Antecedents and consequences of status consumption

The author uses research methods in marketing with an expectation of at first, investigating the influence of following factors: collectivism, individualism, and materialism on the consu

UNIVERSITY OF ECONOMICS HO CHI MINH CITY

International School of Business

-

Vo Thi Thu Trang

ANTECEDENTS AND CONSEQUENCES

OF STATUS CONSUMPTION:

EVIDENCE FROM VIETNAM

MASTER OF BUSINESS (Honours)

Ho Chi Minh City - Year 2014

UNIVERSITY OF ECONOMICS HO CHI MINH CITY

International School of Business

-

Vo Thi Thu Trang

ANTECEDENTS AND CONSEQUENCES

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CONTENTS

ABBREVIATION 5

ACKNOWLEDGEMENT 6

ABSTRACT 7

CHAPTER 1 - INTRODUCTION 8

1.1 Background to the research 8

1.2 Research problem 9

1.3 Research objectives 12

1.4 Methodology 13

1.5 Research Structure 13

1.6 Research scope 14

CHAPTER 2 - LITERATURE REVIEW AND HYPOTHESES 15

2.1 Literature review 15

2.1.1 Collectivism and Individualism 15

2.1.2 Materialism 17

2.1.3 Status Consumption 18

2.1.4 Life satisfaction 19

2.2 Research hypotheses 19

2.3 Conceptual model 23

2.4 Summary 24

CHAPTER 3 - METHODOLOGY 25

3.1 Research design 25

3.1.1 Research process 25

3.1.2 Measurement scales 26

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3.2 Measurement refinement 29

3.3 The quantitative study 30

3.3.1 Sampling and data collection 30

3.3.2 Data analysis 30

3.4 Summary 30

CHAPTER 4 - DATA ANALYSIS AND RESULTS 32

4.1 Data collection 32

4.2 Respondents’ demographics 32

4.3 Descriptive statistic 34

4.4 Confirmatory factor analysis (CFA) 34

4.4.1 CFA for the first-order constructs 35

4.4.2 CFA for second-order construct 39

4.4.3 CFA for the final measurement model 40

4.5 Structural equation modeling (SEM) 44

4.6 Bootstrap method 47

4.7 Discussion 48

4.8 Summary 53

CHAPTER 5 CONCLUSION, IMPLICATIONS, AND LIMITATION 55

5.1 Conclusions about hypotheses and research problem 56

5.2 Implications for theory and managerial implications 60

5.3 Limitations and further research 62

REFERENCES 64

APPENDICES 69

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LIST OF FIGURES

Figure 1.1 Population Pyramid of Vietnam 11

Figure 2.1 Conceptual model 23

Figure 3.1 Research process 26

Figure 4.1 CFA model of collectivism 36

Figure 4.2 CFA model of individualism 36

Figure 4.3 CFA model of life satisfaction 37

Figure 4.4 CFA model of status consumption 37

Figure 4.5 CFA model of materialism 39

Figure 4.6 Final measurement model 43

Figure 4.7 Structural results (standardized estimates) 45

LIST OF TABLES Table 4.1 Source of data collection 32

Table 4.2 Respondents’ characteristics 33

Table 4.3 Descriptive statistic: Eliminated items 34

Table 4.4 Summarized of pvc and pc (first order constructs) 38

Table 4.5 Summarized of pvc and pc (second order construct) 40

Table 4.6 Correlations (of Materialism) 40

Table 4.7 Summary of pvc and pc (final measurement model) 41

Table 4.8 Correlations (final measurement model) 42

Table 4.9 CFA Summary of eliminated item 42

Table 4.10 Unstandardized structural paths 44

Table 4.11 Measurement validation 46

Table 4.12 Regression Weights (bootstrap standard errors) 47

Table 4.13 Removed items 53

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LIST OF APPENDICES

Appendix A List of in-depth interviews’ participants 69

Appendix B In-depth Interview’ refinement measurement scale 69

Appendix C Questionnaire (English Version) 73

Appendix D Questionnaire (Vietnamese Version) 78

Appendix E Descriptive statistics 83

Appendix F Summarized results of Confirmatory factor analysis 84

Appendix G Standardized Regression Weights (Final measurement model) 89

Appendix H Final measurement scales 90

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ABBREVIATION

CIEM Central Institute for Economic Management

GSO General statistics Office of Vietnam

MOIT Ministry of industry and trade of the socialist republic of Vietnam

RS Gross retail sales of goods and services

SPSS Statistical Package for the Social Sciences

VAMA Vietnam Automobile Manufacturers' Association

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ACKNOWLEDGEMENT

At first, I would like to express my deep gratitude to my supervisor Dr Nguyen Thi Mai Trang for her professional guidance, dedicated support, valuable suggestions, instructions, and encouragements during the time of doing my research

Secondly, I would like to express my appreciation to Prof Nguyen Dong Phong, Prof Nguyen Dinh Tho, Dr Tran Ha Minh Quan, Dr Nguyen Phong Nguyen, and Dr Tran Phuong Thao for their valuable time as the members of the ISB research committee Their comments and meaningful suggestions are significantly contributed to this research completion

Finally yet importantly, my sincere thanks are given to all of my teachers at International Business School – University of Economics Ho Chi Minh City for their teaching and guidance during my Master course

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ABSTRACT

In the Vietnam context after Doimoi, Vietnam was one of the TEs nations strongly affected by culture transitions, young population, economic and population growth The author uses research methods in marketing with an expectation of at first, investigating the influence of following factors: collectivism, individualism, and materialism on the consumption behavior – status consumption and the life satisfaction; secondly, strengthening evidence in Vietnam; thirdly, pointing out useful practical and managerial implications, which support the nation and enterprises to understand consumers’ needs Using the data collection of 427 respondents, the author found that life satisfaction is motivated by status consumption, which is motivated by collectivism, individualism, and materialism Furthermore, the results indicated that collectivism and individualism have a positive influence on materialism and coexist in Vietnamese consumers These findings suggest that the companies should carefully consider the culture elements of their products

or services, in order to segment the customers and to plan an adequate strategy Besides, the policy markers should state out the policies, which based on the real demand of status consumption in Vietnam market, in order to increase the life satisfaction of their citizens

Key words: status consumption, collectivism, individualism, materialism, life satisfaction

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CHAPTER 1 - INTRODUCTION 1.1 Background to the research

From Doimoi (Economic Renovation) policy of government in 1986, the new components of economy have formed Hence, the role of organizations and individuals in providing goods and service is continuously developing The open-door policy attracts huge amount of investment from another developed country (Central Institute for Economic Management, 2012) The new economic reformation in Vietnam has dramatically changed the retailing industry A retail sale of goods and services is an important indicator of GDP and is the motivation of Vietnam economy This indicator also reflects the consumption capability of domestic customers Along with economic reformation, in 2008, Vietnam became a lower-middle-income economy and retail sales index rapidly grew up from 0.7 bill VND in 1985 to 2325 bill VND in 2012 (General Statistic Office of Vietnam, 2012) Total retailed sales of consumer goods and services in the first nine months of 2014 rose by 11.1% from the same period in 2013 If the factor of inflation was excluded, it would be 6.2%

Totally, retailed sales of goods went up by 10.7%, accommodation and catering services by 11.9%, traveling service by 17.4% (General Statistic Office of Vietnam, 2014) and other services by 12.5% This was resulted from many factors, such as the increase in population (up to 1% per year), the young population of "golden age", the growing proportion of middle class, government open-door policies, the increasing of foreign investments, and social exchange resulting in social-psychology shift on consumer values, attitudes and behaviors (Ph ng Dung, 2013) In depth, some of these change values are materialism, self-perception (individualistic self and collectivistic self), sense of life satisfaction, and status consumption

Many studies, which are related to materialism, have been investigated all over the world, essentially the relationship between materialism and consumption behavior; the differences of materialism either between collectivistic culture and individualistic culture;

or between various demographic variables (age, gender, generation, etc.) (Flynn et al., 2013; Otero-Lopez et al., 2011; Olivia et al., 2012; Sharma, 2011…) Among consumption behaviors, previous studies explore the impact of materialism on compulsive consumption

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(Rasool et al., 2012; Xu, 2008); consumer involvement (Browne & Kaldenberg, 1997); consumer ethic (Olivia et al., 2012); addictive buying (Otero-Lopez et al., 2011); value consciousness (Sharma, 2011); brand engagement (Flynn et al., 2013)

As defined by Richins and Dawson (as cited in Richins, 2004), materialism is an over design for material goods and includes three components: success, centrality, and happiness The cultural differences of materialism have been researched by various economists Watchravesringkan (2012) points out the dissimilarity of materialism in many countries The exploration of United State-individualistic culture displays higher degree of overall materialism than Thailand-collectivist culture does, he concludes that American participants tend to regard materialism as a sign of success and central to their lives more often than their Thai counterparts do while participants from both cultures tend to view materialism as the pursuit of happiness In like manner, Ogden and Cheng (2011) points out that a high individualism (low collectivism) score is associated with a high materialism level and the Chinese are likely more interested in acquiring possessions to display wealth (MAT-success dimension) and to find happiness (MAT-pursuit of happiness dimension) than the Canadians In addition to this, many researches about the effects of MAT on

children and adolescents are progressed due to an apparent shift in social value orientation

in Asian countries such as Hong Kong, China, Singapore, and Thailand (Chan, 2003; Chang

& Wang, 2006; Durvasula & Lysonski, 2010; Ferle & Chang, 2008) The same as MAT, many studies are interested in status consumption and life satisfaction especially in transitional economies (TEs), due to their potential markets

1.2 Research problem

In the past, Vietnamese could have happy life without paying attention on material values However, in 21st century, Vietnam is a country which undergoing rapid change The rate of population in urban and rural has significant changed from 19/81 in 1986 to 32/68 in

2013, which causes tangible and intangible shifts in economy Likewise, average monthly earning of wageworkers has rapidly increased from 206 (000s VND) in 1995 to 4335 (000s VND) in 2014 Especially in urban area, the shifts of average monthly earning is from 452 (000s VND) in 1995 up to 5119 (000s VND) in 2014 In 2012, about 47.5 percent of the

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population in Vietnam is younger than 30 years old and 29.3 percent in the group age from

30 to 50 years old (General Statistic Office of Vietnam, 2014) In 2014, according to the population pyramid in Figure 1.1, which illustrates the age and sex structure of a Vietnam's population in 2014, the rate of population younger than 30 years old is 50.7 percent and the rate of group age from 30 to 50 years old is 29.3 percent (The world factbook, 2014) These statistic numbers may provide deep insights about political, social stability, and economic development, as well as an evidence of high potential market The younger tend to be more sensitive to status products or brand names, and they like to talk about their consumption experiences: what kind of status products they used, how these products look like, what its utilization is Additionally, Vietnam has undergone the rapid economic development over recent years, which results in the different lifestyle of the young Vietnamese from those of their parents and grandparents In consequence, it may lead to the more important role of material possessions to many people A study of Nguyen (2012) shows that Vietnamese consumers’ judgment of overall life satisfaction is significantly explained by “defining success”, “acquisition centrality” and gender Perhaps, the same as what happened with China, under the effects of globalization of business and telecommunication and the shift of Vietnam to a more free-market economy, Vietnam’s values are beginning to change (Ogden

& Cheng, 2011) Furthermore, according to market survey of Taylor Nelson (TNS) the typical group people, who afford to purchase luxury and expensive products, are in the group age of 35-54 years old (40%) and have income per month higher than 8.5 million

VND (S c hút th tr ng “hàng hi u” t i Vi t Nam, 2013) Thus, the researcher consider

the group age below 30 years old and high-income group of people from 30 to 50 years old

as potential customers of status consumption field

As mentioned above, retail sales index grow up rapidly in 2012 and keep rising up to

2014 with the increasing rate of 11.1% In July 2014, quantity of less than 9-seats used car are imported into Vietnam’s market with an increment of about 45 percent compared with those from previous year (Ministry of Industry and Trade, 2014) All of well-known luxury car brand such as Lexus, Rolls-Royce, Bentley, and Lamborghini… or high-class sport cars like Mercedes-Benz, Porsche, and Audi… report a stable development in yearly financial

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statement with rate of increasing about 10-15 percent per month Vietnam Automobile Manufacturers' Association predicts that the volume of car would be sold in 2014 is about

120,000; there is an increase of 9% compared with 2013 (2014 auto sales likely to rise 9%

year on year, 2014) According to the reports of Ministry of Industry and Trade of the Socialist republic of Vietnam, under the controlled imported goods, which include luxury goods, gems, jewelry, mobile, cars… in eight beginning months of 2014 are 3.77 (billion USD) (increase 12% compared with previous year) (Ministry of Industry and Trade, 2014) Especially, the first-seven-month import turnover of gems and rare metal was 348.61 million USD, which rises up to 30.21 percent Hence, Vietnam market is a potential market for status products, despite the difficult period of economy

Figure 1.1 Population Pyramid of Vietnam

Source: The world factbook, 2014

In general, customer behavior is a driver of many consuming decisions For marketers, a better understanding of how and why people value their possessions would enable them to serve customers in a better way and a good marketing mix management helps them maximize value of the customer while provide profit to the firm Up to present

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time, although many researches have been investigated in both Western and Asian countries, very few studies explore the perceptions of consumers in Vietnam in terms of the self-perception (collectivism, individualism), materialism, status consumption, life satisfaction, and their mutual relationship; and they mostly show these concepts separately (Nguyen, 2012; Nguyen & Tambyah, 2011; Truong, 2014) Accordingly, this study attempts to expand the understanding in customer behavior field through examining the mutual impacts of self-perceptions, materialism, and status consumption on life satisfaction

in Vietnam market The paper also investigate the relationship between two domains of perceptions (adopted from Singelis 1994 & Singelis et al., as cited in Nguyen & Tambyah, 2011), and three domains of materialism as developed by Richins & Dawson (as cited by Richins, 2004) separately in combination with status consumption, life satisfaction in

self-general, and with several domains of life In addition, it contributes a richer understanding

of internal and external effects on consumer behavior in TEs market, especially those related to consumption for the sake of status

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1.4 Methodology

In this research, two phases of study are undertaken: a qualitative study and a quantitative study The questionnaire is translated from English into Vietnamese Through qualitative study, in-depth interviews with six people are conducted in order to modify and revise all observations and to make the improvement for the official questionnaire In the quantitative study, the author collects data and tests the measurement models and structural models

Due to limited time, the researcher uses a convenient sampling approach The method of self-administered survey is employed in this study In order to obtain a sample size of about 300, both indirectly method via electronic mail and Google surveys and directly one via hard copies are used to deliver 550 questionnaires to participants SPSS 20 and Amos 20 are used to test the model The researcher uses CFA in order to test the reliability and validity Then, SEM is used to test the hypothesized model

Chapter 2: Literature Review and Hypotheses

In this chapter, the author reviews the conceptual/theoretical dimensions of the literature and presents the fundamental ideas about: self-perceptions (collectivism and individualism), materialism, status consumption, and life satisfaction Based on the literature review and research problems, this chapter also describes research model and proposed hypotheses

Chapter 3: Methodology

This chapter introduces research design, research methodology, and the process of doing the research to test the hypotheses

Chapter 4: Research Results

Chapter 4 is designed to present patterns of results and to analyse them for their relevance to the research questions or hypotheses

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Chapter 5: Conclusions, Implications and Limitations

The last chapter remarks conclusions about research hypotheses, conclusions about the research problems, implications for theory, implications for policies and practices Accordingly, the limitations are presented to lead to further research

1.6 Research scope

The findings suggest that current theoretical models tested in developed markets need

considerable modifications when applied in emerging markets context Therefore, further researches are required to develop a congruent framework in developing market contexts In order to collect data from participants in Ho Chi Minh City, the method of self-administered survey with the convenience sampling approach was employed for this study However, the rate of Vietnam’s population in urban and rural is 32/68 in 2013, which means that not only urban area, such as Ho Chi Minh City, Hanoi Capital, Da Nang City… but also rural area can be the potential markets for consumption, especially for consumption based on the expectation of improving social standing Thus, status consumption’s prevalence should be noticed in all areas of Vietnam with wider scope of research and larger sample size The convenience sampling which was applied in this research was non-probability sampling To increase the generality of sample, the author should consider the probability sampling in future researches

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CHAPTER 2 - LITERATURE REVIEW AND HYPOTHESES

This chapter mainly introduces the theories, which are proposed by many scholars in academic field and are related to all the concepts and research model Firstly, the author introduces the definition of collectivism, individualism, materialism, status consumption, and life satisfaction in sequence Next, the previous research of these concepts and their related discussion are mentioned Finally, based on these theories and the relation of previous research, the hypotheses of relationship among these constructs and a conceptual model are proposed

2.1 Literature review

2.1.1 Collectivism and Individualism

O’Cass and Frost (as cited in Nguyen & Tambyah, 2011) note that different perceptions influent to purchase behaviors and help explain how and why consumers use products to communicate their image to others Nguyen and Tambyah (2011) display Singelis’s argument that two aspects of the self: the independent self and the interdependent self, which have also been called the individualistic and collectivistic self-concepts, can and

self-do coexist in individuals

Geert Hofstede, who had a notable work in culture dimension theory, indicates that individualism is the concept in which a person conceives him or herself as being separate, autonomous, and distinct from others, whereby individuals consider his or her interests more important than those of the group The individualistic culture orientation is toward oneself and internal attributes In an individualist culture, an individual expresses the independence through acquisition possessions, such as style choices and indicators of success such as the quantity and quality of one’s possessions The collectivist individual, on the other hand, has a lower need for individual recognition Success for the collectivist is measured by group success; individuals show a lower tendency to stand out from the group Thus, high individualism scores are associated with high materialism both overall and in all its components (Ogden & Cheng, 2011)

Western cultures such as the United States tend to be more individualistic, whereas Asian cultures tend to be more collectivistic (Singelis et al., as cited in Le & Stockdale,

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2005) In general, the most apparent difference between Western and Eastern cultures is the influence of the social expectation on individual development Matsumoto and Kupperbusch (as cited in Lee et al., 2010) state that, Western (individualistic) cultures tend to emphasize independent relationships, personal goals, autonomy, and individual competence and Eastern (collectivistic) cultures, on the other hand, tend to emphasize interdependent relationships, group goals, group cohesion, and community cooperation These two cultural orientations could influence the developmental process of individuation (Le & Stockdale, 2005)

Although individualism embraces the attitude of autonomy while collectivism highlights the idea of conformity, most cultures and societies still value some balances of both autonomy and conformity, though they may prioritize them differently (Lee et al, 2010) Moreover, in this era of globalization it is hard to conceive that individuals in highly populated urban areas can be exclusively classified as either collectivistic or individualistic Therefore, Lee et al (2010) suggest that it is more accurate to assess each individual’s cultural value orientation directly rather than to assume that everyone has the same cultural value orientation based on his or her regional residency Given the typical sample sizes and convenience samples conducted by most researchers, Menon (2004) points out common inconsistent results that even if one country scores high on a particular dimension, there could be a wide variation at the individual level He also alerts to the possibility of within country differences

Vietnam is considered a fairly collectivist culture Because of Confucian roots, Vietnamese culture as some other Asian culture is strongly orientated around family and community Family comes before oneself Therefore, the Vietnamese tend to value the group rather than the individual To bring pride to one’s family or community is the ultimate goal However, due to the economic transition, it has been suggested that varying levels of individualism and collectivism could coexist in Vietnamese consumers (Nguyen & Tambyah, 2011) As managers from Western countries come to countries with Asian cultures, such as Vietnam, in order to avoid communication problems and misunderstandings deriving from these differences, they have to understand the insight

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domestic culture and research Vietnam’s culture at both national level and individual level thoroughly before embarking on business ventures (Kohl, 2007; Kobayashi et al., 2010) Besides, the Vietnamese government has to understand inside out the culture orientation of their citizens to be clear about the domestic market and to state out the adequate policies Accordingly, the necessity of expanding researches related to the effect of culture is noticed

To measure collectivism and individualism, Hofstede’s model (as cited in Ogden & Cheng, 2011) with its four cultural dimensions, has been widely used to explain many characteristics across cultures and may apply in this study However, in accordance with the research of Nguyen and Tambyah (2011), which is conducted in Vietnam’s market, the author uses a scale of 14 items (seven items to measure collectivism and seven items to measure individualism) adopted and modified from the self-construal scale developed by Singelis (1994) and Singelis et al (1995) Hence, it is possible to make the comparison among these studies and increase the strength of evidence

2.1.2 Materialism

Goldsmith (2012) states that studying consumer motivation is important, due to it provide the basis for understanding many subsequent consumer behaviors One of the most important consumer motives, which attracts a great deal of attention, is an over desire for material goods Under perspective of personality trait, Belk (1985) defines materialism as

“the importance a consumer attaches to worldly possessions At the highest levels of materialism, such possessions assume a central place in a person’s life and are believed to provide the greatest sources of satisfaction and dissatisfaction” (p.265) Belk’s scale of materialism consists of three dimensions: possessiveness, envy, and non-generosity (Belk, 1985) Under perspective of consumer value, Richins and Dawson (as cited in Richins, 2004) develop material values scale (MVS) to examine materialism as a “facet of consumer behaviors.” Although these two perspectives of materialism have some common items, Richins and Dawson (as cited in Belk, 1996) defines materialism as “an enduring belief in the desirability of acquiring and possessing things” and consisting of three components: acquisition centrality, the role of acquisition in happiness, and the role of possessions in defining success

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Unifying these three components, Richins and Dawson (as cited in Richins, 2004) produce a description of materialism that rests on the two processes of acquisition and possessions, which organize and guide the materialist’s plans and behaviors under the expectation of particular consequent end states In this sense, acquisition and possessions can be considered as a value structure that is framed in accomplishment, esteem, and life satisfaction (Hunt et al., 1996) Although materialisms between countries are different due

to the varied cultures (Caldas, 2010; Ger & Belk, 1996; Minkov & Hofstede, 2011), MVS is already examined the reliability and validation through countries, which are different from cultures (individualist and collectivist cultures, materialist and non-materialist countries) (Eastman et al., 1999; Ogden, 2003; Ogden & Cheng, 2011; Ogden & Venkat, 2001; Watchravesringkan, 2012) In Nguyen’s study (Nguyen, 2012; Nguyen & Tambyah, 2011), the MVS, which is developed by Richins and Dawson, is used to investigate materialism in Vietnam market

2.1.3 Status Consumption

Status consumption is the motivational process by which individuals strive to improve their social standings through the conspicuous consumption of consumer products that confer and symbolize status for both the individual and surrounding significant others This consumption related need for status is the “tendency to purchase goods and services for the status or social prestige value that they confer on their owners” regardless of income or social class level By another expressing, individuals communicate meaning about themselves to their reference group by using status goods as symbols (Husic & Cicic, as cited by Eastman & Eastman, 2011) Investigating by many researchers, status consumption

is positively related to concepts of materialism (Eastman & Eastman, 2011).The period of transition from centrally planned economy to a market system has provided Vietnamese consumers with motivations and opportunities for involving in status consumption (as cited

in Nguyen, 2012) Similarly to urban consumers in other TEs, such as Chinese, Thailand, and Indian, urban Vietnamese consumers, now tend to more desire in luxury goods and services consumption, and in well-known imported brands owning for an image of status (Ogden & Cheng, 2011; Shukla, 2010; Truong, 2014)

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2.1.4 Life satisfaction

There are three well-known theories of happiness: Set-Point Theory, Comparison Theory, and Affect Theory (Veenhoven, as cited in Aydin, 2012) While Comparison Theory expresses happiness as a continuous judgment process involving the comparison of our life as it relates to a perceived “ideal life,” Affect Theory defines happiness as an emotion determined by the subjective assessment of how people feel after considering everything Veenhoven (2006) combines the Comparison and Affect theories in order to define overall happiness Overall happiness is defined as “the degree to which an individual judges the overall quality of his life-as-a-whole favorably.” After Doimoi, the living standard of Vietnamese has been continuously increasing (Ph ng Dung, 2013), which might lead to the increasing of life satisfaction (Aydin, 2012) In 2008, Vietnam became a lower-middle-income economy, which changed life circumstances for ordinary Vietnamese

in a vast number of ways Policy brief of 2012 reported that in Vietnam, income has a strong and positive effect on happiness In the richest income deciles, 70 percent of respondents are “rather” or “very” pleased with their lives In the poorest deciles, the corresponding number is less than 40 percent (Markussen et al., 2012)

2.2 Research hypotheses

Materialism has been recognized as being of primarily cultural in origin This is not surprising as culture encompasses so much of life Van de Vliert (as cited in Ogden & Cheng, 2011) describes culture as a “rich complex of values and practices passed on and changed from generation to generation,” a complex that includes language, morals, religions, and economics and these cultural elements affect how people value their possessions An examination of cultural variables might shed some light on the nature of materialism First, individualism has been characterized by emotional detachment from in-groups, primacy of personal goals over in-group goals, competition, and individual achievement These values correspond to the goal of conspicuous consumption, which is the very "public" nature of luxury consumption as a reflection of one’s success and achievement Second, collectivism has been described by the attributes of family integrity, self-definition through social roles, hierarchical social structures, and strong in-group/out-

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group distinctions In the same way, these values could correspond to the primacy of personal relationships over "things" and physical possessions Therefore, individualists are likely to invest more emotions/self-identities in things, be highly competitive, and value their own achievement and success They may also value their possessions more for their public meaning On the other hand, collectivists are likely to value things that enhance their relationships with others within the social in-groups but elevate their social status to members from these out-groups As a result, they may value a possession due to its private meaning (Wong, 1997) Similarly, a study of Ogden and Cheng (2011) indicates that high individualism scores are associated with high materialism both overall and in all its components Thus, the author hypothesizes:

H 1: Collectivism is negatively related to Materialism

H 2: Individualism is positively related to Materialism Vietnam is considered potential market, with a population of 93 million and the retail sales index keeps going up by 11.1% per year In 2014 July, imported volume of gems, rare metal, and jewelry grows up by 28%, those number are 22.6% for the mobile, and 77.4% for less than 9-seats used car The same with Indian, Vietnamese focus on “success” of MAT as status component, and this component has most significant link to status consumption compared to two others components “happiness” and “centrality” (Nguyen & Tambyah, 2011) In model of Nguyen (2011), examining the relationship of status consumption and materialism, the three components of materialism are separately treated In another research, Shukla (2010) addresses the similarities and differences between the status consumption behaviors among British and Indian consumers (individualist Western developed nations versus collectivist Eastern emerging nation) He states that consumers from collectivist culture (Indian) focus on others self-concept, while consumers from individualistic culture (British) focus on actual self-concept In the same manner, Wong (as cited in Nguyen & Tambyah, 2011) argues that the values of individualism correspond to the goal of SC The reverse relationship is suggested for collectivism Nevertheless, in the study of Nguyen and Tambyah (2011), the proposed hypothesis: “the collectivistic self is negatively related to SC” has been rejected Contrary to expectation, the self of collectivism displays a positive

As mentioned above, in this thesis the researcher expects to explore the relationship among MAT, collectivism, individualism, status consumption and life satisfaction in Vietnam’s market in period of golden age, potential consumption ability, emergent middle class and up, and social-culture shift Moreover, consumers’ motivations in TEs are going to

be explored In order to support an evidence for status consumption and the impact of collectivism, individualism, and materialism on status consumption in transitional economy, especially Vietnam, the researcher hypothesizes:

H 3: Collectivism is positively related to Status consumption

H 4: Individualism is positively related to Status consumption

H 5: Materialism is positively related to Status consumption

A series of researches have been conducted in order to investigate the antecedents of life satisfaction and their influences One of these antecedents that attract attention of researchers is materialism Many respondents have been involved in the studies of answering the question: “Are materialists happy?” In most of previous researches, a negative relationship between materialism and life satisfaction are determined Kassar (as cited in Ogden & Cheng, 2011), describing his own work and the research of many others, reports that people who have a strong materialistic orientation tend to be less happy than those who do not He also reports links to such conditions as narcissism, depression and anxiety, decreased life satisfaction, decreased in the quality of relationships with others, and even various physical ailments Jo-Ann et al (2014) indicates that materialists have

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unrealistically high expectations for the satisfaction that material goods will bring them However, the acquisition of possessions is unable to meet expectations, leading to a decline

of positive emotion In order to maintain positive emotions, materialists may therefore need

to continually search for new purchases, resulting in a chronic dissatisfaction Analysis results of Nguyen’s study (2012) as an evidence in Vietnam, points out the similarities, that the summed measure of materialism is negatively correlated with the overall life satisfaction but the correlation is quite weak and insignificant With expectation to strengthen the evidences of relation between materialism and life satisfaction in Vietnam, the author predicts the following:

H 6: Materialism is negatively related to Life satisfaction The Vietnamese living standard such as income per month has been improved recently This is one of the reasons, which helps to increase Vietnamese life satisfaction The rising number of retail sales index reflects the more “generous” consumption behavior

of Vietnamese, which is different from the traditional consumption behavior Furthermore,

as a consumption trend of young people, the expressions of the uniqueness, personality and experience through the status products are noticed As mentioned above, status consumption

is the “tendency to purchase goods and services for the status or social prestige value that they confer on their owners” regardless of income or social class level (Husic & Cicic, as cited by Eastman & Eastman, 2011) No matter what motivate consumer purchase status goods, either social-driven consumption (consumption based on collectivism self) or individual-driven consumption (consumption based on individualism self), as the status products purchasing is done, means that the need of enhancing and strengthen consumer’s status is satisfied, might lead to the satisfaction with life as a whole

As opposed to the proposed relationship of materialism and life satisfaction, consumers may still keep positive emotions about their status consumption experience, although they are seeking for new status products purchases The over desire for confirming social status motivates consumers to look forward the status products, which might also make them temporarily satisfied Hence, it is expected that the effect of status products on life satisfaction is positive In the previous research, through status product ownership and

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status consumption satisfaction, status consumption was found to be indirectly positive related to life satisfaction (Nguyen, 2012) With expectation to extend existing research in Vietnam, the author examined the direct relationship between status consumption and life satisfaction, which follow hypotheses:

H 7: Status consumption is positively related to Life satisfaction

2.3 Conceptual model

Figure 2.1 Conceptual model

H 1: Collectivism is negatively related to Materialism

H 2: Individualism is positively related to Materialism

H 3: Collectivism is positively related to Status consumption

H 4: Individualism is positively related to Status consumption

H 5: Materialism is positively related to Status consumption

H 6: Materialism is negatively related to Life satisfaction

H 7: Status consumption is positively related to Life satisfaction

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2.4 Summary

In summary, according to theoretical points, which are stated in the previous research, the researcher wants to figure out the research objectives in chapter one in the Vietnamese context Adopted by Ogden and Cheng (2011) and Wong (1997), high individualism scores are associated with high materialism both overall and in all its components, the author hypothesizes that H1: “Collectivism is negatively related to Materialism” and H2: “Individualism is positively related to Materialism.” Based on the study of Nguyen and Tambyah (2011) that indicates the positive influence of collectivism

on SC, the author hypothesizes H3: “Collectivism is positively related to Status consumption.” In other side, as Wong’s argument (as cited in Nguyen & Tambyah, 2011) that the values of individualism correspond to the goal of status consumption, the author suggests H4: “Individualism is positively related to Status consumption.” Adapted from investigating by many researchers that status consumption is positively related to concepts

of materialism (Eastman & Eastman, 2011) and materialists are less happy than those who

do not, the author hypothesizes H5: “Materialism is positively related to Status consumption” anh H6: “Materialism is negatively related to Life satisfaction” In order to confirm the study of Nguyen (2012), the author predicts H7: “Status consumption is positively related to Life satisfaction.” The conceptual model with all seven hypotheses are shown in Figure 2.1

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CHAPTER 3 - METHODOLOGY

In this chapter, whole procedure of research, including qualitative and quantitative studies, is described In order to modify and refine the measures, the qualitative phase involves in-depth interviews Through the modified questionnaire survey, the data collection of quantitative survey is used to test the measurement and structural models Chapter 3 is a description of research design, research process, sampling method, data analysis, measurement scale, and the modification

3.1 Research design

3.1.1 Research process

Two phases of the study were undertaken in this research: a qualitative study and a quantitative study Based on the previous research and the Vietnamese context, the draft questionnaire consisted of five measurement scales, which were collectivism, individualism, materialism, status consumption, and life satisfaction Then, the draft questionnaire was translated from English into Vietnamese Through the qualitative study, in-depth interviews with six people were conducted in order to modify and revise all observed items of the draft questionnaire to make improvement for the official questionnaire In the quantitative study, the author used adjusted questionnaire to collect data and test the measurement models and structural models Due to the limit of time, the method of self-administered survey with the convenience sampling approach was employed for this study In order to obtain a sample size of about 300, both indirect method via electronic mail and Google survey and direct one via hard copies were used to deliver 550 questionnaires to participants in Ho Chi Minh City

SPSS 20 and Amos 20 were used to test the model For the reliability and validity, the researcher tested by running CFA Then, SEM was used to test the hypothesized model (see Figure 3.1)

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Status Consumption (adopted from Eastman et al., 1999) Coding

1 I would buy a product just because it has status StatusC1

2 I am interested in new products with status StatusC2

3 I would pay more for a product if it had status StatusC3

4 The status of a product is irrelevant to me (r) StatusC4

5 A product is more valuable to me if it has some snob

Collectivism and individualism

To measure the two aspects of self (the collectivistic self and the individualistic self), the author used a scale of 14 items (two subscales) adopted and modified from the self-construal scale developed by Singelis (1994) and Singelis et al (1995) (as cited in Nguyen

& Tambyah, 2011)

Collectivism (adopted from Singelis 1994 and Singelis et al., as

1 It is important for me to maintain harmony within my group Col1

2 My happiness is influenced by the happiness of those around

3 I will sacrifice my self-interest for the benefit of the group I

4 I often have the feeling that my relationships with others are

5 It is important to me to respect decisions made by the group Col5

6 I will stay in a group if they need me, even when I am not

7 Even when I strongly disagree with group members, I avoid

Individualism (adopted from Singelis 1994 and Singelis et al., as

cited in Nguyen and Tambyah, 2011)

1 I prefer to be straightforward when dealing with people I

2 I enjoy being unique and different from others in many

4 Being able to take care of myself is a primary concern for

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Materialism

Measurements of overall materialism and three components of Materialism were

based on the short version of Richins and Dawson (as cited in Richins, 2004) scales The

scale consisted of 15 items As being mentioned in chapter 2, three components of

materialism were treated as a whole of materialism Instead of six and seven items as used

widely in literature as recommended by Richins (2004), both “success” and “centrality”

were measured by five items While “success” reflected the use of possessions to judge the

success of others and oneself, “centrality” meant the position of possessions in a person’s

life “Happiness,” which expresses the belief that possessions and their acquisition lead to

happiness and life satisfaction, was measured by five items scale (Richins, 2004)

Materialism (adopted from Richins and Dawson (1992) and

Success

1 Some of the most important achievements in life include

2 I admire people who own expensive homes, cars, and

3 I don’t place much emphasis on the amount of material

4 The things I own say a lot, about how well I am doing in life MatSucc4

Centrality

1 I try to keep my life simple, as far as possessions are

2 The things I own aren’t all that important to me.(r) MatCen2

5 I put less emphasis on material things than most people I

Happiness

1 I have all the things I really need to enjoy life.(r) MatHap1

2 I wouldn’t be any happier if I owned nicer things.(r) MatHap2

3 It sometimes bothers me quite a bit that I cannot afford to

4 My life would be better if I owned certain things I do not

5 I would be happier if I could afford to buy more things MatHap5

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Life satisfaction

Five items, which were modified and refined by Nguyen (2012), were used to measure life satisfaction These five items would indicate respondents’ level of agreement with the statements relating to satisfaction with their life as a whole and three individual

‘life domains’ including family, friends, and living standard (Nguyen, 2012) The validity and reliability in Vietnam concepts had been tested by Nguyen (2012)

Life satisfaction (adopted from Nguyen and Tambyah, 2011) Coding

3 Generally, I’m satisfied with my relationships with friends LifeS3

4 Generally, I’m satisfied with my standard of living LifeS4

In this study, all 39 items of 07 factors were measured by a seven-point Likert scale from “1 = strongly disagree” to “7 = strongly agree”

3.2 Measurement refinement

In qualitative study, all observed items of draft questionnaire were translated into Vietnamese The representative respondents were chosen from varied demographic characters, in order to make sure the official questionnaire survey was easy to understand by most of participants Accordingly, the in-depth interviews with six participants were undertaken with draft questionnaire List of participants is descripted in Appendix A All the comments and recommends are taken note in the Appendix B Changes for the Vietnamese version were made for the purpose of accuracy and clarity Although most of the scales were used widely in the previous research, this study was important before launching the quantitative survey due to the differences in the research setting: applying in the Vietnamese context In the end of this study, the modification and revision of questionnaire survey are noticed in Appendix B The official questionnaire surveys are shown in Appendix C for English version and Appendix D for Vietnamese version

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3.3 The quantitative study

3.3.1 Sampling and data collection

Due to limited time, the convenience sampling approach was conducted in Ho Chi Minh City The method of self-administered survey was employed for this study, which consisted of 07 factors and 39 variables Thus, the minimum sample size was determined by equation: n=39*7=273 observations With expectation to obtain a sample size of about 300, about 550 questionnaires were delivered to participants

3.3.2 Data analysis

Both SPSS 20 and Amos 20 were used to test the model The author ran Amos 20 for CFA and SEM with purpose of enhancing the value of the model The CFA results would indicate the model fit if CMIN/DF was less than 3 with p-value larger than 5%, GFI, RFI, and CFI were larger than 0.9, and RMSEA was smaller than 10% Based on composite reliability (CR), the author evaluated the measurement scale’s reliability and used average variance extracted (AVE) to conclude the convergent validity and the correlation between items (r) to identify the discriminated validity Then structural equation modeling (SEM) was used to test the hypothesized model and was applied to estimate path coefficients for each proposed relationship in the structural model Finally, bootstrap was used to re-test the suitable and reliability of our model

The seven constructs of this study were Collectivism, Individualism, MAT-Success, MAT-Centrality, MAT-Happiness, Life satisfaction, and Status consumption As Life satisfaction, Status consumption, and all components of MAT were endogenous variables, Collectivism and Individualism were exogenous ones The next chapter would present data analysis results of quantitative survey

3.4 Summary

In summary of chapter three, questionnaire survey was designed based on previous measurement scales Specifically, scales of collectivism and individualism consisted 14 items adopted from Singelis 1994 and Singelis et al (as cited in Nguyen & Tambyah, 2011) Scale of status consumption included 05 items, which adopted from Eastman et al

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(1999) Scale of materialism consisted of 15 items based on scale of Richins and Dawson (1992) and Richins (2004), and scale of life satisfaction was made up of 05 items from research of Nguyen and Tambyah (2011) Modifications for the Vietnamese version and English version of questionnaire were conducted due to the necessary of accuracy and clarity Totally, measurement scales included 39 items had been used to formulate the questionnaire survey, which had been delivered to 550 respondents

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CHAPTER 4 - DATA ANALYSIS AND RESULTS

Chapter 4 presents the analysis results, which included respondents’ demographics, descriptive statistic, confirmatory factor analysis, structural equation modeling, bootstrap method, and the explanation for the finding results While respondents’ demographic made the review of sample’s characters, the descriptive statistic tested the normal distribution of variables Then, CFA examined the reliability and validity of the first order constructs, the second order construct and the final measurement model SEM was used to test the conceptual model and bootstrap method was used to measure the parameter estimates Based on the analysis’s results, the explanation for finding research was discussed

4.1 Data collection

After data collection, total 463 responses were collected; the response rate was approximately 84 percent (Table 4.1) Then, total 26 questionnaires were eliminated because they were invalid (respondents just chose one option for all questions or their answers were implausible) Finally, 427 questionnaires were used as valid data for this research In comparison with minimum sample size, this number of data was satisfactory

Table 4.1 Source of data collection Source Distributed Collected Response rate Eliminated Valid

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considered The equal ratio of gender and marital status helped to avoid bias of analysis results Age group from 24 to 30 years old was dominant with 41.5 percent of total sample Age ranged from 18 years old, with 18.3 percent of the respondents was between 18 and 23 years old, 32.6 percent was from 31 to 40 years old, 5.2 percent was from 41 to 50 years old, and 2.6 percent was older than 50 years old Specifically, 74.1 percent of respondents, who were from 24 to 30 years old (41.5 percent) and 31 to 40 years old (32.6 percent), were representative for 8-x generation 8-x generation was considered the innovation group, who very fast caught up the trend of consumption from all over the world The differentiation among age groups might affect the result of data analysis

Income per month was investigated within five groups Most of respondents came from income group from 05 to 10 million VND per month (36.1 percent) In the second place, group of below 05 million VND seized 23.4 percent of respondent 17.8 percent of respondents revealed that their income ranged from 10 to 15 million VND and 15.0 percent earned above 20 million VND every month The last portion with the lowest percentages (7.7 percent) was the respondents with the income fluctuated from 15 to 20 million VND per month Average income per month of urban community in Vietnam was about 5 million per month (General Statistic Office of Vietnam, 2014) Thus, below 5-million-group (23.4 percent) and from 05- to 10-million-group were considered the low-income and average income Almost people in these groups firstly concerned about basic needs (food, clothing, shelter…) before moving their attention to another stage of needs, except people who were living with their parents and relatives Hence, this might affect the affordability of buying status products and on the sense of life satisfaction Moreover, these income groups might not reflect the whole picture Due to cultural behaviors, respondents might intentionally understand the phrase “income” as their wage but not their “total inflow of asset.”

Table 4.2 Respondents’ characteristics Demographic profile Category Frequency Percentage (%)

Gender Female Male

100

Marital status Married Single 215 205 50.4 48.0

100

4.3 Descriptive statistic

Descriptive statistic was run to test whether variables distribute in normal distribution or not The values of Kurtosis and Skewness equal or smaller than |2| were considered well Examining the individual factor as shown in Appendix E, items Col1 and Col2 had values of Kurtosis and Skewness larger than |2|, so they were excluded from the analysis (see Table 4.3) The rest 37 of 39 observed items were moved to the next step of analysis

Table 4.3 Descriptive statistic: Eliminated items Stage No of

Descriptive

statistic 02 Col1: It is important for me to maintain harmony within my group

Col2: My happiness is influenced by the happiness of

those around me

Kurtosis and Skewness

>|2|

4.4 Confirmatory factor analysis (CFA)

Amos 20 ran for CFA with purpose of testing the reliability and validity of measurement model The CFA results indicated the model fit if CMIN/df was less than 3 with p-value larger than 5 percent The goodness of fit index (GFI) was a measure of fit between the hypothesized model and the observed covariance matrix The GFI ranged between 0 and 1, with a cutoff value of 0.9 generally indicating acceptable model fit The comparative fit index (CFI) analyzed the model fit by examining the discrepancy between

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the data and the hypothesized model, while adjusting the issues of sample size inherence in the chi-squared test of model fit, and the normed fit index The non-normed fit index (NNFI; also known as the Tucker-Lewis index-TLI) resolved some of the issues of negative bias, though NNFI values may sometimes fall beyond the 0 to 1 range Values for both the NFI and NNFI should range between 0 and 1, with a cutoff of 95 or greater, indicating a good model fit A CFI value of 0.90 or larger was generally considered to indicate acceptable model fit The root mean square error of approximation (RMSEA) avoided issues of sample size by analyzing the discrepancy between the hypothesized model, with optimally chosen parameter estimates, and the population covariance matrix A value of 0.06 or less was indicated an acceptable model fit Based on composite reliability (CR), the author evaluated the measurement scale’s reliability According to CFA results, average variance extracted (AVE) was used to conclude the convergent validity and correlation between items (r) was used to identify the discriminate validity Then, structural equation modeling (SEM) tested the hypothesized model and estimated path coefficients for each proposed relationship in the structural model As we mentioned above, six measurement scales, which were sufficient for convergent and discriminant validity, were analyzed by the Confirmatory factor analysis before the hypothesized model was tested by SEM The first-order constructs were collectivism, individualism, life satisfaction, and status consumption The second-order construct was materialism, which consisted of three sub-components: success, centrality, and happiness

4.4.1 CFA for the first-order constructs

After eliminating two observed items Col1 and Col2, collectivism was measured by

5 items For the first run of CFA, the CFA model of collectivism fitted the data well However, the factor loading of Col7 was not significant (.379 < 0.5) The author removed Col7 and re-tested the constructs In consequence, as shown in Figure 4.1, the research had the model fit (Chi-square=1.713; df=1; Chi-square/df=1.713; P=.191; CFI=.998; TLI=.987; NFI=.995; RMSEA=.041)

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Figure 4.1 CFA model of collectivism

For the first run of CFA, standardized regression weights of Ind1, Ind 2, Ind3, and Ind4 were lower than 0.5 (0.29, 0.33, 0.41 and 0.21 in sequence) After removing items one after another from the smallest factor loading, the model of individualism was measured by three items: Ind5, Ind6, and Ind7 Although factor loading of Ind5 was smaller than 0.5, the author decided not to eliminate Ind5 to retain the content validity of construct Figure 4.2 and Appendix F displayed the result of CFA analysis

Figure 4.2 CFA model of individualism

The same as collectivism, the model of life satisfaction did not fit the data for the first running (Chi-square/df = 7.444 largely higher than 3) After addressing the largest modification indices, CFA model of life satisfaction had a good model fit The factor loading of all observed items of life satisfaction were significant (>0.6) Figure 4.3 displayed the model fit of life satisfaction

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Figure 4.3 CFA model of life satisfaction

In the common with collectivism and life satisfaction, the author noticed the largest modification indices of status consumption model Then, the data set of status consumption fitted the model well (Chi-square=3.071; df=3; Chi-square/df=1.024; P=.381; CFI=1.000; TLI=.999; NFI=.994; RMSEA=.007) (see Figure 4.4)

Figure 4.4 CFA model of status consumption

For each construct, the author tested the reliability and convergent validity by calculating composite reliability and averaged variance extracted values based on items’ standardized regression weight Composite reliability of Collectivism, Status consumption, and Life satisfaction were larger than 0.7, while the value of Individualism was larger than 0.68 Thus, reliability of first order constructs was acceptable

Except the averaged variance extracted value of Life satisfaction was high (pvc

=0.56), value of the rest first order constructs were acceptable (>0.39) In summary, the CFA model of the first-order constructs including collectivism, individualism, life satisfaction, and status consumption fitted the data well All the data analysis is presented in Table 4.4 and Appendix F