innovative responses gradually leading to sustainability [1,2].

There is a lot innovative theoretical frameworks for achieving sustainability and a competitive advantage based on a coherence between dyadic and social contexts for the benefit of society and all stakeholders. This theory is further amplified by a synthesized explanatory basis including an eclectic mosaic of interdisciplinary theories (institutionalism, non-institutionalism, viable systems approach, isomorphism, and identity) to improve the performance of business and supply chains [3].

The World Commission on Environment and Development has defined sustainability as development that meets the present needs without endangering the ability of future generations to satisfy their own needs [4]. The European Commission Measuring Eco-Innovation (MEI) [5] defined eco-innovation as assimilation or use of a product, production process, service or management or business method that is new to the organization and that reduces environmental risks, pollution, and other negative impacts of resource use compared to relevant alternatives, or contributes to environmentally sound objectives sustainability [6].

As they present [7], eco-innovation can serve as a tool through which companies try to transform environmental constraints into opportunities to reduce costs, gain a better reputation, and benefit new markets. Therefore, marketing plays an important role in implementing and promoting such initiatives, which can be greatly supported by brands to promote the value of sustainability for their customers, consumers, and other stakeholders. This can be achieved through branding activities that emphasize the company’s sustainability practices and their impact on stakeholders. Expressing sustainability measures as measurable and relative results that they provide and their connection with brands has the potential to further facilitate this integration of sustainability and brand building in society [8]. According to Bashir et al. [9], there are various brand positioning strategies that can be represented through the “green” term or symbol. This usually depends on the adaptability to change in the business philosophy due to the implementation of green marketing initiatives such as promotion of natural resource security, responding to green consumers’ demands. From the green consumer’s perspective, a green brand image is an important clue in this regard. Consumers usually perceive a brand based on their associated memories, and such perception eventually generates their overall image of the brand. Therefore, a green brand image is a set of brand perceptions in the consumers’ minds that is associated with environmental concerns and commitments.

Therefore, the aim of the paper is to evaluate the perception of eco-innovation and green brands in the context of sustainability in Slovakia and their mutual relation.

As is evident from different studies and research, the issue of ecological innovation and green brand is a well-touted term. Eco-innovation and green brands in the context of sustainability are highly discussed issues among researchers and academics worldwide, especially in developed countries. The situation is a bit different in emerging countries, including Slovakia, where research on the impact of mutual relations of the perception of eco-innovation and green brands is only in its early stages. The identified research gap opens up various opportunities for investigation.

The authors [10,11,12], regarding an eco-innovation approach, claim that the more innovative a company, the more environmentally friendly the company. According to a literature review [10,11,12], effective management of both innovation and environmental issues proposes that a company with higher-quality innovation takes better care of the environment. Some authors [13,14] identified equality and mutual benefit based on the relationship between eco-innovation and business performance.

Within the eco-innovation indicator (Eco Index), in 2018, Slovakia ranked 23rd among the countries of the European Union. The Eco-Innovation Index illustrates the performance of eco-innovation in all EU (European union) Member States. Its aim is to capture various aspects of eco-innovation through 16 indicators grouped into five components—eco-innovation inputs, eco-innovation activities, eco-innovation outputs, environmental results, and socio-economic results [15]. The identified gap opens various opportunities for investigation.

As authors present [7,16,17,18,19,20], one of the most important interests of consumers is to support the performance of environmental product innovation, but also to improve the implementation of this innovation due to the growing need to develop integrated models for the creation and implementation of sustainable brand management patterns focused on behaviorism in consumer shopping behavior. Space must be created to acquire new knowledge and formulate new postulates built on systematic and multidisciplinary approaches that form the core for sustainable development based on innovations that support sustainable growth and support them through brands [3,21,22,23,24].

In the last decade, the concept of suitability has emerged globally as a result of awareness among the general public. Consumers’ purchase decisions are likely to be influenced by this increasing awareness and inclination towards sustainable consumption [25]. Moreover, businesses are placing much more emphasis on sustainability due to stricter environmental regulations and rising pressure from stakeholders to protect the environment. In order to promote such products, sellers need to understand consumer preferences, because each customer has divergent preferences towards different attributes of an ecological products and their innovation. Hence, there is a need to look for other factors that can explain the indirect link between consumer awareness about social and environmental awareness and pro environmental behavior. Green brands not only communicate brand features as traditional marketing does, but also offer a unique personal recommendation of the brand [26]. Moreover, Panda et al. [26] indicate country of origin as significantly important to influence the level of concern for the environment among customers, but the current literature has a dearth of studies that investigate the ecological innovation purchase behaviour of customers. In a more recent study, Prakash et al. [27] also indicated the need to investigate the pro-environmental behaviour of customers. Contemporary consumers have shown their readiness to pay extra for green products/services and their innovation. As observed by Bashid et al. [9], there was a 400% increase in the global market value of green products, services, and their innovation between 2011 and 2015. Due to such rapid change, the green brand image has become a differential strategy for many trade markets. For sustainable development purposes, several recent studies examined the role of a green brand image. For instance, study of the patterns of a green brand image in the course of consumers’ perception of benefits linked to green brands found that product attributes that fulfill the consumer’s functional, social expression, and outward-directed self-esteem requirements often increase the product’s green brand image. Specifically, compared with emotional benefits, functional benefits have a more powerful effect on consumers’ perceptions that a brand is concerned about the environment and will fulfill its environment-related commitments. Ecological innovations are directly associated with the green brand [28]. The findings by Harini et al. [29] suggest that the performance of green marketing and green brands can be enhanced by ecological innovation through intervening variables of ecological marketing.

Therefore, the research question is: If the value of eco-innovations in Slovakia is low, is the perception of eco-innovation and eco-labels in the context of sustainability also low in Slovakia? The structure of the paper consists of an introduction, focused on the issue, Materials and Methods, which are based mainly on the Kano model and clusters analysis, results, discussion, and conclusion.

2. Materials and Methods

The research deals with the perception of eco-innovation and green brands through the Kano model. The aim of the Kano model is to obtain the opinion of customers according to the requirements of the monitored object. In this case, the object of the research is ecological innovations from the point of view of the following parameters:

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Price of products—characterizing the attitude of respondents in general towards the price of products in Slovakia as an amount that they must give up in order to obtain a good or service.

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The brand—characterizing the respondents’ attitudes towards a brand representing a name, expression, sign, symbol, design or their combination, which are intended to identify the goods or services of one seller or a group of sellers and to distinguish them from the goods and services of competitors [30].

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The origin—characterizing the attitude of respondents towards goods for commercial purposes in terms of identifying the place of its provenance—the origin in the territory of a given country or region, the so-called economic nationality of the goods [31].

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Slovak products—characterizing the attitude of respondents towards the goods in terms of identification of place of origin, which is Slovakia.

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The standards—characterizing the attitude of respondents to regulations determining certain values, properties, composition, method of production, measurement, etc., for a product or service.

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Environmental product safety—characterizing the attitude of respondents towards the relative safety of the public against products presenting environmental threats to society or individuals.

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The importance of eco-innovation—characterizing the attitude of respondents in general towards the effort to protect the environment from the negative consequences of using goods and services in order to protect or alternatively to improve the current state of the environment in order to prevent the negative effects that may be associated with its deterioration [32].

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The origin of eco-innovation—characterizing the attitude of respondents towards eco-innovation for business purposes in terms of identifying their place of origin.

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Green brand—characterizing the attitude of respondents towards products and services that meet the given environmental criteria marked with the eco-label.

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Slovak products with green brand—characterizing the attitude of respondents towards products and services that meet the given environmental criteria marked with an eco-label and Slovakia is their business place of origin.

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Ecological innovation—characterizing the attitude of respondents towards products and services representing eco-innovation, i.e., any positive changes leading to a reduction in the environmental impact.

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Availability of eco-innovation—it characterizes the attitude of respondents to the intuitively evoking idea of reachability and accessibility of eco-innovation in Slovakia.

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Information on eco-innovation—characterizing the attitude of respondents in general towards the availability of information on eco-innovation.

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Advertising of eco-innovation—characterizing the attitude of respondents in general towards the promotion of eco-innovation and information on them with a focus on the potential market.

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The price of eco-innovation—characterizing the attitude of respondents in general toward the price of products representing eco-innovation in Slovakia as an amount that they must give up in order to obtain eco-innovation of a product or service.

The above-mentioned parameters of the research were elaborated in a Kano questionnaire which was consequently constructed. Each examined parameter was asked once by a positive and once by a negatively formulated statement. According to the methodological approach of the Kano model, respondents had the opportunity to answer each statement on a scale from 1 to 5 (1 represents strong agreement, 5—strong disagreement with the question, statement).

The survey was applied in Slovakia, and the sample consisted of 740 respondents. Respondents at the age 18 years and over, of both genders (52% women, 48% men) participated in the survey.

The answers were evaluated according to the cross rule [32], which allows us to categorize the examined objects into the following categories according to how the respondents perceived these objects [33,34,35,36]:

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M (must-be requirements)—mandatory requirements that customers consider to be normal. They are automatically expected and their fulfillment will be reflected in customer satisfaction.

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O (one-dimensional requirements)—those attributes of the product, of which fulfillment leads to customers’ satisfaction and in the case of non-fulfillment, customers are dissatisfied. There is a direct linear relationship between meeting these requirements and customers’ satisfaction, i.e., the higher the rate of compliance with these requirements, the more satisfied the customers.

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A (attractive requirements)—they have a clear impact on customers’ satisfaction, as this is a requirement that customers did not expect, but it is attractive for them.

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R (reverse requirements)—they are contradictory. They annoy customers because they require them to take further action.

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I (indifferent, irrelevant requirements)—requirements that do not affect customer satisfaction or dissatisfaction.

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Q skeptical and questionable requirements.

The most numerous category identified the attitude of respondents toward the examined parameter. Subsequently, the total strength of the parameter was determined according to Equation (1) by [37]:

$$Total Strength= \frac{\#\mathrm{A}+\#\mathrm{M}+\#\mathrm{O}}{\#\mathrm{A}+\#\mathrm{I}+\#\mathrm{M}+\#\mathrm{O}+\#\mathrm{Q}+\#\mathrm{R}}$$

(1)

Then, cluster analysis was used, specifically the method of hierarchical clusters, using an agglomerative approach. This means that at the beginning we considered each object of the research as a separate cluster and gradually they merged in pairs into sub-clusters from the most to the least similar objects until they result in one cluster. The STATISTICA 10 program was used to process the cluster analysis using Euclidean distance (DE) measures. The output of the process of clustering object distances is a dendrogram presenting a graphical grouping of related objects in clusters. The Ward method was used within the algorithms of agglomerative clustering [38]. It connects clusters in which the increment of the total intragroup sum of squares of deviations of individual values from the cluster averages is minimal, which is important to interpret the whole analysis; identified customers’ requirements by the Kano model and indicator clustering were also helpful.

3. Results and Discussion

The results of research (see

Table 1. Evaluation the perception of eco-innovation and green brands.

Parameters	M	A	O	I	R	Q	Requirements	Total Strength
Price of products	142	297	73	95	124	9	A	0.691892
The brand	159	148	288	121	24	0	O	0.804054
The origin	184	189	121	245	0	1	I	0.667568
The standards	87	103	293	154	95	8	O	0.652703
Environmental product safety	161	154	87	311	27	0	I	0.543243
The importance of eco-innovation	138	197	67	261	76	1	I	0.543243
The origin of eco-innovation	108	225	54	231	120	2	I	0.522973
Green brand	97	143	256	108	132	4	O	0.670270
Slovak products	254	115	274	97	0	0	O	0.868919
Slovak products with green brands	134	121	176	169	137	3	O	0.582432
Ecological innovation	24	267	129	262	58	0	A	0.567568
Availability of eco-innovation	66	63	271	276	62	2	I	0.540541
Information on eco-innovation	183	181	107	185	84	0	I	0.636486
Advertising of eco-innovation	74	281	49	289	45	2	O	0.545946
The price of eco-innovation	167	118	75	87	293	0	R	0.486486

) evaluating the perception of eco-innovation and green brands in the context of sustainable development point to the following perspectives. Slovak respondents in the case of brand, standards, green brand, Slovak products, Slovak products with green brands, and advertising of eco-innovation are (in the case of these product attributes) more satisfied the higher the extent of compliance with these requirements. These requirements were characterized as one-dimensional. Price of products and ecological innovation appear to be attractive requirements for Slovak respondents. Respondents do not expect these examined parameters regarding the product and are very attractive to them and have a great influence on their shopping behavior.

On the contrary, the Slovak respondents perceive the price of eco-innovation negatively (contradictory). Other examined parameters (the origin, environmental product safety, importance of eco-innovation, origin of eco-innovation, availability of eco-innovation, and information on eco-innovation) do not influence the respondents’ decision making.

To generalize the relationships among the examined parameters, there were clusters of examined parameters of ecological innovations using Waldor’s method of coupling and calculation of the Euclidean distance among the monitored objects. Identified clusters were subsequently drawn in a dendrogram.

The output of the process of clustering object distances is different possibilities of the number of clusters at different levels of clustering in a graphical form, which is presented in a tree structure (Figure 1).

To detect the number of clusters it is important to determine the level for the cluster calculation based on significant diversity of clusters, which occurred at level 10. There was a significant increase in values in the Euclidean distances among the monitored objects. Three clusters were identified regarding this defined level of cluster calculation.

The results of the cluster analysis present one seven-membered, one nine-membered, and one one-membered cluster.

The first cluster—Slovak products with a green brand, Advertising of eco-innovation, The brand, Price of products, The standards, Slovak products, Green brand, and Ecological innovation—presents “performance attributes”. This cluster represents the product attribute fulfillment of which leads to satisfaction and in the case of their non-fulfillment, to the dissatisfaction of customers. This means the higher the compliance rate with these requirements, the more satisfied the customers. Compared to mandatory requirements, customers do not automatically expect them. There is a direct linear relationship between meeting these requirements and customer satisfaction.

Second cluster—The importance of eco-innovation, Availability of eco-innovation, Information on eco-innovation, The origin of eco-innovation, The origin, Environmental product safety, present “not implemented or unperceived attributes”. Over time, unperceived innovation becomes another basic need. This cluster represents product attributes that are not critical to customers and their fulfillment or non-fulfillment does not affect their satisfaction or dissatisfaction. At the same time, they are also insignificant from the point of view of product competitiveness.

The third cluster—The price of eco-innovation—presents a “reverse attribute”. This cluster represents the attributes of a product where customers react in an opposite way. They have a significant impact whether the innovation is successful, because if customers are dissatisfied with the innovation, then the innovation is unsuccessful and customers have resistance to it. In our case, not all customers are willing to pay the price for eco-innovation. Thus, some customers prefer innovation, while others prefer the basic product model and they will not be satisfied if the product has too many other features. This means they are more satisfied with the basic product model for them at a reasonable price.

The results point to the connection between Ecological innovations and the green brand, as other authors claim [28,29]. Slovakia’s eco-innovation index is low (Slovakia is among the below-average countries for the index of eco-innovation in the EU) [15] and as the results show, the perception of eco-innovation and the green label is not a mandatory requirement for Slovak respondents. Only for selected research parameters do one-dimensional requirements (cluster 1) and other investigated parameters not affect them at all (alternatively they perceive them in opposite ways). The low value of eco-innovations in Slovakia also causes a low perception of green brands, because Harini et al. [29] stated in their study that the performance of eco-marketing and green branding can be enhanced by eco-innovation.

Therefore, to promote green brands, organizations must allocate resources to enhancing consumers’ perceptions of green brand innovativeness and green value and improving their environmental knowledge [28]. Ecological innovations can influence consumers’ perceptions of corporate reputations and brand images [39]. Slovak products and Slovak products with green brands present performance attributes, which is in line with the theoretical basis. As presented by Panda et al. [26], the country of origin is significantly important in influencing the level of concern for the environment among customers. However, it is not the country of origin that is important in general, but it concerns green brand loyalty to Slovak green products and their innovations. To explore consumer loyalty and its predictors from a sustainable marketing perspective, Martínez [40] confirmed the validity of the hierarchy-of-effect theory to understand the process through which green brand images support green consumer loyalty. The cognitive links relating to the brand image affect the trust and loyalty of the consumers [9].

Based on these results and the definition of sustainable development as defined by the World Commission for Environment [4], there is a need to create and/or maintain dyadic consonance while respecting contextual needs [41,42]. In our case, this represents the first cluster of Slovak customers (Slovak products with green brand, Advertising of eco-innovation, The brand, Price of products, The standards, Slovak products, Green brand and Ecological innovation), which is characteristic of “performance attributes”.

In this regard, Lindgreen et al. [43] refer to the new brand concept of a social responsible business based on the principles of sustainability as an integral part of the strategy based on the quote “Think Global, Act Local” [44]. The notion “global” does not emphasize the global perspective that we currently understand, but it rather refers to the inclusiveness of the environment. At the local level, it creates space and interest of media and public in human, social, and environmental surroundings through eco-innovation and their brand creation and building [44]. This means it is necessary to change the rules in the global business world from the perspective of all stakeholders to create a sustainable brand, focusing on local resources and customers’ needs [43,45,46]. These rules can be based on five elementary principles, such as courage, openness, realism, influence, and sustainability [47,48,49]. We recommend better protection of their brand value consistency throughout their journey through the supply chain [44] and better adaption to their social context.

Fare et al. [50] and Picazo-Tadeo et al. [51] stated that environmental behavior changes in proportion to ecological changes. Thus, eco-innovation and its branding can serve as a tool through which companies will try to transform environmental constraints into opportunities, gain a better reputation and benefit new markets, because promoting the performance of environmental product innovation is one of the most important interests of consumers.

4. Conclusions

Nowadays, markets present a place characterized by strong competition where innovation represents an important tool allowing companies to achieve a competitive advantage. On the other hand, it is not sufficient just to innovate, but more importance is placed on the creation of innovations implemented on the principle of sustainable development (eco-innovation). Eco-innovation can be understood as a choice of suitable materials, processes, and distribution methods that are used with lower consumption of energy and natural resources, and overall, with a lower environmental impact. Moreover, many environmental problems, as well as competitiveness challenges within the global economy, have caused an increasing need to change and renew existing technological production and social behavioural patterns. Therefore, it is significant to redirect companies and their focus on the real implementation of activities that have a direct positive impact on sustainable development. This change should be evident in the area of building and increasing knowledge about green brands, as the relationship between eco-innovation, green brand, and business performance has been confirmed. This is important for influencing the level of care for the environment, the perception of the company’s reputation, and brand image by consumers, as well as focusing on consumer confidence and loyalty in terms of building a local green brand—Slovak green brands.