Factors influencing consumers behavior of wine in ho chi minh city

Firstly, a conceptual framework was built based on the Input, Process, Output consumer behavior model, a qualitative research about perceptions of wine quality Charters, 2003 and Vietnam

TRƯỜNG ĐẠI HỌC MỞ TP.HCM

HO CHI MINH CITY OPEN UNIVERSITY

UNIVERSITÉ LIBRE DE BRUXELLES SOLVAY BRUSSELS SCHOOL

MBMM4

Le Quang Vinh

Factors Influencing Consumers’ Behavior of Wine

In Ho Chi Minh City

MASTER PROJECT MASTER IN BUSINESS & MARKETING MANAGEMENT

Tutor’s name: Dr Ha Nam Khanh Giao

Ho Chi Minh City

(2010)

DECLARATION

I declare that this study does not incorporate without acknowledgment any material previously submitted for a degree or diploma in any university; and that to the best of knowledge it does not contain any materials previously published or written by another person except where due reference is made in the text

ACKNOWNLEDGEMENT

This study would not be possible without the advice, assistance, cooperation and encouragement from a number of people I would like to acknowledge their help and support The most important individual have been my supervisor, Professor Dr Ha Nam Khanh Giao I am most indebted to Professor Dr Khanh Giao, who showed an interest and attention in my study His advice and generous guidance since the first term that I begun this study have been very supportive and lead me to the right track of study, and made this research possible

Moreover, I would like to express my appreciation to Professor Dr Nguyen Minh Kieu, who provided me the initial guidance of research method I also would like to thank Professor Dr Hoang Trong, who provided me valuable knowledge of business statistics and SPSS Dr Trong also gave me very precious comments on data processing methods and how to explain the SPSS results Solathien company and my mentor, Mr Nguyen Phu Hai also have my deep gratitude for providing me the market report materials and value discussions on the consumers’ choice of wine

Besides, I would like to thank Mr Serge Bywalski and Ms Nguyen Thi Mong Thuy, Coordinators of the MBMM Program for their devoted supports Mr Phan Le Dung, Solvay Vietnam Alumni also has my deep gratitude for valuable advices Moreover, I would like to thank Solvay Business School Vietnam and Ho Chi Minh City Open University for delivering the wonderful MBMM program

Last, but not least, I wish to thank my family members for their love, assistance, encouragement and patience

in Ho Chi Minh City Besides, the country of origin and grape varieties, which are being used as wine value proposition, were proved to be not significant Based on this finding, the author also proposed some useful suggestions for marketers of wine in the market

 However, the study has some limitations, such as the survey area and sampling method; or the generalised target population …

 In summary, the quality of the study meets the requirements (both content and presentation) of a Marketing master thesis

I propose this study to be presented in front of the examiner board of the Solvay – OU Master of Business and Marketing Management Program

Ho Chi Minh City, December 14 th , 2010

Dr Ha Nam Khanh Giao

CONTENT

DECLARATION i

ACKNOWNLEDGEMENT ii

TUTOR’S COMMENTS iii

CONTENT iv

LIST OF FIGURES vi

LIST OF TABLES vii

1 EXECUTIVE SUMMARY 1

2 INTRODUCTION 2

2.1 Chapter Overview 2

2.2 Rationale of the Project 2

2.3 Vietnam Wine Market 2

2.4 Aim of the Research 6

2.5 Research Outline 8

3 LITERATURE REVIEW 9

3.1 Chapter Overview 9

3.2 Consumer Behavior Models 9

3.3 The Motivation to Drink Wine 15

3.4 Vietnamese Consumer Lifestyle 19

3.4.1 Vietnamese favor foreign brands 19

3.4.2 Spending on alcoholic drink 19

3.4.3 Vietnamese drinking habits 20

3.5 Chapter Summary 20

4 RESEARCH DESIGN 21

4.1 Chapter Overview 21

4.2 Conceptual framework 21

4.3 Hypotheses Development 22

4.4 Concept Operationalization 22

4.5 Survey Design 25

4.5.1 Questionnaire design 25

4.5.2 Sampling method 25

4.5.3 Sample size 25

4.6 Chapter Summary 26

5 DATA ANALYSIS & FINDINDS 27

5.1 Chapter Overview 27

5.2 General Descriptive Information 27

5.2.1 Research response rate 27

5.2.2 Gender, Age and Income 27

5.2.3 Favorite communication channels and wine consuming place 29

5.3 Factors Influencing of Wine Consumption 31

5.3.1 EFA for all the valid scales 33

5.3.2 Multiple regression analysis 35

5.3.3 Discriminant analysis for conceptual framework 1 and hypotheses testing 38

5.3.4 Discriminant analysis for conceptual framework 2 and hypotheses testing 41

5.3.5 Evaluation of the relationship between the factors and Average bottle consumed per month 42

5.3.6 Evaluation of the relationship between Communication channel and Consuming place with Average bottle consumed per month 46

5.3.7 Classification of the responses of open question 47

5.4 Findings 48

5.5 Chapter Summary 49

6 RESEARCH CONCLUSIONS 50

6.1 Chapter Overview 50

6.2 Research Summary 50

6.3 Research Limitations & Future Research Suggestions 51

6.4 Managerial Implications 52

6.5 Chapter Summary 54

REFERENCES 55

APPENDICES 57

Appendix 1: Survey questionnaire 57

Appendix 2: SPSS results 64

LIST OF FIGURES

Figure 2.1: Sales of Wine by Subsectors - Total Volume 2004 - 2009 5

Figure 2.2: Sales of Wine by Subsectors - Total Value 2004 - 2009 5

Figure 2.3: Research process 7

Figure 3.1: A.H Maslow’s hierarchy of needs 10

Figure 3.2: Howarth Sheth Model 11

Figure 3.3: Engel-Blackwell-Kollat Model 12

Figure 3.4: Nicosia Model 13

Figure 3.5: Input, Process, Output Model 14

Figure 3.6: A purposive analysis of wine consumption 17

Figure 3.7: Why do people drink wines? 18

Figure 4.1: Conceptual framework 21

Figure 4.2: Detail conceptual framework 24

Figure 5.1: Gender of respondents 28

Figure 5.2: Age groups of respondents 28

Figure 5.3: Average monthly income of respondents 29

Figure 5.4: Marketing efforts - Communication channel 30

Figure 5.5: Marketing efforts - Wine consuming place 31

Figure 5.6: Adjusted conceptual framework after EFA 35

Figure 5.7: Adjust conceptual framework 1 37

Figure 5.8: Adjusted conceptual framework 2 37

Figure 5.9: Themes from open question 47

LIST OF TABLES

Table 4.1: Concept operationalization and measurement scales 24

Table 5.1: EFA & Cronbach's Alpha for each concept / dimension 32

Table 5.2: EFA result - Full scales 34

Table 5.3: Multiple Regression result 36

Table 5.4: Discriminant analysis result - Average bottle consumed per month 40

Table 5.5: Discriminant analysis result - Average price per bottle 42

Table 5.6: ANOVA result - Symbolic benefit factor 44

Table 5.7: ANOVA result - Enjoyment benefit factor 45

Table 5.8: ANOVA result - Utilitarian & Experiential benefit factor 46

Table 5.9: Chi-Square result - Communication channel & Wine consuming place 47

1 EXECUTIVE SUMMARY

Vietnam wine market is growing fast More and more wine producers, importers and distributors enter the market and compete against each other to bring their products to the consumers Most of them focus on the product features (country of origin, grape varieties, taste, bottle and label) This study was conducted to find out if there are other factors affecting the consumers’ choice of wine in Ho Chi Minh City

Firstly, a conceptual framework was built based on the Input, Process, Output consumer behavior model, a qualitative research about perceptions of wine quality (Charters, 2003) and Vietnamese drinking habits (Euromonitor, 2010) From the conceptual framework, four hypotheses about the relationships of Marketing efforts, Utilitarian benefits, Experiential benefits and Symbolic benefits with the Money spent on wine were developed The questionnaire was built and 386 valid cases were filtered out of 450 responses The valid responses were input to SPSS for further analysis

Secondly, EFA was employed to remove unsuitable variables and extract the factors from the measurement scale The result was a bit different from the original conceptual framework The Symbolic benefit and Marketing effort factor was the same, but there were two new factors, Utilitarian & Experiential benefit and Enjoyment benefit factor The multiple regression model was not statistically significant for finding the relationship between the factors and the Money spent on wine So discriminant analysis method was used to evaluating the contribution of factors to the differentiation between consumers’ group presented by average bottle consumed per month Other analyses also were done to evaluate the relationship of communication channel and drinking place with consumers’ group The findings from these analyses were used to provide suggestions for wine marketers in Ho Chi Minh City market

Finally, the Symbolic benefit factor turned out to be the strongest contribution to the differentiation of consumers’ group The importance of this factor also had a tendency to increase when people consume more wine This is an interesting guideline for wine marketer to produce communication messages that differentiate their wines For example, marketers can focus on symbolic values linking with wine, such as self-image, lifestyle or the importance of ritual instead of talking about the country of origin or grape varieties, which is being used by everyone To a lesser extent, the Enjoyment and Utilitarian & Experiential factors contributed to the discrimination of consumer group as well However, the relationships of these two factors and the average bottle consumed per month were not statistically proven

2 INTRODUCTION

2.1 Chapter Overview

This chapter provides the project overview It begins with the reason of this project, followed by the general background information relating to the Vietnam wine market The key concepts of the research are also presented and, finally, this chapter concludes with the outline of this study

2.2 Rationale of the Project

Vin Attitude is a young and modern French wine producer in Côte du Rhone region, France (www.vin-attitude.com) It represents 2,150 ha vineyard, 550 growers, more than 100,000 hl annually and a turnover exceeding 12 million € The company is looking for a long – term partnership who understands the local market and has a systematically approach Unlike other wine producers and brokers have been penetrating Vietnam market, Vin Attitude is more willing to take risk for better controlling of marketing activities by choosing a foreign based agent instead of an importer / distributor

Solathien is a Vietnamese importer and distributor specialized in premium imported Vodka In order to exploit the existing distribution network and enrich the product portfolio, Solathien seeks out a French wine producer who wants to enter Vietnam market After contacting with many companies, Solathien comes to agreement with Vin Attitude to act as a foreign based agent in Vietnam market

Both companies are the newcomers to a potential but also competitive market In order to have proper marketing strategy, the companies should have good understanding about the consumer behavior of wine, especially in the key markets, e.g Ho Chi Minh City and Hanoi

Because of the need of the companies, the project is implemented to study the consumer selection of wine in Ho Chi Minh City Based on the findings, recommendations will be used form the marketing strategy of the company The findings are also served as reference for wine producers and importers who want to penetrate Vietnam market

2.3 Vietnam Wine Market

In general consumption of wine in Vietnam, as well as in other Asian countries such as China or Hong Kong, is rising Over the past two years demand for wine in Vietnam was high for many reasons Despite the price of a bottle of wine being higher than that of a carton of beer, some more affluent consumers changed their preferences and increased consumption of wine, believing it to be good for their health Second, living standards have

improved, and high income Vietnamese like to spend a large proportion of their money in restaurants and hotels Consequently a lot of companies aim to serve wine to these consumers, as they represent a stable consumption base Thirdly, many people follow western lifestyles, and believe that wine illustrates their knowledge of modern lifestyles as the country increasingly integrates with the rest of the world

There are two types of wine regarding the quality in the wine environment in Vietnam Low quality wine is sold widely through street shops and supermarkets High quality wine

is mainly distributed through restaurants, hotels and sold at high prices to consumers with good knowledge of wine

There are varieties of price for wine in Vietnam The key price for wine is around VND 100,000 If old world wine has an average liter price of under VND 100,000, there is a general belief that this product is not good quality However, consumers believe they get a better taste from new world wine if it costs at least VND 100,000 The price segmentation here is mostly driven by producers and distributors Imported wine is still a luxury product for the average consumer, but there are various products available at different prices

The most popular countries for wine are France and Chile, followed by Italy, Spain, Germany, Australia, New Zealand, South Africa, America, Chile and Argentina France is considered the best choice for Vietnamese consumers, who hold French wine in very high regard This is the traditional perception, which is difficult to change However, Chilean wine is becoming increasingly popular

Glass bottle is the dominant packaging format for wine, accounting for 95% of sales in imported wine and local industrial wine This is the traditional packaging format, as it protects the quality and flavor of the wine Wine in glass bottles is sold in both on- and off-trade channels in Vietnam Local wine can be stored in ceramic packaging, or in PET bottles for home-made wine

Vietnamese consumers prefer foreign wine In the north of the country wine from Chile is favored and is developing strongly Wine from France has an advantage as it has been available for a long time in Vietnam and is considered good quality For domestic wine, Dalat Red Wine leads, benefiting from the wide distribution Dalat wine is different from Hanoi wine and considered a superior offer for urban consumers Hanoi wine and Thang Long wine are consumed in the north Thang Long wine accounts for around 40% of demand in the northern region

Regarding local products, Dalat wine is highly popular among consumers and saw a good sales performance in 2008 Growth increases steadily and its products are present

throughout the country and exported to Asian countries such as Japan, Korea, Malaysia and Cambodia

Local producers account for around 50 million liters of alcohol and sales are three times greater than international producers’ in terms of volume Local wine also competes strongly with international wine thanks to its considerably lower price, as it is not subject

to import tax However, Vietnam offers potential demand for wine, especially VIN wine, but local VIN wine producers have to improve their product quality, service, and brand image In the near future local producers face tough competition with the large international manufacturers and brands when import tax is decreased as a result of WTO integration

Regarding imported wine, there are hundreds of new brands launched every year in the wine environment in Vietnam Wine from New Zealand entered Hanoi in 2008 Wines such as Merlot, Chardonnay, Pinot Noir and Sauvignon Blanc from New Zealand are highly praised, and other famous varietals such as Riesling, Cabernet Sauvignon, Pinot, Cabernet Franc, Malbec, Syrah, Chemin Blac and Gewürztraminer are also present in the country New Zealand wine is welcomed by Vietnamese consumers due to its prestige image and good taste even though it is new It is estimated that New Zealand wine will take share from wines of other origin from 2009 onwards

Local producers like LamDong Foodstuffs JSC (Ladofoods) are more active to provide new products to consumer The company always tries to launch the new products or variants during the event of Dalat city, for example, Dalat Wine Festival, Dalat Flower Festival Dalat is one of the main tourist attraction places not only for foreigners but also Vietnamese therefore it is a good chance for company to promote their own brands and also company awareness

New world wine is gaining popularity The reason is that old world wine is made purely from grapes without adding sugar, but new world wine normally has added sugar and the taste is consequently sweeter Vietnamese prefer sweet, especially women and consumers

in the south Consequently both new and old world wines benefit from a loyal consumer base Prices are competitive and consumers can find both cheap and expensive products in both categories For example, French Champagne prices range from VND60, 000 to VND6 million Competition between new and old world wine is in terms of brand and taste rather than price

Figure 2.1: Sales of Wine by Subsectors - Total Volume 2004 - 2009

Source: Euromonitor, March 2010

Figure 2.2: Sales of Wine by Subsectors - Total Value 2004 - 2009

Source: Euromonitor, March 2010

2.4 Aim of the Research

The Vietnamese consumers are facing many types of wine from local non-grape wine to imported wine with very high price These wines also vary in region of origin, packaging and quality Moreover, wine is quite a complicated product, and the perception of wine quality of the consumer is much diversified

So far the wine producers, importers and distributors don’t invest much in the marketing and communication activities Although wine is not banned from advertising, the consumers rarely see the communication of wine in the TVC or press The information about the products is mostly presented on the website of the importers or distributors Though there are many wine fairs in Vietnam every year, the main target audiences of these events are importers and distributors, not the end consumers

So, there is neither much information nor research about how the Vietnamese consumers select their wines Therefore, this study will explore and evaluate a proper model for wine consumption of Vietnamese people Due to the limitation of time and resources, this project will mainly focus on Ho Chi Minh City market, one of the largest markets of wine

in Vietnam The findings drawing from this market can be applied for other regions in South Vietnam

There are two main objectives in this research:

 Define and measure the factors influencing the consumer behaviors of wine in Ho Chi Minh City

 Provide recommendations for host companies and other wine producers and importers who want to penetrate the Vietnam market

As per mentioned above, the research will explore and measure the factors influencing consumer’s wine selection There are two main stages of the research:

 Secondary research: study the consumer behavior theory and model; Vietnam consumer demographic and lifestyles; wine marketing concepts and consuming behavior to define the factors influencing the consumer behaviors

 Primary research: conduct quantitative research to measure the relationship between these factors and study the findings to infer the recommendations

The research process can be described as following:

Preliminary information gathering &

literature survey

Theoretical framework development

Research design Quantitative data

collection

Data analysis

Interpretation of findings

Recommendations

Research hypotheses

Figure 2.3: Research process

Source: Developed for this project

2.5 Research Outline

Chapter Three of this study further lists and illustrates the previous research and literature related to this study Also, some relevant theories, key concepts and components of this research and the development of the research problem will be addressed in this chapter After the literature review, Chapter Four will describe the research methods including the research models, research design and research methods Chapter Five outlines the results and findings of this research Finally, Chapter Six draws conclusions and summarizes the findings of this research and provides recommendations for target audience and future researches

3 LITERATURE REVIEW

3.1 Chapter Overview

The previous chapter has briefly discussed the general research background, the overview

of Vietnam wine market and the key research objectives This chapter provides the previous theories and research concerning the key concept First, it begins with reviewing different consumer behavior models and the process of consumer decision making The literature about wine drinking motivation is also presented Finally, it ends with the Vietnamese consumer lifestyle issues relating to alcoholic drinks and wines consumption

3.2 Consumer Behavior Models

Consumer behavior includes all of the activities of buyers, ex-buyers and potential buyers from pre-purchase deliberation to post-purchase evaluation, and from continued consumption to discontinuance It extends from the awareness of a want, through the search for and evaluation of possible means of satisfying it, and the act of purchase itself,

to the evaluation of the purchased item in use, which directly impacts upon the probability

of repurchase (Alba et al., 1991)

Consumer behavior is most frequently modeled as a cognitive process, an intellectual sequence of thinking, evaluating, and deciding These information processing activities are believed to shape the more overt aspects of choice: acquiring information, perhaps from an advertisement or salesperson, placing an order, using the product selected, and so on The inputs to the process are the most basic bits of data available to the consumer, stimuli from the environment in the form of marketing messages and conversations with friends and relatives The processing itself consists in the mental treatment of these data as the consumer stores them, links them with existing ideas and memories, and evaluates their relevance to his or her personal goals The outputs are the attitudes the consumer forms toward say an advertised brand, an intention to buy or postpone buying, and – if attitude and intention are positive – the act of purchase A similar sequence characterizes the use of the purchased item: it is evaluated again in use and a decision is reached about its suitability for repurchase

There are various consumers’ models which help in the understanding of consumer

behavior Some of them are listed below:

 Howarth Sheth Model

The Sociological Model is concerned with the society A consumer is a part of the society and he may be a member of many groups in a society His buying behavior is influenced

by these groups Primary groups of family friends and close associates exert a lot of influence on his buying

Figure 3.1: A.H Maslow’s hierarchy of needs

Sources: A.H Maslow, 1970 (Motivation & Personality)

The Pavlovian Learning model, Howarth Sheth Model, Engel-Blackwell-Kollat Model, Nicosia Model are more complicated The Pavlovian Learning Model suggests that human behaviors are based on some central concepts: the drives, stimuli, cues, responses and reinforcements which determines human needs and need satisfying behavior Individually,

a drive is a strong internal stimulus which compels action Stimuli are inputs which are capable of arousing drives or motives Cues are signs or signals which act as a stimulus to

a particular drive The way an individual reacts to the stimuli is known as his response If the response to a given stimulus is rewarding, it reinforces the possibility of similar response when faced with the same stimulus or cue

The Howarth Sheth Model is slightly complicated and shows that consumer behavior is complex process and concepts of learning, perception and attitudes influence consumer behavior This model of decision-making is applicable to individuals (Figure 5: Howarth Sheth Model)

Figure 3.2: Howarth Sheth Model

Source: C.N Krishna Naik, L Venugopal Reddy, 1999 (Consumer Behavior – Discovery

Publishing House)

The Engel-Blackwell-Kollat Model consists of four components: Information processing, Central control unit, Decision process, Environmental influences (Figure 6: Engel-Blackwell-Kollat Model)

Figure 3.3: Engel-Blackwell-Kollat Model

Source: C.N Krishna Naik, L Venugopal Reddy, 1999 (Consumer Behavior – Discovery

Publishing House)

The Nicosia Model explains the consumer behavior on the basis of four fields shown in the diagram (Figure 7: Nicosia Model)

Figure 3.4: Nicosia Model

Source: C.N Krishna Naik, L Venugopal Reddy, 1999 (Consumer Behavior – Discovery

Publishing House)

Input, Process, Output Model describes the consumer decision making process as three distinct but interlocking stages: the input stage, the process stage and the output stage These stages are depicted in the simplified model of consumer behavior in Figure 8

Figure 3.5: Input, Process, Output Model

Source: L.G Schiffman, L.L Kanuk, 2004 (Consumer Behavior – Prentice Hall)

The input stage influences the consumer’s recognition of a product need and consists of two major sources of information: the firm’s marketing efforts (the product itself, its price, where it is sold and its promotion) and the external socio-logical influences on the consumer (family, friends, neighbors, other informal and noncommercial sources, social class, and cultural and sub-cultural memberships) The cumulative impact of each firm’s marketing efforts, the influence of family, friends, and neighbors, and society’s existing code of behavior, are all inputs that are likely to affect what consumers purchase and how they use what they buy

The process stage of the model focuses on how consumers make decisions The psychological factors inherent in each individual (motivation, perception, learning, personality, and attitudes) affect how the external inputs from the input stage influence the consumer’s recognition of a need, pre-purchase search for information, and evaluation of alternatives The experience gained through evaluation of alternatives, in turn, affects the consumer’s existing psychological attributes

The output stage of the consumer decision-making model consists of two closely related post-decision activities: purchase behavior and post-purchase evaluation Purchase behavior for a low-cost, nondurable product (e.g., a new shampoo) may be influenced by a manufacturer’s coupon and may actually be a trial purchase; if the consumer is satisfied, he

or she may repeat the purchase The trial is the exploratory phase of purchase behavior in which the consumer evaluates the product through direct use A repeat purchase usually signifies product adoption For a relatively durable product such as laptop (“relatively” durable because of the rapid rate of obsolescence), the purchase is more likely to signify adoption

Taking into account of the fact that there is no research on this field so far, the Input, Process, Output model is selected for this study This model is comprehensive enough but

is not too complicated The elements of this model will be considered with the following aspects: the motivation to drink wine and Vietnamese consumer lifestyle to form the conceptual framework of the study

3.3 The Motivation to Drink Wine

The exploration of consumer motivation then uses a consumer-focused research project to explore wine drinkers’ own views on why they drink and a range of symbolic and experiential factors will be explored, including historical tradition, situation (including the importance of food), cultural factors, self-image, enjoyment and relaxation

The discipline of consumer behavior developed with a focus on the utilitarian dimension of consumption – that is, the distinct physical and functional benefits provided by a product Its methods tended to concentrate on consumers’ cognitive processes, particularly

information gathering and processing as determinants of consumption behavior This includes, for instance, the stream of work based on Fishbein and Ajzen’s theory of reasoned action (Ajzen & Fishbein, 1980; Fishbein & Ajzen, 1975), subsequently applied

to wine by Thompson and his colleagues (Thompson & Vourvachis, 1995; Thompson et al., 1994) In this interpretation the consumer is seen to be very much a cognitive analyst of precise functional benefit, weighing up the pros and cons of various product alternatives before buying the most cost-effective in the circumstances

Two challenges to this unidimensional approach developed The first, stemming from a psychological perspective, came from the work of Dichter (1964), later developed by Levy (1981; 1986) and then others This approach focused on the symbolic meaning of consumer goods and thus how we use products to convey messages about ourselves

‘Symbolic consumption’ as a paradigm has produced substantial bodies of research into, and explication of, consumption behavior It has been suggested by Richins (1994) that the symbolic use of consumption can be split by separating representations of interpersonal ties (an outward directed focus) from identity and self-expression (an inner-directed focus)

In the early 1980s a second paradigm developed which contrasted utilitarian with experiential and hedonic consumption (Hirschman & Holbrook, 1982; Holbrook & Hirschman, 1982) This interpretation was developed in a series of research papers to show that experiential processes (fun, amusement, sensory stimulation, excitement and enjoyment) were closely linked to the consumer’s engagement with the product It was also suggested that sensory cues are likely to be non-verbal and affective rather than reducible

to words – a factor which is particularly relevant to wine consumption, where sensation rather than language may frame the drinker’s engagement with the product (Solomon, 1990)

This triadic approach to consumption (utilitarian, symbolic and experiential) is regularly used in consumer research at present It has been noted that there are cultural differences in the relative importance of the three purposes of consumption (Wong & Ahuvia, 1998), so that, for instance, in Chinese societies the display of close family ties may be a more important symbolic goal than in European cultures Nevertheless, as a broad approach to consumption it has both some validity and some acceptance, so that we can use these three approaches – the utilitarian, symbolic and experiential – as a means of analyzing consumption purpose It is necessary to stress that no single act of consumption falls into just one category, nor is a repeated act of consumption invariably given the same motivational weighting at each repetition Drinking a wine in solitude may focus much more on the pure pleasure in the taste, whereas drinking in public may be primarily concerned with conveying messages to other people (Groves et al., 2000)

One can conceptualize how this tripartite analysis works as applied to wine in Figure 9 Wine consumption tends to be weighted away from the utilitarian, but otherwise potentially equally concentrated on the experiential and symbolic categories, or possibly tending towards one or other of them depending on the precise situation of consumption

Figure 3.6: A purposive analysis of wine consumption

Source: Steve Charters, 2006 (Wine & Society – Elsevier Butterworth-Heinemann)

There is an increasing interest in the consumption and social meaning of food and drinks in the discipline of marketing There was a qualitative research covering symbolic, experiential and utilitarian purposes Enjoyment, situational factors, personal historical context, and lifestyle-related issues appeared to be crucial Additionally, cognitive dimensions, aesthetics, and memory-related factors are also significant although previously these have been less noted by researchers (Steve Charters; Simone Pettigrew., 2008) The themes they collected when asking people questions about why they drink wine can be summary as following:

Figure 3.7: Why do people drink wines?

Source: Steve Charters; Simone Pettigrew 2008

In this finding, each of the responses has been grouped with a number of others Broadly the first column relates to physical or utilitarian reasons for drinking wine (in fact these are the least likely to be mentioned, and the least important for most consumers) The second column details reasons which are generally experiential in character (sometimes called hedonic) – they link to what people feel when they drink The third column can broadly be classed as symbolic; these factors are connected to messages we convey when we drink – either to other people, about how we want them to see us, or to ourselves, relating to the self-image we try to create Note that this is not a neat division Thus, for example, the impact of alcohol may be utilitarian for an alcoholic who craves the drug or a factor in self-image for another drinker

Regarding the Marketing efforts of wine producers, country of origin and grape varieties are the most important wine attributes (Charles S Areni, 1999) Besides, when asked which wine bottle attribute was most important to their purchase decision, respondents considered price per bottle as the most important, followed by grape varietal and brand

name Women considered the wine brand name significantly more important than men and men considered the country of origin significantly more (Nelson Barber 2009)

3.4 Vietnamese Consumer Lifestyle

3.4.1 Vietnamese favor foreign brands

The preference for foreign brands has long existed in Vietnam Despite government promotion of domestically-made products in recent years, most Vietnamese continue to prefer foreign brands Two factors feed this preference First, higher incomes resulting from the country’s economic development mean more Vietnamese people can afford high-priced products and services Second, the newly emerging affluent classes in Vietnam want

to establish themselves as connoisseurs of fashion and use the ownership of foreign brands

to show off their wealth and status With the current tendency towards importing more products from abroad, Vietnamese shoppers have even more choices among foreign products The Vietnamese preference for foreign products isn’t going to change any time soon

According to the results of a survey on customers’ demands conducted by the Grey Group

in 16 countries in the Pacific region in 2007, 77% of Vietnamese favor foreign brands,

while across Asia the average is closer to 30% (Euromonitor, 2008)

3.4.2 Spending on alcoholic drink

Alcohol is a fundamental part of socializing in Vietnamese culture People drink when discussing issues and maintaining or building up relationships Alcoholic drinks are always available at parties and special occasions such as birthdays, weddings, and opening ceremonies Vietnamese people drink alcohol both when they are happy and sad

Vietnamese men usually drink beer or wine after work with their friends and business partners to maintain relationships or to discuss business issues There have also been more foreigners visiting and living in Vietnam There are many kinds of pubs and bars in Vietnam to satisfy all drinkers, from low-income to high-income drinkers, both foreign and Vietnamese

In the past, Vietnamese women traditionally were not allowed to drink alcohol However, western lifestyles imported to Vietnam have influenced the younger generations in Vietnam and now Vietnamese women are more often seen drinking beers and wines Images in the media of Vietnamese women drinking have helped to further relax attitudes

Vietnam has traditional alcoholic drink such as Ruou Chuoi Hot, Ruou Nep and Ruou De However, Vietnamese people do not buy these kinds of wines as gifts because they are not expensive To celebrate, the Vietnamese prefer imported products, and therefore, thanks to

their increasing income, have started to buy imported wines as gifts on special days Increasingly, they are drinking imported wines at home as well As a result, specialized shops selling imported wines have opened in Vietnam, especially in urban areas

The Vietnamese alcohol market is a profitable one because most Vietnamese men drink after work An estimated VND11,529.9 billion was spent on alcohol in 2007, an increase

of 40% from 2000 (Euromonitor, 2008)

3.4.3 Vietnamese drinking habits

Vietnamese people may go out to drink at bars, pubs or restaurants on weekdays with their friends after work Some of them invite their friends to drink at their homes with their families on weekends However, there has been an increasing tendency of going out to drink because Vietnamese women are increasingly unwilling to clean up after everyone – if friends gather to drink in a home; it is the women, not the men, who have to clean everything after the party

Younger generations – including young women – are now more open about drinking For them, it is just another way of socializing Moreover, as they have become more independent and dynamic and have more money, so drinking alcoholic products has

become common in their lives (Euromonitor, 2008)

3.5 Chapter Summary

This chapter has highlighted the previous research and theories which related to the key research concepts It has reviewed various consumer behavior models The motivation of wine consumption is also presented In particular, the utilitarian, experiential and symbolic benefits of wine are the main factors In addition, the Vietnamese consumer lifestyle issues relating to wine consumption has also been reviewed Based on these key concepts and the literature reviewed, the development of the research problem has been provided in the next chapter

4 RESEARCH DESIGN

4.1 Chapter Overview

Based on the literature review of Chapter Three, Chapter Four illustrates the research conceptual framework and outlines the key concepts in the framework Details of the research hypotheses are also presented Moreover, the concepts are operationalized to create the basis for the survey design Finally, the survey design, including the questionnaires, sampling method and sample size is described in details

4.2 Conceptual framework

Using the Input, Process, Output consumer behavior model, adapting the research of Steve Charters and taking into accounts Vietnamese consumer lifestyle, this study proposes a conceptual framework as follows:

Experiential benefits

Symbolic benefits

Figure 4.1: Conceptual framework

Source: Developed for this project

Marketing efforts of the wine producers or distributors comprise of the 4Ps of marketing mix (Product, Price, Place and Promotion) The Utilitarian (physical) benefits of wine will include the healthy and refreshness characteristics of wine On the other hand, the Experiential benefits and Symbolic benefits deal with the emotional aspects of wine drinker The Experiential benefits embrace the enjoyment and situational facets of wine drinking In addition, the Symbolic benefits describe the importance of ritual, the history perspective and the image of the wine drinkers All of these concepts and dimensions will

be used to measure the relationships between them and wine consumption level through the money spent on wine

4.3 Hypotheses Development

This section gives an outline of the developments of the four research hypotheses that were carried out to discover the factors and their impacts on consumer consumption of wine

H1: The marketing efforts have impact on money spent on wine

Hypothesis 1 aims to find out the relationships between each of the four company marketing efforts and consumers’ purchasing behavior It can discover whether the product features and price affects consumers’ wine spending behavior as well as the impact of the place and promotion Here we are not sure about the impact of price on wine; it might be both positive and negative

H2: The utilitarian benefits have positive impact on money spent on wine

Hypothesis 2 focuses on discovering the relationship between wine purchasing decisions and utilitarian benefits based on the money to spend on wine It can provide evidence as to whether physical benefits of wine influence consumers’ purchasing decisions It will also verify the trend of consuming wine because consumers think that it’s healthier than other alcoholic drinks

H3: The experiential benefits have positive impact on money spent on wine

Hypothesis 3 attempts to find out if there is any relationship between experiential benefits

of wine drinking and wine consumption The result of this hypothesis can indicate the level

of experience that the consumers would expect when consuming wine

H4: The symbolic benefits have positive impact on money spent on wine

Hypothesis 4 aims to know whether the symbolic benefits have effect on wine purchasing decision By knowing this, it can provide insight for marketers to produce differentiated concepts to convince the consumer on purchasing the product This hypothesis also verifies the status-oriented characteristic of Vietnamese consumer, especially on luxury product

4.4 Concept Operationalization

This section provides the anatomization of the concepts and dimensions of the conceptual framework The dimensions will be broken down to one or more elements that will be measured by different scales These elements will be used as variables in the survey and data analysis

In the marketing efforts concept, the product dimension should be described by the country

of origin and grape varieties These are most significant characteristics of the wine bottle that the consumers pay attention to Their level of importance will be measured by 5-level Likert scale The effect of price on consumer purchase decision also be measured by 5-level Likert scale Besides, the places where people tend to have wine will be explored via

nominal scale For the wine product, promotion dimension should include communication channels and packaging elements Similar to the place dimension, the preferred communication channels will also be found out by a nominal scale Finally, the weight of packaging element is measured by 5-level Likert scale

In his research, Charters suggested that utilitarian, experiential and symbolic benefits concepts can be describes by different elements (Charters, 2003) The Utilitarian benefits concept of wine could be simply described by healthy and refreshness elements On the other hand, the experiential benefits and symbolic benefits concept are more complicated

The experiential benefits concept can be explained by enjoyment and situation dimension The enjoyment of drinking wine is represented by the alcohol effect; diversity & intellectual challenge and taste elements Meanwhile, the situation of wine drinking can be described by social drinking, wine and food matching and relaxation elements

Moreover, the symbolic benefits concept can be measured by the importance of ritual, the history perspective and image dimensions The importance of ritual itself is also an element However, the history perspective should be explained by the family tradition and memory of wine drinking elements Finally, the image dimension is presented by lifestyle, self-image and status elements

All of the elements of utilitarian, experiential and symbolic benefits are measured by level Likert scale These elements, combined with the ones of marketing efforts concept, are the independent variables of the study

5-The dependent variable of the study, money spent on wine, is measured by two elements: the average bottles consumed per month and the average purchase price per bottle These elements are presented in nominal scale

Tables 1: Concept operationalization & Measurement Scale summarizes the concepts, dimensions and elements Figure 12: Detail conceptual framework describes the conceptual framework with all the details

Concept Dimension Element Measurement Scale Coding

Marketing

efforts

Product Country of Origin Inteval (5-level Likert) ME_COU

Grape Varieties Inteval (5-level Likert) ME_GRA

Promotion

Communication

Packaging Inteval (5-level Likert) ME_PAC

Utilitarian

benefits

on wine

Average purchase price per bottle Nominal MS_PRI Average bottles consumed per month

Table 4.1: Concept operationalization and measurement scales

Source: Developed for this project

Money spent on Wine

Marketing efforts

Utilitarian benefits

Experiential benefits

Symbolic benefits

SB_MEM SB_STA

SB_SEL

SB_LIF

MS_BOT

MS_PRI

Figure 4.2: Detail conceptual framework

Source: Developed for this project

by means of the average bottles consumed per month and average price per bottle The last section is the demographic data of the respondent It includes the age (question 23), average income (question 24) and sex (question 25) Finally, there is an open question (question 26) to collect other ideas of the respondent about wine drinking

4.5.3 Sample size

Sample size is the suitable number of respondents necessary for a study It is very difficult

to identify the exact number of people drinking wines in Ho Chi Minh City Because the population is unknown, this study uses the proportion technique to derive the sample size (Zikmund, 2000)

To determine the sample size, the study uses a formula based on a confidence level of 95 percent and sampling error of not greater than 5 percent

The formula is:

Where:

- n : First estimate of sample size

- : Square of confidence level in standard error units

- p : Estimated proportion of success

- q : Estimated proportion of failure, or (1 – p)

- : Square of the maximum percentage of allowance for error

If researchers have no information regarding the probable p values, researchers can assume that p = 0.5 and solve the sample size However, the pq ratio can never exceed 0.25 (Cooper and Schindler, 2003)

This study adopted a 95% confidence level, hence, the population parameter is ± 0.10 of the sample portion So, the sampling error or level of precision is ( 0.10/1.96) or 0.05

So, the sample size of this research is calculated as following:

Therefore, the selected sample size is 400 samples In order to have valid 400 responses,

450 questionnaires are used in the survey The personally administered survey aims to collect 300 valid responses; in the meantime the email administered survey seeks to have

100 valid responses

4.6 Chapter Summary

This chapter has illustrated the conceptual framework of the research In addition, it gave details of the construction of the four research hypotheses The concepts in the conceptual framework have been operationalized into twenty elements (independent variables) that are measured in the questionnaire In addition, the questionnaire also collects information about the two dependent variables Due to the limitation of resource, the study implements convenient sampling method (non-probability sampling) However, to ensure the statistical meaning of the study, a sample size of 400 is selected Data derived from the survey are analyzed and presented in the next chapter

5 DATA ANALYSIS & FINDINDS

5.1 Chapter Overview

This chapter presents the results and findings of this research First, it provides general descriptive information including the research response rate, the respondents’ age, gender and income Secondly, it describes the findings regarding the factors influencing the consumer behavior of wine, including the marketing efforts, utilitarian benefits, experiential benefits and symbolic benefits evaluated by the consumption volume and value Lastly, the results of each of the research hypotheses will be illustrated and summarized

5.2 General Descriptive Information

5.2.1 Research response rate

This survey was carried out over one month As mentioned in the research methods chapter, there were 450 questionnaires that were delivered The received responses are 414 that is equivalent to 92% Some of the respondents had never drunk wine and were, therefore, excluded from the analysis of this research The data were cleaned and the invalid responses were removed Finally, there were 386 valid cases were chosen for the data analysis This quantity meets the requirements of the sample size in the previous chapter

5.2.2 Gender, Age and Income

In this study, there are much more male respondents than female The percentage of male

is 82.4%, while the percentage of female is 17.6% Though the female drinkers of wine are increasing in Vietnam, men still are the dominant alcohol consumers

Figure 5.1: Gender of respondents

Source: Data of the study

In terms of respondents’ age, most of the sample population is under 30 years old, the most common group was between 20 – 29 years of age (77%) There were 14%, 5%, 3%, 1% and 0.3% of people aged between 30-39, under 20, 40-49, 50-59 and over 60, respectively

Figure 5.2: Age groups of respondents

Source: Data of the study

Regarding the average monthly income of the respondents, more than half of the sample population is from 3 – 7.5 millions VND The group of 3 – 4.5 millions and 4.5 – 7.5 millions is the most common with 38% and 35%, respectively The others are under 3