Keen to go green?

In Features On

In September 2007, Allianz Schemes commissioned GfK NOP to undertake a consumer research study in the UK to examine people’s opinions and attitudes to early replacement of domestic appliances, and provide some insights into extended warranty purchases. Andrew Cackett, strategic marketing manager at Allianz Schemes, interprets the findings.
The aim of the research commissioned by Allianz Schemes was to gain some insights into the debate about the early replacement of domestic appliances, such as washing machines and fridge freezers. In particular, the company wished to examine consumer buying habits and expectations in relation to white goods, in order to ascertain how likely they are to replace old appliances in the near future, especially if they the environmental and cost-saving benefits of modern appliances were known to them.
The size of the problem and … an opportunity
A third of survey respondents said their oldest domestic appliance is over ten years old. This equates to around 15 million outdated fridges, freezers and washing machines which are still in use in the UK. These inefficient appliances are consuming large amounts of energy and becoming increasingly expensive to run.
This represents a good business opportunity for retailers and manufacturers, with the older age group being the most distinctive target market, since more  than half of over 65s have appliances which are over ten years old.
In geographical terms, the residents of East Anglia are the most likely to hold onto their appliances for the longest period, with 43% of them owning a machine that has been running for at least a decade. 
Customer priorities
The Allianz research showed that the current green climate will be a major allay in the battle for customers’ good will in relation to early replacement of appliances.  In fact, an impressive 77% of respondents said they were more likely to replace their domestic appliances if they could change them for the models that were more beneficial to the environment.
Another incentive for the earlier replacement is a potential reduction of utility bills, as indicated by 70% of respondents. Interestingly, the people of Northern Ireland were most concerned with this issue, with 91% wanting to reduce their energy bills and 88% wishing to protect the environment.
These responses are a reflection of the large rises in energy bills that have taken place over recent years, coupled with a greater awareness of the threat posed by global warming and the need to protect the planet.
In contrast, only 48% of consumers said that additional features of appliances were not important for them. Perhaps not surprising, having more features appealed to men rather than to women, with 53% of men considering this of value.  Age was also a factor, with a noted decrease of interest in additional appliance features in the older age groups.
In terms of other benefits of the early replacement, a better design and absence of repair bills received the equal vote of 67%. 
Green good will
The Allianz Schemes’ research confirmed that the green consciousness is already quite widely spread in Britain, with 25% respondents stating that they were aware of environmental and running costs issues, and plan to change appliances as a result. As previously stated, age is a positive factor here, with 31% of for those in the 35-44 age bracket planning to change appliances. 
There may be an element of ‘aspiration’ in these responses but they are good news for the industry.
When asked what reasons, if any, would persuade them to change appliances early, 55% of people said that this would be improved efficiency and 63% said they would be swayed by savings on utility bills. These appear to be the strongest motivating factors for buying a new machine.
Today’s consumer is not very likely to be tempted by marketing offers, with only 46% saying they would replace an appliance in response to a special price promotion.  An even lower percentage of respondents – 40% – said they would be willing to do so as the result of a financial incentive from a manufacturer.  
The research also clearly indicated what can be done to change consumer behaviour.  19% of survey respondents said they had not been aware of the environmental and cost-saving potential of modern appliances, but they will now take it into consideration. Surprisingly, the youngest group – the 16-24 year-olds – were the least informed. Examining this issue from the regional perspective, it appears that the greatest opportunity for educating customers exists in Northern Ireland, with a massive 40% of Northern Ireland residents saying that they were unaware of these benefits. At the same time, the survey showed that Northern Irelanders were the most concerned about the environment and wished to cut energy costs.
Time to change?
On 11 October 2007, AMDEA launched a new initiative called ‘Time to Change’. It aims to encourage the public to replace the 11.7 million fridges and freezers and 3.7 million washing machines which are over ten years old and guzzling resources around the country. The cornerstone of the campaign is AMDEA’s Time to Change website – It features a savings calculator which demonstrates how, thanks to advances in technology over the last decade, replacing an ageing product with a new energy efficient model can result in personal savings and make a real contribution to the environment.
Prior to the launch of the campaign, AMDEA carried out its own research that revealed that many people are ‘keen to go green’ but the initial cost of  replacement is holding them back.
It is hoped that the online calculator will help to win consumers round to a ‘carbon-friendly footprint’ way of thinking and will also reduce criticism from within the industry that the campaign is an expression of manufacturers’ self-interest.  The challenge now is to persuade owners of outdated models that the long-term advantages of cost-savings on utility bills and safeguarding the environment outweigh the short-term financial outlay of replacing their appliances.
Energy labelling
Energy labelling has long been an area of concern for electrical retailers and manufacturers. More recently this issue has also engaged the attention of many consumers and the growing awareness of green issues made a significant contribution to this.
The Allianz research revealed that 71% of consumers pay attention to energy labelling and 25% said it is the most important factor in making a choice – with women showing the most interest. However, 10% of people still remain confused by energy labels and pay no attention to them when making a purchasing decision.
In September, AMDEA met with representatives from Defra to discuss proposals for a revision of the Energy Labelling Directive (see: Comment Amdea, IER, November 07), to investigate ways in which the system can be brought up-to-date. Most appliances now being placed on the market fall into the A and A+ bands, bringing into question the usefulness to consumers of the current A to G rating scale. Among the potential solutions under discussion is one that would involve keeping the shape and colours of the existing label but replacing the letters with a numeric scale of 1 to 7, where 7 would represent the most efficient appliances. This would then allow for even greater improvements in appliance efficiency in the future.
Whatever the format of the new label, our research shows that consumers want information about energy efficiency to be presented to them in a clear and easily understandable way. It is equally important that the national governments are rigorous in their enforcement of the energy labelling rules, so that consumers can have confidence in the accuracy of the information provided to them.
Perception of warranty
The Allianz research was also aiming to asses people’s perceptions of extended warranties. It was interesting to note that a higher proportion of people thought that it would be more exan extended warranty at point of sale. This was particularly true of those in the 16-44 age bracket. 
A next step
The results of the Allianz survey clearly demonstrated that consumers are interested in saving the environment, and the purchasing decisions of an increasing number of them are guided by ‘green’ concerns. Equally important however, are the economic factors, as they wish to see financial savings on their new purchases. This is a win-win combination of factors for the appliance industry.
The Allianz Schemes aim to be the natural extended warranty insurance partner for the electrical industry, and welcomes discussion on this subject with industry players. The company is also happy to share further findings from its research survey with interested companies.

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