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Abstract:The term "eco-labeling" has become a buzzword in today's sustainable business world. The use of eco-labeling in various forms has been increasing notably for past many years, sometimes as an environmental "requirement" and sometimes merely as a marketing tool. Questions arise about how well these eco-labels are attended and understood by consumers. However, though mentionable studies are found on various aspects of eco-labels, gaps exist in exploring an inclusive set of parameters for investigating consumer perceptions of eco-labels. This paper aims at preparing a synthesis of all the possible factors to be incorporated for measuring consumer perceptions of eco-labeling of products. For making such synthesis, all major works in the field have been thoroughly reviewed. The paper comes up with a total of 10 parameters that include consumer awareness, consumer knowledge, consumer involvement, consumer trust, design and visibility, credibility of the source, type and level of information, clarity of meaning, persuasiveness, and private benefits. This tentative, yet inclusive, set of parameters is thought to be useful for designing large scale future empirical researches for developing a dependable inclusive set of parameters to test consumer understanding and perceptions of eco-label. A framework is proposed for further empirical research.

The use of “eco‐labels” by businesses, both as communication and positioning strategies, is increasing. For these eco‐labels to be effective, however, it requires consumers to understand and value what eco‐labels are communicating. Research suggests that there are many factors impeding consumers’ understanding of eco‐labels. Most of these studies have focused on single dimensions of a complex phenomenon and in doing so they have ignored the multifaceted aspects of the construct, suggesting that a more integrated representation is warranted. The work herein undertakes four studies to empirically test and validate a multidimensional measure that can be used to assess how consumers psychometrically understand and perceive eco‐labelling. The four‐study process involves qualitative interviews to extend the issues identified within the literature, followed by two studies using principal component analysis, confirmatory factor analysis and structural equation modelling analysis, each using separate samples, to test the reliability and validity of the proposed eight‐dimensional 27‐item ECOLSCALE. Another study is then undertaken to assess the nomological validity of the scale regarding to consumers’ environmental orientation. The ECOLSCALE developed in this work can be used to assist marketers, policy makers and researchers to evaluate the impact of eco‐labelling schemes on consumers’ understanding of eco‐labels, thereby enabling consumers to make more environmentally informed decisions.