French households’ willingness to pay for electricity contracts using Smart Meters 

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Satisfaction as a response on value

Consumer and customer satisfaction is a reaction to value received in possession and/or usage. This is a bond between consumer/customer value requirements and organization’s value creation efforts. Therefore, satisfaction and value are not synonyms. First, value tells what is needed, and then, satisfaction indicates what has actually been obtained (Gallarza and Saura, 2006; Hausman, 2011). As shown above, values may exist independently from a particular product or service or be common for several products at the same time. Caelen (2013) defines value equation as a satisfaction of needs divided by costs. Therefore, total satisfaction means a satisfaction of different values, included in individual’s value systems.
Another difference, which helps to define satisfaction in its connection to value is explained as follows: value is a cognitive comparison process taking place before, during and after the purchase/consumption, whereas satisfaction is an affective construct, which occurs only after the purchase towards a concrete product/producer only for the current consumer/customer. For example, a consumer values security a lot (personal value), he values it both when buying a car and a toy for a child (consumer values). Meanwhile, consumer/customer satisfaction is a reaction or a feeling that occurs afterwards for a particular product of use. “When value is viewed as a desirable end-state of consumption, satisfying consumption events are of value to consumers” (Holbrook, 1999, p.58). Therefore, we can say that value and satisfaction have a circular relationship and mutually influence each other.
The level of satisfaction is usually explained by disconfirmation paradigm (Eggert and Ulaga, 2002). It means that customers feel satisfied when the value delivered is equal to the one he has expected. In case of satisfaction after the purchase of consumption, consumer feels satisfied, and feels that it is ordinary, because it is what he/she has expected to satisfy his needs, desire and so on.
If the delivered value is larger than the expected customer value than he/she is very satisfied – positively disconfirming. If the delivered value is lower than the expected one than he/she is dissatisfied – negatively disconfirming. On the other hand, dissatisfaction is usually more accentuated by a consumer, being an aggressive feeling, which leaves more negative traces (Solomon et al., 2005). Therefore, satisfaction may be defined as “the summary psychological state” of positive disconfirmation (Deng et al., 2010).
Transaction-related satisfaction of values in case if they are repeated create overall durable customer satisfaction, which creates strong relationships between a seller and a buyer, these relationships may be extended if a consumer/customer becomes loyal. As a result, this relationship becomes profitable for both exchange participants (Lindgreen and Wystra, 2005; Solomon et al., 2005).

Environmental values, as a part of individual’s value system

Environmental situation has an impact of humans’ wellbeing as well as economic and social environment. However, environmental concern has mistakenly less importance and urgency in the individual’s life. Basic needs and desires, difficulties and casual dramatic situations are perceived to be more urgent to hold with than ecological and biodiversity problems. Personal well-being (comfort, enjoyment, power, pleasure, etc.) have been for a long time of the first importance for people. However, lately environmental protection has taken place among these first-order values of humanity, presenting a new motive for reflection.
Previous experience and scientific research state the presence of environmental values among and as a part of other individual’s values, playing an important role in decision-making. Particularly, it is worth to note that environmental values are usually discussed in individual perspective, or as a citizen (influence of policies, actions, products on society; voting choices, provision of public goods) but it is important to consider environmental values applied to consumption practices (Turner, 1999; Brosch and Sander, 2015).
Environmentally significant behavior can be defined as a behavior, which is undertaken to make positive changes to the environment (Stern, 2000, Clark et al., 2003). Already mentioned that values create a guidance for individual behavior and value orientations may explain positive and negative attitudes. Altruistic and self-transcendence personal values have positive relationships with pro-environmental values, whereas self-enhancement, security, self-discipline personal values may contradict them.
By environmental values we mean here positive stable positions towards environmental protection (environmental concern) and sustainability. What one understands as environmental positive attitudes depends on his worlds-views (Turner, 1999). Environmental concern is a concern about consequences of environmental problems and consequences of one’s actions for environment (Hansla et al. 2008). They may be subdivided into personal-, social- and biosphere-related concerns.
Environmental values may take part in different life and consumption situations. However, even having positive environmental attitudes, values and concern, consumers sometimes does not transform them into pro-environmental behavior (Nordlund and Garvill, 2002; Clark et al., 2003). Also consider that personal values may sometimes be in conflict with environmental values. It can be explained by numerous factors, for example, environmental values are usually concerned about future, whereas personal and consumption values may be immediate in time. Environmental values may seem to give less “harm” immediately, privileging personal well-being. In addition, personal values or consumption values called by needs and desires of an individual may be more stable and strong than environmental values.
Empirically, it is found that individuals who do not accept to recycle state that personal and household inconveniences of recycling are more important for them than collective and environmental benefits (see Nordlund and Garvill, 2002 for references).
Environmental values can be divided into several dimensions, following different authors (Nordlund and Garvill, 2002, 2003; Turner, 1999):
– shallow and deep ecology.
– homocentric, ecocentric and egocentric values.
– social-altruistic, biospheric and egoistic values.
– anthropocentric and ecocentric values.
These dimensions represent progressive environmental concern. The progression starts with egocentric (or homocentic or anthropocentic) category, where individuals think that one should protect environment because it contributes to humans’ lives. Meanwhile in ecocentric (or social-altruistic) group individuals believe that one should protect environment, because it has an intrinsic value and this alone is already a reason to protect it. Nordlund and Garvill (2002) also state that individuals with ecocentric environmental values may accept more easily the trade-offs between personal/consumers and environmental values (in environmental values’ favor).
Having strong personal values for altruism and well-being of others amplifies awareness of societal and environmental problems, hence, encourages the formation of ecocentric environmental values. At the same time, higher concentration of “self” and priority for individual consequences may provoke the development of egocentric environmental values. For example, the awareness of negative environmental consequences of the high level of car traffic, which leads to high levels of air pollution; and the degree of seriousness of this situation, are found to have a positive effect on the readiness to reduce personal car use, therefore, have also an influence on consumption values (see Nordlund and Garvill, 2003 for references).
These explanations stress that positive environmental values may, however, be provoked by different sorts of motives and be elaborated from different reasoning process, which in turn evokes different behavior (discussed in the next section).
Turner (1999) distinguishes 4 dimensions of value: anthropocentric instrumental, anthropocentric intrinsic, non-anthropocentric instrumental and non-anthropocentric intrinsic values. This classification divides values according to their attachment to individual and his needs and desires (anthropocentric or non-anthropocentric), and their nature (intrinsic or instrumental).
Anthropocentric instrumental value corresponds to total economic value (TEV, which equals use + non-use values), where the part of non-use value is represented by altruism motivations and is also called existence value. Existence value is described as a value, which individuals have when they feel better when knowing that rare animal or plant species are protected and preserved somewhere on the planet.
Anthropocentric intrinsic values are culturally dependent and attribute value to entities, which have intrinsic value or, as said by Turner (1999, p.21), “good of their own” or “inherent worth”, which is then used by individuals for their own goals.
Non-anthropocentric instrumental values suppose that entities have their value, but they are not connected to human interests.
Finally, last value dimension is non-anthropocentric intrinsic value, which is « the value that the object possesses independently of the valuation of valuers » (Turner, 1999, p.21) or an “inherent worth” of the product.
Being a classification apart, environmental values have nevertheless numerous bonds with previously discussed personal, consumer and product values. Measuring environmental values has as well numerous interceptions with consumer and personal value theories: for example, through measuring universalism and benevolence values one may perceive individual’s altruism values (Brosch and Sander, 2015). Here, it is supposed that environmental values may be “born” inside each (personal, consumer, product) other value. Looking on the schema of values (see Figure 1.1) we can place it inside each circle separately or intersect with several of them.

Personal and consumption values and their transformation into pro-environmental behavior

Personal values and value orientations are found to have influence on environmental values and environmental decision-making through the awareness prism and individual’s world view. Initially pro-environmental behavior has been explained as an extension of environmental altruism, i.e. “behavior conducted to protect the natural environment, determined by an internal set of values and carried out with no expectation to reciprocity” (Brosch and Sander, 2015, p. 249). Altruism is often inherent to humans, supposing that people are not completely guided by self-directed (egoistic) values, however, it may be present in different degrees.
Based on Stern’s (2000) value-belief-norm theory pro-environmental behavior is influenced and mediated by personal values, beliefs and norms, before being expressed. This theory connects values theory, New Ecological Paradigm (NEP), awareness of consequences (AC) and ascription of responsibility (AR) notions, and personal moral norms (Schwartz, 1977), which altogether lead to environmentally significant behavior.
This theory is moving from the inner personality i.e. stable personal values, through the understanding of the relationship between humans and environment (NEP theory), which altogether leads to certain environmental consequences under individual’s responsibility.
New Environmenal Paradigm (NEP) developed by Van Liere and Dunlap in 1978 (Van Liere and Dunlap, 1980; Dunlap et al., 2000) is widely used to measure individuals pro-environmental orientation and attitudes. It is about the relationship between the humanity and the planet and has been reviewed several times since 1978. The NEP scale (revised and lately called New Ecological Paradigm) consists of 15 questions about individual’s vision about the planet, the nature, the balance between the humanity and the nature, the limits of humanity’s influence on the nature (Dunlap et al., 2000).
The awareness of existing environmental problems and risks (AR), and the knowledge that the individual may do something to avoid/ameliorate this negative/positive consequences (AR) are influenced and exacerbated by personal values.
Consequently, the comprehension that the environmental threat (consequences) (AC) may “hurt” personal values and it is in individual’s responsibility to avoid these negative consequences through his/her pro-environmental actions (Stern, 2000; Nordlund and Garvill, 2003; Slimak and Dietz, 2006). The origins of this structure are formulated in Schwartz’s (1977) norm-activation theory. In other words, individual’s pro-environmental actions are activated, when the individual believes that environmental conditions may have negative consequences for the things they have positive values for (Brosch and Sander, 2015).
All these values pass then through the norms prism (Schwartz, 1977; Stern et al., 2000). Personal norms consist of self-expectations, whereas social norms of expectations, obligations and sanctions (Schwartz, 1977). Norms create the last connection between values and pro-environmental behavior, and are usually conceptualized as “a personal norm that one should take action as a consumer, as a citizen, and/or as an activist” (Brosch and Sander, 2015, p. 338).
Stern’s value-belief-norm theory resumes fractionally Schwartz norm-activation theory, which is based on the notion that individual’s behavior is a function of beliefs about actions’ consequences and understanding of responsibilities of personal actions. This theory gives the beginning to altruism scale. Altruism scale consists of 9 questions, which measure personal norms, awareness of risks and consequences (Clark et al., 2003).
At the same time Stern (2000) indicates that pro-environmental behavior may also be motivated by products’ characteristics, which are only indirectly correlated with environmental impact (power, performance of the car) or such factors like luxury, waste, the importance of time spent with family, personal capabilities and contextual forces.
These ideas support our hypothesis of multi-faceted connection of values and their systematic influence on human behavior, reflected by their superposition on Figure 1.1.
Therefore, the system of values, AC and AR, through norms and ecological world view initiate environmentally significant behavior (Stern, 2000), which can be divided into following classes:
– Environnemental activism, i.e. active participation in environnemental protection, organisations, etc..
– Non-activist behavior in public sphere, i.e. non-active support of environmental protection, actions, policies, etc.
– Environmentalism in private sphere, i.e. participation in environmental protection in private behaviors (consumption, private waste management, travelling, recycling, etc.).
– Other behaviors in organizations, i.e. influencing others’ behavior.
Personal values and pro-environmental behavior may “work” together and overlap each other, but they may be, however, in conflict and, as said before, personal values may “slow down” the manifestation of environmental values and prevent pro-social behavior.
Egoistic values correlate positively with awareness of both immediate and future consequences, whereas, in contrast, altruistic and biospheric values have a positive correlation with only future consequences. Self-enhancement personal values have negative correlation with pro-environmental behavior. Repeated character of environmental behavior (for example recycling or car-sharing) may create obstacles with time and evoke egocentric or pro-self values, leading to the weakening of the environmental values.
Simultaneously, environmental values have a positive correlation with consumer behavior. Choosing paper bags instead of plastic ones or fuel-efficient/electric cars, which reduce energy consumption, represent the presence of pro-environmental values, translated in consumption behavior.
“One important obstacle to consistency between pro-environmental values and behavior might be people’s tendency to exaggerate the pleasure of indulging in a consumer life-style and the negatively of giving that up” (Brosch and Sander, 2015, p. 251). Consumers have high valuations of pleasure and happiness (hedonic value) from possessing a particular product or service. It is also possible that the desire and еру anticipation of the product may be also valuable for a consumer. In both cases, it mitigates connected environmental values and pro-environmental consequences in favor of immediate personal consequences.

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Innovation and innovation values in the consumption decision-making

The characteristics of 5th Kondratieff wave imply that from 1990 our economy is engaged into the period of high technological development, based on networking and communication, i.e. information age. So, the process of research and development (R&D) is now deeply integrated in core activities of companies, with constantly growing budgets for it.
Hence, modern economy, marked by the rapid development of new technologies, has an innovation as a key factor of the economic success of companies. It is necessary for companies to be able not only to maintain a leading position on existing markets, but also – and perhaps more – to develop new markets on the basis of scientific and technological discoveries of recent years (DGCIS, 2011, Khazanchi et al., 2007). “…companies with investment patterns that don’t satisfy their customers and investors don’t survive.” (Christensen, 2011, p.23).
To start with, there exists numerous definitions of word “innovation” and following concepts. Innovation, being closely connected to “new”, should be, however, distinguished from invention (OECD, 2007). Discovery is necessary for invention, when it is not always needed for innovation. The idea that innovation is a practical application of inventions and knowledge is taken for reference (Trott, 2012).
Innovation can be an idea, a product or a service, which is perceived as new and improved by a consumer or any other relevant unit of adoption (Rogers, 1995; OECD, 2007; Dewar and Dutton, 1986). Innovation, of any sort, should first by detected (as advantageous for a company or an individual), adopted, effectively implemented and used in order to obtain the expected benefits of the innovation (Klein and Sorra, 1996).
In European Commission MEI project report (2007, p.4) is stated that “Innovation occurs within a wider context that shapes innovation processes, innovation output and economic and environmental outcomes. This wider context encompasses the values, beliefs, knowledge and networks of actors, the technologies in place, economic growth, the product market conditions, factor market conditions, the education and training system, physical infrastructure and the macroeconomic and regulatory context.”
There are two points of view on product innovation: product side and user side. Product side theory is about a creation of the new innovative product created for a (new) market. Whereas user side theory considers innovation as a product or a technology, which responds on a particular innovative or new need of consumers. So, the former is about the product and the latter is about the consumer (see references in Klein and Sorra, 1996).
A great role in innovation and R&D play science and technologies, where the latter is an application of the former (Trott, 2012). Lukas and Ferrell (2000, p.240) denote product innovation as “a process of bringing new technology into use”. Trott (2012) describes that innovation processes model embraces two linear models: “technology push”, representing technological advances and “marketing pull”, representing a careful consideration of consumers’ wants and needs (Figure 1.5).

Table of contents :

Chapter 1 Consumers’ values and their relationship with individual consumption of innovative products
1. Behavior and its connection with preferences
1.1. Preferences and their changing nature
1.2. Preferences, as a parameter of the economic decision-making process
2. The concept of value, systems of value and their classification
2.1. Personal values
Cultural values
2.2. Values in the consumption decision-making
Customer value
Consumer value
2.3. Product value
2.4. Satisfaction as a response on value
3. Environmental values, as a part of individual’s value system
3.1. Personal and consumption values and their transformation into pro-environmental behavior
4. Innovation and innovation values in the consumption decision-making
4.1. Product innovation
New Products
New Product Development
4.2. Consumer innovativeness and the diffusion of innovations
4.3. Eco-innovation, sustainable development and consumption
Conclusion
Chapter 2 Preference and value elicitation for innovative products. Methodological side of the problem
1. Traditional methods of value elicitation
1.1. Conjoint analysis
1.2. Contingent valuation
1.3. Discrete choice analysis
Referencing or pivot design of discrete choice analysis
2. Designing stated preference value elicitation method
2.1. Experimental view on the estimation of willingness to pay WTP and WTA disparity
2.2. Practical issues of the elicitation mechanism design
3. Auction as a value elicitation method
4. Combined methods of value elicitation
5. Inferred valuation method
Conclusion
Chapter 3 Elicitation of willingness to pay for upgradeable products with calibrated auction-conjoint method
1. Presentation of the “IDCyclUM” project and the goal of research
1.1. Sustainable development and upgradeability principle
1.2. Presentation of the method of willingness to pay elicitation
2. The experiment on upright and wired vacuum cleaners
2.1. General information on the method and the experimental design
2.2. Experiment outlines
3. Main findings
3.1. Analysis of the structure and importance distribution of attributes
3.2. Bids distribution and WTP for both types of vacuum cleaners
Conclusion
Chapter 4 French households’ willingness to pay for electricity contracts using Smart Meters 
1. Smart meters and smart grids technologies
1.1. Demand-side management and its consequences on consumer energy saving behavior
1.2. Insights into consumer acceptance of smart grids and smart meters
2. Methodology
2.1. Discrete choice analysis and pivot discrete choice experiment
2.2. Estimation models seeking to account for the heterogeneity of consumers’ preferences IIA property and its consequences on discrete choices
2.3. Mixed logit models and the heterogeneity of consumers’ preferences. WTP issues for mixed logit models
2.4. Generalized MNL – a new method, which accounts for preference and scale heterogeneity
3. Experiment and the hypotheses
3.1. Experimental design
4. Main findings
4.1. Estimation with the inferred valuation method
Conclusion
General conclusion
References

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