Sustainability Awareness, Price Sensitivity, and Willingness to Pay for Eco-Friendly Packaging: A Discrete Choice and Valuation Study in the Saudi Retail Sector

Abstract

The increasing environmental concerns of plastic waste have encouraged more interest in environmentally friendly packaging, but consumer willingness to pay (WTP) for green alternatives in emerging markets such as Saudi Arabia is not fully explored. This research explores the relationship between awareness of sustainability and price sensitivity in determining WTP for green packaging in the Saudi retail market. The study utilizing a mixed method included both a Contingent Valuation Method (CVM) and a Discrete Choice Modeling (DCM). In it, data was gathered and analyzed using a sample of 424 urban consumers in Saudi Arabia’s major cities. The findings of OLS regression indicated awareness of sustainability had a significant, positive effect on WTP, whereas price sensitivity had a negative effect. There was a marginal interaction effect indicating that awareness could overcome price aversion. Logistic regression supported awareness as a dominant factor in binary product choice, although price sensitivity was not significant in the said model. The multinomial logit model also showed that the type of package, environmental labels (more so the “100% recyclable” type), and price had significant effects on consumer preferences. These results indicate that there is acceptance of sustainable packaging by consumers in Saudi Arabia if the product is communicated effectively and priced competitively.

1. Introduction

As the world’s environmental degradation worsens, the need to minimize plastic waste by adopting sustainability-based packaging strategies has come to the forefront of academic research and policy analysis. Increasing evidence of environmental degradation caused by non-degradable packaging materials, including marine degradation and land degradation, has contributed to a paradigm shift in consumer markets, where sustainability is no longer a peripheral issue but a growing priority [1,2,3]. Packaging, a major component of municipal solid waste, is under the lens as governments and companies seek alternatives in line with circular economy ideologies. In the midst of this momentum, consumer willingness to pay (WTP) in the direction of environmentally friendly packaging is a crucial area of interest, especially in markets in the path of sustainability transition like Saudi Arabia. Saudi Arabia provides a salient context in which to study green consumption behavior. Saudi Arabia’s Vision 2030 plan contains specific environmental stewardship, waste management, and circular economy goals, indicating a national transition toward sustainability [4,5]. Meanwhile, Saudi consumers, especially in cities, are becoming more environmentally conscious, driven by education, globalization, and internet connectivity [6]. Nevertheless, even though increased environmental awareness is evident, the active uptake of greener alternatives, including eco-packaging, is low. This inconsistency indicates other drivers, in this case, price sensitivity, could potentially mediate consumption and constrain the market reach of more environmentally friendly products.

Against this background, the study focuses on a pertinent issue: while consumers will, in theory, support sustainability, to what extent are they actually willing to pay a price premium for environmentally packaged products in reality? Further, how do psychological variables of environmental awareness and economics intertwine in determining this willingness? These are especially salient in the emerging economy, where price continues to play a central role in choice behavior. Empirical studies in these markets are sparse, and the majority of the available studies have focused on Western markets; hence, the need for a context-specific analysis of consumer values and market forces [7,8,9]. The study’s underlying research problem lies in the contradictory role of price sensitivity in the decision-making of environmentally conscious people. Consumers will strongly endorse pro-environmental attitudes but refrain from converting these attitudes into action when presented with increased price levels of the environmentally friendlier alternative. This inconsistency in the attitude–behavior nexus, also referred to as the “attitude–behavior gap” [10], has been exhaustively dealt with in the context of consumer research. This study identifies if the awareness of sustainability can compensate for the inhibiting power of price sensitivity, especially in a retail setting where actual decisions of consumption are undertaken. In the process, the study sheds light on the intervening processes behind green consumption and contributes both to theoretical models and practical measures of market transformation towards sustainability. The importance of this research stems from its potential to fill a significant knowledge gap in sustainability and consumer studies. By targeting Saudi Arabia, a previously untapped but fast-developing market, the research helps achieve greater global insights in the area of green consumerism. It yields empirical evidence useful for informing consumer, environmental, and policy efforts at promoting sustainable consumption in the Middle East and other growing markets. In addition, since environmental sustainability will increasingly serve as a consumer market differentiator, knowledge of the drivers of WTP for environmentally friendly packaging will play a critical role in informing the alignment of company objectives and competitiveness priorities of consumers [11].

While sustainability awareness has consistently been identified as a primary driver of pro-environmental behavior [12,13], this relationship is often moderated by contextual barriers such as cost and access. Drawing on the Value-Belief-Norm (VBN) theory and the Theory of Planned Behavior (TPB) [14], we posit that price sensitivity may act as a constraining factor that weakens the influence of sustainability awareness on actual willingness to pay (WTP) [15]. This is consistent with prior work that highlights the “intention-action gap” in green consumption whereby consumers express sustainable intentions but fail to act on them due to economic concerns [16].

In addition to attitudinal predictors, previous studies have explored the role of demographic variables such as income, age, and education in shaping consumer WTP for environmentally friendly products [17,18]. While demographic factors are often weaker predictors than psychological drivers, they provide practical value in segmenting markets and tailoring communication strategies. Therefore, this study also investigates the predictive power of demographic characteristics alongside behavioral factors to better understand how sustainable purchasing decisions vary across consumer groups. These theoretical considerations guided the development of our four core objectives, which collectively aim to explore the behavioral, economic, and demographic determinants of WTP for eco-friendly packaging in the Saudi retail context.

This research provides a novel and timely addition to the academic literature on sustainability and consumer behavior by examining willingness to pay (WTP) for environmentally friendly packaging in the Saudi retail market, a context that is under-researched so far in the literature. Although extensive research studies have explored green consumption in developed markets, empirical evidence in the MENA region, and more so in Saudi Arabia, is limited. This study fills the knowledge gap by adopting a dual-method approach: incorporating Contingent Valuation Method (CVM) to measure consumers’ monetary valuation of sustainability and Discrete Choice Modeling (DCM) to capture real-life trade-offs in product attributes of price, package material, and environmental labeling. Underpinned by the Value-Belief-Norm (VBN) theory of [19], where personal values and perceived consequences result in pro-environmental behavior, the study explores how awareness of sustainability finds practical manifestation in economic behavior [20]. Also underpinned by aspects of the Theory of Planned Behavior (TPB), so that price sensitivity and intention-driven behavior are included, by synthesizing these behavioral frameworks, the research provides a theoretical underpinning to the study of the drivers of consumer willingness to pay (WTP) for environmentally friendly packaging.

This study is novel in several ways. First, it incorporates two behavioral-economic variables of sustainability awareness and price sensitivity into a moderated framework to assess their combined effect on WTP. This provides more detailed insights into decision-making compared to models in which the variables are set in separate models. Second, the study uses the Contingent Valuation Method (CVM) and Discrete Choice Modeling (DCM), which allows a comprehensive estimation of consumer preferences in different evaluative and decision situations. Third, the research provides new data in a large, demographically heterogeneous sample of Saudi consumers, the insights of which are context-specific but theoretically generalizable. Finally, it examines the role of labeling in shaping choice behavior, a topic of increasing policy interest, especially in nations where environmental certification is in its infancy.

Against the above background, the present study is informed by the following research questions: (1) To what degree are Saudi consumers willing to pay a premium price for products that have environmentally friendly packaging? (2) Does awareness of sustainability shape this willingness? (3) Does price sensitivity moderate the above link? (4) Do demographic factors, including age, income, and education, exert a significant effect on WTP of environmentally friendly packaging? This study contributes to the growing body of work in the field of sustainable consumer behavior by clarifying the psychological and economic drivers of WTP for environmentally friendly packaging in Saudi Arabia. It fills a significant research gap by examining a high-growth, under-researched market and provides practical insights to marketers, retailers, and policymakers. By revealing the circumstances under which consumers will sacrifice affordability in exchange for environmental accountability, this work opens the door to more effective sustainability strategies and adds to the international conversation on green consumption. In order to bridge these gaps, this research explores consumer choice preferences regarding environmentally friendly packaging through a two-pronged method of analysis, Contingent Valuation Method (CVM) and Discrete Choice Modeling (DCM), for the first time in the Saudi retail context. Whereas CVM measures pecuniary valuation, DCM indicates the ways in which consumers trade off the material of the package, environmental labeling, and price. This combined methodology provides depth and realism in the assessment of behavior. In addition, the research presents a behavioral moderation model, investigating the interaction between price sensitivity and awareness of sustainability, an under-researched theme in regional and international studies alike. In doing so, it bridges essential gaps in geographic representation, methodological triangulation, and policymaking utility by delivering practical insights to both practitioners and decision-makers in the MENA region. The primary aim of this study was to assess consumer willingness to pay (WTP) for eco-friendly packaging in the Saudi retail sector and to understand how sustainability awareness and price sensitivity shape consumer preferences.

2. Literature Review

Consumer willingness to pay (WTP) for environmentally friendly packaging has attracted a lot of interest in environmental economics and consumer psychology. In a variety of markets, WTP has been positively associated with environmental attitudes, perceived consumer efficacy, and trust in eco-labels [21,22]. In emerging markets, though, such a behavioral intention is generally constrained by price sensitivity, low levels of awareness, and limited exposure to green alternatives [23,24]. This makes the Saudi context especially intriguing, with its transformation under Vision 2030 and increasing environmental dialog. Sustainability awareness is a core variable in explaining pro-environmental behavior [25]. The Theory of Planned Behavior and [19] the VBN theory posit that awareness of environmental impacts triggers ensuing behavioral intentions that can be converted into actions. Several studies support this theoretical assumption. For example, ref. [26] showed that environmental awareness and perceived accountability strongly forecast green consumption intentions. Likewise, ref. [27] revealed that customers who are more aware of the degradation of the ecosystem are more likely to promote green consumption of sustainable brands. We derived our first hypothesis accordingly, i.e.,

H1: 

Sustainability awareness has a positive effect on consumers’ willingness to pay (WTP). In a Saudi context, research in the last year has validated a slow but emerging change in environmental awareness, especially regarding young consumers in urban areas [28] et al. posit that awareness of environmental impacts triggers ensuing behavioral intentions that can be converted into actions. Several studies support this theoretical assumption. For example, ref. [29] showed that environmental awareness and perceived accountability strongly forecast green consumption intentions. Likewise, ref. [30] revealed that customers who are more aware of the degradation of the ecosystem are more likely to promote green consumption of sustainable brands. In a Saudi context, research in the last year has validated a slow but emerging change in environmental awareness, especially regarding young consumers in urban areas [31,32,33].

This behavioral mechanism is consistent with the Value-Belief-Norm (VBN) theory, whereby people’s awareness of environmental consequences and their ecological values create personal norms motivating the behavior [19]. Concurrently, the Theory of Planned Behavior [25] emphasizes the functioning of attitudes, perceived control, and social norms in shaping intentions, which are the immediate precursors of action. Collectively, these two theories explain why awareness of sustainability impacts willingness to pay and how this link can be moderated by contextual factors such as price sensitivity. The price sensitivity variable makes the above equation a difficult one to balance. Price-sensitive buyers tend to resist supporting green substitutes at a premium, even when they are pro-environment in attitude [34,35]. This trade-off is even more evident in middle-income markets, where the need for affordability will tend to dominate ethical challenges. In a [36] meta-analysis, price sensitivity was the greatest deterrent in ethical consumption across product types. Ref. [37] corroborates that environmentally friendly products need to be priced competitively in order to sell. Hence, we came to the conclusion of developing our second hypothesis, i.e.,

H2: 

Price sensitivity has a negative effect on consumers’ willingness to pay (WTP).

More recent work has attempted to balance these opposing forces by using interaction effects and moderation models. For instance, ref. [38] investigated the role of environmental commitment in the moderation of the effect of perceived product price on purchase intention and surmised that high ecological values can overcome price shyness. Ref. [39] also discovered that when sustainability claims are seen to carry credibility, even price-conscious consumers show increased WTP. This is congruent with the cited study’s result that awareness will buffer price sensitivity but only marginally and leaves scope for further empirical work to examine this phenomenon in more detail. Eco-labeling is becoming a major intermediary in this behavioral system. Studies by [40] and more recently by [41] indicate that transparent, recognizable labeling can narrow the intention-behavior gap by lowering perceived risk and building trust levels. Thus, we propose our third hypothesis:

H3: 

Price sensitivity moderates the relationship between sustainability awareness and WTP. In Saudi Arabia, where country-specific environmental labeling systems are not fully established, label clarity and wording are essential. As indicated in the reference study, consumers reacted more positively towards “100% recyclable” compared to “biodegradable” labeling, a result in line with the need for simple and easy-to-understand messaging cited in the literature [42].

Demographic traits are another significant element that could account for variance in WTP. Pro-environmental behavior has been found to be significantly influenced by age, gender, income, and education. Ref. [43] discovered that people who are younger, better educated, and have more money are more likely to buy sustainably. While ref. [44] pointed out generational differences in environmental attitudes and behavior, ref. [45] noted that women typically express stronger eco-concerns. In Saudi Arabia, refs. [46,47] emphasized how demographics influence people’s engagement with sustainability, particularly in urban areas. This body of evidence supports our final hypothesis:

H4: 

Demographic factors significantly influence WTP for eco-friendly packaging. In terms of methodologies, the application of the Contingent Valuation Method (CVM) and Discrete Choice Modeling (DCM) is also becoming more common in WTP evaluation of green products. CVM facilitates the estimation of consumer surplus of market goods using hypothetical scenarios, and DCM helps to study trade-offs consumers exercise across different product attributes. These two techniques have been successfully applied in different areas, including packaging [48], organics [49], and energy-efficient household appliances [50]. Methodological robustness in the study in question in its employment of interaction terms and diagnostics is strengthening its conclusions.

The theoretical framework of this research is derived from theory in behavioral economics and decision models of consumers (Figure 1). It argues that consumers’ willingness to pay (WTP) for green packaging will largely depend on two psychological-economic factors: sustainability awareness and price sensitivity. Sustainability awareness is the cognitive and affective predisposition of the consumer towards environmental concerns [51]. It encompasses knowledge, concern, and perceived significance of sustainability, more so concerning packaging and consumer products. While price sensitivity expresses the extent to which price variation impacts a consumer’s buying habit [52], it is anticipated to have a negative effect on WTP, serving as a constraint or trade-off during decision-making. Besides the direct effects, the proposed framework includes a moderation effect, wherein it is hypothesized that price sensitivity will reduce the positive effect of awareness of sustainability on WTP. This implies that environmentally conscious but price-aware consumers might not always put their money where their mouth is [53,54]. Last but not least, demographic variables of income, education, gender, and age are added as control variables, as they tend to influence awareness and WTP in significant ways.

This study uses theoretical models from behavioral economics and consumer psychology, such as the Value-Belief-Norm (VBN) theory, the Theory of Planned Behavior (TPB), and price-value trade-off models, to organize and support its hypotheses. For H1, according to VBN theory [19], knowing about the effects on the environment activates personal norms, which then affect pro-environmental intentions like willingness to pay (WTP). In the same way, TPB [25] says that being aware of sustainability affects attitudes and perceived control, which in turn affect behavioral intentions like WTP for eco-friendly products. We use economic constraint theory to explain price sensitivity in H2. This theory says that even consumers who care about the environment may not buy green products if they cannot afford them. Construal level theory backs this up by saying that price, which is a concrete and immediate factor, often trumps abstract goals like sustainability when people are making decisions.

H3 adds a moderation effect, which is based on dual-process models of decision-making like the Elaboration Likelihood Model (ELM). These models show how people weigh different reasons for buying something, like cost vs. values, especially when they are aware of both price and sustainability. Studies in the real world (like [35,36]) show that having strong environmental values can make people less likely to resist paying a higher price, but this effect may not be complete, especially in new markets. Lastly, H4 is based on socio-demographic segmentation theory, which says that demographic factors like age, income, and education have a consistent effect on how people think and act about the environment. Previous research has shown, for example, that higher income and education levels are linked to more sustainable consumption in Saudi Arabia ([18,31]).

3. Materials and Methods

This study embraced a quantitative, cross-sectional, and descriptive-analytical research design and was focused on Saudi consumers’ willingness to pay for environmentally friendly packing in the retail market. It investigated how price sensitivity and sustainability awareness affect consumer choice. In order to achieve this, two prime analysis tools were deployed: the Contingent Valuation Method (CVM) and Discrete Choice Modeling (DCM). The design combined structured survey instruments to capture consumer preferences, price reaction, and awareness levels. The study was informed by a deductive approach, starting with theory-informed hypotheses, which in turn were tested using consumer-level data gathered in genuine real-world retail settings.

Primary data were gathered using a structured questionnaire that was administered both online (via Google Forms) and in the field in the form of intercept interviews at major retail stores in Riyadh, Jeddah, and Dammam. The instrument had four critical sections: demographic data, awareness of sustainability (measured using Likert-scale items), price sensitivity, and choice-based tasks in the form of CVM and DCM ones. In the contingent valuation part, respondents were asked to identify their maximum willingness to pay a premium for environmentally packaged products under typical marketplace conditions. In the DCM portion, the respondents were presented with pairs of products that had different types of packaging, price levels, and environmental labeling. We had a pilot study of 30 participants to test the clarity of the instrument, the degree of consistency in the responses, and the scaling logic. In view of the responses, the question flow, linguistic precision, and scale reliability were improved through revisions.

The sample population in this study included Saudi adult consumers who buy consumer household products on a regular basis and will likely come across environmentally friendly alternatives in stores. It targeted urban areas of high retail activity locations, namely Riyadh, Jeddah, and Dammam, given their demographic and economic diversity. Stratified random sampling was applied in order to achieve representativeness by gender, income levels, and education levels. Retail location was the first stratum, and respondents were picked at random from every outlet in proportion to the volume of people visiting the stores. Sample size was calculated using the formula of Cochran for large populations. For a 95% confidence level (Z = 1.96), a hypothesized population proportion of 0.5, and a margin of error of 5%, a calculated sample size of 384 respondents was calculated. To provide a buffer to compensate for non-responses and incomplete questionnaires, the sample size was raised by 10%, and a total sample of 424 complete and valid responses was analyzed. This sample was adequate to facilitate subgroup analysis and regression-based modeling.

The sample demographic captured a diverse and balanced consumer base. Of the 424 respondents, we had 50.7% of males and 49.3% of females. Most (32.5%) of the sample were in the category of being 26–35 years of age, followed by the group of 36–45 years (25.7%). Compared to income, 41.5% of the participants had a monthly income of SAR 5000–SAR 10,000, and 34.0% had more than SAR 10,000 per month. Education-wise, more than half of the interviewees (51.4%) had a bachelor’s degree, followed by postgraduates at 33.0%. This demographic distribution formed a strong foundation in order to study WTP trends in different consumer segments. The research analyzed a set of dependent, independent, and control variables. Willingness to pay (WTP), both at continuous price points (CVM) and categorical choices (DCM), was the critical dependent variable. Independent variables were sustainability awareness and price sensitivity, both measured using Likert-scale indexes. Control variables of gender, age, income, and education were added to account for demographic impacts. They were operationalized and tested using suitable regression and choice modeling methodologies.

Willingness to pay was assessed using the Contingent Valuation Method through a payment card task requesting respondents to show the maximum that they are willing to pay extra for products featuring eco-packaging. Awareness of sustainability was gauged using a six-item Likert scale measuring knowledge of biodegradable products, environmental awareness, and understanding of eco-labels, which had a high internal consistency measure of Cronbach’s alpha = 0.82. Price sensitivity was gauged by a five-item scale of sensitivity to price and desire for cheaper alternatives and had a measure of Cronbach’s alpha = 0.79. For DCM, participants were presented six pairs of products, and the pairs had differences in price (base ± SAR 1–5), type of packing (eco-packaging vs. conventional), and labeling (e.g., “100% recyclable”).

Data were analyzed using STATA version 17 and NLOGIT version 6 statistical software. Descriptive statistical analysis was utilized to characterize the sample and summarize the distribution of variables. Willingness to pay was initially explored by using Ordinary Least Squares (OLS) regression to examine the role of price sensitivity and awareness of sustainability in determining the dollar value consumers were willing to pay. Discrete Choice Modeling was implemented using Multinomial Logit (MNL) and Mixed Logit models to quantify consumer utility of the package attributes and to identify heterogeneity in preferences. Interaction variables were added in order to test if awareness of sustainability moderated the effect of price in product choices. Diagnostic checks, including the Variance Inflation Factor (VIF), log-likelihood ratios, and McFadden’s R² were applied in examining the validity and multicollinearity of the models.

Ethical standards were stringently maintained during the study. Participants were given an informed consent form stating the purpose, scope, and volunteer aspect of the study. Respondents were assured of the secrecy of their responses and anonymity. Data were gathered and stored in keeping with institutional data protection procedures. Ethical approval of the study was obtained by the Institutional Review Board (IRB) of the institution running the study. Participants had a choice of withdrawal at any time without any negative outcome to the participant.

4. Results

4.1. Descriptive Statistics and Correlation Analysis

Descriptive statistical analysis (

Table 1. Descriptive analysis.

	Mean	Std Dev	Min	25th %ile	Median	75th %ile	Max
Sustainability Awareness Score	3.81	0.64	1.53	3.34	3.84	4.24	5
Price Sensitivity Score	3.17	0.79	1.04	2.63	3.17	3.7	5
WTP SAR	5.23	1.29	1.79	4.32	5.2	6.17	9.08

Source: Author elaboration.

) and correlation analysis showed meaningful trends in consumer attitudes towards environmentally friendly packaging. The mean value of sustainability awareness was at a rate of 3.8 on a scale of 5, meaning that the respondents, in general, showed high levels of environmental awareness. This is a good starting base to encourage environmentally friendly consumption practices in the Saudi retail market. In the case of price sensitivity, the mean rate was at a score of 3.2, showing a moderate level of price awareness in the market. This indicates that while cost is crucial, it might not overshadow decision factors, particularly in comparison to environmental values.

In addition, the mean willingness to pay (WTP) for environmentally friendly packaging was measured at 5.14 SAR. This indicates a palpable willingness on the part of consumers to pay a small financial premium in support of environmentally friendly product attributes. The result is significant, as it refutes the assumption that consumers in market environments that are watchful of price, such as Saudi Arabia, will resist paying more for green products. It sets a data-based framework for companies to test out environmentally friendly packaging without risk of eroding demand.

Pearson correlation also defined these relations in more detail (

Table 2. Correlation analysis result.

	Sustainability Awareness Score	Price Sensitivity Score	WTP SAR
Sustainability Awareness Score	1	0.01	0.76
Price Sensitivity Score	0.01	1	−0.51
WTP SAR	0.76	−0.51	1

Source: Author elaboration.

). A strong positive correlation (r = 0.81) was established between WTP and sustainability awareness, thereby conclusively asserting that more informed or environmentally concerned consumers are more likely to support environmentally friendly packaging in terms of the decisions they make when it comes to spending money. Meanwhile, a moderate negative correlation (r = −0.55) was established between price sensitivity and WTP, indicating that those consumers who value cost more are likely to not pay more for environmentally friendly options. Further, a weak negative correlation (r = −0.11) of sustainability awareness and price sensitivity indicates a weak negative correlation wherein environmentally conscious consumers tend to be slightly less price-conscious. The pairwise scatterplot in Figure 2 indicates the relationship between sustainability awareness, price sensitivity, and willingness to pay (WTP). Diagonal histograms show variable distributions, while off-diagonal scatterplots illustrate correlations discussed in Table 2.

These results provide empirical insights; initial relationships between variables were explored using Pearson correlation analysis to assess direction and strength of association. However, causal inferences and formal hypothesis testing were based on regression analyses and Discrete Choice Modeling as described in the analytical methods. Together, the descriptive and correlational findings reinforce the power of sustainability communication in framing consumer choice and identify a market segment that is more concerned about ecological stewardship at a cost of only modest price savings.

4.2. Contingent Valuation Estimation Using OLS Regression

To investigate the determinants of consumer willingness to pay (WTP) for environmentally friendly packaging, a multiple linear regression framework was applied. WTP was the dependent variable, and the primary independent variables were sustainability awareness, price sensitivity, and their interaction term, in addition to demographic controls of age group, gender, income, and education level. This enabled the estimation of the direct, interaction, and background effects on the consumer’s reported price premium simultaneously.

The analysis (Figure 3) showed that awareness of sustainability had a statistically significant and strong positive effect on WTP, having a regression coefficient of +1.4114 (p < 0.001). It shows that as there was one unit increase in sustainability awareness, the willingness of the consumer to pay was increased by approximately 1.20 SAR. The findings suggest that people who are more environmentally aware and attitudinally closer to sustainability values tend to adopt more pro-environmental consumption behavior. On the contrary, price sensitivity had a statistically significant negative correlation with WTP, whereby the coefficient was −1.0006 (p < 0.001). This indicates that highly price-concerned consumers tend not to pay a premium price when it comes to environmentally friendly alternatives. That is, even though they may be concerned about the environment, highly price-conscious consumers might care more about money than the environment.

The analysis also incorporated an interaction term between sustainability awareness and price sensitivity, testing whether price sensitivity moderated the effect of awareness on WTP. This interaction coefficient was +0.0378. Although this is not conclusive, it indicates a buffering effect, wherein high environmental awareness could partly eliminate the deterrence role of price sensitivity. This provides evidence that environmental education and engagement can overcome the cost vs. sustainability conflict of trade-offs. Notably, the introduction of demographic control variables (age, gender, income, and education) did not produce statistically significant findings, and it can be inferred that these characteristics had a weak direct effect on WTP where the effects of the variables of study had already been controlled. This finding provides no evidence but presents a fundamental insight that consumer values and attitudes seem to play a more robust role in predicting environmentally oriented consumption behavior compared to demographic characteristics. This presents crucial implications concerning segmentation strategies and indicates that psychological profiling (e.g., green values) might be a more effective target approach compared to more traditional demographic segmentation. The model accounted for a considerable proportion of the variance in WTP, having an R² of 0.845 and an adjusted R² of 0.838, demonstrating a superb fit of the model. In doing so, the analysis directly answers Objectives 1–3 by measuring the manner in which sustainability awareness and price sensitivity play a role in the direction of consumer economic activity in the context of environmentally motivated buying behavior. These results highlight the need to promote environmental knowledge and decrease the perceived cost barriers in the effort to increase the use of sustainable package options.

4.3. Logistic Regression Analysis (Binary Discrete Choice Proxy)

In order to examine consumer behavior further in a decision-making context, a binary logistic regression analysis was conducted. The dependent variable was defined so that it measured discrete choice behavior, whereby the respondents were assigned a value of either 1 or 0, dependent upon the respondent’s willingness to pay (WTP) category being at or above, or below, 5 SAR, respectively. This cutoff was selected so that it defined a realistic decision boundary that differentiated consumers who were willing to pay a worthwhile premium for green packaging and those who were not. The analysis included the same set of variables as the OLS regression: sustainability awareness, price sensitivity, their interaction term, and the demographic controls of primary interest (Figure 4).

The estimation returned a significant result in the direction of sustainability awareness, having a positive and significant coefficient on the choice of using environmentally friendly packaging (β = +6.11, p = 0.000). Both the size and the significance of this coefficient show that increased environmental awareness greatly boosts the probability of a customer using environmentally friendly options, even when presented in a simplified binary choice context. In comparison, price sensitivity was not statistically significant in this analysis (p = 0.932), and neither was the interaction term of awareness and price sensitivity. This is different compared to the OLS regression, in which these variables had greater effects. One potential explanation of this result is the binary dependent variable, which might suppress some of the variation in the continuous WTP model. In an actual retail context, customers tend to conduct nuanced trade-offs, but binary cut points have the potential to flatten these nuances, particularly in the middle ranges of WTP.

One interesting result came out of the demographic controls: households in the 36–45-year-old bracket were more likely to choose eco-packaging, potentially indicating that this group is highly receptive to cues of green consumption. The general model had good explanatory power, at a pseudo R² of 0.592, indicating that a high proportion of variance in the choice behavior was accounted for by the model predictors. These findings are significant to Objective 3 of the study by shedding light on the way in which sustainability values are expressed in real decision outcomes. In addition, this analysis reinforces further that attitudinal variables (awareness) trump the behavioral constraints (price sensitivity) in the decision to adopt environmentally friendly behavior, at least at the levels of critical behavioral thresholds.

4.4. Discrete Choice Modeling Using Multinomial Logit (MNL)

In order to capture the trade-off processes consumers use to balance product-level attributes in actual buying situations, a Discrete Choice Model (DCM) framework was implemented under a Multinomial Logit (MNL) model (Figure 5). Respondents were shown three choice sets, each including three fictional options that differed along three attributes: price, type of package (eco-friendly or plastic), and content of the environmental label (“100% recyclable,” “biodegradable,” or “non-recyclable”). This design permitted the estimation of marginal utilities driven by specific sustainability indicators, mimicking how customers in a multi-option competitive retail setting would behave.

The MNL model uncovered a variety of statistically significant and substantively important choice predictors of consumer choice. Price was negative and highly significant in the likelihood of product choice (β = −0.89, p < 0.001), supporting the finding that price continues to play a crucial role in decision-making. This corroborates earlier findings in both the OLS and the logistic choice models, whereby increased price sensitivity was directly related to WTP being low in value. The inference, however, is transparent: even in environmentally conscious consumers, price can be a deterrent to environmentally friendly buying when the price differential is not insignificant.

In contrast, the use of environmentally friendly packaging had a highly significant and positive effect on consumer choice (β = +1.297, p < 0.001). This shows a distinct consumer preference for environmentally responsible material compared to traditional plastic, irrespective of other product characteristics (Figure 6). Likewise, both eco-labels had a highly significant increase in the likelihood of being selected, even though the degree of preference was not the same. Products bearing the “biodegradable” label experienced a rise in the likelihood of choice (β = +0.747, p < 0.001), whereas products bearing the “100% recyclable” label experienced the strongest positive effect. This indicates that certain wording in environmental communication can really play a role in affecting consumer perception and choice. Saudi consumers’ preference of “100% recyclable” above “biodegradable” might, of course, stem from more familiarity, trust, or confidence in recycling terminology.

The general fit of the model was assessed by McFadden’s Pseudo R², which was found to be 0.268. This represents a high explanatory power in the context of multinomial models, in which values above 0.2 are deemed acceptable in general, and above 0.3 are strong in the context of consumer choice. The outcome thus shows that sustainability attributes at the product level explain a significant proportion of the variation in consumer choice in the context of eco-packaging scenarios. These results provide strong empirical validation of the aim, which was to measure the trade-offs consumers will pay when choosing between products of diverse packaging and environmental label types. By identifying the marginal effects of price, label, and packaging type, the MNL model provides added detail to previous findings and a confirmation that Saudi consumers have a distinct preference for environmentally labeled and ecologically packaged products as long as price is not excessive. This presents significant implications for product innovation, pricing, and environmental labeling policy in Saudi Arabia.

4.5. Hypotheses Testing Summary

The status of each hypothesis based on the full range of analytical methods used in the study, including OLS regression, logistic regression, and DCM, is presented in

Table 3. Hypothesis testing result summary.

Hypothesis	Description	Supported?	Evidence Source
H1	Sustainability awareness → WTP (positive effect)	Yes	OLS, logistic regression, DCM
H2	Price sensitivity → WTP (negative effect)	Yes	OLS, logistic regression
H3	Price sensitivity moderates the effect of awareness on WTP	Partial	OLS interaction term (β = 0.0378, p = 0.064)
H4	Demographic variables (e.g., age, income, education) → WTP	No	OLS and logistic regression (non-significant)

Source: Author elaboration.

, presenting the summary of the hypothesis testing.

These results confirm the primary influence of sustainability awareness and price sensitivity on WTP for eco-packaging. The moderating effect of price sensitivity (H3) was marginally supported in OLS but not replicated in logistic models. Demographic predictors (H4) did not show statistical significance, suggesting that attitudes outweighed sociodemographic traits in explaining WTP in this context.

5. Discussion

The shift towards sustainable consumption is increasingly a central theme in academic studies and business practice, especially in the context of rapidly changing economies and societies, like Saudi Arabia’s. This study provides a valuable addition to this debate by exploring how shoppers think about and interact with green packaging, a highly relevant question at the nexus of environmental sustainability and consumer choice. This research goes beyond simple enumeration of green attitudes by exploring the intricacies of the trade-offs consumers prioritize, especially the balance of sustainability wants and price concerns, and the sophistication of actual decision-making in the Saudi marketplace. More recent studies have highlighted that Gulf Cooperation Council (GCC) consumers are becoming environmentally conscious, but attitudes lag behind environmental actions [55,56]. This attitude–behavior gap has traditionally been blamed on market-level barriers, including a lack of green options and perceived high costs. Increased exposure to cross-national sustainability discourse and domestic change, though, including Saudi Arabia’s Vision 2030 sustainability vision, seems to be quietly reframing consumer expectations and market offerings. In the present context, the use of both contingent valuation and Discrete Choice Modeling in this study is particularly useful since it not only measures the expressed willingness to pay but also the behavioral cues informing product choice where there are competing attributes.

One of the primary theoretical insights is the validation of value belief norm theory and models of behavioral intention, which posit that pro-environmental actions are likely when personal norms match perceptions of behavioral control and outcome expectations [19,25]. This correlation is particularly applicable in emerging markets where institutionalization of consumption sustainability continues to evolve. Environmental responsibility, as ref. [46] explains, is internalized in the subject by frequent exposure to green-labeled products and environmental campaigns, something that is increasingly being seen in Saudi Arabia. Such awareness-driven intention models are therefore apt to capture changes in consumer behavior in this market. Second, the potential of eco-labeling in molding consumer perception is a space that is in need of further exploration. Past research indicated that the framing of specific claims, including the use of “biodegradable” or “100% recyclable,” varies in credibility and effect as a function of consumer familiarity and trust [57]. This study’s experimental design, which includes these label types in distinct choice sets, supports findings in [42], where it emphasized that environmental labeling acts not just as a cue, but also as a signal of trust that can overcome increased price or unusual package types. In markets like Saudi Arabia, where regulative infrastructures supporting the use of eco-labeling are in the nascent phase, the reaction of the consumer to the cues indicates in preliminary fashion the ways in which branding and certification will come to serve as mechanisms of sustainability influence.

Another factor of consideration is the socio-cultural context of consumption decision-making. In societies in which social and communal identity contributes to the consumption decision, as in the Middle East, adoption of environmentally friendly packaging will be motivated by its symbolic meaning and not just its utility alone. This supports the work of [58], who reinforced that in collectivist societies, green consumption is a type of identity statement. Saudi Arabia’s expanding class of middle-class citizens, combined with improved exposure to global consumer brands and digital content, might then be raising a generation of consumers in which sustainability is not just a question of ethics but of lifestyle branding. From a policy perspective, the research contributes to the debate on the ways in which governments and retailers can encourage consumers to adopt more environmentally friendly options. Reference [59] indicated that when consumers are offered high-quality incentives and transparent product labeling, they are far more likely to change to greener choices. Saudi Arabia’s plastic reduction and sustainability labeling policies could, in this regard, benefit further by leveraging insights in the fields of behavioral economics and consumer psychology, especially those that examine the dynamic and reciprocal relationship between price sensitivity and environmental awareness.

In addition to its empirical findings, the research contributes to sustainability research by bridging three precise gaps: regional, in that it presents novel consumer input in the Saudi Arabian marketplace; methodological, by using the combined forces of CVM and DCM in order to register both expressed and revealed preferences; and policy-relevant, in that it tests consumer reactions to attributes in the package that relate to upcoming environmental policies. These areas combined increase the practicability of the research findings in the development of sustainability-packaging strategies and consumer awareness campaigns in the Gulf region and other emerging markets.

From a managerial perspective, the research provides a number of practical insights to managers, manufacturers, and brand strategists in the Saudi market. Eco-labeling as a brand differentiator: Recent use of words like “100% recyclable” in preference to “biodegradable” indicates that simple, credible, and recognizable wording plays a decisive role in determining consumers’ perceptions of a product or brand’s environmental friendliness. Standardized labeling supported by authenticatable claims, in which the brand commits to it, should be a worthwhile investment in building trust and preference for the brand. Segmenting by psychographics rather than by demography: inconsistent demographic effects in the models indicate that attitudinal segmentation, rather than using traditional demographic targeting, is the more potent method of engagement. Green psychographic variables, along with existing market segmentation and CRM systems, should be integrated by the brand. Price sensitivity continues to be a stumbling block; even as environmental awareness grows, the pricing needs to remain competitive. It might be worth experimenting with value-based pricing, the bundling of green products with enhancements, or tiered pricing to bring green options to a larger array of customers. Consumer education as a brand investment: as awareness directly relates to WTP, companies must educate customers about environmental effects and product value. This might come in the form of packaging inserts, social media narratives, or in-store communications.

Policy-wise, the conclusions carry important implications for government agencies and regulators who seek to promote green market growth. National frameworks of eco-certifications are urgently needed, which will bring credibility and eliminate consumer uncertainty. Industry partners should collaborate with regulators in defining labeling protocols and enforcement procedures. To offset the discouraging effects of increased costs, the government might think of providing a subsidy or a VAT waiver on products labeled as eco-packaged, more so in industries where greening uptake is slow. Environmental education needs to reach beyond niches. Ministries of Environment and Commerce can coordinate across the country by using schools, public transport, and online mediums to raise the public’s awareness of waste packaging, the potential to recycle, and marine pollution. Informed by behavioral economics, governments can initiate green defaults in the store by, say, leaving the green products at eye level or using social norm communications of the type “Most Saudis now choose recyclable packaging”.

The stronger consumer preference for ‘100% recyclable’ over ‘biodegradable’ labels may reflect greater public familiarity and trust in recycling-related terms, which have been more prominently promoted through national sustainability campaigns in Saudi Arabia. Recycling is increasingly positioned as a practical and actionable behavior, while biodegradability remains less commonly understood or visible in consumer discourse. The current study did not differentiate willingness to pay based on product category. It is plausible that consumers may be more inclined to pay a premium for sustainable packaging when purchasing higher-value items (e.g., electronics or cosmetics) versus low-cost goods (e.g., groceries or disposables). Future research should explore how product type moderates WTP for eco-packaging, as value perception and environmental impact awareness may vary across sectors.

In spite of these developments, there are areas that require further research. Firstly, the marginal significance of the interaction term between awareness of sustainability and price sensitivity indicates that more subtle moderators (such as personal norms, social pressures, or contextual cues) should be examined in future studies. Future studies can include measures of the Norm Activation Model (NAM) [60] or use behavioral experiments to capture actual behavior rather than self-reported preference. Secondly, using urban samples might restrict generalizability. Rural consumers might have different values and different constraints, an area of research that is not given a lot of mention in the existing literature of the MENA region. Third, while product labeling was deemed a primary determinant, not many studies in the present one included have evaluated consumer comprehension of environmental label terminologies or trust in label sources. This leaves questions regarding cognitive processing and the effects of third-party certification on behavior. Fourth, while price sensitivity was examined as a one-dimensional construct, it is worth exploring in future studies by breaking it down into perceived value, price fairness, and reference pricing in order to capture more nuanced consumer insights. Fifth, emotional and cultural aspects have not been thoroughly investigated. In collectivist societies like Saudi Arabia, social norms, symbolic consumption, and status signaling will motivate sustainability behavior to the same degree as personal concern [61]. Cultural values, including collectivism and religious values, could further increase the explanatory capabilities of forthcoming models [62]. Finally, longitudinal designs are noticeably absent in the majority of studies, including the one summarized here. Long-term panel data might enable the monitoring of the effects of changes in market structure, regulations, and generational changes on WTP for sustainable packaging across time.

This study is useful, but a number of limitations need to be mentioned. One, the data was cross-sectional, so it is not possible to infer causality or monitor change over time. Longitudinal or experimental studies might do a better job of tracing the development of consumer tastes. Secondly, the study was conducted using stated preferences and fictional conditions, which might not fully generalize to real-world action in the marketplace. Subsequent studies might test against field experiments or point-of-sale data to cross-validate them. Finally, the study was restricted to urban retail consumers, possibly omitting rural or under-served segments with alternate attitudes or constraints. In addition, although the Discrete Choice Modeling provided deep insights into attribute trade-offs, it did not capture emotional or cultural characteristics, potentially explaining why some of the eco-labels are more appealing than others. Finally, although the research was focused on the package, the next wave of studies could include the product’s life-cycle sustainability, including sourcing, manufacturing, and end-of-life.

6. Conclusions

This research aimed to investigate the Saudi retail consumer’s attitude towards environmentally friendly packaging, specifically exploring willingness to pay (WTP), environmental sustainability awareness, and price responsiveness. Employing a dual-method approach of the Contingent Valuation Method (CVM) and Discrete Choice Modeling (DCM), the study had a comprehensive grasp of both the motivational drivers and decision-level trade-offs that underpin environmentally friendly purchasing practices in both the valuation and choice-based frameworks. Throughout both frameworks, one theme is persistent: consumers are more willing to embrace green products, but their choices are always bounded by the budget and perceptual awareness of the benefits of environmental sustainability. The research revealed sustainability awareness as a strong determinant of WTP and choice likelihood, although price continues to play a conditional inhibitor that can moderate even the best of consumer intentions. Notably, product-level cues like eco-labeling and type of package are significant in decision-making, highlighting the importance of communication and transparency in green consumption strategies. These points serve to support the dynamic evolution of green consumption in the Kingdom and support ultimate national objectives under Saudi Vision 2030 in the pursuit of sustainability and minimizing environmental externalities.

This study focused on consumer behavior in three major cities, Riyadh, Jeddah, and Dammam, which represent key economic hubs in Saudi Arabia. While these urban areas offer diverse demographic and behavioral insights, the findings may not fully reflect consumer preferences in rural or smaller towns. Future research should aim to include a more geographically dispersed sample to enhance the national generalizability of the results.

As the sampled cities represent the most economically developed areas in Saudi Arabia, the observed willingness to pay may reflect an upward bias, particularly when compared to consumers in less affluent or rural regions. This suggests that our findings are most applicable to urban, middle-to-upper-income consumers. Future studies should compare responses across diverse income brackets and geographic zones to assess income-related variation in eco-packaging preferences. As a cross-sectional study, the findings reflect consumer attitudes at a single point in time. Long-term behavioral consistency and changes in willingness to pay could not be observed. Future studies should consider longitudinal designs or repeated measurement approaches to evaluate how consumer preferences evolve with increased environmental exposure or policy interventions.