The research uses the data collection method through a questionnaire on factors affecting the decision to consume McDonald's fast food products among students in Ho Chi Minh City N=207..
INTRODUCTION
Background of the research
Vietnam's economic reform policies and promotion of foreign investment have made it an attractive market for multinational corporations, particularly in the fast food sector McDonald's, a global leader with approximately 31,000 stores in 119 countries and serving 70 million customers daily, entered Vietnam in 2014 with plans to open 100 locations and establish itself as the top fast food brand Nearly a decade later, McDonald's has solidified its presence in the country, catering to the evolving eating habits of young people who increasingly favor convenient and quick meal options due to their busy lifestyles.
In Vietnam, McDonald's has struggled to adapt to the local culinary culture, resulting in limited success and a modest expansion of only 23 stores after a decade in operation Compared to its competitors, this performance is quite lackluster The brand primarily attracts children who enjoy junk food and young, adventurous individuals eager to experience foreign cuisine, yet this demographic has not translated into a strong overall reception.
From the above context, the authors decided to research about ’’WHICH WAY
To ensure stable consumption of McDonald's fast food products in the Vietnamese market, it is essential to explore the opportunities and challenges the brand faces during its operations and development in Vietnam This article includes a survey conducted with students in Ho Chi Minh City to gauge young people's perceptions of McDonald's The findings will provide insights that can guide businesses in adapting their strategies to meet consumer demands in Vietnam's highly competitive culinary landscape.
Research objectives
Evaluate how the factors "Price Perception", "Product Value", "Convenience",
Promotion, customer service, and brand image significantly influence McDonald's fast food product consumption These factors not only shape consumer preferences but also forecast trends in the fast food market As McDonald's continues to enhance its promotional strategies and customer service, it is likely to strengthen its brand image, leading to increased consumption and market share Looking ahead, the fast food industry is expected to evolve, with McDonald's poised to adapt and thrive in this dynamic environment.
- What factors will McDonald's fast food consumption be primarily influenced by?
- Evaluate the position of McDonald’s brand in the Vietnamese food market (compared to other fast food companies and Vietnamese cuisine).
- Provide solutions/dircctions in accordance with the current situation of the McDonald's brand in Vietnam.
Research Methodology
The primary research utilized quantitative methods, supplemented by qualitative approaches for scale design The sample consisted of students from years 1 to 4 residing in Ho Chi Minh City who had previously engaged with products and services at McDonald's.
Non-probability sampling - convenience sampling is used to collect survey samples The survey method involved questionnaires sent via email, messages, Facebook, etc., to the survey respondents.
For a study utilizing factor analysis, the recommended sample size is n = 5m, where m represents the number of questions—in this case, 35—resulting in a minimum requirement of 175 samples (Comrey et al., 1992) In contrast, structural equation modeling (SEM) typically necessitates a minimum sample size of N = 100 to 150 (Tabachnick and Fidell, 2001), with some researchers advocating for even larger sizes, such as N = 200 (Boomsma and Hoogland, 2001) Simulation studies indicate that a suitable sample size for a simple confirmatory factor analysis (CFA) model is approximately N = 150, provided that the indicator variables are well-distributed and there is no missing data (Muthén and Muthén, 2002) Given that the total sample size for this study is 207, it satisfies both the factor analysis and SEM requirements.
The survey was conducted using Google Forms to effectively gather the needs and opinions of respondents on the relevant issue Out of 220 total responses, 207 valid samples were analyzed as input data.
The data of the research article are processed according to the following methods:
• Survey and sampling method: Use convenient sampling methods by survey questionnaires to collect primary survey samples
• Descriptive statistical method: Used to describe and analyze the characteristics of the survey sample.
The literature review method involves utilizing credible research sources to formulate hypotheses and theories, while also comparing findings with related articles This approach ensures that readers receive an objective and detailed perspective on the topic at hand.
• Data analysis method: Using SPSS 20.0 software with the main analysis technique is the MLR multiple linear regression model.
Research content
The research subjects include factors affecting "McDonald's brand fast food consumption in Vietnam" are "Price Perception", "Product Value", "Convenience",
"Promotion", "Customer Service" and "Brand Image".
• Regarding the research content: research on "McDonald's brand fast food consumption in Vietnam" will be affected by the factors of "Price Perception",
"Product Value", "Convenience", "Promotion", "Customer Service" and
• Regarding the research space: Information was collected from 207 survey samples in Ho Chi Minh City
• Regarding the survey subjects: Individuals aged between 18 and 22 years old (students from year 1 to year 4).
• Regarding the research time: Data was collected in early February 2024, and the research process took place from December 1,2023, to February 17, 2024.
The practical significance of the research topic
As the economy and society evolve towards greater international integration, the demand for fast food in Vietnam is expected to rise, driven by the busy lifestyles and convenience-seeking preferences of young consumers To ensure its continued success in this competitive culinary market, McDonald's must adopt a culturally relevant strategy that aligns with Vietnam's dining culture This approach will not only help the brand maintain its position but also foster discussions that significantly contribute to the development of business strategies in the fast food sector.
The survey targeting university students offers valuable insights into the fast food consumption habits of Gen Z This demographic is at the forefront of emerging culinary trends and serves as the primary customer base for fast food chains Their preference for fast food is driven by its alignment with their tastes and its appeal as a trendy choice, especially in contrast to the perceptions of older generations.
Researching the factors that influence students' fast food choices, particularly at McDonald's, is crucial for understanding culinary trends in modern society By evaluating these influencing factors among the student demographic, the project aims to offer targeted solutions for fast food businesses, especially McDonald's outlets in Vietnam This approach will help align their products and services with the authentic lifestyle of Vietnamese consumers Ultimately, the goal is to shape a development plan that anticipates the evolution of national cuisine, providing a unique dining experience and strengthening McDonald’s market position in Vietnam for the future.
Structure of research
The research paper consists of 6 chapters with the following specific contents:
Chapter 3 : Analyzation of McDonald’s in Vietnam
Chapter 4: Implementing research survey (Research model, research methodology and research result)
Chapter 5: Forecast of the Vietnamese culinary market and managerical implications for McDonald's
Chapter 6 : Conclusions, limitations and future research direction
LITERATURE REVIEW
Market Theory
The market serves as a platform for the exchange of products, services, or currency, facilitating the fulfillment of supply and demand needs This dynamic process establishes the appropriate quantities and prices for various goods and services based on prevailing practices.
In political economy, the market is defined as the arena for buying and selling specific commodities, encompassing various sectors such as rice, coffee, stocks, and capital.
In economics, the market represents the competitive dynamics between buyers and sellers, influencing the prices, supply, and demand for goods and services at any given time and location This interaction is crucial for the allocation and utilization of society's limited resources Economists categorize markets into three main types: goods and services markets, labor markets, and money markets.
The market is fundamentally defined as the interaction between supply and demand, serving as a venue for the exchange of goods and services It encompasses a competitive relationship between buyers and sellers, which ultimately determines the price and quantity of goods traded This dynamic process relies on currency as a medium of exchange and is characterized by three essential elements: supply, demand, and price.
The market has 3 main functions:
• The function of recognizing the social uses of goods
The market serves as a platform for exchange and trade, where goods must have buyers to be considered valuable The ability to sell an item at a price that reflects its value indicates societal recognition of its usefulness and the labor invested in its production Conversely, if a product cannot be sold, it may be due to a lack of perceived utility or excessive production costs When goods are sold below their value, it suggests that while society acknowledges their utility, it does not fully recognize the associated production costs Ultimately, the market only accepts goods and services that fulfill consumer needs, rejecting those that are useless, low-quality, or unsuitable.
• The function of providing information to producers and consumers about commodity structure, price, quality
The market plays a crucial role in conveying fluctuations in social demand regarding the quantity, quality, type, structure, and price of goods It provides essential information about total supply and demand, the relationships between different goods, pricing, and factors influencing the market, including product quality requirements This information assists producers in determining which goods to supply, the appropriate quantities, and production costs Additionally, the market guides consumers in identifying products that fulfill their needs while aligning with their financial capabilities.
• The function of regulating, stimulating or restricting production and consumption activities
In a market economy, economic participants are governed by fundamental economic laws that dictate their actions Producers and consumers must adapt to market fluctuations based on available information, leading to increased production of high-demand products and reduced output of items with low consumption This dynamic interplay between supply, demand, and pricing regulates market activities, influencing production, circulation, and consumption within society.
A competitive market is characterized by a multitude of small buyers and sellers engaging in independent transactions, where no single entity significantly impacts pricing This type of market features various businesses offering similar products and services, prompting companies to enhance quality, services, and pricing strategies to attract customers and increase market share Consequently, no business can establish a monopoly or secure a competitive advantage in a truly competitive market.
In a competitive market, numerous sellers lead to each business or individual holding a minimal market share, which does not significantly influence the overall market To attract customers and increase their market share, businesses strive to enhance the quality, pricing, and variety of their products and services, thereby boosting their competitiveness.
In a competitive market where products are identical and serve as complete substitutes, the introduction of a unique and appealing product can disrupt the status quo This differentiation can lead to price changes and ultimately pave the way for the market to evolve into a monopoly.
In a competitive market, individuals and businesses have the freedom to buy and sell, allowing for active participation and the exchange of goods at prevailing prices This environment presents an opportunity for small businesses and startups to enter the market with minimal investment Additionally, businesses and individuals retain the right to exit the market when faced with challenges or intense competition.
In the coffee market, when the price is set at 15,000 VND/kg but growers aim to sell at 18,000 VND/kg, customers will seek alternatives, highlighting that all coffee sellers act as "price takers." The market price is determined objectively through the interplay of supply and demand.
2.1.5 Characteristics of the Vietnamese culinary market
Vietnam is a rapidly developing country with a high GDP growth rate, boasting a population of nearly 100 million, where 60% are young people With an average GDP of approximately $3,756 per person in 2021, Vietnam presents a significant market for foreign products Data from the European Commission indicates that Vietnamese consumers allocate a substantial portion of their income to food, with 78% spent on roadside goods and traditional markets, while only 1% is directed towards fast food outlets The food service sector in Vietnam comprises over 540,000 establishments, including more than 430,000 street vendors and small local shops, along with 80,000 stores offering dine-in, take-out, or online ordering options Additionally, there are 22,000 bars and cafes, and 7,000 stores affiliated with fast food chains.
- Sociability - diversity: Vietnam has rich sources of food, crops, and livestock stretching from the North to the South, thereby creating local specialties.
Vietnamese cuisine is characterized by its rich combination of diverse ingredients and flavors, featuring a harmonious blend of meats, seafood like shrimp and crab, alongside fresh vegetables, beans, and rice This culinary tradition showcases a vibrant array of tastes, including sour, spicy, salty, sweet, and fatty, creating a unique and flavorful dining experience.
Renowned expert Philip Kotler has dubbed Vietnam the "kitchen of the world," highlighting the country's cuisine as both delicious and healthy With a diverse array of flavors and ingredients, Vietnamese food offers a delightful culinary experience at reasonable prices, making it accessible for both locals and tourists alike.
- Community: Every Vietnamese meal includes a common bowl of soup and dipping sauce placed in the middle of the table This shows the bond between those having a meal.
- Hospitality: Vietnamese people have a tradition of inviting older people to cat first When guests visit, Vietnamese people often show hospitality and communication by inviting them to join a meal.
Theory of Consumer Behavior
Consumer behavior is defined in many different ways, according to Bennett
Consumer behavior, as defined in 1988, refers to the interplay of various factors that affect cognition, behavior, and the environment, ultimately influencing decision-making This behavior is manifested through activities such as searching for, purchasing, using, and evaluating products and services to meet the needs of individuals or groups.
Kotler and Armstrong (2001) emphasize the importance of studying consumer behavior for businesses to comprehend customer needs and preferences This involves analyzing what consumers like, need, and wish to purchase, as well as understanding their brand choices and purchasing motivations By examining the how, where, when, and frequency of consumer purchases, businesses can develop effective marketing strategies that encourage consumers to select their products and services.
Therefore, consumer behavior can be understood as the reactions that individuals express during the decision-making process of purchasing goods and services to meet their needs.
According to Philip Kotler (2005), the customer purchasing process is influenced by a number of factors, such as: cultural, social, personal, and psychological.
Culture significantly impacts consumer buying decisions by shaping values, beliefs, traditions, and purchasing habits Customers often prioritize their purchases based on how well they align with cultural values, such as honoring traditional practices, preserving religious beliefs, and maintaining their lifestyle.
Society plays a crucial role in shaping customers' purchasing decisions, as it influences their beliefs, opinions, and buying habits When a product is deemed socially relevant or receives endorsement from influential figures, consumers are more likely to choose that product.
• Personal: Personal factors also influence customers' purchasing decisions
Customer purchasing decisions are influenced by various factors, including age, gender, income, needs, and preferences When a product aligns with a customer's specific needs and preferences, it increases the likelihood of a purchase.
Consumer psychology plays a crucial role in shaping buying decisions, as emotions, moods, needs, and attitudes significantly impact consumers' choices Products that evoke feelings of comfort, happiness, or satisfaction, and fulfill consumer desires, are more likely to lead to purchases.
Regarding the consumption behavior of fast food products in the Vietnamese market, Nguyen Huy Tuan and Mai Thi Hong Nhung (2019), Nguyen Thi Hong Nguyet
In 2020, it was highlighted that diversity in product offerings, ease of purchasing, promotional activities, and competitive pricing significantly influence the online fast food consumption behavior of consumers in Da Nang city.
M.Porter Theory
Michael Porter’s Five Forces Model, as highlighted by Harvard Business Review, is a framework designed to identify and analyze five competitive forces within any industry This model aids in recognizing the strengths and weaknesses of a sector by examining five key elements.
In today's competitive landscape, rivals include individuals, organizations, and businesses offering identical products at similar prices, targeting the same customer base while maintaining comparable quality standards.
2.3.2 Definition of Threat of new entrants
Potential competitors are businesses that will enter your field and market in the future.
Supplier bargaining power refers to the influence that suppliers of raw materials, components, labor, and services have over a company, especially when there are limited substitute inputs available This power can manifest in suppliers refusing to collaborate or imposing high prices for scarce resources, impacting the company's operational costs and profitability.
Customer power refers to the influence that final consumers, agents, and small businesses have in output markets, allowing them to exert pressure on companies This dynamic significantly impacts price sensitivity, as customers' preferences and demands can shape pricing strategies.
2.3.5 Definition of Threat of substitutes
The existence of products outside the common product boundary increases customers' tendency to switch to alternatives.
SWOT model definition
SWOT analysis is a crucial tool in strategic planning that evaluates a business's Strengths, Weaknesses, Opportunities, and Threats This method aids in identifying ways to leverage business opportunities while recognizing potential risks that may impact success By optimizing business strategies and performance, SWOT analysis supports the development of effective strategies by enhancing strengths and addressing weaknesses Despite its simplicity, it enables businesses to conduct a comprehensive assessment of their current position.
A SWOT analysis is a vital tool for businesses, enabling them to develop strategic plans that address both internal and external factors By assessing strengths, weaknesses, opportunities, and threats, companies can avoid costly mistakes and gain a clearer understanding of their situation This comprehensive framework not only highlights areas for improvement but also identifies opportunities to leverage strengths, ultimately leading to the formulation of effective strategies.
ANALYZATION OF MCDONALD S IN VIETNAM
Current status of McDonald's fast food in Vietnam
According to a Nielsen report, Vietnamese youth spend approximately 13 trillion VND monthly on snacks, highlighting their growing dietary needs This significant expenditure reflects the fast-paced lifestyles of young people in Vietnam, who often have limited time to prepare meals and thus prefer fast food and processed options.
Weekends are a popular time for consumers in Vietnam to indulge in food, as they have more leisure time for shopping, relaxation, and family gatherings Additionally, many well-known fast food restaurants are situated in shopping centers, leading to a higher frequency of fast food consumption during weekends compared to weekdays.
Usually, who to go with is categorize quite clearly by age group:
- 13-22 age group always go with a group of friends
- 23 - 30 age group, in addition to going with friends, also goes with their lovers
- Married age group often come with their families and children
Research indicates that fast food consumers rarely dine alone, highlighting the importance for food chains to consider age group differences when designing their restaurant spaces.
A survey published in "Science Magazine No 24 (February 2017)" by Nguyen Thi Minh Hai and Tran Quang Huy reveals that 63% of respondents typically spend between 30,000 VND and 70,000 VND per meal per person In contrast, only 10% are willing to pay over 100,000 VND for a single menu item Additionally, around 20% of participants reported spending between 70,000 VND and 100,000 VND per meal.
McDonald's and their fast food products
- In 2021, McDonald's was the leading quick-service restaurant chain with revenue of $23.2 billion Outstanding revenue is also a key point in the McDonalds SWOT model to promote McDonald's development.
- Approximately 42% (USD 9.78 billion ) of sales revenue is generated by company-operated restaurants.
- And 56% ($13.08 billion) by franchised restaurants in the form of fees from franchisees and development licenses.
- The remaining 2% ($351 million) of revenue is allocated to other categories (technology fees, brand licensing agreements).
McDonald's logo is renowned for its simplicity and recognizability, featuring carefully chosen colors and typography The iconic "Golden Arches" are a standout element, making the brand instantly identifiable to customers worldwide.
Arches " Yellow, is the most visible color in daylight, that’s why we can see
• Product packaging: create a modem, fun experience for customers' meals through packaging images, created based on the color system corresponding to each dish on the McDonald’s menu.
The website has adopted a simplified identity by eliminating numerous fonts and introducing Speedee, a new typeface that is designed to be friendly, dynamic, and easy to read.
• Level of customer interaction on social networks: McDonald's average search result on Google Search is about 756,000,000 results (0.40 seconds)
• “Happy meal”: Children's meal with seasonal toys to create excitement and attract customers.
Analysis of M.Porter model
Vietnam's fast food industry is rapidly growing due to urbanization and economic development, attracting global brands This expansion presents both opportunities and challenges for McDonald's as it seeks to establish a strong presence in the market To succeed, McDonald's must compete with established rivals like KFC, Lotteria, and Jollibee.
KFC, or Kentucky Fried Chicken, is a globally recognized fast-food chain under Yum Brands Inc, specializing in fried and grilled chicken along with a variety of fresh chicken sandwiches and side dishes Since its launch in Vietnam in 1997, KFC has expanded to over 140 locations across more than 21 major provinces and cities in the country.
• Lotteria: is a fast food chain from Korea and currently present in Vietnam
Lotteria Vietnam, a leading fast-food brand, was established on December 9, 1998, in Ho Chi Minh City and has since expanded to over 30 provinces, including major cities like Hanoi and Da Nang Today, Lotteria boasts more than 210 stores nationwide, making it one of the most popular choices among consumers in Vietnam.
Founded in the Philippines in 1975, Jollibee made its debut in Vietnam in 2005 and rapidly gained popularity as a leading fast food brand With over 100 locations across major cities like Hanoi, Ho Chi Minh City, Da Nang, and Can Tho, Jollibee has become a favorite among Vietnamese consumers, known for its vibrant atmosphere, friendly staff, and efficient service.
In the case of McDonald's, to evaluate potential competitive threats, it is necessary to focus on analyzing two factors: Industry attractiveness and industry entry harriers.
The fast food industry in Vietnam has shown remarkable growth, with revenue reaching approximately 35.2 billion USD in 2019, marking a 14% increase from the previous year, according to Euromonitor International Fast food alone captured around 60% of the market share, totaling about 21 billion USD This upward trend is expected to continue, indicating significant business potential in the sector.
As Vietnam's economy continues to grow, consumer demand is on the rise, particularly in the fast food sector This industry captures a significant market share by offering convenience and quick meal options that cater to busy lifestyles Additionally, the variety of choices available in fast food has led to a growing acceptance of its flavors among consumers.
The fast food industry in Vietnam is rapidly growing, yet it remains dominated by a limited number of businesses that adopt a model similar to McDonald’s, resulting in minimal competition.
4 foreign giants (KFC - Lotteria - Jollibee - McDonald’s), so the advantages of joining the industry are highly appreciated by experts and will show signs of increasing year by year.
• Industry entry barriers (including 3 factors)
High capital costs pose a significant challenge for companies in the food service industry, as substantial investment in equipment, factories, machinery, and labor is essential for success Without adequate financial resources, these businesses may struggle to compete effectively and establish a strong brand presence in a highly competitive market.
Building and developing a strong brand presents a significant challenge for companies in this industry, as it requires substantial financial investment and time dedicated to marketing, promotion, and reputation management.
In today's market, customer diversity and the ease of switching between options compel companies to prioritize unique value propositions and superior products or services To retain existing customers and attract new ones, businesses must navigate a highly competitive landscape, driving them to invest significantly in research and development as well as enhancements to their offerings.
McDonald's sustainable supply chain plays a crucial role in the company's success as a leading global fast food brand, particularly through its focus on raw material suppliers By prioritizing sustainable sourcing practices, McDonald's ensures that its supply chain not only meets customer demands but also supports environmental and social responsibility This commitment to sustainability in raw material procurement enhances brand reputation and fosters long-term partnerships with suppliers, ultimately contributing to the overall effectiveness of McDonald's operations.
To become a raw material supplier for McDonald's, partners must adhere to the "Supplier Code of Conduct," which outlines standards for quality working conditions, environmental impact, business ethics, and human rights McDonald's enforces these standards through biannual inspections and unannounced visits to suppliers, while also closely monitoring the farming processes to ensure compliance.
McDonald's Canada leads the way in responsible sourcing by using 100% beef from GRSB Guiding Principles certified sources Additionally, in 2012, the company achieved a significant milestone by ensuring that all of its whitefish supplies were certified sustainable by the Marine Stewardship Council (MSC).
Mr Nguyen Huy Thinh, Director of McDonald's Vietnam, revealed that the company imports chicken from Thailand and Malaysia, beef from Australia, and pork and potatoes from the United States, while sourcing bread and vegetables locally Despite a commitment to avoid imports from China, the localization of Vietnamese ingredients remains low due to inconsistent product quality and inadequate supply capabilities among local suppliers This reliance on imports has resulted in increased transportation costs, making meals at McDonald's more expensive compared to competitors like KFC and Jollibee.
In addition to raw material costs, businesses must consider expenses such as premises, advertising, and staff salaries Ms Hoang Nguyet Minh, Senior Director of Savills Hanoi Commercial Leasing Department, emphasizes that food and beverage (F&B) units invest heavily in initial capital for kitchen systems and customer experience This focus on prime locations in central districts of Hanoi and Ho Chi Minh City has resulted in "Western prices" prevailing in the local market.
SWOT model of business
McDonald's unparalleled brand value stands as its greatest strength, recognized globally for its reputation and extensive network In the "Best Global Brands 2022 - Top 100" list by Interbrand, McDonald's achieved an impressive 11th place, solidifying its status as the most valuable brand in the fast food sector This recognition enhances the perceived value of its offerings among consumers Additionally, with over 40,000 locations in 120 countries, McDonald's generated significant excitement upon its entry into the Vietnamese market.
McDonald's caters to the agile lifestyle of young consumers in Vietnam by integrating into the dynamic market As a leader in the fast food industry, the company effectively designs promotions that resonate with the psychology of youth Fast food favorites like fried chicken and French fries are beloved by children, and the enticing gifts from the Happy Meal program have significantly drawn in families, marking a breakthrough in business strategy.
McDonald's food is renowned for its high hygiene standards, delicious flavors, and appealing presentation, which solidifies its unique position among fast food brands and keeps it favored by diners.
Despite the global expansion of fast food chains, brands like KFC, Lotteria, and McDonald's have struggled in the Vietnamese market McDonald's, in particular, had an ambitious plan to open 100 stores, believing that Vietnam's population of 100 million presented a significant opportunity However, after four years, the chain has only managed to establish 17 locations in the country.
23 stores by 2022 McDonald's development path has no breakthroughs because:
McDonald's entered the Vietnamese market in 2014 with limited research on local customer preferences, initially attracting a strong response from children and young people However, over time, many customers began to overlook the brand due to its offerings of greasy fast food, which contrasted sharply with the nutritious and healthy traditional Vietnamese cuisine As a result, while McDonald's remains a prominent player in the fast food industry, it has not gained universal acceptance across all age groups, primarily appealing to children and teenagers, particularly Gen Z, who are more adaptable to innovation.
McDonald's faces a significant challenge in the Vietnamese market due to the convenience and accessibility of local street food, which Chef Gordon Ramsay likened to a "matrix" where food is readily available on every corner Traditional Vietnamese dishes like banh mi, pho, and vermicelli are not only served quickly but also provide essential nutrition and lasting satisfaction This creates pressure on fast food chains, as McDonald's locations are often found in upscale areas with long wait times, leading consumers to view them as less convenient options Consequently, these establishments are increasingly perceived by Vietnamese customers as places for casual dining and social gatherings rather than quick meals.
McDonald's faced challenges in Vietnam by implementing a "Western prices in our market" strategy, leading to higher prices for items like fried chicken and hamburgers compared to local cuisine This pricing strategy has become a significant barrier for Vietnamese consumers, with a Big Mac costing around $5 (approximately 115-120 thousand VND), which many view as excessive for the nutritional value offered Consequently, many Vietnamese customers prefer more affordable and culturally relevant options, such as a bowl of pho for just 45 thousand VND.
Vietnam's economy is showing positive growth, leading to improved living standards and rising incomes for workers According to the General Statistics Office of Vietnam, the average monthly salary for employees reached 7.4 million VND in the first half of 2022, reflecting an increase of approximately 417,000 VND from the same period in 2021 As high-income consumers emerge, their willingness to spend on diverse and quality products and services increases McDonald's can capitalize on this trend by enhancing its services and updating its menu to cater to the varied preferences of customers.
The fast food market in Vietnam presents significant growth potential, with recent developments indicating a promising opportunity for expansion According to VF Franchise Consulting, the sector has only started to flourish in recent years, especially when compared to neighboring countries like Thailand, the Philippines, and Indonesia, which boast 3-4 times more fast food brands This disparity highlights the long-term prospects for growth in Vietnam Furthermore, international franchisors have recognized Vietnam's effective management of the economic and health challenges posed by Covid-19, sparking interest in entering the market This positive trend bodes well for McDonald's as it seeks to expand its presence in Vietnam.
The growth of ordering and delivery applications has significantly boosted Vietnam's fast food market, particularly benefiting brands like McDonald's This online ordering model streamlines the ordering and delivery process, ensuring a quick and convenient shopping experience for customers Additionally, by analyzing data from online orders, McDonald's gains valuable insights into customer preferences and trends, enabling them to tailor their menus and marketing strategies effectively.
The primary challenge lies in the stark contrast between McDonald's offerings and the rich culinary identity of Vietnam With its deep-rooted traditions and diverse culinary styles, Vietnam boasts a vibrant food culture developed over many years As a result, McDonald's must navigate the complexities of appealing to Vietnamese consumers who hold their beloved culinary values and characteristics in high regard.
Vietnamese cuisine is characterized by its diverse nutrient groups and flavors, presenting a significant challenge for McDonald's, a brand known for its meat-heavy fast food menu The emphasis on low-fat ingredients in traditional Vietnamese dishes complicates McDonald's efforts to grow in this market, particularly with products like hamburgers, necessitating an adaptation to the local culinary culture.
The second challenge that McDonald's faces in the Vietnamese market comes from fierce competition with local food stores Traditional dishes such as "pho" and
Banh mi has captivated the hearts of Vietnamese people for centuries, serving as more than just a meal but as a vital aspect of social culture In this competitive landscape, McDonald's faces the challenge of directly competing with these beloved local brands while striving to earn and surpass consumer trust and affection for their offerings.
McDonald's faces significant challenges in the Vietnamese market, but with dedication and effort, it has the potential to integrate into Vietnamese culinary culture To succeed, McDonald's must understand local markets, respect cultural traditions, and align its social values with business interests.
IMPLEMENTING RESEARCH SURVEY (RESEARCH MODEL,
Research related to the topic
Research indicates that studies on the factors influencing fast food consumption, particularly McDonald's, predominantly utilize a mixed-methods approach, combining quantitative techniques like direct or online surveys with qualitative methods such as in-depth interviews to understand customer behavior (Nguyen and Tran, 2017; Tran et al., 2021; Ha, 2018; Le and Nguyen, 2019; Ergin and Akbay, 2014) To enhance the accuracy and practicality of their findings, these studies employ a 5-point Likert scale, assess scale reliability through Cronbach's Alpha, and conduct exploratory factor analysis (EFA), alongside constructing a correlation matrix and developing multi-parameter linear regression models (Ramzan Sama, 2019).
Empirical studies examining the factors influencing fast food consumption, particularly at McDonald's, highlight key variables such as price, product offerings, location, promotion, convenience, and service quality Research indicates that consumption habits and awareness of healthy nutritional values also play a significant role Notably, data has been gathered from various locations, including Can Tho City and Long Xuyen City in Vietnam, as well as studies conducted in India, providing a diverse perspective on consumer behavior in the fast food sector.
2014) and Turkey ( Ergin and Akbay, 2014),
Research indicates that factors such as price, product value, store convenience, and home delivery positively influence food consumption, particularly fast food Nguyen and Tran (2017) found that despite health concerns, consumers opt for fast food due to its convenience and appealing taste, with 79% of participants affirming this preference The study also noted that fast food consumption peaks during holidays and weekends Ha (2018) highlights that young people's eating habits in Ho Chi Minh City are heavily influenced by income and occupation, with price being a critical factor, suggesting that promotional strategies are essential Additionally, ensuring nutritional value and safe food processing aligns with the health-conscious trends among youth, while fast food outlets should be strategically located for visibility Tran et al (2021) emphasize the importance of a robust communication strategy to engage a broader audience beyond just Gen Z, while Ergin and Akbay (2014) assert that established brands like McDonald's foster consumer trust through their reputation.
Research indicates that factors like price, convenience, and store location significantly influence fast food consumption decisions; however, limitations remain For instance, Nguyen and Tran (2017) did not consider the cognitive aspects of consumer behavior, while Deepak and Sankaranarayanan (2014) highlighted spatial scope limitations in India’s diverse cultural landscape Similarly, Elgin and Akbay (2014) noted that studies conducted in developed Turkish cities may not be broadly applicable, suggesting a need to include smaller towns in future research Additionally, Ha (2018) and Ergin and Akbay (2014) argue that focusing solely on young people or university students can lead to unrepresentative findings Furthermore, the prevalent use of convenience sampling by researchers often results in low representativeness, limiting the generalizability of the results to the wider population.
Research model and research hypothesis
Research indicates that several key factors influence the decision to consume McDonald's fast food, including Price Perception, Product Value, Convenience, Promotion, Customer Service, and Brand Image.
Model of factors affecting the decision to consume McDonald’s fast food products:
In which: Y is the dependent factor, X are the independent factors, p coefficients are the regression coefficients and u is random error.
Figure 4.1 Model of factors affecting decision to consumption McDonald’s fast food of the young people in HCMC
(Source: author)Hl: The factor Price Perception negatively influences the decision to consume McDonald’s fast food.
Price plays a crucial role in customer satisfaction, as consumers often assess the quality of a service or product based on its cost (Al-Msallam, 2015) High dissatisfaction with pricing can lead to negative behaviors, including brand switching, while unreasonable social expectations regarding price can result in disappointment, decreased repurchase intentions, and negative word-of-mouth (Campbell, 1999) Research by Ti Bei and Ching Chiao (2001) highlights that perceived price fairness positively influences consumer loyalty, both directly and indirectly through enhanced satisfaction For customers, price represents a sacrifice made to obtain a product, and if they feel this sacrifice is unjustified, they may refrain from future purchases, regardless of their satisfaction with the product's quality.
H2: The factor Product Value positively influences the decision to consume McDonald’s fast food.
According to the study by authors Rongduo Liu, Zuzanna Pieniak, Wim Verbeke
A review conducted in 2013 highlighted that safety is the primary reason Chinese consumers choose safe food, followed by health, nutrition, and taste, while environmental concerns are deemed less significant Additionally, a 2017 study by Đồ Thị Hà Phương examined factors influencing consumers' willingness to pay for safe food in Thai Nguyen province, revealing that only 10% to 30% of consumers are willing to pay a premium compared to conventional foods This indicates that health, food safety, and consumer trust are the foremost concerns for these consumers.
H3: The factor Convenience positively influences the decision to consume McDonald’s fast food.
Convenience, initially defined in marketing theory by Copeland (1923) as a characteristic of convenience goods, aims to reduce the time and effort customers expend in purchasing products This concept highlights that time, opportunity, and effort are valuable resources, and enhancing convenience can justify higher prices for products and services (Etgar, 1978; Kelly, 1958; Koller and Zaltman, 1971) As customers cannot recover these resources once spent, the significance of service convenience becomes paramount, particularly in today’s competitive service sector, where it serves as a crucial factor in customer satisfaction Suppliers recognize the need to differentiate themselves without increasing costs, responding to both competitive pressures and customer demands A study by Elif Akagun Ergin et al (2014) found that among various factors influencing students' choices of fast food brands, convenience emerged as the most significant determinant.
H4: The factor Promotion positively influences the decision to consume McDonald’s fast food.
Promotions significantly impact brand equity, as highlighted by Rajagopal (2009) and Buu and Trang (2012) Aaker (1991) notes that promotions create positive signals for consumers, particularly those with lower incomes Fazal UR et al (2017) emphasize that promotional campaigns can quickly increase sales volume, while Peattie (1998) describes promotions as special offers designed to attract consumers According to Boddewyn and Leardi (1989), these marketing tools enhance the appeal of goods and services by providing additional benefits Researchers like Peattie and Peattie (1995) and Lehmann and Winer (2002) point out that promotions are often time-sensitive, aimed at encouraging consumers to spend more during specific events Ultimately, promotional campaigns seek to attract both current and potential customers, boosting immediate profit margins and influencing purchasing behavior (Ailawadi and Neslin, 1998).
H5: The factor Customer Service positvely influences the decision to consume McDonald’s fast food.
High service quality significantly influences customers' consumption decisions and fosters brand loyalty, as highlighted by various studies (Kim, 2013; Iskandar et al., 2015; Banjarnahor, 2017) According to Iskandar, Nurmalina, and Riani (2015), both product and service quality are crucial for retaining consumers, while poor service can lead to dissatisfaction and negative recommendations (Gilbert et al., 2004) Research by Qin and Prybutok (2009) indicates that food quality, perceived value, and service quality directly impact customer satisfaction and purchase intentions Furthermore, Saidani (2012) emphasizes that quality influences customer satisfaction and purchasing decisions, leading to repeat purchases and positive word-of-mouth (Anderson et al., 1994) Examples, such as Beef Head Meatballs and fast food chains, illustrate the correlation between service quality and customer purchase intentions (Hutama, 2013; Qin and Prybutok, 2008) Overall, it is evident that high service quality positively affects consumers' purchasing intentions.
H6: The factor Brand Image positively influences the decision to consume McDonald’s fast food.
Advertising plays a crucial role in enhancing brand equity by generating awareness and interest among consumers, as highlighted by Yoo (2000) and supported by Fatima and Lodhi's (2015) research on the cosmetic industry in Karachi Ehrenberg (1992) emphasizes that advertising not only raises awareness but also influences consumer purchasing behavior Often, consumers make purchasing decisions with minimal analysis, relying instead on the emotional responses elicited by advertisements (Aaker, Batra & Myers, 1992 & 1996; Bovee, 1986; Mitchell, 1993) This demonstrates the significant impact of advertising on consumer attitudes and behaviors.
Online advertising significantly impacts consumer purchasing behavior, serving as a vital communication tool between manufacturers and consumers (Akindele, 2020) According to Loudon and Bitta (1994), the decision-making process for spending typically involves five stages: problem recognition, information research, evaluation of alternatives, choices, and outcomes (Swenson, 1990; Maio, 2000) However, consumers often skip these stages, influenced by various advertisements encountered on television or through market posters (Loudon & Bitla, 1994; Tellis, 1987; Hansen & Gronholdt, 1987) Overall, advertising plays a crucial role in connecting consumers with products and brands, creating lasting impressions that facilitate informed purchasing decisions in the future (Mamata Shiva Shankar & Ambika c., 2023).
Research data collection
The authors collected data using the Google Form platform to design a questionnaire and participating students provided completely honest and voluntary assessments based on their experiences.
This research focuses on university students in Ho Chi Minh City, with participants aged between 18 and 21 years old, encompassing first-year to fourth-year students.
Data collection occurred from February 5 to February 10, 2024, utilizing questionnaire responses from surveyed subjects that were screened for suitability A total of 220 responses were gathered, and after thorough screening, 207 complete and valid results were retained.
Scale design
5-point Likert scale with increasing levels (from completely disagree to completely agree) Interpretation options: 1 Completely disagree; 2 Disagree; 3 Neutral;
4 Agree; 5 Completely agree Summarize the scale according to the two tables below.
Table 4.1 Summary of preliminary scales of independent variables
No Items Measurement items Source
1 PRIl McDonald's selling price is consistent with product quality.
Ha (2018); Nguyen and Mai (2019); Clever and Felix (2016); Nguyen el al (2022).
2 PRI2 McDonald's selling price is suitable for my income.
3 PR13 McDonald's selling price is higher than the
Vietnamese culinary market price (compared to the price of a bowl of pho).
4 PRI4 McDonald's selling price is higher than other fast food brands.
5 PRD1 McDonald's fast food is suitable for my taste.
6 PRD2 McDonald's fast food has a variety of options.
7 PRD3 McDonald's fast food ensures food hygiene and safety.
8 PRD4 McDonald's fast food has limited nutritional value.
9 PRD5 McDonald's fast food is more special in the way it is prepared than other brands.
10 CONI Consuming McDonald's fast food helps me save time.
Erg in and Akbay, (2014); Ha (2018); Nguyen and Mai (2019).
11 CON2 Consuming McDonald's fast food via the internet helps me get served quickly.
12 CON3 Consuming McDonald's fast food via the internet helps me easily find the products I need.
13 CON4 McDonald's has many diverse store systems, making it easy for me to choose a location.
14 PRO1 McDonald's regularly has attractive promotions and discounts.
15 PRO2 I often choose newly promoted products/combos.
16 PRO3 McDonald's promotional activities help me have a fun and enjoyable experience (for
(Source: Author compiled from quantitative research) example, McDonald's Happy Lunch combo)
17 PRO4 McDonald's promotional activities attract me and young consumers.
18 CS1 I receive enthusiastic and happy advice when consuming products at McDonald’s.
Clever, and Felix (2016); Afrin and Ramalingam
19 CS2 I receive attentive and quick service when consuming products at McDonald's.
20 CS3 I receive products that match the selection and appearance when consuming products at McDonald's.
21 BI1 McDonald's product promotional images on media are eye-catching and dynamic.
22 BI2 McDonald's communication plan is effective and hits young people hard.
23 BI3 McDonald's product promotional images attract me.
24 BI4 McDonald's image makes me feel safe because of its prestige and trust.
Table 4.2 Summary of preliminary scales of dependent variables
No Items Measurement Items Source
1 DCS1 I will choose to consume McDonald’s fast food products because they meet my expectations.
2 DCS2 I will choose to consume McDonald’s products when I need fast food.
3 DCS3 I will choose to consume McDonald's products instead of other fast food brands.
(Source: Author compiled from quantitative research)
Process and analyze data
The data processing and analysis steps are performed as follows:
1 Determine the sample size by choosing a convenience sampling method:
• n: sample size to be determined
• z a/2 : distribution table lookup value based on reliability
• p*: Proportion of successful sample size estimation
In this study, the authors selected p* = 0.5 to maximize the product p*(l-p*), ensuring the safety of the estimated sample They established an error margin of E = 0.08 and a confidence level of 95%, resulting in a calculated sample size of n = 150.0625 According to Hair et al (2006), for exploratory factor analysis (EFA), the sample size should be at least five times the number of observed variables With 27 observed variables in this study, the minimum required sample size is 135 Nguyen Dinh Tho (2011) further suggests maintaining a ratio of observed to measured variables at 5:1, with an optimal ratio of 10:1, indicating that the research model should include at least 135 to 270 participants.
To accurately estimate a parameter, a minimum of 10 samples is required, translating to approximately 135 to 270 observations Consequently, this study aims to gather around 220 survey responses to ensure a robust database for analysis, accounting for potential shortages, losses, and dishonest answers.
2 Collect data by survey during the period from February 5,2024 to February 10,
2024 with survey subjects being students in Ho Chi Minh City who have been using McDonald's fast food Summarizing the survey, 220 samples were collected and 96.7% of sample answers were valid.
3 Data analysis must be guaranteed to be comprehensive and reliable Data collected from the survey through SPSS 20.0 software to determine reliability using Cronbach's Alpha coefficient and eliminate unobserved variables.
4 Use the EFA exploratory factor analysis method to reduce a set of k observed variables into a set F (F