Sustainability in the Fast Fashion Industry A quantitative Study on Consumers’ Brand Attitude towards Green Brand Extensions and its Effects on Brand Loyalty Celina Hinzmann, Rebecca Stark-Nässlin Department of Business Administration Master’s Thesis in Business Administration III, 30 hp, Spring 2020 Master’s Program in Marketing Supervisor: Vladimir Vanyushyn ABSTRACT Only a few industries face challenges regarding sustainability to the same extent as the fashion industry being one of the largest consumer industries and the second most polluting industry in the world. These challenges are encouraged by the fast fashion business model, which is dominant in the sector and relies on the quick responsiveness to latest fashion trends while maintaining low prices, encouraging more consumption and shorter product life cycles. On the other side, a consumer shift towards more environmental consciousness can be observed leading to most fast fashion brands integrating sustainability in various forms into their products and services. A path that many fast fashion brands take in order to become more sustainable is the strategy of green branding through green brand extensions. Green brand extensions (GBEs) involve the application of an established brand name to new and greener products due to environmental considerations of the brand and can be divided into green line extensions (GLEs) and green category extensions (GCEs). Due to identified research gaps concerning how green brand extensions change consumer attitudes as well as the relationship between brand loyalty and the green image of brands, the following research question got developed to gain in-depth in consumer behavior in the fast fashion industry related to green brand extensions: RQ: How do green brand extensions of fast fashion brands affect the consumers’ parent brand attitude and brand loyalty? This primary study that aims to answer the research question was conducted following a deductive research approach and adopting a quantitative research design through collecting data by means of a web questionnaire. Thereby, the brand attitude of fashion consumers on green line and green category extensions as well as the relationship to brand loyalty got investigated focusing on Generation Y and Z as largest consumer groups of fast fashion. The main results of the study are that the introduction of a GLE by a fast fashion brand generally leads to a more positive brand attitude and a slightly improved brand loyalty of consumers towards the parent brand. However, when introducing a GCE, the launch has rarely a positive effect on the brand attitude and brand loyalty of consumers towards the parent brand. The relationship of GLEs and brand attitude is thereby moderated by the environmental concern of consumers as well as their friends and by the initial brand attitude towards the fast fashion brand. The relationship of GLEs and brand loyalty on the other hand is only moderated by environmental concern of consumers and the initial brand attitude. Looking at GCEs and their relationship with brand attitude as well as brand loyalty, it is influenced and moderated by the age of consumers, the environmental concern of their friends as well as consumers’ initial brand loyalty towards the parent brand. Keywords: Fast fashion, Fast Fashion Industry, Sustainability, Consumer behavior, Brand extensions, Green brand extensions, Green line extensions, Green category extensions, Brand attitude, Brand loyalty, Brand Switching 1 ACKNOWLEDGEMENTS We would like to thank our supervisor Vladimir Vanyushyn at Umeå School of Business, Economics, and Statistics for his continuous constructive feedback and suggestions which helped us improve the quality of our thesis. Moreover, we would like to thank all the participants in our survey who made the conducted primary study possible as well as our relatives and friends who supported and inspired us during this process. Umeå University, May 19, 2020 Celina Hinzmann & Rebecca Stark-Nässlin TABLE OF CONTENT 1. Introduction 1 1.1 Problem Background: The Challenge Sustainability 1 1.1.1 The Fashion Industry and Sustainability 1 1.1.2 Increasing Consumer Awareness towards Sustainable Products 3 1.1.3 Fast Fashion Companies’ Reactions to the Sustainability Trend 4 1.1.4 Green Brand Extensions and the Importance of Brand Loyalty 4 1.2 Identified Research Gaps 5 1.3 Research Purpose & Research Question 6 1.4 Delimitations 7 1.5 Contribution 7 2. Theoretical Framework 8 2.1 The Fast Fashion Industry 8 2.1.1 What is Fast Fashion? 9 2.1.2 Environmental Sustainability in the Fashion Industry 11 2.1.3 Sustainable Branding in the Fast Fashion Industry 12 2.1.3.1 The Concept of Brands and Branding 13 2.1.3.2 Drivers for Sustainable Branding 14 2.1.3.3 Sustainability as Brand Positioning Strategy 16 2.1.3.4 Green Brand Extensions as Form of Sustainable Branding 17 2.2 Consumers in the Fast Fashion Industry 18 2.2.1 Main Age Groups of Fast Fashion Consumers 19 2.2.1.1 Generation Y Consumers 19 2.2.1.2 Generation Z Consumers 20 2.2.2 Consumer Decision Making in the Fast Fashion Industry 21 2.2.2.1 Specific Consumption Patterns in the Fast Fashion Industry 22 2.2.2.2 Influencing Factors related to the Consumer 23 2.2.3 Brand Attitude 25 2.2.3.1 Influencing Factors related to the Brand 26 2.2.3.2 Brand Attitude towards Sustainable Products 28 2.2.3.3 Brand Attitude Outcomes 29 2.2.3.3.1 Brand Loyalty 29 2.2.3.3.2 Brand Switching 30 2.3 Integrative Model & Hypotheses 31 3. Scientific and Practical Methodology 35 3.1 Pre-understanding of Relevant Topics 35 3.2 Literature Search & Literature Review 36 3.3. Research Philosophy 36 3.3.1 Ontology 37 3.3.2 Epistemology 39 3.4 Research Approach 40 3.5 Research Design 41 3.6 Quality Criteria 43 3.7 Data Collection 45 3.8 Ethical Considerations 46 3.9 Survey Design 47 3.10 Sampling Technique 53 3.11 Data Analysis Strategy 54 4. Empirical Findings 56 4.1 Findings on Demographics and Moderators related to the Consumer 57 4.2 Findings on Moderators related to the Brand and Brand Attitude 64 4.3 Findings on Green Line vs. Green Category Extensions 66 4.4 Cronbach’s Alpha 72 5. Analysis and Discussion 72 5.1 Multiple Regression Analysis 73 5.1.1 Regression 1 73 5.1.2 Regression 2 75 5.2 Discussion and Results 76 5.3 Revision of the Integrative Model and Hypothesis Testing 81 6. Conclusions 84 6.1 General Conclusion 85 6.2 Theoretical Contribution 86 6.3 Recommendations to Practitioners 87 6.4 Societal Implications 87 6.5 Limitations and Future Research 88 LIST OF TABLES Table 1. Overview of the Questionnaire and References. Table 2. Overview of the identified Variables. Table 3. Descriptive Statistics FI. Table 4. Descriptive Statistics EC. Table 5. Descriptive Statistics SB. Table 6. Descriptive Statistics FxEC. Table 7. Ranking of Factors Most Important to Least Important. Table 8. Outcome Brand Example. Table 9. Outcome Brand Example split according to Age. Table 10. Outcome Brand Example split according to Gender. Table 11. Descriptive Statistics Green Line Extension. Table 12. Descriptive Statistics Green Category Extension. Table 13. Paired Samples Test GBExBA. Table 14. Paired Samples Test GBExBL. Table 15. Paired Samples Test GBExBF. Table 16. Paired Samples Test GBExS. Table 17. Paired Samples Test GBExSB. Table 18. Cronbach’s Alpha. Table 19. Regression 1: Green Line Extension. Table 20. Regression 2: Green Category Extension. Table 21. Effects of moderating variables on Green Line Extensions. Table 22. Effects of moderating variables on Green Category Extensions. LIST OF FIGURES Figure 1. The Components of Brand Equity. (Source: Mademlis & Werneborg, 2019, p. 11) Figure 2. Theoretical Summary. (Own depiction) Figure 3. Integrative Model to guide the Primary Research. (Own depiction) Figure 4. The Research Onion. (Source: Saunders et al., 2019, p. 130) Figure 5. The Deductive and Inductive Approach to Reasoning. (Source: Bryman, 2016, p. 23) Figure 6. Four Stages of Validity and Reliability in a Question. (Source: Saunders et al., 2016, p. 450) Figure 7. Responses FI Statements (in percentage). Figure 8. Responses EC Statements (in percentage). Figure 9. Responses SB Statements (in percentage). Figure 10. Responses FxEC Statement (in percentage). Figure 11. Results Line vs. Category Extension ‘I would like Brand X even more’. Figure 12. Results Line vs. Category Extension ‘I would buy products from Brand X more often’. Figure 13. Results Line vs. Category Extension ‘The sustainable extension fits to Brand X’. Figure 14. Results Line vs. Category Extension ‘I would be sceptical towards a green extension of Brand X’. Figure 15. Results Line vs. Category Extension ‘I would tell my friends about the extension of Brand X’. Figure 16. Results Line vs. Category Extension ‘I would only buy the new line if the products have similar features’. Figure 17. Revised Integrative Model 1: Green Line Extension. (Own depiction) Figure 18. Revised Integrative Model 2: Green Category Extension. (Own depiction) ABBREVIATIONS ANOVA - Analysis of Variance BA - Brand Attitude (Identified variable) BF - Brand Fit (Identified variable) BL - Brand Loyalty (Identified variable) BPS - Brand Positioning Strategy CO2 - Chemical formula of Carbon Dioxide CSR - Corporate Social Responsibility DV - Dependent variable EA - Environmental Awareness (Identified variable) EC - Environmental Concern (Identified variable) E.g. - Example given Etc. - Etcetera EU - European Union F - Friends (Identified variable) F.e. - For example FI - Fashion Interest (Identified variable)