Factors of consumers choices a reaveled preferences analysis for 3 in 1 coffee

Acknowledgement...i Abstract...ii Tableofcontent...iii Listoftables...v Listoffigures...vi 1... Discountandweightpromotionandconsumer’sutility for3in1 coffee...54 4.2.6.. Table2.1.Import

FACTORSOFCONSUMER’SCHOICES: AREVEALEDPREFERENCEANALYSISFOR3I

NETHERLANDSP R O G R A M M E FORM.AINDEVELOPME NTECONOMICS

VIETNAM-FACTORSOFCONSUMER’SCHOICES: AREVEALEDPREFERENCEANALYSISFOR3I

IwouldfirstliketothankmythesissupervisorDr.TruongDangThuyoftheVietnam–

TheNetherlandsProgramme(VNP)atHoChiMinhCityUniversityofEconomics.Heconsistentlyallowedthispapertobemyownwork,butsteeredmeintherightthedirectionwheneverhethoughtIneededit

Iacknowledgethecontribution ofDr.NguyenBaThanh(IUH) asthesecondreaderofthist h e s i s , andIamgratefullyindebtedtohimforhisveryvaluableadvicesonbuildingideaforthisthesis

i n g andwritingthisthesis.Thisaccomplishmentwouldnothavebeenpossiblewithoutthem.Thankyou

NguyenVanVien

HoChiMinhCity,November2016

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3in1coffeeisknownasanimportantproductofinstantcoffeemarketinVietnam,especiallyi n HoChiMinhCity.Thereasonofthatcomesfromthebenefitswhich3in1coffeebringstoconsumersintermofconvenience, productquality,andappropriateprice.Intheabovecontextof3 i n 1 coffeemarket,themainobjectiveofthiss t u d y i s t o i d e n t i f y t h e determinantsofconsumer’schoicesin3in1coffeemarketsuchasprice, mainingredients,packaging,manufacturer,discount,andweightpromotion

Thiss t u d y i s a practicalr e s e a r c h witht h e basisofr a n d o m u t i l i t y theory.Specifically,empiricalr e s u l t isp r o d u c e d f r o m t h e estimationofc o n d i t i o n a l logitm o d e l fort h e d a t a

ChiMinhCityin2016.Thesurveyprocessreliesont h e revealedpreferencemethodwithseveraladditionalhypotheticalscenarios

Themainfindingofthisstudyemphasizestheimportanceofmainingredients,packaging,a n dmanufacturersof3in1coffeeinconsumer’schoices.Itisrecognizedthatpricemaynotmatterconsumer’sc h o i c e s.However,consumersloved i s c o u n t a n d weightpromotion.Inaddition,severalmanufacturerse n j o y positivemarginalutilityofpri c e forconsumerswhilet h e othersenjoythenegativeone.Ontheotherhand,pricechangesmaygivesmalleffectsonc h o i c e probabilityof3in1coffeeproducts.Accordingtothoseempiricalfindings,implicationshavebeenemployedformanufacturersinordertounderstandmoreabout3in1coffeemarket,widentheirmarketshare,andincreasetheirprofits

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Acknowledgement i

Abstract ii

Tableofcontent iii

Listoftables v

Listoffigures vi

1 Introduction 1

1.1 Researchproblem 1

1.2 Researchobjective 2

1.3 Scopeofstudy 3

1.4 Thesisstructure 3

2 Literaturereview 4

2.1 Randomutilitytheory 4

2.2 Randomutilitymodelforms 9

2.3 Randomutilitymodelforbeverageorfood 11

2.4 Theinvestigationofcoffee’sattribute 12

2.5 Consumer’ssocial-demographiccharacteristics 16

3 Researchmethodology 18

3.1 Revealedpreferencemethod 18

3.2 Attributesofcoffee 20

3.3 Choiceset 21

3.4 Questionnaire 23

3.5 Surveyprocess 24

3.6 Modelspecification 25

4 Data andempiricalresult 30

4.1 Data 30

4.2 Empiricalresult 39

4.2.1 Determinantsofconsumer’schoicesfor3in1coffee 39

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4.2.2 Priceandconsumer’sutilityof3in1coffeebymanufacturers 46

4.2.3 Pricechange and choiceprobability 49

4.2.4 Marginal utilityofpriceforrespondents 52

4.2.5 Discountandweightpromotionandconsumer’sutility for3in1 coffee 54

4.2.6 Manufacturers,social-demographiccharacteristicsandconsumer’schoicesfor3in1 coffee 55

5 Conclusion 58

Reference vii

Appendix xi

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Table2.1.Importanceoffactoronconsumer’scoffeepreferences 14

Table3.1.Listofsuggestedattributes 21

Table3.2.Volumeshare andvalueshareofmainmanufacturers 22

Table3.3.Listofallavailable3in1coffeeproducts 23

Table3.4.Variabledescription 26

Table4.1.District,super-market,andthenumberofrespondents 31

Table4.2.Descriptivestatisticsofthe sample 32

Table4.3.Frequencyofsocial-demographiccharacteristics 34

Table4.4.Factorsofconsumer’schoicesfor3in1coffee 42

Table4.5.Marginalutility ofpriceforrespondentsbyalternative 53

TableA.1.All19alternativesandtheirattributes xii

TableA.2.Pricefluctuationamongsuper-markets xxi

Table A.3.Consumer’schoiceschangeamongvariouschoicescenarios xxii

Table A.4.Regressionresultofequation(3.1)and(3.3)(specificchoiceset) xxiii

Table A.5.Regressionresultofequation(3.1)and(3.3)(singlevariable) xxiv

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Figure4.1.Frequencyofchoiceofeachalternativebygender 35Figure4.2.Alternativeandgender,occupation,income,

and frequencyof3in1 coffeeconsumptionofrespondents 37Figure4.3.Changeofconsumer’schoicesinvariouschoicescenarios 38Figure4.4.Price andconsumer’sutilitybymanufacturer 48Figure4.5.Pricechangesandchoiceprobabilitiesofalternative2,8,15,18

in caseofallchoicescenarios 51FigureA.1 All19alternativesforsurveyprocess xiFigureA.2.Consumer’sutilityalongcurrentpricevalues xxv

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1.1 Researchproblem

Inrecentyears,coffeeisanimportantproductofindustrysector,agriculturesector,andservicesectori n Vietnam.Ac c o rd i n g t o histori ca ldataofInternationalCoffeeOrganization(ICO),besideBrazil,Vietnamisoneofthekeycountries

incoffeeproductionandconsumptionintheworldwith19.4percentoftotalcoffeeproduction,and4.5percentofdomesticconsumption.A n n u a l yieldofVietnamcoffeeproductionincreasesby21timesintheperiod1990–

2014(ICO,2015).Thevolumeofcoffee exporti n Vietnamcontributesmorethan2 4 percentofGDPin2012(VietnamMinistryofIndustryandTrade,2012)

BasedonthereportofACNielsen(2015),3in1coffeemarketinVietnamarecontributedb y manymanufacturersofwhichfivemainmanufacturersareVinacafe,Nestlé,TrungNguyen,F e s Vietnam,andTranQuang.In2015,totalvolumeshareoffivemainmanufacturersis88p e r c e n t (Vinacafe:38%,Nestlé:19%,TrungNguyen:14.6%,FesVietnam:4.2%,TranQuang:1 2 2 % ) comparedtoabout99percentin2014.Moreover,intermofvalueshare,3in1coffeeproductscomprise83percentoftotalvalueofinstantcoffeemarket.Intermofpackage,bag,box,andsachet

arethreemainkindsofpackagewith99.9percentofvolumeshare.Therefore,i t isconcludedthattotaldemandof3in1coffee isrelativelyhighcomparedt ootherinstantc o f f e e productsandthecompetitionamongmanufacturersisalsointenseinordertocapturemoremarketshare

Duetothehighdemandofconsumers,especiallyyoungconsumers,manymanufacturershavediversifiedtheir3in1coffeeproductsintermofbrands,

prices,segments,packages,packs i z e , promotion,mainingredients.Forexample,fivemainmanufacturersincludingVinacafe,Nestlé,TrungNguyen,Fes

Vietnam,andTranQuangprovide27differentkindsof3in1coffeei n termofmainingredients,packaging,andbrands.Moreover,thecompetitionamongthesemanufacturersisa l s o reflectedi nt he aspectofpricesa n d promotions.P r i c e increasecouldh e l p manufacturersenjoyt h e b e n e f i t s

f r o m t h e i n c r e a s e ofprofit;however,t h e y m a y a l s o s u f f e r thedecreaseofquantitysold.Besidepricechange,manufacturerscouldconductpromotionactivitiesi n ordert o i n c r e a s e thenumberofconsumerswhok n o w a b o u t t h e i r productsortheirbrandnames.Promotionactivitiesareconductedthroughm a ny formssuch

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weightpromotion,additionalsachets,oragiftofrelatedproduct,forexample,spoon,plasticc u p , orglasscup.Thus,twoimportantquestionsareraisedthat:

e s s ofidentifyingt h e r a n g e ofs i g n i f i c a n t f a c t o r s , generatinghypotheticalprofiles,collectingconsumer’schoices,andanalyzingchoicedata.Thedatasetsofexperimentalmethodsarecollectedfromtwomainsurveymethods:revealedpreferenceands t a t e d preferencemethods.T w

o mains u r v e y methodsprovidea w i d e applicationi n u n d e r s t a n d i n g consumer’spreferences.Forexample,Durevall(2007)investigatedthatd e c r e a s i n g priceofc o f f e e h

a s lessimpactonc o f f e e demandi n t h e longt e r m d u e tot h e combinationofconsumer’spreferencesandpopulationstructureinSweden.Inaddition,Wolfe t al.(2011)suggestedthattheinteractionofproductattributesalsohave significantimpactonconsumer’spreferences,besideprices.Therefore,theaimofthisstudyistoachievethreeresearchobjectives:

(1) Identifyingthekey determinantsofconsumer’schoicesfor3in1coffee,

(2) Determiningrelationshipbetweenpriceandconsumer’sutilityfor3in1coffee,

(3) Evaluatingtheimpactofdiscount,promotion,andpricechangesonconsumer’sc h o i c e s

First,besidep r i c e , severalfactorsareclaimedt o b e r e l i a b l y i m p o r t a n t a n d influencetheconsumer’schoices.T h u s , identifyingthesefactorsprovidesdeeplyu n d e r s t a n d i n g aboutconsumer’spreferenceinordert o s u g g e s t bothimplicationfori n s t a n t c o f f e e marketa n d developments t r a t e g y formanufacturers.Second,i t iss a i d thatdeterminingt h e relationshipbetweenpriceandconsumer’sutilityplaysanimportantroleinfindingouttheeffectofpricec h a n g e onconsumer’su t i l i t y orc h o i c e probabilityofp r o d u c t s fore a c h manufacturer.Thisf i n d i n

g givesmanufacturersa n evaluationaboutt h e i r advantagesordisadvantagest o g e t h i g h e

r profitsinthe3in1coffeemarketcomparedtothecompetitors.Finally,thisstudyalso

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considerstheimpactofdiscount,promotion,andpricechangeonconsumer’schoices.Since3 i

n 1 coffeemarketisoligopolyinVietnam,anychangeofcoffeeattributesofonebrandwillhavesignificantimpactoni t s q u a n t i t y sol d T h e r e f o r e , manufacturerscouldoptimizet h e i r marketingactivitiesforcapturingmoremarketshares

1.3 Scopeofstudy

Thisstudyisapracticalresearchwhichreliesonthebasisofrandomutilitytheory.Thedatacollectionofthisstudyisconductedinsuper-

marketsinHoChiMinhCityin2016byapplyingr e v e a l e d preferencemethodwiththeadditionofseveralhypotheticalchoicescenarios.Duetot h e limitation offinanceand timespan,asmallsampleof197respondentswhoare3in1coffeeconsumersisc o l l e c t e d E a c h respondentisassumedtof a c e all1 9 surveyedalternativesi n a c t u a l choicescenario,sothedatasetofthisstudyistreatedaspaneldataset

Thecontributionofthisstudyistoinvestigatetheassociationbetweenconsumer’schoicesa n d coffeeattributessuchasprice,mainingredientsofcoffee,packaging,andmanufacturersb y usingtherevealedpreferencemethod.Fromthat,producerscouldunderstandmoreaboutt h e s i g n i f

i c a n c e ofseveralattributes,whichmayh a v e heavycontributiontoc o n s u m e r ’sc h o i c e s Moreover,therelationshipbetweenpricesandconsumer’sutilitycouldhelpproducerst o e v a l u a t e

t h e t r u s t ofconsumerst o t h e i r b r a n d s whenmarketc h a n g e s i n t e r m ofp r i c e s , p r o m o t

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Inthischapter,thetheoreticalandempiricalreviewhavebeensummarizedinordertoprovidet h e researchframeworkfort h i s study.I n particular,thisc h a p t e r concentrateson:

(1)t h e literatureofrandomutilitytheoryintermofabriefhistory,basicassumptions,randomutilitymodela n d i t s estimation;

transitionofindividuals’preferencescouldbereflectedthroughchoicesituationswhenindividualsdonotchoosesamealternativesindifferentchoicesituationsordifferentsetsofalternatives

Thurstone(1927)i n t r od uc e d the“ l a w ofcomparativejudgment”t o a pply to“thecomparisonofp h y s i c a l stimulusintensitiesa n d qualitativecomparativejudgmentss u c h ast h o s e ofexcellenceofspecimensina n educationals c a l e , a n d themeasurementofsuchpsychologicalvaluesasaseriesofopinionsondisputedpublicissues”.Theprocess,inwhichindividualsr e a c t differentlytos e v e r a l stimulitob e s u i t a b l e t o t h e i r demand,i s calledthediscriminalprocess.Althoughvariousstimuliarejudgedbythesameindividual,theirdiscriminalprocessesaredifferent.Thedifferencebetweentwoalternativesismeasuredbyas c a l e , whichiscalleddiscriminaldifference.Withspecificspecimen,discriminalprocessesared i s t r i b u t e d b y t h e standarddeviation,whichiscalleddiscriminaldispersion.A c c o r d i n g t o Thurstone(1927),e a c h specimen,whichi s c h o s e n b y t h e i n d i v i d u a l s , i s d e s c r i b e d b y twocomponents:a s c a l e v a l u e , a nd adiscriminaldispersion.T h e s e twovaluescouldb e determined.Inaddition,intermofscalevalue,thatvaluecomprisestwocomponents:anoriginwithi t s

s p e c i f i c unitofmeasurement,andtheunknowncorrelationbetweendiscriminaldeviationsoftwodifferentstimuli Thurstone(1927)a l so assumedt ha t theunknowncorrelationisconstantforthewholeseriesofstimuli

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Basedonthe“lawofcomparativejudgment”,inordertomeasureandexplaindeterminantsofindividualchoice,constantutilityandrandomutilityapproacheswereintroducedbyLucea n d S u p

p e s (1965).Constantu t i l i t y a p p r o a c h, whichwasfirstintroducedb y L u c e (1959),b a s e dont h e assumptionoff i x e d utilitiesofalternatives.Itm e a n t thatindividualsdidnotchoosealternativewiththehighestutility.Choiceprobabilitiesfordecisionmakersaree x p r e s s e d byafunctionin whichutilitiesofalternativesareparameters.Ontheotherhand,M a r s c h a k (1960)fi r

st introduceda n economicviewpointofr a n d o m ut i l i t y approa ch whichr e l i e d onThurstone’s“lawofcomparativejudgment”(1927).Randomutilityapproachbasedont h e perspectivethatindividualschoosealternativewitht h e highestu t i l i t y a n d u t i l i t y i s t r e a t e d asafunctionofattributesplusarandomcomponent

AlthoughMarschak(1960)interpretedThurstone’s“lawofcomparativejudgment”intheeconomicsfield,McFadden(1974a)introducedthegeneralprocedureinordertoapplyrandomu t i l i t y t h e

o r y f o r analyzingqualitativechoicebehavior.Fromt h a t ,

t h i s t h e o r y i s widelyreviewedi n t h e r e s e a r c h ofD a n g a n z o (1979),H e n s h e r a n

d Button( 2 0 0 0 ) , T r a i n (2009).AccordingtoMcFadden(1974a),conditionallogitanalysisisappropriateeconomicanalysismethodforconsumer’schoicesbehavior.Theresearchofconsumer

Thegeneralhypothesisoftherandomutilitytheoryisthatindividualsarerationaldecision-makers,andtheytrytomaximize

theirutilitywhenfacingachoicebetweenmultiple(mutuallyexclusive)alternatives.Inotherword,theycomparetheutilitiesofalternatives,whicht h e y faceandchoosethealternativewiththehighestutility.Luce(1959)introducedanimportantaxiomofrandomutilityapproach,whichexpressedthatthepresenceorabsenceofadditionalalternatived i d noti n f l u e n c e therelativeoddsofchosenalternativeovert h e secondone.M c F a d d e n (1974a)formalizedthisaxiomintothreebelowassumptions:

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(1) Independenceofirrelevantalternatives(IIA):therelativeratioofchoiceprobabilityofonealternativeoverc h o i c e probabilityofa n o t h e r alternativeisaffectedi n e q u a l l y proportionbythepresenceoftheotheralternatives.

(2) Positivity:c h o i c e probabilitiesofa l l alternativesi n a l l possiblealternatives e t s arepositive

(3) Irrelevanceofalternativeseteffect:aweakidentifyingrestriction

AccordingtoMcFadden(1974a),theperceivedutilityUcomprisestwocomponents:thesyste maticutilityV andtheerrorterm .Thesystematicutilityrepresentstheutility,whichisperceivedbydecisionmakersinthesamepurchasingcontext.Alternativesandattributesareknowna s importantcomponentst o describedifferentp u r c h a s i n g contexts.Theerrort e r m representstheunknowndeviationofu t i l i t y p e r c e i v e d b y d e c i s i o n makersf r o m t h e utility.Specifically,theerrortermcapturestheeffectsofallunobservablefactors.T h e relationshipbetweentheperceivedutilit

yU ,thesystematicutilityV , andtheerrort e r m isexpressedbythebelowequation:

Intheviewpointofresearchers,theycouldnotobservetheutilityU ofdecisionmakers.Theres

earcherscouldobservet h e characteristicsofdecisionmakersandt h e attributesofalternativeswhich

a r e f a c e d b y decisionmakers.From t h a t , t h e y couldestimatet h e choicep r o b a b i l i t

i e s Accordingt oMcFadden(1981),choiceprobabilitieshavet osatisfytwoconditions:(1)choi ce probabilitiesarenon-

negativea nd sumtoone;and(2)c hoi c e probabilitiesdependonbothobservableattributesofalternativesandcharacteristicsofdecisionmakers.Moreover,re se a rc he rs d o notk n o w theerrort erm

U(s,x)V(s,x)

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wheres aremeasuredattributes, xischosenalternativefromthealternativesetbydecisionmakers.

u t e d withWeibull(Gnedenko,extremevalue)distributioninthefirstlemma,andwithGumbeldistribution(ExtremeValueTypeI)inthesecondlemma.Undertheconditionofthes e c o n d lemma,McFadden(1974a)provedthatthechoiceprobabilityofonealternativeequalst h e proportionofexponentialfunctionofutilityofthisalternativeovertheexponentialfunctionofut il it yofre ma iningalternativesi n thealternativese t.McFadden’s(1974a)fi ndingaboutc h o i c e probabilityisexpressedby thefollowingequation:

chareincluded inthedeterministicutilityV areindependentwiththeunobservedcomponento f u

t i l i t y .Moreover,e a c h respondent’sc h o i c e isindependentwiththeothers.Basedonthoseassumptions,thechoiceprobabilityofalternativei forr e s p o n d e n t

nis:

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n i

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distribution functions of unobserved factors, which are expressed by the function

McFadden(1974a)provedthat d 2 LL

()

isalwaysnegativewitheveryvaluesof.Itmeans

d 2thatlog-

likelihoodisgloballyconcave.Thus,thereisexistenceofacriticalpointofthat

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forchoiceprobabilitiesworksundertheassumptionofextremevaluedistributionofunobservedfactors.Thatdistributionisusuallyc a l l e d asGumbeldistributionorExtremeV a l u e TypeI.B a

Second,G e n e r a l i z e d ExtremeV a l u e models,whicha r e knowna s G E V m o de l s, a r e thegeneralizationofstandardlogitmodel.GEVmodelscomprisemathematicalformulationthatdescribesdifferentcharacteristicfunctions.ThekeycharacteristicofGEVmodelsisthatthedistributionofu

n o b s e r v e d u t i l i t y ofa l l alternativesfollowsageneralizedextremevalue.Moreover,thatdistributionallowsthecorrelationsamongalternatives.Thedisappearanceof

allcorrelationsamongalternativeswilltransformGEVmodelstostandardlogitmodel.The

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word,pricevariabletakesbothpositiveva lues andnegativeval ue s However,iti s recognizedthat

probitmodelcouldd e a l witht h r e e importantl i m i t a t i o n pointsoflogitmodel.F i r s t , probitmod

elcouldp r e s e n t ther a n d o m t a s t e variation.Itmeansthatestimatedcoefficientscouldb e r a n d

Characteristicsofproductsandconsumersaffectconsumer’spreferences.AccordingtoIssanchou(1996),thesecharacteristicscouldbedividedintotwogroups:intrinsiccharacteristicsgroupandextrinsiccharacteristicsgroup.Intrinsiccharacteristicsmainlyreflectt h e sensoryattributesofproductssuchasappearance,texture,taste,after-

taste,odor,aroma,f e e l i n g Extrinsiccharacteristicsmainlyre fl e c t thefactorsthata r e outsidet h e products,forexample,personalattributes(age,gender,income,education),t h e situationalattributes(thep r i c e , brandfamiliarity,environmentalattributes,theavailabilityofproducts).Thus,Cardello(1996)suggestedthatconsumer’spreferencescouldbeinvestigatedthroughtwolinkages:

(1)i n t r i n s i c characteristicsandconsumer’spreferences,and(2)extrinsiccharacteristicsandconsumer’spre fe re nce s

Facingwiththeabundanceofproducts,consumersusually

comparedvariousattributesofp r o d u c t s

offproblemamongattributesa p p e a r e d i n consumer’sc h o i c e s

Trade-offp r o b l e m c o u l d b e a n a l y z e d b y conjointa n a l y s i s , whichi s a multivariatetechnique.Thist e c h n i q u e evaluatespu rc ha se r trade-offthroughthedecision-

i a l preferences,a n d narrowe nough t o a s s u r e thee f f i c i e n c y ofestimationandtherealityofhypotheticalprofilestowardtoconsumers(Bunchetal.,1993).Forexample,MtimetandAlbisu(2006)concentratedonfourattributesofdesignationoforigin( D O ) wineincludingorigin,price,wineaging,andthegrapevariety.Byapplyingthemethods u g g e s t e d byStreet,Burgess,andLouviere(2005),thefinal27 choicesetsarechosenwithfourlevelsofeachattribute.Withthesameprocedure,Lockshinetal

(2006)suggestedprice,regionoforigin,brandname,andawardasimportant labelinformationtoconsumer’swinec h o i c e s 2 0 choicetaskswereg e n e r a t e d b y combiningvariousl e v e

l s ofaboveattributes

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Besidehypotheticalp r o f i l e s ,“notbuy”c h o i c e isu su a l l y addedt o consumer’sc h o i c e tasks.However,inmanycases,hypotheticalprofilesbringouthigher

utilityforconsumersthan“notbuy”choiceor“non-purchase”alternative(Mtimet&Albisu,2006).Intermofmethodology,thebasicprocessbasedonrandomutilitytheoryanditassociateddiscretechoicemodelssuchasstandardmultinomiallogit(MNL)model(McFadden,1974a),n e s t e d multinomiallogit(NMNL)model(McFadden, 1978), andmultinomialprobit(MNP)model(Daganzo,1979).Byapplyingrandomutilitytheory,MtimetandAlbisu(2006)foundoutthat:

(1)designationoforigin,wineaging(+),andgrapevarietyalsoplayanimportantrolei n consumer’schoices,and(2)pricehasoptimalpointatwhichrespondent’sutilityishighest.Inaddition,bycombiningrandomutilitytheoryandsim

ulation,Lockshinetal.(2006)claimedt h a t thecontributionofprice,regionoforigin,brandname,andawardtoconsum

er’schoicesi s quitecomplex.Moreover,priceisalsoimportantfactor,whichmatterspurchaseprobability.Besideattributesofproducts,social-

demographiccharacteristicsandfrequencyofproductconsumptionofconsumersa r e a l s o c o n s i d

e r e d inmanyr e s e a r c h e s Lockshine t a l

(2006)notedthatfrequencyofwineconsumptionisdividedintofivelevels:almosteveryday,twoort h

r e e timesperweek,onetimeperweek,twoorthreetimespermonth,andonetimeorlessp e r month.Basedonthisexperience,MtimetandAlbisu(2006)dividedDOwineconsumersi n t o twosegmentsduetothefrequencyofconsumptionincludingfrequentconsumption(everyday,ortwoorthreetimesperweek),andoccasionalconsumption.Withdifferentgroupsofconsumers,t h e i r perceivedu t

i l i t y isd i f f e r e n t (Mtimet& A l b i s u , 2 0 0 6 ) Specifically,u n d e r determinedpricelevel,occasionalconsumersenjoyhigherutilitythanfrequentconsumersdo.However,theopposite

trendisobservedwhenpricelevelis higherthandeterminedpricelevel

2.4 Theinvestigationofcoffee’sattribute

Animportantissuewhendoingresearchesaboutconsumer’schoicesofcoffeeistofindoutt h e signific antfa c t ors, whichmatterconsumer’sc h o i c e s Attributesofc o f f e e coulda l s o be dividedi n t o t w o groupsb a s e d ont h e consumer’sp e r c e i v e d v a l u e T he y areemotionala n d f u n

c t i o n a l attributes.However,accordingt o Issa nc hou (1996),attributesofc o f f e e couldb e dividedintotwogroups:intrinsicattributes,andextrinsicattributes.Whileintrinsicattributesr e l

a t e d t o characteristicsofp r o d u c t s s u c h asp r i c e s , promotion,a n d s e n s o r y characteristics;extrinsicattributesrelatedt o o u t s i d e characteristicsofproductss u c h ascharacteristicsof

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Byaskingrespondentstoranktheselectedfactorsonafive-pointscale(1=notimportant,5 = h i g h l y important),Hanspal(2010)pointedoutthatcoffeequality,taste,flavor,certificationmark,i m p a c t onh e a l t h , a n d pricea r e importantfactorst o consumers.Theimportanceoffactorstoconsumer’scoffeepreferencesisdescribedbypercentageofcontributionoffactorsi n Table2.1.Fromthatresult,itisrealizedthatconsumersevaluatequality,taste,andflavora r e moreimportantfactorsthantheothersa r e Thisconclusioni s c o n s i s t e n t withGeel,Kinnear,andKock(2005)whopointedoutthatconsumersrat einstantcoffeethroughthree

p r i n c i p a l components:flavor,liking,andbrandfamiliarity.Becausecoffeeisdistinctproduct,consumerspaymoreattentiononthefeelingofeatinginsteadofhealthanddiet(Watanabe,S u

z u k i , &Kaiser,1998).Moreover,itisrealizedthatthefluctuationofcoffeepricesinthemarketarenotenoughlargetoinfluenceconsumer’schoices.Geel,Kinnear,andKock(2005)pointedoutt h a

t consumersratekindsofi nst a nt coffeethrought hre e princi pa lcomponents:flavor,liking,andbrandfamiliarity

consumers.Thosevaluesa r e enjoyedbyconsumersthroughs e n s o r y characteristicswhichcouldb

e dividedi n t o fivec a t e g o r i e s : appearance,odor,flavor-by-mouth/

taste,s o u n d , a n d m o u t h

-f e e l (Seo,Lee,&Hwang,2009;Lazim&Suriani,2009).Intermo-fodor,MayerandG r o s c

h (2001)s u g g e s t e d t h a t roastedc o f f e e shouldhavet y p i c a l odorqualitiesincludingcaramell i k e , roasty,s u l p h u r o u s , a n d smoky.Moreover,R o s s , P e c k a , andW e l l e r (2006)claimedt h a t aromaa n d b i t t e r n e s s aree a s i l y a f f e c t e d b y s t o r a g e condition,f

o r example,temperature;andconsumersappeartoconsideraromaandbitternessofcoffeewhentheymakea choiceamongkindsofcoffee

Second,priceandpromotiona re alsosignificantfactorsthatmatterconsumer’schoices.However,Srivastava(2007)investigatedthatpricecutsandsalespromotionmaynotimproveb r a n dloyalty.Int h e shortrun,discounta n d promotionc o u l d a t t r a c t consumers,e s p e c i a l l y “ n e wconsumers”whofirstt r y todri nk c o ff e e orwhodonothavemuchc of fe e experiencethroughtrymanykindsofcoffee.Nevertheless,inthelongrun,discountandpromotioncouldnotbringoutthesameeffectsasthebeginningforseveralreasons.First,manufacturerscouldnotmaintaindiscountandpromotionf o r t h e longtimed u e t o t h e limitationoffinancialr e s o u r c e s Second,consumerswillre-

perceiveabrand’svalueandbrandloyaltywilldominateconsumer’schoices.Thereasonisthatbrandloyaltyisthereflectionofhabitinformationint h e past,andpastconsumptionbehaviorwilldirectlyinfluencepresentconsumptionbehavior(Faria,2003)

Third,besideabovef a c t o rs, brandisal so recognizedasim port antdeterminantofconsumer

’schoices.Becauseprofileofcoffeeisanalyzedtobesimilarintermofmanyfactorss u c h asbasicingredients,prices,andconsumer’sperceivedbenefits,consumersunderlietheimportanceofb r a n d reputationt o t h e i r choicesa n d theirl o y a l t y ( S r i v a s t a v a , 2 0 0 7 ) T h e s e authorspointed

consumer’sboredomthreshold,t h e optimizationofq u a l i t y s t a n d a r d s amongb r a n d s , a n

d thed e l a y ofinnovationi n m a n y b r a n d s areimportantreasonsfortheexplanationwhythenumberofsolelyloyaltyconsumersdiminishes

overthetime.Astheresult,theappearanceofnewbrandscouldbecomesubstitutest o currentbrandsi

n themarket.Inf a c t , t o dat e,consumershaveus ua l l y consideredseveral b r a n d s beforemakingachoice.Thisleadstothevariationof consumer’spreferredchoicesets.Therefore,theidentificationofchoicesetisanimportantstepintheresearchesofconsumer

’sc h o i c e s

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2.5 Consumer’ssocial-demographiccharacteristics

Hanspal(2010)alsofoundouttherelationshipbetweensocial-demographiccharacteristicsofrespondentsandtheircoffeepreferences.Accordingtotheauthors,thelistofimportantfactorsincludeseducationlevel,occupation,age,gender,andincome.Forexample,intermofeducationlevel,respondentswithhighereducationlevelarelikelytousemoremultiplecoffees u

p p l i e r s Itmeansthattheyarewillingtotryotherbrandsofcoffee.Otherwise,respondentswithprofessionaleducationlevelhavestablepreferencessothattheyareusuallyloyalwithaspecificcoffeesupplier.Moreover,itisclaimedthatmarriedconsumers,consumerswithhighl e v e l ofeducation,consumersinsmallfamilies,orconsumerswithmorefreetimehavemoremotivationtobecoffeedrinkers(Watanabe,Suzuki,&Kaiser,1998).Intermofoccupation,consumerswhoa r e employees

i n privatesector,s t u d e n t s , orexpertsconsumemorec o f f e e comparedtotheothers.Intermofageimpactonrespondent’scoffeepreferences,respondentswithageof18-

36yearshavemoredemandoncoffee.However,thatdemandreduceswiththei n c r e a s e ofage.Ontheotherhand,intermofgender,empiricalresultshowedthatmentendt o consumemorecoffeethanwomendo

Infact,thefrequencyofcoffeeconsumptionisalsoimportantdeterminantofconsumer’sc h o

i c e s Withthe samekindofcoffee,consumerscouldchoosedifferentpacksizes,whicharea p p r o p r i a t e totheirfrequencyofconsumption.Geel,Kinnear,andKock(2005)analyzedthed a t a , whichwascollectedfromtwogroupsofrespondents:trainedpanelistsandconsumers.Consumershavefrequencyofinstantcoffeeconsumption,whichisequalorhigherthanonec u p perday;andmostofthemareover25yearsold.Byusingclusteranalysisandinternalpreferencemapping,G e e l , Kinnear,a n d Kock( 2 0 0 5 ) dividedconsumersi n t o fourgroups:“purecoffeelovers”,“instantcoffeeblendlovers”,“notseriouscoffeedrinkers”,and“general

c o f f e e drinkers”.Moreover,t h e authorsalsod e s c r i b e d thepreferencesofe a c h groupofconsumers

Fourgroupsofcoffeeconsumersinclude“purecoffeelovers”,“coffeeblendlovers”,“notseriouscoffeedrinkers”,and“generalcoffeedrinkers”(Geel,Kinnear,&Kock,2005).“Purec o f f e e lovers”areusuallyolderconsumersandtheircoffeepreferencesarestable.Inparticular,t h e y

p a y moreattentiononcoffeeattributessuchasappearance,aroma,bitterness,andalittleofmouth-

feel.Inaddition,t h e y preferpurecoffeea nd a r e insensitivet o highpriceofpurec o f f e e Besides,“coffeeblendlovers”aredescribedaspeoplewhohavelimitedincomeand

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highlevelofsensitivitytopricechanges.Theyusuallylikeanykindsofcoffee,whichhavel e s

s intenseofcoffeeflavorandhighintenseofsweetness,forexample,instantcoffee.“Notseriouscoffeedrinkers”donotlikepurecoffeeareneutralbetweencoffeeblendsandotherhotdrinksuchastea,chocolate.Moreover,theyareusuallyin15-

24yearsoldinwhichtheya r e i n bui l di ng processofc o f f e e preferencesandbrand/

manufacturerknowle dge, a nd specifyingtheirpreferredcoffeeattributes

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The primaryadvantageofrevealed preferencemethodisthatitreliesonconsumer’sactualbehaviora t specificperiodwithe x i s t i n g p r i c e s Consumer’sa ctualdecisioniss i m p l e r t o observecomparedtohypotheticaldecision.Moreover,hypotheticaldecisionusuallygeneratesbiaserrors(McFadden,1974).Inthatcase,economicentitiestrytomaximizetheirexpectedu t i l i t y bycomparingalternativesamongtheotherstomakedecision,andfocusontheactualr i s k totheirwelfare(McFadden,1974a).Inaddition,becauserevealedpreferencemethodisnonparametricmethod,itc an beappliedinthecaseofasmallnumberofobservations,anddoesnotbaseonanyassumptionsoffunctionalforms(Louviereetal.,2000)

However,itisrecognizedt h a t revealedpreferencemethodalsosuffersseverald i s a d v a n

t a g e s Revealedpreferencemethodismainlyappliedtomeasuremarketvalueorusevalue(Adamowicze t a l , 1994).Moreover,b e c a u s e revealedpreferencemethodb a s e d one x i s t i n

g productsandspecificconsumptionsituation,consumersonlyfaceasmallnumberofcombinationofattributes(Adamowiczetal.,1997).Asaresult,revealedpreferencemethod

cannotbea p p l i e d forprototypeproductsord e v e l o p i n g productsbecauseitisdifficultt o

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directlyobserveconsumer’sactualchoices(Adamowiczetal., 1994).Infact,Ben-Akivaetal.(1994)claimedthatrevealedpreferencemethoddoesnotestimatedemandfornewproducts,whichwillbepresentedinstatedpreferencemethod.Ontheotherhand,becausepurchasingbehaviorofconsumershappensinr e a l i t y withoutt h e controllingf r o m r e s e a r c h e r s, unexpectedexternalitym a y i nfluence consumer’schoices.Forinstance,withoutthecontrollingofresearchers,consumer’schoicesm o s t l y dependonrespondent’smarketperception(Caldas& Black,1997).Moreover,B e n-

AkivaandLerman(1985)alsopointedoutthathighercostisoneofthereasonwhyrevealedpreferencemethodcollectsfewerobservationsthanstatedpreferencemethoddoes

Thedatasetofrevealedpreferencemethodiscollectedfromactualpurchasingbehaviorofconsumers.Accordingtopreviousstudies,thevariationofresearchsubjectsandrespondentsl eadst o differentwaystoc o l l e c t t h e respondent’sc h o i c e s Forexample,withn o n -

marketv a l u e , respondent’schoicesaremainlycollectedfr om t h e diary,whichrecordswhatalternativesrespondentsactuallychoose.Withmarketvalue,respondent’schoicesaremainlyc o l

l e c t e d throughdirectobservationsoft he i r purchasingsce na ri os Generally,be ca use 3 i

n 1 c o f f e e iscommercialproduct,respondentsofthisstudy

shouldbeidentifiedastheconsumerswhobuytheproductsatthepurchasingplace.However,itisemphasizedthattheconsumerm a y notthedecisionmaker.Thus,additionalquestionshouldbeaddedtothequestionnaireinordertoidentifywhetherrespondentisdecisionmakerornot

Inaddition,severalimportantissueshavebeenraisedduringthedatacollectingprocessofr e v e

a l e d preferencemethod.First,itisnecessarytoidentifyspecificpurchasingcontext.Thisconditionshouldbeconsistentamongallconsumersintermofpurchasingplace,temperature,a n d thenumberofavailablealternatives.Atleast,thedifferenceofpurchasingcontextamongconsumersshould

be small.Forexample,allpurchasingscenariosareobserveda t thesamep l a c e market,traditionalmarket,orconveniencestore.Second,inordertoassuret h e actualityofpurchasingactivity,purchasingbehaviorofconsumersareobservedinsilence.AccordingtoAdamowicz(1994),intherevealedpreferencemethod,theindividualschooseonealternativef r o m a l l alternative

suchassuper-sb e i n g availablet o them.T h e ordera n d t h e n u m b e r ofalternativesa r e c h o s e n b y consumersarealsonoted.Third,a significantp r o b l e m i s theidentificationofconsumer’schoiceset.Thisidentificationdependsontheresearcher’sargumentswhichbaseonspecificresearchcontext.Inparticular,consumer’schoicesetmay

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bethesubsetofallavailableproductsinthemarket,orallavailableproductsthattheyfaceatt h e purchasingplace,orallavailableproductsinthemarket.Basedonthatidentification,thed a t a s e twouldb e t r e a t e d a s paneldatai n whichdecisionmakersfaceallalternativestheirc h o i c e set,andeachalternativeisanobservation.

3.2 Attributesofcoffee

Inthemarketvaluationliterature,threemaingroupsofattributesaremonetary,non-monetary,a n d environmentalattributes(Bunchetal.,1993).Theinteractionoftheseattributesinfluencest h e choicepreferencesofconsumers.Inthecaseof3in1coffee,threegroups

ofattributescoulde x p l a i n consumer’schoicesa n d predicttheconsumptiont r e n d i n t h e future.F i r s t groupofattributescomprisesthemonetaryattributesrelatingtopricesandproduct’smainingredientss u c h asthecontentofcoffee,sugar,andnon-

diarycreamer.Theseingredientsplaya n importantrolei n consumer’schoicebehavior.Secondgroupofattributescomprisesnon-

m o n e t a r y attributessuchasthenumberofpacksperalternative,theweightofalternative,thew a y toopenthepack.Theseattributesfocusmoreontheconvenienceaspectofalternatives.Because3in1coffeeisonekindofinstantcoffee,theconvenienceofproductgiveshighlevelofeffectsonconsumer’schoices.Thirdgroupofattributescomprisesothercharacteristicsofalternativessuchaspromotion,brand,andappearance

AccordingtoBunchetal

(1993),keyattributesofalternativescouldbeidentifiedthroughf o c u s surveyprocess.Besideoursuggestedattributes,potentialattributesa r e a l s o notedasimportanto

groupsprocessandpre-n e s Forexample,p o t e groupsprocessandpre-n t i a l attributesofpromotiogroupsprocessandpre-n,egroupsprocessandpre-nvirogroupsprocessandpre-nmegroupsprocessandpre-ntprotectiogroupsprocessandpre-nlevel,agroupsprocessandpre-ndcogroupsprocessandpre-nvegroupsprocessandpre-niegroupsprocessandpre-ncelevelalsomatterconsumer’schoices.However,t h e numberofattributesshouldbeminimizedasmuchaspossibleinordertoavoidcomplexc h o i c e t a s k forc o n s u m e r s , a n d r e f l e c t t h e differenceamongvariousb r a n d s AccordingtoM c F a d d e n (1986),t h e numberofattributes,whicha r e t h e outcomeofs c r e e n i n g process,s h o u l d belessthanten

(1998),attributesofalternativesareselectedbyt h e r e s p o n s e s ofexpertsorwhohaveusedproductswithhighleveloffrequency.Theseattributesa r e modifiedbyusingfocusgroups.Focusgroupswilldiscusstofinalizethelistofattributes.Moreover,levelsofattributesareidentifiedbyaskingrespondentsthehighestandlowestlevelsofattributes

atwhichtheyagreetobuythatproduct.Thehighestandlowestlevels

ofattributesm a y bedifferentfromcurrentlevelofexistingproducts.Therangeofattributesreflectboth

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willingnesstopayandwillingnesstoacceptforattributechange.Thefollowingdiscussionwillf o c u

s moreontheidentificationofattributesandlevelsofthem

Table3 1 presentsthelistofs u g g e s t e d attributesof3 i n 1 c o f f e e Theseattributesaref i

n a l i z e d throught h e preliminarysurvey.T h e preliminarysurve yi s c o n d u c t e d throughtw

os t e p s First,smallsampleofabout30personswhodrink3in1coffeeprovidestheinformationt

h a t theycareaboutwhenchoosingakindof3in1coffee.Second,thescreeningprocessofallattributesisconductedb y e v a l u a t i n g whetherattributesisbelongedt o alternativesortoconsumer’spreferences.Moreover,finalattributesshouldbespecificforeachbrandormanufacturer,andeachkindof3in1coffee.Itmeansthatattributesaredifferentamongbrands,manufacturer,andkindof3in1coffee

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Inmarketresearch,s i z e ofc h o i c e s e t ofeachrespondentisa f f e c t e d b y t h e numberofavailableproductsi n themarket,t h e importanceofp r o d u c t category,educationl e v e l ofconsumers,brandloyalty,consumer’sage,andconsumer’sincome(Gruca,1989;Howard&S h e t h , 1969).Forexample,JarvisandWilcox(1973)claimedthatsizeofchoicesetmayben e g a t i v e l y

a f f e c t e d byt h e importanceofinstantcoffeecategory.However,inVietnam,consumer’spreferencesof3in1coffee isbuiltupthroughthelongtimeofusingandtryingm a n y kindsof3in1coffee.Thereasonisthat3in1coffeeispopularanditspriceisalsocheapforallpeople.Therefore,itisassumedthatthechoicesetofeachrespondentcomprisedall19alternatives

3in1coffeeproductsareconsideredinthisstudybelongtofourmainmanufacturersinHoC h i M i

n h City.T a b l e 3 2 presentsthevolumes h a r e a n d valueoft h o s e fourmainmanufacturers,whichincludeVinacafe,Nestlé,TrungNguyen,andFesVietnam.Itisrealizedt h a t theorderintermofvolumeshareandvalueshareofthosemanufacturersarethesame.Vinacafeleadsi n bothvolumes h a r e a n d values h a r e i n 2 0 1 4 a n d 2015.Theremainingmanufacturersa r e followed

b y N e s t l é , T r u n g Nguyen,a n d FesVietnam.F r o m t h a t , i t isclaimedthatthedifferenceamongproductsintheaspectofpriceissmall.Thatsupportstheremarkthat3in1coffeemarketismorecompetitiveandistheoligopolymarket

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isover0.1percent.Allbrandsthathavevolumes h a r e , whichi s l e s s than0 1 % , a r e e x c l u d e

d f r o m t h i s l i s t Iti s recognizedthatmanufacturershavediversifiedtheirproductsi n t e r m ofb

r a n d s , packaging,a n d weightofs a c h e t T h u s , consumersmayfa c e a productwithvariou

sp a c k a g i n g Moreover,T a b l e A 1 presentsasummaryofall19alternativesandtheirattributessuchmainingredients,packaging,a n d manufacturer

Table3.3.Listofallavailable3in1coffeeproducts

3 Vinacafe

3.4 Questionnaire

ThequestionnaireofthisstudyispresentedintheAppendix.Thequestionnaireisdividedintot h r e emainparts.Inthefirstpart,actualpurchasingscenarioofrespondentisnotedintermofalternative(calleda c t u a l alternative)thatrespondentc h o o s e s , theidentificationofd e c i s i o n maker,andtherelationshipbetween decisionmakerandrespondent Inthesecondpart,social-demographicinformationandcoffeeusageofrespondentarenoted.Specifically,social-

demographicinformationofrespondentincludesname,ge nde r, age,religion,maritalst at us, livingplace,schoolingyear,occupation,andincome.Coffeeusageofrespondentincludesthe

Page23

frequencyof3i n1 coffeeconsumptiona ndthenum be r ofsa chet (s)foreachtime.T he t hi rd p

a r t ofquestionnairestartswiththeidentificationofsubstitutealternative(s)byaskingr e s p o n

d e n t : “Supposethatyoura c t u a l alternativedoesnote x i s t a t

thesuper-market,whichalternativeyouwillchoosetoreplaceit?”.Then,fiveorsevenhypotheticalscenariosareshownt o respondent Ine a c h choicesc e na ri o, respondentmakesa choiceafterconsideringtwoo

r morealternativesincludingactualalternativeandsubstitutealternative(s)withtheappearanceofdiscount,weightpromotion,andpriceincrease

3.5 Surveyprocess

Basedontheliteratureofrevealedpreferencemethod,dataofthisstudyshouldbecollectedb y observingtheactualpurchasingbehaviorofconsumersandtheinformationinthelabelofa l l alternativesinthemarket.Thesurveyprocessisconductedoutsidethesuper-

marketanda f t e r thepurc ha si ng context.T he collecteddataisdividedintothreegroupsofinformation.F i r s t , thechoiceofconsumera n d priceofallavailablealternativesi n thesu pe r-

m a rk e t arec o l l e c t e d Ifconsumerschoosetwoo r morea l t e r n a t i v e s , i t isc o n s i d e r e

d t h a t twoormorerespondentsarecollectedinthedataset.Itisnotedthatconsumer’schoicesincludetheactualc h o i c e andthehypotheticalchoices.Thesecondgroupisthesocial-

demographicinformationofrespondentssuchasname,gender,

age,religion,maritalstatus,schoolingyear,livingplace,occupation,income.Thethirdgroupistheinformationofusing3in1coffeesuchasfrequencyof3in1coffeeconsumption,andthenumberofsachet(s)foreachtime

Intermofsurveyplace,itis suggestedthattherearethreemainplacesthatsell3in1coffeei n HoChiMinhCitysuchassuper-

markets,traditionalmarkets,grocerystoresorconveniences t o r e s Thosepurchasingplacesaredifferentint e r m ofp u r c h a s i n g contexta n d p r i c e ofp r o d u c t s TableA.2showsthefluctuationofpriceof3in1coffeeamongvarioussuper-markets.However,itisclaimedthatsuper-marketisthemostappropriateplaceinthecaseofthisstudyforseveral re a sons First,a specificboot

hi s p r e p a r e d form a n y kindsof3 i n 1 c of fe e i n t he

super-

markets.Thenumberofkindsof3in1coffeeinthesuper-marketsismorethantraditionalmarketsandgroceryorconveniencestores.Thatmayaffectconsumer’spreferencesinmakingdecisionbecausetheyhaveanopportunitytofaceandconsidermanykindsof3in1coffeeint h e samepl ac e Incont ra st, consumersus ua l l y choosea specificki nd of3in1coffee beforet h e y cometogroceryorconveniencestores.Second,super-

marketsprovideabetterandmore

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stableconditionforpreservationofproductsthangroceryorconveniencestores.Thisguaranteesthestability anduniformityofproductquality.

Anotherissue,whichshouldbe makec l e a r , istheidentificationofdecisionmaker.Thep e r s o

n s whohaveb o u g h t oneo r morek i n d of3 i n 1 c o f f e e i n t he listof1 9 alternativesarec h o s e n

thissurvey.Therespondentsarechosenbyobservingt h e products,whichtheyhaveboughti n t h e checkoutc o u n t e r Thequestioniswhetherr e s p o n d e n t orbuyeri s decisionmakerornoti

s a d d e d t o t h e questionnaire.Ifbuyeri s

notdecisionmaker,thesocial-demographicandusingcoffeeinformation

ofdecisionmakershouldb e collectedthroughthebuyer.Moreover,weassumethatbuyerwouldberepresentativefordecisionmakert o makechoicesi n hypotheticalc h o i c e s c e n a r i o s T h e reasoni

s thatbuyeru s u a l l y hasc l o s e d relationshipwithd e c i s i o n maker,a n d he/

shechoosese x a c t l y alternativewhichd e c i s i o n makerwants.Fora longtime,buyercouldu n d e r s t

Numberofsachets no_sachet sachet

1=male,0

=female1=student,2=housewife,3=governmentservice,

2=5-<10million,3=10-<15million,4=15-<20million,5=20-<25million,6=25-<30million,7=30-<35million,8=35-<40million,9=40-<45million,10=45-<50million,11=>50million1=everyday,

2=severaltimesperweek,3 = s e v e r

a l timespermonth

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Int h e d a t a se t , c ho i c e ofre sponde nt i s considereda s dependentvariablein t h e equation(3.1).T h e attributesofalternativeswhicha r e

c o n s i d e r e d asexplanatoryv a r i a b l e s i n t h e equation(3.1)includepriceofalternative,bitterness,s w e e t n e s s , f a t , weightofalternative,numberofsachetsperalternative,manufacturers(Vinacafe,TrungNguyen,Nestlé, a n d FesVietnam),andmaterialofpackaging(plastic,paper).Moreover,controllingvariablesincludestablecharacteristicsofrespondentssuchassocial-

demographiccharacteristics(gender,maritalstatus,schoolingyear,occupation,income),andhabitofusingproducts(frequencyof3 i n 1 coffeeconsumption,numberofsachet(s)foreachtime).Moreover,accordingto Mc Fa dde n (1974a),i t isnotedthat conditionall ogi t modelusesf i x

e d effects.Itmeansthateffectsofattributesonconsumer’schoicesdonotchangeoverthetimeforallrespondents.Inaddition,fixedeffectsmethodsestimatetheimpactsofattributesonconsumer’schoiceswithinindividual,a n d ignorea l l t h e differenceamongc o n s u m e r s S t a b l e characterist

respondentssuchassocial-demographicinformationandfrequencyof3 i n 1 coffeeconsumptionarecontrolledandnotestimated.Ifthevariationamongrespondentsi s g r e a t l y highert h a n t h e variationwithini n d i v i d u

a l overt h e time,t h e estimationoff i x e d effectsmethodcouldbebias.Then,thechoosingbetweenfixedorrandomeffectsmethodsisr e c o g n i z e d astrade-

offp r o b l e m b e t w e e n biasnessa n d efficiency.Therefore,i n thisstudy,f i x e d effectsmethodmayprovidetheassuranceforefficiencyofestimatedresultbycontrollingomittedvariablebias.Ontheotherhand,oneofthemostimportantresultofconditionallogitmodelismarginalu t i l i t

y ofpriceforrespondents.Inordertocalculatemarginalutilityofpriceforrespondents,a n o t h

e r formofconditionallogitmodelisgeneratedbyaddinginteractionofpriceandothervariablesintotheequation(3.1).Thus,modifiedequationisexpressedas:

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manufacturers,incomelevel ofrespondents,occupationofrespondents,genderof

respondents,a n d frequencyof3in1coffeeconsumptionofrespondents;iistheerrorterm.Theinteractionsbetweenp r i c e a n d othervariabless u c h asmanufacturer,gender,occupation,income,a n d f r e q u e n c y of3 i n 1 c o f f e e consumptionmodifyt h e estimationofconditionallogitmodelforseveralreasons.First,althoughmanufacturerscompetetheothersi n termofpricetogeneratethesmalldifferenceamongpricesofalternativesinthesamekinds,t h e valueofmanufacturersmayaffectconsumer’spreferencesintermofprice.Itmeansthatconsumersmayevaluatevalueofdifferentmanufacturersthroughpriceofproducts.Moreover,i t isnotedthatmaleandfemalemayhavedifferentevaluationaboutprice.Forexample,femalem a y usuallycareaboutpri ce morethan male,andt he interactionbetweenge nder andpricem a y matterconsumer’sc h o i c e Inaddition,p ri c e

a nd income,orpri c e andoccupationmayi n t e r a c t togethertogiveimpactsonconsumer’schoices.Theincomevariationoroccupationvariationofrespondentsmaymatterthechoiceofcoffeebasedonprice.Thoseaboveargumentsm os t l y dependonconsiderationaboutconsumer’spre fe re n

ce si nspecificmarketp l a c e onthespecificperiod

Duringthesurveyprocess,duetotheproblemofmodification,first69respondentsfacefivechoicescenarios,last128respondentsfacesevenchoicescenarios.Theactualchoiceisc o n s i

d e r e d asfirstchoicescenarioforallrespondents.Otherfourorsixchoicescenariosarec o n

s i d e r e d ashypotheticalchoicescenarios.Eachhypotheticalchoicescenariocomprisestwoormorealternativesinwhichonealternativeischosenintheactualpurchasingscenario,andotheralternative(s)is/

areidentifiedbyaskingrespondentaboutthesubstitutealternative(s)int h e casefirstactualalternativedoesnotexist.Moreover,discount,weightpromotion,andpricei n c r e a s e arealsoaddedintohypotheticalscenarios.Inparticular,choicescenario2and3areg e n e r a t e d bygivingadiscountofpricetosubstitutealternative(s)followingby

10%and20%discountofcurrentprice.Choicescenario4and5aregeneratedbygivingweightpromotiont o substitutealternative(s)followingby10%and20%weightpromotionofcurrentweightofalternative.Finally,c hoi c e sce na ri o6a nd 7 aregenerate dby givinga ni nc re a se ofpricet

o a c t u a l alternativefollowingby 20%and50%increaseofcurrentprice

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U   1X1 2X2  nXn  1PX1

 2PX2  nPXn  

(3.4)

where:Uisutility,1,2, ,nand1,2, ,narecoefficients, X1,2, ,nareattributesofalternatives

includingpriceofalternative,weightpromotion,discount, bitterness, sweetness,fat,weightofalternative,numberofs a c h e t s , p a p e r packaging,V i n a c a f e , T r u n g Nguyen,Nestlé,s q u a r e d p r i c e , andsquaredbitterness;PX1,2, ,naret he interactedvariablesbetweenpr

ic ea nd othervariablesincludingmanufacturers,incomel e v e l ofr e s p o n d e n t s , occupationofrespondents,

genderofrespondents,andfrequencyof3in1coffeeconsumptionofrespondents;istheerrorterm

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demographiccharacteristicsi n t h e interactionwithpriceofalternativeandconsumer’schoices.4.1 Data

Forcollectingdata,surveyprocessisconductedintworoundsseparatelyintwoperiods.Thef i r s

t roundhassurveyedthesampleof46personswhohavedifferentfrequencyof3in1coffeeconsumptioninHoChiMinhCityonOctober2015.Mostofthemdrink3in1coffeeeveryday.Inparticular,respondentswillanswerthequestionnairethroughInternetandpapers.Accordingt o FlemingandBowden(2009),andMarta-

Pedroso,Freitas,andDomingos(2007),thedifferencebetweenonlinesurveyandconventionalpapersurveyisnotstatisticallysignificant.Ther e s u l t off i r s t roundi s a n a l y z e d t o determinet h e fi na l l

i s t ofattributesthatm a y affectconsumer’schoicesof3in1coffee Aswementionintheabovesection,thoseattributesarecharacteristicsofalternatives,couldbemeasuredorbeavailableinthelabelofalternatives

Inthesecondround,dataofthis studyiscollectedthroughsurveyprocessmainlybasedonr e v e a l e d preferencemethod.T h e s u r v e y p r o c e s s isconducteda tfourmains u p e r -

m a r k e t systemsinHoChiMinhCityincludingBigC,CoopExtra,Coopmart,andMetroonthetimef r o m June18,2016toAugust16,2016.Therespondentsofthissurveyareconsumerswhohaveboughtproductsthatareincludedin

thelistofsurveyproducts(Table3.3orFigureA.1).Thefinaldatasetcontainsthesurveyedinformationof197consumersinHoChiMinhCity.T a b l e 4 1 presentsd e t a i l informationoft h e n u m

b e r ofrespondentsfore a c h

super-markets y s t e m foreachdistrict.Inaddition,itisrecognizedthatthefinaldataofthisstudyistreatedaspa ne ldatabecauseeachconsumerwillmakeachoiceafterfacing19alternativesorlesswhichbelongtofourmanufacturers:Vinacafe,Nestlé,TrungNguyen,andFesVietnam

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a r e boughtbyconsumersinactualchoicescenario,andsubstitutealternative(s),whichis/

areboughtifactualalternative(s)disappear(s)

Thedifferencebetweenactualchoicescenario

andhypotheticalchoicescenariosareinnoto n l y termofchoicesetbutalsotheappearanceofdiscountandweightpromotion.Inparticular,positivevalueofdiscountvariableisequivalenttopricedecrease,negativevalueofdiscountvariableise q u i v a l e n t t o priceincrease,a n d positivevalueofweightpromotionvariableis

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