The impact of consumer ethnocentrism, perceived quality and perceived price on willingness to buy local household products evidence from ho chi minh city, vietnam

UNIVERSITY OF ECONOMICS HO CHI MINH CITYInternational School of Business ---Vu Dai Duong THE IMPACT OF CONSUMER ETHNOCENTRISM, PERCEIVED QUALITY AND PERCEIVED PRICE ON WILLINGNESS TO BU

UNIVERSITY OF ECONOMICS HO CHI MINH CITY

International School of Business

-Vu Dai Duong

THE IMPACT OF CONSUMER

ETHNOCENTRISM, PERCEIVED QUALITY AND PERCEIVED PRICE ON WILLINGNESS TO BUY LOCAL HOUSEHOLD PRODUCTS Evidence from Ho

Chi Minh City, Vietnam

ID: 22140066

SUPERVISOR: Dr Nguyen Thi Nguyet Que

Assoc Prof Tran Ha Minh Quan

First, I would like to express my gratitude and deepest appreciation to my two research supervisors, Dr Nguyen Thi Nguyet Que and Assoc Prof Tran Ha Minh Quan for their professional guidance, valuable advice, continuous encouragement, and motivatedsupport that made this thesis possible

Second, I would like to extend deep senses of gratitude to all lecturers who have

taught and transferred me valuable knowledge and experience during the period of Master of Business Administration course at International School of Business

Third, I would like to thank all the participants as well as my colleagues, my friends whodid contribute to this research

Personally, I wish to express my deep gratitude to my parents, my wife, my son and my younger sister for their spiritual support and encouragement during the time of study

Ho Chi Minh City, June 30th, 2017

Vu Dai Duong

The impact of consumer ethnocentrism, perceived quality and perceived price on willingness to buy local household products: Evidence from Ho Chi Minh City, Vietnam

Abstract

This paper examines the impact of consumer ethnocentrism, consumer’s perceived priceand consumer’s perceived quality on willingness to buy local household products in HoChi Minh city, the biggest city in Vietnam It also investigates the influence of consumerethnocentrism on perceived price and perceived quality of Vietnamese customer.Structural equation modeling was used to test the impact, utilizing a sample of 302consumers The result indicates that willingness to buy local household products ofVietnamese customers is affected positively by consumer ethnocentrism, consumer’sperceived price and consumer’s perceived quality In addition, consumer ethnocentrismhas a positive relationship with consumer’s perceived price and consumer’s perceivedquality Furthermore, the result also shows that the impact of consumer ethnocentrism onconsumer’s perceived price, on consumer’s perceived quality, and on willingness to buydomestically household products are not different in term of product categories, gender,age and income

Keywords:

Consumer ethnocentrism, perceived price, perceived quality, willingness to buy, localhousehold products

TABLE OF CONTENTS

CHAPTER 1 INTRODUCTION 1

1.1 RESEARCH BACKGROUND 1

1.2 PROBLEM STATEMENT AND RESEARCH OBJECTIVE 1

1.3 BENIFIT OF RESEARCH 5

1.4 RESEARCH METHOD AND STRUCTURE 5

CHAPTER 2 THEORETICAL BACKGROUND AND HYPOTHESES 7

2.1 THEORETICAL BACKGROUND 7

2.1.1 Willingness to buy 7

2.1.2 Consumer Ethnocentrism (CES) 7

2.1.3.Consumer Ethnocentrism Tendency Scale (CETSCALE) 9

2.1.4 Perceived Price 10

2.1.5 Perceived Quality 11

2.2 HYPOTHESES 12

2.2.1.Consumer Ethnocentrism and Perceived Price 12

2.2.2.Consumer Ethnocentrism and Perceived Quality 13

2.2.3.Consumer Ethnocentrism and Willingness to Buy 13

2.2.4.Perceived Price and Willingness to Buy 14

2.2.5.Perceived Quality and Willingness to Buy 15

2.2.6.Moderating effects of product categories and demographics 15

2.3 RESEARCH MODEL 18

CHAPTER 3 RESEARCH METHODS 19

3.1 PROCEDURE AND SAMPLE 19

3.1.1 Pilot Study 19

3.1.2 Main Study 20

3.2 DEFINING MEASUREMENT SCALES 23

3.2.1.Measurement scale for consumer ethnocentrism 23

3.2.2.Measurement scale for perceived price and perceived quality 23

3.2.3.Measurement scale for Willingness to Buy 24

3.2.4.Measurement scale for consumer’s gender, age and income level 24

CHAPTER 4 DATA ANALYSIS AND RESULT 25

4.1 DESCRIPTIVE STATISTICS 25

4.2 RELIABILITY TEST 26

4.3 EXPLORATORY FACTOR ANALYSIS (EFA) 28

4.4 CONFIRMATORY FACTOR ANALYSIS (CFA) 31

4.5 STRUCTURAL EQUATION MODELING (SEM) 33

4.6 MULTI-GROUP STRUCTURAL EQUATION MODELING (MGSEM) 36

CHAPTER 5 DISCUSSION, RECOMMENDATION, LIMITATION AND DIRECTION………41

5.1 DISCUSSION AND CONCLUSIONS 41

5.2 MANAGERIAL IMPLICATIONS 43

5.3 LIMITATION 44

5.4 DIRECTIONS FOR FUTURE RESEARCH 45

REFERENCE……….……….……….………47

APPENDIX 1: SOURCE OF MEASUREMENT ITEMS 55

APPENDIX 2: SURVEY QUESTIONNAIRE (ENGLISH VERSION) 56

APPENDIX 3: SURVEY QUESTIONNAIRE (VIETNAMESE VERSION) 64

APPENDIX 4: DATA CODING 72

APPENDIX 5: RELIABILITY TEST ‘S RESULT OF THE FULL-SCALE STUDY……… 73

APPENDIX 6: RESULT OF EFA 75

APPENDIX 7: RESULT OF CFA 77

APPENDIX 8: RESULT OF SEM 79

APPENDIX 9: RESULT OF MGSEM 80

LIST OF FIGURES

Figure 2.1 Research model 18

Figure 4.1 Confirmatory Factor Analysis (CFA) Model 31

Figure 4.2 Structural Equation Model (SEM) results 34

LIST OF TABLES Table 3.1 Distribution of the sample 22

Table 4.1 Descriptive Statistics – Results 25

Table 4.2 Fit indices for the test model result (CFA) 32

Table 4.3 Thresholds for the condition of validity and reliability 33

Table 4.4 Fit indices for the condition of validity and reliability 33

Table 4.5 Fit indices for the test model result (SEM) 35

Table 4.6 Hypotheses Test – Results (Standardized) 35

Table 4.7 MGSEM Product Results – P-VALUE 37

Table 4.8 MGSEM Gender Results – P-VALUE 38

Table 4.9 MGSEM Age Results – P-VALUE 38

Table 4.10 MGSEM Income Results – P-VALUE 39

CHAPTER 1. INTRODUCTION

Household goods industry currently has big growth potential in Vietnam According toVietstock (2015), consumption in household goods accounts 9% of total privateconsumption, and among 11 Vietnam major industries, household goods industry stands

at 4th in scale of consumption A report showed that the household products market inVietnam is valued at $13 billion But due to the globalization of world market, a lot offoreign companies can easily join in Vietnam household product market and try tooccupy market share Vietnamese household-appliance companies are concerned thatASEAN-imported products will dominate the local market, especially in traditionalmarkets and supermarkets, in the near future (Vietnamnet, 2015) Local companies indeveloping countries like Vietnam need to be able to compete effectively againstimported products if they don’t want to loss of household product market to foreigners.Therefore, demand for research about consumption in household goods is very necessary,but little research has been done in Vietnam

1.2 PROBLEM STATEMENT AND RESEARCH OBJECTIVE

In an effort to help local products, the campaign "Vietnamese people use Vietnamesegoods" was launched the first time in 2009 by the Party’s Political Bureau (VietnamFatherland Front, 2009) in the expectation that the willingness to buy of Vietnameseconsumers will increase in domestic products and decrease in foreign products Goingalong with this campaign, many Vietnam household companies have been successful in

attracting Vietnamese customers For example, in the Vietnam household plastic sector,according to Ministry of industry and trade of the socialist republic of Vietnam (2013),the household plastic products that manufactured in Vietnam dominant than the importedother from China, Indonesia, Thailand More specific, Vietnam household plastic goodshas occupied most of the domestic market share, with 90%, including highlights of majorbrands like Dai Dong Tien, Duy Tan, Long Thanh, Song Long

So how did this campaign help Vietnam household companies? At the simplest level, tooperate purchase behavior, consumers will estimate perceived value based on perceivedquality and perceived price of his own for such goods (Alhabeeb, 2002) According toDodds, Monroe, and Grewal (1991), perceived price and perceived quality hold a keyeffect on buyer’s product evaluation, and lead to willingness to buy that product.Therefore, the balance between quality and price is a good predictor of a preference forpurchasing domestic products However, in some cases, consumers prefer local productswhose quality and price is not good as that of imported products, and Shimp and Sharma(1987) named this social psychological factor is ethnocentrism The campaign "Vietnamese people use Vietnamese goods" of Vietnam government is also based on thisphenomenon Ethnocentrism is defined as self-consciousness of evaluating yourcommunity have a higher value, better than other communities In the field of marketing,special kind of ethnocentric is Consumer Ethnocentrism Consumer Ethnocentrism hasbeen researched and confirmed the impact of it on willingness to buy domestic productthrough a lot of researches in the developed countries (Shimp & Sharm, 1987; Watson &Wright, 2000; Josiassen, Assaf & Karpen, 2011; Chryssochoidis, Krystallis & Perreas,

2007) However, the majority of these studies have been undertaken in advancedeconomies Little research has been done in developing countries such as Vietnam.

In addition, because of the domestic bias of consumer ethnocentrism, the customerperception about price and quality of local product also seem to be affected The resultfrom Hau, Quynh and Anh (2011) found the effect of consumer ethnocentrism oncustomer’s perceived price when buying product made in Vietnam Tong and Li (2013)also found the effect of consumer ethnocentrism on customer's perceived quality whendid a study in China, a developing country like Vietnam

Although consumer ethnocentrism seems to help local household companies a lot inattracting Vietnamese people, but in some household products that require moretechnique or high-costing, that impact doesn’t seem to work For example, according toKhanh Chi (2015), electronics and refrigeration products imported from Thailandaccounted for 70% market share The local household plastics products occupy most ofthe domestic market share, but in high price segment, the share of them is very small,most of market share is hold by Lock & Lock and other foreign companies (Hoang Lam,2012) This phenomenon shows that local products can satisfy demand for cheap costs,but if the economy develops well and people's living conditions improve, someconsumers will possibly shift their options to use imported luxury products According toThanh Tu (2015), reports at the seminar "Purchasing Behavior of Vietnamese people withlocal and foreign products in the era of globalization" held by National EconomicUniversity in collaboration with the Domestic Market Department - Ministry of Industryand Trade said that Vietnamese people still have psychology in preference for foreign

goods in spite of higher prices than the same type and quality goods from domestic.About 20% of Vietnam's population have high and quite high incomes, accounting for80% of country's spending, but they prefer foreign goods and say no with local products(Tran Thuy, 2015) Therefore, ethnocentric tendencies of consumers could be expected tovary depending on how the product is perceived A number of researcher (Sharma, Shimp

& Shin, 1995; Tho, Trang & Nigel, 2008; Josiassen et al., 2011; Aziz, Bahadur, Sarwar,Farooq & Arshad, 2014) point out that the degree of consumer ethnocentric tendenciesvaries according to demographic characteristics such as age, gender, income and productcategories And these factors not only predict levels of consumer ethnocentrism, but alsomoderate the impacts of such tendencies on willingness to buy However, in Vietnammarket, there are limited research that study about those changes

According to the reviews above, this study tries to address three issues First, it attempts

to find the impact of consumer ethnocentrism on consumer’s perceived price, onconsumer’s perceived quality in Vietnam household products Second, it examines theimpact of consumer ethnocentrism, consumer’s perceived price and consumer’sperceived quality on the willingness to buy local household product of Vietnam Third, ittries to extend the literature on consumer ethnocentrism by investigating not only theinfluence of demographic variables and product categories on predicting consumerethnocentrism, but also whether these demographic variables and product categoriesmoderate the impacts of consumer ethnocentrism on consumer’s perceived price, onconsumer’s perceived quality, and on willingness to buy domestically householdproducts

1.3 BENIFIT OF RESEARCH

This research is expected to contribute to the literature in different ways First, it providesempirical evidence from Vietnam market on the impact of consumer ethnocentrism,consumer’s perceived price, consumer’s perceived quality on willingness to buy domestichousehold product Second, it is the first study about the mix effect of consumer’sperceived price, consumer’s perceived quality, consumer ethnocentrism on thewillingness to buy of household products in Vietnam market Thirdly, this studydemonstrates that consumer ethnocentrism affects on willingness to buy local householdproduct even in developing country Fourth, this study maybe suggests that the impacts ofconsumer ethnocentrism on consumer’s perceived price, on consumer’s perceivedquality, and on willingness to buy domestically household products may vary depending

on product category and demographic characteristic Finally, result of this study will helpVietnam household companies build the appropriate marketing activities with productsand content in each segmentation, from that they will gain leverage and bring theirproducts to more and more consumers

1.4 RESEARCH METHOD AND STRUCTURE

This research is conducted in Ho Chi Minh City (HCMC) – the biggest city located in theSouth of Vietnam Currently, HCMC is the economic, technology and financial hub ofVietnam, which attracts migrants from other provinces As a result of this, the city’sofficial population was 8,146,300 in 2015 (General Statistics Office, 2015) Therefore,this place has more household product users than other places or areas

The rest of this research is organized around the five key points: literature reviews andresearch hypotheses; method; data analysis and results; discussion and implications;limitations and directions for future research.

CHAPTER 2. THEORETICAL BACKGROUND AND HYPOTHESES 2.1 THEORETICAL BACKGROUND

2.1.1 Willingness to buy

Willingness is defined as the quality or state of being prepared to do something(Oxforddictionaries, n.d) Therefore, willingness to buy means the state that a consumerwill being prepared to do a purchase behavior for a given quantity of goods or services.The possibility that a consumer will do purchase behavior on a particular productresulting from the interaction of his or her need for it, attitude towards it and perceptions

of it and of the company which produces it According to Theory of Planned Behavior(TPB) of Ajzen (2005), behavior can predict base on previous intentions Base on thistheory, intention or tendency is the core factor that affects behavior So purchaseintention is a measure of the willingness to buy a product and it is the probability that aconsumer will buy a product or service Dodds et al (1991) and Grewal, Monroe, andKrishnan (1998) said that purchase intention is the willingness of a consumer to buy aparticular product According to Hau, Minh, and Tuan (2013), willingness to buyrepresents the extent to which a consumer has positive attitude towards purchasing aproduct Therefore, in this research, the willingness to buy consists the customer ‘spositive attitude of buying Vietnam household products, the intention to buy them and therecommendation for them to another customer

2.1.2 Consumer Ethnocentrism (CES)

Ethnocentrism is a word composed of two terms “ethnic” (which means group) and

“centrism” (which means focused) Shimp and Sharma (1987) defined ethnocentrism as a

“the universal proclivity for people to view their own group as the center of the universe,

to interpret other social units from the perspective of their own group, and to reject

persons who are culturally dissimilar while blindly accepting those who are culturally like themselves” In other words, a person with a high ethnocentrism often is proud of hisgroup, often enhances value, culture and people that belong to his group and tend to underestimate values and standards of other groups (Chryssochoidis et al., 2007) Tho et

al (2008) showed that ethnocentrism is an evaluative perspective, which means

ethnocentric person will evaluate all other cultures by the standards of one’s own culture The term consumer ethnocentrism is adapted from general concept of ethnocentrism which was first introduced by Sumner in 1906 (Shimp & Sharma, 1987) They defined consumer ethnocentrism as a unique form of ethnocentric in marketing, it is “the beliefs held by consumers about the appropriateness, indeed morality of purchasing foreign-made product and the loyalty of consumers to the products manufactured in their home country.” Consumer ethnocentrism has a direct and negative impact on consumers'

purchase intention towards foreign products These imply that the high ethnocentric tendencies lead to unfavorable attitude towards lower purchase intentions for foreign products According to Shimp and Sharma (1987), Klein and Ettenson (1999)

ethnocentric consumers will refuse to buy foreign products because to do so is damaging

to the national economy, lead to unemployment, and is unpatriotic Even when foreign products are superior in quality or price to domestic products, some consumers still desire

to purchase domestically Non-ethnocentric consumers, however, evaluate products based

on their objective attributes, without considerations of country of origin of product

(Shimp & Sharma, 1987) Therefore, the consequences of consumer ethnocentrisminclude (1) an overestimation of the quality and value of domestic products orunderestimation of imports, (2) a moral obligation to buy domestic products, and (3) anintense preference for domestic products Hence consumer ethnocentrism can beconsidered an antecedent to “willingness to buy” domestic products in general.

Shimp and Sharma (1987) also stated that the ethnocentrism of each customer is differentbecause of the influence of socioeconomic, demographic, geographic, and regionaleconomic factors, which play a role in accentuating ethnocentric tendencies duringadulthood Sharma et al (1995) confirmed that product categories and consumerdemographic characteristics (such as gender, income and age) influence consumerethnocentric tendencies in Korea Josiassen et al (2011) found that consumer tendenciesfor ethnocentrism are directly influenced by characteristics of the customer Therefore,when researching about ethnocentrism, we can’t ignore the impact of demographicfactors to identify ethnocentric differences of each customer segment

2.1.3 Consumer Ethnocentrism Tendency Scale (CETSCALE)

The measurement of consumer ethnocentrism was first developed by Shimp and Sharma

in 1987 with the development of the Consumer Ethnocentrism Tendency Scale(CETSCALE) at USA In their study, they proved that consumer ethnocentrism canmeasure, explain and provide answers to why and to what extent consumers preferdomestic products instead of foreign They used the term “tendency” instead of “attitude”because this scale can explain the consumer decision to buy the most appropriate productfor them This scale has been widely used to measure consumer ethnocentrism tendencies

in many studies within developed and in the developing countries (Balabanis &Diamantopoulos, 2004; Chryssochoidis et al., 2007; Josiassen et al., 2011; Hau et al.,2011; Qing, Lobo & Chongguang, 2012; Maina, Kibera & Munyoki, 2015).

Follow Shimp and Sharma (1987), CETSCALE is a unidirectional measure scale with 17variables, a lot of researches also convinced this express (Kucukemiroglu, 1999; Watson

& Wright, 2000; Wong, Polonsky & Garma, 2008) But, when Douglas and Nijssen(2003) did a study about using the borrowed scale in cross-national research, morespecific in applying the CETSCALE in The Netherlands, they came to an importantresult: the CETSCALE must be considered to compatible with each country, somevariables in the CETSCALE must be adjusted base on economic, culture andcharacteristic of each country

2.1.4 Perceived Price

Price is an indicator of the amount of financial sacrifice required to purchase a product(Dodds et al., 1991; Zeithaml, 1988) According to Zeithaml (1988) consumers do notalways know or remember actual price of product price, instead they encode prices in away that is meaningful to them There are two types of price most commonly used in theliterature, objective price and perceived price (Zeithaml, 1988; Jacoby & Olson, 1977).According to Beneke and Zimmerman (2014), objective price is the actual price ofproduct, in other side the perceived price is the process that each customer encodes theprice and makes it meaningful to him or her This encoding process is the comparisonbetween objective price (the actual price of product or service) and reference price (the

price is the customer’s perceptual representation or subjective perception of the objectiveprice of product or service) (Zeithaml 1988; Jacoby & Olson 1977) In consequence, theperceived price is the evaluation of customer about the valuable of between what theywere, are or will be sacrificed to exchange and what they were, are or will be received.Perceived price will be different with each consumer, product, purchase situation andtime (Dodds et al., 1991).

2.1.5 Perceived Quality

Quality in ISO 9000:2000 is defined as “the degree to which a set of inherentcharacteristics fulfils a need or expectation that is stated, generally implied or obligatory”(Hoyle, 2011) Zeithaml (1988) defined the term “objective quality” refers to measurableand verifiable superiority on some predetermined ideal standard or standards Therefore,according to Zeithaml (1988) and Alhabeeb (2002), the perceived quality is “theconsumer’s judgment or his global assessment about the superiority or excellent of thatproduct” Base on Business Dictionary (2016), perceived quality is defined as

“Consumer's opinion of a product's (or a brand's) ability to fulfill his or her expectations

It may have little or nothing to do with the actual excellence of the product, and is based

on the firm's (or brand's) current public image (see corporate image), consumer'sexperience with the firm's other products, and the influence of the opinion leaders,consumer's peer group, and others.” Although perceived quality has a lot of definitionsfrom many scholars, each of them has a shared common meaning; that is, perceivedquality is the consumer’s judgment of quality of overall components of product relative

to the expectation of quality, in both tangible and intangible characteristics It may also

include performance, features, reliability, conformance, durability, serviceability, andaesthetics of product Hence in this sense, perceived quality seems to be a highlysubjective and relativistic concept (Alhabeeb, 2002), the value and scope of which woulddifferent depending on the subject and the type of product.

2.2 HYPOTHESES

2.2.1 Consumer Ethnocentrism and Perceived Price

As we defined above, perceived price of each customer is different because it dependslargely on each customer ‘s feeling, perceptual representation and evaluation aboutproduct or service that he or she want to buy (Dodds et al., 1991) With the same productwith the same price, a customer with a good feeling in it will feel its price cheaper thanthe one who has a bad feeling in it Meanwhile, consumer ethnocentrism affects strongly

on feeling of customer on product According to Tho et al (2008) ethnocentricconsumers are likely to value highly products belonging to their own group and to de-value products which do not belong to their group Consequently, we must consider theeffect of consumer ethnocentrism on customer’s perceived price in this research Theresult from Hau et al (2011) also found that effect when buying product made inVietnam So, we can conclude the first hypothesis we must do is:

H1 Consumer ethnocentrism positively affects customer’s perceived price for local

household products in Vietnam.

2.2.2 Consumer Ethnocentrism and Perceived Quality

Because the consequence of consumer ethnocentrism as we analyzed above is anoverestimation of the quality of local products, therefore the effect of consumerethnocentrism on perceived quality of the local household products in Vietnam must beconsidered as one hypothesis in this study Consumer ethnocentrism was found toinfluence assessment of the perceived quality of both domestic and foreign products inemerging economies such as Greece (Chryssochoidis et al., 2007) Tong and Li (2013)also confirm this effect of consumer ethnocentrism when did a study in China, adeveloping country like Vietnam So, the second hypothesis is:

H2 Consumer ethnocentrism positively affects customer’s perceived quality for domestic

household products in Vietnam.

2.2.3 Consumer Ethnocentrism and Willingness to Buy

By making clearly about definition and consequences of consumer ethnocentrism above,

we can easily see the relationship between consumer ethnocentrism and willingness tobuy According to Wang and Chen (2004), there is an impact of consumer ethnocentrism

on willingness to buy in the context of a developing country, namely the People’sRepublic of China Tho et al (2008) found that in Vietnam, consumer ethnocentrismplays an important role in the likelihood of purchasing local products Many other studiesalso demonstrated that consumer ethnocentrism has a negative impact to willingness tobuy foreign products, in other word it has a positive impact on willingness to buydomestic product, even in developing countries (Klein, Ettenson & Morris, 1998;Balabanis & Diamantopoulos, 2004; Hau et al., 2011) Because this study mainly focuses

on local product, so we hypothesize that the willingness to buy local products ispositively affected by consumer ethnocentrism The more consumer ethnocentrism incustomer, the more likely they will increase their willingness to buy for Vietnamproducts So, our third hypothesis is defined as following:

H3 Consumer ethnocentrism positively affects customer’s willingness to buy local

household products in Vietnam.

2.2.4 Perceived Price and Willingness to Buy

As we mentioned above, the perceived price is the evaluation of customer about thevaluable of between what they were, are or will be sacrificed to exchange and what theywere, are or will be received Therefore, the change in price will strongly impact on thisevaluation, from that will impact on the willingness to buy of consumer Dodds andMonroe (1985) found that price negatively influences willingness to buy, and the resultsfrom Dodds et al (1991) also confirm this a negative relationship These studies foundthat if the price goes over the sacrifice that consumer willing to exchange, they will codethat product as “expensive” and consider to stop buying that product with that price, or ifthe price goes below the sacrifice, consumer will code that product as “cheap” andincrease the willingness to buy for it Hence, when the consumers feel that the price ofVietnam household product is in the acceptable threshold, worthy of what they must to besacrificed, they will have a high promotion to buy that product And the study from Hau

et al (2011) also found that if a Vietnamese customer has a higher perceived price aboutproduct, he or she will also have a higher willingness to buy for that product Therefore,the next hypothesis is:

H4 Perceived price of local household products in Vietnam positively affects customer’s

willingness to buy these products.

2.2.5 Perceived Quality and Willingness to Buy

Dodds et al (1991) stated that perceived quality has a positive impact to willingness tobuy The good perception of product quality will encourage customers to buy the product,and perceived quality of product has a correlation with the intention to buy a product.Although ethnocentrism does a great help for domestic product, but from the study ofQing et al (2012), in developing countries, consumer often highly assess the quality ofimported product, especially product from a country with a better image (e.g it is highlyindustrialized or economically developed) Therefore, to deeply understanding thewillingness to buy for Vietnam household products, we must consider the impact ofperceived quality on willingness to buy So the next hypothesis is:

H5 Perceived quality of local household products in Vietnam positively affects

customer’s willingness to these products.

2.2.6 Moderating effects of product categories and demographics

This study investigates the moderating effects of product category (low-price and price) and demographic characteristic on the impacts of consumer ethnocentrism onconsumer’s perceived price, on consumer’s perceived quality, and on willingness to buydomestically household products Previous research in other countries shows that thedegree of consumer ethnocentric tendencies varies according to demographiccharacteristics such as age, gender, and income, as well as product category (Shimp &Sharma, 1987; Aziz et al., 2014; Sharma et al., 1995; Josiassen et al., 2011; Pentz,

high-Terblanche & Boshoff, 2014; Balabanis & Diamantopoulos, 2004) For examples, Shimpand Sharma (1987) found that ethnocentric consumers are not uniform for all members ofthe community, because it formed a close relationship to knowledge, experience andeconomic conditions of each individual Aziz et al (2014) concluded that maleconsumers, older, low income consumers seem to have higher ethnocentric tendencies.Sharma et al (1995) also found that consumers with higher income exhibit significantlyless ethnocentric tendencies than consumers with lower income, and they also found thatthere is a significant difference between male and female consumers Josiassen et al.(2011) stated that the degree of consumer ethnocentric tendencies varies according todemographic characteristics such as age, gender For example, older consumers have atendency to be more ethnocentric than younger consumers and ethnocentric tendenciesare more prevalent among female consumers than among male consumers (Josiassen etal., 2011) Pentz et al (2014) suggest that consumers with higher incomes seem to be lessethnocentric than consumers with lower incomes In terms of product categories,Balabanis and Diamantopoulos (2004) found that the impact of ethnocentric tendencies

on product judgment and purchase intention may vary depending on how the product isperceived, i.e., high-involvement or low-involvement In Vietnam, Tho et al (2008)found the impacts of consumer ethnocentrism on intention to purchase local products arenot different in terms of product categories, gender, income, and education levels.However, differences exist between younger and older consumers Overall, it appears thatproduct categories and consumer demographic characteristics have an impact on thedegree of consumer ethnocentric tendencies Therefore, the last hypothesis is:

H6a The impact of consumer ethnocentrism on consumer’s perceived price, on

consumer’s perceived quality, and on willingness to buy domestically household products are weaker for the high involvement product category than for the low involvement product category.

H6b The impact of consumer ethnocentrism on consumer’s perceived price, on

consumer’s perceived quality, and on willingness to buy domestically household products are weaker for female consumers than male consumers.

H6c The impact of consumer ethnocentrism on consumer’s perceived price, on

consumer’s perceived quality, and on willingness to buy domestically household products are weaker for young consumers than for older consumer.

H6d The impact of consumer ethnocentrism on consumer’s perceived price, on

consumer’s perceived quality, and on willingness to buy domestically household products are weaker for higher income consumers than for lower income consumers.

2.3 RESEARCH MODEL

From 6 above hypotheses, we can draw a research model as figure 1

Figure 2.1 Research model

CHAPTER 3. RESEARCH METHODS 3.1 PROCEDURE AND SAMPLE

This research consisted of two phases, a pilot study and a main study, and was conducted

in Ho Chi Minh City The pilot study aimed to explore certain issues before undertakingthe main study There were two product categories: local household plastic products andlocal household electric products Local household plastic products are low-cost and low-involvement products whilst local household electric products are high-cost and highinvolvement products These categories were chosen because they represent a variety oflocal household products, and the statistic of them is easy to collect In addition, themarkets for these two product categories are very different

The pilot study in this research was undertaken by qualitative method while the mainstudy used quantitative method This research focused on the factors affecting on thewillingness to buy towards Vietnam household product, especially the role of consumerethnocentrism, perceived quality and perceived price of individual customer So, the unit

of analysis was an individual customer The research site was Ho Chi Minh City, themost important economic center in Vietnam

3.1.1 Pilot Study

In-depth interviews were used in the qualitative phase Since the measurement scales areoriginally in English and translated to Vietnamese so the purpose of this qualitativeresearch is to ensure the meaning of the measurement scales This qualitative research is

to evaluate the use of terminology in questionnaire as well as to adjust the terminology to

be suitable, to keep the meaning of measurement scales unchanged when being translatedfrom English to Vietnamese before the official quantitative research is conducted Therewere 12 groups of consumers (3 demographics 2 categories 2 products) underinvestigation Therefore, the study first, conducted a series of in-depth interviews with 12consumers had much shopping experiences in HCM City Each participant would beinvestigated separately All participants are living in Ho Chi Minh City Base on theresult of interviewing with 12 consumers, the measurement scales as well as thequestionnaire were modified a little in wording before implementing quantitativeresearch After modifying the questionnaire in Vietnamese, we again interviewed 2 moreconsumers to consider again if any pending issue with the measurement scales and theirmeaning These 2 consumers were asked the same questions as we did in previousinterviews with 12 consumers The result showed that their understanding formeasurement scales was matched with what we expected The questionnaire wasconcluded as being clear; consumers understood the content and the meaning ofmeasurement scales’ questions Therefore, these measurement scales in Vietnamese werethen used in quantitative research.

3.1.2 Main Study

The primary data was collected via direct handout survey or indirect through email oronline survey A link of online survey was established in Google Forms and sent out toparticipants (colleagues and friends who are buying domestic products) via mail.Participants clicked on the link that led them to the electronic questionnaire and filled intheir answers In the meantime, handout survey was also distributed to consumers in

super markets, traditional markets, and convenience store Consumers filled in theiranswers to the questionnaire form and returned to surveyors This study had 2questionnaire forms, 1 form about local household plastic products and 1 form aboutlocal household electric products Each participant only answered 1 questionnaire form.Each questionnaire went out with instructions of how to complete it In order to minimizepossible response bias, instructions also emphasized that the study only focused on therespondents’ personal opinions There were no right or wrong answers The purpose ofthe main study was to assess the scales and test the models The control characteristicswere age and income With age characteristics, because Tho et al (2008) found that theimpacts of consumer ethnocentrism on intention to purchase local products is differentbetween younger (age: 21-30) and older (age: 31-45) consumers in Vietnam, thereforethis study would also be targeted only respondent aged from 21 to 45 (younger: 21–30;older: 31–45) With income characteristics, Vietnam Government (2013) issued Decree

No 65/2013/ND-CP detailing a number of Articles of the Law on PIT and the amendingLaw, supplementing a number of Articles of the Law on PIT This Decree stated clearlythat labors who have do not pay personal income tax (income is lower than VND 9million per month) are low income earners So, this study also used VND 9 million permonth to divide participants into lower income group and higher income group

Total 400 surveys were sent to participants (200 surveys about local household plasticproducts and 200 surveys about local household electric products) Among 400 surveys,there were 302 valid responses over 310 responses Consequently, the final sample sizewas 302

Table 3.1 presents the sample characteristics:

Table 3.1 Distribution of the sample

Collected data was then analyzed with the statistical software packages of SPSS and

AMOS The process of data analysis was as follows:

• Data was coding and entering to SPSS and AMOS softwares

• Provide the summary of those factors in measurements by descriptive statistics

• Test the reliability of the sample data by using the Cronbach’s alpha value to determine the consistency or stability of all scales

• Test convergent and discriminant of factors by using exploratory factor analysis (EFA)

• Assess the validity and reliability of measures by using confirmatory factor analysis(CFA)

• Analyze and test research model by using structural equation model (SEM)

• Examine the moderating effects of product categories and demographic

characteristics by using multi-group structural equation model (MGSEM)

3.2 DEFINING MEASUREMENT SCALES

There are five research concepts in this research that we must measure, which are:consumer ethnocentrism, perceive price, perceive quality, willingness to buy, consumer’sgender, age and income level

Based on the literature review, this study designed the measurement scales from previousresearches (See Appendix 1) for the model’s constructs and rephrased them to adapt thecontext of the current research All of measurement items used a 5-point Likert-typescale, anchored from 1 (completely disagree) to 5 (completely agree)

3.2.1 Measurement scale for consumer ethnocentrism

Consumer ethnocentrism was measured by CETSCALE, was first developed by Shimpand Sharma in 1987 This scale include 17 variables, were show in Table 1 But as Imentioned above, some variables in the CETSCALE must be adjusted base on economic,culture and characteristic of each country Klein, Ettenson, and Krishnan (2006) foundedthat CETSCALE can be used effectively in the transition economies of China and Russia,and they found a consistent pattern of support is found for the six-item CETSCALE.Because Vietnam also has a transition economy, like China, so in this research, consumerethnocentrism was measured by six items based upon Klein et al (2006), were show inAppendix 1

3.2.2 Measurement scale for perceived price and perceived quality

Customer’s perceived price of Vietnam household products measures the evaluation ofcustomer about these products Customer’s perceived quality of Vietnam householdproducts measures the consumer’s judgment of quality of overall components of product

relative to the expectation of quality Perceived price and perceived quality were

measured by six items borrowing from Hau et al (2013), were show in Appendix 1

3.2.3 Measurement scale for Willingness to Buy

The scale for willingness to buy local household products in Vietnam adopted also from Hau et al (2013) It includes 3 variables, were show in Appendix 1

3.2.4 Measurement scale for consumer’s gender, age and income level

Consumers’ gender, age and income level are directly measured by asking consumers on their gender, age and income

CHAPTER 4 DATA ANALYSIS AND RESULT

4.1 DESCRIPTIVE STATISTICS

Some basic statistic numbers of collected data are presented in following table Alldependent factor (willingness to buy) and independent factors (perceived price, perceivedquality and consumer ethnocentrism) were measured based on Likert‘s scale which hasminimum value is 1 (strongly disagree) to maximum value is 5 (strongly agree)

Table 4.1 Descriptive Statistics – Results

of quality.

PP1 Local product is reasonably priced 302 2 5 3.91 703 PP2 Local product offers value for money 302 1 5 3.91 714 PP3 Local product is a good product for the

price.

CE1 Only those products that are unavailable

in Vietnam should be imported.

CE2 Vietnamese products, first, last, and

CE4 Vietnamese should not buy foreign

products, because this hurts Vietnamese 302 1 5 3.22 1.471 business and causes unemployment.

CE5 It may cost me in the long-run but I prefer

to support Vietnamese products.

CE6 Vietnamese consumers who purchase

products made in other countries are

responsible for putting their fellow

Vietnamese out of work.

WB1 I would be willing to buy local product if

it is available at the store.

WB2 I would recommend local product to

WB3 I would buy local product even if there is

another brand at the same quality and

price.

25

Perceived quality (PQ)

Empirical data showed that the perceived quality of local product in consumers is nothigh All means of three score are lower than 2.5 and higher than 2.0 This findingindicates that Vietnam consumers don’t have high knowledge in quality of local products

Perceived priced (PP)

In contrast, empirical data showed that the perceived price of local product in consumers

is very high All means of three score are approximate 4.0 This finding indicates thatVietnam consumers believe that price of local products is very comfortable for them

Consumer ethnocentrism (CE)

Empirical data showed that the consumer ethnocentrism is high All means of three scoreare greater 3.0 This finding indicates that all participants in this research have highethnocentrism This phenomenon is consistent with our national traditions, which comesfrom patriotism and the protection for national economic avoid the bad impacts fromimported products

Willingness to Buy (WB)

Empirical data shows that the willingness to buy local products of consumers is high Allmeans of three score are greater 3.6 This finding indicates that Vietnam consumers arewilling to buy domestics goods

(Gliem & Gliem, 2003) The value of Cronbach’s alpha need to be accepted is over 0.7and any variables which the Item-total correlation are smaller than 0.3 will be deleted.

Perceived quality (PQ)

From table 5.1 and 5.2 in Appendix 5, the value of Cronbach’s alpha of perceived quality

is 0.883 > 0.7 and the values of Item-total correlation of all three items of perceivedquality are over 0.3 This result demonstrates that the measurement scale of perceivedquality is well designed and trustworthy, and all three items PQ1, PQ2, PQ3 of perceivedquality should be kept in this research

Perceived price (PP)

From table 5.3 and 5.4 in Appendix 5, the value of Cronbach’s alpha of perceived price is0.849 > 0.7 and the values of Item-total correlation of all three items of perceived priceare over 0.3 This result demonstrates that the measurement scale of perceived price iswell designed and trustworthy, and all three items PP1, PP2, PP3 of perceived priceshould be kept in this research

Consumer ethnocentrism (CES)

From table 5.5, 5.6, 5.7, 5.8, 5.9 and table 5.10 in Appendix 5, we must delete 2 itemsCE4 and CE6 of consumer ethnocentrism to get the trustworthy for measurement scale ofconsumer ethnocentrism After deleted CE4 and CE6, the value of Cronbach’s alpha ofconsumer ethnocentrism increases from 0.659 to 0.883 > 0.7 and the values of Item-totalcorrelation of all four remain items of consumer ethnocentrism are over 0.3 This resultdemonstrates that after deleted CE4 and CE6, the measurement scale of consumer

ethnocentrism is well designed and trustworthy, and all four remain items CE1, CE2,CE3, CE5 of consumer ethnocentrism should be kept in this research.

Exploratory Factor Analysis is a technique to evaluate interdependence It studies allinterrelationships without defining variables to be dependent or independent In thisresearch, Exploratory factor analysis (EFA) is applied to test the model with KMO andBarltlett’s combined with Promax rotation which are highly recommended for structuralequation modeling (SEM)

• Measure for Factor Loading (Hair, Black, Babin & Anderson, 2010) :

o Factor Loading >= 0.3: sample size >= 350

o Factor Loading >= 0.5: 100 < sample size < 350

o Factor Loading >= 0.75: 50 < sample size < 100

• KMO (Kaiser -Meyer-Olkin) measure of sampling adequacy with KMO from 0.6

to 1 is a good factor analysis (Gerbing & Andension, 1998)

• Bartlett’s test of Sphericity should be significant (Sig < 0.05) for factor analysis to

be considered appropriate (Gerbing & Andension, 1998)

• Total Variance Explained needs to be over 50% (Gerbing & Andension, 1998).

• Eigen-value of each factor must above 1 to be accepted

• Item that less than 0.5 and item that distributes in 2 or more components/factors with difference less than 0.3 will be eliminated

• Convergent validity: all items comprising a scale must load highly (> 0.40 or 0.50)

on the factor representing the underlying construct

• Discriminant validity: No item load highly (> 0.40 or 0.50) on more than one factor

In this thesis, after run Cronbach alpha to test reliability, we deleted CE4 and CE6, westill have 13 observed variables of 4 measure scales All 13 variables would be given ofthe use of factor analysis

Test the appropriate of EFA Model (Kaiser-Meyer-Olkin)

From the table 6.1 in Appendix 6, KMO (Kaiser-Meyer-Olkin) has value = 0.827, itsatisfies condition: 0.5 <= KMO <= 1

Conclusion: EFA is appropriate for this research data

Test the correlation between the observed variables (Bartlett's Test of Sphericity)

H0: The correlation of variables is 0

From the table 6.1 in Appendix 6, the statistical significance sig = 0.000 < 0.05: H0

will be rejected, indicating that the correlation matrix is significantly different from an identity matrix, in which correlations between variables are all zero Conclusion: The observed variables are correlated with each other in each factor

Test cumulative variance of elements (% Cumulative variance)

In total variance explained table, only factor that has total variance explained is greaterthan 50% is accepted

In table 6.2 in Appendix 6, the total variance explained at line Factor 4 and and

column Cumulative % has the value is 68.533% > 50%: satisfy condition

In table 6.2 in Appendix 6, the Eigenvalues of Factor 1, Factor 2, Factor 3, Factor 4 are: 5.142, 2.021, 1.569, 1.396 All of them are greater than 1: Four factors are accepted

Conclusion: 68.533% of the variance is accounted for by the first fours factors

Test the value of Factor loading

According to table 6.3 in Appendix 6, table Pattern Matrix, the factor analysis has pulled out 4 major factors from 13 variables whereas the number of factors in the initial researchmodel is also 4 All observed variables in each factor have the values of factor loading > 0.55, all items comprising a scale load highly on the factor representing the underlying construct of research model No item load highly on more than one factor

Conclusion: All 4 factors in initial research model are convergent and discriminant andthey are suitable for research model

4.4 CONFIRMATORY FACTOR ANALYSIS (CFA)

Figure 4.1 Confirmatory Factor Analysis (CFA) Model

Confirmatory Factory Analysis is a better method to assess the validity and reliability ofmeasures (Bagozzi & Foxall, 1996) The goodness-of-fit of CFA is used to furtherassess the unidimensionality and convergent validity among the constructs